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of the crisis would be no mean feat. we should not harbour unrealistic ambitions of growth that cannot be achieved in the present circumstances. bis central bankers β speeches the sovereign debt crisis leaves its mark in practically all areas, and the european banks play a major role in the crisis. in the eu, the largest banks were stress tested in the summer of 2011, and in the autumn a capital test was performed of the banks with market valuation of government securities. the banks should have a core tier 1 ratio of 9 per cent as a buffer against the storm. if they do not meet this requirement, they should seek to raise capital and retain profits. ultimately, government capital injections may be required. moreover, there is agreement in the eu that it should be possible for member states to decide to provide more individual government guarantees to their banks on uniform conditions, along the lines of the scheme we have applied in denmark. indeed, bank rescue package 2 means that there is still heavy government involvement in the danish banking sector by way of both government capital injections and individual government - guaranteed bond loans. these measures are temporary and were intended to provide the necessary breathing space to adjust the capital base, sources of funding and business models. right now it looks as if the danish banks will generally be able to stand on their own feet when the government guarantees expire. the banking sector is reasonably well capitalised. this is what danmarks nationalbank β s stress test shows, and it is confirmed by the european stress and capital tests. all the same, some banks still have a weaker point of departure and will find it difficult to obtain funding when the government - guaranteed loans expire. one reason could be that they still hold bad assets, combined with a weak capital base. this is where the financial stability company could be relevant. in danmarks nationalbank β s view, denmark should not address these specific problems by deciding to introduce general access to government guarantees, as provided for by the ecofin. this will merely extend the life of an unsustainable business model. one element of a solution that does not involve new government guarantees is danmarks nationalbank β s expansion of the collateral basis to include banks β lending of good quality. this will provide a last - resort funding opportunity for the banks. at the same time, this lending may be included in the banks β liquidity, even if it has not been pledged to danmarks nationalbank, provided that the requirements are met. in danmarks nationalbank | - exchange - policy competence are not likely to be delegated to the home rule of the faroe islands. a currency union would thus entail that the faroese authorities acknowledge - formally and clearly - that the decision - making competence regarding monetary and foreign - exchange policy rests solely with the danish national authorities, including danmarks nationalbank. in a currency union the situation would, in practice, be unchanged. the currency would still be danish kroner, and danmarks nationalbank would continue to conduct monetary policy. this means that the faroese authorities would have no autonomy as regards monetary and interest - rate policy. this is unchanged from the current situation. thus, it appears that delegation of monetary and foreign - exchange policy to the home rule with simultaneous conclusion of a currency union with denmark would be a complex way of maintaining status quo. separate currency - fixed - exchange - rate policy if a decision is made for the faroe islands ( or greenland ) to have their own currency, the options are the same as in other currency areas. however, the currency would be very small, and the narrow business structure would present a number of special challenges. the β strongest β fixed - exchange - rate policy is a currency board, whereby the local currency is completely fixed vis - a - vis another currency. this regime is used today by e. g. estonia, which applies a currency board with a fixed exchange rate vis - a - vis the euro. an initial option for the faroe islands could be a currency board vis - a - vis the danish krone in a ratio of 1 : 1. a currency board entails the establishment of a central bank to set the monetary - policy interest rate and intervene in the foreign - exchange market to stabilise the exchange rate. however, the central bank β s options are rather mechanical. these - often statutory - restrictions on the central bank are imposed to ensure credibility. history shows examples of successful currency boards, e. g. estonia, and total failures, e. g. the currency board in argentina. a country opting for a currency board has to defend its own currency. in case of speculation against the currency no help should be expected from the country to whose currency the currency in question is pegged. speculation may therefore require dramatic interest - rate increases. elimination of the risk of collapse in the event of speculation requires a guarantee agreement with a highly credible external party. for the faroe islands, this could e. g. mean a guarantee from the | 0.5 |
randall s kroszner : recent events in financial markets speech by mr randall s kroszner, member of the board of governors of the us federal reserve system, at the institute of international bankers annual breakfast dialogue, washington dc, 22 october 2007. * * * good morning. in my remarks this morning, i will share my views on events in u. s. financial markets over the past several months. specifically, i will describe what i believe were contributing factors in the breakdown of the price discovery mechanism in certain markets, and i will assess the future prospects for these markets. while i will draw some preliminary conclusions about recent market events, my views and those of other policymakers will likely continue to evolve as we develop a more informed perspective and benefit from further analysis. 1 price discovery when markets are functioning properly, one of the key roles that they perform is what economists refer to as " price discovery. " 2 essentially, price discovery is the process by which buyers and sellers β preferences, as well as any other available market information, results in the " discovery " of a price that will balance supply and demand and provide signals to market participants about how most efficiently to allocate resources. this market - determined price will, of course, be subject to change as new information becomes available, as preferences evolve, as expectations are revised, and as costs of production change. in well - functioning markets, the price discovery process represents the efforts of market participants to use all available information to decide whether to buy or to sell or to abstain from buying and selling. in efficient and competitive markets, participants will tend to undertake a certain amount of due diligence before making their decisions. this means that prices do not just appear by themselves ; a substantial amount of work is required by buyers and sellers for markets to produce prices that clear markets and provide useful signals to consumers and producers. indeed, this is one of the brilliant aspects of the market mechanism in that a number of participants, each pursuing their own interests and trying to maximize their own welfare and profits, determine a market - clearing price. a core principle of economics is that markets are more competitive, and therefore more efficient, when accurate information is available to both buyers and sellers. but for markets to work best, market participants must utilize available information, including analysis of costs and benefits of obtaining such information. in the case of new and innovative products, there might be a particularly strong demand for information. then this information must be processed appropriately before decisions | the availability of funding and thus assisted the functioning of the interbank market. the vigorous provision of funds through open market operations succeeded in damping pressures in overnight funding markets. yet, markets for term interbank funding remained strained. on august 17, the federal reserve board took further action by cutting the discount rate β the rate at which it lends directly to banks β by 50 basis points, or half a percentage point. the fed also adjusted its usual practices to facilitate the provision of financing for as long as thirty days, renewable at the request of the borrower. these actions also appear to have improved market functioning, though strains, particularly in term funding markets, persist even now. moreover, judging from forward curves in interbank and overnight indexed swaps markets, market participants expect pressures in term funding markets to persist for several quarters. i should emphasize that the purpose of these actions was not to insulate financial institutions from the consequences of their business decisions, but rather to facilitate the orderly function of markets more broadly in the face of risks to the overall economy. i believe that this provision of liquidity has contributed, at least in part, to the recent improvements we have seen in the functioning of financial markets. importantly, the federal open market committee β s most recent action, the 50 basis point cut in the target federal funds rate in september, was an attempt to help offset the potential effects of financial market turmoil on real economic activity. the breakdown in the price discovery process can, after all, have real economic consequences that the federal reserve should, in my opinion, consider when fulfilling its statutorily mandated goals of maximum employment and price stability. conclusion in the months ahead, the federal reserve will continue to monitor developments in the financial markets and act as needed to support the effective functioning of these markets and to foster sustainable economic growth and price stability. in addition, we will be reviewing the events of the past several months to understand the likely causes and effects. thank you very much, and i look forward to a lively dialogue following my esteemed colleagues β remarks. | 1 |
mr. lamfalussy reflects on the possibilities and constraints of monetary policy against the background of price stability in europe address by the president of the european monetary institute, baron alexandre lamfalussy, on the occasion of the change of the presidency of the european monetary institute in frankfurt am main on 30 / 6 / 97. the moment has come for me to say a heartfelt β thank you β to you all! i should like to express my gratitude, first of all, to the governors of the central banks of the european union, who, in the autumn of 1993, chose me as their candidate for the presidency of the european monetary institute, thereby setting in train a process which has allowed me to play a part in a ground - breaking enterprise of exceptional scope and responsibility. i should like to thank them, secondly, in their capacity as members of the emi council, for their cooperation in this undertaking and for their wisdom, prudence, willingness to compromise but also their will to achieve results. they have invariably acted with the utmost professionalism. i should like to add that we should not have been able to achieve what has been done without the conviction - which each of us shares - that the first duty of a central bank is to maintain price stability. this fundamental principle has never been a matter of dispute. my thanks go next to the political authorities. first, to the heads of state or of government, who did me the honour of putting their faith in me in appointing me president of the emi. second, to the finance ministers, who resigned themselves gracefully to the existence of an institution which would be independent of the executive and who played their part, with consummate political skill, in establishing the good working atmosphere between the ecofin and the emi, in the mutual respect of our respective competencies. i hope that this will be an enduring legacy. thanks go, too, to the european commission, with which we have been able after a little trial and error, and with both sides demonstrating good will and a certain ability to listen - to draw up the rules of the game for the indispensable cooperation which is needed to enable the project of economic and monetary union to go ahead. the european parliament - and several national parliaments - have given me the opportunity to report on the work of the emi, in an atmosphere of constructive dialogue. their questions and concerns, as well as those of the media and of the large number of associations from both the banking and financial sphere as well | emergence of good luck by hard work, skilful management and good strategic choices. | 0.5 |
yves mersch : the international role of the euro speech by mr yves mersch, governor of the central bank of luxembourg, at a financial seminar, hong kong, 11 november 2004. * * * ladies and gentlemen, since its inception, the euro β s international role has grown in a gradual but steady way. at the outset i would like to recall the eurosystem β s policy position vis - a - vis the internationalisation of the euro. the governing council of the ecb sees the internationalisation of the euro as a market - driven process. nevertheless, we analyse developments closely, as we are keen to know how the euro is used and by whom. thus, i will first review the main developments in more detail. then, i will turn to the eurosystem β s policy stance towards the international role of the euro. i will conclude by shortly highlighting the eurosystem β s stance on reserve management services. the gradual development of the international role of the euro in order to consider the main developments in the international use of the euro for the last 5 years, i will distinguish the varied use of the euro outside the euro area, by public authorities on the one hand and private agents on the other. let me start with public authorities. there are about 50 countries with an exchange rate regime linked to the euro, including those eu member states that have not yet joined the euro area. non - eu countries that use the euro as an anchor currency are mainly located in the eu β s neighbouring regions or are countries that have established special institutional arrangements with the eu or some of the eu member states. in most of these countries, the euro is also the main or the sole intervention currency used by the authorities to stabilise the exchange rates of their respective currencies. additionally, in these countries euro - denominated assets account for a substantial share of the foreign exchange reserves held by the respective authorities. the role of the euro as an anchor currency in third countries outside the euro area has remained stable overall. changes in exchange rate regimes involving the euro mainly involved the new eu member states, as three of them joined the exchange rate mechanism ii end - june 2004. the global reserve build - up continued at a rapid pace, with japan and other emerging asian economies accounting for the largest share in the total increase. benefiting from the appreciation against other international currencies, the share of the euro in official foreign exchange reserves has continued to increase gradually, from 19. 3 % | neutral stance on the internationalisation of its currency. this means that we neither hinder nor actively promote the development of this role. for example, decisions taken by non - euro area authorities to use the euro as an anchor, reserve or intervention currency have to be fully seen as unilateral measures. they do not involve any commitment on the part of the eurosystem. this rule knows only one exception : the exchange rate mechanism ii. with regard to this stance, it has of course to be noted that the eurosystem contributes to the international role of the euro in indirect ways. price stability is a key precondition for the development of the international role of a currency. thus, the stability - oriented monetary policy of the ecb contributes to the euro β s potential for expanding its international role. the eurosystem has also been a strong supporter of financial market integration in the eu. the introduction of the euro itself has undoubtedly led to a deeper and more integrated financial market. the evidence strongly suggests that this has supported the development of the international role of the euro. and when we refer to the fact that potential gains from monetary union will only be fully realised when european financial integration is fully achieved, this also applies to the euro β s use as an international financing and investment currency. let me stress that by being neutral we are not indifferent to the international role of the euro. indeed, we pay special attention to the international use of our currency and provide regular information to the public on related developments in the international financial arena, for example the recent build - up in foreign exchange reserves. the eurosystem β s reserve management services this leads me to say a few words on the eurosystem β s reserve management services. we have seen that the euro has firmly established its role as an important reserve currency, supported by its gradually increasing use at an international level. the eurosystem has therefore developed a new framework that specifically addresses the type of services required to support the management of euro - denominated reserve portfolios. the new framework builds on the well - established reserve management services infrastructures already in place at certain eurosystem central banks. consistent with the manner in which reserve management services have been provided over the years, the new β standardized or harmonized β framework continues to be based on the core principles of financial security, legal security and confidentiality. this basis allows central bank customers to comprehensively manage their euro - denominated reserve assets in a safe, confidential and | 1 |
in this market by south african and non - south african borrowers from non - south african investors, is now almost r202 billion. a part of these loan issues is usually hedged by investing in south african bonds. 4. globalisation and monetary policy the reintegration of south africa into the world economy and the liberalisation of financial markets also have important implications for monetary policy. as bill mcdonough, president of the federal reserve bank, pointed out in 1998 : β the technology for processing information and making this information widely available has fundamentally altered the way the world channels saving into investment. no longer does the global economy rely primarily on loans from commercial banks to meet its financing and investment needs. rather, more than even before, the global economy of today looks to funds from the fixed - income and related capital markets to intermediate its credit needs. because the global capital markets have become so important in the credit intermediation process, the economic well - being of us all depends on the orderly flow of funds in these markets. the flow of these funds, in turn, increasingly relies on price signals generated by trading activity that takes place daily in these markets. the reliance on secondary market trading for price discovery constitutes the fundamental difference between funds from securities markets and loans from banks β. this change in the way that savings are channelled to investments has resulted in greater volatility in international capital movements. recent non - resident transactions on our bond exchange are a clear reflection of this greater volatility in international capital flows. in such a situation, it is more important than ever before to create and maintain a sound environment for foreign investment in a country. this makes it more imperative for monetary policy to pursue clearly stated objectives. increasingly throughout the world, central banks are pursuing price stability as their basic policy focus. where countries have high rates of inflation which are out of line with the rest of the world, disruptive capital flows could occur because of fears of currency misalignments. the closer integration of the world economy has therefore focused the ultimate objective of monetary policy and made it even more important to attain this objective. it should, however, also be realised that such a policy stance does not provide unconditional protection against speculative capital outflows. external economic shocks or perceived poor policy measures can still trigger a reversal in capital movements. monetary policy cannot prevent these reversals. international investors make their decisions on the basis of a wide variety of developments, including price stability. the best approach that central | part of the proceeds from such issues for financing the expansion of their activities in the rest of the world. south african institutional investors, such as insurers and pension funds, were allowed to exchange part of their rand - denominated portfolios for foreign - currency denominated assets through swap transactions entered into with foreign counterparts. in accordance with the principle of relaxing exchange controls, permission was granted in june 1995 to south african institutional investors ( long - term insurers, pension funds and unit trusts ) to exchange, through approved asset swap transactions, part of their south african portfolio for foreign securities. in march 1997 it was announced that institutions that qualified for asset swaps would be broadened to include regulated fund managers registered with the financial services board. with effect from july 1997, portfolio managers registered with the financial services board as well as stockbroking firms which are members of either the johannesburg stock exchange, the bond exchange of south africa or the south african futures exchange, could also apply to acquire foreign portfolio investments by way of asset swaps. integration into the world financial markets required a major restructuring of the institutional arrangements in the south african capital markets. the johannesburg stock exchange ( jse ) introduced changes to provide for corporate ownership, foreign ownership of stockbrokerage firms, dual capacity trading, negotiated commissions, and electronic screen trading. the jse is continuing to improve its facilities by providing for the immobilisation and dematerialisation of shares, and for improved clearing and settlement arrangements. the total value of shares traded on the jse increased from r63 billion in 1995 to r448 billion in 1999. the most spectacular increase in volumes over the past few years took place in the bond exchange of south africa. total turnover in this market increased from r2 trillion in 1995 to r8, 8 trillion in 1999. the relaxation of south african exchange controls made an important contribution to the development of the bond exchange and transactions by non - residents in this market have increased significantly. the adjustments that have occurred in the south african economy, and on south african monetary policies during the past few years, were necessary and timely. these adjustments were needed to restore and maintain overall economic equilibrium. south africa has increasingly developed robust financial, economic and foreign exchange markets. this latter market is growing rapidly and its daily average turnover now exceeds $ 9 billion. another interesting development following the globalisation process is the emergence of a euro - rand market. the outstanding nominal amount of rand - denominated loans raised | 1 |
up for five years ago. as we go forward, people will increasingly face higher interest rates when they renew, and we will learn more about how people are adjusting. it is clear that many highly indebted households will face a difficult adjustment as their mortgages reset and interest rates go up. still, these adjustments will be far less demanding than if there were a serious negative economic shock, especially if financial vulnerabilities were allowed to continue to grow unchecked. now, the fact that household spending is behaving roughly as expected gives us more confidence that we understand what is happening in the economy. but borrowers and lenders are continuing to adjust to rising interest rates and the new mortgage rules. so, we are closely watching a number of trends in mortgage markets. for example, the share of mortgages that originate outside federal jurisdiction, including from private lenders and credit unions, is rising. these borrowers are not subject to a formal interest rate stress test. we have seen a rise in the share of mortgages issued by private lenders in the toronto area, although we do not have this type of data for cities outside of ontario. we have also seen a greater share of highly indebted borrowers taking out variable - rate mortgages. in doing so, they are lowering their debt - service burdens because, usually, the interest rate on a variable - rate mortgage is lower than on a fixed - rate mortgage. this frees up money for spending or saving in the short term, but exposes the borrowers to unexpected increases in interest rates down the road. that said, the stress test in place gives us confidence that these borrowers can manage significantly higher payments, if need be. in summary, while the quality of new lending has improved, the stock of risky mortgages remains high. over time, those mortgages should become less risky as they are slowly paid down. still, this vulnerability will persist for many years. closely related to the buildup of household debt are developments in housing markets. everybody is talking about this issue β which is no surprise when you see that house prices in the toronto area are close to 40 per cent higher than they were three years ago. in the vancouver area, the increase has been even larger β about 50 per cent. outside of those two areas, the average home price has increased just 5 per cent over the same three years. to be clear, fundamental factors have pushed up house prices in toronto and vancouver. strong | bailouts and sovereign credit risk β, nber working paper no. 17136. bis central bankers β speeches discussion on how to reinforce common decision - making over fiscal policies and strengthen accountability arrangements. in other words, this could only take place in the context of a decisive step towards closer fiscal union. and to make that step we would need to first see a process of convergence in economic and financial policies in the ways i have described. conclusion this brings me to my conclusion. what i have argued today is that doubts over the viability of emu will only be fully removed when we have completed it in all relevant areas. this means banking and capital markets union ; it means economic and fiscal union. in a monetary union no policy area can be seen in isolation. each interacts with and affects the other. and as such, completing emu in all areas strengthens and underpins the others. monetary union is more effective in securing the fundamental interests of citizens when common interests are recognised as such ; and when the responsibilities that come with participating in a community are assumed in full. in other words, its ultimate success depends on the acknowledgment that sharing a single currency is political union, and following through with the consequences. and that requires commensurate accountability and transparency arrangements. all countries must benefit permanently from participation in monetary union. and this means that the requirements i have laid out cannot be met only at the time when a country joins the union, or for some of the time. they have to be met all the time. they have to be irrevocable features of participation in monetary union. and for that reason, the institutional arrangements that ensure those requirements are met must ultimately be binding in nature, and permanent in form. bis central bankers β speeches | 0 |
andreas dombret : financial regulation as a global challenge remarks by dr andreas dombret, member of the executive board of the deutsche bundesbank, at a reception to say goodbye to mr jakob orthacker, financial attache, and to welcome his successor, ms julia becker, london, 11 june 2014. * * * ladies and gentlemen thank you, ambassador ammon, for hosting this event here at the german embassy in london. i am happy to have the opportunity to officially thank the bundesbank β s departing representative, mr jakob orthacker, and to welcome his successor, ms julia becker. i am particularly happy that sir jon cunliffe, deputy governor of the bank of england, is here today. thank you, jon, for your remarks. now let me say a few words on financial regulation and the need for international cooperation. my argument begins with the idea that a global financial system requires global regulation. to push this idea further, i would define the term β global β in at least three dimensions and argue that regulation should be consistent in all of them. first, regulation needs to be consistent across jurisdictions. this is necessary to provide a level playing field and reduce the scope for regulatory arbitrage. against this backdrop, recent regulatory initiatives in some countries indicate that the β balkanisation β of the regulatory space represents a genuine risk. we have to be aware of that. second, regulation needs to be consistent across sectors. this is again necessary to prevent regulatory arbitrage. in practical terms this means that we have to deal with the shadow banking system. consequently, the g20 have moved shadow banking high up on their agenda. third, regulation needs to be consistent across asset classes. take the regulatory treatment of government bonds as an example. i cannot see a single good reason why banks should not have to back government bonds in their balance sheets by capital, but i see many reasons why they should β not least the objective of breaking the sovereign - bank nexus. financial regulation that is consistent along these three dimensions will help to make the financial system a safer place. however, while being a safer place in the aggregate, the financial system is not necessarily a safe place for individual banks. after all, we live in a market economy and creative destruction is a central element. individual banks must be able to fail like any other enterprise. this must also hold for large banks which are often labelled β too big to fail β. to allow them to fail without destabilis | to building walls. but walls separate. in europe we have since gone some way to responding to newton β s observation. the creation of the european common market without frontiers was the first significant step towards tearing down walls and building solid bridges across europe. another milestone along the road to european integration was the introduction of the euro. currently, we are working again on a historic project of european integration, namely the creation of a european banking union. the banking union is currently our largest institutional construction site. the legal basis for the new european single supervisory mechanism is now in place since 3 november, thus we have entered the implementation phase. the major challenge ahead is the comprehensive assessment of banks. currently, the banking supervisors are selecting the bis central bankers β speeches critical balance sheet items of the banks under the single supervisory mechanism. these items will then be subject to closer scrutiny. this appraisal of the present situation will be complemented by a joint stress test of the european central bank and the european banking authority which will be designed to reveal future risks. it is essential to convince the markets that banks are solving their legacy problems before the european central bank takes over responsibility for banking supervision at the end of next year. the cleaning - up of the balance sheets will be an important pre - condition to ensuring a smooth start for the new supervisory regime. in a market economy it is essential that banks, like any other business firms, can fail and can exit the market. β too big to fail β was with us for much too long. therefore, it is most important that we move from the old bail - out regime to the new bail - in regime in a credible way. consequently, the single supervisory mechanism has to be accompanied by a corresponding recovery and resolution mechanism with a view to protecting taxpayers β money from failing banks. the rules specifying potential bail - ins have to spell out a clear pecking order for covering losses. thereby, the principle of dual subsidiarity should be observed. to put it in a nutshell : before public money is used, private creditors have to contribute to covering losses. and before european financial backstops, such as the esm, are used, member states have to cover losses of their banks. this would reinforce another important principle, namely that liability and control have to go hand in hand. this being said, let me emphasize that the single supervisory mechanism, accompanied by a recovery and resolution mechanism, can neither resolve today β s debt crisis nor act as a substitute for structural reforms | 0.5 |
to growth and development. this brings me to the second implication of the changing financial regulatory landscape in respect of preserving financial stability and the broader agenda of effective and efficient financial intermediation, taking into consideration the unique considerations in islamic finance. ladies and gentlemen, a sustained process of excessive financial deregulation and over reliance on market discipline particularly in advanced economies which led to a prolonged cycle of optimism and risk taking has been widely cited as part of the root cause of the recent global financial crisis. indeed, the pre - crisis era was a period of exuberance in financial innovation and rapid development in the conventional financial landscape. although it was argued that financial deregulation encourages innovation which in turn result in the more efficient allocation of resources, the recent crisis has shown that there is a need to balance between market discipline and regulatory oversight. whilst there is general support for the reform measures, there is also concern on the dangers of over - reaction by policymakers that could undermine the role of financial intermediation, and adversely affect the ultimate objective of economic growth and development. the concern is specifically on the unintended consequences of the regulatory reform. financial stability is not an end in itself ; it is a means towards achieving the ultimate goal of sustainable growth and shared prosperity. this presents the challenge for policymakers in finding the appropriate balance between preserving the resilience of the financial system versus maintaining the ability of the system to perform their intended function of delivering effective, efficient and innovative financing solutions to customers in the wider economy. hence, the concern is that that the regulatory reforms would increase the cost of financial intermediation. a careful assessment needs to be made of the potential medium and longterm effects of the proposed reforms on market structures and behaviour. these considerations are equally relevant in the context of islamic finance. the assessment on the aims and relevance of each of the proposed reform measures needs to take into account the two important considerations in islamic finance ; the need to support sustainable and responsible innovation, and secondly, to leverage on its inbuilt strengths that set islamic finance apart in performing its role in supporting the efficient mobilisation and allocation of resources to generate real economic activities. given the damaging effects of complexity and opacity associated with the recent unfettered innovative activities in the conventional financial markets, it has resulted in a reassessment of the role and benefits of financial innovation. in islamic finance, innovation is key in pushing the frontier of market development to generate the range of products and | concentrating on those that yield higher returns. and of course, all of these adjustments have implications for the canadian labour market. overall job growth has been strong, but there have been important sectoral differences. we have seen job gains in commodity - producing sectors and in those that have low exposure to foreign competition. however, employment has fallen in a number of manufacturing sectors. this reflects, at least partly, the fact that some firms are now substituting capital for labour in order to reduce costs, which is the opposite of the situation we saw in the late 1990s and at the beginning of this decade. canadian economic prospects before i conclude, let me quickly review the projections for the canadian economy that we set out in our monetary policy report yesterday. the global economy has been unfolding largely as expected, and the prospects for continued robust growth are quite favourable, especially over the near term. the outlook for the canadian economy through to the end of 2006 is essentially unchanged from that in our january monetary policy report update. our base - case projection calls for annualized growth of about 2 1 / 2 per cent in the first half of 2005 and 3 per cent in the second half. growth of about 3 1 / 2 per cent is expected through the four quarters of 2006, consistent with closing the output gap in the second half of next year. to express it in annual average terms, growth in 2005 is projected to be about 2 1 / 2 per cent, down slightly from the january update, while the projection for 2006 is little changed at about 3 1 / 4 per cent. with the economy expected to return to full production capacity in the second half of 2006, core inflation should move back to 2 per cent around the end of next year. based on the scenario implied by oil - price futures, total cpi inflation is expected to remain above the 2 per cent target for some time, before moving slightly below 2 per cent in the second half of 2006. in line with this outlook, a reduction of monetary stimulus will be required over time. however, i want to stress again that the bank is not committed to any particular interest rate path or timetable. conclusion let me conclude. as i noted at the beginning, there are powerful global economic forces at work, and economies everywhere need to make adjustments. in canada, businesses are, indeed, making adjustments to meet these challenges and to take advantage of emerging opportunities. at the bank of canada, we will continue to monitor these global forces closely and to assess their impact. we will | 0 |
, including venture capital, equity crowdfunding and specialised platforms for public listing of smes ; ( 2 ) hybrid instruments, such as convertible bonds and mezzanine finance, typically involving debt instruments that, subject to a trigger, can be converted to equity ; ( 3 ) non - bank debt financing, such as corporate bonds, securitised debt and covered bonds. with the exception of corporate bonds, market - based financing is virtually non - existent in greece for small and medium - sized enterprises, as shown by the present iobe study, and is also very limited at european level. in the eu, market - based financing of small and mediumsized enterprises accounts for less than 15 % of their total financing, and is very costly. a key problem is that investors lack information on small and medium - sized enterprises. in this regard, around 25 % of all companies and around 75 % of owner - managed companies in europe do not have a credit score, according to the european commission β s green paper on building a capital markets union. the extent of the problem across the eu led the european commission, in 2015, to draw up and launch an ambitious plan for building a single eu - wide capital market by 2019. the plan aims to improve access to financing for all businesses across europe, increase and diversify the sources of funding, and make markets work more effectively and efficiently, by removing obstacles that make investor and business access to capital markets harder and costlier. 3 / 6 bis central bankers'speeches well - developed capital markets deliver considerable benefits to market participants and economic activity in general. first, they enable businesses to diversify their financing sources, thereby reducing their reliance on bank credit, and create an environment that is more resilient to shocks. second, they help to improve the allocation of capital in the economy and risk sharing, by offering investors a broader array of options and enabling them to make their investment decisions in line with their risk appetites and therefore finance even businesses that would have been seen, by banks, as too risky to lend to. third, equity financing in particular boosts investment without necessarily increasing private debt in the economy. progress towards the creation of a capital markets union has been steady, but rather slow. of the eight legislative proposals submitted by the european commission before early march 2018, three have been approved so far by the european parliament and the council and concern : simple, transparent and standardised securitisation as an additional source of financing in particular for small | banks, thereby enhancing banks β lending capacity. the above would set in motion a virtuous circle for the economy and the banking system and create the necessary conditions for investment financing and a return to sustainable growth. if consolidating confidence is a sine qua non for the above, i. e. for the increase of both domestic and total investment, greece must also take full advantage of the possibilities arising from eu and euro area membership to create a financial safety net that would convince of its ability to cope with any headwinds that could make its financing costs unsustainable, in particular in an international environment rife with financial and geopolitical challenges. ladies and gentlemen, today, greece faces the historic challenge of returning to normality and to a path of convergence with its european partners. a return to strong and sustainable growth calls for maintaining and implementing the structural reforms already legislated, as well as further crucial reforms in areas that are still lagging behind, such as the tax system, public administration, the judicial system, the link between production, research and education, the legislative and regulatory framework, especially as regards the use of land, and the goods and services markets. it is obvious that only on this condition can greece once again become a friendly place for doing business, effectively support productive investment and make a successful leap in total factor productivity. in closing, i would like to underline that, in the long run, increasing investment require an increase in private sector saving ( by households and non - financial corporations ), which, as i pointed out earlier, has declined dramatically, dropping by 11. 5 percentage points as a ratio of gdp, in ten years. the fall in saving was particularly sharp in the years 2015 β 2016, for households and businesses alike. admittedly, the capital controls combined with higher taxation led households and businesses to tap their savings, in order to meet their current needs. 5 / 6 bis central bankers'speeches however, there can be no investment without domestic saving or, alternatively, without continued foreign financing. this is why it is so important in the long run to restore the saving capacity of the private sector. in this context, the development of the second and third pillars of the social security system will not only ensure the system β s viability, but will also encourage households to increase their saving and open up a new channel for the financing of business investment. this will enable greece, in a self - reliant manner, to increase its | 1 |
currencies including rmb. ladies and gentlemen, we have made good progress on rmb internationalisation. the future trajectory depends on the joint effort of policy makers and, more importantly, market participants including both the real sector and the financial sector. the hkma will continue to proactively engage with the various stakeholders to maintain a conducive environment that supports this journey. with that, i wish you all a fruitful and insightful event. thank you. 3 / 3 bis - central bankers'speeches | and managing risk. with these domestic and global dimensions in mind, i β d like to discuss two important qualities of hong kong as a leading international financial centre. resilience is key 8. the first quality is resilience. it β s easy to think of aspects of finance in which safety and reliability are vital. in a quality financial system, we take these for granted. we believe, rightly, that the banks entrusted with our life savings are prudent. when we transfer money, we don β t worry about whether the payment system will get the funds to where we want them to go. we also expect that the currency we hold will be stable β and that we will not wake up one day to find that our purchasing power has been eroded overnight. 1 / 4 bis central bankers'speeches 9. in hong kong, you and i expect all of this to run like clockwork. and it does. but it β s only when the smooth operation of our monetary and banking systems is put under test by severe external shocks that we will see a reflection of true resilience. 10. we all know the challenges hong kong has faced over the past year, including social events, covid - 19, and the china - us tensions. despite all these challenges for our economy, hong kong β s financial system has remained remarkably stable. 11. the value of the hong kong dollar has stayed close to the strong side of its trading band for most of this year. there have been strong inflows to the local currency, partly because of substantial demand for hong kong equities, including some large ipos, and partly because of the very strong market confidence in the linked exchange rate system. 12. there have been talks about capital flowing out of hong kong, especially during the peak of the social events last year. but if you look at the facts, total deposits in hong kong β s banking system rose by almost 3 % in 2019. they increased by another 7. 8 % in the first eight months of this year. in simple terms, the strength of the hong kong dollar and this expansion of the deposit base tell us that there is more money coming in than going out. 13. our banking system continues to be robust. hong kong β s banks have among the highest capital adequacy and liquidity ratios in the world. and despite a difficult operating environment, our classified loan ratio is still low β around 0. 8 %. and that resilience | 0.5 |
sharon donnery : citizenship, participation and diversity remarks by ms sharon donnery, deputy governor of the central bank of ireland, at the launch of the β¬15 silver proof commemorative coin, marking 100 years since irish women won the right to vote, dublin, 27 november 2018. * * * ceann comhairle, ministers, teachtai dala, senators, ladies and gentlemen, it is a pleasure to be here at leinster house today to launch this commemorative coin. the coin was designed by michael guilfoyle and marks 100 years since irish women won the right to vote. the central bank acts as an agent for the minister for finance and public expenditure and reform in issuing all irish coin β both the circulating coins we use every day and commemorative ones. our commemorative coins aim to recognise figures and mark moments of national importance. recognising that 100 years have passed since women first gained the right to vote in ireland most certainly fits these criteria. and this coin is the latest in a series of coins marking centenary events from the lockout commemorative coin launched in 2013 to the 2016 coin marking the centenary of the proclamation. in a few short months, we will mark the centenary of another significant event with a coin to commemorate 100 years since the first dail. today, i would like to discuss three themes that applied to the suffrage movement and which still resonate today : citizenship, participation and diversity. * * * but first, if i may, a word about coins themselves. when we use our coins on a daily basis β to buy a cup of coffee, to pay for parking, to contribute to a charitable collection β we rarely dwell on their wider significance. throughout history, in addition to their functional role, coins - and currency more broadly - have had important political, social and cultural dimensions. politically, for example, currency and coin can act as a β vector for the construction of a β¦ polity and political community β. 1 currency and coin can thus play a role for citizenship. take the role of the euro in building european identity and citizenship, for example. 2 this is true at national level, too. for many of us as children, we first came to recognise the emblem of the state, the harp, because it was on every coin we used growing up. we could touch and feel the emblem β our emblem β in our hands. the same is true of our own children today who still see the harp on irish euro coins. while we share a common currency with the other | the establishment of the irish free state, universal adult suffrage was granted. which means we can rightly celebrate key moments in history such as women earning the right to vote. but we can never grow complacent that the work is done. * * * participation which brings me to the issue of participation. earning the vote, which hanna sheehy skeffington called the β keystone of citizenship β, has indeed led to β fields that are broader and full of interest β. 5 whilst there are many dimensions to the achievements of women, i am sure you will appreciate that as an economist by training and a central banker by profession, i β m fond of using statistics to tell a story. for economists a key metric is labour force participation. just 30 years ago, for example, the labour force participation rate for women in ireland was 34. 4 per cent. this meant that two thirds of the female working age population were not in any way engaged in the labour market. 6 the comparative figure for men was 70. 8 per cent. 2 / 5 bis central bankers'speeches this was a staggering difference. in 2017, the female participation rate stood at 55. 7 per cent, above the eu ( 15 ) average of 52. 5 per cent. the male participation rate was still above the eu average, at 68. 6 per cent, and more importantly, the gap between men and women had narrowed to 16. 1 percentage points. still a large gap i know, but the trend has certainly moved in the right direction. these numbers may seem abstract, but they have a significant impact on the economy. economic research has highlighted the importance of the rise in female participation through the late 1990s and early 2000s in ireland. 7 it is important that social policies support this. recent research from the san francisco federal reserve for example, found that altering parental leave policies in the us to encourage female participation to rise to levels observed in neighbouring canada could add as many as 5 million prime - age workers to its labour force. 8 * * * diversity of course, women participating in the labour force is one matter, equality of opportunity is another matter again. in the β world i work in β we have a long way to go. in 2017, the central bank first published data on the level of gender diversity at senior levels of financial services firms we regulate, and we have committed to publishing these data on an annual basis. 9 the results were glaring, but unfortunately unsurprising, in that | 1 |
, make the development of a comprehensive macroprudential supervision absolutely essential. ecb monthly bulletin, july 2010. an effective macro - prudential framework aims at delivering a thorough analysis of systemic risks, as well as the formulation of appropriate policies to address such risks identifying, in a timely fashion, the emergence and build up of critical vulnerabilities, and deciding on effective ( pre - emptive ) intervention. central banks have a very important role in this regard. at the european level, a new body will be set up : the european systemic risk board ( esrb ), which will be an independent body responsible for conducting macro - prudential oversight of the eu β s financial system as a whole and which will be supported analytically and logistically by the ecb. the esrb should be seen as a component of a global framework of macro - prudential oversight, also allowing it to contribute to the assessment and containment of global risks. in this sense, systemic risk surveillance and preventing those risks from materializing will be a key contribution to sustainable long term growth prospects. conclusion let me conclude. the global crisis of the last years has shown that policymakers around the globe have acted successfully. confidence has come back. with our policy actions, we at the ecb have supported credit flows to the economy and thus dampened the negative effects of the crisis to the extent possible. looking ahead, we now need to draw lessons from the crisis and focus on the elements that ensure that the global recovery is sound and sustainable. for this, i believe four elements are essential. these are strengthening growth prospects, fiscal sustainability, price stability and financial stability. for price stability and financial stability, central banks play a key role. they will shape the global recovery by maintaining price stability and safeguarding financial stability. price stability is the central contribution that monetary policy makes to economic growth, to job creation and to financial stability. financial stability, in turn, will be a major focus of policy - makers in the aftermath of the crisis. central banks have specific tasks and responsibilities in this domain. for example, the ecb will contribute to the esrb to conduct macro - prudential oversight at a european level. of course, central banks cannot act alone. actions are required to address all conditions and challenges to spur long term economic growth. we all have to work together. national governments, regulators and supervisors, and the private sector and financial industry have to proceed with the difficult, but vital, measures | speech back to normal? balance sheet size and interest rate control speech by isabel schnabel, member of the executive board of the ecb, at an event organised by columbia university and sgh macro advisor new york, 27 march 2023 on 1 march, the ecb started quantitative tightening ( qt ) after eight years of balance sheet expansion. at the peak in 2022, the eurosystem held monetary policy assets corresponding to around 56 % of euro area gdp. this was substantial both from a historical perspective and in international comparison ( slide 2, left - hand side ). the first wave of balance sheet expansion was a response to the low - inflation environment prevailing in the aftermath of the euro area sovereign debt crisis. between 2014 and 2016 headline inflation ran persistently below our target of 2 %, averaging just 0. 3 % ( slide 2, right - hand side ). as the key policy rate had already been lowered into negative territory in 2014 and was approaching the effective lower bound, the ecb started employing β unconventional β monetary policy tools. it offered banks a series of targeted longer - term refinancing operations ( tltros ) and conducted asset purchases to stimulate economic activity and raise inflation. these operations led to a sharp increase in monetary policy assets and, correspondingly, to a rise in central bank liabilities in the form of excess reserves β that is, reserves held by banks beyond minimum requirements ( slide 3 ). the second wave of balance sheet expansion came with the ecb β s response to the pandemic. the launch of the pandemic emergency purchase programme ( pepp ) and adjustments to the third series of tltros resulted in a further large increase of our monetary policy assets. these measures were necessary to protect the euro area economy from falling into a full - blown financial crisis and economic depression. last july, balance sheet growth came to a halt when we ended net asset purchases under the asset purchase programme ( app ). since autumn, the size of the balance sheet has been declining as banks began repaying their outstanding tltro loans. the balance sheet has declined further since the beginning of march, when we stopped fully reinvesting maturing securities bought under the app. further tltro repayments and a gradual run - down of our monetary policy bond portfolio imply that our balance sheet is expected to decline meaningfully over the coming years, thereby reducing excess liquidity. however, the size of our balance sheet will not return to the levels | 0.5 |
the bank of mexico estimates that gdp will grow between 2 and 2. 8 percent in 2014 and between 3. 2 and 4. 2 percent in 2015. consensus analysts β point forecasts fall within these intervals. 2 the balance of risks for the growth scenario is to the upside. the possibility of higher - thananticipated economic expansion in the united states, as well as more constructive see inegi and banco de mexico ( 2014 ), encuesta mensual de opinion empresarial del sector manufacturero, september. see banco de mexico ( 2014 ), quarterly report, april β june 2014, summary, august ; and blue chip economic indicators, september 2014. bis central bankers β speeches investment sentiment stemming from progress in the implementation of structural reforms, contributes to this assessment. financial market developments since february, international financial market volatility has declined considerably due to expectations that the normalization of u. s. monetary policy will take place later than previously thought, and in a gradual way. a return to the search for yield has implied downward shifts for mexico β s yield curve, together with the long end of the u. s. curve. intermittent breaks in the calm since the end of july reflect the swinging of market expectations for the start of u. s. monetary tightening back toward an earlier timeframe, and heightened geopolitical pressures. in this context, the dollar has appreciated, and the prices of some emerging - market financial assets have fallen somewhat. in mexico, the recent increase in global risk aversion has fueled a higher term premium for government bonds and along with it, a steeper yield curve. however, the peso has depreciated less than the currencies of many other emerging - market economies. both markets have behaved in an orderly manner, with traded volumes high and bid - ask spreads tight. going forward, greater financial volatility and further downward pressure in asset prices cannot be ruled out. interest rates on a wide variety of securities in advanced countries, including high - yield bonds, remain close to all - time lows amid market uncertainty and speculative conditions, suggesting that these levels are not sustainable. in the monetary policy meeting of last july, the u. s. federal reserve said that it was within closer reach of its medium - term targets. also, many fomc members noted that if convergence to these targets accelerates, it would be appropriate to begin the tightening phase sooner than previously foreseen. in the | in physical infrastructure, and enhancing public security. concluding remarks mexico has seen an incipient economic upturn this year, driven by stronger external demand and higher domestic spending. the panorama is favorable given more consistent u. s. economic performance and mexican structural reforms in the first stages of implementation. mexico β s economy has benefited from the continuation of portfolio capital inflows amid benign financial conditions, notwithstanding some recent volatility. however, a change in market sentiment could trigger a reversal of this relative financial bonanza at any moment. although mexico enjoys strong macroeconomic fundamentals, financial risks should continue to be monitored. continuation of recent upward trends in inflation as well as factors that may generate additional price pressures are risks that must be carefully watched in order to make convergence to the permanent inflation target a reality. current discussions on recovering the real value of the minimum wage underscore the need to keep the upper hand in the fight against inflation. finally, progress on structural reform is encouraging, but implementation over time must be adequate for expected benefits to fully materialize. bis central bankers β speeches | 1 |
