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vaut en particulier a la veille de l β elargissement de l β union europeenne. valery giscard d β estaing et helmut schmidt ont rappele, a juste titre, dans un article commun publie il y a quelques jours, que β le succes de la monnaie unique depend, a terme, de l β accomplissement de nouveaux pas sur le plan politique. sans cela, les changements de gouvernement intervenant dans l β un ou l β autre des pays membres risqueraient de remettre en cause la solidite de l β union. (... ) on aurait pu s β attendre a ce que le traite d β amsterdam contienne des decisions prises par les pays participants, mais ceux - ci n β etaient pas capables de s β accorder sur des reformes. (... ) l β union monetaire est un projet federal qui doit etre accompagne et soutenu par d β autres mesures. elle n β a jamais ete faite pour rester un ilot isole dans l β Εil d β un cyclone d β interets nationaux. β pour toutes ces raisons, il est necessaire que la cooperation franco - allemande devienne encore plus intense, afin que le dynamisme de l β integration ne faiblisse pas apres l β entree dans l β union monetaire. l β unification europeenne est et reste un objectif porteur. | as to facilitate better interfaces between the financial management systems of corporates ( i. e. enterprise resource planning systems ) and the systems operated by banks. new standards will allow account - related information to be handled more efficiently. corporates will also receive additional information on their bank statements thanks to sepa. β sepa : potential benefits at stake β researching the impact of sepa on the payments market and its stakeholders β, capgemini consulting. let me now turn to those issues that need to be addressed by corporates in order to ensure that sepa is implemented successfully. β’ first, corporates will have to migrate their databases, which still contain national account numbers, in order to incorporate the international bank account numbers. most euro area countries have agreed on a migration procedure aimed at assisting the corporates to do this. 3 β’ second, corporates will have to contact the banks in order to be able to better evaluate the benefits that sepa will bring to their organisation. banks will provide information as to how products and payment cycles may be improved, but you could also contact your provider directly with regard to better products. β’ third, corporates could plan ahead. several initiatives are under way, which are focusing on corporate - to - bank connectivity and a standardised way of transmitting remittance information with the payment. so far, not many corporates have actively started preparing themselves for sepa, as for them, the precise impact of sepa is not entirely clear. this is probably related to the initial reluctance of banks and software providers to communicate on sepa, as some of their products are still in the pilot phase. by the end of 2010, we expect the vast majority of payments to be executed as sepa payments. however, it is becoming increasingly clear that there is a need to specify an end date on which the current payment instruments will be phased out. 4 so far, a conversion procedure for migrating from the traditional national account number ( bban ) to the international account number ( iban ) has been agreed in 13 euro area countries ( be, de, es, fr, gr, it, cy, lu, mt, nl, at, si, fi ). the decision process has not yet been finalised in two euro area countries ( ie, pt ). so far, a schedule for the phasing - out of national payment instruments has been agreed in six euro area countries ( be, fr, cy, nl, si and fi ). discussions have already | 0 |
the complete answer to this question, some elements of the explanation are becoming clear. part of the explanation lies in the extent to which developments in thailand have affected conditions in neighboring countries. for example, in expectation that the depreciation of the baht would erode the competitiveness of thailand β s trade competitors, their currencies also weakened. and as these currency slides acquired an almost self - perpetuating character, the debt service costs of the domestic private sector increased. uncertainty about how far these currencies would slide and how much debt service costs would increase encouraged a rush to hedge external liabilities that only intensified exchange rate and interest rate pressures. another factor is that problems in the thai economy prompted markets to take a closer look at the risks in other countries. and what they saw - - to different degrees in different places - - were many of the same problems affecting thailand : among them, overvalued real estate markets, weak and over - extended banking sectors, poor prudential supervision, and substantial private short - term borrowing in foreign currency. moreover, after thailand, markets began to look more critically at weaknesses they had previously considered minor, or at least manageable in an orderly way, given time. i see two other factors that hastened the stampede : one, the lack of transparency, and hence the increased uncertainty, about government and central bank operations, about the true state of financial sectors, about the links between banks, industry, and government and the impact these links might have on economic policy ; and two, the controls - - and threat of controls - - on market activity. given the tendency of financial markets participants to run with the herd, this was a sure - fire way to send the herd scrambling for safer pastures and set back efforts to restore confidence. ii. what lessons should we draw from all of this? the first lesson is the most obvious one : the necessity of taking early action to correct macroeconomic imbalances before they precipitate a crisis. this did not happen in thailand, despite timely and vigorous warnings. on the contrary, policymakers attacked the symptom of the crisis, the pressure on the baht, accumulating large reserve losses and forward foreign exchange liabilities in the process. this, together with delays in addressing thailand β s severe financial sector problems and lingering political uncertainties, clearly contributed to a deepening of the crisis and its spread to other economies in the region. the second lesson is that other countries can | ( 2019 ), β a bird β s - eye view of the resilience of the european banking system : results from the new macroprudential stress test framework β, macroprudential bulletin, issue 7, ecb, march. 4 / 4 bis central bankers'speeches | 0 |
success in the mpf business also requires an established customer base, good distribution networks and strong brand image. all this means that the mpf is not a business where small players can hope to be successful on a stand - alone basis. even for the large companies that have captured the lion's share of the business, the start - up costs and the ongoing expenses mean that it will probably take a few years for them to break even and still longer to achieve a reasonable return of capital. however, this should not blind us to the strategic importance of the mpf for the banking and financial services industry in hong kong. this is why it was vital for the smaller banks to pool their resources in the bank consortium trust. this has enabled them to establish a credible vehicle and win a market share that is probably larger than the shareholders could have achieved if they had acted independently. the strategic appeal of the mpf lies not simply in the long - term profit opportunities that it offers directly. it is also that it will help to build a relationship with both employers and their employees that can be used to generate cross - selling opportunities. this will be aided by the fact that the relationship established via the mpf is likely to be a sticky one, and companies are unlikely to shift to another scheme unless there are good reasons to do so. this does not mean, however, that mpf providers can afford to provide a bad service. if they do, they will destroy goodwill and make it more difficult to sell other products. the cross - selling opportunities provided by the mpf are not theoretical. there are already signs that it is making an impact on sales of other funds to individuals. as your association recently announced, the fund penetration rate in hong kong has risen from 7. 8 % to 10 % in a year. this is a creditable performance in view of the weakness in the stock market. one of the reasons for the increasing willingness to invest in funds is undoubtedly the low return now offered by bank deposits. however, it also appears that the marketing of the mpf over the last year has helped by focussing employees'attention on the attractions of funds for long - term savings purposes and on the need to plan for retirement. the role of the regulators i have talked so far about the involvement of the banks in mpf business. in practice, however, the role played by banks themselves is mainly to act as intermediaries, selling and advising on mpf schemes. the various mpf services β trustee | ##imr's activities and to alert the board of directors if shortcomings become apparent. while the relationship between the hkimr and the hkma remains close, the hkimr does enjoy independence in research matters. one consequence of this is that the views expressed in its different publications do not necessarily reflect those of the hkma. one of the distinguished members of the hkimr's council of advisors is our first speaker today, charles goodhart, and it is my great pleasure to introduce him. it was very much his visit to hong kong that gave the hkimr the idea of organising this workshop. as you all know, charles is one of the world's foremost monetary economists and an expert on central banking issues. but what some of you may know is that he has had a very long involvement in, and influence on, monetary issues here in hong kong. this began almost exactly twenty years ago when hong kong, suffering from a crisis of confidence in its political future, and without any effective form of monetary control, was on the brink of a financial meltdown. the exchange rate was depreciating sharply and charles was brought in from the bank of england to advise us on how hong kong could be rescued. he gave valuable advice on a proposal to return to a fixed exchange rate system through the currency board arrangement of linking the hong kong dollar to the us dollar. as you all know, that exchange rate link was subsequently established, in october 1983, and it is still in operation now. it commands a high degree of confidence and credibility. it has served hong kong extremely well in the past twenty years. in his advice, charles also covered other strategic issues of central banking for hong kong. as the only remaining person in the public sector continuously involved in this area of work from then until now, i can say with some authority that the views of charles have exerted much influence on the development of the monetary system of hong kong. i do not know whether you remember, charles, your piece of advice to the then financial secretary, the late sir john bremridge, written on 6 october 1983. i have kept a copy of it, and i often refer to it for inspiration in the past twenty years. fortunately for me, but not perhaps for others, the advice is so highly classified that it will probably never see the light of day. but it should be all right for me to quote from your covering letter to sir john, where you said : β i | 0.5 |
henrik auth : cash processing and protection against counterfeiting opening speech by henrik auth, deputy governor of magyar nemzeti bank ( the central bank of hungary ), at the first currency issuance conference at magyar nemzeti bank on cash processing and protection against counterfeiting, budapest, 1 june 2006. * * * ladies and gentlemen, introduction magyar nemzeti bank ( mnb ) is holding a currency issuance conference for the first time. on behalf of the board of directors of mnb, i should like to welcome the invited speakers and participants, and thank all the speakers called upon, and a large number of experts involved or interested in currency issuance for accepting our invitation. among the speakers, i should like to warmly welcome mr. antti heinonen, the director of banknotes at the european central bank, mr. robert juhos, managing director of g4s cash services ltd., mr. tibor pataki, the head of the national counterfeit centre, and mr. barnabas ferenczi, the head of currency circulation, while in the audience i warmly welcome the highly esteemed representatives from hungarian credit institutions, cash in transit companies, magyar posta ltd., the hungarian state treasury, the hungarian banking association, the national police headquarters and mnb. our aim in holding this conference is to further strengthen the dialogue that has been going on for a number of years with market participants, and to further develop our cooperation in cash processing and the fight against counterfeiting by acquainting all of us with experiences and conclusions drawn as well as by discussing opinions. in my speech i wish to elaborate on two issues. β why do we hold the conference now? β what does mnb think about cash processing and protection against counterfeiting? timing this year we are celebrating the 60th anniversary of the introduction of the forint. after the postwar hyperinflation, mnb issued the first series of forint banknotes on 1 august 1946. this series of banknotes, disregarding changing the original design at the beginning of the period, served circulation for over 50 years. the set of denominations altered with the passage of time but the system of security features barely changed. the second series of banknotes was issued by using modern security features between 1997 and 2001. since then mnb has been continually developing the range of security features, the most recent example of which is incorporated in the new thousand | forint banknote issued less than two months ago on 10 april. over the last year mnb has made significant progress in the field of the regulation of cash distribution. in june 2005 and february 2006 mnb issued a total of three decrees of the governor of mnb. consultations were held on the draft of these decrees not only with hungarian market participants but also with the european central bank. the three decrees issued by the central bank regulate, firstly, technical tasks and other duties related to the protection against counterfeiting hungarian and foreign legal tender ; secondly, the conditions for cash processing activity and cash distribution ; and, thirdly, rules and procedures related to the reproduction of the forint and the euro. on 1 july 2005 mnb amended cash handling fees. mnb decreased fees for withdrawals and lodgements of banknotes by 25 %, and made lodging coins free of charge, while increased fees for exchanging cash to another denomination. with this mnb shifted the regulation of withdrawals and lodgements towards that of the euro area and in the field of exchange mnb rose the fees to the level of costs. precisely today mnb β s new regulation containing business terms and conditions come into force with regard to transactions made in cash. in addition to withdrawals and lodgements, this regulation governs all activities related to exchange both for clients with an mnb account and those without such an account. an important change is that mnb will only accept quantities of banknotes or coins in excess of 100 items per denomination provided that a cash in transit company has already processed them. due to the effect of recent changes, i and my colleagues felt that it would be timely to discuss jointly issues related to cash processing and the fight against counterfeiting, and to show and learn about issues deemed important from the viewpoint of the hungarian central bank, market participants and the european central bank. cash processing and the fight against counterfeiting first of all, i should like to share a few thoughts on cash processing and the fight against counterfeiting with you. after the reintroduction of the two - tier banking system in january 1987, credit institutions in hungary established their cash distribution lines, but starting from the early 1990s they outsourced cash processing and transportation to an ever increasing extent to cash in transit companies that had emerged in the market at that time. concerned credit institutions handed over or sold their vaults, or converted or use them for other purposes. in response to this widespread outsourcing, mnb | 1 |
guy quaden : the outlook for the european economy, the turmoil in financial markets and monetary policy remarks by mr guy quaden, governor of the national bank of belgium, at a business dinner, dubai, 31 october 2007. * * * i thank you very much for your invitation to this business dinner. i am very pleased to have the opportunity to spend a few days in the united arab emirates, one of the most quickly developing regions in the world and in my eyes one of the most fascinating places to be. i will present some remarks about the outlook for the european ( eurozone ) economy, the consequences of the turmoil in financial markets ( but not about the causes of the turbulence and the first lessons to be drawn : it will be the subject of another speech ) and the stance of the monetary policy. the latest news from europe is not bad. 2006 was an excellent year and prospects for this year and next year remain positive. however the uncertainty surrounding these prospects has increased. the world has been experiencing a fairly long period of economic good times. for a few years the strong activity has been driven only by the united states and the emerging markets whereas europe seemed to stand back. however the pace of global economic activity has become more balanced across the main economic regions. after having gone through a protracted period of subdued growth and short - lived recoveries, europe was in the upswing of a cycle since early 2005, backed in particular by the longawaited recovery in the largest economy of the zone, germany. in 2006, real gdp expanded by 2. 9 % in the eurozone, twice the rate recorded in the previous year. investment increased by 5. 2 % and private consumption also picked - up. gross exports rose by an impressive 8. 2 %. however the contribution of net exports to gdp growth was relatively moderate ( 0. 3 % ) because imports also rose significantly. therefore last year gdp growth in the eurozone was mainly driven by the faster increase in domestic demand, sustained in particular by a steady improvement in the labour market. the number of employed people rose by around 2 million ( 1. 4 % ) and the unemployment rate dropped in 2007 to the lowest level since 1993. moderate wage developments have also contributed to stronger employment growth. that said, the level of unemployment in the eurozone ( close to 7 % ) is still high in comparison with other regions and there remain inefficiencies and rigidities in labour markets to be tackled through further structural reforms. until this | of discipline can have on the climate of confidence. it seems that people in europe more and more have a β ricardian perception β of fiscal deficits. they are more aware of the enormous challenges and costs our ageing society entails. people in the different european countries are really worried about the long - term sustainability of public finances. high fiscal deficits will only worsen their anxiety and so incite them to increase their precautionary savings. in this context, the rules of the stability and growth pact are appropriate. it is not correct to describe it as a fiscal straitjacket. starting from a budget in balance or in surplus at the peak of the cycle, a country can let the automatic stabilisers fully operate when the activity is slowing down. the main problem with the pact is, i think, that better incentives are needed to respect fiscal discipline during good economic times. so i hope that the forthcoming recovery will be the right moment for the european governments now facing budgetary difficulties, to put their finances again on the right track, so that in that field it will be possible to reconcile short time flexibility with long term sustainability. in that case fiscal policy may again become an element of the required lasting macroeconomic stability. it is by paying more attention to the quality of public finances and by rendering the structure of taxes and that of expenses more growth oriented that governments can contribute to stimulating europe β s growth potential. i refer to expenditures such as education and improvement of human capital, public investment in infrastructure and research and development. r & d could become a comparative advantage of europe. at the moment europe invests 1. 9 p. c. of gdp in r & d and is thus lagging behind the us figures and the lisbon target ( 3 p. c. ). over the past years, european policymakers have become more aware of this growth problem europe is facing. so, in march 2000, during the lisbon summit, an ambitious strategy was adopted aiming to increase the rate of sustainable economic growth and even to enable europe to become the most competitive and dynamic knowledge - based economy in the world in 2010. in order to achieve such a strategic goal the lisbon agenda has brought together the different strands of reform policies on product, labour and capital markets aiming at promoting a more efficient allocation of resources and at higher growth potential. moreover, in order to facilitate monitoring of progress with reforms, quantitative targets have been fixed to measure progress in particular on the labour market in achieving for instance higher | 0.5 |
? perhaps both? i am sure this is something we can debate at our tables later on. for now, i would like to stress that transformation is not just an inspiring concept, but also a practical and operational process. people and organisations have a capacity to transform that can be nurtured. in today β s turbulent environment, banks would do well to evaluate this capacity. it could mean the difference between relevance and irrelevance. but what exactly influences the capacity of organisations to transform? how can you grow this capacity? dnb has conducted research into the capacity of pension funds to transform and we found several things i am sure apply to other industries. for example, we found that leadership is key. specifically, individual leaders with the capacity to identify changes in the landscape, develop best - case and worst - case scenarios and create a compelling vision. also leaders who are able to develop a strategy around this vision and then execute it. the leadership team is of importance, too. there needs to be openness, trust and diversity in terms of personalities and competences. we also found that pension funds need to be appropriately equipped. they need to be agile, have an up - to - date it infrastructure, have sufficient budget and task the right people with the transformation process. and pension funds need to have their house in order. for unless everything runs smoothly, the organisation will focus its attention on managing the present rather than designing the future. finally, we found that pension funds need to be proactive. if they wait until the environment forces them to change, they are at risk. instead, they should proactively adapt. some pension funds began to transition from a defined benefit to a defined contribution system years ago and they are now in a good shape. those who haven β t, are struggling to adjust to changing realities. so transformation is a process that can be managed. but the process needs to lead to something. transformation is a means, not an end. so what is or should be the end result of a bank or the whole banking industry transforming? in exploring possible answers to these questions, it may be worthwhile to make another distinction, this time between goals and purpose. the way i see it, goals are operational and action - oriented. bigger returns. more efficiency. lower risks. goals can be quantified and our progress towards them can be measured. goals are important : they focus our attention and our resources. purpose to me is different. purpose answers the question : | speech by frank elderson at dnb banking seminar β the art of transformation - will banks keep up? β, amsterdam, hermitage, 8 february 2017 ladies and gentlemen, throughout time, mankind has been shaped by wave after wave of changes. economic boom and bust. social and political upheaval. scientific developments that transformed how we travelled, produced and consumed. these changes were reflected in - and influenced by - the evolution of banking. in babylonia, merchants made grain loans to farmers. in ancient greece, lenders began to accept deposits and change money. and in the 17th century, amsterdam became a centre of derivatives, short selling and proprietary trading. today, banking is a global industry. one that sells complex financial products and executes trades over high - speed networks using algorithms. banks have a systemic impact on every aspect of our lives. they catalyse commerce between nations, enable businesses to grow and enable people to buy a house. now, the banking industry is facing several challenges. fintech is rising, consumer trust is damaged and basel 3. 5 is on the horizon. then there is doubt about the future of europe, growing criticism of globalisation and uncertainty about the geopolitical landscape. meanwhile, the world is trying to achieve the sustainable development goals and implement the paris agreement. banks will have to adapt β perhaps contribute β to this and the question is how. what is an appropriate business model or strategy? and what is the best form for the key functions that banks perform, such as safeguarding money, providing loans, and determining risk and return? or is there a future in which non - banking entities perform banking functions? in discussing these questions, perhaps it β s worthwhile to distinguish between change and transformation. to me, change implies an increase or decrease over time of something while its nature remains constant. money was first metal, then paper and now digital, but it β s still money. and today β s stock exchanges are in essence quite similar to those established centuries ago. transformation is different. it implies something essential changes and a new order emerges. a caterpillar transforming into a butterfly. a child transforming into an adult. philips, as hans de jong so eloquently described it, transformed from a consumer tech company into a health tech one. transformation takes time, vision and the courage to take tough decisions. and it is anything but easy to genuinely transform an organisation β s culture. having said that i wonder : is the banking industry changing or transforming | 1 |
middle of autumn 2003, new data has gradually been received that has warranted changes in our view of the inflation situation. these relate to the labour market, which has been weaker than expected with consequences for our assessments of wage developments, to productivity, which has risen more than anticipated, with lower cost pressure as a result, and finally to actual inflation, which has been lower than expected, with effects also on inflation expectations, which have declined somewhat. employment growth has therefore been weaker than expected, particularly at the end of last year. the same applies to the number of hours worked. the weak employment growth coupled with a lower number of labour market policy measures has resulted in higher unemployment. this rose from 4. 5 per cent in february last year to 6. 0 per cent in february this year. business tendency data and other indicators currently suggest that employment growth in the private sector will be relatively weak in 2004. there are some signs that the labour market may be about to turn, but these are weak. very recently, for example, the number of new job vacancies has increased slightly and redundancy notices have declined. at the same time, the strained financial situation in the public sector points to weak employment growth in local governments in the period ahead as well. thus, employment growth is likely to be somewhat weaker during the year compared with our december forecast. as early as february, we changed somewhat our outlook for the rate of wage increases as a result of the situation in the labour market. there is reason to expect total rises in wage costs to average around 3. 5 per cent in 2004 and 2005, which in terms of average collectively agreed levels leaves little room for more than about 2 per cent on average in the years ahead. the wage bargaining round appears so far to have gone relatively well, but the historical experiences of swedish wage formation suggest that one should be cautious about assuming that we are home and dry. the parties appear to be far from agreement on a number of issues, and there are risks of conflicts arising. as long as the agreements are reached at moderate levels from an inflation perspective, longer agreement periods are preferable. this would alleviate some future uncertainty and should thereby contribute to a better economic situation. so while employment, measured by the number of hours worked, in the business sector was weaker than expected last year, gdp growth was roughly in line with the riksbank β s expectations. this means that productivity was higher than anticipated. this picture has been confirmed by the latest national accounts | inflation now remains relatively stable around the target of two per cent ( figure 1 ). the lower inflation rate has not been associated with weaker growth in output, rather the opposite. gdp growth has averaged roughly half a percentage point higher a year in the past decade than in the two previous decades, and the fluctuations in the real economy also appear to have lessened ( figure 2 ). productivity growth has been surprisingly robust β stronger than in the rest of the eu β and there now seems to be broad consensus that the long - term rate of productivity growth, and thus the economy β s potential growth rate, has been raised. real wages have also improved considerably ; since 1995 they have risen by roughly 2. 5 per cent a year on average, compared with less than 1 per cent on average during the 1970s and 1980s ( figure 3 ). growth in employment has not been quite as good, but it nonetheless is worth pointing out that the situation today is far better than it was in the mid - 1990s. at that time unemployment was commonly judged to have become entrenched around 8 per cent. those of us who experienced the crisis years know that this performance was by no means a certainty. that there was a shift in stabilisation policy is in itself perhaps not that surprising given both the seriousness of the situation at the time and the pressure imposed by an environment with free movement of capital. but the decisiveness and speed with which the changes were implemented is something that is still brought up when i speak with colleagues abroad. compared with other countries it is perhaps above all the changes in fiscal policy that have made sweden stand out, in spite of the fact that the limits in the fiscal policy framework have been stretched somewhat in recent years β 1 / 7 inflation targeting is, after all, now conducted in some twenty countries around the world and there also are other reasons than inflation targeting that have contributed to lower price increases globally. the comparatively sound central government finances have been a great strength for our country over the past ten years. in the years ahead demands will rise even further if we are to meet the challenges posed by an ageing population. more surprising, in a positive sense, has perhaps been wage formation. it is not that long ago since swedish wage formation used to be highlighted in economic circles as a warning to other countries. but with the odd exception wage formation in sweden since the mid - 1990s has worked well from a macroeconomic perspective. i think the fact that the swedish trade union confederation has said that β | 0.5 |
as monetary policy is a blunt instrument and cannot affect, for instance, how growth and employment develop in the long term. in other words, the question has never been whether monetary policy should consider the real economy, but rather how this can best be done without neglecting the price stability objective. in practice, monetary policy takes the real economy into account in that we do not aim to bring inflation back on target as quickly as possible in every situation. when there is a deviation from target β which happens most of the time β our ambition is normally to return inflation to target within a time period of two years. one reason why we look ahead in this way is that monetary policy β s effects are exerted with a time lag. but the two - year horizon is also motivated by considerations to developments in the real economy. this creates some scope for trade offs in the inflation - targeting policy. let me explain. if we were only concerned with inflation, we would always want to bring inflation back on target as quickly as possible. on many occasions it would be possible to attain the target sooner than within two years. but we would then need to change the interest rate in larger stages and more often. this type of policy would risk leading to unwanted fluctuations in the real economy. this applies in particular to the situations where inflation has deviated from target as a result of supply shocks. these could be, for instance, sudden increases in companies β production costs due to soaring commodity prices and / or energy prices. the result could then be that inflation would rise above the target, while economic activity would be weak. the reverse can also occur - a fall in production costs could lead to inflation being lower than the target, while capacity utilisation was higher than is sustainable in the long term. if monetary policy were to aim at bringing inflation back on target as quickly as possible in these situations, it would further reinforce the fluctuations in the real economy. when economic developments are instead mainly driven by changes in demand, the conflict between the price stability target and the ambition to subdue fluctuations in the economy is not as clear. if, for instance, demand falls, the result will normally be that inflationary pressures also decline. an expansionary monetary policy can in this situation contribute to stabilising both inflation and activity in the real economy. there may then be justification for aiming to attain the inflation target within a shorter period than two years. of course, in practice it is not always easy to distinguish what shocks the economy | external economic conditions are pushing down import prices, even when measured in terms of what norwegian importers pay in foreign currency. in norway, intensified competition appears to be resulting in high productivity growth, which is probably contributing to low inflation. the inflation rate was lower than expected this summer, but picked up in september and is now approximately in line with projections in the july inflation report. growth is high in the norwegian economy. monetary policy affects the economy with a lag, and there is always substantial uncertainty surrounding inflation developments. the fall in the value of the krone through 2003, low interest rates and solid growth in the real economy are expected to gradually push up inflation. thank you for your attention. | 0 |
fund to give direction to developing countries in times of crises than to provide similar advice to advanced countries. notwithstanding the weaknesses highlighted and the clear need for improvements, the impression gained at the annual meetings earlier this week suggest that, with the right level of commitment from all stakeholders, the bwis may adequately reform in the period ahead and regain their relevance. where do we go from here? with the financial landscape around us under severe stress, we can rightly question, β is there light at the end of the tunnel? β given the changing landscape of the world economy and the failure of today β s multi - lateral institutions to provide us with a collective response to the crisis, an ambitious rethink of the global financial system is required. we need to go far beyond incremental changes of the global financial environment and our ambition in the reform of the global architecture of finance and economic policy making must match the gravity of the crisis we currently face, as well as the realities of the global economic environment. the recent financial turmoil has exposed the peripheral nature of the imf's functions in global finance. once the crisis struck forcefully, its role was unclear and peripheral. the fund needs to be strengthened in order to place it on the centre stage, unless we would wish it to become totally irrelevant. on the other hand the crisis presents the imf with an opportunity to revive itself. with the necessary expertise, its universal membership and the convening power it can play a vital role into the future, especially if it is able to transform its governance structures to meet the challenges of tomorrow β s world. other institutions such as the financial stability forum, the bank for international settlements and the g - 20 have also enhanced their claim on providing leadership in the global economic environment. the g - 7 has proved itself to be increasingly irrelevant in the changing economic environment of today. lessons to be learnt from the current crisis it is too early to draw lessons from the crisis that is yet to run its full course. however we must continue to debate the causes of the crisis and contribute to solutions to avoid a similar situation globally and at home. we need stronger institutions that should be lasting, so that the current problems would not recur quickly. however, as the australian prime minister recently said at the united nations : β the failures that we have seen in recent times do not lie in the institutions alone. the failures lie more in the poverty of our political will to animate these institutions to discharge of the purposes for which | t t mboweni : lessons to be drawn from the financial crisis for multilateralism and global financial co - operation keynote address by mr t t mboweni, governor of the south african reserve bank, at a charity gala dinner, organised by the university of pretoria, pretoria, 15 october 2008. * * * introduction i would like to express my sincere appreciation to the university of pretoria and the organisers of the charity gala dinner for inviting me to address you tonight. i am glad to see that so many representatives of the financial sector are attending this function, notwithstanding the present financial turmoil. there are some encouraging signs that following the concerted commitment shown by various governments and central banks, and backed up by strong action, we may be finally embarking on the road to recovery from one of the worst crises the financial world has had to face. the global financial system has malfunctioned and there appears to be a need to seriously consider what changes and adjustments are required to ensure that the global financial architecture is better equipped to deal with future challenges. given that the changes will inevitably require certain vested interests to be confronted, the international community will have to commit itself to put the greater good of all of us at the centre of any efforts going forward. the change must, however, be managed and embedded in concrete actions plans to create stronger institutions, with more balanced representation, that will contribute to long term financial stability and sustainable growth. the global economic outlook presently, we are witnessing a severe financial crisis, a crisis that many commentators view as the worst since the great depression. even before the escalation of the financial crisis, growth in the advanced economies had been faltering, as shown in the recent world economic outlook of the imf. growth in advanced economies has weakened and is well below potential. economic activity in developing countries appears to be moderating at a somewhat faster pace than had been anticipated. the danger of a major and protracted slowdown in global growth, with inflationary pressures only likely to react with some time lag, is indeed very real. as most of you are participants in the financial market, i do not intend to go into any great detail about the causes of the global market turmoil. by now we seem to have a general consensus that accommodative monetary policy conditions in developed markets laid the foundation for an aggressive search for yield, which resulted in mispricing of risk on a large scale, coupled with some over - zealous β financial innovation | 1 |
has been monitoring the capex and investment plans of selected central public sector enterprises ( cpses ) since fy 12 β 13 with a view to enhance investment in the economy and use cpses to drive economic growth. developments in the banking sector 38. coming specifically to the banking sector, i would like to emphasize that this sector plays a very important role in the economic growth of the country, by providing finance to the different sectors of the economy. though our banking system continues to remain vibrant in terms of capital and profitability, despite the economic downturn, we cannot afford to relax. while the asset quality of the banking system is under stress, the situation is still manageable. let me, however, highlight that as per our analysis, the higher npas in the banking system are, in a large measure, also attributable to some laxity in lending standards in the benign environment that preceded the global financial crisis. we are witnessing another disconcerting trend in our economy and that is the corporate sector and government have become highly leveraged. the banks have to be more discreet in lending to the highly leveraged corporates. the bank credit is primarily meant to be utilized for productive purposes and hence, people cannot be allowed to eat credit. 39. specifically, there is lot of scope for improvement in our public sector banks in terms of governance, risk management capabilities and human capital. one of the primary reasons for the financial crisis was the greed and unethical practices of the market participants. history bears testimony to the fact that an inefficient system breeds indiscipline, which in turn leads to wastage of resources, complacency, frauds, low growth, etc. our banking system has to ensure that it remains efficient and supports the activities of the real sector. message for students 40. i am wary of giving advice to the students as people of your generation are not too receptive to advices. so, i would just give you some suggestions. i would like to give three messages, which i always do whenever i get an opportunity to interact with the students. my first message is that you must strive to achieve β third generation literacy β. while the first generation of literacy pertains to acquiring knowledge by reading books ; the second generation literacy pertains to knowledge about computers and information technology. i am bis central bankers β speeches sure all of you have attained the first and second generation of literacy. however, the third generation of literacy | lenders, it was important to ensure promoters β β skin in the game β or commitment by stipulating personal guarantee. the working group discussed that in case personal guarantee is made mandatory, promoters will be ensuring that only viable packages are submitted for restructuring. in view of the foregoing, the working group recommended that rbi may prescribe that the promoters β personal guarantee as a mandatory requirement for all cases of restructuring, i. e., even if the restructuring is necessitated on account of external factors pertaining to economy and industry. the working group also recommended that rbi may prescribe that corporate guarantee cannot be a substitute for the promoters β personal guarantee. provision for diminution in the fair value of restructured advances reduction in the rate of interest and / or reschedulement of the repayment of principal amount, as part of the restructuring, results in diminution in the fair value of the advance. such diminution in value is an economic loss for the bank and will have impact on the bank β s market value of equity. banks are, therefore, required to measure such diminution in the fair value of the advance and make provisions for it by debit to profit & loss account. such provision should be held in addition to the provisions as per existing provisioning norms for advances. our extant instructions are very clear in this regard. the working group examined the present method of calculating erosion in the fair value of the advance as the difference between the fair value of the loan before and after restructuring, and found the same to be appropriate. however, it was felt that there are certain ambiguities and inconsistencies across the banks and the same were required to be removed. accordingly, the working group recommended that rbi may provide some illustrative examples on calculation of the fair value of accounts on restructuring. the working group also recommended continuance of the existing instruction that if a bank finds it difficult to compute diminution in fair value of advances extended at small / rural branches, it will have the option of notionally computing the diminution amount at 5 % of the total exposure, in respect of restructured accounts where the total dues to the bank are less than rs. 1 crore. conversion of debt into shares / preference shares the next major highlight of the report is regarding arresting the trend of the banks being burdened with shares / preference shares of non - viable companies as a result of restructuring of their debt. the working group observed that banks were adverse | 0.5 |
, bank accounts, credit intermediaries ). one of the legislative initiatives that requires special attention is the proposal for a directive on payment services. the proposed directive, which is part of the wider single european payments area project, aims to establish a modern and harmonised legal and operational framework necessary for the creation of an integrated retail payments market, which would enable payments to be made more quickly and easily throughout the eu. the proposal also aims to introduce more competition in payment systems and facilitate the realisation of economies of scale. this will improve efficiency and reduce the cost of payment systems for the economy as a whole, an issue of high importance to the bank of greece, as electronic payments systems are not very much in demand in greece. future challenges supervisory architecture within the eu lately, several discussions have revolved around the issue of the eu supervisory architecture, one of the arguments being that the complexity of supervisory arrangements increases in parallel with the growth of a banking group's cross - border activity. without dismissing these concerns, we do not share the view that the conduct of cross - border activities is connected with a significant supervisory burden. on the contrary, the most important obstacles to the expansion of cross - border activity in the banking sector are the differences in the tax treatment of banking products among different states, cultural differences and the lack of proximity ( except in the case of branches ). different views on the supervisory architecture advocate alternative models of supervision, ranging from complete centralisation to total decentralisation. each approach has its own merits, but also raises a number of complicated strategic and operational issues that need to be addressed. i believe that in no way should extreme solutions be adopted and instead implement the lamfalussy approach, which though is not a panacea, has the definite advantage of allowing for a lot of flexibility. first of all, it provides for a range of different degrees of centralisation in the regulatory process, which would entail a more or less harmonised set of rules depending on the issues that need to be addressed. in this way, it facilitates the swift adaptation of community legislation to new developments in the financial markets, which in many cases have cross - sectoral dimensions. moreover, it boosts regulatory and supervisory convergence while at the same time allowing for the efficient handling of differences arising from the fact that the vast majority of the 8, 000 credit institutions in the eu operate domestically and sometimes even locally, in markets with diverse characteristics and which can better be assessed by local supervisors, as the | developments. the above considerations indicate areas where further assistance may be required by particular countries. apart from programs supported by international organisations, continuing recourse to bilateral co - operation arrangements between authorities of eu countries and those of see countries would be particularly useful. in this respect, the experience of the authorities of eu countries that have relatively recently completed the reform of their financial sector in accordance with international standards would be a valuable input to the authorities of see countries that currently face similar challenges. also, peer group reviews by financial sector supervisors from other countries could play a useful role in periodically assessing the effectiveness of financial sector regulation and supervision in each see country and in offering advice on needed improvements. finally, national banking federations of see countries can help to bring the operation of local banks up to eu standards through multilateral co - operation in the areas of staff training and convergence in the implementation of sound operating and risk management systems. to this end, the national banking federations participating in the interbalkan banking forum have recently signed a memorandum of understanding. it is important to recognize that, as the financial systems of see countries are liberalized and their economies become more open, the task of maintaining financial stability becomes more challenging. in meeting this challenge, i believe that arrangements for supervisory co - operation and the provision of technical assistance can continue to play a useful role in supporting national efforts for further regulatory and supervisory reform aimed at strengthening the resilience of the financial sector of see countries and achieving conformity with eu standards. let me conclude by stressing the importance of the financial system for economic growth. why is the financial system so crucial? the answer is that the financial system can be thought of as a coordinating mechanism that allocates capital to building factories, houses and roads. if capital is misallocated, the economy will operate inefficiently and economic growth will be low ( mishkin, 2005 ) 1. effectively, just as a high level of human capital increases the productivity of labour, so an efficient financial system increases the productivity of all factor inputs. for this reason, a financial system can be thought of as the central nervous system of an economy. if it is stable and efficient, it coordinates the economy β s activities, helping to improve the living standards of its citizens thank you for your attention. mishkin, s. frederick ( 2005 ), β is financial globalization beneficial? β nber working paper no. 11891 ( december ). | 0.5 |
macroeconomic management requires that the fiscal consolidation process be continued as required in the fiscal ( responsibility ) management act, to enhance public investment, attain a sustainable level of public debt, and reduce inflationary pressures. this has to be accompanied by the continuation of a monetary policy that would maintain price stability and avoid the emergence of inflationary pressures that are highly injurious, particularly to the most vulnerable groups in society. the central bank will continue to focus on this area. in addition, reforms in the financial sector need to be pursued vigorously to ensure a vibrant and stable financial environment that would be able to take advantage of the links to the international markets and support growth. the high international price of fuel is a major concern. competitiveness of the economy has to be improved through productivity and technological improvements, especially in the agriculture sector. the tsunami related relief, rehabilitation and reconstruction have to be accelerated to restore normalcy to economic activities throughout the country. finally, the economy has to be further diversified so that it is better able to withstand internal and external shocks. i have highlighted the main economic challenges that face sri lanka and the broad policy requirements. i hope that today β s discussions would shed further light on how to move forward with a coherent policy package that will have the broadest support in sri lanka, as well as from all other stakeholders and well wishers. thank you. | economic progress has been below the desired level for a sustainable reduction in unemployment and poverty in sri lanka. sri lanka β s inflation has averaged 11 per cent in the post liberalization era. this has the adverse consequence of eroding the living standards of people, particularly vulnerable groups such as pensioners, other fixed income earners and the poor. supply side factors, including sharp increases in the price of oil imports, have contributed to cost - push inflation. sri lanka β s vulnerability to the vagaries of weather, and relatively low agricultural productivity have been causal factors. monetary management has been able to contain demand - pull inflation to a degree. the increase in inflation in 2004 over 2003 was perhaps typical - caused by a prolonged drought in certain areas of the country, a rise in international prices of key commodities, especially fuel, a somewhat higher growth in money supply and an increased budget deficit. investment and savings ratios have been moderate ; not sufficient to raise economic growth to the level necessary to improve the standards of living to the desired degree. investment improved in 2004 to 25 per cent of gdp. however, a level of about 30 β 35 per cent of gdp is required on a sustained basis over the next five to ten years to improve essential infrastructure, to promote a higher and regionally balanced growth. the external sector has been developing rapidly since 1977 with a significant degree of export diversification. external trade expanded considerably in 2004 with an increase in both exports and imports, benefitting from the fastest global economic growth recorded in the past few decades. trade deficits have been mitigated by increased worker remittances, and inflows from services, mainly tourism and port services. the flexibly managed exchange rate regime has helped to maintain sri lanka β s external competitiveness. throughout the post liberalization era, fiscal deficits have been high due to heavy public investment in the early eighties and high defence expenditure from the mid eighties until the signing of the ceasefire in 2002. this has led to the public debt rising to over 100 per cent of gdp, a cause for concern. recognising this, the government made a commitment to strengthen the fiscal consolidation process with the enactment of the fiscal management ( responsibility ) act ( fmra ) in 2002, designed to reduce the budget deficit and outstanding debt in the medium term. the economic policy framework of the new government emphasises the need to increase government revenue, in the fiscal consolidation effort, while maintaining an adequate public investment programme to improve the quality of the | 1 |
treated as matters of paramount importance. this is so because it is well recognised that financial sector and economic development in any country go hand in hand and that the collapse of the sector can have serious negative effects on both the socio - economic and political state of any country. it is therefore important that the financial sector be backed by a strong legal framework. this is even important realising the economies are susceptible to crises as experienced in the recent global financial crisis. a robust legal and regulatory structure can act as a bulwark against the backdrop of the crisis, providing clarity and confidence for market players and consumers alike. distinguished ladies and gentlemen, it is pleasing to note that from 2010 to - date, parliament has passed the following acts : β’ financial services act β’ banking act ; β’ reserve bank of malawi ( amendment ) act ; β’ microfinance act ; β’ insurance act β’ securities act β’ credit reference bureau act bis central bankers β speeches β’ financial cooperatives act and β’ pension act. of all these acts, i wish to draw your attention to the financial services act. this is an umbrella law for the financial services industry which is interlinked with all other individual sector laws cited above. it consolidates the supervisory responsibility for the whole financial sector to the reserve bank of malawi governor, as registrar of financial institutions. it also incorporates more detailed requirements for licensing of all financial institutions in order to be in tandem with current standards. therefore, as we look at sector laws, we should always be mindful of the provisions of the financial services act, which is an all encompassing law. distinguished participants ; you may recall that the process of enactment of some of these laws was not always a smooth one, often faced with objections from various stakeholders of some provisions. as such, the reserve bank of malawi is fully cognisant of the fact that the implementation of these financial services laws shall in some instances be met with resistance, thus giving rise to legal suits. it is in this regard that we believe that a seminar of this kind is very important and timely, as it will give you lawyers an opportunity to familiarise yourselves with these laws and take note of possible litigious areas. looking at the seminar programme, i am very optimistic that the objectives of this seminar will indeed be achieved. let me ask all distinguished participants to be fully involved in this seminar so that at the end of the day, we shall all benefit from the presentations and discussions that will be made. it is the belief of the reserve bank that this is | . thus, once we allow for the possibility of default by the fa, a sufficiently tough cb can have considerable control over the price level. of course, i β ve been arguing through examples. it would be more interesting to deliver a fuller characterization of the term β sufficiently tough β β but i β m not going to attempt to do so. instead, in what follows, i β ll discuss some aspects of the cb β s response to a particularly critical situation. suppose the fa owes $ 10 billion on a given friday. it plans to repay that loan by auctioning new debt on the preceding monday. however, when it auctions off the new debt, it finds that it can only raise $ 5 billion. the fa is now in danger of defaulting on its friday obligation of $ 10 billion. it is at this stage that the level of commitment of the cb to its chosen inflation path will be severely tested. the fa will ask the cb to take some action that will allow the fa to raise an additional $ 5 billion on wednesday. there are many possible actions. the fa might ask the cb to intervene by setting a floor on the price of debt in the wednesday auction. but there are less overt approaches. for example, the cb can commit to a price peg for the fa β s debt in the secondary market for that debt. in any event, if the cb does intervene in some way to ensure the fa β s solvency, the cb no longer can be said to have independent control over the price level. if the cb β s intervention was largely unanticipated by markets, expected inflation will rise after the cb β s intervention. then, incipient fiscal insolvency has triggered inflationary pressures. of course, markets may well have already assigned a positive probability to the possibility that the cb might intervene in this kind of scenario. if so, then past inflation was already influenced by the markets β expectations of this fiscal policy scenario. as modeled, for example, by eaton and gersovitz ( 1987 ). see kocherlakota ( 2011 ). here, i β m assuming that the cb is exchanging reserves and fa securities so as to control the path of a shortterm nominally risk - free interest rate. this nominally risk - free interest rate may not be the same as the interest rate on fa debt. atkeson, chari and kehoe ( 2010 ) and cochrane ( 2011 ) argue ( convincingly to my mind ) | 0 |
cover many issues : development capital flows and financial stability risk surveillance enhancing the global financial safety net and governance. the proposals have varying degrees of ambition and detail, and the same is true for the follow - up work in the g20 and in other fora. we reviewed the proposals on the table, most notably on strengthening global financial resilience through increased surveillance, particularly of risks, and through better integrated advice on monetary policy, macroprudential policy and capital flow measures. 1 / 2 bis central bankers'speeches while we acknowledged that all of the topics covered in the report are clearly relevant, approaches to address them are at times controversial. we also discussed the role of central banks, which is limited given their domestic mandates. still, there is recognition that, for example, capital - sending countries have a stake in global financial stability. major central banks, including the ecb, are therefore analysing the impact of monetary policy spillovers on financial markets and international capital flows. driving forces behind many topics discussed are international organisations, often cooperating with each other. there were also some concerns on the process and the fact that it is mostly driven by the g20. given the large number of topics, there was also some discussion on whether some prioritisation is desirable. more generally, in some areas further work and analysis is needed to strengthen our understanding of underlying issues, before the right reforms can be formulated. but don β t get me wrong : more analysis cannot be a pretext for inaction. in fact, there was a general consensus that progress is needed on many issues mentioned in the epg report. the discussion also highlighted that cooperation and multilateralism are key to finding solutions, even if many of the problems also need to be addressed at the domestic level. turning to global financial stability, its environment is challenging. risks are increasing and economic growth in many countries is slowing. we identified some of the major vulnerabilities, many of which, common to most countries around the table, such as high indebtedness, signs of mispricing of financial assets and increased risk - taking in the non - bank financial sector. risks differ in some cases and include political instability, capital flow volatility, high levels of non - performing loans or low bank profitability. it is crucial for us to not only directly address the visible vulnerabilities, but also to prepare for the unpredictable events by strengthening resilience in the financial sector. important actions in this | gertrude tumpel - gugerell : corporates in the single euro payments area β business as usual? speech by ms gertrude tumpel - gugerell, member of the executive board of the european central bank, at the β panel discussion : cash management in 20 years β, at the 20th finanzsymposium, mannheim, 17 april 2008. * * * introduction it gives me great pleasure today to take part in the 20th finanzsymposium, which has brought together some of the main corporates active in europe. the main topic of this session is the major changes that have been observed in the financial industry over the past few years, and the changes that may occur over the next two decades. after many years of economic and financial integration, i would like to address an issue that has so far received little attention from the corporate side : integration in the retail payments market. in this panel session, let us discuss the extent to which the most recent payment developments are having a positive impact on your businesses. since the launch of the single euro payments area ( sepa ) in january this year, it is no longer simply β business as usual β. through sepa, a single european market place has been created, which will be of great benefit to corporates. the sepa project will bring about a comprehensive, pan - european harmonisation of payment instruments for euro payments. in january 2008, the banking community successfully launched the sepa credit transfer, as well as a common framework for card payments. these will be followed by the sepa direct debit before the end of next year. the new single euro payments area enables customers to make payments anywhere in the euro area as quickly, safely and easily as they can in their own country. within sepa, all euro payments are treated as domestic payments and are carried out using a single set of payment instruments. the single market also stands to benefit considerably from the wide range of new opportunities that have been opened up through the launch of sepa, as it will promote competition and innovation, as well as improve conditions for customers. in this context, i would like to draw your attention to a recently published study on the economic impact of sepa, which was carried out by the ecb in close cooperation with a number of european banks. the study clearly shows that it depends on the interplay between two forces. on the one hand, greater competition resulting from the abolition of cross - border barriers will determine banks | 0.5 |
in india in a cross - country setting let me begin by providing a brief historical context for the establishment of the dicgc. the idea of deposit insurance was shaped by intermittent bank failures between 1948 and 1960. a deposit insurance act was promulgated by parliament in 1961 to set up the deposit insurance corporation ( dic ), a wholly owned subsidiary of the reserve bank of india ( rbi ), the country's central bank. it was merged with the credit guarantee corporation of india and renamed as the deposit insurance and credit guarantee corporation ( dicgc ) on july 15, 1978 with the mandate of " insurance of 1 / 5 bis - central bankers'speeches deposits and guaranteeing of credit facilities and for other matters connected therewith or incidental thereto ". iii. mandate from its very inception, therefore, the corporation was envisaged as a paybox plus1 institution. the credit guarantee function was discontinued in april 2003 and deposit insurance became and remains the principal function of the corporation. the resolution function resides with the rbi as the regulator of the financial sector. currently, the paybox plus mandate is restricted to the provision of financial support in case of the mergers. more recently, however, this mandate has been strengthened with amendments to the dicgc act in august 2021 which provides for up - front payouts within stipulated timelines. this provision is unique among deposit insurers. the corporation is now liable to make payment to depositors of a bank facing solvency stress up to the deposit insurance limit within 90 days of the bank being placed under regulatory directions that restrict it from discharging its liabilities, i. e., even before liquidation and amalgamation. the insured bank has to submit the depositors list within 45 days. the corporation has to get the genuineness and authenticity of the claims verified within 30 days and pay the depositors who have submitted their willingness to receive the same within the next 15 days. in case the rbi finds it expedient to bring a scheme of amalgamation / compromise or arrangement / reconstruction, the liability of the corporation will get extended by a further period of 90 days. globally too, the mandates of dis have expanded significantly, with the share of paybox 2 entities shrinking. by 2023, it was down to 17 per cent. increasingly, dis have been vested with additional responsibilities, including for financing and resolution, in recognition of their crucial role as participants in the national financial safety net. consequently, the share of dis | that we have to keep our reputation as institutions with national responsibility, holding as our priority the long - term economic interests of the people and of the state. hence, the fundamental logic of the so very important ( and very strictly adhered to throughout the eu ) principle of national central bank independence and the need to provide independent analyses and information to the general public. in this sense, we, at the bnb, just as we have done so far, will always support an economic policy in bulgaria that does not threaten long - term economic interests at the cost of achieving quick economic effects β such as the policy of continuing structural reforms, enhancing the efficiency of institutions and improving the general environment for doing business in this country. the bnb traditionally supports conservative fiscal policy owing to which bulgaria today demonstrates excellent fiscal indicators and given the stable banking system we have reasons to expect that our new issue of euro - denominated bulgarian global bonds will be well received. we would also welcome efforts at speeding up privatization and active concessioning β inasmuch as they would not only strengthen our country β s fiscal position, but would also improve the long - term competitiveness of the bulgarian economy. we, however, cannot be indifferent to any ungrounded economic experiments whatsoever. at the same time, the range of working solutions for bulgaria β s economic prosperity must also take into account the analysis of the comparative advantages of the bulgarian economy in a global context. in fact, it is exactly the current crisis that has highlighted and provided empirical evidence of the resilience of bulgaria β s economy. allow me to recall that before the crisis many argued that the currency board in bulgaria was restraining the economy β s flexibility and that the high current account deficit ( above 1 / 4 of gdp in 2007 ) was a dreadful β imbalance β that could in no way be funded in the event of capital flight from the country. to the surprise of many institutions and experts, a great part of them of proven experience and repute, bnb β s gross international foreign exchange reserves increased from bgn 24. 9 billion as at the end of 2008 to bgn 26. 1 billion at the end of 2011. presently the lev is more than 150 % covered with bnb β s international foreign exchange reserves of the highest quality ( not even taking into account the government β s deposit ). in short, for fifteen years now businesses and citizens have benefited from the predictability and stability resulting from the fixed exchange bis central bankers β speeches rate and the | 0 |
our economies and through what channels? in kenya, for instance, estimates of remittances captured only from formal channels that include commercial banks and other authorized international remittances service providers, have averaged usd118. 2 million per month so far in 2014, from usd107. 5 million per month in 2013. this places remittances as an important source of foreign exchange. indeed they have grown exponentially in recent years to surpass some of the major traditional sources. in sub - saharan africa, remittances have become one of the important enablers of economic growth and of poverty reduction. as such, remittances contributed up to 3 % of gdp over the last five years and to more than 20 % of international flows. for example, in nigeria, remittances account for more than a quarter of gdp, while in lesotho they account for more than 20 percent of gdp. there are indications that international remittances to africa exceed bis central bankers β speeches usd30 billion annually, affect 25 million recipient households, and have the potential to stimulate economic growth and reduce poverty. international remittance flows often exceed foreign direct investment in africa and account for more than twice as much as the world β s total official development aid. in this regard, there is no doubt that the capture of timely, reliable, accurate and comprehensive statistics is pivotal to the region β s macroeconomic policy management and deliberate policy must be designed to attract more inflows from our compatriots abroad. it is therefore important to increase transparency and make it easier and more cost effective for remitters to use legitimate channels, particularly in our region. while a majority of developed economies are largely compliant with the acceptable best practices, many developing countries, including mefmi member countries still have work to do, mainly due to inadequate technical capacity among some data compilers. without an adequate pool of skilled personnel, our efforts to bridge the capacity gaps in data compilation in the region will be futile. the importance of regular capacity building activities, interactions and sharing of experiences amongst ourselves, and benchmarking to international best practice therefore, cannot be overemphasized. i am happy to note that this course will make an important contribution to improving our understanding on how to collect, compile and analyse international remittances statistics in line with the 6th edition of imf β s balance of payments manual ( bpm 6 ) and the imf international remittance | ##s guide. this is indeed, in line with imf β s and mefmi β s mandate of imparting hands - on skills. i therefore, expect the course to bring together information on key statistical activities currently undertaken by the statistical organizations in our respective countries and to identify what more can be done to further improve the quality and timely availability of statistics in this area. may i urge you all to make the most out of this rare opportunity so that when you return to your respective institutions, you can take the lead in ensuring that our region benefits fully from this invaluable initiative. this, however, can only be realized through individual commitment, free exchange of ideas, sharing of experiences and a good sense of openmindedness among all participants. it is also my hope that strong networking links will emerge out of this course to foster a longrun exchange of ideas and experiences among professionals in the region. once we have the correct classification of data, then we can open another chapter of how to use it in policy making. this will also inform us on how to target the diaspora to channel investments in specific areas β like diaspora bonds. as i conclude, i appeal to you to take some time out of your densely packed schedule to enjoy the hospitality of nairobi. freely explore the boundless beauty of our country, sample local cuisine and explore the attractive tourism products on offer. it is now my singular honour to declare this course officially open, and i wish you fruitful discussions and a memorable stay in nairobi. i thank you all for your attention. bis central bankers β speeches | 1 |
services. when it leaves the eu the uk β s supervisory framework will, by definition, be β equivalent β because β partly in consideration of the commitments set out in prime minister may β s letter of notification β european regulations will initially be incorporated en bloc in the uk β s internal regulations. any changes made subsequently will have to be examined to ensure that equivalence is maintained. supervisory β equivalence β, as defined in the eu β s financial legislation, gives some benefits to third countries. most of these are exemptions from specific requirements, but in the case of investment services ( mifid / mifir2 ) and alternative investment funds ( aifmd ) the legislation effectively gives equivalent third - country financial intermediaries a single passport of sorts in all eu member states, though only with respect to their professional clientele. ensuring that domestic financial legislation stays aligned with that of europe would make it easier for uk banks to set up a presence in countries, like italy, that only grant authorization after verifying the standard of home country supervision. under a proposal of the european commission included in the review of the capital requirements directive and regulation, in the future, third - country banks that are of systemic importance in the area would have to set up an intermediate parent undertaking ( ipu ) in europe. the ipu and its subsidiaries in the eu would be subject to consolidated supervision and crisis management under european rules. hence, the major uk banking groups β many of which are spin - offs of international groups β would presumably be required to set up an ipu. the uk will certainly try to reach agreements with the eu - 27 that allow it to keep some of the benefits that london banks enjoy in terms of access to the european market. it is impossible to predict what these agreements will be or how they will affect london β s competitive advantage. brexit also means that the european banking authority ( eba ) headquartered in london will have to find a new home. the decision, which will be taken in the coming months, is connected to an on - going debate on possible changes to the architecture of european system of financial supervision. the commission has launched a public consultation prior to introducing new legislation. the present model is a sectoral one : the eba is responsible for the banking sector, the eiopa ( headquartered in frankfurt ) for the insurance and pension fund industry, and the esma ( based in paris ) for securities and markets. one of the options considered ( with some variations ) would reduce | - food products, transport equipment, clothing and footwear, and tourism services. the bilateral balance on goods is very positive for italy, while the balance on services is generally even. italy β s financial ties with the uk are not as close as those of the other main european countries, as regards both portfolio investment and direct investment. in june 2016, italian residents β portfolios included β¬60. 8 billion worth of uk - issued securities ( that is, 3. 7 per cent of gdp, compared with france β s 10. 1 and germany β s 5. 9 ). italian investors have limited exposure to exchange rate risk between the euro and sterling, with securities denominated in sterling accounting for little more than 1. 1 per cent of the total. at the end of 2015 italian direct investment in the uk stood at 1. 4 per cent of gdp, compared with significantly higher percentages for the other leading euroarea countries. uk investment in italy amounted to 2. 2 per cent of italian gdp. if negotiations for a free trade deal between the eu and the uk are unsuccessful, trade between the two will become subject to customs duties. to have an idea of the potential economic impact for both sides let us assume that the uk applies the current eu tariffs at least until it has put its own tariff system in place ; in other words, the trade tariffs that the eu economic bulletin 3 / 2016. currently applies outside the area will apply between the area and the uk. on this basis, and considering only the impact effect ( i. e. excluding any reallocation of trade flows ), customs duty on goods exported by the 27 - member eu to the uk would total about β¬16 billion and the duty on british goods exported to the eu - 27 over β¬6 billion. customs duty would on average represent a higher proportion of the value of goods ( 5. 2 per cent ) for exports from the eu - 27 to the uk than the other way round ( 3. 9 per cent ) because of the different sectoral composition. in fact, tariffs differ considerably across goods categories. close to one fifth of the value of eu27 exports to the uk relates to motor vehicles, which carry very high duty. moreover, as the structure of exports differs across eu - 27 member countries, the average incidence of the tariff applied to exports to the uk would also differ. in the case of germany, the tariff would be similar to the eu - 27 average ; for france and italy it would be | 1 |
it has appreciated substantially against both the dollar and the euro. it is likely that these recent developments have been due to market assessments of the relative strength of the swedish economy compared with the euro area in the near future, but also to a revaluation of the dollar against the euro following comments from the g7 meeting in dubai. all in all, developments in the krona have largely been in line with our forecast in the june inflation report. so the appreciation of the krona so far is in line with previous forecasts. should the krona continue to strengthen - and particularly if there is also reason to believe that the appreciation will last - it will of course have implications for our forecast. however, it is currently too soon to come to any real conclusions for inflation in the near future from the perspective that is significant for monetary policy. what these developments have mainly illustrated so far is perhaps how greatly exchange rates can fluctuate and how unexpectedly quick changes in sentiment can be. developments in the fixed income market have been less dramatic. however, the long - term yield spread on germany widened slightly in connection with the referendum. in all probability, the current yield spread is partly due to recently better growth prospects in sweden than in the euro area. it is also reasonable to expect that we will have to pay a certain premium in the form of a differential between swedish and german long yields for remaining outside the single currency. we can illustrate this by comparing the yield spread in, for instance, sweden, finland and italy ( see chart 1 ). swedish long yields are higher than finland's, whose situation in terms of growth and government finances has been roughly in line with our own. our yields are also higher compared with italy, despite their markedly weaker public finances. the salient features of the economic outlook world economic activity has been broadly in line with our forecast in the june inflation report. if anything, current tendencies are somewhat better, as concluded by the executive board at its monetary policy meeting in august. signs of a recovery in the us economy have become increasingly evident, which is pleasing of course. the outlook is different, however, for the euro area. perhaps there is reason to expect a slightly longer delay in the european revival, even if we have recently seen a number of positive signals of a forward - looking nature. on the other hand, it appears that economic activity in japan will be stronger than expected. on balance, it currently seems likely that international activity will be roughly in line with the forecast | swedish economy continued to grow at a good rate during the first six months of this year. 1 this is partly because the development of domestic demand has been relatively stable. there are several reasons why sweden has coped so well. sweden β s stable public finances, for example, have meant that fiscal - policy consolidation, which has otherwise dominated the economic - policy agenda in several other countries, has not been necessary in sweden. competitiveness has also developed well. this can be seen very clearly if we look again at figure 6. there are also a number of explanations for this positive development. we have had a period in which productivity grew very strongly in sweden for several consecutive years, inflation has been low and stable and pay formation has improved significantly compared with the period prior to the introduction of the inflation target. the fact that the swedish economy has been strong has also led to a resilient swedish labour market, and the number of those employed has continued to increase somewhat during the year. however, the supply of labour has also increased, so that the fall in unemployment we have seen since the start of 2010 was interrupted at the end of 2011. unemployment in sweden is now just below 8 per cent per cent ( see figure 9 ). β¦ but high household indebtedness constitutes a risk another reason why the swedish economy has coped so well is that we have not suffered a crash on the housing market or in other areas of the financial sector. nevertheless, developments in sweden have given cause for concern. housing prices have risen significantly in sweden over the last 15 years in both an international and historical perspective ( see figure 5 ). the same applies to household indebtedness ( see figure 6 ). it is not surprising that there is a link between these factors as a large proportion of the banks β lending to households has been used to buy housing. i and several of my previous colleagues on the executive board warned about the risks associated with household indebtedness and housing prices in sweden long before the financial crisis. one could say that the crisis has given these issues renewed and increased currency. a positive factor is that the rate of increase in lending to households has slowed down recently following the very high rates of increase we saw in the years before the financial crisis. housing prices have also levelled out recently. both monetary policy and the mortgage cap have probably played a role in subduing lending to households. 2 however, the debt ratio, that is debt as a percentage of disposable income | 0.5 |
national bank of serbia governor β s opening remarks at the presentation of the inflation report β may 2017 dr jorgovanka tabakovic, governor belgrade, 19 may 2017 ladies and gentlemen, dear colleagues, welcome to the presentation of the may inflation report. as always, we will give an overview of the current monetary and macroeconomic developments and our expectations for this and the following year. inflation within the target tolerance band first, i would like to underline that since the beginning of 2017, inflation has moved within the bounds of the new, lower target tolerance band. we anticipated that inflation would move within the target tolerance band this year and announced this trend at presentations of the inflation report last year as well as at the previous, february presentation. as in other countries, inflation in this period was affected by the recovery in global oil prices in the latter half of 2016 as was expected ; however, adverse weather conditions early this year resulted in a higher than expected increase in the prices of fruit, vegetables and firewood. that this is an impact of one - off factors on inflation is suggested by low and relatively stable core inflation, which hovered at around 2 % year - on - year. according to our latest projection, over the two - year horizon covered by the projection we expect inflation to move within the bounds of the target tolerance band of 3Β±1. 5 %. you will hear a more detailed elaboration on the projection of inflation and its factors later on in the conference. i would like to take a look at developments in the international environment which for quite a while have posed a challenge to serbia, as well as to all small and open economies, which is why it is important that we preserve macroeconomic stability and improve our business ambience. in the prior period, the international environment was marked by uncertainty β uncertainty regarding the pace of global recovery, uncertainty regarding the character of monetary policies of the leading central banks and uncertainty in terms of movements in the prices of primary commodities, notably oil. the uncertainty in the international financial market originates primarily from the diverging monetary policies pursued by the fed and the european central bank. taking stock of the us economy, the fed continued to raise its fed funds rate in 2017. by contrast, the european central bank β s decision to extend the quantitative easing programme at least until the end of 2017 will mitigate the negative effects of the fed β s monetary policy normalisation. these decisions affect not only their economies, but also global markets and capital flows to emerging | about : masaaki shirakawa ( bank of japan ), sergey ignatiev ( bank of russia ) and miguel fernandez ordonez ( bank of spain ). when the recent financial crises erupted in 2008, there was an emerging consensus in the world on the good strategies for central banks. this consensus emphasized the objective of price stability, which could be pursued by a suitably informed interest rate policy and the careful management of inflation expectations. now, in the current situation, some new ( or old ) questions have been raised : for instance, how should central banks relate to the objective of financial stability without compromising their commitment to price stability? tomorrow, we will start with a monetary policy session presided over by the new president of the bundesbank, jens weidmann. professor carl walsh of the university of california at santa cruz will be the main speaker in that session, and three central bank governors β athanasios orphanides, from cyprus, mark carney from canada and agustin carstens from mexico β will comment. the globalization of financial markets is not a new thing in itself, but during the most recent wave of globalization the volume of finance channelled through international financial markets has grown tremendously. at the same time, the stability of national economies has become absolutely dependent on the stability of the international financial markets. it is clear, then, that the world needs a global approach to financial stability. we are seeking a new balance between market discipline, transparency and stricter regulation of the conduct of financial institutions and market participants. in our second session tomorrow a panel will deal with some of the financial market issues. three well known governors will participate in the panel : stefan ingves from sweden, yves mersch from luxembourg and nout wellink from the netherlands, as well as a renowned researcher, professor bengt holmstrom of mit. the luncheon address will be given by governor mervyn king of the bank of england, who, among his other distinctions, holds an honorary degree from the university of helsinki. the world still faces tremendous gaps in living standards between countries, and opportunities gaps between generations in many countries. even in the advanced countries, the economic adjustment seems to be leaving large parts of the population, especially the young, with disappointingly few opportunities to realize their human potential. the narrowing of these gaps in living standards and opportunities requires economic growth. but it has to be growth which is consistent with the new divisions of labour in the world economy, and which is sustainable in | 0 |