b mahapatra : implications of basel iii for capital, liquidity and profitability of banks address of mr b mahapatra, executive director of the reserve bank of india, at the national conference on emerging macro environment, regulatory changes and bank competitiveness, organized by the national institute of bank management, pune, 3 march 2012. * * * the contributions made by shri rajinder kumar and shri rajnish kumar are gratefully acknowledged. it is heartening that the national institute of bank management ( nibm ), pune is organizing a two - day national conference on β emerging macro environment, regulatory changes and bank competitiveness β, today and tomorrow. i am indeed grateful to the nibm for giving me this privilege to talk to you today on a topic β implications of basel iii for capital, liquidity and profitability of banks β which is contemporaneous, not only in the financial circles, but also in the larger space of public policy. my motivation for the talk on this subject is also due to my job as a bank regulator and my association with the process of policy formulation and implementation of basel iii for banks in india. the context let me first set the context for basel iii. basel iii is the regulatory response to the causes and consequences of the global financial crisis. so, what were the causes of the crisis and the consequence? causes of global financial crisis from the macroeconomic perspective, the crisis has been attributed to the persistence of global imbalances. it is often said that the solution to a previous crisis becomes the cause for the next crisis. you may recall that the previous crisis was the asian crisis of 1997 β 98, and one of the important lessons learnt by the asian countries was to build a war chest of foreign exchange reserves to fight against the attack on the country β s currency. therefore, asia and in particular, china and some other emerging economies produced goods at a cheaper rate and pursued a policy of export - led growth and accumulated huge foreign exchange reserves. as a corollary, the usa and europe consumed that produce and became net importers. the foreign exchange reserves accumulated by the asian and other emerging economies were necessarily to be invested in advanced economies which have deep markets. the huge amount of capital that flowed from the emerging economies to the advanced economies, depressed yields in the financial markets of advanced economies. in the β search for yield β to improve returns on investment, market players indulged in financial innovation and engineering. they developed structured financial products like | externally rated securitization exposures, the elimination of certain β cliff effects β ( sharp increase in applicable risk weights ) associated with credit risk mitigation practices, and the incorporation of key elements of the iosco code of conduct fundamentals for credit rating agencies into the committee β s eligibility criteria for the use of external ratings in the capital framework. transition and phase - in in view of the large scale reforms and their impact, basel iii will be phased in and implemented over a long period of time, staring from january 1, 2013 to january 1, 2019. capital instruments that no longer qualify as non - core tier 1 capital or tier 2 capital, will be phased out over a ten - year period starting from 2013. the final calibration of liquidity ratios and leverage ratio will be made after further quantitative impact study and observation. macroeconomic impact of basel iii assuming that banks may be able to raise the increased capital requirement under basel iii from the market, questions have been raised as to its impact on economic growth and profitability of banks. in general, the increase in equity capital requirement is likely to increase the weighted average cost of capital. banks would partly pass on the increase cost of capital to the borrowers as higher lending rates. thus, the equilibrium lending rates are likely to be marginally higher and as a consequence, credit growth could be a little lower than in the last few years. however, the important question is how much? also, after the steady state has been reached on full implementation of basel iii, whether the cost would come down? i would try to provide some answers to these questions based on the research done by the official sector including the basel committee, and non - official or private sector institutions. the bank for international settlements ( bis ) and the fsb, with a view to phase - in the new regulations in a manner that is compatible with the global economic recovery, undertook studies to assess the macroeconomic impact of the transition to higher capital and liquidity requirements. the macroeconomic assessment group ( mag ) set up by the basel committee and fsb has estimated that bringing the global common equity capital ratio to a level that would meet the agreed minimum and the capital conservation buffer, would result bis central bankers β speeches in a maximum decline in gdp, relative to baseline forecasts, of 0. 22 %, at the end of basel iii implementation period. the estimated maximum gdp impact per percentage point of higher capital was 0. 17 %. in addition, the basel | 1 |
two main building blocks. first, a balance sheet assessment, which is a point - in - time evaluation of the asset side of banks β balance sheets. second, a forward - looking assessment of individual banks β capital positions and provisioning levels in the form of a stress test. this stress test, and future stress tests undertaken as part of the ssm β s regular supervisory functions, will be conducted in close cooperation with the eba, in particular regarding the design and timing of the exercises. european systemic risk board as regards interactions with the european systemic risk board ( esrb ), the activities of the ssm will have a clear systemic dimension and so cooperation between the ssm and esrb will be essential. in particular, while macro - prudential powers will rest also with national authorities, the ecb will be able to use macro - prudential instruments, either at the request of national authorities or by deciding to adopt stricter measures than the ones adopted at national level. this implies an increased coordination function in the macro - prudential areas for countries within the ssm that will naturally create some overlap with the macro - prudential role of the esrb for the wider eu. however, i expect the macro - prudential functions of both institutions to be complementary. the esrb will play its role in adopting recommendations to help coordinating macroprudential decisions as provided for in eu regulation ( namely crr ), in particular with the countries that do not join the ssm. in addition, while the ssm will exclusively focus on banking systems, the esrb has an additional macro - prudential function regarding the nonbank parts of the financial sector, and as such will be well placed to address cross - sectoral issues. interplay with the other esas finally, let me be very brief regarding the ssm β s interaction with esma and eiopa. although the supervision of markets and the insurance sector will remain with the national authorities, bis central bankers β speeches esma and eiopa will play important roles in the coordination of information sharing between the ssm and the national authorities. in particular, cooperation with eiopa on the bank - led conglomerates will have to be very close given that the ssm is expected to take over their supplementary supervision. memoranda of understanding regulating these interactions will be prepared in the coming months. conclusion to conclude, it is unavoidable that the existence of the ssm will alter the functioning | with low productivity growth, this means higher business costs. chart : the krone has depreciated moreover, the krone depreciated markedly in the period to summer last year. a weaker krone means higher import prices. the krone is now a little weaker than before the monetary policy meeting in september and a little weaker than expected. the depreciation has been particularly pronounced against the us dollar, which has appreciated against many currencies in recent weeks. the dollar appreciated further in the hours following the us election. chart : modest rise in unemployment since we started raising the policy rate, unemployment has edged up from a very low level. at the end of october, registered unemployment was 2. 1 percent, in line with our september projection. unemployment is still a little lower than in the period before the pandemic, and the number of job vacancy postings is high. chart : the policy rate will likely be held at today's level to the end of the year the committee judges that a restrictive monetary policy is still needed to bring inflation down to target within a reasonable time horizon. the committee is concerned with the possibility that if the policy rate is lowered prematurely, inflation could remain above target for too long. on the other hand, an overly tight monetary policy could contract the economy more than needed. when we set the policy rate, we have to balance these trade - offs. the economic outlook is uncertain. the committee will have received more information about economic developments ahead of its next monetary policy meeting in december, when new policy rate forecasts will be presented. 2 / 2 bis - central bankers'speeches | 0 |
, neighbors and neighborhoods suffer potential spillover effects from foreclosure sales because foreclosures may reduce the attractiveness of the neighborhood or may signal to the proposed basel iii capital rules would simultaneously introduce a specific minimum common equity ratio and define β common equity β so as to limit or exclude consideration of items that may not provide the loss absorbing capacity that common equity is supposed to represent. written testimony of phyllis caldwell, chief of homeownership preservation office, u. s. department of the treasury, before the house financial services subcommittee on housing and community opportunity hearing on β robo - signing, chain of title, loss mitigation and other issues in mortgage servicing, β november 18, 2010. potential buyers a forthcoming decline in neighborhood quality. in the end, an overhang of homes awaiting foreclosure is unhealthy for the housing market and can delay a recovery in housing markets and the broader economy. several possible explanations have been suggested for the prominence of foreclosures : the lack of servicer capacity to execute modifications, purported financial incentives for servicers to foreclose rather than modify, what until recently appeared to be easier execution of foreclosures relative to modifications, limits on the authority of securitization trustees, and conflicts between primary and secondary lien holders. whatever the merits and relative weights of these various explanations, the social costs of this situation are huge. it just cannot be the case that foreclosure is preferable to modification for a significant proportion of mortgages where the deadweight costs of foreclosure, including a distressed sale discount, are so high. while some banks and other industry participants have stepped forward to increase the rate of modifications relative to foreclosures, many have not done enough. we need renewed attention in many quarters of government and the financial industry, and among investors in mortgage - backed securities, to the lagging incidence of modifications. conclusion in conclusion, i regret to say that the hangover from the housing bubble of this past decade is still very much with us, as revealed both in the inadequate capacity of mortgage servicers and the continued impact of foreclosed homes on the housing market. while bank regulatory agencies can and should respond to specific failings that are being identified in our interagency examination, there is a strong case to be made that broader solutions are needed both to address structural problems in the mortgage servicing industry and to accelerate the pace of mortgage modifications or other loss mitigation | the ongoing need for firms to intensify positive assurance processes and lift investment in systems, processes and compliance. the planned governance thematic review we are conducting with the fma in 2022 will add further light and focus on expectations and practices for board governance. when i joined the bank, i was part of a new internal governors committee, the first step into collective decision - making for monetary policy. subsequently, the government introduced legislation mandating a statutory monetary policy committee, from april 2018. this has proved an excellent development, consolidating collective decision - making and strengthening further transparency and integrity of policy deliberations. the committee has worked well, appropriately testing the bank β s analysis and advice and making consensual decisions in the uncertain times. the interaction between monetary policy and financial stability analysis and decision - making has been increasingly close, partly driven by economic forces ( low interest rates, rising house prices and high household borrowing ), and by the evolving practice of the financial policy committee 3 / 6 bis central bankers'speeches directly advising mpc of its financial stability assessment. looking ahead, the bank faces significant governance changes with the board ( comprising 4 - 8 non - exec directors plus the governor ) accountable for all non - monetary decisions. it will take great discipline and skill to make this unique model ( for a central bank ) work and maintain the bank β s operational independence, reputation, and effective coordination of decision - making across the mpc, the board and the bank β s policy ( e. g. financial stability ) committees. my first speech when i joined the bank was on communication β with the tagline β i β m just a soul whose intentions are good, oh lord, please don β t let me be misunderstood β ( courtesy of the animals ). i must say, somewhat immodestly, that looking back on it, it was rather prescient, or perhaps timeless. as yogi berra was reported to have said β it β s like deja vu all over again. β for example, i touched on the special challenges of communicating lvr policies and noted that [ the ] extension in regulatory and supervisory responsibilities will demand new channels, new audiences and new messages. β communicating the objectives of macro prudential and unconventional monetary policies hasn β t gotten any easier, but we have been broadening our channels, our audiences, and our story - telling narratives, and will keep doing so. looking ahead i have already touched on some important continuity challenges | 0 |
monetary union depends on their causes, size and persistence. what are the facts about the relative macroeconomic performances of euro area member countries? and what is the diagnosis about the causal factors and the underlying processes that explain them? i would like to point out two interesting facts that are contrary to popular perceptions. the first is that during the first six years since the creation of the euro, the growth and inflation differentials observed between member countries have not been greater than those recorded in the 25 years before the establishment of emu. on the contrary, according to some measures, the dispersion in growth rates has recently reached a historically low level. the second fact is that both growth and inflation differentials in the euro area since the introduction of the euro have been broadly of the same order of magnitude as the corresponding differentials observed across regions and metropolitan areas in the united states. these facts would seem to suggest that, at least on the basis of size, the heterogeneity observed in the macroeconomic performance of euro area member countries is not exceptional and thus need not be a cause of alarm. nevertheless, there are certain other developments that suggest caution and point to the need for a deeper and more comprehensive analysis. one such development relates to the significant and persistent divergences in measures of competitiveness between member countries. the diverging competitiveness is a consequence of various factors and policies as well as of market adjustment mechanisms, which in some cases reflect rigidities in labour markets and the low degree of integration and competition in certain product markets, particularly for services. the persistence of these developments suggests that adjustment mechanisms are functioning slowly and that self - equilibrating forces are not sufficiently strong. the extent and the cumulative effects of differences in competitiveness between some euro area countries raise concerns about their impact on growth. in addition, other factors β some exogenous, such as competitive pressures resulting from globalisation, and some internal, influencing consumer sentiment β affect economic activity and tend to compound the adverse effects of the erosion of competitiveness in some countries or partly offset the benefits from the increased competitiveness attained in other countries. a better understanding of the factors and processes that determine economic fluctuations, inflation persistence and competitiveness developments across the euro area countries will contribute to the diagnosis of the present situation and the assessment of future trends. two papers in this workshop provide insights and useful results to this end. the extent of synchronisation of economic activity in europe is examined in the paper by domenico giannone | currently, virtually all the directors and key executives of bank islam are new, with diverse banking experience. in accelerating the provisions and in instituting the measures to address the bank's system, processes and business culture, it has now paved the way for drawing in new shareholders. it can now offer a valued proposition. and indeed, the participation of a new strategic investor will in fact further strengthen the bank. this has allowed the existing and new shareholders to focus taking the bank to the next level and to capitalize on the new opportunities the environment offers. indeed, the bank can gainfully advance to venture abroad to explore new business opportunities in the regional markets. the growth prospects will also be further strengthened by the overall performance of the industry and the sound and mutually reinforcing inter - linkages of the various market components in the islamic financial system. in closing, i would like to take this opportunity to congratulate bimb holdings berhad, bank islam malaysia berhad, dubai financial llc and lembaga tabung haji for their contributions in the successful completion of the share subscription agreement for bank islam. i wish bank islam and its shareholders every success in taking the bank to greater heights in its future endeavours. thank you. | 0 |
group to reach where we are today β but there is still much work to be done. after laying the foundation of a digital ecosystem for pera, we are targetting to reach 5 million filipinos in a period of 5 years, or what we call 5 in 5. the target seems ambitious. but with more than 40 million locally employed filipinos prior to the pandemic and around 2. 2 million overseas filipino workers, i am optimistic that this goal is easily attainable. while the pandemic rendered many filipinos jobless, we nevertheless expect the philippine economy to bounce back and create more job opportunities for displaced workers. we recognize that achieving this target needs commitment from all stakeholders. we, at the bsp, together with other relevant government agencies, will continue to promote a conducive regulatory environment for pera. i encourage the market players to provide convenient and affordable pera experience to your customers. i also hope to see more market players participate in the digital pera ecosystem, such as insurance companies and mutual funds. to all the attendees today, may you promote the value of pera in your organization, with your colleagues, and your families. at the end of the day, saving for retirement is a necessity. but this is just the beginning. we look forward to continuing our partnership with you to achieve a more convenient and affordable retirement savings for every filipino. after laying the foundation of a digital ecosystem for pera, we are targetting to reach 5 million filipinos in a period of 5 years, or what we call 5 in 5. the target seems ambitious. but with more than 40 million locally employed filipinos prior to the pandemic and around 2. 2 million overseas filipino workers, i am optimistic that this goal is easily attainable. while the pandemic rendered many filipinos jobless, we nevertheless expect the philippine economy to bounce back and create more job opportunities for displaced workers. we recognize that achieving this target needs commitment from all stakeholders. we, at the bsp, together with other relevant government agencies, will continue to promote a conducive regulatory environment for pera. i encourage the market players to provide convenient and affordable pera experience to your customers. i also hope to see more market players participate in the digital pera ecosystem, such as insurance companies and mutual funds. to all the attendees today, may you promote the value of pera in your organization, with your colleagues, and your families. at the end of the | benjamin e diokno : promoting retirement savings through digital pera - convenient and affordable retirement savings ( cares ) through digital pera # peracares speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the executive briefing on digital transformation, manila, 8 september 2020. * * * ladies and gentlemen, good morning. it is a pleasure to welcome you all, as we bring together the government and private sectors to celebrate this important milestone β the virtual launching of digital pera, or the personal equity and retirement account. today β s event takes place in an unprecedented time. needless to say, the covid - 19 pandemic continues to disrupt economies and societies around the world. the pandemic has changed the way we live, work, and communicate. but the crisis also presents an opportunity to rethink our priorities and to prepare for our next steps moving forward. through this event, we hope to encourage more filipinos to plan and save for the future amid these challenging times. this aspiration can be made possible through digital pera β a convenient and affordable program that aims to boost retirement savings. pera was established under republic act no. 9505 as a means to help filipinos build funds which they can use upon retirement. preparation is key when thinking about retirement, and there is no better time to prepare than when you are still able and productive. after all, we deserve to sit back and enjoy our retirement after years of hard work. unfortunately, this is not the case for many of us. in fact, most filipinos do not expect to receive a pension in their old age. based on the latest report of the philippine statistics authority, the philippines has around 7. 6 million filipinos aged 60 years old and above. of this group, only 20 percent are covered by either sss or gsis, leaving 80 percent of senior citizens with no mandatory pension at all. retirees who are fortunate enough to be covered by state - sponsored retirement systems receive an average monthly pension of p5, 123 for sss and p18, 525 for gsis. depending on the lifestyle you would like to have in your senior years, this pension may or may not be enough to meet all your needs. according to a recent survey, we filipinos tend not to prepare for their own retirement. specifically, filipinos only set aside 3. 6 months β worth of | 1 |
gradually in 2009. risks to price stability at the policy - relevant medium - term horizon remain clearly on the upside and have increased over the past few months. these risks include notably the possibility of further increases in energy and food prices and of increasing indirect effects on consumer prices. there is a very strong concern that price and wage - setting behaviour could add to inflationary pressures via broadly based second - round effects. the governing council is monitoring price - setting behaviour and wage negotiations in the euro area with particular attention. furthermore, there are potential upside risks from unanticipated rises in indirect taxes and administered prices. against this background, it is imperative to ensure that medium to longer - term inflation expectations remain firmly anchored at levels in line with price stability. the shift in relative prices and the related transfer of income from commodity - importing countries to commodityexporting countries require a change in the behaviour of companies and households. therefore, broadly based second - round effects stemming from the impact of higher energy and food prices on price and wage - setting behaviour must be avoided. all parties concerned, in both the private and the public sector, must meet their responsibilities in this regard. in this context, the governing council has repeatedly expressed its concern about the existence of schemes in which nominal wages are indexed to consumer prices. such schemes involve the risk of upward shocks in inflation leading to a wage - price spiral, which would be detrimental to employment and competitiveness in the countries concerned. the governing council therefore calls for such schemes to be avoided. the monetary analysis confirms the prevailing upside risks to price stability at medium to longer - term horizons. in line with our monetary policy strategy, we take the view that the sustained underlying strength of monetary and credit expansion in the euro area over the past few years has created upside risks to price stability. over recent quarters, these risks appear to have become manifest as inflation has trended upwards. not least in the face of the ongoing tensions in financial markets, the monetary analysis helps to support the necessary medium - term orientation of monetary policy by focusing attention on the upside risks to price stability prevailing at medium to longer horizons. while the growth of broad money and credit aggregates is now showing some signs of moderation, also reflecting the policy measures taken since 2005 to address upside risks to price stability, the strong underlying pace of monetary expansion points to continued risks to price stability over the medium term. the current yield curve has led to very rapid increases in time deposits and to a substantial decline in annual | sabine lautenschlager : looking ahead β closing remarks at the ecb forum on banking supervision closing remarks by ms sabine lautenschlager, member of the executive board of the european central bank, at the ssm banking supervision forum, frankfurt am main, 4 november 2015. * * * let me close this conference by making a few remarks on the political climate in which regulators and supervisors are working and which the previous panel discussed. and while today is certainly a day for celebration, i also want to mention one major challenge the ssm is facing in the years to come. in my view, we should fairly swiftly bring to a close the global reform agenda. after nearly a decade of regulatory reforms the public, the media and policy - makers are weary. regulatory fatigue is spreading ; the pendulum is swinging back from widespread pressures for regulation to a preference for lighter banking regulation and supervision. we therefore have to carefully channel what is left of the original momentum. i join those calling for an end to the development phase and a turn to the implementation phase of regulatory reforms. in this context, it will be key that we not only implement the many new rules and standards diligently ; it is even more important to actually use newly acquired supervisory instruments in a consistent and risk - oriented manner. we cannot allow the fatigue we are experiencing to lead to supervisory forbearance. turning now to the ssm, i would like to mention one challenge i am very concerned about. although many projects such as the work on harmonising options and national discretions are making good progress in reducing divergence, the ssm on its own is not sufficient to address the remaining fragmentation in the euro area banking system. the flexibility given to member states when implementing directives might result in a worst - case scenario consisting of 19 different national banking acts varying from a word - by - word transposition of european norms to national gold - plating. don β t misunderstand me : the transposition of directives into national law is the prerogative of national lawmakers. but as many directives define key supervisory powers, it is of utmost importance to agree on common key supervisory instruments that are available to the ssm. let me just provide one example. diverging national implementations of the brrd result in noticeable differences across countries. the ecb has to be sure that the distinct national requirements are met before it issues, for example, a β failing or likely to fail β verdict. for a β single | 0.5 |
in the twentieth century to make small loans to industrial workers. as insured banks, ilcs are supervised by the fdic as well as by the chartering state. however, under a special exemption in current law, any type of company, including a commercial or retail firm, may acquire an ilc in a handful of states - principally utah, california, and nevada - and avoid the activity restrictions and supervisory requirements imposed on bank holding companies under the federal bhc act. when the special exemption for ilcs was initially granted in 1987, ilcs were mostly small, local institutions that did not offer demand deposits or other types of checking accounts. in light of these facts, congress conditioned the exemption on a requirement that any ilcs chartered after 1987 remain small ( below $ 100 million in assets ) or refrain from offering demand deposits that are withdrawable by check or similar means. this special exemption has been aggressively exploited since 1987. some grandfathered states have allowed their ilcs to exercise many of the same powers as commercial banks and have begun to charter new ilcs. today, several ilcs are owned by large, internationally active financial or commercial firms. in addition, a number of ilcs themselves have grown large, with one holding more than $ 50 billion in deposits and an additional eight holding more than $ 1 billion in deposits. affirmatively granting ilcs the ability to offer business now accounts and open de novo branches across state lines would permit ilcs to become the functional equivalent of full - service insured banks and operate across the united states. this result would be inconsistent with both the historical functions of ilcs and the terms of their special exemption in current law. because the parent companies of exempt ilcs are not subject to the bhc act, authorizing ilcs to operate essentially as full - service banks would create an unlevel competitive playing field among banking organizations and undermine the framework congress has established for the corporate owners of full - service banks. it would allow firms that are not subject to the consolidated supervisory framework of the bhc act - including consolidated capital, examination, and reporting requirements to own and control the functional equivalent of a full - service bank. it also would allow a foreign bank to acquire control of the equivalent of a full - service insured bank without meeting the requirement under the bhc act that the foreign bank be subject to comprehensive supervision on a consolidated basis in its home country. in addition, it would allow financial firms to acquire the equivalent of a full - service bank without | net between november and january and rebounded partially in february. the lengthy government shutdown likely contributed to the january decline. and although recent readings are below those that prevailed for much of 2018, they are still in a range consistent with ongoing spending growth. other spending indicators have also shown some slowing. residential construction data have been soft for some time, reflecting in part earlier increases in interest rates, and homebuilders report that supply constraints on available lots, shortages of skilled workers, and tariffs on inputs are also contributing to the slowdown. business investment registered strong gains last year, including in the latest quarter, but there are some indications of softening there as well. the latest data on capital goods orders, for example, suggest some softening in equipment spending gains. surveys of businesses, such as the institute for supply management β s purchasing managers index and similar regional indexes, have generally moved lower over the past six months, reversing much of the run - up seen in 2017 and late 2016. the national federation of independent business β s small business optimism index is also lower than its mid - 2018 peak, although it remains well above the levels of 2015 and much of 2016. the weaker foreign outlook also acts as a crosscurrent to the modal outlook. while strong foreign growth provided tailwinds early last year, foreign growth - 3projections have been revised down repeatedly more recently. 2 the slowdown of foreign growth now appears to be more persistent than initially assumed, with growth likely running below potential for most of last year. economic activity slowed noticeably in the second half of 2018 in china, where policymakers have been trying to achieve a balance between restraining very elevated levels of domestic debt, on the one hand, and maintaining strong aggregate growth, on the other. the protracted trade conflict with the united states has further complicated that challenge. concerns about china β s slowdown are reverberating globally, as was true in 2015 - 16, although the incidence is somewhat different. while germany had appeared to be weighed down primarily by transitory factors late last year, some of the weakness in industrial production now appears likely to be more persistent, in part reflecting spillovers from china. the euro area is also seeing slowing in some other large member economies. global weakness in trade and manufacturing has also weighed on japan. the slowdown in foreign demand spills over into the united states through a variety of channels. although the dollar has weakened somewhat lately, its earlier appreciation and | 0.5 |
addiction of depending on foreign savings to finance our consumption and investment. this dependency means that we have persistently needed interest rates above those in most developed economies to maintain inflation at target levels similar to those being followed elsewhere. policies that increase domestic savings, including reducing the government β s fiscal deficit, and to reduce the flow of resources into the public sector and other non - tradables sectors, would help to achieve a sustainable reduction in the exchange rate. ( iv ) concluding comments throughout the world, monetary policy is being conducted in a highly challenging environment. years of close to zero interest rates and massive liquidity injections in the u. s., japan and euro area are creating negative spill - overs for smaller economies such as new zealand. difficult adjustments lie ahead as the major central banks try to re - establish more normal monetary conditions and prevent inflation from moving beyond target levels. and, in new zealand, we have never had to conduct monetary policy when a major part of the economy faces a concentrated construction programme in the order of 12 percent of gdp β and insurance payouts in excess of this. various groups in our economy are under pressure from the high exchange rate, rising house prices, and those living off interest income worry about low yields. monetary policy, by itself, cannot deliver quick fixes to achieve and sustain more rapid economic growth, lower unemployment, or maintain a lower exchange rate. other policies are central for achieving these outcomes, but when they are applied, monetary policy can be supportive of them. in conducting monetary and prudential policy, the reserve bank will be consistent, open, and flexible in reflecting on new information and data. in doing so, our focus will remain on bis central bankers β speeches meeting the objectives in the pta and maintaining new zealand β s reputation for credible monetary policy outcomes and financial stability. this is the best contribution we can make to help bolster new zealand β s rate of economic growth and serve new zealanders. graeme wheeler bis central bankers β speeches | achieved annual cpi inflation within our 1 - 3 percent target range now. such a policy shift would have been inconsistent with the committee β s remit and led to many other severe and persistent economic challenges. the committee could have commenced its tightening cycle earlier in 2021 than it did, in order to better contain core ( domestic demand - led ) inflation pressure. however, the subsequent rise in international food and energy prices would still have led to headline cpi inflation exceeding 6 per cent now. chart 1 : cpi inflation split between β core β and β headline β source : stats nz. the blue bars represent ex - food and energy inflation, an internationally comparable measure of core inflation. these examples are not excuses for inflation not being at 2 percent. they highlight the extent of the economic shocks that buffeted the economy, and the importance of being forward - looking when setting policy, with flexibility in achieving our targets. the lags between our monetary policy actions and inflation outcomes remain long and highly variable. other central banks are in the same boat, and we are learning the lessons together. in an absolute sense, actual and expected inflation is too high and needs to be reduced. however new zealand is in a strong macroeconomic position relative to most oecd nations. chart 2 β international inflation and unemployment rates note : the data are sourced from the oecd database. the latest available data points have been used ; inflation data for 2022q3 for all countries, and unemployment data for 2022q3 for all countries except switzerland for which 2022q2 data is used. turkey has been omitted since it is an outlier with an exceptionally high inflation rate of 81 %. we are in the lowest quartile for both inflation and unemployment in the oecd. we have a stable and well - functioning financial system that is resilient to a wide range of interest rate and employment shocks. 3 and, as outlined in our statement released yesterday, we have resilient household, public, and business sector balance sheets in aggregate. now turning to the monetary policy statement. the monetary policy committee yesterday increased the official cash rate ( ocr ) from 3. 5 percent to 4. 25 percent. the committee agreed that the ocr needs to reach a higher level, and sooner than previously indicated, to ensure inflation returns to within its target range over the medium - term. core consumer price inflation is too high, employment is beyond its maximum sustainable level, and near - term inflation expectations have risen. _ | 0.5 |
, signal a continuation of the very gradual recovery in the second quarter of 2014. looking ahead, domestic demand should be supported by a number of factors, including the further accommodation in the monetary policy stance and the ongoing improvements in financing conditions. in addition, the progress made in fiscal consolidation and structural reforms, as well as gains in real disposable income, should make a positive contribution to economic growth. furthermore, demand for exports should benefit from the ongoing global recovery. however, although labour markets have shown some further signs of improvement, unemployment remains high in the euro area and, overall, unutilised capacity continues to be sizeable. moreover, the annual rate of change of mfi loans to the private sector remained negative in may and the necessary balance sheet adjustments in the public and private sectors are likely to continue to dampen the pace of the economic recovery. the risks surrounding the economic outlook for the euro area remain on the downside. in particular, geopolitical risks, as well as developments in emerging market economies and global financial markets, may have the potential to affect economic conditions negatively, including through effects on energy prices and global demand for euro area products. a further downside risk relates to insufficient structural reforms in euro area countries, as well as weaker than expected domestic demand. bis central bankers β speeches according to eurostat β s flash estimate, euro area annual hicp inflation was 0. 5 % in june 2014, unchanged from may. among the main components, services price inflation increased from 1. 1 % in may to 1. 3 % in june, while food price inflation fell from 0. 1 % to β 0. 2 %. on the basis of current information, annual hicp inflation is expected to remain at low levels over the coming months, before increasing gradually during 2015 and 2016. meanwhile, inflation expectations for the euro area over the medium to long term continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 %. the governing council sees both upside and downside risks to the outlook for price developments as limited and broadly balanced over the medium term. in this context, we will closely monitor the possible repercussions of geopolitical risks and exchange rate developments. turning to the monetary analysis, data for may 2014 continue to point to subdued underlying growth in broad money ( m3 ). annual growth in m3 was 1. 0 % in may, compared with 0. 7 % in april. the growth of the | narrow monetary aggregate m1 moderated to 5. 0 % in may, after 5. 2 % in april. the increase in the mfi net external asset position, reflecting in part the continued interest of international investors in euro area assets, has recently been an important factor supporting annual m3 growth. the annual rate of change of loans to non - financial corporations ( adjusted for loan sales and securitisation ) was β 2. 5 % in may 2014, compared with β 2. 8 % in april. lending to non - financial corporations continues to be weak, reflecting the lagged relationship with the business cycle, credit risk, credit supply factors and the ongoing adjustment of financial and non - financial sector balance sheets. the annual growth rate of loans to households ( adjusted for loan sales and securitisation ) was 0. 5 % in may 2014, broadly unchanged since the beginning of 2013. against the background of weak credit growth, the ongoing comprehensive assessment of banks β balance sheets is of key importance. banks should take full advantage of this exercise to improve their capital and solvency position, thereby supporting the scope for credit expansion during the next stages of the recovery. to sum up, the economic analysis indicates that the current low level of inflation should be followed by a gradual upward movement in hicp inflation rates towards levels closer to 2 %. a cross - check with the signals from the monetary analysis confirms this picture. as regards fiscal policies, substantial fiscal consolidation in recent years has contributed to reducing budgetary imbalances. important structural reforms have increased competitiveness and the adjustment capacity of countries β labour and product markets. however, significant challenges remain. to strengthen the foundations for sustainable growth and sound public finances, euro area countries should not unravel the progress made with fiscal consolidation, in line with the stability and growth pact, and should proceed with structural reforms in the coming years. fiscal consolidation should be designed in a growth - friendly manner, and structural reforms should focus on fostering private investment and job creation. a full and consistent implementation of the euro area β s existing fiscal and macroeconomic surveillance framework is key to bringing down high public debt ratios, to raising potential growth and to increasing the euro area β s resilience to shocks. finally, i wish to inform you that the governing council today announces that the frequency of our monetary policy meetings will change to a six - week cycle, from january 2015. the reserve maintenance periods will be extended to six weeks to match the new schedule. moreover, we | 1 |
patrick honohan : financial regulation in ireland β past, present and future speech by mr patrick honohan, governor of the central bank & financial services authority of ireland, at the financial services ireland annual dinner, dublin, 1 december 2009. * * * this evening i want to say a few words about the past, the present and the future of financial regulation in ireland. as far as the past is concerned, it is conventional to assume that, in the recent words of judge richard posner, applied to the us regulatory agencies in the run - up to their own crisis, β ignorance and inattention β were at the heart of regulatory failure. whatever else about that assessment, it hardly represents an explanation. nor is it credible that a few simple rules like β no 100 % mortgages β would have prevented the disaster that has occurred. in seeking a deeper understanding of why things went wrong, i have been struck by the disruptive effect in ireland of the attempt to adopt the new international fashion in supervisory practice that emerged in the late 1990s. this new fashion, which later underpinned aspects of the basel 2 standard, involved a shift from scrutinising the accounts, the loan portfolio and other aspects of the books of financial firms, to focusing on procedures and models. the motivation for this shift was the rapidly growing complexity of banking and other financial business, including the use of derivatives and complex hedges. precisely because of the rapidly growing complexity of banks β business models, a supervisor who only looked at individual parts of a bank β s business ( i. e., their exposures ) on a piecemeal basis, without reference to the correlation of risks across those parts, would have a false picture of the institution β s overall risk. in addition, the wider range of instruments being traded and held in bank portfolios meant that, not only could an institution β s exposure to market risks change dramatically from day - to - day ( or even hour - tohour ), but there were growing operational risks related to the difficulties of controlling a complex portfolio. this approach envisaged the supervisor standing back from individual transactions and loans. instead, the supervisor looked in a holistic way at the banks β systems, at their corporate governance and their risk procedures and models and control structures and confirmed they were in place and in operation. the champions of the this approach rightly pointed to the importance of ensuring that banks had good systems and incentives for remaining safe and sound. there is much | the authorities considered it necessary to make that call. since the nationalisation of anglo irish bank, the regulator here has adopted what has been termed an β intrusive β approach to supervision of the main firms. this involves on - site presence on a daily basis by several regulatory staff in each of the institutions covered by the government guarantee. they have been sitting in as observers on key decision - making committees in each of these banks as well as conducting a number of specific investigations and reviews. meanwhile, more recently we have been re - engaging with the business of understanding the portfolios of these institutions in greater depth. the assets going into nama are of course being subjected to an intensive due diligence exercise which the regulator is not duplicating ; our main focus now is on the rest of the business. as you know, the new head of financial supervision, matthew elderfield, will be starting in a few weeks. he brings his own considerable experience and skills to upgrading and restructuring regulation in ireland on a risk - based basis. we are together planning details of the new structures and approaches that will be adopted in what is rapidly becoming a unitary central banking organisation without artificial and unnecessary internal barriers. it may not be sufficiently recognised just how much restructuring and strengthening there has already been. i find that of the team dealing with the domestic banks as many of seventeen staff members β or about half of the total β were externally recruited within the past year or so, with management and staff moved in from entirely different parts of the organisation since the severity of the crisis became evident around the time of bear stearns. the decision, which predates my arrival, to make a fresh start in this area was clearly a sound one. actually, my personal impression is that, while we will undoubtedly continue to be much more hands - on than in the past, the style of engagement currently being practiced, while appropriate now, will probably not be quite the right approach as a supervisory model for the long term. when things settle, as they will over the coming months, we need to make the transition to a more sustainable and effective way of operating, one that is calibrated to the risks posed by the different firms in the sector. this will involve applying the existing rulebook, strengthened as necessary to plug the holes revealed by the crisis, with a renewed clarity of principles that will serve to back - up and amplify these rules to deal with unforeseen loopholes and blockages. in recent years | 1 |
to influence inflation up to our two - year horizon. here is a picture of our inflation assessment last october and the outcome ( chart 1 ). i have chosen to present it in terms of und1x because that is the indicator of inflation on which monetary policy has been focused in the past year. the chart also shows the price of imports and an indicator of underlying domestic inflation, undinhx. as you will see, we believed inflation would move up gradually in the wake of rising activity. this would be countered by low, even falling, import prices in connection with a stronger exchange rate, lower oil prices and generally strong global competition. even our inflation forecast was evidently on the high side, at least to date. it is perhaps even more noteworthy that underlying domestic inflation has turned out to be appreciably lower. this is something that observers of the swedish economy cannot ignore, particularly as the past decade has provided so many surprises of this sort, though not as dramatic. the main point to consider is, of course, how permanent the changes are likely to be. to what extent should we abandon earlier relationships and commit ourselves to a continuation of the relationships that have applied in recent years? why has inflation been low? the first thing to note is that this development has not been confined to sweden. inflation in many other countries has also been unexpectedly low. there, too, the reasons for this are not entirely clear. some pieces of the puzzle have been identified but not enough to make up a clear picture. as decision - makers, however, we cannot simply shrug our shoulders and say we don β t know. decisions have to be made and it would not be reasonable to go on acting as though nothing had changed until sufficiently long time series are available for econometric analyses. recently i had the pleasure of chairing a central bank seminar that the bis arranged on just these issues. my impression was that it has proved difficult to produce definite evidence of any structural shift in the relationships that govern inflation, such as various versions of the phillips curve. in many countries, including sweden, appraisals of resource utilisation, for example, are now more optimistic. as you are no doubt aware, in the past five years our output gap estimates have in fact been revised a number of times. one explanation i find fairly plausible is that after the profound crisis in the early 1990s we simply misjudged the size of the gap. there is also some support for the possibility that productivity | swedish economy might become overheated. at the riksbank we were more inclined to wait and see. there is no reason now to adopt a different view and exaggerate the risks of the share price fall. consumption is being sustained in the first place by a strong development of income that stems from increased employment, a good increase in real wages and a fiscal stance that is less restrictive than before. there is some cause for concern in the present round of wage negotiations. in a sense, that is inevitably the case when many settlements are being concluded simultaneously and the wage share is approximately two - thirds of the economy. that means that no other single factor is anything like as important as the wage trend for the path of the swedish economy in the coming years. the picture of the negotiations that are now beginning is mixed. the outcome to date has been a positive surprise. it also looks as though the negotiating parties are formulating their bids on the basis of the inflation target. moreover, the available picture of future wage expectations looks relatively good ( chart 3 ). here we see the wage outcome, wage expectations and unfilled job vacancies. it is evidently becoming increasingly difficult to find the right people for the jobs that are advertised. this presumably makes the risk of wage drift greater than in previous years. moreover, the wage demands that have been presented are higher than before the previous round of negotiations. wage outcome, wage expectations nov - 00 and unfilled job vacancies per cent and thousands, respectively wafe outcome ( left scale ) faktisk lon ( vanster skala ) arbetsmarknadens nov - 00 ( vanster skala ) wage expectations ( leftforvantningar scale ) kvarstaende lediga platser unfilled vacancies ( right scale ) ( hoger skala ) sources : prospera research ab and statistics sweden when it comes to judging future inflationary pressure, the degree of resource utilisation is the crucial concept, at least as long as inflation expectations are parked around the 2 % target. the next chart is instructive here ( chart 4 ). as you know, we estimate total resource utilisation econometrically in terms of the output gap. if we take the october estimates as a starting point and project them with the accompanying gdp forecast, we find that for the first time in a number of years we look like having full or more than full resource utilisation in the | 1 |
we are trying to re - iterate with industry is that these are key issues that the firms themselves are responsible for. that they need to take more ownership of their governance and risk management, including a proactive, rather than reactive, approach to managing the risks and uncertainties facing their business and their customers. well - run firms know that this is not just about meeting regulatory requirements β but is in the long term interests of their businesses. and so while embedding good governance and proactive risk management is a supervisory priority of our own related to the financial sector, i think that this is something that should be a priority for boards more broadly. as the iod's standards for the board states, a board's key purpose " is to ensure the company's prosperity by collectively directing the company's affairs, while meeting the appropriate interests of its shareholders and relevant stakeholders. " 4 in this regard, while governance and risk management is fundamental to ensuring prosperity and appropriately meeting the interests of shareholders, it is not enough to have these things on paper β they need to be embedded throughout the organisation. and i would suggest that properly delivering and embedding these enablers all begins with culture. for without the right culture, good governance and strategic plans won't get delivered β or they won't get delivered right. and without the right culture, firms are unlikely to look after the long term interest of its stakeholders. boards should therefore look to play a pivotal role in overseeing the culture of their organisation. by setting the tone from the top, both through their interactions with the executive and by making culture an integral part of the organisation's strategy, boards can make a powerful contribution to establishing a strong ethical and cultural environment throughout. you know it when you see it so, i hope the importance of good governance, good culture and good risk management is clear, and that boards can play an important role in delivering good. but what does " good " look like? governance and culture is of course a matter for each organisation β there is no one size - fits - all model, and no two boards are alike. but, generally, " good " looks the same β as in you know it when you see it ( or indeed when you do not ). 3 / 6 bis - central bankers'speeches however, as former central bank governor philip lane once said β the " defining cultural test is how a firm deals with adverse situations5 and indeed adverse situations are the real test too for | the other hand, time and time again we have seen how poor governance is the root cause of many failings ; how external shocks can amplify poor management behaviour ; and in the world of financial services, how risks of consumer and investor detriment rises when poor business practices and weak business processes are allowed to persist. for this reason β and following the hard lived experience of the governance, risk management and cultural short - comings that led to the financial crisis β strengthening the governance framework of financial services firms and improving the leadership and culture of these organisations has been a key focus for policymakers and regulators over the last 15 years. i am happy to say we have come a long way since then β both in terms of the regulatory framework as well as the increased importance placed on good governance by all stakeholders, including industry. while standards have improved, however, it is a journey we are all still on. established firms continue to improve their governance and culture β through supervisory engagement and lessons learned from previous failings. many new entrants, especially fast growing and innovative firms, on the other hand are at the start of their own commercial and regulatory journey β and from our point of view have the opportunity to embed good practices at the very outset. in this regard, it is important that good governance and risk management is treated as a founding pillar of their business. that it is seen as a key enabler for growth, rather than an afterthought in their commercial strategy. 3 for good governance and risk management is not just good for compliance β it is good for business, good for shareholders, good for customers, and good for the economy. furthermore in the fast changing environment we operate in, and in light of the evolving challenges we face, governance is also something that needs to continuously evolve. something that needs to reviewed, updated and enhanced regularly β not just in the face of evolving governance codes, but through lessons learned and in the spirit of ongoing efforts to foster confidence and trust in your organisations. risk management, traditionally a backward looking exercise based on historic data, needs to adapt too β with more forward - looking risk management techniques necessary in a changing and uncertain world. tone from the top so, good governance and robust risk management practices are essential components of sound and successful organisations. and indeed in a rapidly changing world, and in a heightened external risk environment, they are becoming increasingly so. 2 / 6 bis - central bankers'speeches as a regulator and supervisor, one of the things | 1 |