policies. we have learned over the years β and sometimes the hard way β that to maximise our citizens'welfare we need free trade policies and a sustainable fiscal stance. 6. decoupling between the ecb and fed monetary policy decisions the euro area monetary policy stance needs to be differentiated from that in the u. s. the two economies are at divergent positions, with inflation falling faster in the euro area. two reasons why inflation has fallen faster in the euro area than in the u. s. are : ( 1 ) the u. s. inflation cycle was mainly demand driven, whereas the euro area has been hit more severely by supply side shocks ( the energy prices surge and russia's invasion of ukraine ) and ( 2 ) the u. s. fiscal stance since 2020 has been highly expansionary. in particular, the u. s. fiscal deficit stood at 8. 8 % of gdp in 2023, up from 4 % in the previous year, after having reached about 14 % in 2020 and 11 % in 2021. by contrast, in the euro area the fiscal deficit stabilised at around 3. 5 % of gdp in the previous two years, from 7 % in 2020. on the other hand, economic growth in the euro area is more sluggish and fragile than in the u. s. due to the differing macroeconomic situation, the monetary policy actions of the fed and the ecb might turn out to be different. the way forward for the eurosystem should only have to be based on what serves our price stability mandate and our domestic economy. we need to focus firmly on domestic conditions, taking into account any impact from the expected path of u. s. interest rates. domestic conditions provide the guideposts on our decisions. furthermore, as philip lane, chief economist of the ecb, said in a recent interview with the financial times, 5 delays in the expected timing of fed 5 / 7 bis - central bankers'speeches rate cuts have pushed up u. s. bond yields and this has also lifted long - term yields of european bonds, creating some extra tightening from the u. s. conditions ". philip indicated that the ecb might have to offset this with extra cuts to its policy rates. of course, a divergence of interest rate paths of the euro area and the largest economy in the world could impact on the exchange rate and on trade. these effects are difficult to predict. our gradual and data - driven approach will allow us to | other major global currencies, while in the fixed income, again the us will continue to offer one of the highest interest rates in the developed world. for example, us 2 - year treasury yields are the most attractive among the g10 economies, a situation highly unusual and unprecedented since the turn of this century. the main driver behind this is us economic policy, which β if you allow me to use a catch phrase β may be described as follows : β fed up, with tariffs β, plus of course the drop in tax rates. in the eurozone financial markets, the normalisation of ecb β s monetary policy remains the main driver of the still fragmented euro area government bond market. the core euro area countries form a rather homogeneous group ; the europeriphery, by contrast, is less homogeneous. the diversity is due to recent developments in italy, headed by a fragile, populist coalition government. indeed, as a result of the latest political turmoil over immigration and the budget debate, the italian 10 - year yield has reached 3 % and remains in this area since august. other peripheral countries such as spain and portugal remain resilient and contagion remains limited. italy is not greece. it is too big to ignore, as the eurozone β s third largest economy and the world β s third largest, after the us and japan, sovereign debt market with total public debt of more than β¬2. 3 trillion, of which more than 36 % is held by foreigners, and the political uncertainty could generate severe spillover effects to the global sovereign markets. there is a nightmare scenario which i do not share, of which markets are of course aware and already factor it in. this political tit - for - tat between the populist government of italy and brussels may escalate into a genuine 3 / 5 bis central bankers'speeches diplomatic war ( for some people, what is at stake here is the next italian prime minister ) and this would lead to a downgrade of italy β s credit rating ( currently at bbb ), and a potential loss of its investment grade, which would force the ecb not to accept italian bonds as collateral for the provision of liquidity and to stop buying italian government bonds under its pspp. taking into account that qe ends next december, borrowing costs in some euro area countries could surge to more than 5 %, near 2013 levels. the worry then would be that this could perhaps trigger the next eurozone crisis : a | 0.5 |
investors will be acting in an investor centric way. a strong investor culture, based on establishing trust and confidence with investors could be what sets a firm apart in an increasingly digital investment environment. a prevailing theme is also the impact of different fee arrangements for retail investors as compared with the more favourable terms offered to institutional investors. of course, there can be underpinning reasons for this, such as economies of scale and so on. notwithstanding this, a firm which has strong investor centric culture, will be challenging themselves on such fee arrangements to assess whether they are justifiable and appropriate. building an effective culture for retail investors understanding and addressing these challenges will require action across the board by firms, industry representatives, policy makers and regulators. without action to address these issues, we risk increasing disengagement from retail investors with traditional capital markets. we know that the trust of investors is hard earned, and easily lost. as we seek to encourage greater retail participation in capital markets it will be important that all of us play our role in supporting that trust. before i conclude, i would like to spend a few minutes discussing the challenge of how to navigate the changing and evolving environment in a way that maintains and builds trust to the extent that new retail investors may be attracted to engage and invest. as you might expect, for regulators and public policy makers, this is primarily about better investor outcomes, ensuring their interests are upheld, and client assets are protected. high quality regulation plays a vital role in supporting well - functioning markets. it ensures that investors are protected and that risks to financial stability are identified and mitigated. our interventions are intended to : promote and safeguard the integrity of the funds sector and maintain confidence in the financial system more generally ; and identify and mitigate systemic risks which may arise. high quality regulation plays a vital role in supporting well - functioning capital markets. there is a direct link between effective regulation and ultimately better investor outcomes. regulatory intervention should : support innovation and product development to meet the changing needs of investors and the broader evolution of the global financial sector ; and 4 / 6 bis - central bankers'speeches be appropriately calibrated in order to achieve the right outcomes without being unduly onerous on market participants. ultimately, any inefficiencies that may be created will be borne either by the end investors or users of the financial service. at the start of my remarks today, i noted the similarity of purpose that both the international investment funds association and iosco have in | 33 5. 58 - 1. 25 new zealand 2 - year fixed 6. 19 7. 79 - 1. 60 germany fixed ( > 10 years ) 4. 49 5. 33 - 0. 84 sweden variable 2. 16 4. 18 - 2. 02 * * * * sources : bloomberg ; thomson reuters ; national data * data : to april for australia, us and canada ; to march for uk and nz ; and to february for germany. * * in the uk, variable rate and 1 β 5 year fixed - rate loans account for approximately the same proportion of the market. in assessing the level of global interest rates, it is important to look not just at official rates, but at a broader spectrum of rates faced by borrowers. we don β t have data on housing rates going back 150 years, but it is clear that they are not at the very low levels of official rates. in most countries, including australia, they are around 1Β½ - 2 percentage points below their decade averages β that is, low, but not at extremes ( table 2 ). for corporate borrowers, interest rates are not unusually low. in fact, in most developed economies, interest rates faced by corporations in capital markets are, if anything, still a little above decade averages, due to the large increase in risk premiums ( table 3 ). table 3 : non - financial corporate bond yields * maturity 10 - year average current rate rate deviation from average australia 1 - 5 years 7. 29 6. 62 0. 67 united states 5 - 10 years 6. 59 6. 26 0. 34 canada 1 - 10 years 5. 37 5. 75 - 0. 38 united kingdom 5 - 10 years 7. 04 6. 43 0. 61 euro area 7 - 10 years 6. 00 5. 50 0. 50 new zealand 10 year * * 8. 66 7. 84 0. 83 * industrial corporates * * a - rated bonds sources : bloomberg ; merrill lynch other monetary measures let me now turn to the other unconventional measures central banks have undertaken. these are often grouped in the popular press under the generic title of β quantitative easing β or β printing money β, but they really fall into three distinct categories : β’ measures to add to banks β reserve balances ; β’ measures to reduce the term structure of interest rates ; and β’ measures to support specific credit markets and / or take credit risk onto central bank balance sheets. the us fed has coined the term β credit easing β 1 to | 0 |
delisle worrell : the search for practical economics remarks by dr delisle worrell, governor of the central bank of barbados, at the international monetary fund β central bank of barbados β university of the west indies ( imf - cbb - uwi ) conference, bridgetown, 27 january 2011. * * * i begin this morning with a quote from eric d. beinhocker of the mckinsey global institute, london, from his 2007 book the origin of wealth : β as i write this, the field of economics is going through its most profound change in over a hundred years. i believe that this change represents a major shift in the intellectual currents of the world that will have substantial effects on our lives and the lives of generations to come. β¦ just as biology became a true science in the twentieth century, so too will economics come into its own as a science in the twenty first century β. 1 i am not as confident as is beinhocker that change has begun to take root ; i scan working papers from all the leading economic research institutes and university departments daily, and they are all comfortably situated in a conventional idiom of economic analysis. however, i do share his conviction that a change that goes to the foundations of our discipline appears to be needed, if economists are to have useful advice for policy makers about improving the performance of modern economies. the longer i stay in this business, the more i am disappointed by the disconnect between what economic analysis would seem to suggest, and what is practical and makes sense. 2 clearly a conference such as the one we begin today cannot address the fundamentals of our discipline, but i believe it offers an opportunity which should not be missed, to explore needed changes in our approach to economic analysis. no doubt the revolution in economic thinking will come upon us, when and from what quarter we cannot tell ; but in the meanwhile there is much that we can do, as economists, to improve our practices, approaches and techniques, so that we are able to offer usable advice on economic policy. i offer an illustration in this short address, of what might be called β practical economics β, meaning analysis that enlightens the decisions policy makers have to make. let me begin with an example of conventional monetary policy analysis and advice in caribbean. conventional economics, reflected for example in the imf occasional paper β monetary policy implementation at different stages of market development β, 3 recommends that monetary policy is the tool that should be used | open market operations, and what, if anything, has happened to bank liquidity, but they never bring the story to a conclusion, to say what effect policy actions have had on output or inflation, even in the broadest terms. we simply do not have the information we would need to make such an assessment. does that mean we are in a hopeless situation, and that we can do nothing to stabilise the economies of small open economies? i do not think so. however, the search for practical advice, advice that a policy maker can actually put into practice and measure its impact, takes us beyond conventional economics. to begin with, the policy objective of choice should be economic stabilisation, not inflation control. policy makers need to choose as target a variable over which they can have some control. we cannot target inflation at 5 percent if 80 percent of that inflation is imported from abroad, and import prices rise 10 percent. whatever our policy, domestic prices are going to rise at least 8 percent. a more useful objective, in the open economy, is to stabilise external payments and receipts, and maintain a level of foreign exchange reserves which market agents find to be adequate. that creates a stable environment for business and investment planning, and is therefore the best platform for sustained economic growth. as a result, this is an objective which resonates with the companies and households whose collective decisions will result in the outcome of whatever policy is chosen. practical policy requires us to start with this objective, and to find the economic policies that may be employed to achieve it. what might these policies be? first, are there any policies that might significantly increase foreign exchange earnings in the near term? the answer is, not really. the only way to increase foreign currency inflows in the short run is by borrowing, attracting foreign direct investment, or selling assets to foreigners. each of these implies higher commitments of foreign payments in the future, which means that the limits on capital inflows are first, the supply of foreign finance and secondly, the capacity for future debt service. the policy maker β s challenge then boils down to this : how can expenditures on imports and other foreign currency spending be brought down to the level of available foreign currency inflows? in economies like the us or brazil, which produce practically everything domestically, it may be possible to persuade consumers to switch from imported to domestically produced items by depreciating the exchange rate or imposing a tariff. in the caribbean, that | 1 |
a prudential policy in performing its function as a licensing authority of financial entities that are involved in the crediting activities. in the spirit of what i have stated above, i use the opportunity to express our commitment to involve in our supervisory structure all those credit companies or institutions, which one way or another mobilise the population β s funds or manage public funds in the crediting process. assessing the information issue as a critical element in facilitating the lending activity, i would like to point out that bank of albania has already included the project of establishing the credit register in its immediate plans and we are strongly committed to implement it as soon as possible. this register shall be under administration of bank of albania and the participation of other member banks of the system will be compulsory. only in this way, the information evasion can be minimized as well as its integrity can be ensured, and it would be simultaneously available for each of member banks of the system. 2 / 4 being aware that credit issue is complex and connected with many obstacles arising from inaccuracy and misadministration of the mortgage system, from deficiencies in the civil procedure for mortgage execution, which make the operation of executor office difficult in administering correctly these procedures, we will undertake initiatives aiming at enhancing the effectiveness of mortgage system, as a guaranteeing and selective instrument of great importance. the banking system has a primary role in creating a warm climate in the relationships between business and bank. above all, i would like to request that the banking system be more transparent and open to the public. transparency is one of the most important factors, which strengthens the relations between client and bank and, furthermore, it gives a wider meaning to the reciprocity concept in the bilateral relations bank - depositor and bank - business. i think that most of the common people still manifest a certain hesitation to refer to banks. one cause might be also the lack of detailed information. banks should be more active, not only for advertising new products and services, but also for explaining more correctly the prices / costs they hold and the necessary requirements that are to be met for their benefit. there are not a few cases when clients are not well informed on the interest rate they have to pay for their loans or on the criteria applied by the banks to benefit credit. communication from depositors is neither the best. while small changes of deposit interests may be justified by the changes of market conditions, changes somewhat stronger need to be accompanied by full | relevant information and explanations. the strengthening of this transparency should be accomplished not only in the name of ethics but also in the name of the increase of market competition. the system can play a greater role in reducing cash in the economy, by increasing and improving further the level of services. the positive recent developments have given their effects in reducing cash quantity in the economy. on the other hand, we have conducted an intense public activity, of informative and promotional character, where meetings of another nature have frequently been held and in which we were concretely involved as a banking system. allow me just to remind you the open meetings we have already organised with the business of utility services and with that of treasury bills primary market. i hope that now, after finalising the automated electronic clearing house project, each bank should think seriously of increasing the benefit degree from this new facility offered by the bank of albania. after the implementation of this project, i estimate that we should think more seriously of increasing the number and the quality of electronic payments. for this purpose, i would appeal to start thinking from this moment on of future projects in the payment infrastructure. i personally will insist that even in this direction we should focus as a banking system on the european union directives, so that to orient every step in the future towards the country β s integration in the european union. short time ago i was informed about a new initiative of eu, which requires establishing within a certain period of time, a unified payment system within the euro area, including payments with cards. for this purpose, i would suggest that respective specialists from the association and bank of albania be informed as soon as possible about this project and they should come out with their relevant suggestions. also, i remain persistent in my position that we have to adopt in albania the most advanced solutions for all the infrastructure projects we are going to implement. i believe that we don β t need to examine and consider old - fashioned models, which besides the initial cost would require all the time new funds for their maintenance and modification. in addition, now when the public administration became a client of the system, i think that there are real opportunities to solve the payments of utility services through the banking system. returning to the financial markets, i think that in spite of the above - mentioned restrictions there is room for improving competitiveness among banks even under the current conditions. i would like to draw your attention on the following topics : β’ the system should be more active and keep its public promises to put its | 1 |
##fold. first, i believe that you should encourage honest disclosure from government entities on their degree of preparedness and the general outline of contingency plans that they are making. also, regulators should use the weight of regulatory control to encourage regulated entities to engage in voluntary self - disclosure. if you represent the media, you have a special obligation to engage in balanced and accurate reportage, not attempting to hide important facts, but not seeking the most sensational coverage. a broad synthesis that captures facts, not drama, is probably most useful. finally, all of us as members of the public have an obligation to listen to the most responsible voices. we should recall that in times of uncertainty, many views are expressed ; only the most factually accurate deserve our attention. | mr ferguson looks at public information and confidence as concerns posed by the year 2000 problem remarks by mr roger w ferguson jr, a member of the board of governors of the us federal reserve system and chairman of the joint year 2000 council, at the second global y2k national coordinators conference held at the united nations in new york on 22 june 1999. public information and public confidence in year 2000 year 2000 is a unique problem that has various dimensions. it started as a technical problem, has progressed to being a senior management business issue and is now becoming a public confidence concern. in addition, it is unique in that we all know that the century date change will occur, but what will occur on that date is still open to differing perspectives. this is certainly a case in which the future is opaque. in this environment, there are, and will increasingly be, a variety of views and analyses. some of them will be fact - based and responsible ; others will perhaps be less analytical and more emotional. why is public disclosure important? public disclosure of each business β s plans, and indeed of country plans, for remediation, testing and renovation of systems, as well as general outlines for contingency plans are all critical. this is axiomatic, but it might be helpful to explain why. in a business context, individual counterparties, i. e. suppliers, customers, creditors and others, are all working to develop business continuity plans. full and comprehensive information is essential to that process. the readiness of counterparties is being evaluated based on available information. inadequate details in a business environment can well lead to negative perceptions in the marketplace, which may have pronounced market and / or economic consequences. not surprisingly, in a number of instances, earlier pessimistic perceptions have been positively revised with greater disclosure of information. with respect to public confidence, year 2000 seems to be an issue in which a better - informed public is a more confidant and calm public. for example, in the united states the financial regulators have recently completed a survey of public perceptions on this matter. the results show that those with the greatest exposure to the year 2000 issue were more likely to believe that any problems that emerge will be short - lived and subject to repair. more broadly in the context of public confidence, we know that the public will become aware of and develop a heightened interest in year 2000 at differing times. in an environment in which public perceptions emerge slowly, i believe that it is important to maintain a | 1 |
of discipline can have on the climate of confidence. it seems that people in europe more and more have a β ricardian perception β of fiscal deficits. they are more aware of the enormous challenges and costs our ageing society entails. people in the different european countries are really worried about the long - term sustainability of public finances. high fiscal deficits will only worsen their anxiety and so incite them to increase their precautionary savings. in this context, the rules of the stability and growth pact are appropriate. it is not correct to describe it as a fiscal straitjacket. starting from a budget in balance or in surplus at the peak of the cycle, a country can let the automatic stabilisers fully operate when the activity is slowing down. the main problem with the pact is, i think, that better incentives are needed to respect fiscal discipline during good economic times. so i hope that the forthcoming recovery will be the right moment for the european governments now facing budgetary difficulties, to put their finances again on the right track, so that in that field it will be possible to reconcile short time flexibility with long term sustainability. in that case fiscal policy may again become an element of the required lasting macroeconomic stability. it is by paying more attention to the quality of public finances and by rendering the structure of taxes and that of expenses more growth oriented that governments can contribute to stimulating europe β s growth potential. i refer to expenditures such as education and improvement of human capital, public investment in infrastructure and research and development. r & d could become a comparative advantage of europe. at the moment europe invests 1. 9 p. c. of gdp in r & d and is thus lagging behind the us figures and the lisbon target ( 3 p. c. ). over the past years, european policymakers have become more aware of this growth problem europe is facing. so, in march 2000, during the lisbon summit, an ambitious strategy was adopted aiming to increase the rate of sustainable economic growth and even to enable europe to become the most competitive and dynamic knowledge - based economy in the world in 2010. in order to achieve such a strategic goal the lisbon agenda has brought together the different strands of reform policies on product, labour and capital markets aiming at promoting a more efficient allocation of resources and at higher growth potential. moreover, in order to facilitate monitoring of progress with reforms, quantitative targets have been fixed to measure progress in particular on the labour market in achieving for instance higher | to external shocks as those which have reduced its growth in the latest years and to increase its long term growth potential. europe has to cope with a structural problem of low economic growth. the growth performance of the euro area is weak from an international point of view, in particular vis - a - vis the united states : over the past 10 years the american economy has shown an average gdp growth of 3. 3 p. c., while the euro area could only reach an economic growth of 2 p. c. the euro area only succeeded in achieving a higher growth rate in 2001 when the united states were hit by a severe but short slowdown. the following years the american economy however showed a much stronger recovery than the euro area and now again acts as the main growth engine for the world economy. yet it is important to note that data for the eurozone are averages for twelve countries and that a country like finland in the euro area ( and more generally the nordic countries ) has booked in the most recent decade performances in the field of growth and employment rates which are comparable to those of the us and are much better than those of countries like germany and italy. given an unequal population growth - it is higher in the us - a further analysis shows that the gap in real gdp growth between the us and the euro area that opened up in the mid - 1990s is half the size if measured in per capita terms. the remainder is due to differences in productivity growth ( the increase in overall labour productivity in the us, measured by real gdp per person employed, reached on average 1. 9 p. c. in the last 10 years, almost twice as much as the 1 p. c. recorded in the euro area ) and to a much lower level of labour utilisation in the euro area. in the euro area unemployment rates are currently around 3 percentage points higher, labour force participation rates more than 10 percentage points lower and annual hours worked per employed person lower by more than 300 hours. europe is of course not the us. it has its own specificities which should be taken into account. so at least part of the gap in average hours worked between the us and the euro area should be attributed to structural preferences rather than to structural rigidites. however, when discussing this issue it has to be borne in mind that households also take into account the institutional environment, including tax, social security and pension systems when deciding on their labour supply. moreover, the problem to what extent the present european system is sustainable | 1 |
both this and next year. this is an important factor supporting productivity growth in the economy. let me now turn to euro adoption. the clear perspective of joining the euro area increases markedly estonia's credibility and serves as the main factor supporting our economy in the near future. we are likely to meet the numerical values of the maastricht criteria by the end of 2009 and estonia expects to join the euro area in 2011, in full accordance with the treaty provisions. it is clear that in order to adopt the euro, the key issue of estonia's fiscal policy is ensuring sustainable public finances in the next years. looking at longer - term growth potential, it would be advisable not to achieve this by excessive increases in the tax burden. finally, the way out from the current crisis depends critically on further strengthening of the eu single market for goods, services and production factors ( including capital, labour and know - how ). to conclude i would like to assure that eesti pank is always open for your inquires and cooperation. thank you for your attention! | developed the liquidity, infrastructure and ecosystem that are capable of serving the financing, investment and risk management needs of corporates and investors alike. there are many factors behind the success of hong kong as a china gateway and an offshore rmb hub. our " one country, two systems " institutional arrangement is critical : it facilitates cross - boundary cooperation between mainland and hong kong authorities, while allowing hong kong to maintain a market environment that is familiar to market participants from the rest of the world. 2 / 5 bis - central bankers'speeches the design of these products and service offerings are also conducive to international participation. investors using these connect schemes can continue to follow common offshore market practices and rules that they are accustomed to, and leveraging their established legal and operational set - ups in hong kong, without the need to open onshore accounts and engage onshore agents. all these are familiar factors. i would, however, argue that hong kong's robust regulatory regime has played a crucial, if understated role. for our fellow mainland regulators, the various connect schemes in effect allow investors that are not directly under their purview to access the mainland market. mainland authorities would need to have confidence that such investors are properly regulated in hong kong. consider how much emphasis that mainland authorities put in market stability and order, the trust that they have in hong kong's regime is remarkable. likewise for international investors : the fact that they are now investing in a market β the mainland market β without actually having connected to that market shows how much they trust that hong kong regulators have done their homework for them, and that we will make sure that their interest is well - protected and the investment channel will run in an orderly manner. our robust regulation is what underpins this trust and in turn, our success as the hub for all things china. ( ii ) tech and innovation tech and innovation is another area that i believe regulation and market development are complementary and can feed into each other in a virtuous cycle. this is particularly the case for virtual assets. there was a time when virtual assets and the so - called cryptocurrencies were seen as a way to escape from the reach of governments and regulation. some continue to hold this belief, but they are now a minority. two reasons explain this. first is some high profile failures in the industry. many of the causes behind the failures - poor governance, misuse of client assets, etc. β are not new and are exactly the | 0 |
brexit as we see them, continue to communicate them publicly and with our firms, and actively engage in constructive fora such as this. thank you for your attention. 1 see most recent central bank of ireland macro - financial review 2 see sibley, ed. ( 2017 ) " the irish financial services sector : a prudential regulation perspective ", speech, financial centres summit, october 17 for perspectives on the european regulatory framework 3 consolidated figures based on regulatory returns submitted to the central bank of ireland. 4 see lch β swap volumes 5 see financial conduct authority business plan 2018 β 2019 6 see european central bank β β relocating to the euro area " 7 see cross, gerry. ( 2018 ) β integration, interconnection, innovation : some current themes in european financial regulation ", speech, barclays capital conference, march 14. 8 the uk β government has committed to bring forward legislation, if necessary, to create a temporary permissions regime to allow relevant firms to continue their activities in the uk for a limited period after withdrawal. in the unlikely event that the withdrawal agreement is not ratified, this provides confidence that a back - stop will be available β see bank of england - firms β preparations for the uk β s withdrawal from the european union : update following march 2018 european council 7 / 7 bis central bankers'speeches | ##es the firms we regulate, we are essentially looking at four objectives from a prudential supervision perspective. regulated firms should : 1. have sufficient financial resources, including under a plausible but severe stress. 2. have sustainable business models. 3. be well governed, with appropriate cultures, effective risk management and control arrangements in place. 4. be able to recover if they get into difficulty, and if they cannot, they should be resolvable in an orderly manner without significant externalities or taxpayer costs. brexit has the potential to affect each of these, and all financial services firms should be evaluating the impact of brexit on these aspects of their business. from a regulatory and supervisory perspective, a primary concern is to ensure that regulated firms that have business models with direct or indirect exposures to the uk economy address and plan appropriately for the potential negative impacts of brexit. therefore, we expect regulated firms across all sectors to consider, plan and adapt to the potential implications for their business models and revenue streams. it is the responsibility of firms β boards to assess the potential impact of brexit on their firm and to plan accordingly. new or materially changing entities in terms of new entities or business lines, we have been working for some time with a range of firms who have recognised that they need to relocate some of their activities in order to continue to access the eu market after brexit. once again there are asymmetries here. brexit is an imposed and undesired cost for businesses. there is the potential cost of setting up a new business in a different location, seeking authorisation, finding premises, relocating staff and so on. perhaps more importantly for some firms, there are ongoing costs and frictions associated with reorganising business lines, funding flows, booking models, and so on. it is understandable that firms want to minimise these costs and frictions. however, our gatekeeping role is hugely important in mitigating financial stability risks and 4 / 7 bis central bankers'speeches protecting market integrity and customers in ireland and across europe, and, consequently, protecting trust in and the reputation of the irish financial services system. so, it is imperative that any new business authorised here as a result of brexit meets the high standards that are expected of any such firm authorised in the eu β consistent with them effectively being, in many cases, an eu head office responsible for business undertaken in multiple jurisdictions. they need to organise themselves so | 1 |
? let me say a few quick words about our 2023 sustainability report which we are releasing today alongside our annual report. the report gives a good account of how sustainability is integrated across mas'various functions : as a central bank safeguarding singapore's ofr against climate risk ; as a financial regulator ensuring a climate - resilient financial sector ; 13 / 16 bis - central bankers'speeches as a promoter of the financial sector developing a vibrant sustainable finance ecosystem ; and as an organisation trying to reduce its own carbon footprint. today, i will focus on an area we have not spoken about much - how mas is safeguarding the ofr against climate risk. it is probably the least news - worthy of the issues i have covered today but likely to be the most critical for the future. in 2021, mas developed and published a climate risk management strategy to enhance the climate resilience of our investment portfolio. we conducted a climate scenario analysis for the whole portfolio. we also developed carbon intensity metrics for the equities portfolio, which we extended to cover corporate bonds last year. we then set out the portfolio actions we will take to reduce the carbon intensity of our equities portfolio by up to 50 % by fy2030. these included : defining the stewardship principles for our external fund managers to engage their portfolio companies on climate - related risk issues ; launching a climate transition programme to mitigate the impact of climate transition risk ; and excluding investments in companies that derive more than 10 % of their revenues from thermal coal mining and oil sands activities. let me provide an update on our climate scenario analysis, climate portfolio actions, and stewardship efforts. we have examined the possible impact of climate change on our long - term investment returns under four scenarios. the best - case scenario is a paris - aligned orderly transition where global warming is capped at 1. 5 - degrees celsius. early and ambitious policy measures drive the adoption of low carbon technologies and result in quick reduction in global greenhouse gas emissions. the worst - case scenario is a failed transition with temperatures rising to 4 - degrees emissions continue to rise and the world is faced with catastrophic and irreversible climate change. a first middle scenario is a delayed disorderly transition that keeps temperature rise within 2 - degrees. but this is at the cost of disruptive policy actions in response to an alarming spike in extreme weather events around the globe happening at the same time. a second middle scenario is a too - little - too - late | affect the government budget? let me start with currency translation effects. about 70 % of the net loss or s $ 21. 4 billion was due to the negative currency translation effects of a stronger singapore dollar. as we have explained on many past occasions, currency translation effects arise when mas'official foreign reserves ( ofr ) which are held in foreign currencies are reported in singapore dollars. if the singapore dollar weakens against the foreign currencies maintained in mas'ofr, we will experience positive currency translation effects. conversely, if the singapore dollar strengthens against the respective foreign currencies, we will experience negative currency translation effects. the singapore dollar appreciated significantly during fy22 / 23 as mas tightened monetary policy to dampen inflationary pressures. as you know, singapore's monetary policy is centred on managing the exchange rate of the singapore dollar against a trade - weighted basket of currencies. mas tightened exchange rate policy three times during fy22 / 23 amid rising inflation. the trade - weighted exchange rate of the singapore dollar strengthened by 6. 5 % over fy22 / 23 β the highest rate of appreciation in the last 10 years. negative currency translation effects are not cause for concern. they do not affect the external purchasing power of the ofr. thus, they do not affect mas'ability to conduct monetary policy or support financial stability. the ofr are meant to be used in foreign currency β to support the singapore dollar in times of currency weakness ; or to provide us dollar funding to the banking system in times of financial stress. a negative currency translation effect in the ofr when expressed in singapore dollars therefore does not affect mas'ability to carry out its functions. market players understand this, and this has never been an issue for mas. in 10 out of the last 15 fys, mas recorded negative currency translation effects β not surprising given that the singapore dollar has generally been strengthening against other currencies. it does not make sense to try to avoid such negative currency translation effects. 5 / 16 bis - central bankers'speeches for example, if mas wanted to hedge against such negative currency translation effects, we would have to sell us dollars from the ofr and buy singapore dollars. that would negate our interventions in the foreign exchange market to implement monetary policy and cause the singapore dollar to appreciate much more, thereby harming the economy and, not to mention, depleting the ofr. the remaining 30 % of the loss, or s $ 9 | 1 |
the topics and discussions at this conference, i have no doubt that we will be successful. 5 / 5 bis - central bankers'speeches | technology is not entirely free of new problems. or, put more optimistically, challenges. for instance, the algorithm could exhibit biases and lead to discriminatory outcomes. also, as with any data - dependent method, it is inherently backward - looking since it takes time to collect data and train the models. furthermore, since many of the techniques are new, users often feel they are forced to use black boxes with very low explainability. up to a point, they are right, since approaches are often a - theoretical, making it difficult to establish not just correlation but also causality. therefore, more and more work is being done to create'explainable ai '. lastly, since we often have to turn to cloud - based implementation β primarily because of computational demands β data security is an issue. i don't want to sweep these issues under the rug, but i do feel that careful application can yield benefits and that the least we can do is explore the possibilities. these possibilities have implications for how we supervise. in terms of supervision β the topic closest to my experience β these developments will have a significant impact on how we work. let me first turn to a showcase of how we, at de nederlandsche bank, have applied these new techniques in actual supervision. in the last year we have employed an outlier detection algorithm in " know your customer " - deep dives at several institutions. as you all may know, a great deal of media attention is given these days to preventing financial institutions from being used by criminals for activities such as money laundering. the standards that were designed to protect these institutions against money laundering were implemented in 2012 and are also referred to as " know your customer " or kyc in short. financial institutions have to comply with the standards, and as a supervisor, de nederlandsche bank needs to ensure that banks have incorporated the minimum standards in their business operations and that their systems work properly in fighting financial crime. but how to detect potential fraudulent transactions in a dataset that contains millions of customers and bank accounts and billions of transactions? data science has a clear role to play here. to identify exceptions we applied an isolation forest algorithm, and i probably don't need to explain it to this audience. but please indulge me while i take a few minutes to explain to you what i take away from the intuition and workings of an algorithm like this. 3 / 5 bis - central bankers'speeches since we have limited resources and since our supervision is | 1 |
not on the latest observed inflation. this requires projecting inflation via different approaches. recent ecb staff forecasts see inflation averaging 2. 3 % in 2024. given this, earlier this month we decided to front - load the normalisation path of our key interest rates, and to announce further rate hikes down the road, in order to ensure the return of medium - term inflation to our 2 % target. third, it is very difficult to know how much further our key rates will need to rise eventually in this hiking cycle, given the huge uncertainty that we face in the current context. but for this very reason, economic models are helpful in providing us central bankers with some guidance. i have provided in this speech some estimates based on models developed by banco de espana staff. crucially, this is a data - dependent forecast which may change as time goes by and new information comes in. also, it will depend on our future decisions regarding our asset purchase programmes. i hope that my words have reassured you about our determination to rein in inflation without causing unnecessary suffering to our fellow euro area citizens. we live in difficult times, but we expect to rise to the challenge. thank you for your attention. | term orientation requires projecting the future path of inflation. surveys and financial market instruments provide us with a useful tool in this respect, as they give us evidence of how different agents ( experts, households, firms, and financial market participants ) see inflation evolving going forward. in addition, central banks rely on their staff β s forecasts for inflation and economic activity β which typically draw on a huge amount of economic and monetary analyses β as a key input in their decision - making process. summing up, our task is not to respond to the latest inflation data point, a futile and β especially in the face of adverse supply shocks β counterproductive task, but to stabilise inflation over the medium run at the desired level, in our case 2 %, while ensuring that longerrun inflation expectations remain anchored to the target. returning inflation to 2 % over the medium run in the context of a steady increase in medium - term inflation expectations, as economies recovered from the worst phase of the pandemic crisis, at the end of 2021 we started at the ecb governing council a process of progressive normalisation of our monetary policy. the first step was to withdraw the extraordinary policy stimulus that we had launched at the onset of the pandemic. to this end, in march we stopped the net asset purchases under the pepp. in our june meeting we concluded that the conditions in our forward guidance for raising interest rates had been fulfiled ; we therefore communicated our intention to raise rates in july and again in september, and β consistently with our chained forward guidance see, for instance, carvalho, c., s. eusepi, e. moench and b. preston, β anchored inflation expectations β, american economic journal : macroeconomics ( forthcoming ). see gati, l., β monetary policy and anchored expectations : an endogenous gain learning model β ecb working paper no. 2022 / 2685, 2022. between rate hikes and asset purchases - we announced that net purchases under the app would end at the start of july. in that month we raised our rates by 50 basis points, a larger increase than we had signalled in june, based on our updated assessment of inflation risks and the reinforced support provided by the new transmission protection instrument ( tpi ) for the effective transmission of monetary policy across the euro area. earlier this month we hiked rates by an unprecedented 75 basis points, motivated by inflation levels that were far too high and likely to | 1 |
bis central bankers β speeches as with fiscal reforms, risk - sharing mechanisms should be established only if powers to control risk - taking have been delegated to the european level as well. hence, a de - risking of banks is necessary before further steps towards a further mutualisation of liability in the form of a common dgs can be taken. as regards policies that contribute to mitigate risks in the banking sector, regulatory reforms that limit banks β exposure to sovereign risk are crucial. therefore, reforms of the current regulatory treatment of sovereign risk should be a pre - condition for further risk - sharing mechanisms. because sovereign debt is not per se a risk - free asset, regulation should address both, credit risk and concentration risk of sovereign exposures of banks. otherwise, effects of sovereign distress would be mutualised under the common deposit insurance system via the direct effects on its national banks. in addition, there are many national and economic policy measures which, directly or indirectly, affect the risk profiles and thus the solvency of banks. for instance, differences in national insolvency laws have direct consequences for the valuation of banks β assets and the burden that creditors must bear in the event of insolvency. hence, reforms need to strike a balance between retaining national discretion over domestic policies while, at the same time, preventing national sovereignty from risk - shifting to the european level through ( changes in ) regulations affecting bank solvency. the preconditions for a common deposit insurance scheme will not be met before these issues have been resolved. the capital markets union : enhancing channels for private sector risk - sharing the focus of the banking union has been on markets for debt capital. the capital market union can complement the banking union by supporting the development and integration of european capital markets beyond the banking sector, and by creating additional channels for private sector risk sharing. developing and integrating markets for equity capital through the removal of impediments to efficient, non - distorted market outcomes can play an important role in this regard ( deutsche bundesbank 2015b ). integrated capital markets contribute to risk sharing among investors, which can generate welfare gains. in integrated markets, local risks are shared amongst investors from different regions. individual investors can safeguard themselves against local income risks by diversifying their equity and debt - financed investment across borders. as the nominal exchange rate cannot adjust in a currency union, cross - border risk sharing plays an important role in balancing asynchronous business cycles and thus in supporting the stability of the currency union | measures β such as the provision of funds from the rescue packages, offer pain relief. they help to buy time for the necessary adjustments, but all they actually do is fight the symptoms. they cannot eliminate what caused the crisis. it will take time until the causes of the crisis have been treated. this treatment should seek to remedy unsound developments at the national level while stabilising the framework of monetary union on a sustained basis. thus, the very first priority must be to regain confidence in the soundness of the public finances of individual countries, in the stability of their financial systems and in the competitiveness of their economic structures. this is where the adjustment programmes come in, providing assistance with conditions attached or promising β solidarity in exchange for solidity β. but at the same time, this assistance undermines the no bail - out clause to a greater or lesser extent, depending on the form it takes. but it β s not just a matter of correcting national policy. just as an earthquake reveals how structurally unsound a building is, so the crisis has exposed the shortcomings in the framework of the monetary union. what is more, the architects of the maastricht framework underestimated certain elements which exacerbated the crisis, such as the contagion effects between the individual countries or between banks and governments as well as the significance of national macroeconomic imbalances. essentially, there are two possible paths to a more stable monetary union. either we dare to take the step towards deeper political integration or we enhance the current framework and strengthen the countries β individual responsibility as a constituent element of the monetary union. deeper political integration could, for example, be a fiscal union. however, a fiscal union must not simply mean a greater mutualisation of liability : that would be a transfer union. a serious fiscal union would require the member states to transfer national sovereignty to the community level by giving the community the necessary right to intervene in the event of unsound public finances. liability and control must be kept in balance if the incentive to incur debt, which is inherent in the monetary union, is not to be increased and if the monetary union is to prevail as a stable monetary union. bis central bankers β speeches such a transfer of sovereignty would be a radical move and require wide - ranging legislative changes nationally and at the european level. above all, such a step towards greater integration would need not just political support but also public backing from the individual countries. on | 0.5 |
unfortunately, this is only available from january 2000, so observations of quarterly average pay growth begin in 2000 q2. the last observation is 2015 q3. unemployment is measured by the quarterly average of the lfs unemployment rate. inflation expectations are measured using general public inflation expectations measures taken from the barclays basix index. variations on this simple specification are also estimated. first, annual spot inflation, lagged one quarter, is used to replace the inflation expectations. that is on account of the strong collinearity between survey measures of household inflation expectations and actual inflation outturns. second, the bank of england β s agents β scores for recruitment difficulties are included as an additional gauge of labour market frictions, which could reflect the ease or otherwise of labour market matching, and which are not captured by contemporaneous measures of headline unemployment. third, productivity growth ( in heads ) is included as an additional explanatory variable. table a1 contains the estimation results. the model in column ( 1 ) of the table contains a very simple wage phillips curve ( wpc ), relating pay to its lag and to unemployment. the wpc slope of around unity is highly statistically significant and the simple model explains around 40 % of the variation in wage growth. column ( 2 ) adds lagged inflation as a crude measure of inflation expectations, and column ( 3 ) further adds the recruitment difficulties measure. both enter with the expected sign and indicate that a 1 percentage point rise in inflation or a 1 - point rise in the agents β score would tend to correlate with rises in wage growth of between Β½ and ΒΎ percentage point. the coefficient on unemployment remains at around unity. columns ( 4 ) and ( 5 ) add measures of inflation expectations. relative to ( 3 ), the inflation expectations measure in model ( 4 ) adds little explanatory power and enters with the β wrong β sign, possibly indicating multicollinearity. dropping inflation, in column ( 5 ), restores a role for inflation expectations with the expected sign. model ( 5 ) has overall marginally less explanatory power than model ( 3 ). columns ( 6 ) and ( 7 ) add productivity growth to the model. in moving from model ( 4 ) to ( 6 ), there is a small increment in explanatory power, and productivity growth enters significantly, although the coefficient on recruitment difficulties falls and is now estimated less precisely. inflation expectations continue to enter with the β | are guides to monetary policy decisions, but there are no magic thresholds. 23 this journey doesn β t have a set timetable ; only an expected direction of travel. in my opinion, we need to see cumulative progress in these three areas to have reasonable confidence that inflation is on track to return to the target and that a modest tightening in monetary policy will be necessary to ensure it does so sustainably. this means : sustained momentum relative to trend ; domestic cost growth resuming a path consistent with headline inflation at 2 % ; and core inflation measures moving notably towards the target. it is clear to me that, since last summer, progress has been insufficient along these dimensions to warrant a tightening of monetary policy. the world is weaker and uk growth has slowed. due to the oil price collapse, inflation has fallen further and will likely remain very low for longer. this may mean modestly weaker cost growth through this year, with the likely path for inflation, both headline and core, softer as a result. in short, recent developments suggest that the firming in inflationary pressure we had expected will take longer to materialise. in economic parlance, they are elements of a reaction function. one can think of a reaction function as akin to guide or policy rule relating the policy instrument to a set of macroeconomic variables. these are usually evaluated with respect to an β objective function β containing the policymaker β s target variables. for example, a flexible inflation targeting regime would be consistent with an objective function containing the deviation of inflation from its target and the deviation of a measure or measures of real activity from their equilibrium levels, weighted according to the policymaker β s preferences for stabilising one at the cost of another. the reaction function approach is arguably more robust to uncertainty about the structure of the economy than alternatives that seek to characterise policy by the first - order conditions of the policymaker β s objective function, although that robustness comes at the cost of not being formally the β best β rule for a given model structure. see for example levin and williams ( 2003 ). bis central bankers β speeches it has always been the case that, because the economy is subject to unforeseen disturbances, the precise path for bank rate cannot be preordained. 24 but β data driven β means more in the post - crisis world. the economy β s performance will, over time, reduce some of the uncertainty about its supply side and underlying inflation dynamics. although great uncertainties remain, we are arguably | 1 |
point to participation. emu is one important component of the eu cooperation in which sweden is now taking part. from the debate about economic aspects of emu one sometimes gets the impression that an alternative exists which is much simpler, enabling us to avoid all the adjustments which brussels imposes. that is not the case. sweden has experienced a profound economic crisis in the 1990s that was essentially self - inflicted. development in the rest of europe has on the whole been better. we must now in any event continue to consolidate government finance and establish long - term confidence in the stability of swedish economy. this will scarcely be easier outside emu. i find it hard to envisage that sweden would ultimately want to remain outside a functional emu. bit by bit the countries of europe will grow together. this makes the question not whether but when sweden ought to join. perhaps this perspective can help to make the question less dramatic. in our efforts to prepare the financial sector for emu we can see that the work has come a long way. we also meet a strong desire from the parties concerned to get going as quickly as possible so as not to fall behind ; so as to compete on the same terms as other european enterprises and not lose business opportunities. my own experience of eu cooperation prompts the same conclusion. as a β free rider β alongside emu it is not just business opportunities that we lose but also influence on european cooperation. | effective crisis management. i am going to give you some examples of what i see as good crisis management, but i will also show the detrimental outcome that may result when these core principles are violated. in addition, i will also touch upon how regulation may facilitate β but sometimes also hinder β the application of these crisis management principles. one of the lessons i have learnt is that resolving a financial crisis takes time. it is a messy process and it costs a lot of money. therefore, to handle a crisis effectively and minimise its detrimental effects on the overall economy, you need to stick to three basic principles : firstly, cooperate ; secondly, act swiftly ; and thirdly, be economically savvy. this holds true regardless of what caused the crisis, and regardless of the solution. let me explain to you in more detail, starting with the first principle. principle 1 : cooperate without cooperation between central banks, supervisory authorities and finance ministries, there is no such thing as effective crisis management. there are several examples of situations in which inadequate or failed cooperation has resulted in a deepened and prolonged crisis. in fact, we recently experienced such a cooperation failure in my country, with the situation concerning swedish banks operating in the baltic countries. we, at the central bank, saw the build up of risk as problematic and believed that remedial measures should be applied. we also pointed to these problems in our financial stability report. in retrospect, we should have been clearer, especially regarding the potential consequences of these problems. but more importantly, we failed to reach agreement on this with the authorities in the baltic countries and with our own swedish supervisory authority ( as you may know, we have a separate supervisory authority β in contrast to spain, where supervision is undertaken under the umbrella of the central bank ). i am not pointing a finger at any particular authority in any particular country β let me be clear about that. but i firmly believe that if we had cooperated better, our countries would probably not have been as severely affected by the global repercussions of the credit crunch. to avoid this kind of cooperation failure, you need a clear division of roles and responsibilities. you need to share information and coordinate your actions. and to manage a crisis effectively, you need to be prepared. this requires planning ahead. by establishing, in normal times, what is usually referred to as a domestic standing group β bringing together the supervisory authority, the central bank, the finance ministry and perhaps certain other relevant authorities β you | 0.5 |
jerome h powell : trends in fixed - income markets testimony by mr jerome h powell, member of the board of governors of the federal reserve system, before the subcommittee on securities, insurance, and investment, and subcommittee on economic policy, committee on banking, housing, and urban affairs, us senate, washington dc, 14 april 2016. * * * chairmen crapo and heller, ranking members warner and warren, other subcommittee members, i would like to thank you for inviting me to testify today on trends in fixed - income markets. because these markets perform important functions in our economy, it is imperative that we understand the significant changes they are currently undergoing. as i will discuss, a number of factors have been driving these changes. some market participants have expressed concerns about low liquidity across fixed - income markets, although many recent studies have found it difficult to identify such a broad reduction. it may be that liquidity has deteriorated only in certain market segments. it may also be that, even if liquidity is adequate in normal conditions, it has become more fragile, or prone to disappearing under stress. the sharp swing in treasury prices that took place on october 15, 2014, led the federal reserve board, in conjunction with the treasury department, the commodity futures trading commission, the federal reserve bank of new york, and the securities and exchange commission, to create a joint staff report and to host a conference on the structure of treasury markets at the federal reserve bank of new york ( frbny ) in october 2015. 1 the staff of the four agencies and the frbny compiled transactions data across both treasury cash and futures markets and analyzed the factors that could have caused the rapid rise and subsequent reversal in treasury prices in such a short span of time. this analysis did not find a single factor that caused the sharp swing in prices. as had already occurred in equity markets, advances in computing and communications technologies have allowed proprietary trading firms ( ptfs, also often called high - frequency trading firms ) to capture a majority of the interdealer market in treasuries. as a consequence of these changes, trading in treasury markets now moves at extreme speed. it may be that these changes have also led to greater liquidity risk, or sudden declines in liquidity. researchers at the frbny have shown that spikes in volatility and sudden declines in liquidity have become more frequent in both treasury and equity markets. 2 there is also evidence that liquidity shifts more rapidly and hence is less predictable | in such way, the global economy has moved somewhat deeper into a deceleration phase, with the effects of the european debt problem combined with unique factors various countries and regions have been involved in β namely, a great challenge of balance - sheet adjustments in advanced countries and that of searching for a sustainable growth path in emerging economies. as mentioned earlier, with the u. s. economy continuing to recover moderately and policy effects gradually surfacing in the chinese economy, the global economy is likely to get out of a deceleration phase, but the exit has been deferred. ii. current state and challenges of japan β s economy let me move on to japan β s economy. as i have just explained, overseas economies have moved somewhat deeper into a deceleration phase. as a result, exports and industrial production have been relatively weak. the month - on - month rate of change in real exports has been negative for four consecutive months since may due to a weakness in exports to europe and china, and, against such a backdrop, industrial production declined again in july relative to the april - june quarter, following a decline in the april - june quarter relative to the previous one. on the other hand, domestic demand has been resilient mainly supported by reconstruction - related demand. public investment has been clearly increasing and business fixed investment has been on a moderate increasing trend with an improvement in corporate profits. private consumption has been resilient with improving employment and housing investment has generally been picking up. however, there have recently been somewhat weak indicators in private consumption. while that is partly due to a weather factor, a sluggish pace of growth in overtime wages mainly in the manufacturing industry due to weak production and a decline in summer bonuses might have contributed to constraining consumption from the income side. while an application for receiving subsidies for eco - friendly cars ended at the end of last week, last minute demand was not observed. that was partly because efforts by car sellers after ending of the application, including a rebate in place of the subsidies and the release of popular fuel - efficient new - models, had been anticipated, but it perhaps should be interpreted as a sign that pre - consumption of future demand has reached its limit. as for business fixed investment, while it is likely to continue increasing as a trend, attention should be paid to whether there are any effects of a global deterioration in business sentiment. while domestic demand as a whole is likely to maintain its firmness, it might be difficult to | 0 |
will ultimately contribute to future prosperity. but experience has taught us that it is a development which needs to be monitored very closely and presupposes a high degree of discipline in economic policy. it requires a great deal from decision - makers in the political system and the supervisory authorities, as well as from those of us who work in central banks. developments in the financial field are creating large opportunities. but it is also important to bear in mind that major, far - reaching changes normally entail risks. in view of these risks, every agent in the financial system needs to act wisely and discerningly. only in this way can the full benefits be drawn from the opportunities that financial developments are providing. | still reason to expect gdp growth in the years ahead to be somewhat higher than what the riksbank believes to be sustainable in the long term. for inflation in the years ahead, it is of course important that there are some unutilised resources to begin with. so what can we expect in terms of inflation developments? in this respect, the outlook has gradually undergone a number of more marked changes since the end of the autumn. principally, as a result of lower expected increases in wage costs and better productivity growth, unit labour costs are expected today compared with in december to grow a number of tenths slower in the years ahead. normally, there are few factors that are more significant for inflation a few years ahead than unit labour costs. in addition, international price pressure is muted. against this background, most factors suggest that inflation in the next two years will be below the riksbank β s target. also with regard to the various risks to economic activity and inflation, i believe there is cause to reason somewhat differently than in december. as the economic upswing is gradually confirmed, the risk of a setback in the coming two years will diminish. correspondingly, the probability that economic activity could prove unexpectedly positive and that the upswing will be quicker than anticipated is also likely to increase. however, this does not mean that there are no downside risks whatsoever in the short term. one such risk is that the weak labour market in the us or in sweden - confirmed by the latest data - will worry households and dampen their consumption. it seems unlikely, however, that the upswing could be derailed entirely for this reason. as regards inflationary pressure, there are a number of question marks as i mentioned earlier. we don β t know how long the recent rise in productivity will last. in the inflation outlook that i have presented, some consideration has been given to the new data. at the same time, there are good arguments pointing to both higher and lower productivity growth. the same applies to our view of international inflation. as regards wages, there are also risks on the upside, which are essentially related to the way in which wage formation in sweden is conducted. it can still not be ruled out entirely that the wage bargaining round will be derailed. should the outcomes prove higher than expected, it is likely to have an impact on the future level of interest rates. so far i have not said anything about the exchange rate. there may be reason to touch upon this. | 0.5 |
##acency by the success of short - term volatility management. 20. in particular, there remain important long - term challenges to the sustainability of growth in indonesia. as we all aware, in many emerging market including indonesia most policy responses have been focused on demand - side management through monetary or fiscal policy. after all, pursuing demand management policies alone can only take us so far β somewhat akin to stepping on the gas pedal without β upgrading β or modifying the car we drive. 21. thus, from domestic backdrop, bank indonesia give serious consideration on the need to address structural issues to be very pressing since the real lift of potential growth of the economy must essentially come from supply - side progress. without effective structural policy, an external shock would always require substantial adjustment in the demand side that will only intensify boom - and - bust cycle in the economy. 22. indeed, the task is not going to be easy. reorienting the economic growth strategy to focus more on skills development, innovation, and productivity involves deliberate planning over relatively long stretch of time. two principles are of the essence : consistency and continuity. due to the long - term nature of structural readjustments, continuity of policy implementation is required for the policy measures to take meaningful effect on the economy. 23. the good news is that some of the infrastructure projects in indonesia have already been in progress and will continue move on regardless of β the political regime shift β. last month, the construction of double tract railways just completed, connecting jakarta and surabaya, as the biggest and second biggest city respectively. meanwhile, the other many ongoing projects remain the responsibility of the next administration to ensure adequate infrastructure in the medium term. 24. to be sure, in indonesia, democracy is a continuous process since its conception fourteen years ago rather than a fixed state of bliss to be attained. the process is shaped by voices of the people, under an institutional setup that provides checks and balances. with more than 500 elected offices throughout the archipelago, election and peaceful transition of power actually occur almost every day in indonesia. i am confident that the upcoming presidential elections will be no different. and it will be a testament to the strength of our democracy and its ability to support economic development. it β s my firm believe that the next administration will ensure quality public policy that can enhance the country β s competitiveness and sustain long - term growth. outlook 2014 ladies and gentlemen 25. against the background of quite an unpredictable external environment, i believe that the | . britain was entering a severe recession that year at the end of the napoleonic wars with deflation of more than 10 %. the annual return in 1817, the year of jane β s death, was actually negative 2 % as inflation rebounded. a few years later britain reverted to its pre - war monetary standard by restoring sterling β s convertibility to gold. over the following 50 years, nominal interest rates came down a little but stayed in the 3 - 5 % range. broadbent ( 2018 ). from a narrow financial stability perspective, growth of own currency sovereign debt, especially when financed internally, is not a good predictor of financial crises. see cunliffe ( 2019 ). all speeches are available online at www. bankofengland. co. uk / news / speeches but real returns on the navy fives and similar fixed rate securities continued to be highly volatile reflecting the very large swings in inflation for much of period β a period that was punctuated by frequent financial crises. that perhaps illustrates that there is a great deal more to stability - both financial and monetary - than nominal interest rates. all speeches are available online at www. bankofengland. co. uk / news / speeches references anadu, k., m. kruttli, p. mccabe, e. osambela and c. h. shin ( 2018 ), the shift from active to passive investing : potential risks to financial stability?, working paper pra 18 - 04, federal reserve bank of boston. andersen, a., c. duus, and t. jensen ( 2016 ), household debt and spending during the financial crisis : evidence from danish micro data, european economic review, 89, pp. 96 - 115. avery jones, j. ( 2019 ), jane austen β s income : insights from the bank of england archives, bank underground blog, 2 august 2019 bank of england ( 2019 ), financial stability report, issue no. 45, july 2019. bank of england ( 2018 ), inflation report, august 2018. bank of england ( 2017a ), stress testing the uk banking system : key elements of the 2017 stress test, march 2017. bank of england ( 2017b ), financial stability report, issue no 42, november 2017. borio, c. ( 2017 ), secular stagnation or financial cycle drag?, keynote speech, national association for business economics, 33rd economic policy conference. brainard, l. ( 2017 | 0 |
form of international macro - prudential stabilization. it is important, however, that nothing that is done as a possible short - term palliative be allowed to interrupt the rebalancing and necessary process of normalization that is underway in the global economy. some may use this more forgiving attitude as cover to continue earlier unhelpful practices, but this would only invite a replay of past unpleasant events. exiting from the extraordinary policies that were put in place by several advanced economies to buttress growth is going to be challenging. as many observers have noted, β we are travelling in uncharted territory. β but at least the incentives of the countries that are exiting β and those on the receiving end β should be well aligned. no one should want advanced economies to exit too early or too late, and no one benefits from excessive market turbulence. some episodes of increased volatility will no doubt be experienced, but advanced bis central bankers β speeches economies are committed to being as transparent as possible in order to minimize surprises and smooth the adjustment process. it is important that countries play by the rules and stand by the commitments that many of them made as part of the g - 20 framework. displaced pressures from exchange rates that are not allowed to move, from capital flows that are directed elsewhere, and from outsized reserves that are looking for a safe home often squeeze small open economies such as canada β s and, more critically, frustrate the international adjustment process. bis central bankers β speeches | plan that g - 20 leaders outlined in the early days of the crisis, the g - 20 framework, was designed to deliver strong, sustainable and balanced growth. it had four critical and mutually reinforcing parts : ( 1 ) meaningful fiscal consolidation in overly indebted countries ; ( 2 ) sweeping financial sector reform ; ( 3 ) wideranging structural reforms to boost future growth prospects ; and ( 4 ) a necessary rebalancing of global demand between deficit and surplus countries, assisted by more flexible, marketdetermined, exchange rates. the first three parts of the plan would inevitably have contractionary effects in the short run, so a domestic - led expansion of demand in surplus countries was a critical component of the g - 20 plan if global deflation was to be avoided. any positive confidence effects that might be associated with promises of fiscal rectitude and substantive structural reform were likely to be small and insufficient, on their own, to correct the widening output gap. bis central bankers β speeches so how have we done? it is safe to say that global economic performance over the past five years has been disappointing. as acknowledged in various g - 20 communiques, growth has been neither strong, nor sustainable nor balanced. shortly after the crisis and the announcement of the g - 20 framework, economists at the bank of canada decided to use their global model to examine three very different scenarios for how the global economy might unfold. the first was the so - called β good β scenario, where every player did what it had promised and all four parts of the plan were delivered. it is important to stress, however, that this was not a goldilocks scenario by any means, just something that, in a rough and ready way, would satisfy the requirements of the g - 20 framework. the second scenario was a β bad β one, in which no one initially did what they were supposed to. but it assumed that eventually everyone would come around, after a substantial lag, and do the right thing. without this assumption the model and, presumably, the global economy, would explode. the third scenario was actually worse than the bad one, at least for the first few years of the simulation, and our economists called it the β ugly β scenario. it involved doing only half the job. more specifically, only the first three parts of the g - 20 framework, which were inherently deflationary, were set in motion. the estimated cumulative costs to the global economy from following | 1 |
coin, ubs β s utility settlement coin or facebook β s libra. they share many of the features of crypto - assets but seek to stabilise the price of the β coin β by various means. they might therefore be more capable of contributing to the enhancement of payment systems, with a potentially global reach, especially those sponsored by large technology or financial firms. in the retail market, stablecoin - based solutions seek to address evolving consumer preferences towards instantaneous, continuous, and standardized payments, as consumers become ever more mobile. while this demand is largely already met through an increasingly diversified and digitalised supply by many payment services providers β be they new entrants or established players -, stablecoins could challenge the latter by offering cheaper, easier and instant anonymous and peer - to - peer payments. in addition, at the global level, we are far from having a network ( or set of interconnected networks ) that could support quick and cheap 1 / 4 bis central bankers'speeches transfers of funds. the current supply of cashless means of payment lacks a universal and ergonomic cross - border solution akin to cash person - to - person payments. stablecoins could be seen as a β universal β means of payment facilitating cross - borders payments in a single unit of account. as we know, this is an argument put forward by some global stablecoins promoters. furthermore, stablecoins could help remedy other limits of the existing payment ecosystem, even if the issues at stake might concretely vary between developed and developing countries. in particular, their blockchain - based technology could help improve wholesale clearing and settlement mechanisms and facilitate delivery - versus - payment processes as well as cross currency settlements, while guaranteeing resilience and recovery from operational incidents. however, stablecoins may also bring material risks to payment systems. as many central bankers have pointed out, stablecoins do not satisfactorily offer the qualities expected from a settlement asset to be used interchangeably with commercial bank money and central bank money. as intermediaries in exchanges, stablecoins are far less effective than a settlement asset with legal tender status, insofar as ( i ) they are not entirely stable since their price stability depends on the value of a basket of assets, and ( ii ) they offer no guarantee of a refund in the event of fraud. the fact that they have no intrinsic value and that they offer no guarantee that they may be converted at par upon demand | circumstances? real interest differentials of, say, 3 % might persist for a decade or more. if these numbers are realistic, the portfolio balance model would suggest that the exchange rate has to appreciate initially by some 30 % ( and will appear seriously and persistently uncompetitive for trade in goods and services ), before depreciating by 3 % per year over the following decade. so the potential swings in real exchange rates, even if well - behaved in terms of the model, are much greater for emerging markets. add to this some extrapolative expectations, some herding, and above all a risk premium which varies with the latest wave of euphoria or pessimism, and the potential both for volatility, and for significant and sustained misalignment - in both directions - is clear. it seems unlikely, to say the least, that an exchange rate could follow this portfolio - balance path of appreciation followed by depreciation without the market balking at the large shifts and the overvaluation during the long transition. is it not surprising, in such a world, that countries have sought to limit the extent of the swings ( misalignments ). they have sought to resist the appreciations of the exchange rate during the periods whether these persistently high rates were a response of the underlying fundamentals, or a period of prolonged euphoria, is not the point. i favour the first explanation, but whatever the reason, domestic borrowers had strong incentives to seek foreign - currency - denominated ( ie lower interest rate ) funding overseas, and foreigners had incentive to provide funds. keynes ( 1980 ) had identified this problem in 1942 : β in my view the whole management of the domestic economy depends upon being free to have the appropriate rate of interest without reference to rates prevailing elsewhere in the world. capital control is the corollary of this. β of large capital inflow partly because of an intuition ( which gains some support from the japanese experiences in the 1950s and 1960s ) that strong international competitiveness provided beneficial price signals for the most dynamic sector of the economy - tradeables, especially exports. elements of old - fashioned mercantalism may be present also. perhaps more important still, the large foreign capital inflow creates a destabilising feedback loop while the inflow is strong, the rising exchange rate reduces the cost of borrowing in foreign currency, and encourages more borrowing. at the first sign of some weakness in inflow or | 0 |
##ncies ) over periods of up to six months against an expanded range of eligible collateral. as a result, the size of the eurosystem β s balance sheet increased by 37 % during the fourth quarter of 2008 to a total of just over β¬2 trillion at the end of last year. this simultaneous easing of monetary policy and liquidity provision was fully consistent with the separation principle and the medium - term orientation of our strategy because of the new constellation of risks to price stability and financial stability. the unprecedented reduction in the ecb β s policy rates and the extraordinary increase of liquidity in the money market have been helping to mitigate the impact of the processes of disinflation and deleveraging on the real economy. consequently, they have been containing the possible emergence of β endogenous β risks to price and financial stability. at the same time, we continue to be confronted with exceptionally high uncertainty. the transmission mechanism of monetary policy has been affected by the strains in the money market and the ongoing adjustment of banks β balance sheets as well as by the increased risk aversion and reduced confidence of consumers, firms and investors. accordingly, we will continue to monitor closely all relevant developments. in early march, with the benefit of additional information and the ecb staff macroeconomic projections, we will assess the medium - term outlook for price stability and the associated potential risks. if inflationary pressures are diminishing and risks to price stability are assessed to be on the downside, a further easing of monetary policy may be appropriate in order to maintain inflation over the medium term at a level consistent with price stability, that is, below, but close to, 2 % and keep inflation expectations firmly anchored in line with this objective. an important issue which has been discussed extensively recently is whether the persisting strains in the money market and the significant tightening of credit conditions β and the possible emergence of supply constraints β in the bank credit market require further measures to be taken by central banks and governments in order to preserve financial stability and support the recovery of the economy. such measures have been taken or pledged in the past in the united states, the uk and the euro area. and yesterday, the us government announced an extensive new package of measures to β stabilise and repair the financial system, and support the flow of credit necessary for recovery. β 3 in the euro area, as i previously noted, the ecb has already taken non - standard measures in the past by changing aspects of its operational framework to | witnessed in the euro area as a whole. banking union is expected to increase the efficiency of financial intermediation by banks. in a bank - based economy like the euro area, this is particularly relevant, because enterprises rely to a much greater extent on banks for funding than e. g. firms in the u. s. a. according to a recent ecb report, loans on bank balance sheets account for close to 50 % of nonfinancial corporate debt in the euro area, but only 20 % in the u. s. a. therefore, strengthening the banking system is also essential for the real sectors of the economy, as more resilient banks are much more effective in performing their vital functions vis - a - vis the real economy. bis central bankers β speeches first of all, a credible and respected supervisor together with clear rules on bank resolution will reduce the uncertainty premiums that many european banks currently pay on their refinancing. as the ecb is set to be an exacting and respected supervisor, banks subjected to its supervision will enjoy high confidence, and this should result in a reduction of the uncertainty premiums. moreover, the principle of bail - in in case of bank failures and the uniform cascade of liability as it is laid out in the banking recovery and resolution directive ( brrd ) will help strengthen market discipline, although the ensuing effects on banks β funding costs will differ depending on the structure of their liabilities. in some cases, this may entail additional costs, as banking industry representatives have pointed out. for example, unsecured creditors that until now have almost always avoided a bail - in will demand higher risk premiums. at the same time, deposits can be expected to become less sticky, which again might exert upward pressure on funding costs ( which will definitely be the case with the annual contributions to the resolution fund, scheduled at eur 5. 5 billion ). but overall, banking union will result in a more stable refinancing structure of the banking sector and thus enable banks to better contribute to the economy. likewise, banking union will be a strong incentive for banks to improve their risk management. yet, while it is certainly one of the central aims of banking union to make banks β lending policies more risk sensitive, supervisors will also have to bear in mind the impact their actions have on the real economy. banks β willingness and ability to share the risks of the real sectors of the economy lies at the heart of the house bank principle that | 0 |