expectations from banks ; the guidelines adopted an integrated approach to risk management. even earlier, in february 1999, banks were advised to set up an asset liability management framework to manage liquidity and interest rate risk. in this context, i would like to make following observations : a ) the need to accelerate the speed at which banks have been moving towards establishment of risk management systems b ) the need to achieve convergence with regulatory and supervisory expectations / requirements while deciding on the sophistication of methods to be adopted. c ) developing appropriate risk management architecture, mis and skill enhancement d ) the need to integrate risk management process with capital planning strategies the current business environment, with its pointed emphasis on corporate governance, is making it critical for banks to explain their risk profiles publicly with greater clarity and detail than ever before. risk is still a complex and technical subject, so achieving transparency will not be easy. internal constituents, analysts, ratings agencies, investors, and regulators all have varying levels of understanding of advanced risk measurement techniques. all will require continuing education before the market as a whole reaches a common understanding of risk. in particulars, direct stakeholders in any transaction need to be aware of the risks involved. for the third pillar of basle ii ( market discipline ) to be efficacious, it is important that the stakeholders are aware of the risks involved in the banks β transactions and the systems in place to manage the risks. in this context, the importance of an appropriateness policy for banks offering various products to the corporate clients can't be overemphasised. the risk management systems developed by banks would include a lot of attention of top management to the suitability of it structure including issues of connectivity, designing an mis format that is risk focused, setting up an organization to manage risk that ensures segregation of risk assessment from operations, frequent review of risk management systems to ensure there is no slippage and last but not the least, to develop appropriate skills within the organization. in this context, it must be kept in view that risk management is not the sole concern of the risk management department but rather a culture that pervades the whole organization with specific support from the top management. iii. recent initiatives in risk management in india, over the years various steps have been taken to strengthen the risk management architecture, both at the bank specific level as well as a broader systemic level. alm guidelines : most banks have put in place an alm framework. however there is lot to be done to internalize | in corporate bonds. prudential requirements of the sectoral regulations would, however, need to be balanced with the need for a developed bond market which ultimately would be in the interest of all the financial market participants. expanding access to the foreign investors there is a growing demand to open up the corporate debt market and, in particular infrastructure debt segment to the fiis / qfis. there is also a demand for fiscal concession to the fiis. it has to be kept in view that based on our experience and lessons learnt from the global financial crisis, we have adopted a cautious approach. nevertheless, the limits and bis central bankers β speeches conditions for investments by the fiis have been liberalized particularly for the infrastructure bond as mentioned in para 12 above. the limits available so far, however, have not been used up significantly. the recent announcement regarding reduced withholding tax to five per cent for foreign currency denominate infrastructure bonds and its likely extension for the rupee infrastructure bond investments by the fiis may lead to greater utilization of the available limits. settlement systems / trading platform the success of order matching trading platform in g - sec market can act as guidance for setting up of order - matching trading platforms for the corporate debt market. considering that the trading platforms on exchanges are non - functional, a quote driven anonymous screen based trading platform could possibly bring about the desired focus on trading in corporate debt market due to reduction in transaction cost and improved time efficiency in execution of trades. efficient bankruptcy regime a robust, timely, effective and efficient bankruptcy regime is essential to development of corporate debt market from investors β point of view. steps, such as, reforming bankruptcy law, early resolution of bankruptcy cases and streamlining the procedures relating to insolvency would go a long way in achieving the same. the issue of insolvency of financial institutions established under statutes bi - lateral netting among them during bankruptcy also need resolution. possibly as recommended by the committee on financial sector assessment, a comprehensive insolvency regime for banks and other financial institutions need to be expedited. f. implementation of basel iii and corporate bond market many steps have been taken to promote bank lending to infrastructure sector like liberalisation of credit exposure norms, liberal dispensation for classification of investments under htm category, expansion of list of businesses included under infrastructure sector, etc. as a result, banks β exposure to infrastructure lending has grown by more than four times between 2005 and 2011. however, two factors are limiting the ability | 0.5 |
of strong banking supervision, the gains will be mutual. but let β s be honest. as any economist will tell you, there β s no such thing as a free lunch. surely all this must come at a price? well, in my view, the price of being a part of the banking union is low compared with the benefits it offers. is it a free lunch? if you are part of the banking union, you need to share. you need to share control over banking supervision and resolution. that is the price to be paid. now, i understand that it is often seen as vital to have total control over sensitive policy areas. and i understand that there is a feeling that if 4 / 7 bis central bankers'speeches you want something done well, you must do it yourself. but is that really true? i don β t think so. if we work together, we are still in control and we can still do things well. the history of the eu is a case in point. when european countries signed the treaty of rome 61 years ago, they chose to work together instead of working alone. today more than ever, this choice is also a reaction to a changing world. some of the current changes are beyond any single government β s control, and are better managed with the help of strong allies and good friends. the world of banking is no exception. our financial systems have grown closer together and have become much more complex than they used to be. large banking groups now cover many member states. we have all benefited from this. but if we want this trend towards integration to continue, we must make sure it does not come at the cost of greater instability and more crises. we need rules that apply across borders just as banks operate across borders. and we need supervisors who have the power to see and act across borders. in short : we need to cooperate. and when i say cooperate, that β s what i mean. i know that some may think we have created a system in which the ecb and the single resolution board hold all the power. i think otherwise. the banking union is very much a joint project. just look at banking supervision. we at the ecb cannot act alone. instead, we work closely together with the national supervisors. we also rely on their national expertise, and we rely on their experience. after all, they know a lot about the local circumstances, such as specific covered bond frameworks. without them, european banking supervision would not work. | it runs counter to the idea of a single market and fosters regulatory arbitrage ; and it violates the principle of same business, same risks, same rules. every day we supervisors struggle to maintain the equal treatment of banks that have to comply with different rules even though these differences are not justified by national specificities with regard to risks. that said, where we do have scope to act, we have made use of it. we have, for instance, agreed to exercise options and discretions contained in european law in a harmonised manner. this was a huge step, but more could be done. that, however, is up to the legislators. and there are indeed a few areas where further harmonisation would help the single market to progress : the fit and proper assessments of banks β board members, the liquidation of banks, large exposures and the supervision of branches of non - eu banks. now, don β t get me wrong : what has been achieved so far is truly remarkable. no large reform project has ever been perfect from the start, so it is only natural that more remains to be done. and it is worth putting our achievements into perspective. a lot has been done in a short time. the banking union is a project that is unprecedented in scope and scale. just look at its first pillar, european banking supervision. it involves 26 authorities from 19 countries plus the ecb. this sometimes prompts questions about how efficient it can really be. did we, in the end, just build a huge and overly complex bureaucratic machine? well, i β m not giving away any secrets if i tell you that it is kind of complex. and to countries that are thinking about joining the banking union through close cooperation agreements, it might look even more complicated. 3 / 7 bis central bankers'speeches in order to take a decision, we have to follow a finely balanced procedure. one of the reasons is that two bodies are involved which have to interact in a careful manner. the first one is the ecb β s supervisory board, which brings together the ecb and all the national supervisors. the second body is the ecb β s governing council ; it brings together all the national central banks and acts as the ultimate decision - making body. while both bodies play a role when it comes to taking decisions, they are, at the same time, subject to what is known as the separation principle. this principle was put in place to deal with potential conflicts of interest between monetary policy | 1 |
asset purchases step by step over the coming quarters, and will end net purchases under the pandemic emergency purchase programme at the end of march. in view of the current uncertainty, we need more than ever to maintain flexibility and optionality in the conduct of monetary policy. our monetary policy is always data - dependent, and this is all the more important in the situation that we are facing at the moment. we will remain attentive to the incoming data and carefully assess the implications for the medium - term inflation outlook. those implications are key parameters in our forward guidance. our forward guidance has several dimensions. there is a defined sequencing between the end of our net asset purchases and the lift - off date. a rate hike will not occur before our net asset purchases finish. moreover, there are three conditions that will have to be met before the governing council feels sufficiently confident that a tilt in our policy rate is appropriate. all the three conditions are meant as safeguards against a premature increase in interest rates. finally, any adjustment to our policy will be gradual. conclusion let me conclude. former commission president jacques delors described the process leading up to the maastricht treaty as one requiring β great determination, rockhard solidarity and a little daring from time to time β. 2 the leaders of europe have once again demonstrated these qualities with their policy response to the pandemic crisis. and as we emerge from the pandemic, we need to continue down this path. the ecb will play its part and show the determination needed to ensure price stability. you may rest assured that our commitment to deliver on this remains absolutely unwavering, as does our resolution to explain, to convince, but also to listen and better understand people β s concerns. our regular exchanges with you, their elected representatives, are crucial in that regard. with this in mind, i very much look forward to today β s discussion with you. 1 see introductory statement by christine lagarde, president of the ecb, at the econ committee of the european parliament, 2 december 2019. 2 see presentation by president jacques delors at the european parliament, 12 february 1992. 3 / 3 bis central bankers'speeches | mario draghi : continuity, consistency and credibility introductory remarks by mr mario draghi, president of the european central bank, at the 21st frankfurt european banking congress β the big shift β, frankfurt am main, 18 november 2011. * * * ladies and gentlemen, it is a privilege and a pleasure for me to be here today. as you know, this is the first time i β m speaking publicly as president of the european central bank outside the ecb. i could not think of a more appropriate occasion than the european banking congress in the ecb β s home town. i understand that this congress was established about 20 years ago to strengthen the position of frankfurt as a european financial centre, and thereby make the city attractive as a location β first for the european monetary institute and now for the ecb. well, i am pleased to see how successful it has been! before discussing the shift towards a much greater role of emerging economies, which is the theme of today β s congress, let me elaborate on the current situation in the euro area. i. the euro area situation and ecb monetary policy activity is expected to weaken in most of the advanced economies. this is the result of a weakening of various components of aggregate demand, both domestic and foreign. and it is evident in β hard β data as well as survey data. in the euro area, downside risks to the economic outlook have increased, and the weaker degree of activity will moderate price, cost and wage pressures. this is why the ecb decided to reduce its key interest rates by 25 basis points on 3 november, acting in full compliance with its mandate to maintain price stability in the medium term. we are aware of the current difficulties for banks due to the stress on sovereign bonds, the tightness of funding markets and the scarcity of eligible collateral. we are also aware of the problems of maturity mismatches on balance sheets, the challenges to raise levels of capital and the cyclical risks related to the downturn. in the money market, we see rising spreads between secured and unsecured segments, and a widening of repo prices between different types of collateral. interbank activity remains subdued and concentrated in the very short - term maturities. this limited activity is reflected in increased recourse to our liquidity - providing operations, as well as to our deposit facility. so far, the ecb has taken several non - standard measures to ensure that short - term funding does not represent a problem for euro area banks. | 0.5 |
in this respect, history tells us that loose monetary and fiscal policies lead to entrenched inflation processes, which in the end had adverse consequences for economic growth and employment. if we were to learn a lesson from the 1970s and the 1980s, it would be that there are high economic costs to be paid in fighting inflation once it has become entrenched. i should recall that it was this realisation which led to the worldwide conviction that monetary and economic policies should be stability - oriented. if i look back at the early years of stage three of economic and monetary union ( emu ), i can say that i am satisfied with what has been achieved by the monetary policy of the ecb. inflation expectations over this very challenging period indicate that there is public confidence in the fact that price stability in the euro area will be maintained. this confidence constitutes a major achievement which - through a variety of channels - contributes to raising the growth potential of the euro area. however, i must also confess that other macroeconomic policies have not lived up to expectations. in the area of fiscal policy, we have seen a process where commitments made have repeatedly been broken. from the start of stage three, some countries have not shown sufficient determination to meet one of the key objectives of the stability and growth pact, namely to achieve budgets in balance or surplus over the medium term. as the times of strong economic growth have not been properly used to bring the fiscal position of these countries onto a sustainable basis, it is not surprising that these countries have had problems during the last few years in keeping fiscal deficits below the threshold of 3 % of gdp laid down in the treaty. in this light, i view recent fiscal developments and the discussions surrounding the stability and growth pact with great concern. there is growing evidence that most countries will miss their budgetary targets for 2003 by a significant margin. while the deterioration of budgetary balances mainly reflects thelower than anticipated economic growth, it is worrying that not all countries with severe imbalances have so far introduced sufficient consolidation measures. the lack of fiscal discipline - and notably the lack of any clear medium - term - oriented consolidation strategies - is a factor weighing adversely on the euro area's long - term growth prospects. in order to strengthen confidence in the euro area, it is fundamental to maintain the credibility of the institutional and economic underpinnings of emu and to abide in all respects by the agreed rules of the game. it is essential that, in the budget | ##feiting has consistently been that there is no undue cause for alarm about counterfeiting, but that the public should remain vigilant in checking banknotes using the feel - look - tilt test, thereby denying criminals any chance of succeeding in their attempts at counterfeiting. this remains my message. in addition, we are also trying to identify any need for the provision of additional information and training to the general public and, in particular, to professional cash handlers, i. e. cashiers of shops and banks, which are normally frontline targets for counterfeiters. at the same time, the ecb has been stepping up the institutional framework for combating counterfeits. in this context, i should like to refer to the close co - operation on anti - counterfeiting issues that has been established between the ecb, europol and the european commission. moreover, co - operation agreements are about to be concluded between the ecb and interpol, and between the ecb and national central banks of acceding countries. before concluding, let me make a final remark. as you know, this is my last testimony before your committee. i have had the privilege to preside over the ecb for the past five years, guiding it from its very inception through a number of crucial - and successful - stages, such as the introduction of the euro in 1999 and, three years later, the euro cash changeover. both events were, in my view, major steps towards a europe β united ever more closely β, and i am honoured to have served the european public and the cause of european integration during these times. madam chairman, honourable committee members, let me convey to all of you my sincere thanks for our very fruitful co - operation over the past few years. while we may not always have agreed on all issues, i believe that our relationship was marked by mutual confidence and a truly co - operative spirit. i have enjoyed working with you and wish you, as well as my successor, much success with the challenges that lie ahead. | 1 |
zeti akhtar aziz : the malaysian bond market speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the launch of ambank's malaysia corporate bond handbook commodity murabahah house, kuala lumpur, 18 august 2009. * * * it is my pleasure to be here today on this occasion of the launch of the malaysia corporate bond handbook. the handbook, which is the first comprehensive guidebook for bond investors, is an initiative that will contribute towards improving the visibility and the development of the malaysian bond market. our bond market continues to be dynamic, with continued new developments that enhance malaysia's position as a centre of origination for securities. in addition, a deeper and more liquid domestic bond market is also important for the development of a vibrant regional bond market which would in turn allow for a part of the savings in the region to be recycled and re - invested in the region. growth and development of the malaysian bond market the malaysian bond market has experienced significant transformation over the recent decade and is now well positioned to have a more significant role to support the changing requirements of the economy in our next stage of development. initiatives introduced by bank negara malaysia to spur the development of the domestic bond market started as far back as 1986. the establishment of cagamas berhad, the national mortgage corporation was the first institution that the bank established as part of the efforts to develop the domestic bond market. this was followed with the establishment of other institutions, which included the securities commission and the domestic rating agencies. the bank also put in place a comprehensive and modern depository, delivery and settlement system to facilitate the issuance, trading and settlement of debt securities in the market. mechanisms to increase liquidity in the market to enhance the overall price discovery process were also introduced through the provision of updated market information. in addition, measures were also introduced to release the captive holdings and to facilitate the efficient borrowing and lending of securities. more flexible foreign exchange policies was also implemented to facilitate capital raising and investment by non - residents to further accelerate the development of our domestic bond market. today, the malaysian bond market is the largest in the asean region, accounting for nearly 90 percent of our gross domestic product. corporations now have access to more innovative and sophisticated financing solutions through the bond market to meet their diverse funding requirements. financing through the bond market by the corporate sector now accounts for 58 percent of their total financing compared to 33 percent prior to the asian financial crisis, when there | group in asia is estimated to be increasing at 7 % per year, second only to those in the middle east, numbering 300, 000 and growing at 9 % per year. traditionally, investors in asia and the middle east have looked to the developed western markets to meet their investment needs, in view of the more developed financial markets and the range of asset classes. increasingly however, there is growing interest and search for improved returns on investment in other parts of the world. this has been a global phenomenon for some years now, characterised by excess liquidity and low yields in the traditional markets. the new silk road creates linkages that build on the comparative advantages between asia and the middle east ladies and gentlemen, historically, trade and investment in asia and the middle east has been linked to the developed economies. however, it is now increasingly recognised that there are significant complementarities between our two dynamic regions. these complementarities provide a platform for two - way flows that enhances income and wealth creation. the different demand patterns of each respective region reinforces the significance of the complementarities. the middle east investors have a greater need for diversification, both in terms of geographical allocation and asset classes, beyond the traditional investments in the us and europe. asia in turn, the home to some of the fastest growing economies in the world, offers highly diverse investment opportunities, ranging from in vietnam to japan, and in a broad scope of industries, ranging from natural resource producers to established high - tech brands. such investment opportunities continue to support the growth momentum in the region. at the same time, middle east domestic infrastructure requirements are estimated to total usd500 billion for the next five years, and asian companies have demonstrated the capacity to provide the technology, expertise and human capital to meet these infrastructure demands. asia's relentless march towards development offers new opportunities for the middle east. asia's continued need for productive capital and uninterrupted energy supply to sustain its high growth matches the middle east's resource endowments. it is estimated that asia needs usd 1 trillion worth of infrastructure investment over the next five years, and is in search of new partnerships and strategic investors to co - invest in these undertakings. in focussing on the respective comparative advantages and connecting via the new silk road, it contributes to expanding the opportunities in both the regions. essentially, this extends the production possibility frontiers to create new areas of growth. the participation of a wider pool of investors also enables better risk sharing and consequently, increases | 0.5 |
in bonds and other instruments. more important, banks β overall exposure would also include the non - funded exposures through credit substitutes and derivatives transactions which have grown significantly over the last few years. the continuing close linkage between the balance sheet of banks and of the corporate sector is, thus, clearly evident but only the nature of bank - corporate interaction is getting diverse and wider. a regulator β s comfort, therefore, lies not only in satisfaction about the quality of risk - management in the banks but also in the banks β level of understanding of risk - management by their corporate clients. in a sense, there is an element of delegated supervision to be exercised by the banks over the corporates. in this background, a closer ongoing dialogue across a wider spectrum in a spirit of partnership between the banks and the corporates adds to the comfort of the regulator. consistent with the theme of the conference, it is essential to ponder over the implications of the paradigm shift in global banking for the bank - corporate relationship. there are differences across countries in the role and functioning of banks vis - a - vis the corporates. for example, the anglo - saxon, the european and the japanese practices do vary though there is some evidence of elements of convergence with the emerging importance of trans - national corporates, global banks as well as financial intermediaries and increasing global financial integration. in the bank - dominated financial systems, such as in india, banks support corporates not only by direct lending, but also through their positions in money, debt, equity and derivatives markets. further, the industrial progress involves entrepreneurship, inevitably entailing some measurement and management of implicit risks. as the partners in progress, the banks are now called upon not only to manage the risks in lending but increasingly, to also assess the risks involved in the business to which they are lending. in this background, the case for a more intense dialogue, to the extent of some partnering, becomes stronger. let me conclude by complimenting the organisers for the excellent conference ; the participants who met me deeply appreciated the high quality deliberations at this truly global gathering. thank you. 3 / 3 | in the upswing of a cycle which can cushion their losses during the downswing. we, in india, also adopted a similar approach through a calibrated increase in the risk weights and provisioning requirements during the period of rapid credit growth. however, the important difference was that our approach entailed sector - specific prescriptions. the objective was not so much to lean against the wind of rising asset prices but as a cautionary measure to contain the exposure of the banking sector to sensitive asset classes where rapid credit expansion was observed. it is commonly agreed now that the monetary authorities can β t avoid creation of bubbles by targeting asset prices. however, they should communicate their concerns on the sustainability of strong increase in asset prices and contribute to a more objective assessment of systemic risks. however, this is where there is a tension between the regulatory approach and the accounting rule makers who, view such counter - cyclical measures as being liable to be misused for profit smoothening and find it against their basic principles of transparency and reporting plain economic reality. according to the critics, dynamic provisioning is a form of β cookie - jar accounting β and has the potential for misuse. earnings management of an entity is not something which is acceptable to the accounting profession since there have been accounting frauds which involved cookie jars. a solution that is being considered for resolving this tension is to add a separate line, further down the balance sheet into shareholders β equity instead. the envisaged counter - cyclical provisions will, therefore, be made after the net profit has been arrived at and will be in the nature of an appropriation of profits. this would be called something like β undistributable reserves β and to my mind, should also not be allowed to be included in regulatory capital β even though the general provisions are allowed to be treated as a part of tier ii capital, subject to the prescribed caps. going beyond β capital β as you are aware, over the years, the definition of β regulatory capital β of banks has gradually widened to include certain innovative and hybrid forms of capital also. for instance, besides the tier i capital, banks are allowed to treat their external liabilities, meeting certain well defined criteria, as part of tier ii capital. a portion of capital towards securities business is also allowed in certain countries to be maintained as tier iii capital. the expectation was that yields on subordinated debt would reflect the perceived strength of the bank and would, therefore, function as an instrument of market discipline. | 0.5 |
last fall. the u. s. federal banking agencies are working hard to develop an advance notice of proposed rulemaking, or anpr, that will explain concretely their vision of how basel ii would be implemented in the united states. the anpr will be tailored to the u. s. context in a way that particular banks will be able to see whether the proposal applies to them and what it will mean for them if it does. the anpr will also seek to pose questions in several areas in which the u. s. agencies need specific feedback. we hope to issue the anpr by the end of june. the next stage in the process will be the feedback that we receive from you and other interested parties, both on the cp3 and especially on the anpr in the united states. the federal banking agencies will consider these comments very carefully. i should be very clear about this. some believe that with the issuance of cp3, the shape of basel ii is essentially set in stone. this is wrong. if the cp3 or anpr comments show that elements of the proposal need to be modified, the u. s. agencies will seek such modifications. these views do not conflict at all with those that i elaborated a few minutes ago. as i indicated, there is a well - understood need for a basel ii and any realistic version of it will need to balance flexibility and comparability in the use of modern risk - management techniques. but the members of the basel committee need to remain open to the possibility of specific improvements to the proposals. let me describe some of the conceptual issues that have been raised regarding the proposals and provide some perspective on them. first and foremost has been the issue of complexity. concern over this issue appears to have several aspects. the first is a concern over the sheer volume of the proposals. this aspect of the complexity concern is, i think, somewhat misguided because it has typically equated the basel proposals with the sum total of those background papers that have been released in an effort to explain more transparently not only what the proposals are but why they look the way they do. nevertheless, there is no doubt that the basel ii proposals themselves are several times longer than basel i. one reason for this is that basel ii contains several different versions - - it is no longer a one - size - fits - all approach. but in the united states, we are not proposing to implement every flavor of basel ii. the anpr should therefore | - border payments beyond the euro area struggle to meet the needs of consumers. the european commission is therefore proposing to facilitate linkages between european systems and instant payment systems of third countries. in april this year, the ο¬rst cooperation agreement to allow settlement of non - euro instant payments in tips was concluded with the swedish central bank. https : / / www. bundesbank. de / en / press / speeches / shaping - the - future - challenges - in - the - european - payments - market - 851850 6 / 9 01 / 12 / 2020 shaping the future β challenges in the european payments market | deutsche bundesbank looking beyond europe, the g20 is stressing the need to make cross - border transactions more [UNK], as problems are particularly pronounced for low - value remittances. according to the world bank, remittance ο¬ows reached a record of almost us $ 550 billion last year, [ 19 ] surpassing foreign direct investment ο¬ows. at the same time, the global average cost for remittances remains high. to send us $ 200 home, migrant workers from low - and middle - income countries have to pay almost us $ 14 on average. clearly, improvements in this area could foster economic development and ο¬nancial inclusion, thereby helping the poorest in the world. in this context, the bundesbank is proposing β amplus β : an international multilateral settlement platform which would not compete with established cross - border solutions. it would be limited to low - value transfers that are often characteristic for remittances. thus, amplus is not about building a β correspondent banking highway β, but rather a β one - way - street β for remittances. 3. 3 token - based solutions moreover, in order to ultimately serve the consumer, the needs of businesses are also essential. as digitalisation is fully automating more and more processes, a programmable payment medium would be practical and relevant for smart contracts or machine - to - machine payments. representatives from the bundesbank, the federal ministry of finance, the ο¬nancial industry, and the real economy are investigating and advancing the idea. one option may be to build a bridge from private blockchain networks to the existing payment infrastructure. bundesbank experts are exploring the so - called β trigger solution β, which could allow smart contracts to trigger conventional target2 transactions. thus, dlt - based trade would be settled in central bank money. another step would | 0 |
centre of christchurch have lost some production, generally from the impact on their workforce. the canterbury employers chamber of commerce estimates around 30 percent of businesses in christchurch were materially impacted by the february quake. however, we may be seeing the first signs of a stabilisation phase, with business confidence surveys recovering strongly. bis central bankers β speeches the official cash rate cut in march, along with government support programmes, looks like it has been helpful in stabilising confidence, and we would expect the deterioration in activity to be arrested by mid - 2011. in canterbury, activity can be expected to lift due to resumption of business activity, replacement spending and government support. but the canterbury economy will remain subdued due to wealth losses, weakness in tourism and construction, and obstacles including damage to infrastructure and capital. nonetheless, recovery in the canterbury economy, combined with the boost from the rugby world cup, will result in a marked pick - up pace of overall gdp growth. the reconstruction phase is expected to begin in earnest in 2012, with residential and nonresidential investment lifting growth sharply. spare capacity and labour will be absorbed rapidly, and inflation pressures will pick up from current low levels, prompting interest rates increases. the likely drivers of inflation from a reconstruction such as we will see in christchurch are the demand and supply of labour, materials and equipment, and the availability of finance. how government policy affects regulatory standards and the rebuild is also clearly important. how will the reserve bank deal with this? we are guided by our policy targets agreement ( pta ) with government that says, in the case of natural disasters, we should accommodate any initial inflation effects, such as higher rents or insurance premiums. however, we should respond to any medium - term generalised inflationary pressures that are likely to develop, as resources are devoted to reconstruction in canterbury. this means assessing the extent to which wages, construction costs and other prices rise nationally, as resources are drawn into the canterbury region. at the same time, monetary policy should also look to avoid any unnecessary instability in activity, the exchange rate and interest rates resulting from the earthquakes. this consideration was behind the decision to reduce the ocr in march so as to mitigate the near - term negative impact of the february earthquake. it is appropriate for monetary policy to remain supportive, given the continued downside risks to economic activity stemming from the canterbury earthquakes and more broad fragility in the new zealand economy. it is likely that the ocr remains on hold until these | jean - claude trichet : the governance of globalisation speech by mr jean - claude trichet, president of the european central bank, at the bocconi university and corriere della sera international forum 2008, milan, 12 may 2008. * * * it is a great pleasure to be here today at this forum and i wholeheartedly thank mario monti for having invited me. after presenting some key features of globalisation, i would like to discuss their implications for inflation and monetary policy, as well as issues related to the governance of globalisation at the international level. globalisation, while frequently quoted in many circles, is a rather broad concept open to many definitions. to my mind, a succinct general characterisation of globalisation in the current context can be thought of as essentially consisting of two main elements. first, globalisation involves the entrance of new participants into the global market - place. on this count, there has been a significant expansion in global productive capacity over the last decades. this has come through the opening up of emerging economies to international trade and production, notably the greater involvement of emerging asia in world trade, as well as central and eastern europe following the collapse of the soviet union. on the basis of one measure, an export - to - gdp weighted labour force, the effective global labour supply quadrupled between 1980 and 2005, with much of the increase having occurred since 1990. 1 the second main element of globalisation is the growing interdependence between both existing and new participants via trade, production and financial market linkages. trade in goods and services has effectively doubled over the last 20 years, with world imports and exports of goods and services as a share of world gdp having increased from 33. 9 % of world gdp in 1986 to 60 % of world gdp in 2006. the increase in interdependence on the financial side has been even more impressive, with the share of gross international asset holdings in world gdp β which provides a measure of financial openness β having exhibited an eightfold increase over the last 25 years ; now standing at more than 130 % of world gdp. indeed, global cross - border capital flows have been growing at an extremely robust pace over the last decade, increasing threefold as a percentage of gdp. 2 for the euro area over the last decade, the stock of outward and inward foreign direct investment has virtually doubled as a percentage of gdp since 1999. ultimately, these globalisation forces provide the scope for many | 0 |
is not unlimited. third, the policy actions taken in the area of fiscal and monetary policy β as well as macroprudential and supervisory policy β have been necessary to mitigate the amplification of the immediate shock, enable the financial system to support households and businesses through the crisis, and to minimise the extent of longer - term difficulties. as a result of the pandemic we have seen over one million people in receipt of state income support. alongside the domestic economic shock, ireland remains sensitive to global developments, both the near - term global downturn and financial market conditions as well as any longer - term structural changes that might be triggered by the experience of the pandemic. closer to home, the outcome of the negotiations on the future eu - uk relationship is also of relevance to the macro - financial outlook. the immediate strain on households and businesses as a result of the economic shock has resulted in a necessary increase in public spending : fiscal policy is the first line of defence given the unprecedented collapse in economic activity. government support is also necessary to 1 / 2 bis central bankers'speeches minimise the risk of a long - term fall in the productive capacity of the economy due to covid - 19. the necessary intervention will result in much higher public debt than what would otherwise have been the case. the implications of this will be addressed in the bank β s next quarterly bulletin due to be published on 3 july. the near - term liquidity challenges faced by households and businesses as a result of the covid - 19 shock are significant and depending on future developments could result in solvency issues emerging. in the months ahead minimising the extent to which these liquidity issues are followed by solvency issues will be important. the banking system has a role to play, and it must do so in a sustainable way. temporary payment breaks that have been introduced are partly offsetting the immediate liquidity shock households and businesses are facing, but a portion may ultimately require longer - term solutions. in such cases, the central bank expects lenders to ensure appropriate solutions, including forbearance, are available. we expect lenders to engage with borrowers well in advance of the expiry of the payment break to support customers, and our existing arrears handling frameworks, including the statutory code of conduct on mortgage arrears ( ccma ), will apply in the normal manner. those frameworks are designed to protect the interests of borrowers, particularly in times where they | experience financial difficulties because of illness or loss of income. however, policy actions in the years since the last financial crisis have contributed to the financial system being in a much better place to support households and businesses now. resilience has been built incrementally through the mortgage measures, and has been locked - in with the activation of the countercyclical capital buffer ( ccyb ) and other capital buffers. with the release of the ccyb that we announced in mid - march, and the availability of the other capital buffers such as the o - sii buffer to absorb losses, banks are in a better position to lend sustainably to the real economy. to sum up, the covid - 19 crisis is not over and the scale of its economic impact is uncertain. the initial shock is behind us but the macro - financial outlook will depend on a number of factors. fundamentally, it boils down to the uncertainty over how the pandemic itself will play out : the success of the public health measures and medical advances to tackle it, the capacity and actions of the financial system, households and businesses to absorb and not amplify the shock, and the success of economic and financial stability policies to mitigate its impact. we are, as i said, at the end of the beginning. finally, when we published our previous fsr in early december last year, i spoke about our key areas of focus going into 2020 from a macro - prudential perspective, and how we were developing our approach to building additional resilience, covering banks, borrowers and nonbanks. that agenda remains but events over the last few months have led us to focus our work programme to devote more resources to ensuring that the resilience built in recent years can be drawn upon, as appropriate, to support the economy through the crisis. it is in the wider interests of the irish financial system that it continues to provide credit to households and businesses in a sustainable way, minimising the extent of the downturn and maximising its contribution to the recovery. 2 / 2 bis central bankers'speeches | 1 |
bank of england repo rat e chart 11 : composition of uk pnfc sector gross debt ot her debt securit ies ot her t han shares borrowing from non - uk resident mfis borrowing from uk resident mfis per cent chart 12 : corporate credit spreads basis points basis points high yield ( lhs ) bbb ( rhs ) aa ( rhs ) aaa ( rhs ) source : m errill ly nch op tion - adjusted corp orate bond sp reads chart 13 : share of world imports in world gdp 1995 = 1 1. 5 1. 2 0. 9 0. 6 0. 3 0. 0 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 source : un ( pre - 1980 ) ; imf weo summer 2004 database ( post - 1980 ) chart 14 : import shares in consumption and business investment expenditures per cent business investment consumption table 3 : value of sales over the internet by uk non - financial sectors Β£bn households business - to - total business 6. 4 11. 4 12. 7 28. 2 19. 0 39. 5 source : ons chart 15 : distribution sector profits ( margins ) percentage of output at basic prices 25. 0 retail 20. 0 total distribution sector 15. 0 wholesale 10. 0 5. 0 0. 0 chart 16 : output price inflation and cpi goods price inflation percentage change on a year earlier 4. 0 3. 0 producer output prices 2. 0 1. 0 0. 0 - 1. 0 cpi goods - 2. 0 - 3. 0 chart 17 : domestically produced manufactured goods : costs and prices percentage change on a year earlier percentage changes on a year earlier 8. 0 input prices ( lhs ) 15. 0 10. 0 unit wage costs ( rhs ) 6. 0 4. 0 5. 0 2. 0 0. 0 0. 0 - 2. 0 - 5. 0 - 4. 0 - 10. 0 output prices ( rhs ) - 6. 0 - 15. 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 - 8. 0 chart 18 : private sector productivity percentage changes on a year earlier 5. 0 per hour 4. 0 per head 3. 0 2. 0 1. 0 per job 0. 0 source : lfs, workforce jobs dat a and bank chart 19 : private sector factor utilisation ( based on production functions ) elasticity of substitution = 0. 5 elasticity of substitution = 1 percentage deviation of | debts : lending, foreclosure and redemption from bronze age finance to the jubilee year β, islet - verlag dresden kahneman, d and tversky, a, ( 1973 ), β on the psychology of prediction β, psychological review, 80 keynes, j m ( 1936 ), the general theory of employment, interest and money. lovell, m ( 1986 ), β tests of the rational expectations hypothesis β, american economic review, vol. 76, no. 1. https : / / www. jstor. org / stable / 1804130 macgregor, n ( 2010 ), a history of the world in 100 objects, allen lane malmendier, u and nagel, s ( 2015 ), β learning from inflation experiences β, quarterly journal of economics, volume 131, issue 1. https : / / doi. org / 10. 1093 / qje / qjv037 mian, a and sufi, a ( 2014 ), house of deb :, how they ( and you ) caused the great recession, and how we can prevent it from happening again, university of chicago press shiller, r ( 2000 ), irrational exuberance, princeton university press all speeches are available online at www. bankofengland. co. uk / speeches shiller, r, ( 2007 ), β understanding recent trends in house prices and home ownership β, proceedings of the economic policy symposium at jackson hole, federal reserve bank of kansas city. https : / / www. kansascityfed. org / publicat / sympos / 2007 / pdf / shiller _ 0415. pdf university of chicago ( 1995 ), β economics dynasty continues : robert lucas wins nobel prize β, the university of chicago magazine, december 1995. https : / / magazine. uchicago. edu / 9512 / 9512journal. html williams, a, ( 1987 ), β the formation of price forecasts in experimental markets β, journal of money, credit, and banking, vol. 19, no. 1 all speeches are available online at www. bankofengland. co. uk / speeches | 0.5 |
08. 07. 2019 the banco de espana and its promotion of economic history research presentation of the β guide to historical banking archives in spain β pablo hernandez de cos governor good morning, ladies and gentlemen. it is a pleasure for me to close this conference, which has presented the β guide to historical banking archives in spain β. this publication, both for the quality of its information and the wealth of data it contains, will no doubt contribute to increasing knowledge on the historical development of the spanish banking system. i would like to thank all those who have participated in this project for their efforts. my gratitude in particular to the academic historian, pedro tedde, to professor maria del carmen angulo, and to all those institutions and individuals who have enthusiastically collaborated in the publication of the guides to their respective archives. and naturally, too, to the banco de espana teams behind this initiative. the value of the initiative lies in the very value of the spanish banking and banco de espana archive collections. these archives are fundamental to the study of our history and the development of spain β s banking system. in this respect, i wish to highlight the importance of having historical archives that allow documents to be held and conserved and that guarantee their traceability and integrity. without these archives, our knowledge of the past would no doubt be limited. indeed, their subject matter provides for well - founded historical analysis and for a better understanding of the reasons that led to specific financial decisions. and, in light of the central role of banking in our economic system, it also allows us to examine the conditioning factors of many decisions taken by bank debtors, i. e. by firms, households and governments over time. i therefore believe we should welcome a new publication which describes and identifies for the first time, in an orderly fashion, the contents of 10 different historical archives of banks or spanish institutions and of the 218 documentary series they comprise. the publication also contains a full map of the development of the spanish banking system from its origins until late 2017. adding to it is the article by pedro tedde, which rigorously analyses the spanish banking system during the twentieth century. a reading of the publication offers clues that the process of change has, with differing degrees of intensity, been continuous. hence, while the current transformation in banking may have different causes and rhythms than those in the past, deep knowledge of previous events can also offer us significant lessons today on the challenges currently ahead of the spanish financial system. in any event, the publication we present | . specifically, it requires a policy to further reinforce fiscal consolidation, to push through greater labour market flexibility in industrial relations bargaining and to forcefully pursue deregulation and the infusion of greater competition in product and service markets β. thank you. bis central bankers β speeches | 0.5 |
##p paribas has enjoyed in bahrain for the past 35 years will continue into the future. that success will be underpinned by the same principles as in the past : adherence to sound business practice, enlightened staff policies and good customer relations, all of which have been the framework within which the bank has prospered. honoured guests, ladies and gentlemen, it is with great pleasure i declare open the bnp paribas office in the bahrain financial harbor. may i wish the bank a successful and prosperous evolution and continued close association with the development of bahrain as the leading international financial centre of the gulf region. | rasheed mohammed al maraj : bahrain develops its financial centre in the gulf region address by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the bnp paribas β inauguration of new premises at the bahrain financial harbor, manama, 9 november 2008. * * * monsieur de courscel, monsieur durand, ladies and gentlemen : it is an honour and a pleasure for me to join you today to celebrate the formal opening of the bnp paribas premises at the bahrain financial harbor. may i welcome m. de courscel and his colleagues who have travelled from paris to be with us today. their presence is indicative of the importance that bnp paribas places on the development of its business in the gulf region and an acknowledgement of the role of bahrain as the leading financial centre of the region, can play in that development. the bank β s relationship with bahrain goes back nearly 35 years and this relationship has been rather special. with the granting of a full commercial banking licence in february 1975, the bank became the first european mainland banking institution to conduct business in bahrain. later in the same year, the bank was one of the first international institutions to be granted an offshore banking unit licence. therefore, from an historical perspective alone, the bank has been closely involved in, and has become an integral part of, bahrain β s development as an international financial centre. the professional competence of its staff, the commitment of local management to maintain and enhance its operational base in bahrain, and the support given to this concept by its regional and head office directors, have been foundations upon which a success story has been built. at the beginning of this decade, bahrain was officially appointed as the hub for the bank β s regional operations. the opening of these splendid premises at the bahrain financial harbor are a physical expression of the success that bnp paribas has subsequently enjoyed in the region. these are, of course, challenging times for the global financial system. there now seems little doubt that, in the short term at least, this region will not remain unaffected by the global economic downturn. however, it is important to look beyond the immediate picture and focus instead on the long - run prospects for global and regional economic growth. the fact that bnp paribas is now strengthening its commitment to this region, is testament to its view that many good business opportunities are still to be found here. i am confident that the success that bn | 1 |
reserve banks, congress adopted several significant departures from the standard business corporation model. notably, three of each bank's nine directors are selected by the board of governors, which designates one of its appointees as the chairman. three of the directors are elected by the stockholding banks and must represent the public. the remaining three directors are chosen by and represent the member banks. the board of governors is also given general oversight authority relating to the reserve banks and their activities. these characteristics reflect the fact that the reserve banks are structured to carry out public policy objectives set in the federal reserve act, not to advance the interests of their shareholders. consolidation of certain reserve bank functions in recent years, in response to major developments in the financial industry and technology, as well as statutory and regulatory changes, a number of reserve bank functions have evolved from highly localized operations at individual reserve bank offices to more consolidated and centralized functions. this trend is particularly evident in the financial services the reserve banks offer to depository institutions. from the creation of the system, the federal reserve has not only been closely involved in overseeing the nation's payment systems but has also been an important operational component of that system. historically, each reserve bank and branch provided a full range of services to local institutions. in particular, the federal reserve act gave the system the authority to establish a nationwide check - clearing system to minimize inefficiencies and disruptions. the ongoing transformation of our retail payments system, resulting from shifts in consumer behavior and rapid industry innovation, has directly affected the operations of the reserve banks. the number of checks being written has been steadily falling as consumers increasingly take advantage of electronic payments mechanisms. in 2003, for the first time, the number of electronic payments in the united states, such as credit card, debit card, and automated clearinghouse ( ach ) payments, exceeded the number of check payments. a range of data indicates that electronic payments have continued to increase and that check payments have continued to decline. not only are more payments being made electronically, but more check payments are also being processed electronically, in part because of the enactment of the check clearing for the twenty - first century act, commonly known as check 21. 2 as a result of these trends, the reserve banks'check - collection volume has declined. since 1999, the number of checks collected through the reserve banks has fallen by about 30 percent. consequently, the reserve banks have taken major steps to reduce check costs, including reducing the resources devoted to | of the 19 bank holding companies were projected to maintain capital ratios above all four of the regulatory minimum levels β even after taking into account their proposals for capital actions such as dividends, share buybacks, and share issuance in the baseline scenario. the banking sector overall also has substantially improved its liquidity position over the past few years. indeed, large banks in the aggregate have more than doubled their holdings of cash and securities since 2009. large banks have reduced their collective dependence on short - term wholesale funding, and many are flush with retail deposits, which tend to be a more stable funding source. challenges on the liquidity front remain, however : some large firms still rely heavily on wholesale short - term funding ; and the liquidity needs of the banking system as a whole may become somewhat higher for a while as some of the securities issued under the federal deposit insurance corporation β s temporary liquidity guarantee program come due, and as the unlimited insurance on noninterest - bearing transaction accounts expires at the end of the year. nevertheless, over time, greater liquid asset positions and reduced dependence on wholesale short - term funding, together with more and bis central bankers β speeches better capital, will make the banking sector less susceptible to unexpected disruptions in short - term funding markets. the credit quality of large banks β assets is looking better as well, although the improvements have been uneven across types of loans. in the aggregate, delinquency rates on loan portfolios at large banks have declined substantially from their peaks. however, while delinquencies on commercial and industrial ( c & i ) loans and consumer loans have fallen to the lower end of their historical ranges, delinquencies on loans backed by commercial or residential real estate have declined only moderately and remain elevated. the profitability of large banks has been edging up as credit quality has firmed and banks have trimmed noninterest expenses. even so, large banks β profitability remains well below the levels that prevailed before the financial crisis began, and banks continue to struggle to expand their revenues. developments that can be traced back to the financial crisis β including a still - weak economy, changes in market conditions and practices, and tighter financial regulations β are clearly important reasons for these trends. community banks play important roles in local economies, and so it is notable that their condition has also improved. their regulatory capital ratios have increased significantly since 2009 and stand well above their recent norms. as has been the case at large banks, del | 0.5 |