can be processed in the same manner as original checks, recipients of substitute checks should incur little or no additional processing costs. recipients, however, will incur some additional costs relating to the act's customer protection and disclosure requirements. it is difficult, however, to estimate the overall cost savings. different banks will take different approaches toward using the new authority granted by the act. each bank's use of the new authority will depend on its technology infrastructure and strategy, its physical infrastructure, and its customer and business profiles. thus, the magnitude of the cost savings, which will depend on the rate at which banks begin using the new authority, is difficult to determine. we recognize that the most challenging policy issue in the proposed law, and the aspect of this legislation that has generated the most spirited discussion, relates to customer protections. current check law protects customers if there is an unauthorized debit to their accounts. a customer already has a claim against its bank for an unauthorized charge, and the bank may be liable for interest on the amount of the unauthorized charge and consequential damages for the wrongful dishonor of any subsequently presented checks. the proposed legislation applies these existing protections to substitute checks. there are, however, differing views as to whether additional customer protections are necessary for substitute checks and, if so, how extensive those protections should be. we believe u. c. c. Β§ 4 - 401 ( a ) and Β§ 4 - 402 that, in determining the form these protections should take, the associated benefits and costs will need to be carefully balanced. federal reserve board authority to regulate the payments system we understand that there is some debate regarding whether the federal reserve board already has sufficient statutory authority to adopt by regulation the concepts embodied in this proposed legislation. although congress has given the board authority to regulate the check system and other aspects of the payments system, we do not believe that this authority is sufficiently broad to enable us to adopt regulations that accomplish the purposes of the act. in the 1987 expedited funds availability act ( efaa ), congress gave the board broad authority to regulate " any aspect of the payment system, including the receipt, payment, collection, or clearing of checks ; and any related function of the payment system with respect to checks " in order to carry out the efaa. the efaa also provides that the board's regulations supersede any inconsistent provision in state law, including the uniform commercial code. in the efaa, congress directed | early to draw any more farreaching conclusions from recent events. as usual, the riksbank will monitor developments and how these may affect inflation and other macroeconomic developments, β concluded mr oberg. 2 / 2 | 0 |
##tionality ; gradualism and flexibility in the conduct of monetary policy. in that context, financial markets are currently considering that the rise in interest rates might start in the near future, with a first 25 bps hike almost fully factored in ( 90 % ) as of next july, followed by two others by the end of this year. we will see whether these expectations, which are very volatile, will be vindicated by the actual decisions of the governing council as they will remain data driven and will reflect their assessment of the outlook. however, i believe it is fair and safe to say that the interest rates environment is likely to change after a long period of very low interest rates. as a supervisor, the current downside risks to growth and upside risks to inflation, and the associated perspective of a normalization of monetary policy of the euro area, make it all the more relevant to maintain credit and market risk management of banks, including exposures to vulnerable sectors, to leverage finance and to shocks in interest rates and credit spreads, a top ssm supervisory priority. 2. financial stability situation : the risks associated with indirect exposures 1 / 4 bis central bankers'speeches normalization of monetary policy will certainly come with a rise in interest rates. an orderly rise in interest rates as well as the direct exposures, which are small and concentrated, of euro - area financial intermediaries to ukraine and russia, are not likely to threaten financial stability. through these direct exposures, the financial stability impact of the war has been well contained so far. however, the outlook is uncertain as vulnerabilities associated in particular with markets underpricing of risk, nfc high level of debt and exposure to cyber - attacks may unravel through indirect exposures and amplification mechanisms. particular attention should be paid to abrupt repricing moves in risky asset prices, in the wake of rising interest rates. this situation could put some non - bank financial actors in difficulty, especially the ones using leverage, as illustrated by the archegos β default at the end of march 2021. likewise, given the role played by russia and ukraine in the supply of energy and more widely some commodities, rising prices and volatility in commodities markets have led to a major increase in the magnitude of margin calls for derivatives, in particular for energy and agricultural products. such margin calls have generated liquidity strains for commodity market participants, which require strong vigilance notably to ensure that any possible default should remain idiosyn | . there are two interoperable clearing houses in the country - - pesonet and instapay. as of march 31, 2022, participating banks and electronic money issuers registered with pesonet stood at 96, while that with instapay totaled 66. likewise, the digital payment streams of the national qr code standard, or qr ph, has expanded to cover person - to - merchant and person - to - person payments. we are also broadening the use cases for three digital payment streams this year. first is the interoperable bills pay facility, which will address the existing fragmented bills payment mechanism. second is the request to pay facility, which will empower payees to initiate collections of nonrecurring receivables. third is the direct debit, which will allow customers to better manage recurring payments. we have also issued the open finance and digital banking frameworks to accelerate digital transformation and financial inclusion. the open finance framework promotes consent - driven data portability, interoperability, and collaborative partnerships among entities that adhere to the same standards of data security and privacy. the digital banking framework provides the regulatory guidelines for setting up and operating a digital bank in the country. in line with our digital transformation roadmap, the bsp has issued licenses to six purely digital banks. the bsp, or the central bank, has also commenced initiatives in the digitalization of offshore payments. we are prioritizing the establishment of interoperable cross - border real - time retail payment systems among asean member states. with digitalization and financial technology re - shaping the landscape of the philippine banking system, the central bank stands ready to reform, innovate, and transform. we do so by providing an enabling regulatory environment to keep pace with the evolving developments in the financial system and to prepare the country as it faces the challenges of the future. moving forward, i see these wide - ranging reforms ultimately creating tangible economic benefits to the filipino public, as the central bank remains committed to promoting price stability and a resilient, responsive, and inclusive financial system. i β ll stop here. thank you. | 0 |
made to set up the action plan which includes issues related to securities, such as a ) cutting costs of the securities issue, b ) tax treatment, c ) development of the regulatory framework, etc. i sincerely hope that this project will be completed soon after the summer break since, in addition to foreign assistance, we shall also have a new government in place by then. the new government will, hopefully, place faster development of the capital market high on its list of priorities. thank you for your attention! | radovan jelasic : strengthening integration and cooperation in southeast europe speech by mr radovan jelasic, governor of the national bank of serbia, at the press conference of the european fund for southeast europe ( efse ), belgrade, 26 may 2009. * * * dear ladies and gentlemen, it is a pleasure to be here today with dr. klaus glaubitt and ms. sylvia wisniwski from the european fund for southeast europe β efse. before they start their presentation on efse, i would like to depict the current economic situation and describe efse β s role in stabilising the economies in serbia and southeast europe as well as in promoting economic and financial sector development in the region. the financial crisis has been a huge liquidity shock. this means that investors, financial institutions as well as businesses and households around the world have been scrambling for liquidity. as we are all facing the effects of this β sudden stop β, we have to undertake bold measures, almost as bold as those which were taken at the fall of the iron curtain, however, with one difference β this time it would be purely for the maintenance of stability and standards of living, and not for their substantial increase. the national bank of serbia β nbs β was relatively well prepared for the initial effects of the crisis. as of today, the nbs has undertaken several measures in order to limit the impact of the crisis on the banking sector, which include securing additional support from the international finance institutions such as kfw, the european investment bank β eib and the european bank for reconstruction and development β ebrd. time is critical for all parties and help from international finance institutions including from vehicles such as efse is needed more than ever to : mitigate the impact of the crisis in the region, resolve the prevailing credit crunch and, more importantly, to secure the stability of the financial sector. the stability of the financial sector remains the key pillar of a functioning market economy a precondition of general stability. the services it provides like payments, deposits and loans are fundamental for the entire economy, especially for micro and small enterprises. the microfinance sector has been hit hard by the financial crisis, not only due to higher interest rates but even more significantly due to the lack of availability of funds for such purposes. in this respect, efse plays a key role in providing a stable funding source for development finance and the micro and small enterprise | 0.5 |
the incentives of a protection scheme are affected by the way that contributions are decided. ideally, members should pay contributions in line with their individual burden of risk. riskbased contributions are, incidentally, also what the eu directive and the german implementing act require. for a joint - liability scheme such as that operated by the savings bank sector, it is essential that the contributions made by the leading institutions in the group are commensurate with their respective risk levels. in my opinion, the system of contributions proposed by the european banking authority gives too much weight to covered deposits, with the result that the central institutions, which have smaller deposit levels, are not adequately taken into account. however, incentives are not affected solely by the system of contributions. intra - group claims β in other words the lending relationships between the individual members of the protection scheme β also play a role. it can be assumed that the savings bank sector will aim to continue treating intra - group claims on a privileged basis. this makes perfect sense for a collective, as the redistribution of liquidity is one of its central functions. however, this provides incentives to build up high levels of reciprocal claims, above all within the collective. a balance needs to be struck here between an internal redistribution of liquidity and an excessive build - up of internal financial relations, which could be a source of stability risk. the right incentives are therefore crucial for the stability of a protection scheme. specifically, this means that the protection system as a whole must be able to manage risks. in this vein, the capital requirements regulation requires institutional protection schemes to have centralised risk management. it is only through this centralised structure that liability and control can be brought into balance. i do, of course, understand that it is difficult to square this type of centralised approach with the regional responsibilities and decision - making channels of the savings bank sector, and, not least, its decentralised self - conception. nevertheless, i believe that a tenable solution can be found, and i would warmly welcome it if all group partners would commit to achieving this. a balance must be found between those who benefit from a protection scheme and those who are disadvantaged by it. however, time is of the essence, as the statutory requirements must be fulfilled by july of this year. bis central bankers β speeches 4. conclusion as the philosopher pericles said in 500 bc, β it β s not a matter of predicting the future, but of being prepared for it. β and this still | certainly not to take on more and more risk in the search for yield. in the worst case, that kind of β quest for yield β can contribute to the formation of price bubbles. looking ahead, i want to be able to count on bis central bankers β speeches the savings banks to run their lending business prudently and responsibly β not least in the real estate segment. and as for the possible answer that savings banks should charge their own depositors negative interest rates β that is something which banks alone should decide at their own discretion, not banking supervisors. as supervisors, we have no intention of intruding on your decisions. the response to the current challenges can probably be found primarily on the cost side β staff resources can be deployed even more efficiently, and operating outlay can be reduced. as a case in point, there are some savings banks which still run a relatively large branch network, and a growing number of them will probably be wondering whether that is still in keeping with customer demand, demographic change and changes in customer behaviour. to sum up : like it or not, we will have to get used to the idea that the persistent low - interestrate environment will take a heavy toll on savings banks β bottom line. particularly the pressure on net interest income is likely to intensify further, pushing down savings banks β operating results. the good news is that many savings banks do have sufficient resources to hold their own in the medium term, even amid such inclement conditions β provided they aren β t hit by a huge wave of write - downs in the future. all things considered, savings banks now need to adopt a strategic and operational stance that will guide them through these choppy waters as best they can. incidentally, it is not just the low interest rates which are forcing credit institutions to rethink their strategic alignment β developments like the growing digitalisation of banking business also need to be considered. 3. reforming protection schemes let β s now turn our gaze inwards on the shoal β s structure. it β s clear that the structure of the savings bank sector will have to change. the reason for this is the need to comply with the requirements of the eu β s new deposit guarantee directive and the german deposit guarantee act. these, in turn, necessitate a swift reform of the sector β s institutional protection and joint liability schemes. the new eu directive requires all credit institutions to provide their depositors with statutory deposit protection cover of β¬100, 000 by | 1 |
robert ophele : micro economic analysis of companies introductory speech by mr robert ophele, second deputy governor of the bank of france, at the plenary meeting of the european committee of central balance sheet data offices ( eccbso ), paris, 18 β 19 october 2012. * * * mr president, ladies and gentlemen, it is a great pleasure for me to welcome you in our new conference center. i am delighted to receive so many distinguished participants to this meeting, coming from the same universe of statistical institutions or central banks β whether they are members of the eurosystem or not β and sharing the same interest for micro economic analysis of companies. we are very happy indeed to organise this year β s eccbso regular meeting which will enable you to discuss in depth about the past achievements of your task forces and the prospects, drawing possibly some kind of action plans. undoubtedly, we need to explore further a number of those issues where your committee is fully and often very successfully involved. i am grateful that bdf can provide, in its turn, the opportunity to host this conference. as you know, banque de france is one of the co - founders of the committee and has always shown its commitment by actively contributing to these task forces. from my previous experiences, especially as head of the directorate general operations, and presently also, as president of the french banking and insurance supervisory authority, i measure what your contributions can provide in operational terms ( risk assessment ) and also in terms of analysis ( research, advice, bach data base ). the works of your committee, and so to say its affiliates, is useful and i would like to take the opportunity of this plenary meeting to encourage you to keep the same stance. from the perspective of a ncb, your contributions are important in so far they provide platforms for exchanging our thoughts, our know - how and, last but not least, for exchanging data within the eurosystem but also with statistical institutions, witness in that regard is all what is being done with the european group register managed by eurostat and now with the committee for monetary financial and balance of payment statistics. obviously, balance sheet and profit & loss information, or more generally information on non - financial companies, have a real bearing on our institutions in line with a twofold objective : assessing individual companies and using aggregated company data to perform macro economic analyses or researches. first, it is important for micro - analyses in the assessment of individual companies using classic ratio - based | balanced. but as we look further out to 2007 and beyond, we see increasing risks that the unwinding of global economic imbalances could involve a period of weak world economic growth. the bank will continue to assess the adjustments and underlying trends in the canadian economy, as well as the balance of risks, as it conducts monetary policy to keep inflation on target over the medium term. mr chairman, paul and i will now be happy to answer your questions. 1 / 1 | 0 |
trade - off between growth and inflation can only be avoided with increases in potential output. monetary policy can only play a facilitating role in enhancing the productive capacity of the economy. once inflation picks up significantly and stays at elevated levels, nominal interest rates also have to rise to match inflation so that saving is sustained and a macro - economic environment conducive to sustainable growth is maintained. in this regard, countries with rising inflationary pressures and limited fiscal space will be constrained in their use of expansionary macro policies to stimulate the growth momentum. on the other hand, where inflationary pressures are contained, further monetary stimulus could be provided. 5. conclusion in conclusion, the recent financial crisis has exposed the strains in the banking system in the advanced world. while the banking systems in many african countries are not well developed, they are stable. in general, african banks are well capitalized and have avoided being overly exposed to the sub - prime and other financial crises that have affected the world economy over the past two decades. the challenge confronting policymakers on the continent is to ensure that the hard - fought economic gains achieved during the past decade are not lost. in this regard, african central bankers are committed to ensuring that monetary policy makes a significant contribution to sustainable economic outcomes by fostering price and financial stability. but much more is required than what central banks can contribute : the challenge to africa in general is to not only plan but also implement the structural reforms necessary to bolster the continent β s sustainable growth rate. thank you. bis central bankers β speeches | for their important contribution to the development of this forward - looking vision 2015. thank you. bis central bankers β speeches | 0.5 |
mugur isarescu : strengthening supervision, corporate governance and risk management in the financial sector of the republic of moldova speech by mr mugur isarescu, governor of the national bank of romania, at the event for the launching of the twinning project β strengthening supervision, corporate governance and risk management in the financial sector of the republic of moldova β, bucharest, 18 january 2022. * * * esteemed president of the parliament of the republic of moldova, dear governor armasu, your excellency, ambassador of the european union to the republic of moldova, dear president of the central bank of the kingdom of the netherlands, mr. klaas knot, dear president of the board of the central bank of lithuania, mr. gediminas simkus, mr. vice - president of the administrative board of the national commission for financial markets of the republic of moldova, ladies and gentlemen, i am honoured to address the audience today, not only as governor of the nbr, but also as a long - trusted and close partner of the national bank of moldova. looking back, i am pleased to see the progress made in the last decades by the republic of moldova, on its path towards a banking and financial system at international and european standards. the modernisation of the banking and financial system of the republic of moldova is, ultimately, to the benefit of the society and citizens. ever since 1991, romania and the nbr have supported the republic of moldova and the national bank of moldova. supporting moldova β s first currency issues via technical support, expertise and professional training was the first area of institutional cooperation. this was followed by a more focused collaboration in almost all areas of professional training. i would like to mention, for example, the 2001 project in the field of banking supervision, then the provision of technical assistance in the field of inflation targeting in 2010, but also the 2015 β 2017 twinning project on banking regulation and supervision. also noteworthy is the multilateral cooperation, within the joint constituency at the international monetary fund, or during the meetings of the central banks governors β club of the central asia, black sea region and balkan countries. given the time span of more than 30 years of close bilateral institutional cooperation between the national bank of romania and the national bank of moldova, highlighted by the strategic partnerships for developing and broadening cooperation in areas of mutual interest, i would like to emphasize the positive synergies created over time. i express my firm belief that these synergies are a | , the discipline it imposes on the mpc is symmetric. the inflation target has been instrumental in ensuring that monetary policy has responded boldly and decisively to the events that have unfolded since the autumn. and, when the time comes, the clarity and transparency of the inflation targeting framework will ensure that the committee takes the right decisions on the way back up, however courageous or unpopular those decisions might appear. the public commitment that the committee will do whatever it takes to hit the inflation target is central to the conduct of monetary policy. it underpins the credibility of the inflation target. this commitment is more important than ever in the current environment of unprecedented shocks and unconventional policy measures. recent events have raised the question of whether the committee could provide even more information about its policy strategy by committing to keep interest rates low for a particular period of time or until the economic outlook evolves in some specified way. the difficulty is in designing such a commitment that would be both useful and that the committee would be willing to adhere to. a commitment to keep interest rates low for a certain period of time runs the risk of being overtaken by events. the past eighteen months has demonstrated only too well how rapidly the state of the economy can change. i truly have little idea as to how long bank rate will need to be maintained at its current low level in order to meet the inflation target. as such, it would make little sense to commit to a rule that suggested i did! the potential benefit of a state contingent commitment β in which the mpc commits to maintaining bank rate at its current level until the economic outlook has evolved in a particular way β is that it may aid the public β s understanding of how the committee is likely to react to economic developments. it may convey information about our reaction function. but such a commitment is not easy to design. if too general, it will not add anything to our existing β and over - riding β commitment to do whatever it takes to hit the inflation target. if too precise, it will not capture the myriad of factors that affect the outlook for inflation. the array of judgements underlying the committee β s policy decisions are not easily summarised by reference to one or two economic variables. the committee β s preferred approach is to describe its assessment of the outlook for output and inflation, and allow the public and markets to make their own assessment of the likely future path of interest rates. in the most recent inflation report published in may, the committee judged it was more likely than | 0 |
market conditions, has enabled the economy to weather external turbulence, bring inflation back to within the target, without putting much risk on growth. 38. against the background of much lower inflation and a small negative output gap, the board meeting carefully adjusted the degree of policy stance to ensure sufficient support to domestic demand since december 2015. indeed, with a more volatile and uncertain external environment, calibrating monetary policies towards supporting growth have become a delicate task. bis central bankers β speeches 39. moving forward, priority would continue to be placed on stability, although with policy calibrated carefully and gradually to support economic growth. 40. we will remain vigilant and stress the importance of monitoring risks to price stability closely, while stand ready to respond if external pressures resume or inflationary pressures reemerge. this holds particularly true given the high volatility of food prices as well as potential pressure on the financial account in an uncertain external environment. 41. to help manage external financial volatility, we will further progress on financial market deepening as a continued priority, allowing exchange rate volatility as automatic stabilizer while its extreme movements will be carefully managed through judicious foreign currency interventions, and preserving the relatively comfortable international reserves as the first line of defenses. ladies and gentlemen, 42. to end my address, allow me to conclude that with a strong buffer, indonesia has fared well from external headwinds. however, this does not mean we can be complacent. 43. as the world economy is in transition to a new steady state, we are still facing greater volatility ahead. hence, we have to continuously build a robust macroeconomic policy management - primarily well - tailored, consistence, and prudent monetary and fiscal policy mix -, which should be underpinned by a well implemented structural reforms. 44. we are convinced that with maintaining reform momentum would shore up public confidence and create investment - friendly environment. apart from that, it would allow the country to diversify economic growth away from its reliance on natural resources, in a better position to withstand against global shock, and ultimately to sustain its economic growth in the longer term. 45. we applaud the government bold steps and moving rapidly in implementation of many of the reforms initiatives. at the same spirit, bank indonesia will continue to strengthen coordination with government to ensure that monetary policy, fiscal policy, and structural reform mutually support each other, to preserve macroeconomic stability and achieve a strong and sustainable growth | . 46. i hope that this investment forum will also provide us with a clearer understanding and pave way for effective preparation to meet future challenges as well as to smooth our journey towards the sustainable growth. thank you very much. bis central bankers β speeches | 1 |
caleb m fundanga : launch of info - zambia bank student loan scheme remarks by dr caleb m fundanga, governor of the bank of zambia, at the launch of the indo - zambia bank student loan scheme, mulungushi university, kabwe, 21 april 2009. * * * hon. minister of education, professor geoffrey lungwangwa, mp the chairman of mulungushi university council, mr costain chilala the vice chancellor of mulungushi university, professor vernon chinene the chairperson of indo - zambia bank limited, mrs o moyo the managing director of indo - zambia bank limited, mr s r shukla members of staff of mulungushi university and indo - zambia bank limited members of the press invited guests ladies and gentlemen i am grateful to the vice chancellor of mulungushi university, professor chinene, for extending an invitation to me to witness the launch of the student loan scheme by our minister of education hon. professor lungwangwa. chairperson, i am reliably informed that the student loan scheme being launched today is the latest among the many product initiatives that indo zambia bank limited will be launching in the near future. the student loan scheme represents a major shift from the traditional loan schemes that have for a long time characterised traditional banking models in zambia. chairperson, the bank of zambia supports the introduction of innovative products such as the student loan scheme, a service that will allow parents and guardians who bank with indo zambia bank limited to access loans to meet university fees for their children at concessionary rates. hon. minister, this loan scheme being launched today provides a real opportunity for human capital development, which is necessary for national development. it enables children who would otherwise be excluded from the educational system have decent opportunities to receive education, as their parents can now access loans specifically targeted at meeting their educational expenses. ladies and gentlemen, a nation β s development depends on the levels of skills among its people and it is our expectation that the launch of this scheme will contribute towards this noble cause. to this end, i would like to encourage parents and guardians to use the student loan scheme in order to realise the vision of educating their children. chairperson, what we are witnessing today represents an initiative by banks to respond to the needs of the community. as the central bank, we commend your bank for this initiative, which was borne out of the identified need to develop financial products that address problems in our society. chairperson, ladies and gentlemen, let me end | money lenders. i am happy to report that seven out of the nine proposals made have been progressed with the other two still under discussions. the government and world bank are already in negotiations for a financing arrangement that may incorporate a form of guarantee scheme and financial education elements while dbz has been recapitalized and has disbursed some funding through other financial institutions. a legal framework for consumer protection as well as possible incentives have already been taken account of through adequate provisions in the revised banking and financial services act which is under government consideration for possible legislation in 2014. guest of honour we all agree that one of the major barriers to growth of the sme sector in zambia is the shortage of financing despite its high potential to catalyze growth and employment creation. it therefore makes business sense that the financial sector should start to look at the financing problems for smes in a holistic manner which takes into consideration other developmental constraints which may impede sustainable growth and render the financing ineffective. in line with government β s desire to enhance local content through smes and use of locallymanufactured inputs in the zambian mining industry, a study in the mining sector is being under taken by the zambia local content initiative ( zmlci ) facilitated by the world bank and co - financed by dfid. the goal is to build sustainable collaboration between smes and the mining industry. it is our hope that the above initiative will be extended to non - mining related smes such as those in agribusiness, tourism and retail. honourable minister you may wish to note the following topics that will be discussed during this forum : i. sme financing and business linkages, ifc experiences in africa ; ii. sme financing and experiences and lessons learned β afdb ; iii. promoting business linkages in zambia β dfid zambia ; and iv. sme financing and business linkages in zambia β focus financial services. further, the programme will include panel discussions on policy recommendations and an interactive session. the discussion panel will, among others, cover policy issues and outline some possible recommendations for action. chairperson as i conclude, allow me to thank the presenters and panelists for accepting to facilitate our deliberations at this forum. i urge all delegates to engage fully in these discussions so that we can collectively develop pragmatic solutions to the financing challenges facing zambian businesses. thank you for listening. bis central bankers β speeches | 0.5 |
focus on our third mandate of an efficient payments and settlements system aims to transform the economy. we recognize that such will bring efficiency to business transactions. substantial savings will likewise be generated from a shift from paper - based to digital instruments. an efficient payments settlements system benefits consumers and businesses in terms of affordability, convenience and speed of services, promoting financial inclusion. conclusion ladies and gentlemen, as i have shared, while the bsp β s mandates are highly technical, our goals address the betterment of filipino lives. we function to provide a macroeconomic environment conducive to economic growth. we guard against erratic and uncontrolled inflation and work vigilantly to promote confidence in the safety, soundness and strength of our banking and financial system. we are committed too to delivering an efficient payments and settlements system that promotes interoperability of payments, financial inclusion and which will allow us to transition from a cash - heavy to cash - lite economy. at the bsp, we are foremost, public servants, committed to our mandates for the furtherance of the national and public interest. this, is what our work means. it was my distinct pleasure to speak about our role and share our initiatives with all of you. maraming salamat. 4 / 4 bis central bankers'speeches | benjamin e diokno : the philippine economy - bright prospects ahead speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the asset philippine forum, manila, 8 october 2019. * * * friends from the asset, stakeholders from the financial sector and investment community, members of the media, ladies and gentlemen, good afternoon. i would like to thank the asset for always inviting us to take part in its annual forum, which provides the audience relevant updates on the philippine economy. in keeping with the theme β seizing the opportunity, β my presentation will talk about the bright prospects ahead for the philippine economy, which i hope would prompt investors to do business here so they can β seize opportunities. β the philippines is among the fastest growing and most resilient economies in the world. in fact, it grew by 6. 2 percent last year and, based on forecasts by the imf, it is poised to maintain growth in the 6. 0 - percent territory this year and next. the government is even more bullish, with the official growth targets set at 6. 0 to 7. 0 percent this year, 6. 5 to 7. 5 percent next year, and 7. 5 to 8. 0 percent in 2021. the inflation environment is also favorable. while the economy experienced elevated inflation last year, it was fixed through the prompt implementation of monetary and non - monetary actions. bsp raised policy rates by a total of 175 basis points to arrest brewing second - round effects and to anchor inflation expectations. other concerned government agencies also implemented measures to boost food supply, including streamlining of processes for food importation. congress passed, and the president approved, a game - changing law that liberalizes rice importation. as such, after peaking at 6. 7 percent in september 2018, inflation continued its downward trend, settling at 0. 9 percent in september, the lowest in over three years. based on these developments, bsp estimates that inflation will settle at 2. 5 percent this year, and 2. 9 percent in 2020 and 2021, well within the official target of 2. 0 to 4. 0 percent. third - party institutions agree that inflation will be within target range up to 2021. with this benign policy environment, the bsp, so far this year has been able to : 1 ) cut the key policy rate by a total of 75 basis points and 2 ) cut the reserve | 0.5 |
the scale of small firms in the sme sector, which tend to be smaller than in peer countries, need to be pursued. more attention needs to be placed on the education system and professional training to enhance human capital and reduce skills mismatches. finally, greater investment in r & d and innovation by spanish firms would enhance their competitiveness and contribute to generate more growth through higher value added. only by raising productivity and correcting macroeconomic imbalances can the long - term growth potential of the spanish economy rise. this is a condition to place spain on a solid growth path, increase employment and raise wages to finally leave behind the financial crisis that erupted ten years ago. let me conclude. the importance of increasing long - term growth potential is true for spain as it is for the whole euro area. 3 / 4 bis central bankers'speeches at the same time, i cannot emphasise enough that a robust euro area economy has to rely on sound economic governance. solidifying the institutional architecture of emu is essential at this juncture in order to foster cohesive economic performance without fragmentation or excessive imbalances. reforms at the national and eu level are needed to uphold a stable financial system and a resilient monetary union. a common stabilisation function, which β in the spirit of a true countercyclical fiscal policy instrument β would maintain convergence in the event of large shocks, is an overriding priority. completing the banking union with the establishment of a european deposit insurance scheme, its third pillar, and firm moves towards capital markets union, promoting deep and liquid bond and equity markets in europe, are necessary reforms of the financial sector. attaining these goals is essential to safeguard financial stability, foster further integration and support economic growth and well - being of european citizens. thank you for your attention. 1 see also camba - mendez, g. and forsells, m., β the recent slowdown in euro area output growth reflects both cyclical and temporary factors β, economic bulletin, issue 4, ecb, 2018. 4 / 4 bis central bankers'speeches | the results did not call into question the citizens β attachment to the european construction process. at the same time, they agreed on the need for a period of reflection. the issue will be taken up again during the first half of this year in an attempt to agree on a way forward. the ecb is in full support of the constitution. the point i would like to stress, however, is that whatever the outcome of the ratification process, the stability of the euro will not be affected. the ecb, whether it operates under the current treaty or the new constitution, will continue to fulfil its mandate and deliver price stability in the euro area, thus contributing to a macroeconomic environment conducive to growth and employment. during the several years he spent in china, it is said that marco po - lo learned to speak fluent chinese. i have been here only a few days, unfortunately. but let me still try to wish you, in mandarin, a happy and prosperous new year! xin nien kai le, kog xi fa cai! thank you. xie xie. | 0 |
, may 22, https : / / www. federalreserve. gov / newsevents / speech / files / yellen20150522a. pdf. - - - - - - - - ( 2016 ). β the outlook, uncertainty, and monetary policy, β speech delivered to the economic club of new york, march 29, https : / / www. federalreserve. gov / newsevents / speech / yellen20160329a. htm. - - - - - - - - ( 2017 ). β statement, β testimony before the committee on banking, housing, and urban affairs, february 14, https : / / www. federalreserve. gov / newsevents / testimony / files / yellen20170214a. pdf. | hours of production workers β a comprehensive measure of labor input that reflects the extent of part - time employment and opportunities for overtime as well as the number of people employed β fell, remarkably, by nearly 10 percent from the beginning of the recent recession through october 2009. although hours of work have increased during the expansion, this measure still remains about 6 - 1 / 2 percent below its pre - recession level. for comparison, the maximum decline in aggregate hours worked in the deep 1981 β 82 recession was less than 6 percent. other indicators, such as total payroll employment, the ratio of employment to population, and the unemployment rate, paint a similar picture. particularly concerning is the very high level of long - term unemployment β nearly half of the unemployed have been jobless for more than six months. people without work for long periods can find it increasingly difficult to obtain a job comparable to their previous one, as their skills tend to deteriorate over time and as employers are often reluctant to hire the longterm unemployed. bis central bankers β speeches although the jobs market remains quite weak and progress has been uneven, overall we have seen signs of gradual improvement. for example, private - sector payrolls increased at an average rate of about 180, 000 per month over the first five months of this year, compared with less than 140, 000 during the last four months of 2010 and less than 80, 000 per month in the four months prior to that. as i noted, however, recent indicators suggest some loss of momentum, with last friday β s jobs market report showing an increase in private payrolls of just 83, 000 in may. i expect hiring to pick up from last month β s pace as growth strengthens in the second half of the year, but, again, the recent data highlight the need to continue monitoring the jobs situation carefully. the business sector generally presents a more upbeat picture. capital spending on equipment and software has continued to expand, reflecting an improving sales outlook and the need to replace aging capital. many u. s. firms, notably in manufacturing but also in services, have benefited from the strong growth of demand in foreign markets. going forward, investment and hiring in the private sector should be facilitated by the ongoing improvement in credit conditions. larger businesses remain able to finance themselves at historically low interest rates, and corporate balance sheets are strong. smaller businesses still face difficulties in obtaining credit, but surveys of both banks and borrowers indicate that conditions are slowly improving for those firms as well. in contrast | 0.5 |