national bank of serbia opening remarks at the presentation of the inflation report β august 2019 dr zeljko jovic, vice governor belgrade, 14 august 2019 ladies and gentlemen, esteemed members of the press, dear colleagues, welcome to the presentation of the august inflation report, where colleagues from the economic research and statistics department will present to you in detail the current macroeconomic trends and our latest projections. in my introductory address i will touch on the key macroeconomic conditions in which monetary policy was implemented and on the decisions the national bank of serbia has made in the period since our previous report. first of all, i would like to say that favourable macroeconomic trends continued into 2019 β inflation is low and stable, macroeconomic and financial stability has been preserved, and the costs of financing have stayed low, feeding through into higher economic and investment activity. over the past six years inflation has been low and stable, at around 2 %, and is expected to remain so in 2019 and 2020. financial stability has been maintained and the issue of inherited non - performing loans resolved in a sustainable way β their level has been reduced by more than 70 % over the last four years and their share in total loans cut to 5. 2 %. relative to may 2013 when we embarked on the cycle of monetary easing, the interest rates on dinar loans for households are now twice lower and for corporates as many as three times lower. this served as a fillip to investments, which remain one of the key drivers of economic growth this year as well. the sustained positive fiscal trends, with a surplus of 0. 7 % of gdp in the first half of the year, are a reflection of the successfully implemented fiscal consolidation and full coordination of monetary and fiscal policies. all of this has been achieved in the face of unfavourable effects of some factors from the international environment, notably the slowing of global economic growth amid announcements of additional protectionist measures and heightened geopolitical tensions. at the same time, this is a proof that by strengthening our economy, primarily through the reduction of external and internal imbalances and through favourable macroeconomic prospects, we have increased its resilience to unfavourable effects from the international environment. since the may report, external financial conditions have been largely affected by the shift in the monetary policies of leading central banks, which are not only slowing the normalisation process, but also announcing additional monetary stimuli. thus, the federal reserve system lowered its policy rate for the first time since | the work of the vienna initiative climate change working group, which is co - chaired by the european investment bank, the european commission, the european bank for reconstruction and development and the world bank group. the goal of the working group is to discuss availability and quality of data, regulation and supervision, development and improvement of knowledge and capacity in the area of climate risks, as well as the transition process faced by many sectors. it is a good platform that enables the exchange of experience and plans, especially since the representatives of the european and global regulators are present in the working group, which gives an insight into the current and planned measures for managing and monitoring the risks related to climate change. ladies and gentlemen, there is no doubt that ecology must be one of the priorities of policy makers, and in serbia it is, because it is interwoven with many policies. also, all actors β from individuals to institutions and decision makers β must act responsibly. however, this does not mean that we should close factories that are not eco - friendly, but that every activity should be carefully measured, and that our task is to find sustainable solutions that will be the best for our citizens. this is evident in the example of the current global 3 / 4 bis - central bankers'speeches energy crisis, where it takes time to build alternative energy sources, and where energy security is a priority. this means that it is important to find the right measure and the right sequence of activities, and we all have to participate. today's event is a proper collective action. thank you for your attention and i wish you a successful first western balkans sustainable investing forum 4 / 4 bis - central bankers'speeches | 0.5 |
david opiokello : overview of economic achievements in uganda farewell speech by mr david opiokello, acting deputy governor of the bank of uganda, in honour of mr peter allum, imf senior resident representative in uganda, kampala, 5 july 2006. * * * mr. peter allum, the outgoing imf senior resident representative in uganda distinguished guests staff of the bank of uganda ladies and gentlemen on behalf of the governor, the board, management and staff of the bank of uganda, it is my pleasure to welcome you all to this function. this occasion was organised to pay special tribute to mr peter allum as he prepares to return to washington. as you may be aware the bank of uganda has had the privilege of working very closely with him over the last three years or so. before making specific remarks about mr. allum β s contribution towards uganda β s recent economic developments, let me first reflect and remind ourselves of some of the important economic achievements made in the past several years. as you all know, with the support of development partners, uganda undertook a major economic reform program aimed at creating sustainable economic stability, growth, and prosperity for all through poverty eradication in the late 80s and nineties. in these first round of reforms, which occurred between 1987 and 1999, the country underwent numerous adjustment measures. these measures included : β’ the restoration of monetary and fiscal discipline intended to establish macroeconomic stability ; β’ deregulation of prices designed to induce efficient allocation of resources ; β’ a gradual liberalisation process of the uganda β s foreign exchange markets intended to promote uganda β s competitiveness. further reforms were undertaken to transform public and private enterprise activities, and the domestic financial system, in order to meet national objectives of improved productive efficiency and increased resource mobilisation. the combination of the above measures effectively set the foundation for further successes that have been recorded. these successes included : β’ growth in the size of the economy from about us $ 3 billion in the early 1990s to over us $ 9 billion now ; β’ increased real domestic investment. increases in the private sector foreign exchange inflows into the ugandan economy have supported the expansion in domestic investment. for instance, private transfers grew from us $ 256. 5 million in the fiscal year 2000 / 1 to us $ 650. 44 million in 2005 / 6, while foreign direct investment ( fdi ) increased from us $ 133. 4 million to us $ 263. 83 million over the same period ; β’ sustained price stability. | of business and technical skills, the high costs of inputs, and often volatile market conditions. the ability of these businesses to make profits consistently and thereby service loans is precarious. the problems are most acute in small holder agriculture where qualitative changes in agricultural practices are a prerequisite for farmers being able to utilise credit productively. land reform is also needed to support the transformation of agriculture in many parts of uganda. page 6 of 8 the argument that micro - loans alone can transform the fortunes of household enterprises, whether in agriculture or other sectors, is not supported by empirical evidence, either in uganda or elsewhere in africa. in addition, attitudes towards borrowing are poor throughout society ; loans meant to fund business expenses are sometimes diverted for personal expenses or speculative purposes and the culture of loan repayment is weak. until a much stronger private business sector can develop in uganda, characterised by good, modern business management, and a clear separation of business and personal interests on the part of business owners ; it will be very difficult for banks and other financial institutions to further raise the level of intermediation in uganda. to conclude, i believe that it is necessary to be realistic about what can be expected from the financial sector. the shallowness of the financial system in uganda reflects the structure of our economy much more than the deficiencies of the financial sector itself or of the institutional and regulatory environment in which it operates. page 7 of 8 in many respects β technology, productivity, levels of professionalism, the application of modern business practises β the financial sector is one of the most advanced sectors of our economy. most of the other sectors of the economy are not as advanced as the financial sector, and some lag far behind it. it is the structural problems afflicting the real sectors of our economy which provide the largest obstacle to greater use of financial services, and especially credit, in uganda. thank you for listening. page 8 of 8 | 0.5 |
specific future developments is impossible to assess with confidence. my own guess is that various patterns will emerge. globally active universal financial service providers will continue to emerge. we should also see the further development of firms specialized in the production of particular components of financial services or in the distribution to end - users of products obtained from specialized providers - - providers that may exist within or outside the traditional financial services industry. i fully expect a large number of efficient and profitable small and medium - sized financial institutions to remain important players in the united states. i would guess this will also be the case in many other nations. in addition, the uncertainties of successful post - merger integration may well favor more use of looser forms of consolidation, such as joint ventures and strategic alliances. monetary policy one of our more important policy concerns in designing the study was the potential effect of financial consolidation on the conduct and effectiveness of monetary policy. the study finds, however, that financial consolidation has not significantly affected the ability of central banks to achieve the objectives of monetary policy. why is this? although the answer is somewhat complex, let me try to explain briefly. as part of our research, we asked central banks in all the study nations about their experiences with consolidation and monetary policy. virtually all reported that they had experienced at most minor effects, and those that had experienced somewhat stronger effects had been able to adjust with little difficulty. a key reason for this finding is that even with the substantial consolidation we have observed, the financial markets important for monetary policy have generally remained highly competitive. even in those nations where consolidation has been considerable, competitive behavior has generally been sustained by the possibility that new firms could enter the markets at relatively low cost. it is also well worth noting that our work suggests that the development of the euro has been particularly helpful in maintaining competition in europe. the euro has encouraged development of european money and capital markets, thus making the number of participants in a particular nation's markets less relevant. consolidation could, at least in theory, affect the way changes in monetary policy are transmitted to the real economy. for example, consolidation could potentially alter the way banks adjust the availability and pricing of credit to their customers as the central bank changes the stance of monetary policy. however, central banks generally indicated that such effects had not been observed. moreover, frequent reviews of the data should allow central banks to take account of any future changes when setting policy. on balance, and despite these quite positive results, our study recommends that central banks should remain alert | segment of the financial services industry within the same country, while domestic mergers involving firms in different segments of the overall financial services industry were the second most common type of transaction. cross - border mergers and acquisitions were less frequent, especially those involving firms in different industry segments. still, all types of mergers and acquisitions, whether within one country or cross - border and whether within one industry segment or across segments, increased in frequency and value during the 1990s. joint ventures and strategic alliances provide an interesting contrast with some of the patterns in outright mergers and acquisitions. as with m & a activity, the number of joint ventures and strategic alliances increased during the 1990s, with especially large increases in the last two years. in the united states, which accounted for nearly half of all joint ventures and strategic alliances, the arrangements were overwhelmingly domestic. however, in the other twelve countries studied, crossborder joint ventures and strategic alliances overall exceeded domestic deals. our research shows that financial consolidation substantially decreased the number of banking firms during the 1990s in almost every nation studied, and measures of the national concentration of the banking industry have tended to rise. still, at the national level, the structure of the banking industry continues to differ greatly, ranging from very unconcentrated in a few nations β the united states and germany β to highly concentrated in about half of the nations in our study. in contrast to banking, there are no consistent patterns across countries in changes in the number of insurance firms or concentration in the insurance industry during the 1990s. within the securities industry, several specific activities, such as certain types of underwriting, are dominated by a small number of leading institutions. it is unclear, however, whether this pattern changed much over the 1990s. one of the most important conclusions of our study is that financial consolidation has helped to create a significant number of large, and in some cases increasingly complex, financial institutions. in addition, these firms increasingly operate across national borders and are subject to a wide range of regulatory regimes. these observations have several important implications that i shall return to in a moment. our work finds that the most important forces encouraging financial consolidation are improvements in information technology, financial deregulation, globalization of financial and nonfinancial markets, and increased shareholder pressure for financial performance. because we expect these forces to continue, we expect financial consolidation to continue as well, even though the pace may be interrupted by swings in the macroeconomic cycle and other factors. the study considers few possible future scenarios but concludes that the likelihood of | 1 |
are intensified in strengthening the vibrancy of the islamic financial markets via instrument diversification and providing regulatory clarity. these aim to widen the range and volume of shariah - compliant investable assets including to international investors. over the past half - decade, malaysia's sukuk market has grown about usd70 billion ( rm332. 3 billion ) or 35 % to an outstanding amount of usd267. 5 billion ( rm1. 27 trillion ). foreign participation in malaysia's sukuk market now stands at total investments of usd12. 6 billion ( rm59. 6 billion ). 3 building from this progress, the islamic financial market subcommittee ( ifmc ) set - up by the central bank has also been tasked to explore strategies to enhance foreign investors participation in domestic sukuk issuances. we look forward to welcoming increasing participation from around the globe in the times ahead. one key progress of the ifmc is in the area of hedging. this has led to a shariah advisory council ruling on the permissibility of anticipatory hedging, subject to specified conditions. this is aimed at further developing the islamic derivatives market, ensuring that it aligns with both shariah principles and prudent risk management practices. we are also establishing a stronger collaboration with the gcc and asian countries to advance mutual development in islamic finance. these efforts will strengthen malaysia's position to be the islamic finance gateway to the gcc and oic markets. global investors stand to benefit from investing in malaysia and participating in sustainable economic prospects this brings me to malaysia's broader growth prospects, and the investment opportunities it presents in the area of sustainability. the malaysian economy is projected to grow at 4 - 5 % in 2024, supported by robust domestic demand and an improvement in the external sector. the improving global economy together with the tech upcycle are benefitting our exports, especially since malaysia is a dominant player in the global semiconductor industry. in 2023 alone, a total of about usd70 billion ( rm329 billion ) investment was approved with foreign direct investment accounting for 57 %. almost 74 % of the projects approved between 2021 - 2023 have also been realised. 4 last year, malaysia's national energy transition roadmap ( netr ) and the new industrial masterplan ( nimp ) were introduced, solidifying further our focus on the sustainability agenda and our commitment to bolster the nation's manufacturing sector. these | ##cy and risk management. the ifsb has also commenced work on standards for corporate governance. whilst appropriate regulations and standards are vital to mitigate the risks involved, of equal importance is the oversight and monitoring of the islamic financial institutions through effective supervision by the regulatory authority to ensure that the prudential requirements are observed. lack of oversight, inadequate check and balances, and over exposure to risks are amongst the factors that may result in vulnerabilities to the system. the best of regulations and financial safety nets would not be able to avoid vulnerabilities if early warning systems are not in place. to effectively perform the supervisory function it is important to not only identify the risks involved in the various islamic financial transactions but also to be able to detect any contravention of shariah principles in financial transactions and operations. a central feature of the regulatory framework for islamic financial institutions is financial transparency and disclosure. this is particularly pertinent for islamic financial transactions. for example, investment depositors in the islamic banking institutions have the role of quasi shareholders that are not only entitled to share the profits of the islamic banking business but are also exposed to the risks of losing their capital in the event of losses. in this connection, the issuance of a standard framework for the derivation of the rate of return in islamic banking business has an important role in addressing the information asymmetry between the islamic banking institutions and the depositors so as to ensure depositors receive their appropriate share of returns on the investment. in addition, the issuance of the guidelines on the model financial statement for islamic banks will provide for greater disclosure on the risk and return profiles of the different categories of deposits. this will enable depositors to obtain the true and fair assessment of the islamic banks β financial performance and hence, promote confidence and strengthen the competitiveness of the islamic financial industry. enhanced financial disclosure needs to be complemented by customer education and awareness programmes to elevate the level of financial literacy of consumers and businesses to be able to make informed financial decisions and instill market discipline amongst financial players. the launching of the consumer education programme and the organization of the islamic banking and takaful week are aimed at achieving these objectives. these programmes have contributed to enhance the understanding and appreciation of the unique characteristics of islamic banking and finance, islamic financial products and services and their underlying shariah principles and concepts. enhanced awareness on the manner in which islamic financial transactions are being conducted and islamic financial contracts are being executed will not only strengthen the | 0.5 |
a swf for the future while consuming only a part of it. under this strategy the effects of the dutch disease can be minimized. this fiscal strategy will also make it easier for the management of monetary policy in addressing inflationary concerns. this is in contrast to spending more than it receives or spending all that it gets where the effects of the dutch disease will be exacerbated. some sectors such as building and construction, transportation, manufacturing and services will benefit from the project, especially in the short run during the construction phase. while others will not, particularly the traditional agricultural exports sector as it will be adversely affected by the dutch disease effect ( due to appreciation of kina exchange rate ). let me emphasize that these findings are based on preliminary information and data, and they can be updated once all the information and the data will be provided by the project developers. so the bank of papua new guinea will have to assess the developments and take the necessary steps to ensure that inflation is not getting out of control. the system used to fund projects will assist in containing some of the inflationary pressures. the major developers or engineering, procurement and construction ( epc ) contractors use off - shore finance to fund the project. we expect most of these financing transactions to be undertaken between offshore accounts as allowed for under the 2008 exemption regulation, where they are exempted from seeking approval from bpng for opening of foreign currency accounts offshore. but other sub - contractors will still be required under the central banking ( gold & foreign exchange ) act to submit their requirements to the bank of papua new guinea to determine their eligibility under the 2008 exemption regulation. some of the labor, materials and supplies will be purchased in the domestic markets. to purchase them the developer or contractor has to exchange foreign currency for kina. the result is that the supply of foreign exchange increases which has a revaluation effect on the exchange rate. as a result imported inflation declines. this will mitigate some of the unprecedented very high demand pressures on domestic resources, and inflation. this together with prudent management of the budget and trust accounts can minimize the effect of dutch disease in png. the analysis leads me to the conclusion that the bank of papua new guinea is going to face untested turbulent times. once all the information will become available, we will design the policy framework for ensuring that price stability is maintained. the challenges faced by the government and the bank of papua new guinea are huge. i am sure that we can live | philipp hildebrand : in the focus of the swiss national bank - economic outlook and monetary policy summary of a speech by mr philipp hildebrand, member of the governing board of the swiss national bank, at the wgz - bank, luxemburg, 9 september 2005. the complete speech can be found in german on the swiss national bank β s website ( www. snb. ch ). * * * the world economy expands at a robust pace but the growth rates of the important economic blocs diverge considerably. in spite of the accommodative monetary policy in most industrial countries, inflation and inflation expectations remain well contained which may, among other things, be due to the process of globalisation and the credibility of central banks. switzerland, small and extremely open, benefits from a recovering global economy. the conditions for returning to a path of modest expansion look favourable. however, there are certain risks that may affect the global and the swiss economy negatively. most importantly, high oil prices and the devastating effect of the hurricane β katrina β, as well as the possibility of increasing long - term interest rates have to be mentioned. a persistently high price of oil could act as a brake to demand dynamics and growth prospects could also be threatened by soaring long - term interest rates, an effect that could be amplified through the housing channel. in the foreign exchange markets, structural and cyclical factors continue to determine the value of the us - dollar. 1 / 1 | 0 |
breaching of ceilings on fiscal deficits, especially in countries where this could trigger recovery. we welcome the reforms undertaken to improve the accounting and auditing standards and corporate governance practices both in the us and the eu. these improvements are partly reflected in the strengthening of corporate bond and equity markets. the primary bond market issues have become more buoyant. sovereign yields, in general, have declined, combined with a compression of yield spreads. we consider these developments as supportive of increased capital flows into emerging markets and for the general strengthening of intermediation in international capital markets. though there was a temporary upward shift in the long - term yields of bonds in the us, potential for significant risks of further increase in bond yields appear remote. first, the policy interest rates have declined to historically low levels and upward hikes in quick succession are therefore unlikely. the housing and mortgage markets as also bond markets cannot withstand such sudden shocks. second, the probability of inflation undershooting and the consequent adverse implications for deflationary expectations are feared by many. the question also remains as to how long and to what extent the us would lead the global recovery. it is important for the eu and also japan to intensify structural and financial sector reforms with redoubled vigor. in some countries, labor and product market reforms should receive priority as important components of such reforms. we encourage the euro area countries to take steps to promote productivity and efficiency gains, given the minimal scope, in the short - run, for achieving higher labor participation rates. the necessity of achieving these gains, and a general increase in demand arises from the impending medium - term fiscal risks associated with demographic trends and the attendant pension reforms. similarly, we recognize that more vigorous steps may help japan counteract deflationary expectations an address the fragility of the financial system. in the mediumterm japan also requires further restoration of fiscal stabilization. growth is expected to remain robust in most emerging market economies and, to some extent, in africa. these are propelled in no small measure by stronger macroeconomic policies, structural reforms and improvements in the institutional structure. prospects have also improved due to general improvements in major industrial countries, favorable terms of trade due to non - oil commodity price increases, and improved financial market conditions, especially in the bond markets. it is imperative that greater resources flow into these countries to help sustain growth. the current favorable financial market conditions, no doubt, provide an opportunity for these countries to steer ahead with remaining structural reforms and | requirements, albeit lower than those in other major european countries. the current macro - financial environment will heighten the financial vulnerability of households, firms and the public sector clearly, the combination of inflationary pressures, tightening financial conditions and higher uncertainty will weigh on households β consumption decisions and their residential investment. in the case of firms, these adverse factors may also reduce their productive investment and hiring expectations. in short, activity will face additional downward pressures. and these factors are also having significant effects on public sector financing, which i will turn to now. again, it is important to underscore the private sector β s relatively benign financial position before the pandemic, thanks to households'and firms'considerable debt reduction since the global financial crisis. in fact, in march 2020 their debt as a proportion of gdp stood at 150. 4 %, slightly below the european average and down by 76 pp on the peak of june 2010. the outbreak of the pandemic and the measures adopted to mitigate its effects, such as the moratoria on financial obligations and the public loan guarantee scheme, underpinned and galvanised credit in 2020, putting that debt at 157. 8 % of gdp. however, the overall cumulative growth in the stock of loans has been moderate, with bank lending to the resident private sector in spain increasing by 4. 2 % since 2019. in the case of firms, business turnover appears to have continued to recover in nominal terms during 2022 h1, leading to an improvement in most firms β economic and financial position, particularly those in the sectors hardest hit by the pandemic thanks to the lifting of the restrictions on movement. the exceptions are firms in the sectors most exposed to the rise in energy prices and that were not greatly affected by the pandemic, whose economic and financial situation now appears to be deteriorating somewhat. against this background, the latest bank funding data suggest greater buoyancy in business lending, with the total stock of loans growing year - on - year in recent months, contrasting with the declines recorded in 2021. this performance seems to owe both to firms covering their financing needs and to a precautionary motive, since the growth in their bank deposits is also accelerating. in any event, the rise in interest rates is beginning to affect new lending. the simulations recently conducted by the banco de espana suggest that a rise in market interest rates in line with that observed to date ( around 300 bp ) would, in the short term, drive up the | 0 |
adequacy of capital and provisions. in view of the depth of the current problem, and the fact that it may be quite sometime before the global standards on these issues can be settled, regulators, in my view, must be ready to take the needed action to ensure that we address these risks in our financial systems systematically. this is why pillar ii is all the more important, because the essence of pillar ii is to ensure that financial institutions have adequate risk management process and capital, commensurate with their risk profiles. and this is why we are seeing increased vigilance by regulators and the financial institutions themselves, in terms of the rigour in the use of stresstests, which is essential in the environment of heightened volatility that superseded historical norm. the implementation of pillar ii is, however, a challenge, not only in terms of the technical and quantitative expertise for reviewing internal capital adequacy assessment process, or icaap, but also on qualitative aspects such as how to foster an on - going two - way dialogue with the supervised institutions that would enhance the icaap process. to meet this challenge, regulators need to establish a strong credibility so as to strengthen the impact of their recommendations and requirement on icaap, and in some cases, increase capital requirement to ensure capital appropriate to the material risks, not yet covered in pillar i. also, there are challenges on the legal and institutional capacity aspects on how to handle the more principle - based, and therefore, more institution - specific regulatory requirement. as for the bank of thailand, our progress on pillar ii implementation is continuing. by working closely with all stakeholders especially thai bankers, association, we have issued three prudential guidelines for basel ii since 2006. pillar ii formally took effect the end of last year, while pillar iii will be implemented in june this year. as far as pillar ii is concerned, we expect thai banks to put in place the icaap within this year and establish the comprehensive process by the end of next year. overall, we are on track with the implementation of basel ii, thereby reaffirming our commitment to international best practice. with this brief initial remark, it is my hope that this seminar would provide the needed knowledge and skills to supervisors from seanza countries for the challenges posed by pillar ii. | bandid nijathaworn : risk management and pillar ii implementation opening address by dr bandid nijathaworn, deputy governor of the bank of thailand, at the fsi - seanza regional seminar on the implementation of the supervisory review process ( pillar ii ) of basel ii, bangkok, 21 - 24 april 2009. * * * distinguished speakers ; and colleagues from seanza central banks and regulatory authorities, let me begin by extending a warm welcome to all of you to bangkok, and on behalf of seanza members, i would like to express our appreciation to all the speakers, as well as the fsi, for their contributions to make this fsi - seanza regional seminar on the implementation of the supervisory review process possible. this is all the more so as this seminar had to be rescheduled from last year, and in this regard, let me express our commitment that the bank of thailand stands ready to facilitate you and ensure that your experience here will be a fruitful and enjoyable one. ladies and gentlemen, the current global financial crisis underscores the need to strengthen risk management and risk - based supervision, so that we can deal more effectively with the increased complexity arising from both financial product innovation and increased interconnectedness between financial institutions. as for the current crisis, while many causes have been identified, what has become very clear is that financial institutions, capitals were not adequate given their risks, and this had allowed over - leveraging by financial institutions as well as by their customers, leading to over - indebtedness and asset price bubbles. the issue, therefore, underscores the inadequate risk management, covering the entire process : from the lack of proper risk measurement, especially with regard to complex product, as well as liquidity risk, to inadequate risk management and control, and to micro - prudential risk - based supervision. in addition, there is now greater attention being paid to the importance of macroprudential approach, in recognition of the risk from procyclicality and interconnectedness of institutions, especially the large and highly complex financial institutions. also, greater recognition is given to the problem of the unregulated shadow banking sector, like the hedge funds, which are also key in systemic risk process. all these issues pose a major policy challenge, as indeed the various working groups and committees of the bis are now working on the guidelines, and on the key issues such as accounting, valuations, procyclicality, and | 1 |
clear that we can no longer drag out feet with putting - it - intopractice. here an important contribution will be made by the new ngfs task force on nature - related risks that will be led by saskia de vries from de nederlandsche bank and sylvie goulard from the banque de france. both representatives from institutions that have done pioneering work on naturerelated risks. at the ecb the work on environmental risks is already starting to take shape in our banking supervision. in 2020 we published our guide on our supervisory expectations for the risk management of c & e risks. [ 3 ] indeed, c - and - e : climate - related and environmental risks. in this guide, we explicitly recognised that environmental factors related to the loss of ecosystem services, such as water stress, biodiversity loss and resource scarcity have also been shown to drive financial risk. we therefore expect banks to evaluate all environmental risk - related information beyond just climate risks to ensure that their risk management is all encompassing. when we asked banks last year to evaluate their own risk management practices in relation to our expectations, we found that some of them had already started to identify and manage risks beyond those that are just climate - related. however, very few banks back then had actually begun to implement these practices and we made them aware of this gap with regards to our supervisory expectations. as part of this year β s thematic review on climate - related and environmental risks, we followed up on these points, focusing on banks β assessments of the materiality of environmental risks and on their risk management frameworks. our preliminary results show that many banks have by now made an initial assessment of their environmental risk exposures. we also see that banks are using the β climate risk playbook β to develop their approach to environmental risk. they map out physical and transition risk drivers and typically start by excluding some activities to avoid financing those that have an excessive environmental impact. banks also integrate these risks into their due diligence processes to collect information and gain a better understanding of how their clients might be affected. besides these qualitative approaches, several institutions are leading the way in quantifying the risks and impacts through the use of biodiversity footprinting exercises and the development of approaches for biodiversity scores. we welcome this progress and will use the opportunity to share the best practices we have identified when we will soon publish the results of the thematic review. at the same time, we will reiterate that all banks must ultimately comply with all | the inception of the pss act and issuance of guidelines in april 2009, 21 non - bank entities have been authorized for ppi issuance exclusively of which 18 are issuing ppis, while the other 3 non - bank entities are in the process of doing so. apart from authorization, rbi has also proactively undertaken policy measures in consultations with stakeholders to encourage the growth of the industry. while doing so, we have always kept the management of risks and addressing aml concerns as a cornerstone of our policy. based on this approach, we have ushered in several rationalisation measures. but as we all know, while the regulator can act as a catalyst, it is the issuers who have to hit the ground running. third, have the industry associations done what could have been done? are we focusing too much on so called stumbling blocks and regulations instead of channelising our energies in achieving the required scale of operations? let me not pre - judge. but, may be it is time for more introspection. let me now flag certain important issues which i hope would be discussed over the course of next two days. payment system innovation and role of non - banks payment system providers the increased role of non - bank entities in payment system is linked to their potential to change the payment system landscape as they can leverage on their product offerings with latest technological features to cater to wide segment of the market. has this taken place in india? as can be seen from statistics, the share of ppis in the overall retail segment though growing is yet to achieve a significant level. if we analyse the types of ppis being issued, paper vouchers constitute the major share of pre - paid payment instruments with 73. 40 percent. the relative share of others is magstripe cards : 16. 59 percent ( mostly issued by banks ), m - wallets : 9. 94 percent and e - wallets : 0. 07 percent. what is the innovation that has taken place if paper ppis are merely acting as a substitute for cash? similarly, why are micro payments with ppis not been successful even though regulations are not stringent in this segment? kyc requirements for ppis issued up to rs. 2000 / β as well as utility payment ppis are quite relaxed. why then have ppis not been successful in at least these segments? do we have any credible answers? promoting access and inclusion in our vision document we have laid emphasis on access and inclusion. we have been | 0 |
cannot predict how banking will look in ten or twenty years β time, we can be almost certain that risks of fraud, theft and manipulation in banks through cyberspace will continue to rise. the reason is straightforward : digital channels can be used to steal a lot of assets with comparatively little effort today. nowadays, a large proportion of banks β assets and value - generating capability is stored on hard drives and servers. the technical infrastructure facilitates the managing of bank accounts and grants access to money. but it also provides access to vast sources of data. there have been several incidents recently of truly large - scale data theft. company secrets, too, are at stake. if, for example, the trading algorithms of your bank became known to others through illegal activities, they could be exploited in the market, causing huge losses to banks. in the same way, politically motivated acts of sabotage jeopardise trust in financial functions and integrity. looking at those on the other side of cybercrime, the potential attackers β they often have access to far more powerful weapons than before and convenient access through the internet. targeted attacks on it systems can originate from anywhere in the world. hackers often need little more than a laptop with internet access. why do we have to expect a continuous evolution in this field? attack vehicles like computer viruses differ widely and may target any chink in a bank β s defence, rather as human viruses attack biological systems. its logic follows the arms race between criminals and law enforcers that can be traced down through human history, but is now taking place with digital weapons. what makes this evolution more dangerous still is that we now face a highly complex digital world where progress is constantly being made in technologies and innovations. but, crucially, you cannot risk a trial - and - error process here. once an easy point of attack is identified in the it infrastructure, the word will quickly spread and criminals from all over the world will try to exploit the weakness. on top of this, we need to bear in mind that cyber and general it risks are not only of a technical nature. the human factor often plays a crucial part. employees may act in gross negligence, or they may be tricked by a trojan horse or a phishing mail. in complex it systems, even small system errors can quickly cause enormous damage. the error - prone human factor can only be eliminated by installing an appropriate system of controls and incentives. in today β s world, this is an important management task. 4. adaptation as | . macroprudential policy uses more targeted instruments, which makes it better suited to addressing growing imbalances in financial markets. the question is whether or not a clear separation of responsibilities β in terms of " macroprudential policy takes care of financial stability " while " monetary policy only pays attention to price stability " β actually makes sense. 7 in other words, is monetary policy out of the woods? i don β t think so. while i am not in favour of a dual monetary policy mandate, i am convinced that monetary policy cannot stand on the sidelines when financial imbalances build up. first, we cannot be sure that macroprudential policies will eliminate financial imbalances. the experience with macroprudential instruments is still limited, and the toolkit is still incomplete. second, the crisis has vividly demonstrated how financial instability affects inflation developments and the capacity of the central bank to safeguard price stability. therefore, monetary policy would be wise to take the implications of financial imbalances for price stability into account. as the financial cycle is longer than the business cycle this comes down to extending the policy horizon. to quote from the latest bis annual report, " shifting the focus from the short to the longer term is more important than ever. " in any case, a more symmetrical monetary policy stance over the financial cycle seems to be warranted. on the one hand, the monetary policy stance should be eased aggressively during a marked downturn. on the other hand, monetary policy should be aware of its implications for financial stability, and so it should tend, in upswings, to be stricter than shortterm inflationary developments would suggest. claudio borio, the current chief economist of the bis, said : " the more you concentrate on the long - term perspective, the more price stability and financial stability complement each other and the less they contradict each other ". 3. 2 monetary policy and price stability this brings me to the second lead question : should the monetary policy target be changed? some academics 8 have suggested higher inflation targets, given that central banks have reached the zero lower bound ( zlb ) in response to the crisis, and they see the need for further expansionary impulses, and more generally the need for a greater distance from the zlb. as the economist once wrote, " asking a central banker to accept higher inflation may seem like asking a cardinal to accept more sin ". but on a more serious note, the issue is about | 0.5 |
), publicly - posted examination manuals and other guidance. on a day - to - day basis, banking supervisors collect information on financial institutions through examinations and analysis. examiners look at key aspects of a supervised firm β s businesses and risk management functions. they use this information to assess the adequacy of the firm β s systems and processes for identifying, measuring, monitoring and controlling risks at the firm and in the financial sector more generally. that said, the ultimate responsibility for risk identification and risk management remains with the supervised institution. the federal reserve β s role is to ensure that the institution has the necessary strong processes in place to achieve this objective. as risks emerge, supervisors intervene, within the realms of their safety and soundness mandates, to require that banks take corrective actions as necessary. supervision can reduce the chance that a financial firm fails, but it can never provide a guarantee against failure. supervisory policies have undergone important changes over the past few years, especially in the context of the largest financial institutions. banking supervision no longer focuses solely on the safety and soundness of individual institutions β so - called micro - prudential supervision β but now also focuses on the implications for financial stability more generally. the evolving supervisory framework has resulted in a number of organizational changes in the way supervision is conducted at the new york fed and in the federal reserve system more broadly. a very important change in the federal reserve system is that supervision of the largest, most systemically important financial institutions are now coordinated across districts through the large institution supervision coordinating committee ( liscc ). the liscc is a system - wide committee, chaired by the director of the board of governors of the federal reserve β s division of banking supervision and regulation, and composed of senior officers at the board and reserve banks. in addition, the federal reserve has instituted three major horizontal evaluations, which are a key element of the new enhanced supervisory framework for large banking companies. these horizontal evaluations, which focus on capital adequacy, liquidity resiliency and preparedness for recovery and resolution, examine practices and conditions across a group of firms simultaneously, enabling supervisors to develop peer perspectives about best practices and approaches. these programs involve a consistent and systematic assessment board of governors of the federal reserve system. β consolidated supervision framework for large financial institutions. β supervision and regulation letter 12 β 17. december 17, 2012. http : / / www. federalreserve. gov / bankinforeg / srlette | s. and overseas, we hope to broaden the understanding of the role and objectives of supervision. the goal is to spur conversation and new research on what supervision should be trying to achieve and the best means for achieving those ends. just as important, we want to generate ideas for how to better assess the effectiveness of supervisory activities. in a world of limited resources, how do we deploy our people and technology in the most effective way to limit disruption and distress at individual firms and to the financial system, while still fostering an efficient and innovative financial system? in considering these questions, a good starting point is to understand more fully what supervisors do and how they do it in the current environment. the papers that are being presented here today are largely aimed at achieving this goal. as described in the first paper β β supervising large, complex financial institutions : what do supervisors do? β β bank supervision has long been an integral component of the federal reserve β s beverly hirtle, david lucca and joseph tracy assisted in preparing these remarks. bis central bankers β speeches responsibilities. at a broad level, federal reserve supervision of large financial institutions is guided by two key objectives : β enhancing the resiliency of a firm to lower the probability of its failure or inability to serve as a financial intermediary [ and ] reducing the impact on the financial system and the broader economy in the event of a firm β s failure or material weakness. β 2 in addressing these objectives, bank supervisors enforce laws and regulations, but there is much more to supervision than just enforcement. the activities and practices at large, complex financial organizations are simply too intricate and evolve too quickly to be fully described ex ante in regulation. banking supervision works in concert with regulation as the more flexible element of banking policy. supervisory policy and standards can, and do, evolve over time to reflect the evolution in practice in the banking industry and in financial markets. overall, supervisors are guided by the mandate to identify any practices or conditions at supervised firms that are a threat to the safety and soundness of those firms β and, of course, to ensure that the firms take all necessary steps to promptly remediate any such conditions. critically, the definition of what constitutes β safe and sound β is not hard - coded into regulation, but is guided by the information and analysis done by supervisors and other federal reserve staff, such as economists, attorneys and market analysts. supervisory expectations and standards are expressed through public guidance such as supervision and regulation letters ( sr letters | 1 |
the reach of rural banking, seem to be less than expected. perhaps it is time we ask ourselves some questions. first have our strategies, in terms of institutions and strategic directions, been flawed all along? have we run out of ideas in this regard? is our thinking on rural credit has fallen behind the emerging realities in the economy? is there a need for distinguishing between the cause and the effect as also between the symptom and the disease? is it lack of credit availability or want of commercial viability of agriculture that is constraining the credit - flow, or is it a complex combination of both? while we may not be able to answer many of these questions satisfactorily, i submit that we need to keep asking these right questions. new policy directions answers to some of the complex questions relating rural credit may be found in the most recent policy directions. the national development council approved a week ago " an approach to the 11th five year plan " which contains extensive references to the future policy directions. some extracts from the document may be in order. on objectives and challenges " one of the major challenges of the 11th plan will be to reverse the deceleration in agricultural growth from 3. 2 % observed between 1980 and 1996 - 97 to a trend average of around 2. 0 % subsequently ". " to reverse this tend, corrective policies must not only focus on the small and marginal farmers who continue to deserve special attention, but also on middle and large farmers who suffer from productivity stagnation arising from a variety of constraints ". " a second green revolution is urgently needed to raise the growth rate of agricultural gdp to around 4 % ". on financing development " the 11th plan must ensure that our policies are sufficiently flexible to support the development of micro finance. interest rates in the micro finance sector have to be significantly higher than in the banking sector reflecting the much higher cost of doing business. it is important to remember that most micro - finance institutions charge rates which are much lower than rates charged by money lenders ". on agriculture sector policy " the failure of the organised credit system in extending credit has led to excessive dependence on informal sources usually at exorbitant interest rates. this is at the root of farmer distress reflected in excessive indebtedness ". " there is evidence that farm debt is increasing much faster than farm incomes and the larger issue of the overhanging debt stock, as distinct from credit flow, has not even been on the agenda except of a | easing policy. specifically, the bank specified two conditions. first, the year - on - year rate of increase in the core cpi must register zero percent or above over a few months. second, the prospective year - on - year rate of increase in the cpi must not be zero percent or below. these two conditions, as necessary conditions for terminating the policy, constitute a firm commitment : in other words, the bank commits itself to continuing the policy until they are fulfilled. at the same time, the bank made it clear that these two conditions are not sufficient conditions in the sense that the bank will not necessarily make an automatic decision to terminate the policy as soon as they are fulfilled. to put it in a nutshell, the bank will decide whether to terminate the policy by examining developments in economic activity and prices and judging whether the situation justifies asserting that the year - on - year rate of change in the cpi is registering zero percent or higher on a sustainable basis - - in other words, whether the commitment has effectively been fulfilled as a whole. of course, the timing of terminating the quantitative easing policy crucially depends on developments in economic activity and prices. based on the projections regarding economic 3 / 4 activity and prices mentioned earlier, the probability of terminating the policy is likely to gradually increase over the course of fiscal 2006. at that juncture, the bank will shift the operating target for money market operations back to short - term interest rates from the outstanding balance of current accounts at the bank. since, as i pointed out earlier, the quantitative easing policy is effectively becoming closer to a maintenance of zero interest rates, a change in the policy framework itself does not imply an abrupt change in monetary policy. although the future course of monetary policy obviously depends on developments in economic activity and prices, an accommodative financial environment is likely to be maintained, as long as upward pressures on prices continue to be to a large extent contained and the economy follows a sustainable and balanced growth path, as projected in the april 2005 outlook for economic activity and prices. conclusion the japanese economy has emerged from a pause and continues to recover, albeit at a moderate pace. the bank is determined to carry out monetary policy so as to support private - sector initiatives, and thereby realize sustainable economic growth and stable prices. 4 / 4 | 0 |
a deficit of around 0. 11 % of gdp in 2009. global fund flows are estimated to return to normal in 2009. however, there is one particular note for indonesia. if the experience of the 2004 general election reoccurs this year, namely a safe general election that results in the formation of credible cabinet, then during the fourth quarter there will be relatively large inflows of funds. the majority of such funds belong to our nation β s citizens, temporarily placed abroad while awaiting confirmation of the domestic political situation. based on our calculations, foreign reserves by the end of 2009 are estimated at usd51 billion ; adequate to finance 4. 7 months of imports and government foreign debt repayments. in the banking sector, stress tests indicate that the resilience of our domestic banking industry is sufficient. in 2009, the capital adequacy ratio ( car ) is estimated to decrease slightly from 16 % in 2008 to 14 %. from regulatory capital point of view, this ratio is still well above its minimum limit. however, from the economic capital view, this development should be anticipated in a timely fashion. a declining capital adequacy ratio indicates the reduced ability of banks to absorb various risks and expand credit. therefore, i would like to see efforts to reinforce bank capital remain as our primary focus in the future. bank indonesia will continue to closely monitor the development of capital at each bank. we are all aware that without safe and adequate capital, the bank intermediary function will not run optimally, and industry resilience to inauspicious conditions, such as now for example, will be undermined. based on current capital strength and contradictory to credit growth in developed countries such as in the european union and united states, where a downturn was experienced in 2008 and perhaps negative growth will prevail in 2009, credit growth in indonesia in 2009 is estimated to remain in the range of 18 % - 20 %. yet the downside risks are relatively large. meanwhile, slow economic growth will precipitate a rise in npl to around 5 % in 2009, which is still considered within safe boundaries. it is important to be aware that liquidity in our banking system is currently adequate. this is evidenced by large placements in bank indonesia certificates by indonesian residents ; now totaling rp200 trillion, and undisbursed loans of rp253 trillion ( november 2008 ). this large liquidity pool indicates that our economy is not suffering from a liquid | assets quality, legal lending limit, foreign borrowings, and asset securitization ; third, measures to improve consumer protection through certainty in the application of standard, secure, and transparent banking services. this objective will be achieved through the issuance of bank indonesia regulations relevant to consumer protection and transparency of banking products. fifth, bringing the national banking industry to international standard of capital adequacy according to basel ii principles. the adoption of basel ii will commence in 2008 by applying standardized models. by adopting this consolidation policy, we believe that the indonesian banking system will consist of banks with strong commitments and capacity to play an optimum role in the national development process. ladies and gentlemen, financial sector outlook in line with improving economic performance as well as a strong banking performance, bank loans are projected to expand about 20 % in 2005 ( or about rp106. 2 trillion ). based on our projection, banking sector will have adequate capacity to expand loans as targeted without impeding their capital adequacy and liquidity. with loan growth of 20 % - 23 % and deposit growth of 6 % - 7 % in the next three years, the cars of banks are projected to stay at 16 % and ldr will be approaching 100 %. in addition, higher international commodity prices ( especially primary non - oil / gas commodities ) resulting from rising demand in export markets would have a positive impact on the domestic business climate, which raise demand for loans. as i have mentioned earlier, we have so far achieved significant progress in putting in place the foundation for economic stability and financial system more in line with challenges in the years ahead. however we are also aware that in our path toward achieving the objective of a more satisfactory financial and banking sector requires time. we are entering a crucial period in the process of transition toward a better future of banking system. the process of consolidating the national banking industry is an objective that we cannot compromise if the stability and resilience that we desire for the banking system is to be achieved. we must all take note, first of all that the coming years will be no time for complacency. before us lies only one choice, to work hard to fulfill the commitments and sincere intentions to restructure whatever needs to be put right. we should no longer feel comfortable watching as the various problems unfold within our banking industry. in fact, we as the banking authority see that much remains for us to do to be able to meet this demand. the | 0.5 |