dearth : real estate and public investment have contributed to the post - crisis decline in total investment, but what matters the most for our economy is the contraction in business investment. the imf estimates that it stands 10 % to 15 % below pre - crisis forecasts in the euro area. ii however, to fully understand the situation, we need to take a closer look at the nature of business investment. we must distinguish between investment in construction on the one hand β which in itself does not spur innovation β and investment in research and development and industrial machinery on the other, which i call β productive investment β. iii the matter of concern is that productive investment is insufficient : across the economy as a whole, the productive investment rate has long been lower than before 2007 in the euro area and is persistently weaker in france than in germany. this brings us to the third important feature of this investment dearth : the behaviour of businesses ( slide 6 ). since mid - 2009 it has dramatically changed : given the weakness of business investment, non - financial corporations have turned from net borrowers into net lenders. thereby they have fuelled the current account surplus in the euro area. in short, all of these realities converge : the root of the problem today in europe is the investment deficit more than the savings glut. 2. now, why has this investment dearth happened? let me briefly elaborate on the key levers of investment. the first and most important one is expected demand ( slide 7 ). the overall weakness in economic activity acts as a deterrent for most businesses. the latest biannual survey conducted by bpifrance shows that demand remains the main obstacle to investment for french small business ownersiv. this diagnosis is confirmed at the macro level by one of our staff β s recent working papers, which investigated a panel of 22 advanced economies : expected demand appears as the main determinant of the slowdown in business investment ( negative contribution of more than 80 % ). v the second key economic lever of investment is confidence, or to put it another way, the level of uncertainty ( 17 % ). vi if the environment is blurred, complex or unstable β especially as regards rules and norms β, businesses opt for a β wait - and - see β behaviour and postpone their investment decisions. so, the simplification and stabilisation of rules is an often underestimated albeit key trigger of business investment. economic levers are of the essence, but financial ones also | and legal barriers to equity financing. the fiu would promote further convergence of insolvency regimes, as well as standardised and more detailed financial information on european corporates, including smes. in this regard, advantage could be taken of the experience acquired in certain member states β in france for instance, the central bank β s expertise in company rating. * * to conclude, let me quote benjamin franklin who, in his essay entitled the way to wealth, gave advice that remains highly topical : β vessels large may venture more, but little boats should keep near shore β. in the present situation, savings are certainly closer to large vessels than to little boats. and yet, unlike large vessels, they do not take sufficient reasonable risks. our future will depend on them venturing more to help fill the investment dearth that plagues our economy. i have given you my view on the forms it can take, and i wish you fruitful debates throughout this conference. i 12 - month cumulated current account for the period ending in august 2016. source : ecb. imf weo chapter 4 β private investment : what β s the holdup? β, april 2015. the figures express the average percent deviation from spring 2007 forecasts. iii gfcf in machinery and equipment and intellectual property. iv rd 63 % of french small business owners mention demand as an obstacle to investment. source : bpifrance, β 63 survey of the economic climate for smes β, may 2016. v matthieu bussiere, laurent ferrara and juliana milovich : β explaining the recent slump in investment : the role of expected demand and uncertainty β, banque de france wp no. 571 β september 2015. vi ibid. vii the hurdle rate is the internal rate of return that must be cleared for a project to be approved by a company. viii β savings and investment behaviour in the euro area β, ecb occasional paper series no. 167, january 2016. note : finland, france and italy are not included in the panel. ix ibid. ii | 1 |
11. 07. 2022 welcoming remarks to the conference on econometric methods and empirical analysis of microdata in honour of manuel arellano pablo hernandez de cos governor good morning, and welcome to this conference on econometric methods and empirical analysis of microdata in honour of manuel arellano, one of our country β s leading economists and a key figure in the field of econometrics at international level. let me take this opportunity to, once again, congratulate professor arellano on all his important achievements. we are indeed very honoured at the banco the espana to have manuel with us at the cemfi. in his recent acceptance speech at the award ceremony of the king of spain β s prize for economics, manuel arellano argued that a nation without good administrative data is like a hospital system without access to advanced magnetic resonance equipment. i couldn β t agree more with this comparison. to have an accurate diagnosis of the problems of an economy it is crucial to be able to observe economic reality in sufficient detail. and, the analysis of an economy in high resolution is possible thanks to the empirical analysis of data, of microdata in particular, using, of course, the appropriate econometric methods. indeed, in recent decades, the analysis of microdata has revolutionised research in the social sciences1 and policy evaluation. the availability of granular data, together with the development of innovative econometric methods, has radically changed the way researchers approach and understand social issues. at the same time, economists are increasingly being given the opportunity to help governments design new policies and regulations2. and, in this respect, we should bear in mind that carefully designed scientific experiments have been an engine of economic, technological, and social progress. social experiments have become crucial to ensure that governments implement policies with a proven record of success3, that are based on evidence and not on prejudice or intuition. we are now in a position to create a virtuous circle that begins with the allocation of resources to the compilation of data and the provision of access to them, continues with the evaluation of public policies, and ends with the application of the findings to the design of policies. however, unlike medical trials, social experiments β large - scale, publicly funded randomised controlled trials β have not become the gold standard for the evaluation of public policy interventions. einar, l. y levin, j. ( 2014 ) " the data revolution and economic analysis ", working | significantly across euro area countries. exposures are highest among banks operating in countries with high household indebtedness, subdued household income prospects and / or where there is potential for a decline in residential / commercial property prices and also among banks that issued loans in foreign currencies that have now appreciated. the tools available to limit the exposure of banks to borrower credit risk are well known by this audience but i β ll list a few anyway : loan - to - value thresholds, debt - to - income thresholds, caps on the monthly repayment - to - income ratio. as regards the banks resilience, the current financial crisis revealed that fragmented microprudential supervision was insufficient to ensure a stable banking sector. since then some substantial changes have been made and are currently under way in financial regulation. these include a strengthening of micro - prudential oversight and, perhaps most importantly, the introduction of a complementary macro - prudential perspective. the role of the esrb the practice of macro - prudential oversight β the bird β s eye perspective on the financial system β was not yet sufficiently established in the period before the crisis erupted. in europe a key response to the crisis was the creation last year of the european systemic risk board ( esrb ) β an independent eu body responsible for the macro - prudential oversight of the union β s financial system. an important challenge for the esrb in its task of monitoring systemic risks and vulnerabilities is bringing this new macro - prudential perspective to the traditional microprudential one. this interaction is key, as the recent financial crisis painfully illustrated that financial institutions may be sound on a stand - alone basis while the financial system as a whole can still be exposed to serious risks and vulnerabilities. in the esrb this interaction is facilitated by the body β s composition which brings together representatives from both central banks and financial supervisory authorities from all 27 eu member states, from the european commission and the three european supervisory authorities. to prevent and mitigate systemic risks to the eu financial system, the esrb identifies and assesses risks and vulnerabilities and may as a next step issue risk warnings and / or recommendations if deemed appropriate. warnings and recommendations can be either public or private. they can be addressed to supervisory bodies, both national and european ones, as well as individual member states and the eu as a whole. the esrb gives the addressee of a recommendation a timeline for its implementation, and | 0 |
ravi menon : seeking decent returns in an era of sub - par growth speech by mr ravi menon, managing director of the monetary authority of singapore, at the sovereign investor institute government funds roundtable, singapore, 6 november 2014. * * * mr scott kalb, executive director, sovereign investor institute distinguished guests, ladies and gentlemen, good morning. the global conjuncture the major economies of the world are at an inflection point. in the us, the era of quantitative easing has come to an end. next year, for the first time in eight years, we are likely to see a hike in the fed funds rate. β’ the good news is that monetary policy normalisation will occur in the context of a strengthening us economy. β’ the bad news is that for financial markets conditioned by persistently easy monetary conditions over the last six years, there is considerable uncertainty over the pace and extent of interest rate normalisation. β’ the federal reserve has done as best as it can in communicating its approach through forward guidance. but there is many a slip between cup and lip that could to lead to disorderly market adjustments. in the eurozone, there is tension between restoring public debt to a sustainable trajectory and supporting a faltering economy. β’ the ecb has committed to expand the size of its balance sheet by increasing asset purchases, while an active debate rages in brussels on the appropriate balance between reducing fiscal deficits and supporting growth. in japan, the impact of the first arrow of monetary stimulus is at risk of being blunted by the recent consumption tax hike. β’ the bank of japan has just announced a further expansion in stimulus β an openended asset purchase at a rate of about 15 % of gdp a year until the inflation target of 2 % is met. β’ meanwhile, the third arrow remains largely in its quiver. in china, the challenge is to strike a delicate balance between implementing the reforms necessary for long - term sustainability while supporting short - term growth and stabilising the property market. β’ the reform agenda that emerged out of the third plenum offers a credible and comprehensive blueprint for the way forward. β’ the leadership is keenly aware of what needs to be done and is committed. β’ but significant execution risks remain. in india, there is a new government in place committed to improving the business environment for investment and building the infrastructure necessary for a strong manufacturing sector. β’ but india needs to accomplish this while taming inflation and reducing its fiscal deficit, not to mention rec | starting in 1 / 6 bis central bankers'speeches new zealand, australia, and moving to singapore and london as the day progresses, before ending in new york. participation is diverse β with banks, asset managers, corporates, and central banks, each transacting fx to meet different objectives. participants act as principals or agents, and the responsibilities pertaining to each may not be well understood. hence, there could be market failures, asymmetry in information and potential conflicts of interests. good practices are therefore, essential to guide behaviour in the fx market, and to anchor a strong ethical culture within firms. the code will support the nurturing of good practices and in turn, the growth of the fx market across key financial centres, including singapore. unique features of the code codes of conduct have been in existence and are not new. so why will this code be different? there are several factors why this may be the case, including : what the code captures ; who the code will apply to ; how the code was developed and will be maintained ; and how it will be implemented. first, the content of the code is relevant and reflects good practices that should exist in the fx market. the code provides guidance in areas where clarity is needed. for example, after the misconduct came to light, many market participants swung to the other extreme and became highly reluctant to share market colour. this negatively affected market liquidity. the code includes principles on information sharing, stating explicitly that β the timely dissemination of market colour can contribute to an efficient, open, and transparent fx market β. additional guidance has been provided on how to apply this principle e. g. while communications should not include specific client names, aggregated and anonymised information can be shared. both positive and negative examples also provide additional practical guidance. second, it will apply to all market participants. previous codes were catered to sell - side participants. this code extends to all wholesale market participants β sell - side, buy - side, non - bank market makers, trading platforms and market infrastructure. a question that we have been asked frequently comes from buy - side participants β why does the code matter to me? the application of the code to all wholesale market participants, including the buy - side, stems from the belief that good practices should apply to all market participants and not only a subset. 2 / 6 bis central bankers'speeches with widespread adoption, the power of market discipline and peer pressure can be immense. this is important for a voluntary | 0.5 |
operating across national boundaries. its goal was modest : to make sure no bank could escape supervision. it did not try to harmonise supervisory standards. and, of course, it was primarily directed at supervisors, not banks themselves. in subsequent years, the committee pronounced on international lending and foreign exchange positions. these documents began to set expectations for the way in which banks should manage these risks, but they were not standards in the way we use the word today. it was the first basel accord that really marked this new role for the committee. as in 1974, a severe crisis triggered this step β in that case, the latin american debt crisis of the early 1980s, which raised the political pressure for banks to increase their capital base and for the regulators to create an international level playing field in this respect. since then, the committee β s role as a standard setter has only grown β to the extent that, today, this is seen as its primary purpose. whereas the committee took 10 years to publish its first 10 documents, this year alone it has published more than 30 β with more to come. but with all the public focus on standard - setting, it is important not to forget the critical β behind the scenes β role of information - sharing, since we all well know that regulation cannot be successful without strong supervision and cooperation to back it up. the second important influence on the committee has been the growing sophistication and complexity of international financial markets. the original basel accord was beautiful in its simplicity β something that many people long for today β but it could not keep up with the development of increasingly complex financial instruments. these may have offered substantial benefits to society, but they strained the simple basel i methodology. the committee β s response was most obviously manifested in basel ii. this marked another turning - point in the committee β s evolution, moving us from a β one size fits all β regime to differential approaches using internal models. this meant the regulatory regime was better aligned with banks β underlying risk profile, but regulation was now no longer simple or completely uniform across banks. like any change, it has delivered some undoubted benefits, but it has also created a whole new range of challenges that we are still grappling with today. the third key influence on the committee stems from increasing globalisation. as a creature of the g10, the committee could originally lay claim to coverage of most of the world β s truly internationally active banks. but as banks and financial markets became increasingly integrated across national | to have pushed down the interest rate on government bonds to a certain limit. however, there are no signs that this caused households and companies to encounter lower interest rates. it is therefore very unclear whether the result was that the economy was stimulated via the interest rate channel. 15 13 the market is dominated by so - called frn - bonds, where the coupon follows stibor 3 months. 14 erikson and vestin ( 2021 ) show a similar figure. some larger companies also finance themselves through the bond market. however, when the riksbank began purchasing government bonds, this form of financing was fairly unusual and accounted for only 22 per cent of the companies'total borrowing ( see the riksbank, 2014 ). moreover, it is common for companies'bond loans to have variable interest rates. as turnover in the market is small, it is difficult to follow price developments. nevertheless, the statistics indicate that rates on corporate bonds fell less than those on government bonds in 2015 and 2016. however, the lower interest rates could reasonably contribute to a lower central government borrowing cost, something i will return to in a moment. however, this was not the purpose of the riksbank's purchases. 7 figure 4. lending rates have followed the policy rate per cent note. the riksbank's policy rate and average lending rates from monetary financial institutions to households and companies, new agreements, all interest - fixation periods. sources : statistics sweden and the riksbank. unclear whether the riksbank's purchases contributed to the krona remaining weak one of the motives behind the riksbank's acquisition of assets was to avoid the krona strengthening in a situation where inflation was already too low. in that case, inflation would have been pushed down by lower import prices and the demand for swedish export products would have fallen. this would have brought down economic activity, which would have further dampened inflationary pressures. since other central banks also had large purchase programmes, the riksbank's intention was precisely to avoid the krona becoming too strong, not to weaken it. 16 it is hardly possible to say with precision how the riksbank's acquisition of assets affected the exchange rate. the analysis is complicated by, among other things, the fact that the riksbank published decisions on the asset purchases at the same time as decisions on the policy rate. 17 one indication that the purchases had the intended effect is that the krona did not strengthen but weakened, | 0.5 |
is why we think we need to adapt our central bank money services if we are to address the settlement needs of an increasingly digital financial system. as such, the banque de france was one of the first central banks to launch an ambitious experimental programme on wholesale cbdc. the mas and the banque de france have been travelling companions on this journey for some years now, and our partnership has proved very fruitful. we have been, and continue to be, close partners working on bis innovation hub projects involving crossborder payment processes. let me just highlight a few of those projects here. in the wake of project mariana, where we tested the cross - border exchange of cbdc, we are currently working together on project rialto to improve the fx layer of instant crossborder payments. we are also exploring on - chain compliance checks for cross - border transactions with project mandala, and are collaborating, with a group of financial institutions, on the les gardiennes project, to implement a cross - border and crosscurrency repo on - chain solution for tokenised financial assets issued in public permissioned blockchain infrastructure. within the euro area, as it is likely that traditional infrastructures will coexist with new dlt systems for quite some time, i believe that the availability of central bank money, irrespective of the infrastructure used, and the interoperability within and between those infrastructures, will be crucial to preventing market fragmentation and ensuring a safe settlement process. this is why, since may 2024, the banque de france has been deeply involved in the eurosystem's ongoing exploratory work to test different interoperability solutions for the settlement of tokenised financial assets in central bank money. looking further ahead, the bis's vision of a unified ledger is promising and could start with the development of regional unified ledgers, such as a european shared ledger. building on a public - private partnership, we could thereby establish a more integrated, efficient, and resilient wholesale payment infrastructure, which could host wholesale cbdcs and private settlement assets as well as tokenised deposits in commercial bank money. this perspective lead the banque de france, as a representative of the eurosystem, to take part in bis innovation hub's project agora, in order to explore the possibilities of this type of programmable platform. 2. retail digital payments in the retail space, the digitalisation of payments offers numerous benefits for consumers | denis beau : the future of central bank money in the coming digital age of wholesale and retail payments keynote speech by mr denis beau, first deputy governor of the bank of france, at the singapore fintech festival, singapore, 6 november 2024. * * * ladies and gentlemen, i am delighted to be here with you at the singapore fintech festival today to open this second session on the future of money in a world of growing digitalisation in finance. i would like to take this opportunity to share our perspective at the banque de france on this topic. while wholesale and retail payment processes are being shaped by different drivers and trends, they raise a common challenge for us at the banque de france, given our monetary and financial stability mandate : namely to safeguard and promote their safety and efficiency in a digitalising financial system. to meet this objective, we at the banque de france are focusing our efforts on three key levers : first, adapting central bank money services ; second, supporting industry initiatives that align with our policy objectives ; and third, helping to shape an appropriate regulatory framework. today, i will primarily focus my remarks on our use of the first lever β the adaptation of central bank money services β and on the importance we grant to that end to cooperating and experimenting with other public and private stakeholders, exemplified by the partnership we have established with the monetary authority of singapore. 1. wholesale digital payments the safety of financial transactions depends to an important degree on the type of settlement asset chosen. this has led policymakers and market participants for decades now to favour central bank money as the preferred settlement asset in the wholesale space. this preference is well reflected in principle 9 of the cpmi - iosco's principles for financial market infrastructures ( pfmis ). our conviction at the banque de france is that, in an increasingly digitalised financial system, where tokenised assets and dlt - based infrastructures may gain an important role, central bank money should be maintained as the predominant settlement asset between financial intermediaries. private settlement assets, particularly stablecoins, are being used and, in the absence of central bank money on dlt - based infrastructures, could be widely used going forward to settle tokenised assets. but stablecoins do not have the safety, liquidity and stability of central bank money. in addition, the lack of coordination in the development of private settlement solutions, could lead to increased market fragmentation. 1 / 3 bis - central bankers'speeches this | 1 |
the stability of the financial system and the delivery of essential financial services to the economy than any other type of financial institution. as i have already noted, mobile banking is already providing a partial substitute for the retail payments services of banks and could eventually challenge the dominance of banks in the provision of other types of services, including deposits. if so, prudential regulation which is focused on ensuring the soundness of the banking system may no longer be sufficient to protect the safety of customers β savings or the systemic stability of the financial system and the preservation of its critical functions. finally i want to stress the vital importance of carrying out high quality research on these issues. this is the only way we will improve our understanding of what is a very complex and rapidly changing phenomenon. i am pleased, therefore, that we will end this conference with a discussion on the directions of a future research agenda. i wish everyone a very productive conference. thank you for listening. bis central bankers β speeches | david g opiokello : bank of uganda - recent achievements opening address by mr david g opiokello, deputy governor of the bank of uganda, on the occasion of the senior management workshop for the fy2005 / 2006 work plan and budget preparations, entebbe, 4 march 2005. * * * ladies and gentlemen : i welcome you all to this annual event. i would like to thank all bank staff who have been effectively participating in the implementation of the strategic plan 2003 - 2008. allow me to mention a few achievements. β’ the issuance of 2, 3, 5 and 10 year government bond was successfully done. β’ the bank successfully implemented automation of currency note processing. β’ the rtgs has been launched while that of the foreign exchange application had reached the stage of identifying the winning bidder. β’ on the capacity building front, the bank trained a number of staff on professional and academic courses, and most staff are now computer literate. β’ the installation of the internet link was a tremendous success for the bank. it has enormously eased communication both internally and externally and also helped to improve positively the perceptions of staff and external persons on the bou operations. last year around the same time in jinja, we resolved that this event is necessary for overcoming some of the challenges the bou faces in drawing up budgets and work plans. however, in spite of the resolutions we made last year the challenges in implementing and monitoring the current budget and annual work plans have remained onerous. i wish to point out three areas of major concern : 1. absence of the linkage between planning and budgeting best practice requires that annual work plans be closely linked with the budget. last year the budgeting exercise was carried out before agreeing on work plans. this caused a mismatch between planned activities and resources, with the resulting risk of making the whole work planning process irrelevant. part of this problem was caused by functions and departments not submitting their budgets and work plans according to the agreed submission calendar. it is, therefore, not surprising that the budget and work plans were approved late - in september 2004 for the budget and october 2004 for the annual work plans. to overcome this problem this year, we must strictly adhere to the timetable for submission of departmental budget proposals and work plans, which should then fit consistently into the overall budget. it means that functions and departments should give due time to the process so that documents are ready and approved according to schedule. 2. over / under budget | 0.5 |
gold standard, and the banking panic of 1933, β southern economic journal, vol. 66, no. 2, october 1999, pg. 271. bis central bankers β speeches support the overall mission of the federal reserve system. but, by virtue of its location, the new york fed has a unique responsibility on behalf of the system β namely to serve as the operational arm of the federal open market committee with respect to the implementation of monetary policy. this separation of the policy arm and the operational arm of monetary policy in two distinct institutions is a very unusual setup among central banks. 20 there are good reasons why these important functions are assigned to the new york fed. monetary policy works by affecting financial market conditions in order to promote the economic outcomes consistent with the fed β s dual mandate. as such, effective and efficient monetary policy execution requires a practical and thorough understanding of the broad range of the financial markets through which monetary policy operates. new york city is the nation β s principal financial center. by locating the duties related to the execution of monetary policy at the new york fed, the system gains a number of benefits. these include the new york fed β s ability to develop expertise in and understanding of the broad spectrum of financial markets and institutions, and its access to a deep pool of specialized financial talent in the place where it is most concentrated. the new york fed β s institutional knowledge and experience in financial markets and its related disciplines are a critical input at all times, but never more so than during periods of duress. this was evidenced during the financial crisis, when the new york fed β s unique insights and expertise helped the federal reserve respond quickly and effectively to unfolding events. the authors who crafted the federal reserve act such as carter glass β assisted by h. parker willis β deliberately created a central bank structure that fits the u. s. political system, with a series of important checks and balances β between washington and the rest of the country, between washington and new york, and with respect to the role of the federal government versus the private sector. these checks and balances exist to ensure that the central bank acts in the broadest interests of the nation, and is appropriately insulated from short - term political pressures and considerations. in this construction, new york does have a special role, but one that stems from where it sits, in new york city, the nation β s most important financial center. the federal reserve exists to serve main street, not wall street. the dual mandate objectives established | , but not all regions have benefitted equally here in the second district. some portions of upstate new york have benefitted from an influx of technology companies and other industries, while other regions remain challenged due to a lack of population growth. later today we will hear from two of our economists who will share national and regional economic trends. also in the spirit of looking forward, i can share some views on what community bankers can expect from the supervisory process. examiners are keenly focused on emerging trends around funding costs and liquidity risks. bankers consistently share with us the challenge of raising core deposits to fund loan growth. community banks compete not only with other community banks for deposits, but also with credit unions and larger institutions. and, these larger counterparts are actively courting customers through direct mailers and offering competitive rates. data in the second district show cost across most deposit categories have increased with a slight uptick in the higher cost funding sources such as borrowings. data for the largest banks exhibit a comparable trend, but they control a larger market share. i expect another area of focus during the examination process will be interest rate risk and related challenges. bankers have shared with us that customers are demanding higher rates on deposits, yet those same customers are reluctant to pay higher rates on their loans. what is a banker to do in trying to maintain a productive, long - term relationship? we are seeing signs of lower net interest margins ( nim ), where the average nim in the second district is 3. 47 percent compared to the national peer average of 3. 71 percent. examiners will be reviewing initiatives by community bankers to partner with β fintech β firms. we know there is competition from non - bank providers who have the capacity to provide automated loan pre - approvals in minutes and loan closings within days after approval. today, you will hear from a panel of your peers on how fintech is changing the way their firms do business, and how they mitigate the risks associated with outsourcing. in my view, new innovations from the fintech space have the potential to fundamentally transform the provision of financial services. as i β ve said elsewhere, this disruption brings both opportunity and risks and that need to be managed. 2 a third forward - looking topic is the coming implementation of accounting changes for reserves, known as the β current expected credit loss β approach or cecl. one of our colleagues from the board of governors will join us later to address a common question raised by our bankers | 0.5 |
between harmonisation and flexibility, and which accommodate necessary national responsibilities, including for supervision β. narrow rules - based approaches to regulation create inflexibility and can be easy to arbitrage. the sensible application of judgement involves looking at a situation from several angles, and employing forward - looking tools such as stress tests. for us, β judgement β is most certainly not a slogan. so judgement by whom, how, and to what end are reasonable questions to ask. i am going to place most emphasis today on the β by whom β question, but use that to illustrate the others. i want to consider the role of boards, but in the broader setting of three groups of people : executive senior management of firms ; boards ( with non - executives in the majority ) ; and supervisors. it is the job of senior executives to exercise judgement on risks and returns on a day - to - day basis. i know that you could be confused to hear me say this given some of the things that are written about financial regulation, but we want firms to earn sustained and thus sustainable returns through the exercise of good business judgement. senior executives exercise that judgement within frameworks set by, and overseen by, their boards, namely the overall strategy, the risk appetite and assessment frameworks and the oversight of controls and compliance. as supervisors we apply our judgement against our framework of rules and regulations, the distinctive feature of which is that they represent public policy objectives and thus the public good, which is the overall objective of the bank of england. bis central bankers β speeches i want now to focus on the role of boards. they must be able to set a strategy and risk appetite and oversee implementation, but they do not substitute for the role of the executive. likewise, supervisors challenge hard and can ask for changes, but they do not substitute for the board or the executive. the recent past has not been an easy story in this area. it is very understandable that in the wake of the financial crisis, there was hard questioning of the role of senior executives and of boards. change in the approach of supervision to approving senior managers was needed. it is perhaps natural given the scale of the shock, that some change went too far or not in the best direction. i think there was a rebound in the direction of wanting all non - executive board members to have technical skills of a similar sort, and thus deeper technical knowledge of the business. but that is the job of an executive. when i came back into supervision | triggered liquidity stress in related derivatives markets. an increase in initial margin requirements has greatly increased firms β liquidity needs, making it more difficult for some firms to hedge. this recent episode raises the question of whether margining practices, including those between the clearing member and their clients, may be too procyclical. financial markets remain vulnerable to further corrections that could potentially be triggered by an escalation of the war, or a faster - than - expected pace of monetary policy normalisation. conclusion let me conclude. sound financial regulation and greater resilience have helped the european financial system navigate both the pandemic and the economic fallout stemming from the russia - ukraine war. yet sizeable challenges remain. to address financial stability risks, we need to implement targeted macroprudential policy instruments. at the same time, amid global inflationary pressures and risks to growth, we are walking on a narrow path as we strive to deliver on our price stability mandate. but rest assured, we remain fully committed to stabilising inflation at our 2 % target over the medium - term. | 0 |
chairman, when a country attains price stability, economic growth on sustained basis is likely to follow. accelerated economic growth, of at least 8 % per year, is a sure way of ensuring that most of the mdgs are attained in our developing countries. this has the positive impact of reducing poverty levels of the people as it increases their disposable incomes and eventually improve their standard of living. ( f ) reduction of poverty usually, some people think that achievement of low inflation is not important to the achievement of mdgs. this assertion should be dismissed using macroeconomic analysis and modelling, which i expect the participants at this workshop to actively be involved in. even a simple econometric analysis will show that high inflation in a country erode peoples β disposable incomes and, therefore, reduces their purchasing power, particularly the vulnerable that may not have the resources and skills to hedge or protect themselves against http : / / www. unmillennuimproject. org / reports / fullreport. htm. the effects of high inflation. attainment of low and stable inflation, therefore, leads to people particularly the poor being able to afford to buy the goods and services that they need in order for them to lead a decent life. low inflation implies that more people will have stable or improved income that may raise them above the poverty datum line and thus reduce the high incidences of poverty. financial system stability in addition to the attainment of price stability using monetary policy, the central bank β s other pillar is the responsibility of ensuring financial system stability. financial system stability is the prevention of disruptions to the financial sector that are likely to cause significant costs to real output. it compliments monetary policy implementation, as monetary policies are transmitted through financial institutions. if the financial system is unstable, monetary policy will not be effective. in summary, the central bank, such as ours, has a key role in the attainment of the mdgs through the implementation of appropriate monetary and supervisory policies that ensure price and financial system stability. macroeconomic analysis and modelling are key components in arriving at sound and effective macroeconomic policies which will contribute to poverty reduction through the acceleration of economic growth and facilitate the achievement of the mdgs. in a nutshell, mr chairman, one can simply state that low inflation coupled with a developed and stable financial system, will enhance higher economic growth. sustained and higher growth will create more jobs and subsequently increase people β s income. an increase in people β s | speech by : loi m bakani cmg, governor, bank of png at the uncdf 50th anniversary 19 january 2017 ladies and gentlemen, it is my pleasure to address you all at this momentous occasion marking uncdf β s 50th anniversary. the bank of papua new guinea has had a close relationship with uncdf through the pacific financial inclusion programme ( pfip ) since its inception in 2008. i would like to share with you some of pfip β s highlights over the past 9 years. on a regional level, pfip has been instrumental in supporting the role of the central banks in driving the financial inclusion agenda, and actively contributes to the pacific islands regional initiative, a knowledge - sharing platform for the central banks in the pacific region. by the end of september 2016, pfip had reached an impressive cumulative total of over 1. 1 million clients across the pacific, already surpassing the programme β s 2019 goal of 1 million clients. these clients are now connected with financial service providers through a variety of financial services including bank accounts, mobile money, micro insurance, microfinance and more. closer to home for us, in papua new guinea alone, pfip partnerships have led to over 400, 000 clients receiving some form of financial service. in papua new guinea, pfip has been supporting the bank of png and the centre for excellence in financial inclusion through support for development and implementation of the country β s national financial inclusion strategic plans, the second of which ( spanning from 2016 - 2020 ), you may be aware, was launched recently in december 2016. this new plan has the ambitious target of reaching 2 million more unbanked lowincome papua new guineans, 50 % of whom are women, by 2020. bima is one example showing the tremendous need and potential for financial service in papua new guinea. a recent entrant into the insurance market, bima provides convenient, affordable life and hospitalization insurance cover via a mobile platform to nearly 400, 000 often low - income, financially underserved papua new guineans, the majority are receiving the economic safety net of insurance cover for the first time. pfip β s investment grant helped bima expand outreach in the highlands region, reducing delivery costs and improving customer service through and expanded agent network. pfip is currently working with the with department of education, provincial government and bank of png to develop a pilot for financial education integration into technical and vocational | 0 |
. β’ we have learnt much from these interactions. the response from the industry has been encouraging. β’ insurers such as aon and metlife as well as banks such as citibank, credit suisse, dbs, hsbc, and ubs have already set up innovation labs in singapore. β’ aviva has announced plans for a β digital garage β and axa for a β data innovation lab β here. β’ mas is working with several other banks and insurers on their plans to establish and expand their analytics and innovation teams in singapore. at the heart of a smart financial centre must be a progressive information technology architecture. two key characteristics of such an architecture are : β’ common standards ; and β’ seamless data sharing. common standards let me begin with common standards. they are key to making systems interoperable and harnessing fully the benefits of new payments technologies. lack of standardisation leads to fragmentation, inefficiency, and inconvenience. β’ take for example electronic funds transfer. β’ without a common standard, an application written to effect funds transfer for one group of financial service providers may need to be rewritten to work with another group of financial service providers that operate on different interface standards. common standards allow systems and applications to operate efficiently and seamlessly when different financial service operators and solution providers come together. β’ the emv chip is one of the most impactful examples of a common standard. it is all the more impressive as it was an industry initiative without any government involvement. β’ nfc, or near - field communications, represents the next big thing in common standards. it is enabling contactless payments on mobile devices like smart phones. yet another good example of a common standard is iso 20022. this is the international standard for electronic data exchange among financial institutions. β’ its growing adoption has helped to make payments platforms interoperable and reduce inefficiency. fast and secure transfers a successful example of iso 20022 adoption in singapore is β fast and secure transfers β or β fast β. this is a secure electronic funds transfer service that is available 24 / 7. bis central bankers β speeches β’ we started with 14 participating banks in march 2014, we now have 19. β’ fast usage has risen steadily, clocking 18 million transactions since its launch. fast offers several advantages for bank customers in singapore. β’ you can pay someone almost instantaneously from your computer or mobile device at any time of the day. β’ you can receive confirmation of payment within | seconds. β’ if you are a company, whether big or small, near - instant payment and confirmation round - the - clock makes a huge difference if you rely on cashflow to pay suppliers frequently. with the whole transaction going electronic, you can look forward to more efficient reconciliation of your payments with your financial accounts. β’ in short, fast is almost as convenient as cash, yet potentially safer and cheaper. while the take - up of fast has been encouraging for person - to - person payments, it has some ways more to go for merchant payments. on the payee side, a barrier to adoption by merchants is the challenge of integrating electronic payments with the existing work flow of confirming and reconciling receipt of payment, which is currently done at the cash register. two of our banks have come up with solutions for this. β’ standard chartered bank has had some success with helping food courts, fast food joints, convenience stores and taxi companies accept electronic payments by dash. β’ dbs has just announced a new product called fastrack, which lets you order and pay for coffee before you even arrive at the counter. it is good that there is a proliferation of innovative e - wallets, payment apps and mobile payment solutions in singapore. β’ but just as man is not an island, neither should payment solutions be limited to themselves. β’ for widespread take - up and usage of any digital payments solution, interoperability is critical. β’ and this is where fast comes in. with the common standard provided by fast, banks can more readily collaborate on innovative payment products that are interoperable, without having to worry about incompatibility. on the payer side, a barrier to adopting digital payments is the hassle involved in on - boarding payees. β’ people should be able to pay each other electronically as simply as writing a cheque or handing over some cash. β’ it should not matter which bank that i bank with nor should a payee be identifiable only by his bank account number. β’ few of us can readily recall our own bank account numbers, let alone be familiar with those of our friends and family. i am pleased to note that the participating banks are studying a mobile addressing system for fast. β’ this means that you will be able to make payments through fast as long as you know the payee β s mobile number. bis central bankers β speeches β’ may i suggest to the industry to go one step further and explore an β all - in - one β addressing system? | 1 |