by denting confidence, uncertainty might affect real economic variables, such as capital goods production, which declined strongly last quarter, possibly as a result of this reduced confidence. all these elements indicate that the moderation in the pace of the euro area economic expansion will likely extend into the current year. this is also reflected in our staff macroeconomic projections. in fact, growth for this year has been revised downwards to 1. 1 %, which is 0. 6 % lower than anticipated in the december forecast. the fundamental factors supporting the euro area expansion remain broadly in place, however. looking ahead, the effects of the idiosyncratic factors currently weighing on economic growth are expected to unwind, albeit at a slower pace than initially foreseen. for instance, recent data on motor vehicle production show signs of normalisation, and consumer confidence recently edged up again. beyond more temporary fluctuations, the euro area expansion will continue to be supported 1 / 3 bis central bankers'speeches by favourable financing conditions, further gains in employment and rising wages. also, the ongoing yet somewhat more modest expansion in global activity should continue to support euro area growth. in fact, bank lending rates to euro area firms and households remain close to their historical lows. the euro area unemployment rate currently stands at its lowest level in more than a decade, and the wage increases that result from tightening labour markets should continue to underpin household income and private consumption. on the external side, preliminary estimates for the fourth quarter of 2018 point to a pickup in net exports after a very weak third quarter. for these reasons, gdp growth in the euro area is expected to remain sound in the medium term. accordingly, our staff projections expect euro area gdp growth to reach 1. 6 % in 2020 and 1. 5 % in 2021, which is largely unchanged from the december forecast round. the risks surrounding euro area growth are still considered to be tilted to the downside, on account of the persistence of the uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets. turning to inflation, hicp inflation increased to 1. 5 % in february, from 1. 4 % in january ( according to preliminary estimates ). this slight increase was mostly driven by higher energy and food price inflation, while measures of underlying inflation remain generally muted. headline inflation is likely to remain around current levels in the coming months, before declining towards the end of year on the basis of the financial market β s outlook for | to restore the sustainability of the public finances, which were weakened by the bis central bankers β speeches deep recession. as regards this process, it is not at the end yet. the process is not even at the beginning of the end. but perhaps it is at end of the beginning ( churchill ). what can we do in our own countries? we manage to navigate through unchartered waters by simply keeping our house in order ; taking care of the competitiveness of our economies, not letting public finances deteriorate too much and by investing for the future. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | 0 |
opening remarks delivered by mrs. leila matroos - lasten, acting president of the centrale bank van curacao en sint maarten during the second of the third cbcs central banking conference opening remarks delivered by mrs. leila matroos - lasten, acting president of the centrale bank van curacao en sint maarten on the occasion of the third cbcs central banking conference reinventing central banking : supporting inclusive growth and financial innovation centrale bank van curacao en sint maarten, willemstad june 7, 2019 excellencies, distinguished guests, ladies and gentlemen, good morning. welcome to the second day of the third central banking conference of the centrale bank van curacao en sint maarten ( cbcs ). on behalf of the board of directors of the cbcs, also today i would like to extend a special, heartfelt thank you to the speakers who graciously accepted our invitation. during yesterday β s program, we discussed the concept of inclusive growth. ms. henriquez of the cbcs kickedoff the program with an overview of indicators beyond the gdp for inclusive growth, while mr. ivanyna of the imf and mrs. grenade of the caribbean development bank focused on the development of inclusive policy frameworks and the impact of such policies on our communities β well - being. mr. kanz from the worldbank discussed household over - indebtedness and the policies and actions that can be undertaken in this area. additionally, the program featured a presentation on the determinants of growth in the caribbean by ms. dare and ms. hieroms of the cbcs. finally, given the continuous risk of financial instability, mr. campos cuevas of the asba shared some insights on resolution regimes, while the governor of the central bank of trinidad and tobago, mr. hillaire, shared with us the lessons learnt in the area of resolution regimes. the overarching theme of this year β s conference : β reinventing central banking : supporting inclusive growth and financial innovation β, is no coincidence. inclusive growth and financial innovation are two areas where the cbcs can play a key role in supporting the sustainable development of curacao and sint maarten. the theme underscores a very important issue that we all are facing : the digital economic sector is purported to be growing 35 % faster than the wider economy. if inclusiveness, financial technology, and innovation | of last year. the inflation projections were also revised down, to 0. 1 % for 2015 and 1. 1 % for 2016. inflation is, therefore, expected to continue to rise, in 2017 also, but at a slower pace, remaining still some distance from the price stability target of 2 %. on 3 september the ecb reiterated that it was willing and able, if need be, to adopt a more expansionary monetary policy stance. the various measures taken, including in particular the purchases of government debt securities, have allowed a more uniform transmission of expansionary momentum to the euro area countries. this benefits, in particular, the countries such as spain that were hardest hit by the fragmentation of european financial markets. the financing conditions of the spanish economy have improved significantly. lending is slowly but gradually returning to normal, as households and firms undertake the necessary deleveraging and new financing flows towards those that are in the best position to take on new investment and spending projects. as the cost of these new funds is lower, this also bis central bankers β speeches reinforces the fiscal consolidation process and helps improve the balance of payments position. performance of and outlook for the spanish economy compared with the weakening in the euro area, gdp in spain grew by 1 % in q2, slightly above the growth rate for the opening months of the year. this figure confirms the recovery in the spanish economy, the progress made in the correction of imbalances and the improvement in financing conditions for households and firms. gdp growth in q2 continued to be based on highly robust domestic demand, with some quickening among the components most closely linked to private demand ( household consumption and investment in capital goods and housing ). however, net external demand made a slightly negative contribution, as has been the case almost continuously since the start of the recovery, owing to the strong import momentum. the latest indicators, for q3, suggest that this growth trajectory will hold in the second half of the year, in keeping with the banco de espana β s pre - summer projection of gdp growth of slightly over 3 % in 2015. for 2016 the estimate was marginally lower ( 2. 7 % ), on the back of a degree of weakening in some of the factors that have driven growth this year, stemming in the main from the drop in oil prices and the depreciation of the euro. as i indicated earlier, the outlook for the external setting has deteriorated and there is heightened uncertainty and volatility in the financial markets. it is | 0 |
yannis stournaras : reforming and rebalancing the economy in greece introduction by mr yannis stournaras, governor of the bank of greece, to the presentation of the european bank for reconstruction and development ( ebrd ) transition report 2016 - 2017, athens, 25 january 2017. * * * it gives me great pleasure to welcome artur radziwill, director for country economics and policy of the ebrd, and his colleagues to the bank of greece. as you are aware, the bank of greece has on several occasions provided the venue for the presentation of the transition report and for many other ebrd initiatives. it this vein, we endorse the activity and positive role of the ebrd in greece, in particular during the last couple of years following the establishment of its local office. its commitment to the country sends a strong signal to private sector investors that greece is serious about reforming and rebalancing its economy. the 2016 transition report is of particular relevance to greece, since it deals exclusively with the important subject of inequality and economic inclusion. the report focuses on a number of key aspects of inclusive growth : the distribution of income ; the impact that the transition process has had on people β s well - being and happiness ; equality of opportunity ; and financial inclusion. these aspects are topical for greece. the economic adjustment programmes that have been implemented since 2010 in greece aimed at addressing the twin deficits ( i. e. fiscal and current account ) and structural weaknesses from which the economy has suffered for decades. the achievements so far have been remarkable : unprecedented fiscal consolidation. over the period 2013 β 16, the primary deficit was eliminated and, for the first time since 2001, general government primary surpluses were recorded. moreover, the improvement in the β structural β primary budget balance by more than 17 percentage points of potential gdp between 2009 and 2016 means that, taking the impact of the economic cycle into account, the fiscal adjustment in greece was more than double the one achieved in other member states under similar programmes. a recouping of the sizeable cumulative loss in labour cost competitiveness vis - a - vis our trading partners between 2000 and 2009. an elimination of the external deficit, which exceeded 15 % of gdp in 2008. an increase in the share of exports from 19 % of gdp in 2009 to 32 % today. structural reforms, notably in the labour market, but also in the product markets and in public administration. recapitalisation | and restructuring in the banking system, enabling it to withstand the crisis and the flight of deposits, and ensuring that it now has adequate capital, provisions and collateral, i. e. that the necessary ( though not sufficient ) conditions are in place for the banking system to address the major problem of non - performing loans. a halting of the increase ( and even a slight decrease ) in the volume of non - performing loans in the second and third quarters of 2016, for the first time since 2014. a rebound of the economy in the second and third quarters of 2016, making it reasonable to anticipate a positive growth rate for the year as a whole, for the first time since 2014. these stabilisation policies in order to correct the unsustainable twin deficits inevitably came at an economic and social cost : even more recession, job and income losses. but as argued above, these sacrifices have not been wasted. 1 / 2 bis central bankers'speeches greece is currently on the road to recovery. it is therefore more topical than ever that the reforms that will be put forward in order to keep greece on the track of a new, extrovert growth model will also safeguard social cohesion. this is a prerequisite to ensure that reforms will be politically sustainable, a key finding of this report. the analysis of the 2016 transition report draws, inter alia, on the third round of the life in transition survey ( lits iii ), a household survey conducted by the ebrd and the world bank. crucially, the life in transition survey also covered greece, to which a whole chapter of the respective report is dedicated. according to the life in transition survey, the impact of the economic crisis on greek households has been deep and widespread. lastly, the bank of greece has repeatedly underlined the importance of investment in the revival of the economy. therefore, tackling successfully the obstacles greek firms are currently facing in the business environment, according to the key findings of the business environment and enterprise performance survey ( beeps ) for greece, will induce investment, boosting in turn the economic prospects of greece. i am looking forward to today β s presentations and i am confident that they will contain many useful insights for greece that will contribute to the constructive discussions on the way forward. 2 / 2 bis central bankers'speeches | 1 |
risks. the increased usage of digital channels is equally having a bearing on financial crime. customer expectations are showing new trends. concurrently, as part of the banking evolutionary process, changes are happening on the front of climate change, fintech, cloud - based services, digital banks and artificial intelligence to name a few. supervisors should be able to navigate within the new confines of the banking environment. they should be capable of reacting to the unexpected, and crafting adequate regulatory and supervisory responses. more importantly, they should be capable of striking, at the very first go, a near - perfect balance between the soundness of the financial system and sustaining economic activity. this is why, as forward - looking regulators, central banks have to fully embark on the digital journey. at the level of the bank of mauritius, with the technical assistance of the imf, we are currently developing our own central bank digital currency. the upcoming deployment of a digitalised c - kyc platform as well as the forthcoming introduction 2 / 3 bis central bankers'speeches of a dedicated licence for digital banks are some of the other major projects the bank is currently working on. we are also closely monitoring heightened conduct risks and cybersecurity issues. ladies and gentlemen, the pandemic is also prompting enhanced monitoring and shrinking the timelines for the implementation of corrective measures. i can anticipate that regulators will need to engage in a process of perpetual risk and priority reassessment. policies will be bound to focus on crisis - generated risks and their impact on credit portfolios and liquidity pressures. data requirements need to be reviewed and a higher frequency may be required for reports that support supervisory duties. similarly, fundamental supervisory tools like stress testing and onsite inspections call for an evolution of their operational modality so that supervisors can remain abreast of situations requiring urgent action. as banks and financial institutions operate regionally and globally, increased cooperation and coordination between local and foreign regulatory counterparts become equally vital. such collaboration enhances exchange of information and home - host supervision, while facilitating any required collective upgrade of supervisory regimes. in this regard, i am a fervent proponent of cooperation. in that regard, since march last, the bank of mauritius has signed several memoranda of understanding with other central banks and regulatory agencies, and have many others in the pipeline. ladies and gentlemen, the risk of recurring waves of pandemic is material and calls for adaptability. as this varies from country to country, supervisors will | are typically quite set in their payment habits. furthermore, like all networks, there are positive externalities the more participants there are. that is, as more financial institutions offer fast payments and the reach of the system grows, it provides greater value to both individuals and businesses. if none of my family and friends can receive payments through the npp i am less likely to sign up for an alias and use it. but the more people i can pay using the system ( and the more people i can receive money from ) the higher value i get from the system. 4 / 6 bis central bankers'speeches third, as noted earlier, the system has been set up to encourage the development of commercial β overlays β using the real - time payment capability to deliver value - added services to consumers and businesses. aside from the additional osko services in prospect, possible overlays might include services for superannuation, e - invoicing and motor vehicle sales. i am sure there are many innovative minds turning to the possibilities. this brings me to an issue that has caused some concern among potential new players in this space β access to the npp. they observe that the system has been built by the financial institutions and is governed by a board made up of those institutions, including the four major banks. they worry that these institutions will either make participation very difficult or costly or, alternatively, will have the inside running on developing and launching commercial overlay services. i think there are a few reasons to be optimistic that access will not be an issue. to begin with, as i noted earlier, the npp is a utility. it is aiming to cover costs, not make a profit. further, given that many of its costs are fixed, it is in the interests of npp australia ( nppa ) to get as many payments through the system as possible to lower the per - transaction cost. the structure of the board and the constitution also provide some protection. the board is comprised of eight participant financial institutions ( the four major banks plus four elected representatives of smaller institutions ), two independent non - executive directors ( of which one is chair ) plus a director representing the reserve bank. each director has one vote and the constitution notes that an objective of nppa is to promote the public interest, including through fair access. but it is also worth noting that the npp at its core is an infrastructure that facilitates clearing of payment messages between financial institutions and settlement of those obligations across accounts at the reserve bank | 0 |
alan greenspan : technology and banking speech by mr alan greenspan, chairman of the board of governors of the us federal reserve system, at the sixth annual reception for regulators, sponsored by women in housing and finance, washington, dc on 20 november 2000. * * * i am pleased to join you this evening, and would like to thank diane casey, your former president, as well as nancy camm and the current officers for inviting me to participate. women in housing and finance certainly deserves commendation for its twenty very successful years of providing a forum for individuals, particularly women, from across the spectrum of participants in the financial services industry to exchange views on policies and market developments. more important, i want to applaud the energy with which your organization is approaching its next decades of service. clearly, we have witnessed a rapid evolution of financial markets in recent years, and the likelihood of continuing fundamental change is high. your work in studying and interpreting these changes will be no less challenging in the years ahead than in the twenty past. the remarkable innovations and adaptations that have permeated many aspects of our economy, especially in the most recent years of your history, are a part of the ongoing process of creative destruction that moves our economic potential forward as new technologies displace the old. over the past decade, we have witnessed an acceleration of this process of change, not only in the real economy but in finance as well, with innovations that have swept through the banking, mortgage finance, and securities industries. these innovations have brought with them new products and services, and, of necessity, evolution in the approaches required of both managers and regulators. the unbundling of risk that accompanies the deconstruction of financial products into their constituent parts has revolutionized finance, irreversibly transforming the way services are provided, as well as by whom. what is particularly impressive is that, fueled by both computing and telecommunications capabilities, the pace of financial innovation does not appear to be slowing. technological advance has expanded the scope and utility of our financial products and - as i noted - has increased the ability to unbundle risks. it has also promoted the faster and freer flow of information throughout the financial system : we are quickly moving to real - time systems, not only with transactions but also with knowledge. of course, the process of change poses challenges to the institutions competing to adapt to the evolving needs of businesses and consumers. and it challenges those of us here this evening - policymakers, | . we strongly believe that the act's " chiefly compensated " requirement was intended to apply to a bank's aggregate trust and fiduciary activities and not on an account - by - account basis. an approach focused on the bank's aggregate trust and fiduciary activities is consistent with the nature and operations of bank trust departments and would β in conjunction with the act's prohibition on banks publicly soliciting brokerage business apart from their trust and fiduciary activities β effectively prevent banks from running a full - scale brokerage operation out of their trust departments. the account - by - account approach adopted by the interim final rules, on the other hand, is both unworkable and overly burdensome. first, this approach appears premised on the notion that an individual trust or fiduciary account that engages in a significant number of securities transactions during a year is not a traditional trust and fiduciary account. this premise is flawed, however. it is entirely natural for a bank to engage in numerous securities transactions for a trust or fiduciary account. for example, there may be numerous securities transactions for an account when a trust is initially established and the assets provided by the grantor are initially invested or when the investment see h. r. conf. rep. no. 106 - 434 at 164 ( 1999 ). strategy of a fiduciary account is altered to reflect changes in the beneficiary's investment objective. an account - by - account approach also does not accommodate the complex, multi - account relationships that a bank's trust department is frequently called upon to establish to achieve the individualized wealth preservation and transfer goals of its customers. the account - by - account approach also proves too much. to put this in context, a moderately sized trust department may have on the order of 10, 000 separate trust and fiduciary accounts and a large trust department may have more than 100, 000 such accounts. under the account - by - account approach adopted by the interim final rules, changes in the amount of compensation received during a year from a single trust or fiduciary account could cause a bank and its entire trust operation to become an unregistered broker - dealer, thereby opening the bank to the threat of enforcement action by the sec and, after january 1, 2003, suits by private parties for the rescission of securities contracts entered into by the bank. such a result is unreasonable, | 0.5 |
make banks β shareholders and investors more prudent and will better protect european taxpayers from any misbehaviour by banks. that said, the best way to prevent crises in the future is to make sure that our economies are prudently managed and that we don β t let financial imbalances develop, as was unfortunately the case before the crisis. 4. the biggest challenge that cypriot banks have to face today is how to manage and resolve the extremely difficult and sensitive issue of loan servicing β¦ the cypriot economy needs a functioning banking sector which contributes to the economic recovery. that can only be achieved if the non - performing loan issue is addressed forcefully. for that, the structure of incentives would have to be changed, so that both borrowers and lenders have a common interest in finding a pragmatic solution to the debt problem. the data tell us that this is not happening. conversely, non - performing loan levels are continuing to increase. the reform of the foreclosure process is part of the change that has to come about. in this respect, i welcome the supreme court decision on the unconstitutionality of the four parliamentary bills concerning the foreclosure law. this will help to contribute to the reduction of non - performing loans in the banking system and recreate margins of manoeuvre for banks to extend loans to profitable projects supporting the recovery. bis central bankers β speeches 5. the cypriot economic adjustment programme was well on track until recently. however, when political decisions touch upon legal reforms, such as foreclosures and privatisation, delays arise amid reactions β¦ the work of the cypriot authorities and their commitment to the programme has been commendable. those measures were painful and they have imposed a large short - term cost on the economy and cypriot society. but they have started to pay off. they have helped to stabilise the economy and to improve the confidence of international investors. institutional and legal reforms are fundamental to enhancing the business environment and boosting economic growth and job creation. this raises difficult political discussions in cyprus, as in any country, but such discussions are nonetheless indispensable, as this is about changing the business model of the cypriot economy, and we are in a democratic society. 6. policy in the euro area is characterised by the lack of a common approach, given that the ecb is willing to proceed, if necessary, with further monetary policy easing and has called on those governments that have room for manoeuvre to loosen | markets union would lead to deeper and more diversified sources of financing for european businesses and households. for that to happen, financial market regulation first needs to be further harmonised. however, applying the rules of civil law should not be mistaken for financial regulation. and the completion of the banking union, notably through the creation of a european deposit insurance scheme, would make the euro area banking system safer while promoting healthy competition among banks. third, a clearer understanding of the delineation of responsibilities between the national and eu levels would improve political accountability and legitimacy all round. this is well reflected in two important political principles identified in the werner report. werner argues that the degree of european integration should be proportionate to the objective, and that any transfer of power to the eu level should go hand - in - hand with a corresponding transfer of parliamentary responsibility. so far, the political dimension of the eu β s integration has been the most neglected. shifting competences to the european level needs to be accompanied by further political integration and democratic accountability. ensuring that everyone plays by the same rules is an important component of our european democracy. the eu is built on the principles of equal and fair participation in economic and political life, which can only be guaranteed through strict enforcement of the rule of law. any shift in powers to the european level must not come at the expense of the representation of eu citizens. in particular, democratic participation at the national level cannot simply be replaced by indirect participation at the eu level. if public risk - sharing, for example, is to become a permanent feature, the roles of the european parliament, the european commission and the council would have to be reviewed. these are constitutional issues that would β if we were to go down this road β require a rethink of the fundamental structure of the eu and would ultimately need to be reflected in the treaty. the fact that the crisis response has been designed within the eu institutional framework shows that our framework is flexible. it leaves the eu and its member states scope to tailor policy responses to specific situations. but it also leaves a grey area of blurred responsibilities between the national and eu level. this ambiguity may undermine the eu β s full potential. a treaty change, if there were appetite for one, would be an opportunity to incorporate in our common framework the tools used in the last crisis, such as the european stability mechanism. it could also confirm whether the instruments used in this crisis β such as the possibility to issue common debt in exceptional times β would be at the eu | 0.5 |
by the larger number of financial investors in primary product markets and the proliferation of financial derivatives tied to these products. it is likely that this also has had an impact on food price trends. 8 in this context, it is clear that the design of policies oriented toward moderating increases in the level and volatility of agricultural and food prices, and dealing with their consequences when they are inevitable, faces significant challenges. i would like to highlight four of them, which from my point of view are particularly relevant. first, the design and implementation of the policies required to deal with the macroeconomic impact and the social costs of food price fluctuations. second, the setting in motion of actions oriented toward overcoming structural difficulties that are affecting food production, such as low investment levels, infrastructure deficiencies, modest storage facilities, and the high concentration in brokerage markets. third, the need to take into consideration that some of the policies that have been adopted to attenuate the effects of food price increases, such as export restrictions or tariff reductions in several countries simultaneously, price controls and subsidies, frequently end up having the opposite effect. fourth, the importance of taking actions focused on improving transparency, the availability of information, and in general the functioning of markets for these products, in such a way as to provide adequate incentives for the adoption of schemes that stimulate productivity and competitiveness in this sector, contributing in this manner to a lower disparity in food prices, both across countries and regions, as well as through time. world bank, food price watch, february 2011. r. arezki and m. bruckner, β food prices and political instability β, imf working paper, wp / 11 / 62, march 2011. nakaso, hiroshi et al., β report of the g20 study group on commodities β, november 2011. bis central bankers β speeches | its relations with frankfurt during its first ten years the ecb has developed excellent relations with its environment here in frankfurt, be it with the institutions of the city or with the population. at the beginning there were still some taxi drivers who did not understand immediately where to bring a passenger who just said : β european central bank, please β. today, the situation is quite different. and the ecb has endeavoured to spread the knowledge of what is happening in there. we do that via our publications or our website but also by inviting the public to come inside the ecb. therefore, we participated in the skyscraper festivals of 2001 and 2007, following the example of our forerunner, the european monetary institute which did so in 1996 and 1998. in the framework of our 10th anniversary we held an open day on 1 june, and about 1, 000 visitors could get first hand information of the role and functions of the ecb. in addition, we regularly explain our work to groups of visitors from around the world, and among them of course citizens from frankfurt and the rhein - main area. in 2007 their number reached 13, 500 altogether and each visitor did not only see the ecb but also the city of frankfurt. for completeness, i wish to also mention our taking part in the osthafenfest and in the luminale, during which the groΓmarkthalle was fantastically illuminated. also, ecb staff participated in dragon boat races and got the enthusiastic support from the public and their colleagues on the banks of the main. the ecb is a european body, and its staff is now composed of nationals from the 27 member states of the european union. every day, i enjoy the multi - cultural atmosphere at the ecb which is stimulating as it brings fresh ideas into our professional life because of the different experiences, work styles and cultural backgrounds only to name a few of the inspiring factors. our daily encounter with the richness of european heritage brought us to the thought to let the public participate in this understanding. we did so by launching the cultural days of the european central bank which we have organised every year since 2003. the basic concept is to feature each time aspects of the variety and affluence of the culture of one of the member states of the european union, and bring it to frankfurt to present it to the citizens of the rhine - main region and beyond, with events covering music, literature, film, and modern dance. furthermore, we offer lectures about different | 0 |
/ 13 / 190, august 2013. for the lessons learnt from the financial crisis and proposals for future monetary policy frameworks, cf. bindseil, u. ( 2016 ), evaluating monetary policy operational frameworks, paper presented at the economic symposium of the kansas city fed, jackson hole, august 2016. page 5 / 8 an example of this is the continued efficient operation of the repo market. by contrast, the transmission of negative interest in the banking system is varied. as interest rates on bank deposits largely remain at zero, lending rates, particularly mortgage rates, have also fallen less sharply than money and capital market rates. from the snb β s perspective, this imperfect transmission to lending rates is not entirely unwelcome in the current economic environment. it has helped to ensure that the risks to financial stability associated with a persistent low interest rate environment have so far not increased to any significant degree since the introduction of negative interest. it is therefore all the more important for monetary policy purposes that we thoroughly understand the transmission mechanisms of negative interest. we have therefore extended our analyses in this area and are in regular contact with the relevant market participants. third, as far as the impact of negative interest on investors is concerned, varying levels of risk appetite are observed. domestic investments appear to be particularly popular. in international capital flows, we are continuing to see a strong aversion to risk among domestic investors. current account surpluses in the economy are generally converted into swiss francs and no longer invested abroad. this contributes significantly to the strength of the swiss franc. from a monetary policy perspective, increased willingness on the part of major investors to take additional risks would certainly be desirable. focus shifted to the foreign exchange market let me turn now to the foreign exchange market. as i mentioned already, the snb started to make large - scale purchases of foreign currency against swiss francs in 2009. naturally, the foreign exchange market is therefore of great interest to us. we are active in the foreign exchange market at all market hours. this is a particular challenge. after all, it is a global market and trading takes place round the clock. needless to say, we have built up the relevant capacities and necessary know - how in this area. but the changes go much deeper. in simple terms, the growing importance of the exchange rate instrument has meant that the snb has had to catch up rapidly with the structural changes that have taken place in the foreign exchange market in recent decades, especially in relation to the introduction | markets as a major participant. in the case of quantitative easing, or qe, it will often purchase medium and long - term government bonds with the aim of lowering the relevant interest rates. 5 as well as government bonds, some central banks have extended their purchase programmes to include other asset classes, including asset - backed securities, covered bonds and corporate bonds. at the bank of japan, the purchase programme also encompasses certain equities 6 and shares in real estate funds. in chart 3, you can see that a qe programme impacts directly on a number of financial markets. this more direct influence of monetary policy on a broader segment of the financial markets is evident in the extent and impact of the qe programmes. chart 4 shows the impact of the qe programmes by the federal reserve, the european central bank, the bank of england and the bank of japan. 7 the chart is based on findings from a total of 24 studies which estimated the impact of each securities purchase programme on capital market rates. the blue bars show the breadth of the estimated impact of each qe programme. the red diamonds indicate the respective median. we can see that the qe programmes across the different currency areas may have reduced the yields on ten - year government bonds by over half a percentage point on average. i now come to central banks β foreign exchange market interventions. the exchange rate is an important variable for a small open economy like switzerland, and thus for its monetary policy. yet the snb only rarely intervened directly in the market in previous decades, and in addition to the federal reserve, the european central bank, the bank of england and the bank of japan have also introduced securities purchase programmes. with respect to switzerland, the snb β s purchases of swiss franc bonds in 2009 and the large - scale repo transactions and foreign exchange swaps concluded in august 2011 may be termed quantitative easing. these are exchange - traded funds which replicate the topix, nikkei 225 or jpx - nikkei 400 indices. andrade et al. ( 2016 ), the ecb β s asset purchase programme : an early assessment, ecb working paper series, no. 1856, september 2016. page 4 / 8 then only with small amounts. since march 2009, this has changed. it was at this point that the snb began buying foreign currency on a large scale, in order to counter excessive upward pressure on the swiss franc and prevent an undesirable tightening of monetary conditions in switzerland. alongside the negative | 1 |
benoit cΕure : interview in le figaro interview with mr benoit cΕure, member of the executive board of the european central bank, in le figaro, conducted by ms alexandrine bouilhet on 4 april 2014. * * * le figaro : isn β t the strong growth seen in the financial markets out of touch with economic reality? benoit cΕure : markets are anticipating economic recovery. that is a good sign, and we think they are right! it is not a bad thing in itself to anticipate a recovery! we at the ecb believe that the recovery is already underway, albeit a gradual and fragile one, and so we want to accompany it with low, or even lower, interest rates for a prolonged period. is this strong growth not already creating bubbles? in our opinion, no β not in the euro area. but, in a period of very low interest rates, there is a need for vigilance. if this risk were to materialise, supervisory authorities in the member states have new β macro - prudential β instruments at their disposal, not to mention the other macroeconomic measures. is the ecb really ready to start quantitative easing ( qe )? yes, the governing council is unanimous in its commitment to using unconventional instruments, including qe, if the current period of low inflation extends for longer than expected. we do not consider that necessary at present, because the low level of inflation is partly due to temporary factors and we believe in the recovery : inflation should therefore increase. but we will continue to monitor developments very closely and act if required. how can qe help to increase lending? that is the question! even if qe means there is more liquidity on banks β balance sheets, there is no guarantee of that increasing lending. the ecb cannot be a substitute for putting the banking sector back on a sound footing. the review of banks β balance sheets that we are carrying out in 2014 will help. qe in the european context would inevitably be different to the approach taken in the united states. on that issue, mario draghi has weakened the euro. why? market participants have now fully understood that the exchange rate is not an objective of our monetary policy, but it is nevertheless an important variable in our decision - making because of its influence on price developments. in a period of low inflation, the effects of exchange rate developments are closely monitored. what should be done to weaken the euro further? another reason | tips allows individuals and firms to transfer money by settling electronic payments in less than ten seconds. 3 / 4 bis central bankers'speeches but, for private risk - sharing and market integration to be effective, they need to be supported by policies on other fronts. fully applying the budgetary rules and coordinating economic policies more effectively remain vital to strengthen the resilience of the euro area and create the confidence among member states that is needed to proceed towards further integration. in parallel to this, the institutional foundations of emu need to be fortified. on the one hand, it is important to strengthen the governance and operational capacity of the european stability mechanism while fully respecting eu law. this will better protect euro area countries against severe shocks. on the other hand, establishing a budgetary instrument that supports convergence and competitiveness would help to strengthen the resilience of the euro area as a whole, as well as the resilience of each of its member countries. conclusions let me conclude. as we are approaching the end of this parliamentary term, let me take the opportunity to thank this committee for the very constructive relationship our two institutions have established over the past five years. these have not been easy times, and the public has rightly asked for effective and tangible responses to economic and financial challenges. you have played a vital role in relaying those expectations and in ensuring that the ecb β s accountability β the necessary counterpart of its independence β was effectively discharged. moreover, as co - legislators you drafted and adopted the reforms that made it possible to have a stronger union today. you know better than i that reform is a continuous endeavour and that the benefits of these efforts are not always easy to communicate. still, the december eurobarometer showed that support for the euro rose to 75 % in 2018. this provides a solid basis on which to build and advance along the path towards a deeper and more complete emu. i am now at your disposal for questions. 4 / 4 bis central bankers'speeches | 0.5 |
. 28. finally, there are hand holding schemes such as the rajiv gandhi udyami mitra yojana ( rgumy ) which provide handholding support and assistance to the potential first generation entrepreneurs, who have completed edp or vocational training programmes. bis central bankers β speeches 29. can entrepreneurs be created? this question is cast in the mould of the nature vs. nurture debate. there are no answers. however, ingrained in the idea of edcs, the step programme and technology business incubation and msme initiatives is the idea that by creating the right and conducive ecosystem and by education and capacity building, entrepreneurship talent latent in society can be drawn out, and, perhaps, this conducive ecosystem can also create new entrepreneurs. inclusive growth and social entrepreneurship 30. from the 1990s india β s growth rate has accelerated from the hindu rate of growth of 3. 5 %. india has had much to celebrate over the past two decades on the economic front. it has become one of the world β s fastest growing economies. indian companies have made their mark abroad and indeed many are transforming themselves into multinationals with a global presence. most important, there is a new found sense of confidence. confidence reposed by the world in us and confidence by us in ourselves. there certainly is the feeling of β yes, we can! β. to sustain this momentum, it is important that the growth that we have seen is inclusive, people centric and translates into overall development. it is important that this feeling and confidence permeates all sections of society and none are left out of the india growth story. without this we will not be able to sustain high growth. 31. while the growth story has been impressive, there are causes for concern on other dimensions. issues of income distribution are important. we have a long way to go in addressing concerns of absolute poverty. in the context of human development, the country ranks 119 among 169 countries on the 2010 human development index published annually by the united nations development programme. we compare poorly on almost all indicators such as life expectancy, education and per capita income. we have issues of water, sanitation, power, infrastructure and environmental degradation. more importantly, there are issues of social and economic inequalities and multiple deprivations. all budding entrepreneurs have to face these challenges and find solutions. 32. with these concerns in view, government of india has adopted the strategy of inclusive growth in the ongoing eleventh | k c chakrabarty : furthering financial inclusion through financial literacy and credit counselling address by dr k c chakrabarty, deputy governor of the reserve bank of india, at the launch of federal ashwas trust, kochi, 30 november 2009. * * * i am happy to be here this morning and feel privileged to launch the federal ashwas trust for running the financial literacy and credit counselling centres ( flcc ) of federal bank. at the outset, let me warmly congratulate my old friend and colleague shri m. venugopalan, md and ceo, federal bank, and his team for bringing the flcc of federal bank to fruition. even though kerala has the highest literacy rate amongst all states in the country, i am sure that centres such as these have a vital role to play in providing valuable services to the people in the district. as our hon β ble finance minister emphasized in his budget speech, our approach to banking and financial sector has been to ensure robust oversight and regulation while expanding financial access and deepening markets. the merit of this balanced approach has been borne out in the recent experience as the turbulence in the world financial markets has left the indian banking and financial sector relatively unaffected. the recent turmoil which engulfed the western world and its financial sector brought to even sharper focus the pressing need to protect the vulnerable from ponzi schemes through safety nets of financial education, counselling and timely advice. the establishment of flccs is an important milestone in furthering financial inclusion. as i have emphasised time and again, opening a no frills account is by itself not financial inclusion. that is just the beginning. financial inclusion is a much broader term which can be construed as the process of ensuring fair, timely and adequate access to financial services, namely, saving, credit, payment and remittance facilities, and insurance services at an affordable cost in a fair and transparent manner by the mainstream institutional players. educating people and making them financially literate thus becomes integral to achieving financial inclusion, which is why centres such as these are needed. with the above perspective, i organize the rest of my remarks under the following sections. in section 1, i propose to talk about the importance of financial education. in section 2, i would briefly touch upon the need for credit counselling. section 3 discusses the specific objectives of setting up the flccs. section 4 covers the role of rbi and, finally, i shall share some of | 0.5 |
challenges. chief among them is the conduct of monetary policy during a period of profound adjustment during which deflation, inflation and financial stability risks could all threaten. the bank of canada believes flexible inflation targeting provides a robust framework for all seasons, and we will use its full potential to deliver price stability and to enhance the economic welfare of canadians. a general understanding that monetary policy will be employed to counteract the buildup of such risks and imbalances is likely to enhance the stabilizing impact of this approach. bis central bankers β speeches | and the recent strength in quebec and british columbia normalizes. these dynamics were built into our october projection. on the federal side, the government β s fiscal plans are pending. the slowing of growth in canada β s economy has been concentrated in goodsproducing industries, which were more heavily affected by the trade conflict and by lower commodity prices. the service sector β which now accounts for about 70 percent of the economy β has continued to show solid growth for some time. our overall assessment is that the canadian economy is near capacity. however, this masks significant regional differences. oil - producing regions continue to go through a painful adjustment to lower oil prices and transportation capacity constraints, and the labour market in alberta has been weak. meanwhile, some other provinces are seeing strong growth in employment and wages. finally, inflation remains broadly on target, with measures of core inflation holding steady around 2 percent. total consumer price index inflation was 1. 9 percent in october and is expected to fluctuate around 2 percent. the october reading was slightly higher than we anticipated, because of the impact of higher airfares. inflation is expected to rise temporarily above 2 percent in the coming months, reflecting the impact of weak gasoline prices a year earlier. cpi inflation should then return to target. - 9chart 5 : the service sector continues to support economic growth a. contribution to annualized growth in gdp by industry % percentage points - 2 - 2 2017q1 2017q3 2018q1 2018q3 2019q1 services ( right scale ) construction ( right scale ) manufacturing ( right scale ) oil and gas extraction and supporting activities ( right scale ) other goods industries ( right scale ) growth in real gdp by industry, quarterly, at annual rates ( left scale ) sources : statistics canada 2019q3 last observation : 2019q3 b. exports excluding energy, index : 2015q4 = 100, quarterly data index goods excluding energy sources : statistics canada and bank of canada calculations services last observation : 2019q3 yesterday β s decision this takes us up to yesterday β s monetary policy decision. overall, the tone of developments in recent weeks gives us more confidence in the outlook for growth and inflation that we set out back in october. so, i and my colleagues on governing council decided that the current setting of the policy interest rate remains appropriate to keep inflation at our 2 percent target. - 10 in our discussion, we noted some initial signs that global economic growth is beginning to level off, as expected. in particular, we | 0.5 |
that the capital ratios, however calculated, meaningfully reflect the bank β s ability to absorb losses. the second stage, then, is to consider how the second and third pillars of the new framework can be implemented. supervisors do not need to wait for the formal adoption of basel ii to start introducing or using the principles of the three pillars. on the contrary, incorporating these principles is excellent preparation for adopting basel ii in the future. for example, supervisors might choose to move towards a more risk - based approach to supervision, developing skills in assessing the quality of a bank β s risk management and its ability to assess risk exposures. at the same time, banks could be reminded of their responsibility to develop their own processes for evaluating their capital needs and a strategy for maintaining their capital levels, consistent with the principles of pillar 2. with regard to the principles of market discipline in pillar 3, supervisors may wish to focus initially on ensuring a baseline level of disclosures across all banks. this might include discussing with banks, investors, and other users of financial information their information needs and the tools available so that supervisors can tailor requirements accordingly. in my view, these two preliminary stages provide an excellent preparation for the β final β stage of moving to basel ii. with a strong foundation in place, supervisors can then select the alternatives within basel ii that are most appropriate for their own circumstances. conclusion to conclude, let me insist on the general principle on which i think supervision should be built, which i mentioned before. supervision needs to consider a broader analysis of the vulnerabilities internal and external to the banking sector, including the necessary macroeconomic and institutional elements, and those relative to the stability of financial markets on which banks operate. i think that basel ii recognizes the importance of a combination of micro and macro factors for achieving greater financial stability. furthermore, i would say that basel ii incorporates some of the key basic principles that are also built in modern approaches to monetary policy : a flexible and forward - looking approach, anticipatory rather than reactive behaviour to risk, and the need to take into account market views. looking into the future, we must direct our resources to ensure that banking supervision in the 21st century is more dynamic, more preventive, more flexible, more inclusive, and more transparent. we should continue adapting and learning. i believe the ultimate objective of financial stability increasingly requires co - operation and properly aligned incentives on the part of the industry, markets, and supervisors. thank you. | jaime caruana : overview of basel ii and its reflections on financial stability speech by mr jaime caruana, governor of the bank of spain and chairman of the basel committee on banking supervision, at the international conference on financial stability and implications of basel ii, central bank of the republic of turkey, istanbul, 16 may 2005. * * * introduction and overview thank you, governor serdengecti, for your kind words of introduction and your opening remarks on what promises to be a timely and interesting conference. i am honoured to have the opportunity to share with you some thoughts on two related topics that are near and dear : financial stability and the basel ii capital framework. as i will be discussing this morning, the financial sector and banking supervisors are in the midst of a period of great change. change and growth must be second nature to this great city on the bosphorus, where the remains of the roman, byzantine, and ottoman empires reside within a modern, forward - looking city. istanbul has thrived over the centuries in the face of constant evolution, and today serves as a bridge between europe and asia, east and west, ancient and modern. of course, the challenges of basel ii cannot truly compare to the development of a city with almost 3, 000 years of history, but certainly istanbul seems to me a very appropriate place in which to discuss the role of banking supervisors in a rapidly changing world. my talk this morning will address several issues. first, i will talk about why the basel committee developed the basel ii capital framework and what it intends to accomplish. second, i will share some thoughts on how prudential banking supervision contributes to the stability of the financial system. next, i will discuss how i see basel ii contributing to financial system stability. finally, i will offer some thoughts on steps countries can take in preparation for adopting basel ii. but let me advance the main conclusion of my presentation : in a nutshell, i think that the new capital framework represents a significant step towards achieving a more comprehensive and risk sensitive supervisory approach. basel ii is about much more than just setting better quantitative minimum capital requirements. it is about establishing incentive - based approaches to risk and capital adequacy management, within a comprehensive framework of three mutually - supporting pillars. in my view, the combination of better risk management, a stronger capital structure and improved transparency standards in the banking system can significantly improve financial stability. why basel ii? let me begin with an overview of the basel ii capital | 1 |
##ntial supervision of individual financial institutions is undertaken. this may occur, for example, if the risk profiles of the institutions in question show a high degree of similarity, making the system especially vulnerable to a particular type of shock. supervision at the micro level, therefore, has to be complemented with a macro analysis of the interlinkages between different segments of the domestic financial sector and its links with the payment system, the rest of the economy and its counterparts abroad. on the other hand, it is also true that the bank β s macroprudential analysis may not provide precise information on individual institutions, particularly those that may be on the brink of insolvency. here, the authority, through regular inspections of individual service providers will have a more in - depth knowledge of the health of single intermediaries and market segments, including those which play a peripheral role in the monetary policy transmission process and with which the bank β s relationship is, at least on a one - to - one basis, rather distant. in this sense, the authority also contributes to the soundness of the bank β s counterparties. it is also the authority which ensures that only sound institutions are licensed to enter the maltese market. furthermore, confidential supervisory information available to the authority could be useful to the bank as an input into its overall analysis of the financial system, enabling it to respond to liquidity and related constraints that could set off negative ripple effects. the potential for synergies between the two institutions prompted them to sign two memoranda of understanding in 2002 to provide for enhanced co - operation, including through the establishment of a standing committee. this cooperation framework has contributed to the general soundness and stability of the financial system. the profitability of our banks, for example, has remained stable with an average return on assets after tax of 0. 8 % in 2003, the same level as that recorded by european banks. furthermore, bank liquidity and capitalization levels have both remained strong. liquid asset holdings as a percentage of short - term liabilities were close to 53 % at the end of 2003, compared to a minimum threshold of 30 %. meanwhile, the banks β aggregate capital adequacy ratio, defined as the ratio of own funds to risk - weighted assets, currently stands at 23 %, compared to a minimum of 8 %. in the insurance sector and collective investment schemes steady growth continues to be registered. this positive performance notwithstanding, there remains scope for further improvement in the framework through which the | be to preserve macroeconomic stability while maintaining the soundness of the financial system as this has been key to address adverse shocks in the past as well as to create a solid basis to achieve a sustainable economic growth. as a conclusion, allow me to summarise with the following points : as we have and will be discussing these days in different forums, our economies are, again, vulnerable to external shocks arising from other regions. even though we have made significant improvements, particularly regarding the strengthening of the economic fundamentals of our economies, which is reflected in a lower volatility of the main macroeconomic prices including lower inflation rates, bis central bankers β speeches strengthened financial systems, more sound fiscal balances, improvements in productivity and so on, we are not exempt, now and in the future, from experiencing these kind of shocks that at the end affect not just economic and financial variables but most important the well being of our populations. as policy makers, we have the responsibility to preserve those economic fundamentals and to come up with policy actions that may reduce their negative impact, or even better that could make our economies less vulnerable to their effects. in this context, i am glad to be here and looking forward to the discussion of our challenges as we may come up with specific policy actions that may be needed now or in the future to address these challenges. thank you very much for your attention. bis central bankers β speeches | 0 |
and made significant adjustments. in each stress test that has followed, and building upon the considerable progress in data collection, we have made completely independent estimates of a progressively greater proportion of potential net income or losses. these improvements in data and models have increased our ability to distinguish risks within portfolios. we have also refined the formulation of the hypothetical scenarios that form the basis of the stress tests. the severely adverse scenario is designed to reflect, at a minimum, the economic and financial conditions typical of a severe post - world war ii u. s. recession. 2 in devising recession scenarios, we draw on many of the same macroeconomic modeling tools used in making monetary policy. because not all significant risks facing banks are tied to the business cycle, our scenarios now incorporate other adverse developments such as an exceptionally large decline in house prices, sharp drops in the value of stocks and other financial assets, or a worsening of global economic conditions more severe than might normally be expected to accompany a deep recession in the united states. we have implemented the dodd - frank requirement for an β adverse, β as well as a β severely adverse, β scenario not by simply hypothesizing a milder recession, but by testing for somewhat different risks. the past two years we have used the adverse scenario to test the impact of a sudden, significant increase in interest rates. more discrete changes of note include the assumption of default by each firm β s largest counterparty and the incorporation of salient risks beyond those in the overall scenarios. 3 the former obviously serves a microprudential purpose, but it also could promote systemic stability objectives if it were to identify a single exceptionally large exposure for the entire financial system. the incorporation of salient risks helps to use stress tests to β lean against the wind, β not just build a buffer for future losses. for example, the 2011 and 2012 scenarios incorporated possible severe stress in europe. inclusion of this factor may have led to greater awareness and better risk management of u. s. firms β european exposures. dodd - frank act Β§ 165 ( i ), 12 u. s. c. Β§ 5365 ( i ). see board of governors of the federal reserve system ( 2013 ), β policy statement on the scenario design framework for stress testing ( pdf ), β final rule ( docket no. op β 1452 ), federal register, vol. 78 ( november 29 ), p. 71443. see board of governors of the federal reserve system ( | christine lagarde : hearing at the committee on economic and monetary affairs of the european parliament introductionary speech by ms christine lagarde, president of the european central bank, at the econ committee of the european parliament ( by videoconference ), 19 november 2020. * * * madam chair, honourable members of the economic and monetary affairs committee, ladies and gentlemen, thank you very much for giving me the opportunity to speak to you today as part of our regular hearings. we continue to be confronted with serious circumstances, from both a health and an economic perspective. pandemics are highly infrequent and unpredictable events, and consequently the economic outlook is characterised by high uncertainty. the key challenge for policymakers will be to bridge the gap until vaccination is well advanced and the recovery can build its own momentum. in this situation, it is pivotal that public policies chart a clear way forward and inspire confidence in eu citizens. good public policies are what will allow us to persevere in these challenging times, and to do so, they need to be ambitious yet realistic. given the central role played by the european parliament in ensuring that eu policies work for eu citizens, i could hardly be in a better place to discuss the topics you have chosen for today β s hearing. first, i will comment on the evolving economic outlook and the impact of uncertainty on the economy. second, i will discuss the respective roles of the ecb β s monetary policy and of fiscal policy in the current environment. economic outlook, monetary policy and uncertainty while the latest news on the vaccine looks encouraging, the recent surge in coronavirus ( covid - 19 ) cases and the associated re - imposition of a number of containment measures are adding to the already heightened level of uncertainty and present a serious challenge to the euro area and the global economy. following a strong but partial and uneven rebound in real gdp growth in the third quarter, latest surveys and high - frequency indicators signal that euro area economic activity lost momentum going into the fourth quarter. the resurgence in covid - 19 infections is weighing on services sector activity in particular, which is especially vulnerable to the voluntary and mandatory social distancing measures introduced. the purchasing managers β index for the euro area shows that while manufacturing output continued to improve, services sector activity weakened further in october. this uneven impact is also evident across euro area countries, with those countries particularly dependent on tourism and travel affected the most. so far, government support measures, particularly short - time | 0 |
the quran3, " o believers! be steadfast, strive to excel in steadfastness, remain firm on your belief and be mindful of allah, so you may be successful. " on this count, i commend the malaysian islamic finance industry for taking the leap forward more than half a decade ago - to embrace value - based intermediation ( vbi ). this strategic alignment with the maqasid shariah has enabled the industry to have a leg up while the rest of the sector is still at the exploratory stage in the ethical and sustainable journey. with the recent launch of the 3rd cohort of the vbi financing and investment impact assessment framework ( vbiaf ) 4 sectoral guides and the maqasid shariah scorecard ( mss ) in october, the industry should collectively work to intensify the implementation of vbi and measure its impact more effectively. moving forward, stronger implementation of vbi requires concerted efforts and holistic alignment across all key stakeholders. in particular, shareholder stewardship is vital to 2 / 5 bis - central bankers'speeches ensure the transformative impacts of value - based finance are seen and felt by many. with louder tone from the top - shareholders have the power to drive positive changes across the entire ecosystem - aligning business practices with the best conduct - which can further strengthen governance and promote positive consumer outcomes. the islamic finance talent ecosystem must also evolve from treating shariah requirements as a compliance exercise to encapsulating the shariah values in its entirety aβ¬ β by demonstrating trustworthiness ; fairness ; transparency ; social responsibility ; and a commitment to justice and shared prosperity. ladies and gentlemen, the second key proposition is to advance innovation for value - based solutions. in adapting to the changing market needs, islamic finance must remain agile - by structuring sophisticated instruments, using the basic building blocks ; unbundling ; and repurposing different components of existing islamic financial instruments. the industry should actively explore the full range of shariah contracts and instruments to drive financial innovation to address real - world challenges. i believe that the future of value - based innovation is certainly bright. first, blended finance has great potential to expand access to finance for the underserved and unserved segments. this is particularly due to its ability, to mobilise social finance capital, such as zakat and waqf - combined with traditional financing. an example of blended | abdul rasheed ghaffour : revitalising the economy via islamic finance speech by mr abdul rasheed ghaffour, governor of the central bank of malaysia ( bank negara malaysia ), at the 19th kuala lumpur islamic finance forum 2024, kuala lumpur, 5 november 2024. * * * it is an honour for me to be here at the 19th kuala lumpur islamic finance forum. for over nearly two decades, kliff has been a mainstay in the annual calendar of events surfacing global islamic finance perspectives, which resonate with contemporary developments. this year's forum, with the theme'revitalising the economy via islamic finance ', again - fosters dialogue and collaboration among stakeholders - to cultivate ideas and address the challenges of our time. islamic finance to elevate its role and impact in revitalising the economy allow me to begin by drawing some reflections and lessons from our rich islamic history. right from the start, the principles of ethical trade and equitable wealth distribution - have always been foundational in islamic society. back then, when slavery was prevalent, islam called for the move away from involuntary and slave labour - to be in favour of productive labour. as reported by abdullah ibn umar, prophet muhammad exhorted his people to - " pay the worker's wages, before his sweat gets dried " 1. such a progressive move was not only virtuous, but also a significant labour market reform. in fact, we see in the history of islam, many important developments - which led not only to the boosting of productivity, but also the emergence of innovative business techniques - laying the foundations for the modern economic system we have today. these include limited partnerships or mudarabah, the earliest forms of credit ( qard ), as well as the practice of mutual aid and cooperation - through zakat and waqf that enable resources to be redistributed and utilised, for the common good. these advancements strengthened social welfare - and in turn - encouraged cooperative enterprises and community - driven initiatives fast forward to today, i believe that the islamic financial sector, must carry on this tradition of courage and ingenuity - by continuing to challenge the status quo and to unlock next - level frontiers in financial practices and offerings - while remaining anchored on our fundamental values. to follow in the footsteps of our forefathers - in pushing the envelope in bringing about change, as we work to build and develop a more inclusive and | 1 |
. at the time of corrigan's essay - - the early 1980s - - the statutory authority for that separation was largely contained in two laws : the glasssteagall act, which separated commercial banking from certain investment and securities activities, and the bank holding company act ( with amendments ), which narrowly limited the activities of corporations that were allowed to own banks. when it passed in 1956, the bank holding company act was thought to have been in response to one company's aggressive expansion into banking activities. that company, transamerica insurance, had expanded into several western states and concerns were raised about the resulting concentration of financial resources. therefore, the ensuing body of law on the commerce and banking issue concentrated significantly on separating, or was inspired by desire to separate, banking from securities or banking from insurance. from the time of corrigan's essay until passage of gramm - leach - bliley, the banking industry had expanded substantially into both the securities and insurance agency fields, though significant restrictions still remained. much of the industry's expanded securities authority was gained through the federal reserve's approval of securities underwriting for banks, under section 20 of the glass - steagall act. under the federal reserve's rule, a bank subsidiary was " not engaged principally " in securities underwriting if at first 5 percent, then 10 percent, and ultimately 25 percent of its revenue came from underwriting. this expanded authority allowed many banking organizations, though almost exclusively large banks, to significantly expand their domestic securities activities. these same powers were extended to foreign banks operating in the united states. in insurance, gains for the banking industry were largely the result of court determinations that annuities could be underwritten and sold by banks. court determinations also expanded national banks'ability to market insurance products. consequently, banks of all sizes have expanded their involvement in insurance and annuity activities. by 1999, banks and bank holding companies had gained significant additional product authority in securities and insurance, areas that had been perceived to be on the other side of the banking and commerce wall at the time corrigan wrote his essay. a number of factors persuaded congress that federal action was appropriate, and the gramm - leach - bliley act was passed. congress had learned from the securities and insurance experiences of foreign banks, both the high points and the low points. on the one hand, institutions in some european countries had successfully broadened their securities and insurance activities. on the other hand, there were | less rapidly. firms had built inventories at a rapid clip in 2004 and the first part of this year, and by late winter many businesses seemed to have been more satisfied with their inventory positions. consequently, they scaled back rebuilding efforts and trimmed the growth of production accordingly. still, activity rose rapidly enough to further erode margins of economic slack. the unemployment rate fell from 5. 4 percent at the end of last year to 4. 9 percent in august, and the rate of capacity utilization continued to rise toward its long - run average, though that increase was slowed with the production adjustment in the spring. measures of labor compensation have given somewhat mixed signals about how tight labor markets have become. the rate of increase in the measure of compensation per hour derived from the national income and product accounts moved up appreciably over the four quarters ended in mid - 2005 compared with the preceding year. this rise was apparently due in part to bonuses and stock options that may be only loosely related to labor market slack, however. moreover, according to the employment cost index, which is based on a survey of firms, and to the growth in average hourly earnings in the payroll employment report, compensation pressures remained quite subdued. on balance, i do not believe conditions in labor markets have become excessively taut, but experience suggests remaining humble in making any such assessment. i would like to thank stacey tevlin, lawrence slifman, vincent reinhart, and david stockton, of the board's staff, for valuable comments. 1 / 4 measures of core consumer inflation eased some over the late spring and early summer, even as headline inflation was pushed higher by rising energy prices. in addition to the favorable news on core inflation, observations from the financial markets showed that forward measures of inflation compensation beyond the next few years - - the difference between distant forward rates on nominal and indexed debt - - moved down over the spring, despite the rising energy prices. even so, core inflation had moved higher in 2004, interest rates were still low, and the economy seemed to be expanding at a pace that over time could threaten to impart added upward pressure on inflation. as a consequence, the fomc indicated in its august announcement that its intention, in the absence of unexpected developments, was to continue to remove monetary policy accommodation at a measured pace. hurricanes are obviously the very embodiments of unexpected developments. among other effects of hurricanes katrina and rita, they have materially increased uncertainty about the economic outlook. the questions | 0.5 |
heng swee keat : monetary authority of singapore β s initiative to develop singapore dollar sovereign - rated sukuks speech by mr heng swee keat, managing director of the monetary authority of singapore, at the 5th annual islamic financial services board summit, amman, jordan, 13 may 2008. * * * introduction it is my honour this afternoon to join my ifsb colleagues in discussion of this very current topic. i am very glad that we are addressing this issue of regional integration of islamic financial services at this point. this is very timely and relevant to both the soundness and vibrancy of islamic finance. let me explain. the global islamic finance industry has grown rapidly β it is estimated that total assets are now over us $ 750 billion. this is impressive. still, this is a small proportion of conventional finance. the potential for growth is hence very large. while each country is taking measures to promote islamic finance, we can grow much faster as well as increase the scope and depth of the industry if we work towards integration at an early stage. integration increases market size, efficiency and liquidity. this in turn provides for more competitive cost of capital, spurring further growth. second, having service providers from different regions allow risks to be distributed across a wider group of players, and can improve the overall stability of the financial system. regional integration between middle east and asia, which may have different business cycles, provides a cushion for financial institutions and investors from country specific shocks. third, integration promotes greater interaction and knowledge sharing, and can help lift the standards of the islamic finance industry. in short, the 3 facets β development, integration and stability of markets β are closely intertwined. proper attention to all these 3 facets will enhance the soundness and vibrancy of islamic financial services. we are in fact seeing greater integration already with more cross borders flows, both within the middle east and asia, and between the two regions. banking and capital markets are opening up to foreign investors, more shariah products are listed on stock exchanges and islamic financial service providers are expanding their operations overseas. this is a promising trend. three tasks we should build on this positive momentum. allow me to share my views on three broad categories of essential tasks in promoting greater integration in the coming years. 1st task : promoting more economic integration first, financial integration and economic integration are deeply linked, and mutually reinforcing. hence, to promote financial integration, we also need to focus on economic integration | important β a recent mckinsey report 2 indicates that investors are more likely to invest in shariah - compliant products if returns are comparable to that of conventional products. in facilitating the growth of islamic finance in singapore, mas works with financial institutions to ensure a level playing field between islamic and conventional financing deals. this includes the waiver of additional stamp duties incurred by qualifying islamic financing arrangements involving immovable property. in developing the islamic financial services market during its nascent stage, we also provide tax incentives to help offset the initial additional costs. in february this year, our finance minister announced a 5 % concessionary tax rate on the income derived from qualifying shariah compliant financial activities. in addition, all investors will enjoy tax exemption on income derived from qualifying sukuks. this is to create a seamless framework for the industry in singapore, although i understand that in the gcc and malaysia the tax framework is even more favourable. the various changes in our regulatory and tax framework are done in partnership with the industry. based on our latest consultation, to promote the further growth of islamic finance and to meet the needs of financial institutions conducting shariah - compliant activities in singapore, i am pleased to announce that singapore will develop a facility to make available sovereign - rated sukuks. our facility is likely to be different from traditional issuances in two respects. first, the issuance will be on a reverse enquiry basis, which means we will issue according to the needs of financial institutions in singapore conducting islamic finance. second, at the initial stage, we plan to price these against the liquid singapore government securities market. this will provide a transparent price discovery mechanism for this new instrument in singapore. as the s $ sukuk market grows and deepens in time, it can then develop its own pricing benchmarks. the design of our sukuk issuance facility reflects our effort to harness the price discovery potential of existing liquid instruments, while adhering carefully to shariah principles. further details of this arrangement will be announced in due course and we look forward to your feedback. we will also make significant progress in integrating financial markets when we provide greater market access for islamic service providers to operate across borders. i am glad that regulators in the middle east and south - east asia have been very supportive in this area. for instance, several major islamic banks in the middle east now have operations in malaysia. more recently, several middle eastern banks have also established themselves in singapore. the first home | 1 |
joseph yam : current issues for monetary and financial stability in hong kong speech by mr joseph yam, chief executive of the hong kong monetary authority, at the hong kong management association annual fellowship dinner, hong kong, 27 november 2007. * * * introduction i feel especially honoured to have been asked to speak at this hkma fellowship dinner, one particular reason being that the hong kong management association and the hong kong monetary authority share the same initials. i have, ever since the establishment of the hong kong monetary authority in april 1993, felt some what indebted to the hong kong management association in its acquiescence to our use of that symbol of excellence, the hkma, no doubt in the hope that we too would in time mature to deserve the respect that those initials command. about fifteen years on, i hope we have not disappointed you. this evening i would like to talk about the monetary and financial issues currently confronting hong kong. i have chosen to do so because what is going on around us on the monetary and financial fronts appears, to me at least, to be unusually complex, presenting risks to monetary and financial stability that are perhaps less well understood and possibly less benign than those that we have been experiencing since the economic recovery from the second quarter of 2003. and i believe that the best way of managing risks is for those concerned, not just the authorities responsible for the maintenance of systemic monetary and financial stability but more importantly also those actually assuming risks, whether as investors or as financial intermediaries, to be alert to them, and to understand that they may have peculiar characteristics. then there are importantly those innocent parties in society, who are often hard - pressed to make ends meet or struggling to acquire a dwelling place, who could be further disadvantaged if there were monetary and financial instability, should the risks materialise to the extent of causing a shock of systemic dimension. sub - prime crisis the first such issue is the sub - prime crisis in the united states. the use of the word " crisis " is not an exaggeration on my part, notwithstanding the absence so far of anything approaching a crisis in hong kong. it is the word that is increasingly being used in the developed markets and in international finance when talking about the current difficulties in the united states and europe that originated from sub - prime mortgages. at the risk of oversimplifying something that is really quite complex, let me make a few observations that might help understand what is going on. first, sub - prime mortgage | rapid growth in crossboundary capital flows in recent years. in particular, hong kong β s mutual market access schemes with the mainland, namely the stock connect and the bond connect, have played a crucial role in encouraging greater portfolio investment into china and the inclusion of rmb assets into major global indices. within three years, foreign holdings of onshore equities had more than tripled and foreign holdings of onshore bonds had more than doubled at the end of last year. 9. following a strong 2021, foreign equity and bond inflows into onshore markets softened this year on the back of geopolitical uncertainty, covid lockdowns, and the china - us monetary policy divergence leading to a reversal of onshore bonds β yield premium. 10. notwithstanding this, the scale of the decline in foreign purchases and holdings has moderated recently and is relatively small compared to global investors β total holdings in onshore equities and bonds. we believe that these short - term fluctuations will not reverse the long - term trend of foreign investment in mainland capital markets. 11. in fact, several key drivers will continue to strengthen interest in diversification into rmb assets over the medium term. these include ( i ) continued inclusion of onshore equities and bonds into major global indices ; ( ii ) china β s long - term economic growth prospects ; ( iii ) rmb being a stable currency that is increasingly recognised as a reserve currency ; and ( iv ) lower correlation of rmb assets with other global financial market assets. 12. these factors are paving the way for a structural shift which will motivate global investors to think more strategically about their exposure to china. this, in turn, will spur demand for rmb assets and facilitate the further opening up of the onshore capital markets. 13. in the remaining time, i would like to highlight in more detail a few upcoming developments which will be of interest to international investors seeking access to mainland capital markets. 14. first is mainland authorities β efforts to connect the interbank and exchange bond markets, which will allow participants in each market to access securities in the other market through an infrastructure connection without having to open separate accounts. this should ultimately be beneficial to the growth of both the cibm and exchange bond markets, thus creating a bigger pie. 15. foreign investors who access the interbank market through bond connect or cibm direct will be able to trade in the exchange market, which is the platform where most non - financial corporate | 0.5 |
##mediaries and correspondent banking with varying levels of operational efficiency, local requirements and cut - off times effectively lead to longer processing time and incur higher cost ; lack of transparency in the traceability and visibility of payment status, primarily due to lack of standardized payment status notification process ; and limited access of cross - border payment services, often caused by time zone differences and mismatch in operating hours of intermediaries. given these challenges, i believe that more innovative approaches are required to ensure that users can access safe and affordable cross - border payment channels. if banks are not providing these critical cross - border financial services, users may resort to less - or non - regulated channels. recently, new business models and arrangements have also emerged to address the prevailing 1 / 3 bis central bankers'speeches gaps in the cross - border payments space. these among others include the introduction of swift β s global payment initiative ( swiftgpi ), a pioneering attempt at linking payment infrastructure through the experimental usage of distributed ledger technology. these have the potential to improve efficiency, allowing faster, secure and transparent cross - border payments. at the asean level, efforts have been made to foster greater regional integration through linkages of the real - time retail payment infrastructures ( rt - rps ). the asean payments policy framework was established as a set of principles to facilitate the linkages of rt - rps. bilateral arrangements have also been established by several asean countries, including malaysia, to enhance the efficiency of cross - border payments. for instance, linking between singapore β s paynow and thailand β s promptpay to facilitate more seamless cross - border payment transactions in real - time, and similarly to extend the linkage to malaysia β s duitnow. once operationalised, this could enable cross - border payments between participating financial institutions to be virtually as seamless as domestic transactions. at the national level, bank negara malaysia ( bnm ) is directing its regulatory and supervisory resources towards safeguarding the safety and soundness of payment and remittance systems. we are stepping up efforts to reinforce public confidence and acceptance of e - payment and eremittance services, particularly among underserved segments. we are also working to futureproof the country β s payment infrastructure to meet evolving market needs, including migrating to the iso 20022. as a global messaging standard with richer data content, iso 20022 has the potential to drive greater payments efficiency, facilitate risk management and compliance with regulations as well as facilitate cross - border | sustained growth in world gdp, an increase in global trade integration, and a very sizeable increase in trade with the ten new member states of the european union. all in all, these developments are particularly noteworthy given the already high degree of openness of the euro area countries, suggesting that we are not witnessing the creation of a β fortress europe β but that the european integration is perfectly complementary with the global integration. see, among others, engel and rogers ( 2004 ) β european product market integration after the euro, β economic policy, july pp. 347 - 384, and mccallum ( 1995 ) β national borders matter : canada - us regional trade patterns β, american economic review 85 ( 3 ) : 615 - 623. for a description of the european process of integration see mongelli, f. p., e. dorrucci, and i. agur ( 2005 ) β what does european institutional integration tell us about trade integration? β, ecb occasional paper series no 40. garcia - herrero, gaspar, hoogduin, morgan and winkler ( 2001 ) introduction of volume with conference proceedings, in why price stability, first ecb central banking conference, european central bank. in june 2005, the ecb held a workshop on β what effects is emu having on the euro area and its member countries? β the workshop was organised in five areas : 1 ) trade integration ; 2 ) business cycle synchronisation, economic specialisation and risk sharing ; 3 ) financial integration ; 4 ) structural reforms in product and labour markets ; and 5 ) inflation persistence. all proceedings are now available in the ecb working paper series : see nos 594 to 599. see baldwin ( 2006 ) β the euro β s trade effects, β ecb working paper series no 554, and anderton, di mauro, and moneta. ( 2004 ) β understanding the impact of the external dimension of the euro area : trade, capital flows and other macroeconomic linkages, β ecb occasional paper no 12. a lesser - known feature is that trade in services with partners inside and outside the euro area has also increased as a percentage of gdp in recent years. intra - euro area exports and imports of services increased from about 5 % of gdp in 1998 to around 6. 5 % in 2005. proportionately, this represents a slightly higher increase than extra - euro area exports and imports of services, which increased from about 7. 5 % | 0 |
sakuya fujiwara : recent financial and economic developments in japan and the euro area keynote speech by mr sakuya fujiwara, deputy governor of the bank of japan, at the fourth paris europlace financial forum, held in paris on 27 november 2000. * * * introduction ladies and gentlemen, it is my great honor to be given this opportunity to speak again at this paris europlace financial forum. i also understand that this is a forum, where exchange of views among distinguished participants of different experiences is of special importance. therefore i reserve the right to ask for your opinions on such interesting topics as recent developments in capital markets and the impact of information technology in the euro area. now, with respect to my duty today, i have three topics in my mind. first, i will discuss japan β s economy and the challenges it faces. then, i will turn to recent developments in the euro area, a subject which is of particular interest to myself. here, i dare to introduce my observation on the economic structural reform recently underway in the euro area. and last, i will briefly touch on enhanced interrelations between the euro area and japan. 1. japan β s economy and the challenges it faces compared with a year ago, when i gave a speech at this forum last year, japan β s economy has shown notable improvement. the recent economic recovery is mainly driven by the corporate sector, where we witness the increases in production and corporate profits. against such background, business fixed investment has been increasing, especially in the it and telecommunications fields. although the pace of recovery remains sluggish in the household sector, positive developments are observed in employment and income, reflecting the recovery of business activity. in sum, japan β s economy is recovering gradually, with business fixed investment continuing to increase. at the same time, however, we cannot ignore the fact that japan has yet to solve structural problems in the economy. in this context, japanese firms and banks continue to suffer from balance sheet problems, the aftereffects of the bursting of the bubble in the 1990s. and, while the world economy, especially the united states, has registered high growth by exploiting the benefits of new technology supported by salient entrepreneurship as well as the vibrant capital market, japan has somewhat lagged behind in its ability to adjust itself to such new environment. with a nascent recovery now underway in japan, constant efforts are necessary to continue to tackle the remaining structural problems head on, which in turn should be the | i would like to give my view on interrelationships between the euro area and japan, focusing on capital flows. as i have mentioned, in the euro area, monetary union has triggered various kinds of structural change, bolstering the development of the overall economy. the impact is so large that it has affected not only the euro area itself, but also japan. an example of the effect is direct investment. direct investment from western europe to japan soared more than tenfold in a year, from about 100 billion yen in 1998 to over 1 trillion yen in 1999. investment from france was especially large, which reflects the capital collaboration that was seen in the automobile industry. direct investment from japan to the euro area is also on the rise. the increase in direct investment will promote the reallocation of management resources, technology transfer, and competition, resulting in boosting both economies. the increase in capital flows between the two economies is well evidenced in portfolio investment. in 1999, japan β s portfolio investment in the euro area exceeded that in the united states. japan β s foreign portfolio investment in france, germany, the netherlands, and luxembourg, the four euro area countries for which individual data are available, totaled almost 5. 6 trillion yen in 1999. on the other hand, japan β s portfolio investment in the united states was 1. 4 trillion yen. this is rather noteworthy, because, in international capital markets, the united states, with its huge current account deficit, absorbs a lot of funds provided by the euro area and japan. despite such a situation, capital flows between the euro area and japan are surging, and both economies are growing more interdependent in international capital markets. in the increasingly integrated global market, the euro area and japan are becoming more and more dependent. i hope today β s forum will contribute to bringing the two economies closer, and serve as an opportunity to enhance communication between the private sector of the euro area and that of japan. i know this forum will be a success. | 1 |
a sharp rise in global equity prices. chart 6 a good decade for the gpfg. average annual return on the gpfg. 1 ) percent equities fixed income 1999 - 2009 2010 - 2019 1 ) at 30 september 2019. source : norges bank the rise in equity prices has largely been driven by a fairly small number of companies. us corporate profit margins have increased markedly. the big earners have been the tech giants, which typically operate in markets where there are substantial profits to be gained as the dominant company. their profits have drawn growing attention from competition authorities and higher taxation is under discussion internationally. current valuations are based on expectations of sustained profit growth. this entails a downward potential. developments in the fund β s value over the past decade must also be seen in the context of the decline in global interest rates over time. the interest rate decline reflects the expansionary monetary stance prevailing since the financial crisis. central bank policy rates were reduced to very low levels in many countries in order to stimulate economic activity. several central banks have also engaged in substantial asset purchases, which has pushed down long - term interest rates further. norges bank economic perspectives 13 february 2020 but low interest rates also reflect other driving forces such as population ageing, high saving in emerging economies, growing inequality and a general decline in productivity growth. lower interest rates imply higher bond prices. during the period of falling interest rates, the rise in bond prices has contributed to sustaining the return on the fund β s fixed - income portfolio. but this is a one - off gain. at today β s interest rate level, the fixed - income portfolio will yield much less ahead. the interest rate decline and massive central bank asset purchases have also driven up equity prices. in the search for yield, investor demand for equities has steadily increased worldwide. at the same time, low interest rates have increased the valuation of expected income further ahead. over time, shareholders are well rewarded for taking risk, but at times it may also require patience. an investor with a broad equity portfolio in 1972 β the year before opec shook the world economy for the first time β had to wait more than ten years to recover the value lost ( chart 7 ). after the financial crisis, it took five years for the equity market to return to the 2007 level. with its long - term horizon, the fund has been able to earn solid returns since that time. chart 7 we should factor in future downturns. real return on | may be painful, even though norway has its own currency and a floating exchange rate. our welfare state may also have become too large and the adjustment required here may also prove to be very demanding. nonetheless, there are aspects of our oil wealth management that have served us well. thank you for your attention. | 0.5 |
of advanced economies. these are the β the facts β that have changed. today i β m going to discuss them in more detail, and explore our options for dealing with the challenges they present. β the facts β shifts in demographics and productivity growth have fundamentally altered the economic environment in which we operate. 1 / 3 bis central bankers'speeches starting with demographics, two changes have taken place : people are generally living longer, and population growth is slowing. dwindling birth rates are bringing population growth to a standstill. in oecd countries, population growth averaged over 1 percent back in the 1950s and 1960s, but it is now running at half a percent per year, and is expected to gradually fall before dipping into negative figures by 2070. 1 slowing birth rates mean fewer consumers and fewer workers. people planning on longer retirements will tend to save more. and while this is undoubtedly good news in many respects, an abundance in the supply of savings also has a big effect on the global economic picture. when it comes to productivity, there has also been a stark step - down in growth. rapid changes in the kinds of technology we use in our daily lives β robotic vacuum cleaners, self - driving cars, and facial recognition technology in our phones β may make this seem counterintuitive or plain wrong. 2 but the data are clear. in oecd economies, growth in labor productivity β the amount produced per worker hour β has averaged a little over 1 percent per year since 2005, about half the pace seen over the prior decade. falling r - star so what does all this mean for the future? two things : first, slower population and productivity growth translate directly into slower trend economic growth. second, an abundance of savings, and a decline in demand for savings resulting from slower trend growth, together lead to lower interest rates. all of these factors combined have contributed to dramatic declines in the longer - term neutral rate of interest, or rstar. while a central bank like the fed sets short - term interest rates, r - star is a result of longer - term economic factors. it β s the rate expected to prevail when interest rates are neither giving the economy a boost, nor slowing it down. that β s why it β s called the β neutral β rate. the evidence of a sizable decline in r - star across economies is compelling. the weighted average of estimates for five major economic areas β canada, the euro area, japan, the united kingdom, and | philipp hildebrand : the swiss national bank β s view of international financial markets against the background of trends in the united states introductory remarks by philipp hildebrand, member of the governing board of the swiss national bank, at the end - of - year media news conference, zurich, 12 december 2003. * * * the past year was a turbulent one for the international financial markets, which were essentially influenced by trends in the us. during the first half of 2003, market developments were shaped by economic and deflation fears as well as by the war in iraq. in this environment, equity markets reached an annual low in march. in june, bond market yields fell to their lowest level. the second half of the year saw an economic recovery in the us, which is now spreading to other economic regions as well. capital markets long - term yields on swiss paper rose by approximately 60 basis points from their low in june to roughly 2. 7 %, approximately tracking yields in the euro area. in both cases, yields followed the us market very closely, albeit with modest fluctuations ( see graph 1 ). under the present economic conditions, the interest rate environment in switzerland is still viewed as attractive by consumers. the high level of new fixed - rate mortgages is an indication of this sentiment. the higher swiss yields reflect the improved economic outlook and not inflation expectations, which are modest given that there is still pronounced underutilisation of capacities. in contrast to capital market yields, money market yields were decidedly stable. the three - month libor remained almost constant at 0. 25 %. the global trend in capital market yields was chiefly determined by long - term yields in the us, which themselves were shaped by the recovery of the us economy. in the early summer, deflation fears had dragged the yield on ten - year us government bonds down to 3. 1 % - a level last reached at the end of the 1950s. in july and august, however, positive economic data pushed the yield right up to 4. 6 %. convexity hedging was one of the factors contributing to the unusual scale of the turnaround. as interest rates fell in the early summer, the refinancing of existing mortgages - which is possible in the us at any time - had triggered extensive buying of government bonds. us investors holding substantial mortgage portfolios had to make these purchases in order to keep the residual maturities of their portfolios constant. when interest rates rose, therefore, the correction was similarly swift | 0 |
monthly bulletin. in this respect the ecb β s strategic framework has in my view important advantages compared to an inflation targeting strategy. the ecb strategy permanently and comprehensively captures longer run risks to price stability within its monetary analysis. in the inflation targeting framework - to the contrary - reacting to potential asset price booms will always have the flavour of introducing an exceptional escape clause in the strategy. proponents of inflation targeting have recommended to simply extend the horizon of the inflation forecast beyond the standard one to two year policy horizon. i doubt that serious inflation forecasts can be derived at this horizon given the uncertainty surrounding asset price boom periods. 28 thus i fully share the view that the longer horizon in inflation targeting is basically a substitute for a more structured assessment of risks to price stability. 29 this risk assessment is part of the ecb β s monetary analysis. in order to maintain the effectiveness and credibility of monetary policy, it is important to foster the public understanding of the implications of the ecb β s monetary policy strategy. the fact that our monetary analysis uses a comprehensive assessment of the liquidity situation that may, under certain circumstances provide early information on developing financial instability is an important element in this endeavour. conclusions let me conclude. experience with past asset price boom episodes tells us that we should be very careful in calling a boom, which is observable, a bubble. such labelling will always contain a substantial degree of arbitrary judgment. nevertheless, empirical evidence also reveals that it is possible to find characteristics of potentially dangerous asset price boom developments, which are useful from a policy maker β s point of view to identify risks to long run price stability. the methodologies to identify those threatening booms certainly need to be refined. in particular, we have to know more to which extent we can rely on empirical analyses which, out of necessity or lack of sufficient recent boom - bust cycles, have to pool information from various boom episodes, happening in different countries under very specific and furthermore time - varying financial systems. not all boom or bubble episodes are threatening financial stability. policy makers should not fall into the fallacy of attempting to eliminate all risk from the financial system. either they would be unsuccessful ( moral hazard ) or they are likely to hamper the appropriate functioning of a market economy where risk taking is of the essence. with regard to the optimal monetary policy response to asset price bubbles, i would argue that its informational requirements and its possible - and difficult to assess - side effects are in reality very onerous. empirical | also started out with reform ambitions. yes, indeed. lots of governments have good intentions. the oecd has commented positively on that recently. above all, reform means getting people on board. i sometimes take a taxi and i often talk to the taxi driver. many of them have paid huge sums for a licence, which they intend to sell later to guarantee themselves a pension. it β s only logical that the taxi drivers will fight for their jobs. if you suddenly changed the rules to try to break the taxi market open, it would really cost a lot of money. let β s assume that in the paris region alone there are more than 30, 000 taxis. the costs 3 / 5 bis central bankers'speeches for a licence can be as high as β¬200, 000. if you want to buy out those rights, you β re already talking about billions. those are amounts that are suddenly macroeconomically relevant. this is what you also see with labour market reforms. the incumbents, the insiders, are protected when there are reforms, while the newcomers who want a job have to be more flexible. belgium has been held up as a champion of reform. were you surprised? a bit. at the same time it is good to acknowledge that there have been reforms. nevertheless we know that there are still huge challenges. belgium is still some way behind germany, where there β s money left over and they don β t know what to do with it. which reforms are needed most urgently now? there are several. reforms to pensions, the labour market and justice for example are recognised as being crucial in italy. education and training are also crucial in my view. flanders has a good education system, but training for jobs on the shop floor could be better. should we be worried about automation and robotisation? productivity growth has been the source of wealth since time immemorial. but there are other ways of countering negative redistribution effects than blocking progress. that β s what we have the government β s redistribution policies for. there are also things that robots can β t do. human interaction will remain important in many service jobs. these are currently often quite badly paid jobs, such as waiting tables or caring for the elderly in retirement homes. there is a reason why these professions are known as β bottleneck jobs β. whether their wages will rise if demand increases further? i don β t know. in any case in the future it will be not just about having the right skills on | 0.5 |
mohd razif bin abd kadir : brief overview of islamic banking and finance speech by mr mohd razif bin abd kadir, deputy governor of the central bank of malaysia, at the official launch of kuala lumpur international islamic finance expo 2006, kuala lumpur, 24 november 2006. * * * it is indeed an honour to be here this morning at the launching of the kuala lumpur international islamic finance expo 2006, organized by the association of islamic banking institutions malaysia ( aibim ). it was exactly five years ago that all of us witnessed the launching of the first islamic banking and takaful week by the then deputy prime minister, dato'seri abdullah ahmad badawi. and now, after those years, alhamdulillah, we are pleased with the positive impact of the comprehensive awareness campaign in the year 2001 as it has paved the way to subsequent nationwide annual campaigns on financial awareness in islamic banking and finance. in this regard, i wish to congratulate all financial institutions involved for providing their unwavering support in this virtuous endeavour. before i proceed, allow me to take this opportunity to welcome our exhibitors, both local and foreign, who will be participating in the kuala lumpur international islamic finance expo 2006. we believe that your participation will benefit the patrons to this expo. i hope you will exploit this platform to disseminate as much information on islamic banking and finance as possible so as to provide an opportunity for the public to learn more on the products, services and benefits of islamic banking and finance. this year's islamic financial expo presents a different appeal altogether with various differentiated activities and events organised for the diversified target groups and consumers. i note that various activities have been arranged for the next five days including islamic banking and finance exposition, the annual islamic finance forum, colloquium on islamic finance, convention on takaful and islamic unit trust advisors and muzakarah for shariah advisors. this is indeed an excellent opportunity for exchanging ideas as well as providing relevant information to the public on islamic finance. it is also timely and augurs well with the recent announcement of the initiatives to position malaysia as the international islamic financial centre. the islamic financial industry in malaysia has experienced rapid transformations particularly in the past ten years. the malaysian islamic banking system registered strong performance with higher profitability and positive trends in all key indicators. profitability surpassed the rm1 billion mark for the first time in 2005, and this year the industry | to respond by matching it with an investment of its own on the same scale. the inflow of capital was enormous. as if this was not enough, public sector involvement in housing finance was reformed around the same time ; this structural reorganisation had unexpected multiplier effects when the recently privatised commercial banks eagerly followed that lead and ran ahead along the same path even faster than the policy makers had expected. at the same time, icelandic banks and financial institutions have been establishing their influence in neighbouring foreign markets and, to some degree, more distant ones. the banks have expanded rapidly and are now very large relative to iceland β s domestic economy, and in fact by any measure. their international activities have also created a new situation that has sometimes been called β the problem of explaining the icelandic economy β. although i feel that this problem is overstated because it must surely be temporary, it cannot be denied that the icelandic currency itself, and its small size, are recurrent themes. the economic factors i mentioned earlier have driven strong inflationary pressures in iceland, which have partly appeared in the form of higher measured inflation, but have to some extent been contained by central bank policy rate decisions, which in turn have affected the exchange rate of the icelandic krona, at least for some while now. and in combination, these two factors have raised yet another question that is relevant to this conference. that is to say, these special conditions have inspired new investors, the carry traders, to venture to our shores. these modern - day vikings try their fortune in distant places in the hope of quick gain and handsome returns, which they can no longer find closer to home. what will happen when these bold hunters of yields and expectations suddenly lose their nerve? or their appetite? regardless of whether this is caused by events that have occurred somewhere else and under completely different conditions from here, or due to persistent rumours, speculation and theories about the situation in iceland and risks that have little or no foundation at that time. will they load everything aboard and sail off, like the vikings in the past, with what they have managed to gather up, and look for shelter with their bounty against real or imaginary threats? if this happens, might the high - yield countries suffer a shock? and if so, will that shock be felt the most by the smallest countries, where investors naturally have the least knowledge and confidence? then the question will arise about the impact that all this will have on the effectiveness of the central bank β s policies for controlling | 0 |
##r for greater spending and consumption in the economy, encourage the migration of the informal economy to the formal space, and support businesses to grow by digitalising its operation, thus contributing towards overall economic growth. ensuring safe and resilient payment services the rapid expansion of services has invited new risks and complexities to the payment landscape. in this digital age, it is rare for us to go for more than a day without hearing of a case of fraud or cyber - attack. cognisant to this, in 2022, the bank introduced five key measures to enhance online banking security, including by requiring banks to tighten fraud detection rules and raise the bar in terms of payment authentication methods. this was complemented by the establishment of the national scam response centre, or nsrc, in october last year to coordinate an industry - wide rapid response to combat financial fraud. the bank is currently actively supporting efforts in developing a national fraud portal to digitalise and further strengthen the nsrc's operations. 3 / 6 bis - central bankers'speeches all these initiatives are coming hand - in - hand with the ongoing efforts by the bank to strengthen our prudential framework to promote sound risk management and business practices as well as to preserve the integrity and professionalism of payment service providers in malaysia. apart from driving product innovation and strong business growth, it remains critical that the payment industry uphold its responsibility to safeguard users'safety and security. frictions induced by additional security safeguards could add yet another hurdle to user experience and affect access to payment services. however, these are key steps in preventing financial losses when all other guardrails have been breached. thus, helping to preserve public trust and confidence in the payment system. from this, we learn that only by having a healthy balance of the three ingredients β efficiency, inclusivity, and security, could we support sustainable e - payment adoption in malaysia. ladies and gentlemen, in order to chart our path forward, the key question we ask is how do we harness innovation along the e - payment value chain without jeopardising the safety and soundness of our payment services? exploration : what lies ahead for innovation? to answer this, let's revisit the question which i posed at the beginning of this speech β " what does success in innovation look like? ". to me, three key indicators of successful innovation stand out. these are the three cs β customer - centric, close collaboration and continuous learning. allow me to briefly touch on these | zeti akhtar aziz : central banking β using leadership energy to build resilience speech by dr zeti akhtar aziz, governor of the central bank of malaysia ( bank negara malaysia ), at the iclif leadership energy asia summit 2015, kuala lumpur, 1 december 2015. * * * welcome to this year β s leadership energy summit asia organised by our iclif leadership and governance centre. this is our third summit in the series on leadership energy. the focus on leadership energy reflects its importance in today β s leadership. the contemporary environment we are living in has become increasingly more challenging β characterised by highly destabilising and tumultuous events. not only are we living in a world that has become highly unpredictable and unstable but a world that is being more frequently subject to extreme conditions in which we are tested to the limit. how do we survive against the odds manifested in this environment? it is all about having the ability to endure and prevail. it is also about being able to succeed and thrive in such an environment. it is about being resilient. resilience is key to surviving in this environment. today we are privileged to hear and be inspired from the experience of personalities who not only survived against such great odds but who have also achieved great success. let me take this opportunity to express our gratitude to our distinguished speakers who have come from different parts of the world to share their knowledge and experience on this subject. it is all about their perseverance and resilience and how they have defied all expectations. the issue before us is the source of their energy to persevere and their courage to stay the course when it all appears to be hopeless. in the business of central banking we are increasingly being confronted by such extreme conditions. building resilience is therefore key. i have described central banking as being an unfinished business because there are always new challenges on the horizon, endless demands emerging from an ever changing and more complex environment and great expectations that the central bank will provide the solutions to resolve the financial and economic problems that confront us. the central bank is also at the forefront in the management of any financial and economic crisis β a phenomenon that continues to plague the world with increasing frequency. the central bank can be described as a high impact organisation. its decisions or indecisions, its action or inaction will have major and far reaching repercussions and consequences on the economic well being of the public at large and | 0.5 |