base availing of mobile banking facilities as on september 30, 2010 stands at 8. 87 lakh as compared to 6. 16 lakh as at the end of august 2010. during september, 2010, 4. 9 lakh transactions of value rs. 44 crores were carried out using this mode of payment both for transfer of funds and purchase of goods and services. concluding thoughts 18. while the growth of mobile payments has been rapid, it is far from becoming an important source of financial inclusion. this in my view calls for two important facilitations. one, partnership rather than competition among the stake holders, importantly mobile companies and banks and two, a ubiquitous switch for enabling interbank p to p and p to b payments. while we are working towards achieving the first facility, npci has taken the important step of enabling the second important facility. 19. the interbank mobile payment services ( imps ) provides an inter - operable infrastructure to the banks for enabling interbank real time funds transfer transactions. what may be one of its strongest points, imps rides on the existing nfs interbank atm transaction switching infrastructure and message format β and hence easy for banks to adopt. it has the potential for the wide reach across the country when all nfs member banks adopt this service and promote this service aggressively. 20. alongside this, with the recent relaxations in the bc guidelines, i believe that all the building blocks are in place. now it is entirely up to the various stake holders to take the product forward. more importantly, what has been facilitated by npci today can be construed as yet another step towards achieving its stated vision of becoming a true umbrella organisation for retail payments in this country. i hope npci will continue to show equal enthusiasm in commissioning and completing other important projects like the cheque truncation and the much awaited india card. 21. i too join mr balachandran in congratulating the iba, entire npci team and all others who have contributed to the roll out of this product. i wish the npci success in all their endeavors. | prize in 2004, it has galvanised a worldwide search for proximate 3 / 9 bis - central bankers'speeches solutions such as appointing a conservative central banker who is more averse to inflation than the government ( kenneth rogoff in 1985 ) ; writing a state - contingent wage contract with the head of the central bank, specifying the inflation rate to be achieved ( carl walsh in 1995 ) ; independence of the central bank ; and since the early 1990s, inflation targeting. you can gauge the lengths to which central banks have to go to be time consistent in the presence of lags in the operation of monetary policy. much of these lags emanates from frictions in financial markets, especially at the synapses. i will focus on the market segments over which the reserve bank exercises regulatory jurisdiction, namely, the money, government securities, forex and derivatives markets. within this focal length, my interest is confined to impediments to monetary policy transmission that are encountered due to market microstructure as well as the manner in which each segment integrates into the continuum. my purpose is just to highlight a few instances of transmission and distribution losses that make my job adrenaline - driven and pressure - cooked, not to pontificate on any policy agenda. money market let me begin with the money market, the happy hunting ground of central banks the world over. technically, the responsibility of transmission as far as central banks are concerned is to ensure that the monetary policy impulse is fully and seamlessly reflected in the money market. hence, money market rates, preferably the uncollateralised rate which provides a sense of the infra - marginal demand for liquidity, are typically chosen as the operating target of monetary policy. by being the ultimate supplier of reserves, central banks have a dominant influence on the money market. in india, the experience has been that the transmission of monetary policy to overnight money market rates is instantaneous and full. collateralised markets may quote slightly finer and draw more volumes than uncollateralised segments, but together they are fully aligned with the policy stance. of course, an issue stemming from the thinning of uncollateralised volumes relates to the integrity, stability and signalling function of the overnight mumbai inter bank offer rate ( mibor ), the benchmark in the largest and most liquid interest derivative market in india and importantly, a transactions - based rate. the bulk of money market activity is concentrated in the overnight segment, which | 0.5 |
andrew bailey : capital and lending article by mr andrew bailey, deputy governor of prudential regulation and chief executive officer of the prudential regulation authority at the bank of england, published in the sunday times, 5 may 2013. * * * crises often lead to big changes in public policy. britain β s decision in the 1990s to embrace the objective of sustained low inflation and an independent central bank had its roots in the horribly high inflation of the 1970s. now we have a big change in financial regulation rooted in a more recent crisis, the credit crunch of six years ago. since the start of april, the financial policy committee ( fpc ) of the bank of england has had a statutory duty to protect and enhance the stability of the financial system. alongside it at the bank is the new prudential regulation authority ( pra ). its job is to promote the safety and soundness of banks, insurers and large investment firms by focusing on the problems they cause for financial stability. this is a new direction for financial regulation. the crises that lead to such big changes often follow long upswings in economic and financial conditions that are allowed to go to excess. light touch regulation in the run - up to the start of the financial crisis in 2007 supported expansionary growth in the balance sheets of banks β too much borrowing β which was literally too good to be true. our new approach is designed to counter the risk that policy is too accommodating in upswings and too harsh in downturns. two important principles stand out for me : first, that we must carry out financial regulation with an eye on conditions in the real economy, which means promoting stable and sustainable credit creation and growth ; and second, we should always be prepared to look to the risks ahead, and exercise sensible judgment. the financial crisis has taught us in the most painful way of the dangers of waiting too long to take action and then being unable to prevent the worst consequences of delay. the fpc has recommended that british banks make sure their capital level is high enough to withstand future threats. some banks will need to increase their equity capital for a given level of risk in their balance sheets. concerns have been expressed that this change will harm lending to the uk economy. i do not agree with these concerns. equity capital is not money that has to be stashed away for a rainy day and thus put to no good use. it is the shareholders β stake in the company. in nonfinancial | that libor behaved quite differently from rates with no credit risk embedded in them, such as risk - free rates. libor is a less - than - ideal rate for most derivatives contracts and secured borrowing because movements in the credit risk component do not reflect well the underlying risks of the actual question asks banks only about transactions of β reasonable market size β. this size is not defined and is left to banks β judgment. bis central bankers β speeches those contracts. however, libor β s pervasiveness has become self - reinforcing. firms use libor in contracts, even when it is less than ideal, because they know they can hedge the resulting risk using highly liquid, libor - based interest rate swaps or other derivatives contracts. and those derivatives markets are so liquid because most market participants use libor as the reference rate in their financial contracts. because of the progression of this dynamic over time, and not because of some careful design, libor has spread well beyond its intended uses and become an important pillar of the global financial system β perhaps too important. in recent years, two separate developments have called into question the wisdom of that arrangement. i have already mentioned the first one β the emergence of a pervasive pattern of attempted manipulation of libor dating back many years. this misconduct was designed either to increase the potential profit of the submitting firms or to convey a misleading picture of the relative health of such firms. since 2012, seven financial institutions have settled related charges with the u. s. commodity futures trading commission and the u. s. department of justice, and the cumulative penalties and fines paid in the united states now stand at more than $ 3 billion. 8 global penalties paid related to benchmark misconduct exceed $ 6 billion as investigations into reference rate manipulation continue. although these penalties and fines are themselves substantial, to my mind the longer - term damage to the public β s trust represents the greater cost of this misconduct. a second problem is that unsecured interbank borrowing has been in a secular decline that predates the global financial crisis. changes in bank behavior following the crisis exacerbated the decline and further weakened the foundation of libor. the result is a scarcity, or outright absence in longer tenors, of actual transactions that banks can use to estimate their daily submission to libor. ongoing regulatory reforms and the shift away from unsecured funding raise the possibility that unsecured interbank borrowing transactions may become even more infrequent in | 0 |
nils bernstein : the danish economy in an international perspective speech by mr nils bernstein, governor of the national bank of denmark, at the annual general meeting of the association of dlr kredit, copenhagen, 25 april 2007. * * * thank you for the invitation to speak here today. my subject today is the danish economy in an international perspective. i will first present some views on globalisation, and then turn to the internationalisation of the financial markets. finally, i will consider some of the financial products that have come to us from abroad and today are offered to private danish investors. the danish economy has traditionally been internationally oriented, with considerable external trade. agriculture became globalised more than 100 years ago. much of our prosperity is a consequence of the international division of labour. the current development has made this international perspective even more relevant. globally, there is an ever - increasing international exchange of goods and services, investments, information, people, culinary habits, culture, etc. the economic changes have been extensive and help to explain why globalisation is currently a major topic of debate. * * * globalisation has developed in waves of shorter or longer duration over the last few centuries. especially in the golden eras, there was major technological progress within transport and communication. these eras were also characterised by an international political environment that stimulated free trade and the unrestricted mobility of capital and people. in current years, globalisation seems to have even more wind in its sails. populous nations such as china and india have become part of the global market economy. technological progress in e. g. the it area has fundamentally changed how companies organise their production set - ups. the free movement of capital has probably never enjoyed better conditions than those prevailing today. these changes have increased the benefits from the international division of labour. lowtechnological production has moved to the countries whose labour - intensive production gives them a comparative advantage. production in more developed countries has become further concentrated around high - tech products. at the same time, the outsourcing of services, rather than just the production of goods, has been increasing rapidly. today, cross - border trade in services accounts for 20 per cent of world trade. one indicator of the growing economic integration between different countries is that world trade is expanding faster than global output measured by gdp ( slide 2 ). this has been the case without any interruption since the second world war. compared to other industrial countries, the danish economy has enjoyed double globalisation gains. denmark's export | uncertainty on the introduction of the euro has contributed further to the increasing financial integration of the euro area member states. in recent years, new joint framework conditions for the european securities markets have also been drawn up. the globalisation of the financial markets provides for more efficient use of capital, with potential substantial gains for the global economy. for investors, the greater integration of the financial markets augments opportunities for investment. capital can seek out new markets yielding higher returns, and a larger financial market increases opportunities to spread risk. in addition, borrowers gain access to raise capital from a wider and deeper pool of investors. the overall effect is the more efficient use of capital, such that the capital is utilised where it has the greatest effect. but financial integration has also brought new risks. substantial financial imbalances across countries can be financed for as long as the financial markets have confidence in developments, but once this confidence has gone, things can change very quickly. since 2002, and without interruption, the usa has been able to finance a current - account deficit of around 4 - 7 per cent of gdp ( slide 6 ). during this period the usa's consumption and investment demand has persistently and significantly exceeded its income. considerable capital inflows from abroad have made this possible. but what will happen if these capital inflows suddenly cease? this will push up us interest rates and weaken the dollar significantly. in this scenario there is a risk that the necessary adjustment will be very cost - intensive for large parts of the global economy. the prices of a number of financial assets will adjust rapidly, leading to economic adjustments. fortunately, it is widely believed that the risk of an abrupt adjustment is diminishing, but it still exists. denmark has also been part of the global financial integration. danish companies frequently acquire companies abroad, and foreign companies buy danish companies. even in international terms, the sale of tdc to an international capital fund in 2006 was one of the largest ever transactions of its kind. the development in the danish securities markets reflects increasing financial integration, especially with the euro area. statistical analyses show that yield changes in danish 10 - year government bonds closely follow equivalent german yield changes ( slide 7 ). there is also relatively close covariation between danish, german, british and japanese interest - rate changes and interest - rate changes in the world's most important bond market β the market for us government bonds ( slide 8 ). the convergence has increased significantly in recent years. investors apparently increasingly consider | 1 |
to shift part of their activities outside the regulatory realm. it is therefore decisive that we continue our work to improve our capacity to identify and assess the potential risks stemming from the shadow banking system. this includes regulatory reform of money market funds, securitisation and the interaction with the banking sector. the second challenge is how to keep pace with financial innovation. improving the otc and commodity derivatives markets is a key part of this agenda, it is a complex matter and one in which alignment of details is essential to avoid regulatory arbitrage. bis central bankers β speeches the third challenge is to enhance transparency across the board : with regards to markets, institutions, and products. insufficient information contributes to mispricing of risks, mistrust among market participants, which can result into downturns and crises. at our october meeting of g20 finance ministers and central banks governors we will be discussing iosco β recommendations to promote markets β integrity and efficiency to mitigate the risks posed to the financial system by the latest technological developments β. 2. improving policy discipline globally aside from a more resilient global financial system, we need to have more disciplined macro policies as the lack of discipline in macroeconomic policies in several countries led to the build - up of unsustainable external imbalances before the financial crisis. there is still a gap between the degree of economic integration and the willingness of policy makers to take into account interdependence and spillovers. keeping one β s house in order is no longer sufficient in an integrated world. spillovers from the rest of the world can influence economies considerably. multilateral surveillance is now being enhanced along two tracks. the informal g20 track and the formal imf track. the g20 framework for strong, sustainable and balanced growth, incorporates a first systematic multilateral assessment of global imbalances. it comes at an appropriate time because four years after the crisis, global imbalances remain unsustainably high. the sum of the current account balance ( in absolute terms ) of the major economies are projected to remain close to 2. 5 % of world gdp in the next few years. this is less than their pre - crisis peak ( over 3 % of world gdp ), but still twice as high as in the early 1990s, before the acceleration in financial and real globalization. it is now of foremost importance to implement the framework effectively, and to fully live up to the expectations that the g20 process raised internationally. the g20 cannes summit | financial stability in the euro area. in addition, this macroeconomic surveillance procedure should rely on transparent and effective trigger mechanisms. conclusions let me conclude with three key messages to policy makers β in advanced and emerging market economies alike β who all have a role to play to address the challenges that are ahead of us. first, what has already been decided has to be implemented expeditiously, comprehensively and fully. this requires resolve and fortitude on the part of the public authorities, but also lucidity on the part of the private sector. second, there can be no complacency as regards the unfinished part of our reform agenda for a stronger international financial architecture. and i cannot help saying that on top of what is clearly identified by the international community as the urgent issues under discussion in the financial stability board and the g20, we are far from understanding the potential global systemic instability that is associated today with the sheer size of the non - banking sector which experienced an exponential growth over the last 20 years. third, as regards the euro area and the sovereign debt crisis, of which the euro area is currently the epicentre, the euro area central banks, and the ecb in particular, have been permanently calling for sound economic policy management, in particular in the fiscal domain, for structural reforms and for reinforced economic governance. as independent institutions that are devoted to stability and that are medium - to long - term oriented, we are an anchor of stability and confidence. this is especially valuable in the turbulent market environment that we are witnessing and that is characterised by acute tensions of some sovereign signatures which are causing negative spillovers on others. only a few weeks ago, the central bankers were all meeting in the bis headquarters in basel in our global economy meeting. reporting to the press afterwards, i stressed that we were all very closely β united in purpose β : each of us in our own economy, with its different features and challenges, striving to solidly anchor inflation expectations, preserve stability and consolidate confidence. meeting here in washington, authorities have the opportunity to display the same unity in purpose to address their economic challenges at home, prevent negative spillovers for the global economy and consolidate confidence in the world recovery. now, at the end of this exposition, it might be useful for me to tell you what is the assessment that the european systemic risk board has expressed after its last meeting only two days ago : bis central bankers β speeches since its previous meeting on 22 june 2011, risks to the stability | 1 |
growth in the euro area, which slowed in the second quarter of 2011 to 0. 2 % quarter on quarter, is expected to be very moderate in the second half of this year. there are signs that previously identified downside risks have been materialising, as reflected in unfavourable evidence from survey data. looking forward, a number of factors seem to be dampening the underlying growth momentum in the euro area, including a moderation in the pace of global demand and unfavourable effects on overall financing conditions and on confidence resulting from ongoing tensions in a number of euro area sovereign debt markets. at the same time, we continue to expect euro area economic activity to benefit from continued positive economic growth in the emerging market economies, as well as from the low short - term interest rates and the various measures taken to support the functioning of the financial sector. in the governing council β s assessment, the downside risks to the economic outlook for the euro area are confirmed in an environment of particularly high uncertainty. downside risks notably relate to a further intensification of the tensions in some segments of the financial markets in the euro area and at the global level, as well as to the potential for these pressures to further spill over into the euro area real economy. they also relate to the impact bis central bankers β speeches of the still high energy prices, protectionist pressures and the possibility of a disorderly correction of global imbalances. with regard to price developments, euro area annual hicp inflation was 3. 0 % in october according to eurostat β s flash estimate, unchanged from september. inflation rates have been at elevated levels since the end of last year, mainly driven by higher energy and other commodity prices. looking ahead, they are likely to stay above 2 % for some months to come, before falling below 2 % in the course of 2012. inflation rates are expected to remain in line with price stability over the policy - relevant horizon. this pattern reflects the expectation that, in an environment of weaker euro area and global growth, price, cost and wage pressures in the euro area should also moderate. the governing council continues to view the risks to the medium - term outlook for price developments as broadly balanced, taking also into account today β s decision. on the upside, the main risks relate to the possibility of increases in indirect taxes and administered prices, owing to the need for fiscal consolidation in the coming years. in the current environment, however, inflationary pressure should abate. the main | ##marks, to the 30 - year segment - the future euro area market interest rates became aligned with the lowest market rates available denominated in the most credible currencies. on 4 january 1999, the first working day after the euro β s launch, europe β s financial markets showed that the transition to the euro had been an ostensible success. the letter and the spirit of the maastricht treaty had been fully vindicated, along with the promise made to europe β s people and its impact on the financial markets. the euro area β s 300 million inhabitants benefited immediately from the best yield curve, possible financial environment. the conditions for success no doubt, a great deal of the success had a solid foundation. on the one hand, national governments were solemnly committed to respecting a number of clear and transparent convergence criteria before they could qualify to adopt the euro. these criteria ensured a level of quality in the management of public finances and - more broadly speaking - a fair pace of economic and monetary convergence among the economies that were to unify into a single currency area. on the other hand, the treaty which had established the european community had laid down in stone the fact that monetary policy would be conducted with the aim of maintaining price stability and that the new central bank would be fully independent. these provisions were designed to ensure the long - lasting credibility of the euro. i will now try to expand on these institutional requirements more analytically. price stability objective for monetary policy first, the treaty establishing the european union assigned the ecb the primary objective of maintaining price stability. it was particularly important that this key objective was clear and unambiguous, since for the national central banks with the most credible currencies and lowest market interest rates, price stability was enshrined by national law as their own primary objective. in any case, far from being a novel aspect of the european institutional system, as it is sometimes claimed, price stability is defined as central banks β primary responsibility in almost all industrialised, emerging and transition economies, with a particular emphasis being attributed to this notion in all economies that have adopted β direct inflation targeting β. i recognize that the united states has chosen to present its objective of monetary policy in a different format. but, as i will argue in a while, i do not believe that the us approach differs fundamentally from the concept we have adopted. central bank independence second, the treaty made the ecb fully independent. economic research has shown that central bank β s independence | 0.5 |
in any book ( such as giving an already overheated economy a demand stimulus ), and those more closely related to the orthodoxy prevailing at the time : freely floating exchange rates, interest rate policy focusing mainly on low inflation in terms of goods and services, and good micro - supervision ; and let the markets do the rest. the first factor is perhaps of interest here. the process runs as follows : domestic interest rates at the longer end of the maturity spectrum tend to become more closely correlated with the global rate, or the rate of the largest trading partner, and less correlated with the domestic policy rate. this means that monetary transmission tends to go increasingly through the exchange rate channel, which is only a problem, however, if the exchange rate behaves badly. unfortunately, there is a lot of evidence to suggest that it does. uncovered interest rate parity ( uip ) does not hold except over long horizons. interest rate differentials give rise to widespread carry trading, which is by nature a bet against uip. exchange rates bis central bankers β speeches thus diverge from fundamentals for protracted periods, followed by sharp corrections. so the exchange rate often seems to be as much a source of shocks and instability as a tool for adjustment and stabilisation. ultimately, these cycles can take the boom - bust form and, in extreme cases, can result in serious financial instability or crisis. the research on this phenomenon is still ongoing, but there is a lot of evidence to suggest that the problem would not disappear even if macroeconomic policies in the traditional sense were perfect. this process was important in the icelandic episode. the capital inflows were driven by the traditional push and pull factors. but when a benign upturn originally driven by fdi in the energy - intensive sector turned into overheating, and fiscal and other demand levers pulled by the government were either insufficiently used or pulling in the other direction, monetary policy was overburdened and the increased interest rate differential that resulted pulled in further capital and carry trade positions. let me now turn to the banking part of the story. before the collapse, the banking system had expanded very rapidly, growing in just five years from a combined balance sheet of less than 2 times gdp at the end of 2003 to 10 times gdp. most of this expansion was cross - border, and a significant part of it was really off - border, having little to do with iceland, as both financing and investment took place abroad. around two - thirds of | border banks was dealt with and the lessons learned from it. it is now more widely known in our circles than it was to begin with and less controversial. for more, i can refer you to various publications and speeches of mine and others. but the main reason is that, as far as iceland is concerned, the problem is solved for the near future : we are simply not going to do it. we are not going to establish international banks headquartered in a very small country with its own currency without an access to a sufficient regional or international financial safety net. this does not preclude that we, as well as others, will with time forget the lessons of the crisis and find ways to create problems or even failures of our banks, but it should be a much more domestic and contained affair. so what did we do? deposits were given priority over unsecured bond holders prior to the failure of the banks. at the point of failure, smaller domestic banks were carved out of the failing private cross - border banks, which went into resolution governed by law. it was not a clean split, which later became a major impediment to lifting capital controls ; however, that impediment has now been removed. although they were not necessarily clearly articulated at the time, these measures were guided by the following goals : to preserve a functioning domestic payment system, ring - fence the state in the case of bank failures, limit the socialisation of private sector losses, and create the conditions for rebuilding a domestic banking system. 1 / 2 bis central bankers'speeches i have already alluded to some of the lessons learned, which relate to large, internationally active banks in small countries and the flaws in the framework for cross - border banking. this is by now well accepted and is partly what a banking union is all about. but it will not fix the problem for eea countries outside the eurozone, due to potential fx risks on banks β balance sheets. let me now turn back to the other story about macroeconomic management and financial stability in sofies. here the issue is that, with ongoing global financial integration, the interest rate channel of monetary transmission weakens in sofies, as longer domestic rates increasingly co - move with longer rates in the big countries. inflation targets could still be reached through the exchange rate channel, but exchange rates are not necessarily smooth reflections of underlying fundamentals. instead they tend to be excessively volatile and are sometimes misaligned for protracted periods. uip does | 0.5 |
central bankers β speeches β and numerous other measures were implemented to guarantee that debit card payments go through without fail, and β the introduction of the connect reporting system has improved communications and guidance among banks, providers, and retailers when payment systems fail. in addition to this, the forum is working hard on initiatives to reduce the dependencies between online banking, mobile banking and ideal. this will definitely be discussed at the foundation β s autumn meeting. pin agreement 2014 prelude to european efficiency and innovation with the introduction of iban, european payment transfers and european direct debits, the migration to the single euro payments area was successfully completed on 1 august 2014. in 2012, sepa had already been brought closer when the magnetic strip on bank cards was replaced by the emv chip. you all made an impressive contribution to the successful migration to sepa, which warrants a well - deserved compliment from de nederlandsche bank. but sepa is only the start of efficiency in payments transfers. we are on the brink of a new payments world in which businesses, retailers and consumers will be able to reap the benefits of the european market even more. road clear for innvations the 2014 pin agreement has provided an excellent stimulus by explicitly promoting innovation. it builds on the rapid technological innovations and the quickly changing consumer preferences and market conditions. to my mind, the dutch agreement is an example that the netherlands can convey to the single european payments market. this will not be done overnight. changes to the large european market require great commitment from market participants. to streamline these changes, the euro retail payments board, the erpb was launched last may with a view to sepa. this new european payments governance body may grow into a european version of the forum on the payment system with users and suppliers working together on the further development of sepa. the erpb therefore definitely deserves the chance to prove itself in the years ahead. contactless paying may be generally adopted a few years from now currently half of all bank cards and over one tenth of the 280, 000 payment terminals have been equipped for contactless payment. the latest generation of smartphones can also be used for contactless payments. particularly for payments up to eur 25 β the most frequent ones β this saves a lot of time, as they take nine seconds as opposed to 20 seconds for contact payments. if we assume that some two billion debit card payment up to eur 25 will be made by 2018, this means that a total of | . i wonder how han reflects on this quote today, looking at the current calibration of monetary policy on both sides of the atlantic. whereas by now the fed has unwound the bulk of its qe - portfolio, the ecb restarted net purchases under its qe - program as recently as in september. but today, i will not dwell on the merits of the policy package that was adopted in september and has been discussed extensively afterwards. instead, i will focus on longer - term challenges for monetary policy. in my view, these challenges constitute a point of departure for the review of the ecb β s strategy that is anticipated to start formally in the new year. earlier this week, han remarked in the dutch newspaper het financieele dagblad that a new captain is in charge of developing a new strategy for his team. 1 well, this is also the case for the ecb. i will focus on three challenges affecting central banks worldwide. i will also discuss two challenges related to the specific context in which the ecb operates. i will argue that these challenges warrant a discussion in the upcoming review of the monetary policy strategy on the merits of increased flexibility with respect to our inflation aim. three challenges for central banks worldwide let me start by outlining three challenges that are not unique to the ecb, but apply more broadly to central banks worldwide. the first challenge, of course, is the fact that in the current environment, inflation is persistently low, and no one knows exactly why β¦ different possible explanations for this phenomenon have been put forward, of which i would like to mention four : 1. we now see a weaker relationship between real economic activity and inflation than in the past. 2. inflation may be subject to more negative shocks than in the past. 3. inflation expectations are increasingly backward - looking. 4. and, finally, inflation may be subject to a declining trend in some of its underlying components. this explanation has been confirmed by recent dnb research. 2 to be more precise, i am not talking here about a secular declining trend that will inherently go on forever. some of the underlying drivers of this trend, like globalization or ageing, might fade away or reverse, as was also stipulated by carl tannenbaum. the process of globalization of the past decades for example might reverse due to an ongoing escalation in protectionism. the various explanations for persistently low inflation are interrelated and may to some extent co - exist. in terms | 0.5 |
market of the euro area has become fragmented. this is harmful as the euro area is a bank - based economy. around three quarters of firms β financing comes from banks. so if banks in some countries will not lend at reasonable interest rates, the consequences for the euro area economy are severe. although we see a decrease in fragmentation on the funding side, our very accommodative monetary policy stance is only partly passed on to the financing conditions faced by firms and households in some euro area countries. companies headquartered in stressed countries face worse borrowing conditions than equally risky competitors in non - stressed countries. and, within the same stressed economy, small and medium - sized enterprises ( smes ) suffer relatively more than large companies that have easier access to capital this is a stylised account of the intended aim of the various policies. in the empirical literature there is evidence, for instance, that a sizeable part of the effect of lsaps on long - term rates comes from affecting expectations regarding future short - term rates ( see m. bauer and g. rudebusch ( 2012 ), the signalling channel for federal reserve bond purchases, federal reserve bank of san francisco, working paper 2011 - 21 ). bis central bankers β speeches markets and are less dependent on the banking system. this is especially disconcerting given that smes account for about three quarters of euro area employment. our non - standard monetary policy measures have, therefore, the task of removing these stumbling blocks to ensure that our single monetary policy in fact reaches all parts of the euro area. this is crucial for fulfilling our mandate. beneath the surface : the root causes of the crisis in the euro area within the limits of our mandate we have acted with determination. our balance sheet has expanded substantially, to almost three times its pre - crisis size. while it has shrunk since its peak, the expansion is comparable to the increase in the balance sheet of the fed during the crisis. 3 tail risks have been largely removed from the pricing of euro area assets. financial fragmentation has been receding : banks in stressed countries have seen the deposits placed with them by euro area residents increasing by about 130 billion euro since august 2012, target2 balances of the national central banks in these countries have declined by more than 200 billion euro or about 20 % since their peak and also banks β dependence on ecb liquidity intermediation is waning to some extent. nevertheless, problems in the euro area economic landscape still loom large. this understand | and security of retail payments remain of vital interest to market participants and authorities alike. the secure pay forum published its recommendations for improving the security of internet payments in january 2013, and it recently published its β public note on security of payment account access services β. 6. the creation of the euro retail payments board ( erpb ) by the ecb β s governing council is another step taken by the eurosystem to foster an integrated, innovative and competitive market for retail payments in euro in the eu. the erpb will bring together representatives from both the supply and demand sides to identify strategic issues and work priorities, see β iso 20022 financial services β universal financial industry message scheme β. see http : / / www. ecb. europa. eu / pub / pdf / other / pubnote201403securitypaymentaccountaccessservicesen. pdf. bis central bankers β speeches including business practices, requirements and standards, and ensure they are addressed. the commission will participate as an observer. similar β social dialogue β bodies have already been set up and are successfully operating in several member states. the move to establish the erpb was very well received and its first meeting is scheduled for 16 may. finally, i would like to say a few words on virtual currency schemes. bitcoin is perhaps the most notable and topical of these, but certainly no longer the only one. many media commentators have been wondering what impact these currencies will have on retail payments and even on central banks. i agree that virtual currency schemes are an interesting phenomenon and should not be ignored or dismissed. the ecb was one of the first public authorities to see their potential and their risks and published a detailed analysis in 2012. 7 despite the overall rise in the value of bitcoin since the publication of the report and the media attention it is getting, our conclusions still seem to be valid, namely, that such currencies are not ( at least yet ) economically important. in europe, virtual currencies do not pose a risk to price stability or financial stability, but do pose a risk for users. however, this user risk is more related to speculative investments and consumer protection, and not necessarily to payments. nevertheless, we are closely following developments and keeping in touch with other authorities. all in all, we are living in a time of rapid change. it may well hold in store some novel and even unconventional challenges as we create the building blocks for | 0.5 |
, would significantly lower u. s. imports from china but would comparably raise u. s. imports from other low - cost sources of supply. at only slightly higher prices than prevail at present, u. s. imports of textiles, light manufactures, assembled computers, toys, and similar products would in part shift from china as the final assembler to other emerging - market economies in asia and, perhaps, in latin america as well. few, if any, american jobs would be protected. more generally, any significant elevation of tariffs that substantially reduces our overall imports, by keeping out competitively priced goods, would materially lower our standard of living. a return to protectionism would threaten the continuation of much of the extraordinary growth in living standards worldwide, but especially in the united states, that is due importantly to the post - world war ii opening of global markets. such an initiative would send the adverse message to our trading partners that the united states, while accepting the benefits of broadened world trade, is not willing to absorb the structural adjustments that are often necessary. to maintain a rising standard of living, a dynamic economy such as ours requires a continual shifting of resources toward the most up - to - date technologies, financed not only by savings but also importantly by the depreciation of increasingly obsolescent facilities. this highly dynamic process is mirrored in our labor markets, where jobs are constantly being created and destroyed at a rapid pace. new hires in the united states currently average more than a million per week, half resulting from voluntary job change. at the same time, during a typical recent week, about 150, 000 workers are temporarily laid off and another 225, 000 are subject to permanent job loss. any effect of trade with china on u. s. employment is likely to be very small relative to the scale of job creation and job loss in our economy. a policy to dismantle the global trading system in a misguided effort to protect jobs from competition would redound to the eventual detriment of all u. s. job seekers, as well as of millions of american consumers. policy should aim to bolster the well - being of job losers through retraining and unemployment insurance, not to stave off job loss through counterproductive efforts to impede the process of income - enhancing international trade and globalization. * * * while the presumption that a revaluation of the rmb will notably increase jobs in the united states by con | the federal reserve, often describe their policies in this way. i would now like to discuss how i think about two the seminal reference is john b. taylor ( 1993 ), β discretion versus policy rules in practice, β carnegierochester conference series on public policy, vol. 39 ( december ), pp. 195 - 214. see also richard clarida, jordi gali, and mark gertler ( 1999 ), β the science of monetary policy : a new keynesian perspective, β journal of economic literature, vol. 37 ( december ), pp. 1661 - 707 ; richard clarida, jordi gali, and mark gertler ( 2000 ), β monetary policy rules and macroeconomic stability : evidence and some theory, β quarterly journal of economics, vol. 115 ( february ), pp. 147 - 80 ; michael woodford ( 2003 ), interest and prices : foundations of a theory of monetary policy ( princeton, n. j. : princeton university press ) ; and lars e. o. svensson ( 2015 ), β forward guidance, β international journal of central banking, vol. 11 ( september ), pp. 19 - 64. - 5distinct roles that data dependence should play in the formulation and communication of monetary policy. it is important to state up - front that data dependence is not, in and of itself, a monetary policy strategy. a monetary policy strategy must find a way to combine incoming data and a model of the economy with a healthy dose of judgment - - and humility! - - to formulate, and then communicate, a path for the policy rate most consistent with our policy objectives. in the case of the fed, those objectives are assigned to us by the congress, and they are to achieve maximum employment and price stability. importantly, because households and firms must make long - term saving and investment decisions and because these decisions - - directly or indirectly - - depend on the expected future path for the policy rate, the central bank should find a way to communicate and explain how incoming data are or are not changing the expected path for the policy rate consistent with best meeting its objectives. 4 absent such communication, inefficient divergences between public expectations and central bank intentions for the policy rate path can emerge and persist in ways that are costly to the economy when reversed. within this general framework, let me now consider two distinct ways in which i think that the path for the federal funds rate should be | 0.5 |