kevin stiroh : climate change and risk management in bank supervision remarks by mr kevin stiroh, executive vice president of the financial institution supervision group of the federal reserve bank of new york, at the conference on β risks, opportunities, and investment in the era of climate change β, harvard business school, boston, massachusetts, 4 march 2020. * * * as prepared for delivery introduction good afternoon and thank you for the opportunity to participate in this conference on β risks, opportunities, and investments in the era of climate change, β a topic of critical importance for all of us. climate change is already affecting economic and financial outcomes, and projections point to increasingly severe and unpredictable change. 1 in recent years, we β ve seen a growing focus of central banks on the financial risks related to climate change. some may argue that this shift was slow in coming, but the change is striking nevertheless. beginning with bank of england governor mark carney β s speech in 20152, climate change has emerged as a key issue globally. within the federal reserve, governor brainard detailed how climate change impacts the fed β s core objectives around monetary policy, financial stability, financial regulation and supervision, community and consumer affairs, and payments and describes efforts to build capacity to assess these risks. 3 today, i β m going to take a more narrow perspective and talk about climate change from the perspective of risk management. i β ll discuss how the development of new risks associated with climate change is beginning to change the practice of risk management at financial institutions in terms of governance, risk identification and management, scenario analysis and transparency. i β ll also say a few words on why i believe it is appropriate, even critical, for supervisors to focus on this particular risk. before proceeding, i will emphasize that i am speaking for myself and my views do not necessarily reflect those of the federal reserve bank of new york or the federal reserve system. climate change and risk management the discussion of climate change and risk management has introduced a new lexicon for risk discussions. physical risk is the potential for losses as climate - related changes disrupt business operations, destroy capital and interrupt economic activity. transition risk is the potential for loss resulting from a shift toward a lower - carbon economy as policy, consumer sentiment and technological innovations impact the value of certain assets and liabilities. these effects will be felt across business sectors and asset classes, on strategies and operations, and through the balance sheets and income statements of financial firms. at a practical level, risk managers at financial institutions | for supervisors related to time horizon, data limitations, and inherent complexity. 7 one question that gets particular attention centers on time horizon and prioritization. more specifically, given the many risks that financial firms face β cybersecurity, geopolitical uncertainty, and the credit cycle to name a few β and the relatively long time horizon around climate change, why should supervisors focus on this particular risk? i think that is a fair question and there are good answers. first, we are already observing the impacts of climate change on financial firms. evidence continues to grow that climate change is affecting economic and financial outcomes. 8 moreover, evidence from climate science suggests that some further physical climate impacts are lockedin due to past emissions. 9 some investors consider an assessment of sustainability to be integral to their fiduciary responsibilities. 10 and, as i described earlier, supervised firms are choosing to build capacity in this areas, so supervisors need to understand and assess these changes. this is a risk management question for today with direct implications for safety and soundness. second, given the complexity of the problem, we all need time to build data, models, and intellectual capacity to address risks as they arise in the future. it took the better part of a decade to approach a steady - state in central bank stress testing capabilities for more familiar and arguably less complex risks like credit card losses or shocks to asset values from interest rate spikes. the economics of climate change are more complex with feedback effects, nonlinearities and massive uncertainty that will require substantial investments to understand. 11 third, financial markets and institutions face the potential for a β minsky moment β related to climate change β an abrupt repricing of assets in response to a catastrophic event or change in investor perceptions. 12 financial firms and supervisors need to consider the potential and impact of this type of sudden event. conclusion in closing, the impact of climate change on the structure and performance of the economy and the financial sector is happening now and will continue. conferences like this certainly help to further our awareness and understanding of this critical issue. i am confident that risk managers and central banks will continue to invest and build capacity to understand and mitigate these risks in order to make the financial sector more resilient. i look forward to hearing the insights from across the financial sector in the remainder of this conference. thank you for your attention. 3 / 4 bis central bankers'speeches 1 u. s. global change research program, β fourth national climate assessment : volume ii : impacts | 1 |
bank of japan β s october report of recent economic and financial developments1 bank of japan, communication, 16 october 2000. * * * the bank β s view2 japan β s economy is recovering gradually, with corporate profits and business fixed investment continuing to increase. with regard to exogenous demand, public investment is starting to decrease since the implementation of the supplementary budget for fiscal 1999 has peaked out. net exports ( real exports minus real imports ) continue to follow a moderate upward trend due to steady developments in overseas economies. as regards domestic private demand, business fixed investment is on an increasing trend. the recovery in private consumption continues to be weak as a whole through lack of notable improvements in employment and income conditions, although there are somewhat positive signs in some indicators. housing investment is mostly unchanged. reflecting such developments in final demand, industrial production is increasing. corporate profits and sentiment continue to improve, and the number of firms that take positive action, such as increasing the amount of fixed investment, is increasing, especially in high - growth sectors. income conditions of households still remain severe but regular and overtime payments as well as new job offers continue to increase in line with the recovery in corporate activities, and compensation of employees has stopped decreasing. as for the outlook, public investment is expected to decrease. while the expansion in overseas economies is likely to continue, the increase in exports is likely to slow down as restocking activity in asian economies has peaked out. meanwhile, imports are projected to continue increasing, particularly for those of information - related goods. therefore, real exports will level off for a while. in the corporate sector, firms still strongly feel that they have excess equipment and that they should reduce their debts to restore financial soundness. however, it is very likely that fixed investment in highgrowth sectors, including those related with information technology services, will increase as corporate profits continue to recover. moreover, an improvement in corporate profits will increase household income and this in turn is expected to boost private consumption. however, the pace of recovery in household income will be modest for the time being, since firms β perceptions of excess employment still persist, and thus significant changes have not been observed in their efforts to reduce personnel expenses. overall, the economy is likely to recover gradually led mainly by business fixed investment, while the developments in crude oil prices as well as foreign and domestic capital markets, along with their effects on the economy, need careful monitoring. in addition, the favorable financial environment created partly by the bank β s sustaining | credit risks involved. on the other hand, the improvement in economic activities has not stimulated corporate demand for external funds, since firms β cash flow is at a high level in parallel with recovery in profits. moreover, firms continue to reduce their debts as part of their balance - sheet restructuring measures. as a result, credit demand in the private sector has continued to be basically stagnant. in view of this, the underlying tone of private banks β lending remains sluggish. recently, however, the expansion in the year - to - year decline seems to be ceasing. issuance of corporate bonds and cps has been steady. money stock ( m2 + cds ) grew faster in september compared with the previous month on a year - onyear basis. recently, funding costs for firms are somewhat increasing, due to the rise in money market rates after the termination of the zero interest rate policy. in this financial environment, there seem to be no substantial changes in the lending attitude of financial institutions and easing of corporate financing conditions. | 1 |
cyprus. first of all, that is economically plausible : capital flows from highly developed countries into countries that are catching up economically. in our case, however, the inflowing capital did not finance a sound catching - up process. instead, it financed house price bubbles in some countries β such as ireland and spain. elsewhere, it funded excessive government consumption β for example, in greece. the inflowing capital did not fund sound growth : instead, it masked an existing lack of competitiveness and, in fact, made it even worse. and it was precisely these structural problems that were the breeding ground for the crisis. what was the situation at the european level? here, it was mainly shortcomings in the framework of monetary union that laid the ground for the crisis. in order to understand these shortcomings, it is important to know the particular features of monetary union. the european monetary union is special because it combines a single monetary policy with national fiscal policies. the monetary policy for the 18 countries of the euro area is decided by the governing council of the ecb in frankfurt. however, the fiscal policies of the 18 members of the euro area is a matter for the national policymakers β each country decides itself on its own government revenues and expenditures. given such an imbalance of responsibilities, the individual countries have incentives to borrow. this incentive to borrow, this β deficit bias β, was also recognised by the founders of the monetary union. in order to reduce it, they did two things. first, they created explicit rules on borrowing in the form of the stability and growth pact. this pact was intended to keep a tight check on national fiscal policies. second, they incorporated the β no bail - out β principle into the maastricht treaty : no euro - area country was to be liable for the debts of another member state. thus, individual responsibility was to be the guiding principle for fiscal policy in the monetary union. each country was itself to bear the consequences of its own fiscal policy. these rules were intended to keep borrowing by the euro - area countries within reasonable limits. but rules were not the only means of achieving this. the financial market actors, too, were to ensure that that the euro - area countries did not incur excessive debt. bis central bankers β speeches the idea behind this is simple : if a country were to become excessively indebted, it would only be able to borrow on the financial markets in future at very high rates of interest. this means | nascent area that mas is studying together with an industry grouping. this relates to data ethics such as on fair and transparent use of data by financial institutions. i am sure this will be a discussion topic in future forums. managing cyber threats 26 given the technological developments in the financial services sector, a key priority area for regulators must be the work on cybersecurity. to do this well, regulators will have to work in close partnership with financial institutions, law enforcement agencies, sector agencies such as in telecommunications and power, as well as fellow regulators given the often cross - border nature of cyber threats. to further foster the exchange of cyber intelligence in the region, mas collaborated with the financial services β information sharing & analysis centre ( fs - isac ) to establish an apac 4 / 5 bis central bankers'speeches regional intelligence and analysis centre. this centre in singapore provides 24 / 7 coverage of actionable intelligence and resources to respond to incidents. mas also implemented a 24 / 7 sectoral security operations centre ( soc ) to obtain information from intelligence sources on cyber threat targeting our financial sector. we have partnered the association of banks in singapore ( abs ) to update mas β technology risk management guidelines. also in partnership with the abs, we are in the process of establishing guidelines for β redteaming β to enhance cyber security testing. 27 i know that this theme of technology will feature prominently over these two days. such mutual sharing and learning will be an important aspect of regulatory up - levelling. integrity and conduct 28 last but not least, let me wrap up my remarks by highlighting the importance of strong integrity and proper conduct in the financial industry. no amount of regulatory reforms or supervision can assure a stable financial system if the culture and conduct of firms and individuals are flawed. around the business complexities of different firms, the core should be the same β a business culture centred on doing right and doing good. 29 mas will be stepping up our supervisory reviews on various aspects of risk governance and culture in financial institutions. recently, we conducted a culture and conduct survey among a number of the key institutions. based on the survey responses, we are carrying out dialogues to ascertain commonalities and differences in industry practices. we are sharing our supervisory experiences with other regulators to learn from one another. from these, we hope to provide the broader industry with our observations on best practices and areas for improvement. conclusion 30 i have probably spoken longer than i should. i think this only goes to show the many | 0 |
new surveillance and what new information will it offer? in this regard, the shift towards exchange - based trading of derivative products and away from β over - the - counter β markets may be a welcome move towards increased transparency, centralised data collection and better monitoring. electronic trading and data will mean greater availability of a wide range of financial market data. these data will provide information about market pricing, volumes, liquidity and investors β appetite for risk. however, just as important as information gathering is filtering, analysis, and transmission in forms suitable for economic interpretation and forecasting. much more work will need to be done on developing suitable analytical methods to achieve this. international economic surveillance what had been thought to be a financial crisis turned into an economic one in late 2008 when fast - growing economies including asian economies like singapore ( which had been the subject of a debate on international economic decoupling ), were suddenly hit with a vicious reduction in trade flows, industrial production and growth. before the crisis, models of the international transmission of economic shocks were based mainly on trade linkages. the bis central bankers β speeches crisis reminded us that financial market channels can cause contagion in ways that may not always be obvious. although the possibility of contagion through financial channels has long been recognised, macroeconomic models and analysis have typically relied more heavily on trade linkages as the key transmission channel of shocks across countries. however, during the crisis, the explosion in risk premiums and a changed pattern of capital flows transmitted the shock much more quickly to many economies. as a result, there has been greater focus on financial market conditions and linkages to understand the impact of international shocks on real economies. more recently, the rapid development of commodities as an asset class has meant policy easing by major central banks can be transmitted through higher commodity prices to the rest of the world. as easier monetary conditions make funding cheaper and reduce returns on fixed income investments like government bonds, investors may look for higher returns on riskier assets, such as commodities. this could potentially cause a ( temporary ) divergence between commodity prices and market fundamentals, and has prompted concern about rising inflationary pressures in many countries during recent months. this has provided new challenges for understanding transmission channels between economies and for forecasting inflation. 6 at the same time, however, the stronger relationship between commodity markets and investment flows could potentially allow us to use commodity prices as new indicators of financial conditions in global markets, although determining the precise nature of the for a discussion of | data in monetary policy formulation, triggered by the breakdown in the forecasting performance of structural and statistical models. likewise, more attention is paid to real economy imbalances and sectoral financial positions, by looking at household and business sector balance sheets, when assessing financial sector risks. as a result, there is a very active research agenda aiming to incorporate housing and financial sectors into the dynamic stochastic general equilibrium models used in many central banks. 4 this broader outlook and greater overlap between monetary and financial stability policy is reflected in the rbnz β s β cobweb β diagram, which is h. davies and d. green ( 2010 ) banking on the future : the fall and rise of central banking. independent evaluation office of the international monetary fund ( 2011 ) imf performance in the run - up to the financial and economic crisis : imf surveillance in 2004 β 7. see w. white ( 2010 ) β some alternative perspectives on macroeconomic theory and some policy implications β, globalisation and monetary policy institute working paper 54, federal reserve bank of dallas. bis central bankers β speeches used to indicate financial stability risks across several different dimensions. 5 in this framework, financial stability risks could be reflected in the global and domestic economies, and in financial market conditions. all of these areas are also routinely monitored for monetary policy formulation. following the crisis, concerns about the sustainability of sovereign debt have risen in many countries, most notably in the peripheral euro zone economies. consequently, central bankers have also needed to co - ordinate their policies more closely with fiscal policy decisions. as a result of these changes, policymakers now need a much wider spectrum of information to set policy, and central banks are now required to have broader concept of β economic surveillance β in mind to inform their decisions. the global financial crisis showed economic surveillance is more important than ever and how we go about that has been permanently changed. during the rest of the discussion, we will consider how different aspects of surveillance have been altered. international financial surveillance this crisis was initially about financial institutions and markets and we have learned that it is necessary for central banks and regulators to know more about financial market flows, about non - traditional financial institutions and instruments, and about the inter - connectedness of institutions, especially in the presence of instruments that can go viral. before the crisis, it a number of other institutions, including the imf, have introduced similar frameworks or indices in recent years to measure financial stability. see p. bedford and c. | 1 |
if the pfandbrief today can boast of a reputation of reliability, it is to a great part because it rests on a solid german state and a sound economy. and it has been resting there for quite some time now. originally, the german pfandbrief was introduced over 200 years ago by the prussian king frederick ii. frederick β s intention was to ease a credit crunch after the seven years β war, and with the pfandbrief he created a financial product of extremely long standing. after more than 200 years of trading experience on the german bond market, the pfandbrief has gained the trust of investors and a reputation as a secure and crisis - proof investment. in 2012, the size of the pfandbrief market was some euro525 billion, which amounts to almost 19 % of outstanding global covered bonds. the trust in the pfandbrief also stems from the fact that since 1901, no german pfandbrief bank has had to declare bankruptcy. but as frederick ii remarked : β what is the good of experience if you do not reflect on it? β more than 100 years without a single default is certainly an impressive feat. however, we have to reflect on the question of how to continue this accomplishment in the future. bis central bankers β speeches we have to acknowledge that during the crisis some pfandbrief banks encountered difficulties. hypo real estate, for instance, had to be saved with public money. and in the first half of 2009, the pfandbrief market as a whole was affected to a certain degree when the broader covered bond market experienced significant stress. the intervention of the eurosystem in the covered bond market certainly helped to ease that stress. in the wake of the financial crisis, though, many sovereigns and banks lost their top ratings. the consequence was widespread downgrades, also in the covered bond market. many pfandbriefe were affected and lost their aaa - rating. nonetheless, their spreads versus riskfree securities did not significantly change, displaying unbroken investor interest and trust. meanwhile banks have adjusted to the changing conditions. regarding mortgage pfandbriefe cover pools, for instance, overcollateralisation more than doubled. in 2007, assets in these cover pools on average had a value of 116 % of issued pfandbriefe. in the third quarter of 2013, the value of cover pools rose to 133 %. indeed, over | large enterprises that have benefited so far from the freedom of the enlarged markets when taking up funds. even so, competition is well under way. issuers are compelled to gear their issuing policy more closely to the requirements of international investors. banks and european stock exchanges and financial centres are also feeling the higher wind speed of competition in the euro area. the euro zone has accelerated the change engendered by the advance of globalisation ; in a sense, european financial markets are undergoing a dual process of radical change. many enterprises are finding that the larger and more liquid euro capital market offers more favourable financing conditions than traditional financing via a bank loan. therefore, powerful borrowers are reconsidering their method of refinancing and are more and more taking the direct route to the capital market and the financial service providers operating there. the disintermediation of the banks in the wholesale market is increasing. securitisation is intensifying competition among the banks and is having a crucial impact on the structure of the banking system. competition among financial centres has become harder as well. in securities business, the costs and the transparency of the trading platforms as well as the efficiency of the settlement systems have become increasingly important in choosing which financial centre to use. thus, competition among financial centres is increasingly also becoming a competition among systems. now that the triumphant progress of computerisation has become unstoppable, the race for the establishment of electronic trading systems has become more heated. fiercer competition, in terms of both products and costs, has necessitated concentration and cooperation. the splitting up of the trading platforms for the spot and futures markets into individual markets and the fragmentation of settlement systems with inefficient and cost - ineffective settlement procedures, especially those for cross - border securities trading, are no longer suited to the age of the single currency. 3. addressing the issue of the global perspectives of the european financial markets, in general, and the pfandbrief market, in particular, requires a brief review of the developments in the european financial markets since 1 january 1999. in the money market, the changeover to the euro and to the single monetary policy has taken place rapidly and smoothly. the development of a single european money market made such progress during the first nine months of monetary union that it can now be described as integrated and liquid. this is a crucial factor both for the ecb β s monetary policy, which is geared to the stability of the euro, and for the development of | 0 |
the duty of the organisation to equip their employees by providing a minimum training support at periodical intervals. apart from taking away the monotony of their daily work, and expanding their horizons and knowledge levels, it can also change employee attitude and behaviour, thereby contributing to the organisational performance. 18. studies have shown that training and effectiveness programs have a positive impact on employee performance. in this backdrop, there is an interesting suggestion in the committee report to introduce a system where employees have to pass a certification bis central bankers β speeches program compulsorily to progress to the next grade in the hierarchy. it is in this context that institutes like iibf, ibps, nism and cafral have a very vital role to play. 19. another interesting suggestion is for training programmes to be combined with certification which will improve training efficiency and will offer quality assurance. this will also ensure that training efforts are taken seriously by the recipients. system - wide measures 20. the next set relates to the steps needed to be taken on a system - wide basis to drive capacity building. the committee acknowledges the need to look beyond an individual institution β s perspective and consider various measures on a system - wide basis to support and drive capacity building. the success of these measures would hinge on coordination and collaboration of all relevant stakeholders. the committee has outlined the various aspects that need to be reckoned, including creation of accreditation agency, introducing banking aptitude test, developing centre of excellence for leadership development for banking sector, fostering development of data and research on skills in banking sector and improving academic - industry interface, etc. 21. a very important suggestion is for an accreditation agency to be set up as an independent quality assurance body for the banking sector which would be responsible for accrediting learning initiatives within the banking industry. as per the report, the main focus of the accrediting agency will be to accredit training institutes in the industry. when it comes to implementing this recommendation, the modalities of such accreditation needs to be worked out. i understand that this would be one of the issues which will also be discussed today. 22. in this respect some other action is also needed. of utmost importance are discussions with the stakeholders β the banks, the premier training institutions, the bankers β associations, and in the case of public sector banks, the government itself. building capacities of top management and members of boards of banks 23. public sector banks have been witnessing increasing number of younger officers at top levels | emmanuel tumusiime - mutebile : expanding financial access and financial inclusion in uganda speech by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the official opening of bank of baroda ( u ) ltd β s new branch, entebbe, 2 june 2012. * * * the global chairman and managing director of bank of baroda, the board of directors, bank of baroda ( u ) ltd, management and staff of bank of baroda ( u ) ltd, distinguished customers, invited guests in your respective capacities, ladies and gentlemen, it gives me great pleasure this morning to preside over the official opening of the entebbe branch of bank of baroda ( uganda ) ltd. i would like to begin by congratulating the bank of baroda for its foresight in extending its branch network outside of kampala, a move which bears testimony to the fact that our economic growth is geographically broad based. with the opening of this new branch in entebbe and another which will open in kabale next week, bank of baroda will expand its network to 13 branches countrywide. bank of baroda began its operations in uganda almost 60 years ago, in 1953. it has demonstrated its attachment to uganda through good times and bad, and in doing so has built up a reputation for serving the needs of customers with dedication and reliability. the opening of new bank branches, especially in the towns and cities outside kampala, makes an important contribution to the goal of expanding financial access and financial inclusion in this country. it brings banking services closer to the people, reduces transactions costs for ordinary customers and enhances competition in the banking industry. as our economy develops and per capita incomes increase, demand for financial services from both the corporate sector and the general public is growing rapidly, as is demand for new types of financial products. the expansion of bank of baroda β s branch network will strengthen the bank β s capacity to meet this growing demand for financial services. the decision of bank of baroda to open a branch in entebbe also bears testimony to the very bright prospects for business and commerce in the town. entebbe and its environs already play an important role in the tourism and horticultural industries. both of these industries are at the forefront of uganda β s efforts to modernize and diversify its economy, through the production of higher value goods and services which can compete on international markets. to be competitive on global markets | 0 |
role in this context. but before i do so, i would first like to discuss the changes in our method of communication made over the past two years and the reasons behind them. what are the reasons behind the increased openness and clarity? many consider that the riksbank is currently one of the world β s most open central banks. 2 and we have taken further steps in this direction over the past two years in particular. but what are the reasons behind this development towards greater openness? i think there are two reasons β democracy and efficiency. the first concerns our role as an independent authority. the second is linked to the fact that our communication with the financial markets and the general public is essential for monetary policy and the financial system to function efficiently. page 38 in blinder, a. s., ( 2006 ), β monetary policy today : sixteen questions and about twelve answers β. i fernandez de lis, s. and f. restoy ( ed. ), central banks in the 21st century, banco de espana. see, for instance, eijffinger, s. and p. geerats, ( 2006 ), β how transparent are central banks? β european journal of political economy, vol. 22, 1 - 21. our independence requires openness the riksdag and ultimately therefore the swedish people have given the riksbank considerable independence. but this is a β freedom with responsibility β that goes hand in hand with the requirements for insight and accountability. this is how things should be in a democracy. openness is also something that traditionally imbues the swedish public administration system in general. one of the corner - stones is the principle of public access, which means that the authorities β activities should as far as possible be carried out in an open way. and this also applies to the riksbank, of course. but openness is not only a requirement in itself but also a necessary condition for monetary policy to work. it does not work unless the riksbank and the objective of our activities are supported and legitimated by the people. and this requires that we are open and clear. it should be easy to critically examine how monetary policy is conducted and how well we live up to our principles. most people probably agree that the riksbank β s openness has contributed to a good monetary policy debate in recent years. openness and clarity contribute to monetary policy functioning better but it is not only democratic reasons that have led to the riks | policy. policy has therefore focused on the underlying or core rate of inflation as measured by und1x ; this averaged 1. 2 %, with constituent annual rates in these three years of 1. 4, 0. 9 and 1. 4 %. the report that has been submitted to the committee today contains an appendix that is intended to serve as a foundation for the committee β s evaluation of the implementation of monetary policy and its outcome in the period 1997 - 99. this is something that the committee requested earlier. let me now consider the implementation of monetary policy in the course of 1999. as an indicator of inflation, undinhx has merits as well as drawbacks, as i have pointed out on many occasions. besides excluding imported goods, the index has a tendency to eliminate prices for domestic goods and thereby disregard inflation effects from important structural factors. but it does serve to illustrate the extent to which domestic demand pressure contributes to inflation β s path. monetary policy in the past year the early months of 1999 were marked by continued effects of the asian crisis on the world economy, with weaker international demand. in order to prevent this from leading to a weaker economic trend in sweden and thereby a lower path for inflation, the riksbank reduced the repo rate twice, in february and march, bringing it down to 2. 90 %. the situation stabilised during the late spring and summer. the relatively relaxed monetary policy that had been implemented for a number of years - both in sweden and in many other parts of the world economy - played an important part in the improvement that occurred during 1999 and contributed to more positive economic forecasts. it was then important for the riksbank to take timely action so as not to have to implement a more pronounced monetary tightening and economic retardation to cope with rising inflationary pressure at a later stage. a process was therefore initiated in november that amounts to successively taking our foot off the monetary β accelerator β. as the after - effects of the asian crisis and the financial market turbulence in the autumn of 1998 subsided, a strong economic stimulus from monetary policy was no longer required. in november 1999 and february this year the repo rate was therefore increased by a total of 0. 85 percentage points. the analytical and monetary policy challenges that confronted the riksbank during 1999 were not minor. the strong growth of demand in recent years has been accompanied by paths for underlying and trend inflation that have been weaker than earlier relationships seemed to suggest. a number of reasons have been put | 0.5 |
to the bank in resolution but may also be critical for clients. if there is doubt about continued access to clearing services from a bank in resolution, clients may look to migrate rapidly to another provider. these fsb, ( october 2014 ) key attributes of effective resolution regimes http : / / www. financialstabilityboard. org / 2014 / 10 / r _ 141015 /? page _ moved = 1 http : / / www. financialstabilityboard. org / wp - content / uploads / joint - ccp - workplan - for - 2015 - for - publication. pdf for financial institutions bis central bankers β speeches issues around continuity and portability will be the subject of work within the fsb over the course of the coming year. together, these initiatives to improve the resilience and recovery arrangements for ccps and their members will help to reduce the probability of ccp default. but while improvements to resilience are necessary they may not by themselves be sufficient. no institution is β fail sfe β. ultimately, we need to have a credible resolution approach for ccps. if we do, resolution should offer a continuing benefit in helping to incentivise recovery by removing expectations that the taxpayer will be compelled to step in. by contrast, if we do not have a credible regime in resolution, we run the risk of weakening the incentives both to manage a ccp prudently, as well as incentives for clearing members to contribute to a ccp β s recovery should it get into trouble. the benefits of resolution to market discipline and recovery are common to all financial institutions. but that is not the only insight from banks that is relevant to ccps. before going too far in talking up the similarities, i should note β although it should go without saying β that ccps are very different from their bank clearing members in many important respects, including their business models, legal structures and balance sheets. ccp recovery and resolution therefore poses some specific issues, some of which i will touch on today. however, at base there are principles that are common to the resolution of any systemically important institution. perhaps the most obvious similarity between the resolution of banks and ccps is in the common objective : resolution should deliver continuity of critical economic functions without reliance on solvency support from taxpayers to achieve it. for that continuity to be achieved it is not enough that the financial losses of the institution are fully absorbed ; the going - concern resources of the institution, or of | speculate as to how, precisely, the present imbalances within and between the major industrial economies will work themselves out, as they necessarily will over time. but, notwithstanding the current difficulties, i am convinced that the best prospect for a relatively happy ending is for all of us to persist in our attempts to achieve the macroeconomic stability and supply - side flexibility which i identified as our common goal at the outset of my remarks. i am very happy now to take your questions. | 0.5 |
the following, at least, 20 years. we have been actively working on other euro area - related legislative amendments as well. for example, yesterday the governing council adopted the required amendments to the law on the payment systems concerning the euro area. this draft will be submitted to the ministry of finance today or on monday at the latest because the bnb is not entitled to direct legislative initiative. 3 / 4 bis - central bankers'speeches i do not have to dwell on this any further. what i would like to say is that on the part of the bnb, there is not a single day of delay with regard to the euro area - related legislative programme, nor is there any unsettled issue in this regard, with the ecb or with the european commission. and yesterday, during our debates with mr. dombrovskis, we cleared up this topic. the same is true for the technical preparations. the bnb and commercial banks provided in their 2023 budgets the funds required for these preparations which are well underway. for example, yesterday we discussed with mr. dombrovskis and his team as to how we can move forward with the implementation of the memorandum on the minting of test bulgarian euro coins, signed in december. a few words about the date. we do understand the considerations of the european commission and the government about changing the date. this certainly will bring new challenges for the bnb and commercial banks to deal with, as this will require changes to their timetables and the relevant calibration of the resources earmarked for this purpose. let me sum up in conclusion. the current issues relating to inflation and the legislative programme must be considered in the wider context of the needed political and fiscal consolidation. otherwise the measures in these spheres will remain sporadic and ineffective. the bnb and commercial banks have been systematically and consistently working on the issues within their competence concerning the euro adoption, but they are prepared to calibrate the tasks and the resources for their performance should the target date be changed. 4 / 4 bis - central bankers'speeches | dimitar radev : bulgaria on the road to the euro speech by mr dimitar radev, governor of the bulgarian national bank, at the conference " bulgaria on the road to the euro ", sofia, 24 february 2023. * * * dear mr. president, dear mr. prime minister, dear mr. dombrovskis, dear ministers, dear members of the public, dear guests, first of all, i would like to thank the ministry of finance and minister rositsa velkova for organising this conference. a proper assessment of the current situation related to our path to the euro area will enable us to make the right decisions. for this reason, i will touch on three issues : 1. assessment of the current situation ; 2. possible solutions ; 3. the role of the bulgarian national bank ( bnb ). at this point of time we are rightly talking about inflation, which is one of the nominal criteria for accession, the only one we are currently not fulfilling. process - wise, legislation is not an insurmountable obstacle. the genesis of the overall delay in the process, however, lies in the political framework and more specifically in the political crisis of the last two years. the ongoing problems with the legislative program and with the domestic factors for high inflation are largely a consequence of the political crisis. as a result of this crisis, the budget process in the country is seriously disrupted. for the past two years, we have not had a clearly defined law on the annual state budget or a realistic macroeconomic framework and medium - term fiscal program. there is a tendency to loosen the country's traditionally strong fiscal stance, fuelling inflation and impeding market - based measures to reduce it, as fiscal expansion, among other things, increasingly conflicts with the global and regional trend of monetary policy tightening. 1 / 4 bis - central bankers'speeches it is, of course, worth noting the efforts of the ministry of finance and the current caretaker government in controlling the negative fiscal trend and achieving a budget deficit for 2022 within the nominal convergence criterion. such a result, however, cannot be sustained without the adoption of a regular budget that is sufficiently disciplined, or in other words, guarantees the achievement of a budget deficit for this year and over the medium term firmly below 3 % of gdp. therefore, the solutions to the current problems in the process of joining the euro area can be sought along two lines : political consolidation and fiscal consolidation. by political consolidation i | 1 |
our local debt market, liberalize further the domestic foreign exchange market, digitalize our payment system, and ultimately enhance access to financial services and products. all these complement our financial inclusion agenda. the philippines has a lot of potential as a promising investment destination. our capital market is being positioned to serve as an important source of long - term funding, in support of the national government β s β build, build, build β agenda. developing the domestic capital market is critical given its role in complementing bank lending to support economic growth. last august 2017, the bsp, together with the department of finance ( dof ), securities and exchange commission ( sec ) and bureau of the treasury ( btr ), unveiled the roadmap to hasten the development of the domestic debt market. deliberately, we sequenced and calibrated the roadmap to prioritize urgent and foundational issues. the initial phase will focus on improving market benchmarks, covers initiatives to increase volume of treasury issuances, promotes market - making and price discovery, enhances the yield curve, establishes an organized repo market, and strengthens regulatory oversight. we look forward to the launch of the first trade in the organized repo market by next month. on the part of the bsp, we have started improving the regulatory framework for project financing starting last year with the issuance of circular no. 914. just this month, we issued circular no. 976, which enhances prudential reporting requirements over project finance exposures. this will sharpen bsp β s ability to assess bank exposures to project finance, and timely deploy macroprudential measures, if necessary. finally, we issued amendments to provide banks and quasibanks ( qbs ) more flexibility in issuing bonds and commercial papers. these proactive measures are important as demand for infrastructure picks up and gains traction. complementing capital market development initiatives, we are also further liberalizing and rationalizing foreign exchange ( fx ) rules in order to reduce the cost of doing business and facilitate job - generating investments. this forms part of a broader fx market reform agenda to enhance transparency, improve price discovery, and increase availability of fx products, especially hedging instruments. ultimately, a deeper fx market will increase resilience of our domestic economy against external shocks even as we allow greater exchange rate flexibility. finally, we come to a topic that is closest to my heart, our advocacy for financial inclusion. we are passionate about em | of an irc system in the philippines is the strengthening of monetary policy transmission by ensuring that money market interest rates are meaningfully influenced by the bsp β s policy rate. importantly, the irc system also supports the development of the philippine capital market by promoting money market transactions and active liquidity management among philippine banks. the ensuing higher level of activity in the money market in turn helps promote price discovery. for the first nine months of 2017, the inflation rate averaged 3. 1 percent. we remain on track to stay within the target range of 3. 0 percent Β± 1. 0 percentage point for 2017. this sustained low and stable inflation lends support to robust household spending, preserves the public β s purchasing power and supports the demand for goods and services. based on our latest forecasts, inflation is likely to settle near the midpoint of the government β s target range of 2 to 4 percent in 2017 to 2019. 1 / 4 bis central bankers'speeches carefully - calibrated and well - communicated monetary policy has effectively anchored market expectations. it has enabled us to maintain price stability while providing support to economic expansion. we shall continue to improve the irc system towards a more market - friendly implementation of monetary policy. the financial sector also demonstrates stability and sustained growth. domestic liquidity conditions remains ample to finance the requirements of a growing economy. bank lending is upbeat and loans continue to flow into the country β s productive sectors such as wholesale and retail trade, motor repair ; manufacturing ; electricity, gas and water utilities ; financial services ; and real estate. the level of non - performing loans ( npls ) has been relatively flat since 2008 despite the continued uptrend of total loan portfolios ( tlp ). the philippine banking system β s non - performing loan ratio ( npl ) stayed low at 2. 0 percent of total loans as of end - august 2017. this is fully covered as npl coverage ratios registered at 114. 1 percent. philippine banks have developed a good ability to absorb losses. data as of end - june 2017 shows that the capital adequacy ratio ( car ) of universal and commercial banks is stable at 15. 3 percent on a solo basis and 16. 0 percent on a consolidated basis. this is well above the minimum car requirements. this robust ability of the banking system to provide credit support to the economy is the result of a long and systematic reform process, boldly implemented since the asian financial crisis. these reforms include asset cleanup, industry consolidation | 1 |
manuel sanchez : systemic risk β policy challenges remarks by mr manuel sanchez, deputy governor of the bank of mexico, at the mfi international harper lecture, milton friedman institute, mexico city, 11 may 2011. * * * it is a pleasure and an honor to participate in this panel of the mfi international harper lecture. for me, this conference is particularly relevant as the key note speaker is distinguished economist, lars peter hansen, my former professor, a member of my thesis committee and a good friend. as in the days when i took courses from lars at the university of chicago, today i have learned a lot from his interesting presentation on systemic risk. i would like to comment on some policy challenges related to systemic risk, hoping that they may complement lars β deep empirical insights on this issue. in my remarks, i will emphasize three points : first, that the available definitions of systemic risk are dependent on judgment in an environment of uncertainty ; second, that we need a deeper understanding of the causes of systemic risk, particularly regarding the distinction between root factors and symptoms ; and third, that policy measures should be clearly designed to mitigate the causes of systemic risk. i would like to mention that these comments are entirely my own and do not necessarily reflect those of the bank of mexico. the notion of systemic risk let me begin by recognizing that there is no widely accepted definition of systemic risk. however, any overview of research and policy reports in this area uncovers a frequently held notion of systemic risk as the possibility of a disruption affecting the normal functioning of the financial system. there are at least three noteworthy elements of this common concept. one is the reference to the financial system. this definition implies a potentially large scope, as the referred system can comprise all financial intermediaries, regulated and unregulated ; the markets of all financial assets ; the infrastructure that the financial system uses to perform its tasks, including payments and settlements ; and, the regulatory framework. the second element is the allusion to normal functioning. the activities of any well operating financial system are many, but they can be summarized as intermediating payments, converting savings into lending usually through maturity transformation, and managing risk. however, to my knowledge, there are no clear indicators of what normal functioning is meant to be, which makes this qualification subjective, as it calls for the judgment of the observer or the policy maker. for instance, do stock - market crashes or sudden and substantial currency depreciations constitute interruptions to normal functioning? | the renminbi destined to become a global or regional currency? β, asian economic papers 16 : 1. see subramanian, a. and m. kessler ( 2013 ) : β the renminbi bloc is here : asia down, rest of the world to go? β, peterson institute for international economics working paper no. 12 - 19, august. dominant reference in other emerging market economies outside asia with strong trade ties with china. on the other hand, it is undeniable that the renminbi β s role as a major reserve currency at the global level is still relatively modest. this is clearly illustrated by the fact that china β s global economic significance, as measured for instance by its 18 and 11 percent shares in total ( ppp - adjusted ) output and merchandise trade, respectively, is still far from being matched by the renminbi β s 1 percent participation in global international reserves. to some extent, this may be explained by the significant network - increasing returns ( that is, the increased likelihood of a currency being used as either a means of payment, unit of account or store of value deriving from its use for such purposes by other parties ) backing the persistence of the us dollar as the main global currency and reserve asset. however, it must be kept in mind that given china β s trade and financial linkages worldwide, network effects could in fact rapidly move in favor of underpinning a much wider use of the renminbi globally. therefore, the main challenge the chinese authorities face in allowing the renminbi to achieve a more relevant global currency status, seems to be related to the implementation of additional efforts in a number of areas. in my view, action is particularly important in connection with the following : 1. the further liberalization of the capital account. i fully agree that the best approach here is one emphasizing gradualism and prudence, as a movement in this direction must be accompanied by reforms in a number of other, key areas, to avoid adverse implications for macroeconomic and financial stability. given china β s economic size, this is important not only from a national but from a worldwide perspective. my impression here is that the room of maneuver for the chinese authorities is not very wide. while a more ambitious pace for the internationalization of the renminbi requires a speedier and more comprehensive liberalization of the capital account, to be successful the latter in turn needs a stronger financial system, as well as further efforts to upgrade governance of the | 0.5 |
- bills / cmbs of the average month - end stocks need to reviewed as the market has grown significantly during recent years and the prescribed turnover ratios are far too low at present. ( c ) market development ( i ) widen investor base : it is the responsibility of the primary dealers to provide liquidity in government bonds as well as interest rate products. in order to do so, pds need to make efforts to widen the investor base, distribute securities more efficiently and bring in retail and mid - segment investors. reserve bank has imposed targets for retail and mid - segment business, but pds must cultivate the clients as a business opportunity rather than regulatory compulsion. even now certain entities are depending on brokers to buy g - sec at high costs. pds need to expand their reach and pds reluctance to do so in this technology driven era raises fundamental questions relating to their commitment. ( ii ) develop interest rate derivative markets : another aspect of market development is to deal in interest rate derivatives and provide liquidity. as entities dealing in interest rate risk, it is surprising that pds are not active in using the derivatives for hedging and trading. irs market is still dominated by select foreign banks. reserve bank permitted cash settled interest rate futures ( irf ) on 10 - year government of india security with settlement price based on a single benchmark bond after extensive consultations with stakeholders. the irf has received reasonably good response from the market with average trading volume at around rs. 3000 crore. however participation is not widespread as many market participants including pds are yet to start using the product. pds, as expert investors are expected to actively use the available products to hedge. this would perhaps call for pds warehousing more securities for market making. the interest rate risk that this may entail needs to be mitigated through greater participation in the irf market. why this is not happening needs serious soul searching. ( iii ) market intelligence : debt management operations of the sovereign, especially large scale borrowings can be accomplished only with active engagement with all stakeholders. bis central bankers β speeches we have been meeting the market participants regularly and exchanging views on several issues such as auction calendar, demand, maturity of instruments, introduction of new products etc. pds have been great sources of information and provided valuable inputs while preparing the auction calendar and introducing products like inflation indexed bonds, interest rate futures etc. we would like to keep the channel of communication free and open. ( iv ) prevention of | on β and β off - balance β sheet items, complex risk models threw up measures of risk that seemed to be quite capable of being absorbed. there was obviously a clear limitation to these models especially in times of stress. the inadequacies stemmed from two perspectives : a. use of past data without adequately factoring in the data from acute periods of stress and b. the presumption that the highly sophisticated mathematical models could be as successful as they are in physical sciences. the latter presumption is clearly wrong inasmuch as financial events are heavily influenced by largely unpredictable or irrational human behaviour which models cannot capture. nevertheless, these are useful when considered as one of the inputs supplemented by stress / scenario analysis and informed judgement. the other aspect which causes serious concern is that the comprehension of these models remains confined to a small group of quants and it becomes very difficult for the top management and boards to comprehend the actual risk undertaken by the organisation. these lessons will have to be kept in view now that some of the banks will move towards advanced approaches. β’ pricing of risk is important. there is a temptation to under - price risk whenever there is excess liquidity and pressure to generate profits. pricing below cost can be risky and the risk cost is very often not captured adequately. moreover, this gives rise to asset price bubbles with attendant implications. β’ while credit, market and operational risk are captured in the capital framework under pillar i of basel ii, liquidity risk, concentration risks, strategic risk, reputation risk and risks arising out of securitisation, off balance sheet vehicles, valuation practices need to be recognised. banks β boards need to focus on all these risks and set firm wide limits on the principal risks relevant to the banks β activities. banks should focus on robust stress testing. compensation packages should also form part of risk management policies. β’ this crisis has also highlighted the importance of internal controls, good corporate governance and risk management. as shown in the senior supervisors group report on risk management, some banks with strong risk management systems weathered the current crisis much better than many banks that had poor or inadequate risk management systems. β’ for banks that are part of financial conglomerates, the process of risk management must focus on intra group exposures and transactions as also group wide exposures to sectors and borrowers. β’ the new element recognised in this crisis is that even while sound risk management policies are observed at the firm level there could be systemic risks over which individual banks have no control and this calls | 0.5 |
mark carney : the uk at the heart of a renewed globalisation speech by mr mark carney, governor of the bank of england and chairman of the financial stability board, at an event to celebrate the 125th anniversary of the financial times, london, 24 october 2013. * 1. * * introduction when the financial times opened for business in 1888 london was the world β s preeminent financial centre. it had the most international banks, the largest capital markets, and the deepest money and gold markets. it backed projects all over the world, and most of world trade was financed by bills drawn on london. supporting the critical mass of banks, insurers and investors was an army of solicitors, accountants and clerks. 1 what london had lacked, at least until the ft β s great rival financial news was founded in 1884, was a ready provider of financial news. the ft famously set out to report β without fear and without favour β, and declared itself to be the friend of the honest financier, the respectable broker and the legitimate speculator ; and the enemy of the closed stock exchange, the unprincipled promoter and the gambling operator. perhaps as a consequence, its initial circulation was modest. the preoccupations of 1888 were not very different than today. editions of the ft 125 years ago contained stories on economic development in china, the health of spanish government finances, and the state of irish banks. what is clear in those early editions is the decidedly international flavour of a london investor β s interests β from tramways in buenos aires to copper mines in portugal. since then, london has been a truly international financial centre. in 1913, at the twilight of the last great wave of globalisation, 71 foreign banks had london offices. a century later, there are nearly four times as many. today, almost twice as much international banking activity is booked here as anywhere else. london is the home of global markets as well as global banks. almost half of all turnover in over - the - counter ( otc ) derivatives takes place here. london β s share of global foreign exchange turnover is almost as high and it remains a major hub for trading in gold. uk insurance companies have around 10 % of the global market. 2 extending the net further, the uk is home to the third largest β shadow banking system β with assets of $ 9 trillion. 3 the emergence of london as a financial centre in the nineteenth century owed a lot to the uk β s position | and academic economists to observe the decision - making process and provide comments on potential areas of improvement. 7 a recent study by the bis indicated that the bank has self - commissioned more reviews than any other central bank. 8 one further avenue of review is to assess our own forecasting performance. 9 reviews of forecast performance help to update our understanding of economic relationships, evaluate risks to the current outlook and identify areas where we could improve our accuracy. the bank will always make forecast errors, reflecting the uncertainties in assessing the current state of the economy and its outlook. for example, the vast majority of forecasters were unlikely to have been able to accurately predict the sharp decline in oil and export commodity prices that occurred over 2014 and 2015 β one factor that has led to current low see : rbnz ( 2001 ). β the monetary policy decision - making process β, independent review of the operation of monetary policy supporting paper ; rbnz ( 2007 ) above. these visitors will often present a paper containing views on the decision making process and recommendations to improve the process. bis ( 2016 ), β self - initiated reviews of the central bank β s policy performance β, background note for the february 2016 meeting of the central bank governance group. past forecast performance reviews include : mccaw s and ranchhod s ( 2002 ), β the reserve bank β s forecasting performance β, reserve bank of new zealand bulletin, vol. 65, no. 4 ; turner j ( 2006 ), β an assessment of recent reserve bank forecasts β, reserve bank of new zealand bulletin, vol. 69, no. 3 ; labbe f and pepper h ( 2009 ), β assessing recent external forecasts β, reserve bank of new zealand bulletin, vol. 72, no. 4. bis central bankers β speeches inflation. to further illustrate the point, figure 2 shows the bank β s central outlook for annual gdp growth and the error bands around this estimate implied by our past forecast errors. figure 2 june statement annual gdp growth forecast and error bands note : the error bands displayed above reflect the direction and magnitude of the bank β s past annual gdp growth forecast errors at different forecast horizons, calculated over the period 2010q1 - 2016q1. to set the range of the error bands, the bank β s forecast ( in blue ) is adjusted for bias using the bank β s mean forecast error at each relevant horizon. the error bands are then set symmetrically relative to this bias adjusted forecast, using the standard deviation of the | 0 |
. 7 / 7 bis central bankers'speeches | the global economy is moving eastwards, to where it was 200 years ago, from which it was temporarily displaced by the industrial revolution and that β s a factor, one of many factors that we in israel have to take account of, as we think about how the rest of the world affects us. there was a european theory that you should get 1 β 2 countries out of the eurozone, so that the other countries would realize it could happen to them, but they β ve given that up for a very good reason β if you start a process like that it could really get out of hand. but they made that decision that they wanted to save the euro. mario draghi made the decision ; he said that the european central bank would do what it had to do to save the euro. well what it has to do is clear β provide some way of providing support directly to governments. find some way of keeping the finances of governments more or less whole. we should understand that greece in the end defaulted on its debt in a negotiated way. not every government has to be forgiven its debt, but it has to be guaranteed support in negotiations over its problems. in any case, europe is in a recession ; over the next year we β ll probably see slightly better growth than we were expecting to have in the second half of 2013. on the capital markets side, interest rates have been low for a very long time. that situation will continue until we begin to see signs of growth or signs of inflation. in 1994 the fed changed its monetary policy from being very expansionary, and it raised rates unexpectedly and caused a temporary slowdown in global growth, because people were simply caught bis central bankers β speeches unawares. that should not happen now. the fed has been telling everybody that it β s got to be ready for a change like this. by the beginning of 2015 interest rates should possibly begin to rise. i won β t go into the argument on currency wars, or if there aren β t currency wars. it is a simple fact, whatever the motivation, that interest rates are zero, it β s a simple fact that it β s harder for us to deal with an environment in which global interest rates, in countries which account for more than half of global gdp, are essentially zero, but that β s not a fact that we β re going to change by complaining. so what do we do in the israeli economy? at the ceremony when i got this job, in the house of the | 0 |
regulation in which it is complemented by the newly developed mechanisms for surveillance including across borders, strengthened supervisory oversight and institutional arrangements for resolution. central banks and financial markets a more recently much discussed mandate is the role of the central bank in ensuring the orderly functioning of financial markets. orderly functioning financial markets are vital not only for the efficient allocation of financial resources in the economy but it is also essential for the transmission of the monetary policy and for preserving financial stability. while competitive forces are expected to result in efficient and optimal outcomes, central banks in emerging economies have had the important role of balancing between the market forces and intervention with the objective of ensuring the orderly functioning of the financial markets. it needs to be recognised that several important preconditions need to be in place to generate equilibrium prices that reflect the underlying fundamentals. this includes the institutional and market infrastructure, the incentive structure, the rules of the game and the level of financial literacy that recognise and understand the market signals. when these elements are still yet to be fully developed in many emerging economies, it increases the risk to instability. thus, as a result of the stage of development of such markets, or its size or prevailing market imperfections, emerging economies have tended to be more vulnerable to greater volatility and circumstances in which markets do not self - equilibrate. the recent global financial crisis has shown that such dislocations have occurred even in developed financial systems. institutional structures and rules that become deficient and less relevant heighten the risk for such unstable market conditions. experience has also shown that such market dislocations have severe and far reaching adverse implications on the overall economy. for the effectiveness of such interventions, however, there needs to be clarity in the objectives to be achieved by such central bank presence and the results that are expected to be delivered. of importance, there needs to be the recognition of the temporary nature of such interventions and the challenge of efficiently unwinding such presence when the objectives are achieved. there is also the need to manage the risks of unintended consequences of such direct central bank interventions. such risks could include the potential for circumvention, or the gravitation to other markets not protected by such intervention. there could also be potential costs associated with such interventions, not only the current costs, but also the cost to future generations. while the pace of deregulation and liberalisation may differ across emerging economies, there is a discernable distinct shift to greater market orientation in this | differ in their regional impact. these risks are also expected to increase in the coming decades, with some likely to be concentrated in particular geographical areas. floods are the most significant hazard in central and northern europe, for example, while heatwaves, droughts and wildfires represent the greatest risks in southern europe. taken together, around 30 % of the credit exposures of euro area banks are to businesses with high or increasing exposure to at least one source of physical risk. ultimately, the impact of climate change on financial stability depends on the degree of concentration of exposures, and what mitigation measures are in place. both fronts give cause for concern. over 70 % of identified physical risk exposures in the euro area are held by just 25 banks. there is also a notable concentration by country ( chart 2, left panel ), suggesting that physical risk could become a prominent source of asymmetric shocks. moreover, the physical collateral backing loans may itself be damaged by the event, exacerbating the risk to banks. chart 2 exposure concentration and insurance as a mitigating factor sources : anacredit, 427 data, emdat, oecd and ecb calculations. notes : left panel : credit exposures to non - financial corporations ( nfcs ) above β¬25, 000 are considered ; β¬4. 2 trillion of exposures overall ; nfc location used to assign risk levels refers to the corporations β headquarters ; country breakdown refers to the bank β s country of residence. right panel : sample includes 45 countries for which the oecd provides quarterly gdp data from 1996 to 2019. the chart shows the impact of large - scale natural disasters ( i. e. with total damage larger than the third quartile at 0. 1 % of gdp ) when the share of insured losses is high ( above the median of 35 % ) on the left, and low ( i. e. below the median of 35 % ) on the right. the estimates are obtained using a panel regression model where the dependent variable is the year - on - year difference in the log of gdp and the explanatory variables include two dummies capturing large - scale disasters with a high and low share of insured losses respectively ( included with up to three lags ), and country and quarterly fixed effects. for the quarter including the date ( s ) of the disaster ( t = 0 ) and the three subsequent quarters, the y - axis measures the percentage point impact of | 0 |
gent sejko : bank of albania β s engagement in financial education address by mr gent sejko, governor of the bank of albania, at the opening ceremony of the money week 12 - 18 march 2018, tirana, 12 march 2018. * * * dear mr pedrazzi, dear students, teachers and friends of the global week, like in previous years, i have the pleasure to welcome you today to our central building, and thank you for your participation in the money week 2018. this is a special year as it marks a decade of bank of albania β s engagement in financial education, which meaningfully started with a memorandum of cooperation signed with the ministry of education. over these years, financial education and financial inclusion have increasingly held a significant place in our work, in designing and implementing numerous educational projects. they are dedicated to different age groups, and consist of a variety of initiatives ranging from training and brochures to the high school elective module β personal finance in your hands β, the educational package for the elementary schools and the albanian money app. moreover, the museum of the bank of albania, our utmost effort in this regard, offers / provides a multifunctional space, where visitors may not only learn more about the monetary history in albania and the central bank, but also deepen their financial literacy and expand their financial awareness. as a result of all these valuable experiences, we have been able to participate with dignity in the money week, which, in 2018, is celebrated in more than 135 countries. the week of 12 β 18 march 2018 is internationally known as the money week. initiated by child and youth finance international, with the support of the organisation for economic co - operation and development ( oecd ), and adopted by more than 23. 000 organisations across the globe, the money week is an annual financial awareness campaign built to inspire children and young people to learn about money matters, livelihoods and entrepreneurship. the celebration of this week aims at raising the awareness of the younger generation to be responsible future citizens and capable of making well - informed financial decisions following the tradition from the previous years, the bank of albania, in cooperation with the albanian association of banks, with the support of the ministry of education, sports, and youth, like many other institutions worldwide, will organize various activities to involve children and young people, teaching them how to manage money, to save money, to think financially, to understand the changes in the economic systems where they live, to | ardian fullani : responsible finance in albania speech by mr ardian fullani, governor of the bank of albania, at the international conference β responsible finance in albania β, jointly organized by the bank of albania, the kreditanstalt fur wiederaufbau ( kfw ) entwicklungsbank and the european fund for southeast europe ( efse ), tirana, 23 march 2010. * * * it is with great pleasure that i open the proceedings of this important forum entitled β responsible finance β. this concept is being ever - increasingly mentioned in the discussion topics and macro finance debates, in particular following the 2008 events. participation in this forum pushed me to find an accurate definition for this concept. β responsible finance β can be summarized as practices that are designed to create a fair balance of interests between a finance institution and other stakeholders. in fact, my search made me realize that this concept may perhaps best describe in a single designation the wide - ranging efforts of the bank of albania in the last 3 β 4 years with respect to banking and financial supervision, monetary policy and public education. responsible finance is an encompassing topic that affects and should be applied by all financial market players. it implies a phenomenon that goes beyond prudential supervision since it is a necessity to guarantee both the financial and macroeconomic soundness of an economy. this philosophy cannot be reduced merely to the best business principles and practices but it also summarizes the desire and goal to assist the poor groups of the population and remove poverty by providing more affordable borrowing and prudence that guarantees their economic success. responsible finance focuses on guaranteeing the system β s customers β rights, however the requirements and practices of responsible finance are first and foremost a guarantee for the soundness of financial institutions and therefore of the entire financial system. responsible finance at the bank of albania has focused on three main directions : banking supervision transparency and accountability education first, responsible finance cannot be understood as a phenomenon and responsibility to be left to the market players β own initiative. it should be grasped not merely as a right but also as an obligation of all market players. if you agree to this principle, then you should be an advocate and promoter β indeed, this is the position of the bank of albania as far as this is concerned. from a central bank β s point of view, responsible finance begins with sound supervision of the banking and financial system. it constitutes an obligation for the central bank to provide the savers with the right of having | 0.5 |
and the requirements of competition on an increasingly demanding international market. at first glance, there are few connections between the changeover to the euro and labour market flexibility. in fact, the connection is strong, even essential, i would say. before proceeding to a more in - depth analysis of the topic, allow me to clarify an issue that was subject to previous public debate. the national bank of romania has nothing against wage hikes. quite the opposite, we might say. the romanian economy could only benefit from an increasingly fast rise in wages, in order to enjoy a higher living standard, surmount the historical disparities that separate us from the western economies and put a stop to labour force migration. nonetheless, we must analyse with a clear mind and assert bluntly that a mismatch between pay rises and labour productivity gains is unsustainable. wage hikes in excess of labour productivity are not likely to bring about a higher living standard, but on the contrary, they may lead to a lower living standard, given that, sooner or later, the disparity between the two fundamental indicators will entail a fast - paced rise in prices, the weakening of domestic currency, external indebtedness. all this has a negative influence on investment and delays the achievement of real convergence of the economy rather than speed it up. over the past few years, annual productivity gains came in at impressive 10 % and beyond each year. multiple factors stood behind this performance, such as the initial low level, the significant decline β even if not always illustrated by statistical indicators β in the population working in agriculture and, highly important, the strong increase in investment. however, this increase was exceeded by far by the wage hikes, which explains the sizeable widening of the external deficit, as well as the increasing inflationary pressures over the past year and a half. so, we embark upon this path, carrying a serious burden on our shoulders. i wonder what will happen the moment the increase in labour productivity slows down. such a trend is closely connected to economic rigidities, the infrastructure - related issues, the slowdown in economic restructuring. in view of all these issues, the nbr does not embrace the idea of slowing down wage increases, but rather it advocates the creation of conditions likely to render this hike sustainable and maintain its actual nature. after all, from a nominal point of view, there is no limit to increasing wages. however, the market will admit only pay rises matched by labour | mugur isarescu : romania - post - crisis performance and current challenges speech by mr mugur isarescu, governor of the national bank of romania, at the amcham ceo forum, bucharest, 31 may 2019. * * * accompanying slides of the speech. ladies and gentlemen, i am honoured to address, this morning, such a distinguished audience. i have gladly accepted your kind invitation, for amcham romania has become, during the last 25 years, an important voice of the business community, speaking on behalf of many us - based, international and local companies that are doing business in romania, and promoting its members β best practices. 1. growth, convergence and sustainability i am aware that, when talking to business community representatives, more than to other categories of public, the topic of economic growth, with all its determinants, trends, uncertainties and tensions, is of great interest. indeed, romania β s post - crisis performance has been impressive : average annual growth rate of 4. 6 percent in the last five years. romania β s economy is constantly growing, yet some tensions surround the macroeconomic equilibria. the advance seen in recent years was primarily driven by consumption that benefited from a loose fiscal and income policy, coupled with a tight labour market profile, which additionally spurred wage growth. the pass - through of consumption to output was nevertheless limited by the weak competitiveness position of some local industries on the domestic market, so that high consumption rates were accompanied by strong imports. thus, in spite of high export growth rates, net external demand has not made a positive contribution to the gdp advance since 2013. instead, this caused a significant current account deficit widening. therefore, in order to preserve the gdp growth trend, economic policies should focus on its sustainability. in the quest for supporting potential growth and increasing the resilience of the economy, there is no substitute for a coherent mix of macroeconomic policies and structural reforms. a durable economic growth is extremely important also from the perspective of euro adoption, as it would lead to progress in convergence, which will put us on the right track for achieving the goal of joining the eurozone. in order to stay on course, economic growth and convergence must advance in line with economic fundamentals. otherwise, the gains, as spectacular as they might be, could be jeopardised by abrupt setbacks. at the end of the day, forcing convergence or postponing convergence is equally harmful. i had the honour to be one | 0.5 |
fiscal stimulus policies, aimed at increasing the support to the real economy and the financial system. monetary policy followed an easing trend, cutting the interest rates and satisfying the interbank market needs for liquidity. back to albania β s case, i would like to emphasize that our experience in absorbing the impacts of the crisis proved successful. albania, i think, is one of the countries that : did not experience any bank failure or capital injection by the state ; courageously withstood the crisis of confidence in the banking system, where financial intermediation was never interrupted ; the economy continued to grow in positive terms, albeit at a slower pace ; inflationary expectations remained anchored throughout all time. during this period, the albanian banking sector continued to increase its lending to the economy, albeit at lower paces. difficulties added to the real sector of the economy and the exchange rate depreciation by about 12 % in 2009 were followed by decreased credit quality and increased bank provisions to face the credit risk. distinguished participants, the pre - crisis phenomena and those that occurred in 2008 β 2010, offer a valuable experience to economic actors and public authorities of each country in our region. not to mention all, i would like to dwell only on some of them, which i consider important for enhancing the sustainability of our economy and of the financial system in the future. first, the region needs a better balance in the factors supporting the sustainable economic growth. i think that the public authorities should assign priority to increase in investments and implementation of stimulus policies for developing the competitive sectors. in this way, the country β s export capacity would grow by creating better conditions for a sustainable improvement of the external balance of our economy. bis central bankers β speeches second, closely related to the first issue, i would highlight the need for undertaking and deepening the structural reforms. this strategic objective remains a constant priority for each of our economy. their focus should be comprehensive, meaning further adaptation of legislation, improvement of infrastructure, full privatization of public assets, improvement of the business climate, deepening and broadening of the financial market, comprehensive reform in pensions, as well as a number of other actions which i can not mention here because of objective reasons. i think that the inflow of foreign direct investments remains our major target. without them the region would remain small, fragmented, with a low development, social and economic potential, with sporadic exports, with premature markets and high costs, or in other words, with a low productivity. personally, i am of | in the brics community play an important role in the g20, in shaping global economic policy and promoting financial stability. 4. the future role of brics following an impressive performance in the aftermath of the global financial crisis, brics countries have recently started to slow. in this respect, there seems to be an awful lot of doom and gloom bandied about the brics in some quarters. some have referred to the brics bubble bursting, others have noted that brics β instead of propelling the global economy into calmer waters, now risk capsizing it β and others question β why the mighty brics nations have broken? β this slowdown has been reflected in a number of areas. exports from brics to developed markets and investments into their respective economies have declined, while the collective contribution to global growth has fallen from a peak of nearly 50 per cent in 2013 to around 36 per cent in 2015 6. real gdp growth of brics, which was over 8 per cent in 2010 declined to just over 4 per cent in 2015. in addition, the local currencies of brics, with the exception of china, has experienced varied levels of volatility following the onset of the global economic crisis. as christine lagarde noted in a recent speech 7 there have been three particular challenges confronting the global economy and also the brics countries. first is china β s growth transition and the rebalancing of its economy from industry to services, from exports to domestic markets, and from investment to consumption. in the short run, this will lead to slower growth with spill over effects through trade and lower demand for commodities. global trade, which fell to 20 per cent below its pre - crisis trend, was driven by sluggish growth in advanced economies, and the maturation of global value chains which has further reduced the elasticity of trade flows to economic activity and exchange rate changes. furthermore, higher capital requirements and tightened financial regulations have reduced banks β willingness to extend trade finance, and the pace of trade liberalization slowed. secondly, declining commodity prices has placed many commodity - exporting emerging economies under severe stress with very large currency depreciations in some cases and has set back growth in commodity - exporting brics. third, asynchronous monetary policies has contributed to an appreciation of the u. s. dollar, putting considerable strain on emerging market currencies. meanwhile, net capital flows to brics have undergone significant bouts of volatility, which | 0 |
speeches published date : 20 september 2022 " critical economic uncertainties " - keynote speech by mr ravi menon, managing director, monetary authority of singapore, at the superreturn asia conference on 20 september 2022 ladies and gentlemen, good morning. i am happy to join you at the superreturn asia conference β the first time the conference is being held fully in person since the start of covid - 19, and the first time here in singapore. uncertainty has become the dominant theme in investment today. let me touch on four key uncertainties around the global economy : first, how severe will the economic downturn be next year? second, where is inflation headed in the medium term? third, how will geopolitical tensions impact the global economy? fourth, how might climate risks affect investor portfolios? how severe will the economic downturn be next year? the global economy is facing a severe bout of inflation with two positive stimuli to demand coming up against two negative supply shocks. on the demand side, the lagged effects of the massive fiscal and monetary stimulus in response to the pandemic coupled with the unleashing of pent - up demand following the re - opening of economies have substantially added to general inflationary pressures. supply disruptions stemming from the lingering effects of the pandemic and the russia - ukraine war have sharply driven up global food, energy, and commodity prices. the surge in inflation has necessitated monetary policy tightening by central banks, at a pace not seen in the last four decades. it is inevitable that economic growth needs to slow down to bring aggregate demand and supply back into balance. the risk of the major advanced economies entering a recession in 2023 is high. the latest consensus forecasts has us and eurozone gdp growth for 2023 coming in at 0. 5 % or less. two recent polls by bloomberg place the probability of recession in the us and the eurozone in the next 12 months at 50 % and 80 % respectively. the asia - pacific economies are at lower risk of a recession but they will see a spill - over from the broader global slowdown. exports from the region are already declining. the key question is : how deep and prolonged will the downturn be? that will depend on how high and persistent inflation is. for if inflation turns out to be stubborn, central banks will have to tighten monetary policy more and for longer than currently anticipated by markets. the good scenario is a short and shallow downturn, maybe even a technical recession β | ##ntial standards for large banking organizations and nonbank financial firms designated by the fsoc. these standards will include enhanced risk - based capital and leverage requirements, liquidity requirements, and single - counterparty credit limits. the standards will also require the fsoc β s internal structure consists of a deputies committee β composed of personnel from all of the voting and nonvoting members β and six other standing committees, each with its own specific duties. the deputies committee, under the direction of the fsoc members, coordinates the work of the six committees and aims to ensure that the fsoc fulfills its mission in an effective and timely manner. bis central bankers β speeches systemically important financial firms to adopt so - called living wills that will spell out how they can be resolved in an orderly manner during times of financial distress. the act also directs the federal reserve to conduct annual stress tests of large banking firms and designated nonbank financial firms and to publish a summary of the results. to meet the january 2012 implementation deadline for these enhanced standards, we anticipate putting out a package of proposed rules for comment this summer. our goal is to produce a well - integrated set of rules that meaningfully reduces the probability of failure of our largest, most complex financial firms, and that minimizes the losses to the financial system and the economy if such a firm should fail. the federal reserve is working with other u. s. regulatory agencies to implement dodd - frank reforms in additional areas, including the development of risk retention requirements for securitization sponsors, margin requirements for noncleared over - thecounter derivatives, incentive compensation rules, and risk - management standards for central counterparties and other financial market utilities. the federal reserve has made significant organizational changes to better carry out its responsibilities. even before the enactment of the dodd - frank act, we were strengthening our supervision of the largest, most complex financial firms. we created a centralized multidisciplinary body called the large institution supervision coordinating committee to oversee the supervision of these firms. this committee uses horizontal, or cross - firm, evaluations to monitor interconnectedness and common practices among firms that could lead to greater systemic risk. it also uses additional and improved quantitative methods for evaluating the performance of firms and the risks they might pose. and it more efficiently employs the broad range of skills of the federal reserve staff to supplement supervision. we have established a similar body to help us effectively carry out our responsibilities regarding the oversight of systemically | 0 |
yannis stournaras : welcome speech - 6th endless summer conference welcome speech by mr yannis stournaras, governor of the bank of greece, at the 6th endless summer conference on financial intermediation and corporate finance, vouliagmeni, 3 september 2024. * * * ladies and gentlemen, on behalf of everyone here at the bank of greece, i am pleased to welcome you all to the second day of the 6th endless summer conference on financial intermediation and corporate finance. over the past six years, this conference has established itself as a premier platform to share rigorous research in the fields of financial intermediation and corporate finance. i understand that about thirty papers presented in the last editions have been published in top peer - reviewed journals in finance and economics. this achievement is undoubtedly a reflection of the high quality of the conference's research program. the focus of the conference is directly relevant to the work of a central bank. new ( and old ) risks loom high. geopolitical shifts fundamentally reshape the business environment for financial intermediaries. technological advances and new climaterelated risks also put the current business models to the test. at the same time, corporate finance continues to evolve in response to emerging trends such as the incorporation of environmental, social, and governance ( esg ) criteria into investment decisions. in view of the obvious importance of these risks for the transmission of monetary policy and financial stability, i am indeed pleased that so many eminent speakers in the fields of financial intermediation and corporate finance are present to lead the discussions today and i am sure that the conference will provide plenty of food for thought. today's event is structured into three sessions, each of which includes presentations on cutting - edge topics : in the first session, we will see research about the implicit trade - off between financial stability and economic performance when designing macroprudential policies, a topic clearly of high value to central banks. the discussion will highlight that setting higher bank capital requirements to increase the resilience of the banking sector to domestic financial shocks is, however, associated with a larger reliance on foreign liabilities which make the economy more vulnerable to external financial shocks. we will also see a paper on the far - reaching implications of the shift towards digital banking and the decline in physical bank branches on local economies. all in all, the findings will show, and in my opinion this is how technology works for the real economy, that there are mixed blessings of technological disruption | : large gains often come at the expense of some losses. 1 / 3 bis - central bankers'speeches the last paper of this session explores the increasing reliance on bond financing by small, private, and unrated firms in the euro area. i understand that this shift has implications for financial stability and firms'access to credit, especially during economic turmoil. in a more general context, the global rise of bond financing is of course of particular interest in europe, as its financial sector has always been heavily bank - based relative to the us. the topics on which the second session focus follow naturally from the first. we will first see research on the potential of suptech, the use of innovative technology by supervisory agencies to support supervision, in enhancing financial stability. this type of research is of high policy relevance since suptech initiatives have gained momentum around the world, but little is known about how the use of suptech impacts bank behavior. next, we will hear about the emergence of two distinct types of banks - high - rate and lowrate banks - each characterized by different deposit rate behaviors and how technological advancements in banking contributed to the divergence between these two types. understanding this shift is particularly relevant today, as more banks opt to operate online and the allocation of deposits across banks has significant implications for the transmission of monetary policy. the last session of the day features another three interesting papers. the first paper looks on how bankers affect the personal finances of their social connections. this is an idea that it worths examining given that earlier work shows peer effects play an important role in various financial decisions by households. the effect that financial intermediaries have on the macroeconomy, has been central to macroeconomics and has received significant attention from researchers in recent decades. as such, the session also includes a paper on the causal effects of changes in financial intermediaries'net worth in the aggregate economy. finally, the second day of the conference will end with a paper suggesting a unified model on how firms should optimally manage emissions through production, green investment, and the trading of carbon credit. this type of research is extremely important now since the control of carbon emissions is a pressing issue for both policymakers and firms. at this point, let me say that as you know very well, the last few years have been an incredibly challenging time for monetary policymakers. no one could have predicted the series of supply shocks that struck the euro area economy and therefore, no one could have predicted β | 1 |
. even if comprehensive data on hedge funds β assets under management were available, we would still have a hard time assessing the true economic risk they carry. for they typically make extensive use of derivatives and hold leveraged positions, not least in rather illiquid markets. a partial industry survey conducted by the fsa in the uk found out that hedge fund equity of usd 250 billion translated into gross counterparty positions in the range of usd 860 billion. 1 the opaqueness of risk profiles is an issue in at least three respects. first, with their high leverage and active trading, hedge funds now wield considerable clout in some financial market segments. second, hedge funds are important counterparties to systemically relevant financial intermediaries, for example, to their prime broker banks. and, third, institutional investors such as pension funds have turned to hedge fund investing, a trend that is expected to continue. what does all this mean for the international financial system? β’ there are some blind spots in the system. β’ these blind spots have recently grown in size and number. dan waters, fsa, β regulation and the hedge fund industry : an ongoing dialogue β, 8 february 2005, speech at hedge funds blueprint europe conference. β’ and more and more often, these blind spots are related to systemic players. owing to the lack of transparency, the overall risk allocation in the international financial system and the potential for disturbances have become harder to gauge. possible systemic risk has become harder to spot. the lack of transparency hampers market discipline and, as a logical consequence, its use as an important pillar of financial stability. however, direct regulation of the hedge fund industry is hardly feasible, if not impossible, and the efficiency of indirect regulation via the regulation of counterparties is limited. this means that authorities responsible for safeguarding financial stability have to rely on banks monitoring their hedge fund credit clients. however, aggregating their total hedge fund exposure and assessing their hedge fund clients β total risk profile have become more difficult for lending institutions since hedge funds are being served by multiple prime brokers. when looking at new trends in the financial system, we need to consider both sides of these coins. shining improvements to financial stability must be weighed against the darker side of stability - impairing features. the challenge is to harness the benefits of new financial trends while minimising their potential costs. unfortunately, there is no instant recipe for safeguarding the stability of evolving financial systems. case by case assessments are required. 4 | costly. after all, one needs only to find and repair all date instances in programs. but when you consider the number of lines of code in computer programs in the aggregate, however, the scale of this task is monumental. consider these estimates : β’ the gartner group believes that there are about 180 billion lines of cobol code alone in the u. s. β’ british telecommunications estimates it will need 1, 000 staff at peak to check and correct some 300 million lines of computer code. the federal reserve is faced with checking some 90 million lines, and some very large financial institutions have many more than that. clearly, solving the year 2000 problem requires skilled staff and is time consuming. because of so many unknowns, however, it is difficult to accurately estimate the amount of resources that will ultimately be required. killen & associates estimates that $ 280 billion will be spent worldwide between 1997 and 2002. other responsible estimates run to over twice that. federal reserve readiness efforts let me now turn to the approach toward year 2000 compliance that we have taken at the federal reserve, as it may be a useful case study of the scope and scale of what a substantial public agency faces. doubtless there are larger entities that will confront larger tasks internally, but there are probably not very many with more substantial external relationships requiring attention. for example : the federal reserve operates several payments applications that process and settle payments and securities transactions between depository institutions in the united states. three of these applications, fedwire funds transfer, fedwire securities transfer, and automated clearing house ( ach ) are the most critical payment systems. about 10, 000 depository institutions use the fedwire funds transfer system to transfer each year approximately 86 million payments valued at over $ 280 trillion. about 8, 000 depository institutions use the fedwire securities transfer service to transfer each year approximately 13 million securities valued at over $ 160 trillion. the average total daily values of fedwire funds and securities transfers are about $ 1. 1 trillion and $ 650 billion respectively. the ach is an electronic payment service that is used by approximately 14, 000 financial institutions, 400, 000 companies, and an estimated 50 million consumers. approximately 4 billion ach transactions were processed in 1996 with a total value of approximately $ 12 trillion. about 3. 3 billion of these payments were commercial transactions and the remainder were originated by the federal government. the scope of the federal reserve β s year 2000 activities includes remediation and testing of all components of these processing environments, | 0 |
of course, future economic shocks. consequently, the surrounding uncertainty can also be divided into similar parts. let me first shortly address the last point, something we can call the β shocks β uncertainty. it is necessary to admit that both today β s central bank forecast and today β s central bankers β decision are deterministic from this point of view. this means that no shock that the economy will face in the future is incorporated into both the forecast and the decision. in other words, there is no way of avoiding the last - mentioned uncertainty connected with future shocks and neither the central bank nor the markets have any superior information about them. the uncertainty surrounding the first two mentioned points β the current state of the economy and future monetary policy β will be the heart of my remarks tonight. being forecasters we all face uncertainty surrounding the knowledge about the current state of the economy. this current state should be thought of as a shortcut to all the inflationary determinants brought from the past, but due to the transmission lags having an impact on future developments. every forecaster, and of course also the central bank, has his own opinion about the economy β s current state. one question arises immediately : should the central bank look at market forecasts and use them as a source of information about the economy β s current state and for its decision - making? my answer is : market forecasts should not be neglected. on the other hand they cannot be the core for decision - making and the central bank must rely primarily on its own structural modelling. this implies that despite all the transparency and communication, the central bank will β from time to time β have to surprise other forecasters and the market. let me now briefly explain why this is the case. in their article β inflation forecasts and monetary policy β, ben bernanke and michael woodford discuss the case of the central bank fully relying on market forecasts for its decision - making. they conclude that relying only on the market inflation forecast the central bank cannot perfectly stabilise inflation on the target. in the economist β s technical jargon, it can be shown that the rational expectations equilibrium under such circumstances does not exist. although such a statement looks suspicious, there is quite a simple intuition behind it. let β s assume that the central bank can infer the current state of the economy only from the market forecasts. then, following the market forecasts, the central bank will clearly settle monetary policy in order to achieve its target | long - term economic growth, as i have argued. what a shame for the eu and for us. thank you for your attention. | 0.5 |
of working with foreign supervisors at both bilateral and multilateral levels. through regular contact, we track changes to foreign bank regulatory and supervisory systems and seek to understand how these systems affect the banking institutions we supervise. this is especially important in the european union, where u. s. banking organizations have substantial operations. as of september 30, 2003, thirty - four u. s. banking organizations operated in the european union with aggregate eu assets of more than $ 747 billion. as of december 31, 2003, sixty - eight eu banking organizations maintained active banking operations in the united states, with total third - party banking assets in their u. s. offices of $ 937 billion. as these figures suggest, institutions from the united states and the eu are major participants in each other β s markets. the dialogue as an additional forum for monitoring eu regulatory developments as the eu seeks increasingly to harmonize financial services rules across its internal market, the regulatory role of the european commission has grown correspondingly. in this environment, the dialogue complements the federal reserve β s ongoing relationships and discussions with eu national regulators. the dialogue, moreover, fills a role not presently served by any one of those ongoing relationships and discussions. as the market for financial services becomes increasingly integrated, the interests of banking, securities, and insurance regulators correspondingly are becoming more common and intertwined. the dialogue provides a forum for discussion of issues in each of these areas. the regulatory discussions benefit from this sharing of different substantive perspectives. for this reason, too, the dialogue is an efficient forum for information exchange, which has great utility for supervisors of large complex financial services organizations. global companies operate across many countries and must adapt their business and strategy to local regulatory and supervisory requirements. it is now generally accepted in the u. s. and internationally that a foreign firm that conducts business in a local market should receive national treatment, that is, the foreign firm should be treated no less favorably than a domestic firm operating in like circumstances. the united states adopted a specific policy of national treatment for foreign banks operating in this country with the enactment of the international banking act of 1978. as we have previously testified, implementing a policy of national treatment can be challenging. although large financial services companies operate in a globalized world, each is based in a specific country whose economic regulation or supervisory approach will differ from those in other countries. the challenge of providing national treatment arises as we seek to adapt our own regulatory system to a foreign banking organization that operates under a different legal | provide input on issues to be taken into account in verifying equivalence. the group sent questionnaires to home country supervisors of financial organizations having operations in the eu, inquiring about the measures those supervisors take to ensure that the entities they supervise are subject to consolidated supervision at the top - tier level. the federal reserve and the office of the comptroller of the currency prepared a joint response on supervision of u. s. banking organizations with eu operations. we understand that the ec β s guidance is expected to be issued in the summer. member state lead regulators are expected to rely on the european commission β s guidance in verifying equivalent supervision with respect to individual institutions. we anticipate that the european commission will keep us informed of member states β progress in this regard during the dialogue and also will alert us to the existence of and procedures for addressing any disparities in member states β approaches. we fully expect that u. s. banking organizations will be found to meet the supervision standard of the directive. another topic of discussion relating to banks has been the status of work on revisions to the basel capital accord ( basel ii ). the discussions within the dialogue have not focused on technical issues that have been under consideration within the basel committee on banking supervision ( basel committee ), but rather have addressed the scope of application and implementation and timing concerns. specifically, the dialogue has served as a useful venue for both the eu representatives and the federal reserve participants to gain a better understanding of the implementation procedures that are anticipated to be applicable in each jurisdiction. staff has been able to ask questions about the eu legislative process, and to explain in detail how the u. s. regulatory process functions. understanding the requirements and limitations of each others β legislative and regulatory processes has helped both sides achieve, in my view, a better sense of the implementation challenges we all face and of the commitment to see the process through. with regard to the scope of application of the proposed new accord, the federal reserve representatives were able to provide information for the eu participants about the reasons the u. s. banking agencies proposed to require only a core set of banks to apply the advanced approaches for both credit risk and operational risk. as you know, one of the primary drivers behind this decision was the u. s. banking agencies β collective view that complex, sophisticated organizations should be using the most advanced risk measurement and management practices available and those techniques and practices are recognized in the basel ii advanced approaches. the u. s. agencies also proposed | 1 |
##h compliance of all bank operations. shariah advisory board has shariah scholars but also industry representatives. β’ bahrain, sudan and syria have adopted shariah standards issued by the accounting and auditing organization for islamic financial institutions ( aaoifi ) and some others use them as guidelines. both the prudential regulation and shariah inspection and supervision are integral elements of the check and balances to ensure products and transactions meet the test of authenticity and compliance with shariah. while these systems may not be in place right away but development and implementation of this regulatory and supervisory infrastructure requires build up of capacities both at institution and regulators level and will pave way for building confidence in islamic system. e. conclusion in conclusion, from a regulator β s perspective development of if in tandem with conventional finance will help broaden and deepen financial markets which will help not only meet diverse requirements but will also infuse financial stability. the evolution and path pursued by if industry has triggered debates regarding the authenticity and innovation. what is critical to recognize is that if by design has to be authentic and brings in additionality both in terms of superior corporate governance framework as good ethical practices are embedded in if, and risk sharing structures which along with product diversity that the system offers lend itself to innovation. product proliferation and approaches to security markets, development of islamic exchange and fund management will help nurture financial diversification from bank based to market centric system. proper application of pls system will help provide greater opportunities for innovation provided it is backed by the right corporate governance architecture. on their part regulators have provided the industry free play. cooperation among regulators has helped to develop core and supportive if infrastructure which better weaves in the unique features and nuisance of the if. development of islamic prudential regulatory and supervisory framework, which subscribes to basel standards for conventional banking, will pave the way for development of if, while tweaking the regulations to accommodate special risk characteristics of the if. institutional framework and evolving approaches for supervision systems will help build confidence among investor and customers. it is my belief that proper practical application of if has the potential of taking global finance to new frontiers and heights. | yaseen anwar : brief overview of pakistan β s banking sector and innovative banking practices speech by mr yaseen anwar, governor of the state bank of pakistan, at bahria university convocation, karachi, 22 december 2014. * * * vice chancellor, bahria university, prof β¦. β¦.. distinguished faculty members, dear students, ladies and gentleman, i would like to thank bahria university for inviting me to this convocation. first of all, let me congratulate all position holders and students who have earned their distinctions and university degrees through sheer willpower, hard work and dedication. your education has provided you with the resources to lead and change. you should be determined to create your own individual voice upholding the values of creativity championed by this institution, while acknowledging your link with the community. the importance of education cannot be overemphasized. education is fundamental to any society β s progress for it prepares generations to equip themselves with the knowledge and skills to meet the challenges of the ever changing world. when education blends with youthful energy, it organizes people economically, socially and politically, which helps the society to step - up on the ladder of civilization. education is the catalyst of national development ; it is what distinguishes nations form one another. pakistan has immense human potential. more than half of our population is below the age of 25 ; sadly the education systems aren β t appropriately managed and sufficient enough to exploit this potential. this is where institutions such as bahria university and the rest of private sector can play their role to ameliorate current educational level. to increase the pace of economic development, our policies must be focused towards advancement of education. for a stronger, respected and flourishing pakistan, we must in our capacity address the issues related to education. taking benefit of this opportunity, i would like to share my thoughts on the state of banking sector and the need for adopting innovative banking practices from around the world to deliver better customer value and financial inclusion in pakistan. in recent years, growth and turnaround in pakistan β s banking sector has been remarkable and unprecedented. classified as pakistan β s and region β s best performing sector, the banking industry β s assets have risen to over us $ 97 billion with profitability of rs 187 billion ( pre - tax ) in fy12 which is exceptional and at an all - time high. similarly, during fy 2012 deposits have grown at a fast clip of 17 percent which is the highest in | 0.5 |
and supervisors, and i have great confidence in ravi menon β s leadership. beyond climate change, the ngfs is acting as a great catalyst on nature - related issues. in light of its march report, the ngfs launched in april a nature - related risks taskforce co - chaired by sylvie goulard, deputy governor of the banque de france, and saskia de vries from dnb, with the objectives to incorporating nature - related risks into the ngfs β s long standing workstreams within the next two years. as much as possible, let us have interim deliverables earlier. conceptual framing and research : as a problem well - stated is a problem half - solved. bridging methodological shortcomings and data gaps is a crucial pre - requisite for action, before jumping to any conclusions on the prudential or monetary front β these must come in due time. our priority as page 11 sur 13 central banks and supervisors is thus to build the capacity to further analyse and study empirical evidence of the financial implications of biodiversity and naturerelated risks. at the banque de france, we are fully committed to this effort, thanks to a dedicated team of experts within the climate change centre ( ccc ) who contribute both to ngfs and bdf research advances. we will strive to provide state of the art metrics, financial assessment, and, hopefully in a near future, scenarios analysis. the work plan of the ngfs taskforce includes the development of a unique conceptual framework adapted to our activities, which will be key to build a common understanding and address the knowledge, capacity and methodological gaps that we face. contribute through individual or national pilot initiatives be it on reporting, monitoring, or responsible investment. and let me underline here that france is leading the way, especially on biodiversity issues. article 29 of france β s energy and climate law extends climate - related risks reporting requirements for financial investors to biodiversity - related risks. the french prudential supervision and resolution authority ( acpr β part of the banque de france ) is assessing the compliance of our supervised entities with article 29 of the insurance companies we supervise. we received the first reporting last september, and β not so surprisingly β early control checks indicate that reporting entities are facing challenges in the access to relevant biodiversityrelated data and mostly relied on third party providers. as required by law, entities that are not able to disclose on all required information will have to disclose on their plans for continuous | corporate bonds discovered that these products were very different. for example, the so - called bespoke collateralised debt obligations ( cdos ) have became impossible to value in an acceptably precise manner and, at the current juncture, efforts are made to either mark - to - market the products using some comparable tradable asset prices or the latest available price quotes. another problem β closely related to the valuation issue β is the role the rating agencies have played in the development of structure finance products and the propagation of the turmoil as well as the excessive reliance of investors on ratings in their credit risk assessments. questions have also been raised about the potential conflicts of interest in the activities of rating agencies. finally, with regard to funding liquidity risk, an important ingredient in the turmoil which contributed to the propagation of tensions from the credit markets to the money market, was the maturity mismatch on the balance sheets of abcp conduits. the risks associated with these funding mismatches were further aggravated when market liquidity evaporated from the markets for complex structured credit products. in addition, it became clear that banks often did not have adequate contingency plans in place to deal with unexpected funding liquidity needs arising from the contingent liquidity facilities they had provided to conduits or to deal with the risk that they would face difficulty in syndicating the bridge loans they had extended to finance leveraged buyouts. looking forward, at the current juncture the outlook for the subsequent evolution of the subprime originated turmoil is highly uncertain. in order to obtain some indication on the possible propagation of market tensions, i would like to refer to box 5 in the review which focuses on the interactions between credit and market de - leveraging cycles. it concludes that in an environment in which bank loans are widely used as collateral for asset - backed securities, a sudden increase in borrower default rates could have implications on the financial performance of banks not only via credit risks, but also through market and income risks. from this perspective, an important issue for the euro area and global financial stability outlook is the way in which the ongoing re - pricing of credit risk feeds into the evolution of the credit cycle. a crucial channel that will determine the impact of money market tensions and the re - pricing of credit risk on the credit cycle and the real economy is the extent to which they will affect banks β lending behaviour and, consequently, the financing conditions of households and the corporate sector. indications of a considerable tightening of | 0 |
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