of bank deposits for such digital assets could ultimately affect the banking sector β s net financing capacity and lead to credit being rationed or becoming noticeably more expensive. it could also put collateral markets under strain, undermine bank customer loyalty and know - your - customer standards and potentially prompt greater risk - taking by deposit institutions. moreover, any rise in banks β direct and indirect exposure to crypto - assets would also increase both their financial and reputational risks23. while currently limited, exposures relating to the provision of ancillary services to the distribution of third - party products or as a result of providing support to clients operating in the crypto sphere are on the rise. fourth, the potential consolidation of crypto - assets as an alternative payment method threatens to create parallel value transfer systems. for as long as such assets fall out of the scope of central bank oversight, they will be hard pressed to contain the emergence of possible systemic risks. in certain circumstances ( particularly in emerging markets ), there may be even a risk of what is known as β cryptoisation β : i. e. the replacement of the national currency and other financial assets denominated in that currency with a crypto alternative. 24 among other aspects, such circumstance can compromise a country β s monetary autonomy and undermine the ability to exercise effective control over international capital movements. 25 fifth, we should also be mindful that some crypto - assets could increase the financial sector β s climate transition risk, given that some of the underlying consensus mechanisms require a significantly greater amount of energy than traditional financial market infrastructures. to put this more clearly, proof - of - work associated crypto - assets currently account for around 80 % of the total capitalisation value. in certain cases, their carbon footprint is as large as the one of 15. 5 million petrol cars in a year. 26 sixth, since crypto assets can also be used for unlawful activities, including money laundering, financial integrity concerns follow. such risks could be larger on account of the fact that transactions are performed through non - standard payment systems and their heightened degree of anonymity. seventh, crypto - assets β value could also become swiftly eroded on account of the limitations and problems associated with cyber risks associated to the technologies underpinning their operations, i. e. blockchains. this could occur due to a wide range of possible causes, such as their technical configuration placing constraints on the scale of operations, which would prevent growing public demand from being met. while progress | is investment in or proprietary trading of crypto - assets or the purchase of structured products in which they are an underlying asset would appear to be the most common means by which they are incorporated onto banks β balance sheets. in certain cases ( e. g. el salvador ), this state of affairs is deliberate. see β cryptoassets as national currency? a step too far β. t. adrian and r. weeks - brown ( 2021 ), imf blog, 26 july. see β hearing on cleaning up cryptocurrency : the energy impacts of blockchains β. us house of representatives committee on energy and commerce ( 2022 ). being made in this field, these developments are still far from being mature enough. for example, a card - based payment ecosystem can process around 65, 000 transactions per second, while blockchains such as the one underpinning bitcoin do not usually support more than seven in their most basic configuration. 27 finally, their decentralised governance together with the realization of potential cyber threats could give rise to instances of fraud that end up compromising agents β confidence both in digital assets and in other areas of the ecosystem. the consequences of such a scenario would be compounded owing to the lack of safeguards protecting customers β interests and property rights. given its potential scope, this scenario could become a serious problem. for example, a recent chainalysis study shows that up to $ 1. 3 billion was stolen from digital wallets and platforms during the first quarter of 2022. nearly three - quarters of said amount pertain to defi activity, a rise of 72 % compared with the previous year. 28 bearing in mind there are an estimated 200 - 300 million crypto - asset users across the world, it is fair to call this a nonnegligible impact. 29 the regulatory response in view of the extent of the challenges i have outlined, a number of regulatory initiatives are taking shape. it combines public warnings on the risks of buying and / or holding virtual currencies, and both national and international regulatory initiatives that are of the most importance, given the global nature of crypto - assets. regarding the international initiatives, what started out with the regular monitoring of such initiatives became, in 2020 and at the behest of the g20, a multilateral regulatory response from the fsb30. the fsb has released a report setting out high - level recommendations for the regulation and supervision of so - called β | 1 |
graeme wheeler : improving new zealand β s economic growth speech by mr graeme wheeler, governor of the reserve bank of new zealand, to the canterbury employers β chamber of commerce, christchurch, 1 february 2013. * * * i β m conscious of george bernard shaw β s comment that β if all the economists were laid end to end, they would never reach a conclusion β. so i β ll try and be more of a one - handed economist in offering some thoughts on new zealand β s economic performance, ways in which it might be improved, and our role in the reserve bank. new zealand β s economic performance like other small, commodity - producing economies, our economic prospects depend greatly on the growth in world trade and output. imf data suggests that the global economy is expanding at an annual rate of around three and a quarter percent β or just below its average rate for the past three decades. but it doesn β t feel like business as usual. over the past two decades, the global economy has changed dramatically. asia is now the world β s largest economic region. its gdp at market exchange rates is about 15 percent higher than that of north america and 60 percent more than the euro area. china and east asia are the main growth poles in the global economy and emerging and developing countries accounted for 80 percent of global growth last year. among the advanced economies, growth prospects in the us are improving ( despite december quarter gdp ) but the recovery is the slowest for 70 years. japan is going through another weak patch, and the euro area is likely to be in a difficult recession until 2014, and then recover slowly. this, in spite of us $ 15 trillion of additional spending by the world β s governments in response to the global financial crisis and over us $ 5 trillion of quantitative easing by the major central banks. with official interest rates close to zero in the major advanced economies, investors continue to search for higher yields in countries with stronger growth rates, favourable commodity price outlooks, sound macroeconomic policies, and higher interest rates. as with australia, canada, sweden, norway and some asian and latin american countries, the ensuing exchange rate appreciation affects the growth of our import substitution and export sectors. i β ll return to this issue in greater depth when addressing the new zealand manufacturers and exporters association later this month. how have we fared relative to other advanced countries over the past two decades? since 1990 we β ve outperformed many oecd countries on inflation and unemployment. our inflation | than the foreign exchange market. during september β november 2011, the domestic yield curve tended to move up and to steepen slightly, but this movement was not continuous, as it was interrupted by downward shifts. in any case, interest rates for tenors of one year and longer remain below the maximum levels observed in the first half of the year. the relatively minor impact of the financial instability on mexico β s yield curve seems to reflect the high proportion of long - term bonds within foreign holdings of peso - denominated government securities. furthermore, during the last few months, the amount of long - term bonds held by foreigners increased slightly more than a reduction observed in holdings of short - term securities. the important role played by long - term investors in the government securities market seems to reflect their confidence in the sound management of public debt as well as the flexible exchange rate regime. two additional possible factors explaining the prevalence of contained long - term interest rates are a decline in projected economic growth, and stable and moderate inflation expectations in recent months. 4 during 2011, the mexican economy has continued a recovery process after surpassing, by the beginning of the year, the maximum levels of economic activity observed prior to the global financial crisis. indeed, gdp quarterly growth has been successively rising and, in the third quarter, the change in output was positive for each of the economy β s three sectors. on a year - over - year basis, gdp grew 4. 4 percent in the third quarter. the services sector, which accounts for about two - thirds of mexican gdp, was highly dynamic in the first nine months of the year, and particularly in the third quarter. this growth, along with extraordinarily high agricultural production, more than compensated for a slight deceleration in industrial activity in the third quarter. lower industrial growth reflected, notably, a slowdown in manufacturing production, which in turn responded to lower growth from mexican non - oil exports, particularly non - auto products, to the united states. apparently, a slowing of manufacturing production in the united states had an almost instantaneous impact on mexico β s manufacturing production. october data on foreign trade suggests that this deceleration has probably continued in the fourth quarter of 2011. domestic demand, as reflected by retail sales and investment, continued showing high rates of growth, although investment levels remain below those observed before 2008, mainly because of a virtual stagnation in the construction industry. retail sales growth seems to have been fueled by a recovery in employment, real wages | 0 |
its distribution since 2018, points to a mixed picture, with some signs of easing pressures ( chart 15 ). the first feature that emerges from the heatmap is the transmission of the price pressures along the pricing chain, with β red spots β generally emerging first on the commodity front and then showing up in producer prices and further β downstream β. compared to the peaks during the re - opening phase of last year, the latest observations point to weaker pressures from the energy commodities, non - energy and non - food commodities, global and domestic economic activity and supply side bottlenecks. by contrast, stronger pressures are indicated by the indicators for food - related costs and labour market developments, in particular from the tight labour market and from wage growth. generally, producer price pressures are still elevated, reflecting recent increases in input costs. overall, the heatmap suggests still strong inflationary pressures, but some signs of easing are emerging. chart 15 inflation drivers heatmap red = risk of higher inflation ; blue = risk of lower inflation ; grey = no data. source : eurostat, world bank, sdw, haver analytics and ecb staff calculations. notes : the colours have been assigned based on where each indicator lies in comparison to past readings starting 2018 ( the historical distributions were split into 11 areas with equal empirical probabilities ). most of the variables are expressed in annual growth rates. the exceptions are pmis, unemployment rate, the global supply chain pressure index ( gscpi ) from the new york fed, the global economic conditions indicator, european commission indicator of limits to production ( insufficient demand ), capacity utilisation and labour shortages, where no transformation is applied. conclusions in this lecture, i have highlighted that the monitoring of underlying inflation is an essential input into the monetary policy process. i have emphasised that an accurate assessment of underlying inflation is especially tricky in view of the large dislocations that have hit the economy, since the energy crisis and the pandemic have generated inflation shocks that do not fit neatly into either the β pure noise β or β medium term β components of inflation but rather also plausibly contribute to a β reverting β component of inflation. differentiating the reverting and medium - term components of inflation the main analytical challenge and is inevitably subject to high uncertainty. there are no short cuts in the analysis of underlying inflation, which requires a comprehensive multivariate and multi - method assessment. in particular, the tracking of underlying inflation must | the international community differ depending on the eurosystem tasks involved in international relations. in particular, the ecb can play three different roles. first, the ecb is a primary and autonomous counterpart whenever the eurosystem β s exclusive competencies - ie monetary policy and related central banking tasks - are involved in international relations. second, with regard to issues related to the exchange rate of the euro, the ecb shares with the ecofin council the responsibility for both consultations with third parties - for example at g7 level - and communication to the general public. however, the ecb is solely responsible for deciding foreign exchange operations. third, within the limits of the eurosystem β s field of competence, the ecb can advise other euro area policymakers on international issues. in specific circumstances the ecb may also act as a β catalyst for cooperation β. this may happen when the eurosystem develops common views on issues which fall within the competence of other euro area authorities ( mainly national governments ), but in which the eurosystem has a strong institutional interest, in accordance with its statute. this applies, for instance, to issues related to the stability of the global financial markets and the architecture of the international monetary system. in dealing with these issues, the ecb may provide value added to the development of common euro area positions to be taken at the international level. rationale for cooperation the relations of the ecb with other policymakers at the international level involve a number of cooperation activities designed to increase the β joint welfare β resulting from their policies. generally speaking, β international cooperation β takes place within the relevant organisations ( eg imf ) and fora ( eg g7 ), between the competent authorities of different countries for either a given policy ( eg monetary policy ) or a set of policies ( eg macroeconomic policies ). in this context, the term β country β should be understood to include monetary unions such as the euro area. in principle, cooperation can include a wide spectrum of activities, namely : β’ consultation, which simply consists of a mutual exchange of information and views ; β’ surveillance, ie the systematic monitoring and assessment, by an independent organisation, of the economic policies of its members. within this context, the international community may also develop β standards β and β codes β, which constitute a form of multilateral rule - making to be implemented on a voluntary basis ; and β’ coordination, ie the agreement between separate policymakers to take and implement joint | 0.5 |
benoit cΕure : financial regulation and innovation - a two - way street introductory remarks by mr benoit cΕure, member of the executive board of the european central bank, at a roundtable organised by finleap, berlin, 14 march 2018. * * * let me thank finleap for organising this roundtable. it is no surprise that we are having this discussion here in berlin, which has quietly emerged as a european capital when it comes to fintech. over 200 fintech companies already call berlin home, and this number is growing by the day. 1 i hope that this morning β s roundtable can provide a platform to exchange experiences and stimulate discussion. that central banks take a keen interest in fintechs should not come as a surprise. as evidenced by the financial stability board, crowd funding and peer - to - peer lending have the potential to affect bank lending services. e - trading and robo - advice may change the way banks provide investment management and advisory functions and therefore the way savings are channelled to the economy. 2 and it is fair to say that the current frontier of innovation falls squarely within central banks β remit β that is, the provision of payment services. 3 the challenge for regulators is to balance the obvious benefits that fintech innovations may have for growth and welfare with their potential risks. after all, the history of financial innovation is littered with examples that led to early booms, growing unintended consequences, and eventual busts. the interaction between financial regulation and innovation is a two - way street, however. it is not just that change in the financial sector will impact the way we do regulation. regulatory initiatives will also affect the direction and speed of transformation in the financial sector, with all the repercussions this implies for monetary policy, financial stability and the way firms and households manage their finances. pre - emptively drawing in the reins in the name of financial stability could stifle innovation, prevent fintechs from developing important economies of scale, and deprive small businesses and households of the benefit of technological progress. on the other hand, allowing risks to accumulate in an unregulated sector may undermine financial stability and undo the benefits of past regulatory efforts. banking services could migrate to less - regulated parts of the financial system unless the provision of similar services with similar risks is regulated in a similar way. we β ve been here before : decisions taken 20 years ago to leave otc derivatives largely unchecked created | . to give just one example, the newly released sepa instant credit transfer scheme that enables transfers of up to β¬15, 000 in less than ten seconds will benefit as of november 2018 from the target instant payment settlement ( tips ) service ensuring pan - european reach of instant payments. with the scheme layer and the clearing and settlement layer in place, it provides a good opportunity for fintechs to build efficient and innovative end - user solutions. the ecb is also investigating the potential of distributed ledger technologies ( dlt ) in the context of our real - time gross settlement ( rtgs ) system. like other central banks experimenting with the technology, though, we have come to the interim conclusion that the technology is not yet mature enough. 7 and in our separate role as banking supervisor, we apply a technology - neutral approach that ensures that the use of new technology in the banking sector is not discouraged. we have developed a β guide to the assessment of fintech bank licence applications β. the purpose of the guide is to make the process more transparent for potential fintech bank applicants and to increase their understanding of the procedure and criteria applied by the ecb when assessing licence applications. this initiative is part of a broader effort by european supervisory authorities to map current authorising and licensing approaches by national authorities and the launch of socalled β fintech facilitators β in several member states. just last week we established the euro cyber resilience board for pan - european financial infrastructures to create a regular forum to enhance the cyber resilience of financial market infrastructures, their critical service providers and the wider eu financial sector. 8 such efforts are critical in an environment where both the level and scope of cyberattacks are growing rapidly. in this context, i would also be interested in hearing how you ensure cyber β hygiene β and to what extent information on common cyber threats is exchanged within the wider fintech community. so, overall, fintechs here in berlin, and in the eu more generally, can thrive in an innovationfriendly environment. but this does not mean that we ignore the risks. should regulatory loopholes emerge, we would need to close them to ensure that financial intermediation outside 2 / 3 bis central bankers'speeches the banking sector remains safe and sound. thank you. 1 see comdirect fintech study, november 2017. 2 see e. g. fsb ( 2017 ), β financial stability implications from fintech β, 27 june. | 1 |
decisions one at a time. the past few years were unlike anything we β d experienced before, and none of it was easy. but we believe inflation will once again fade into the background as it settles back at 2 %. this will allow canadian consumers and businesses to spend and invest with confidence and the economy to work better for everyone. thank you. | and wage growth has reached pre - pandemic levels. businesses can β t find enough workers to meet demand and they are telling us they β ll need to raise wages to attract and retain staff. we expect strong growth to continue in the months ahead. as remaining public health restrictions ease, canadians are spending more on services β travel and recreation, lodging and restaurants. and we β re still buying a lot of goods. housing activity is still strong, and while we expect it to moderate, it will remain elevated. business investment and exports are both picking up, and higher prices for many of the commodities canada exports are bringing more income into the country. robust business investment, improved labour productivity and higher immigration should help 1 / 3 bis central bankers'speeches boost the economy β s productive capacity. and higher interest rates will slow spending. putting this all together, the bank forecasts the canadian economy will grow 4ΒΌ % this year, before moderating to 3ΒΌ % in 2023 and 2ΒΌ % in 2024. that brings me to my second point β the bank β s primary focus is inflation. consumer price index ( cpi ) inflation in canada hit a three - decade high of 6. 7 % in march, well above what we projected in the january mpr. the war has driven up the prices of energy and other commodities, and it is further disrupting global supply chains. while most of the factors pushing up inflation come from beyond our borders, with the economy in excess demand, we are facing domestic price pressures too. about two - thirds of cpi components are growing above 3 %, which means canadians are feeling inflation across their household budgets, from gas to groceries to rent. our latest outlook is for inflation to average almost 6 % in the first half of 2022 and remain well above our 1 % to 3 % control range throughout this year. we then expect it to ease to about 2Β½ % in the second half of 2023 before returning to the 2 % target in 2024. high inflation affects everyone. inflation at 5 % for a year β or 3 percentage points above our target β costs the average canadian an additional $ 2000 a year. and it is affecting more vulnerable members of society the most, both because they spend all their income and because prices of essential items like food and energy have risen sharply. this broadening in price pressures is a big concern. it makes it more difficult for canadians to avoid inflation, no matter how patient or prudent they are as shop | 0.5 |
mario draghi : building the bridge to a stable european economy speech by mr mario draghi, president of the european central bank, at the annual event β day of the german industries β, organised by the federation of german industries, berlin, 25 september 2012. * * * ladies and gentlemen, it is a privilege to be invited to address the bundesverband der deutschen industrie this afternoon. the bdi in many ways mirrors the strengths of the german economy. it simultaneously represents global multinationals and family - owned small businesses. it is this combination of small, medium and large firms that gives german industry its uniqueness and resilience. and this has been rewarded in recent years through strong growth and high employment. the euro area as a whole has been facing challenging times. financial markets are fragmented. economic growth has been broadly flat for the first half of 2012. growth also remains highly uneven, with some parts of the euro area economy expanding at a solid pace, while others are still in a phase of adjustment. but my central message to you today is that, provided that all policy - makers persevere with the necessary reforms, we have a number of reasons to be positive about where the euro area is heading. we are seeing signs of improved sentiment in financial markets and we expect the economy to return to growth next year. at the same time, considerable progress is being made on all fronts to strengthen the foundations of the euro area. above all, the member states of the euro area are undertaking determined measures to address the root causes of our current challenges. individually, governments are implementing the fiscal and structural reforms essential for growth. collectively, they are reforming the governance of the euro area so as to guarantee sound policies for the future. we at the european central bank ( ecb ) are continuing to maintain price stability, which is the foundation of growth and job creation. we have introduced new measures to ensure price stability by removing unfounded fears about the euro area. these measures are supporting financial market sentiment while deeper reforms are implemented across the euro area. however, our measures can only build a bridge towards a more stable future. it must be completed with decisive measures by governments to address fundamental challenges and complete the euro area β s institutional architecture. they are currently making progress in this direction. the key challenge going forward is to ensure that the immediate upturn strengthens rather than weakens this commitment. actions by the member states to strengthen the euro area β s foundations let me begin with | a digital euro would also generate synergies with other elements of our strategy, facilitating the digitalisation of information exchange in payments through e - invoices, e - receipts, e - identity and esignature. and in making it easier for intermediaries to provide added value and advanced technological features at lower cost, it would give rise to products that could compete with those of the big techs, thereby benefitting end users. the ecb and the national central banks have started preliminary experimentation through four work streams. first, we will test the compatibility between a digital euro and existing central bank settlement services ( such as tips ). [ 28 ] second, we will explore the interconnection between decentralised technologies, such as distributed ledgers, and centralised systems. third, we will investigate the use of payment - dedicated blockchains with electronic identity. and fourth, we will assess the functionalities of hardware devices that could enable offline transactions, guaranteeing privacy. we will take the necessary time to explore all aspects of different options : whether they are technically feasible, whether they comply with the principles and policy objectives of the eurosystem, and whether they satisfy the needs of prospective users. conclusion let me conclude. the digital transformation is triggering a revolution in the financial sector, which will bring innovation but also risks. in particular, big techs and stablecoins could disrupt the european financial system. and while they could offer convenient and efficient payment solutions, they also risk endangering competition, privacy, financial stability and even monetary sovereignty. our policies provide a forceful policy reaction to the digital shock. we want to create the conditions for a resilient, innovative, diverse and competitive payments landscape that can better serve the evolving needs of european people and businesses. we are promoting safe, pan - european instant payments. what is at stake is nothing short of the future of money. as private money goes digital, sovereign money also needs to be reinvented. this requires central bank money to remain available under all circumstances β in the form of cash, of course, but also potentially as a digital euro. we want to enable people to choose their preferred way of paying without having to compromise on their expectations of fast, secure, inclusive and seamless payments. this is our aim today, and it will remain our aim in the future. [ 1 ] the data refer to european citizens aged 18 or over and include point - of - sale, person - to - person | 0.5 |
in 2018 β 2019, even though it has already been largely factored in by markets and banking institutions. but regulation is still under development for the rest of the financial system. pressures increase from regulated entities, which complain about regulatory uncertainty, and from policy - makers, who are keen to foster economic recovery and growth after 8 years of low economic performances almost a lost decade! keeping the momentum relates to three objectives : β complete the regulatory agenda, in particular regarding what is named now as β market - based finance β, so as to effectively and comprehensively strengthen the financial system and remove regulatory uncertainty ; β make sure that the regulatory spectrum expands well beyond the sole banking sector so as to avoid unfair level playing field, regulatory arbitrage and a paradoxical outcome that is favoring and encouraging those who are still β in the shadows. β on top of that, keeping pace with the creativity of all players is no small challenge. bis central bankers β speeches β devoting adequate resources and designing the proper organization of supervision which needs to be intrusive. preserving diversity while the objective of expanding the scope of regulation beyond the banking sector may require applying similar β though not identical - regulation to similar asset classes or risks, irrespective of the legal status of the intermediary bearing them, it must also be acknowledged that business models, accounting frameworks, liability structures, time horizons of decisions may differ across sectors and entities. in that respect, it can be argued that that β one size does not necessarily fit all β and that one should preserve and ensure diversity. this is especially the case in the financial system, where identical behaviors at the same critical moments, possibly due to identical regulations, may generate endogenous risk and amplification as in professor shin β s millennium bridge analogy. this reasoning applies not only to financial intermediaries but also to financial market infrastructures, where networks effects through interlinked central counterparties might actually amplify shocks. keeping a systemic eye of financial intermediaries means that one should not look at them in isolation but rather consider both how their behaviors can propagate systemic risk in the financial system and how their failure can disrupt the provision of critical financial services to the real economy. 3. increasing global robustness this latter point brings me to the issue of recovery and resolution of both financial intermediaries and market infrastructures. this is probably the key novelty in the regulatory framework that is emerging from the crisis. it serves both the objectives of preventing disorder | anne le lorier : regulating non - banks β ways forward and challenges ahead speech by ms anne le lorier, first deputy governor of the bank of france, at the acprbank of france conference β financial regulation - stability versus uniformity, a focus on nonbanks actors β, paris, 28 september 2015. * * * dear ladies and gentlemen, dear colleagues and friends, on behalf of the banque de france and of the acpr, i would first like to thank very much the speakers and the participants in today β s conference for the quality of their presentations. indeed, they helped us to have insightful debates on the ongoing efforts made to prevent systemic crisis as much as possible, strengthen the global financial system and its resilience i. e. its capacity to withstand systemic shocks. as illustrated today, this is not an easy task and the global regulators are facing many challenges in shooting at a moving target : the financial system not only adapts, but also transforms itself and anticipates regulatory changes, sometimes constructively, sometimes less, thereby continuously modifying the sources, the channels and the shape of systemic risks. regulation itself can be ill - designed, too narrowly focused or can generate unintended consequences. there is no doubt that tremendous efforts have been made in the wake of the financial crisis to reach our objective of financial stability, providing the policymakers with additional tools to build - in robustness into the global financial system, increase the loss absorption capacity of financial institutions and infrastructures, and limit the scope for contagion while new approaches to prevent systemic risk have been developed, namely macroprudential policies. however, due to the magnitude of the task, its difficulty and its complexity, global regulators had to proceed with a sequential approach, starting by the banking system where their knowhow was the best, and expanding gradually a framework to the rest of the financial system in concentric circles. as a consequence, we are currently facing three challenges that i would like to focus on : keeping the momentum for reforms, allowing for the diversity and ensuring the robustness of the global financial system. 1. keeping the momentum after such a long and intense conference day, you might already feel a sentiment of regulatory fatigue! consequently, you might appreciate the feeling of regulators and financial intermediaries after more than 8 years of intense regulatory developments and debates! and yet, the latter are not completed nor their implementation! banking regulation, which is almost complete now, will only come into force | 1 |
, also the recovery is on track to overcome the crisis. europeans, for all our differences, have many values that we share more closely than even close allies such as the united states. our social model ensures adequate healthcare and workers β rights that are absent elsewhere. we value highly human and civil rights ranging from gender equality, data protection, to the condemnation of torture, including the rejection of capital punishment. the protection of these values and rights relies on the vigilance of the legal professionals here in this room and elsewhere. this is even more important vis - a - vis a reality of extreme and obsessive forms of nationalism. the eu has also increased personal choices. the ability to travel, work and live across borders has been enhanced. the european health insurance card permits european citizens to obtain healthcare wherever they are. 1. 5 million people, perhaps including some of you here today, bis central bankers β speeches have completed part of their studies in another member state as part of the erasmus programme. more than 15 million eu citizens have moved to other eu countries to work or to enjoy their retirement. this wider range of options increases people β s wellbeing. these reasons, and the other positive aspects of membership, have been drowned out in debate by concerns over migration and the large wave of refugees from troubles in the middle east and elsewhere, the impact of the crisis, disaffection with high levels of unemployment β especially youth unemployment, and a perceived lack of accountability and legitimacy of the eu institutions. i fully recognise that europe in its current state is not perfect. the crisis has shown that economic and monetary union is incomplete, and further work is required, particularly in the areas of banking and credit markets. in order to function democracy requires that citizens can hold decision - making accountable at the level at which these are taken. but today we can only elect and sanction at the national level, while decision making is widely done at the european level. therefore, we have to enhance the decision - making process at the european level through appropriate democratic control measures and more direct election and sanctioning features. the solutions to these issues are not simple, and reasonable people may well disagree on their form. this forum is an ideal place to debate what laws, rules and institutions we need to put in place to strengthen the integrity of the union. i promised earlier that i would give you something to argue about tonight! i believe the vision of a united europe is worth striving for. to make this vision | important thing, in contrast to the previous and other growth cycles, is that it is growing without an increase in loans and without a real estate bubble. with lending growth that is below nominal gdp and a current account surplus in the balance of payments. as long as these two things continue, the spanish economy will keep growing faster than the rest. the recommendation, which is also valid for portugal, greece and ireland, and even for italy, is this : stabilise the banking sector and the credit markets. and maintain competitiveness. then you will do better than average. 3 / 5 bis central bankers'speeches the public message is quite clear. are there more discreet messages in private? no, none. i say the same thing in public that i do in private. have the ecb β s non - standard measures run their course? no. we can still increase bond purchases or lower interest rates further, which means that we still have the same tools available. what is happening is that the secondary effects are becoming more tangible. and each measure has less of a return. i look at the effects, and these can vary greatly. i am worried by risk taking in the asset management sector against the background of low interest rates. it is a matter of concern for me. banks are now better capitalised, they have more liquidity, and they are much safer than they were. but they face low profitability, which is a problem. supervision is centralised and is more suitable than when it was the remit of national authorities. but in the area of asset management and investment funds, what we see is that, in a low interest rate environment, their investment strategy always moves towards increased risk, in the sense of assets with potentially greater returns and greater risks but that are less liquid. and there is also more leveraging, not to the extent seen in the united states, but still more than before. and the supervision in this sector is not comparable with that in the banking sector. there is a risk. if they are asked for units to be paid out they have to do so within two or three days. i see a potential risk of liquidity imbalance. that is what worries me the most at the moment. and, while it may not technically be a secondary effect of monetary policy, because its causes are structural, i am concerned by the banking sector β s low profitability. are you in favour of changing or widening the ecb β s mandate? or of defining more | 0.5 |
kiyohiko g nishimura : this time may truly be different β balance sheet adjustment under population ageing speech by mr kiyohiko g nishimura, deputy governor of the bank of japan, at the 2011 american economic association annual meeting, panel β the future of monetary policy β, denver, 7 january 2011. * 1. * * introduction : population ageing this panel β s topic β the future of monetary policy β is doubly opportune. firstly, more than two years have past since the immediate fallout of the lehman brothers β collapse, giving us time both to look back and to look forward. secondly, we are not yet out of the woods and are still in the process of soul - searching ; pursuing a better understanding of our economic environment and the appropriate monetary policy responses. in this presentation, i will give a perspective that may be different from other panelists : longer - run, more qualitative than quantitative. specifically, to contemplate the future, i start from the fact that we are in the midst of a balance sheet adjustment process after the financial bubble burst, at a time when the population is ageing. this is not the simple balance sheet adjustment of the past, which took place with a growing young population. this is an acute balance sheet adjustment when the composition of the nation β s population is rapidly tilting toward the old. this is unprecedented in our modern history of economic growth. this ageing population is the result of people β s choices made many years ago when, after the second world war, birth control became possible and substantial medical improvements were reducing child mortality and increasing longevity. these medical advances and the baby boom after the war, together with longer life expectancy, are true blessings for economic growth, bringing what are often called population dividends, with many young workers producing and few old people being supported. however, at some point in time, the trend had to be reversed. the significant point for us here is that the bubble we have experienced has coincided closely with the turning point in these demographic dynamics. population ageing : inverse dependency ratio let me show you some telling figures on the inverse dependency ratio, which indicates how many people of working age it takes to provide for one dependent person. the japanese ratio peaked around 1990, and it was in the very next year, 1991, that the japanese bubble peaked. the peak of the us ratio was between 2005 and 2010, and the peak of the us subprime bubble was 2007 ( | the table. india has also voluntarily agreed to reduce the carbon emission intensity of its gdp by 20 - 25 per cent over 2005 levels by 20202. india was one of the early signatories of the montreal protocol on ozone depletion and, as of 1st january, 2010, has completely phased out the production and consumption of ozone depleting substances such as chlorofluoro carbons ( cfcs ) once used in almost all refrigerators and air conditioning systems3 and halons, which were used in fire extinguishers. it remains on track towards complete phase - out of production and consumption of hydro cfcs by 2030. within the country, the government is also consistently making efforts / policies towards ensuring environmental sustainability. this includes policies like joint forest management, green rating for integrated habitat assessment, coastal regulation zone, clean energy drive through eco labeling and energy efficiency labeling, fuel efficiency standards, etc. emissions from the agriculture sector would not form part of the assessment of its emissions intensity. these exclude use of pharmaceutical grade cfcs in manufacturing of metered dose inhalers for asthma and chronic obstructive pulmonary diseases patients. bis central bankers β speeches reducing global wastage 14. an integral part of doing business in a sustainable way is to reduce waste and, in the process, decrease operating costs and increase profits. as per estimates4, between 30 to 50 per cent ( about 1. 2 β 2 billion ) tonnes of food produced around the world never reaches a human stomach. while wastage in the sub - saharan africa and south - east asian countries, including india, tend to occur primarily at the farmer - producer end of the supply chain due to inefficient harvesting, inadequate local transportation and poor storage infrastructure, in developed countries such as the uk, produce is often wasted through retail and customer behaviour. surveys also show that in india, at least 40 per cent of all fruits and vegetables are lost between grower and consumer due to lack of refrigerated transport, poor roads and inclement weather. wasting food means losing not only life - supporting nutrition but also precious resources, including land, water and energy. about 550 bn cubic metres of water is wasted globally in growing crops that never reach the consumer. within india, water use efficiency in agriculture, which consumes around 80 per cent of our water resources, is only around 38 per cent, which compares poorly with 45 per cent in malaysia and morocco and 50 β 60 per cent in israel | 0 |
2007 ). conway, nicoletti, de rosa and steiner ( 2006 ). see, for instance, crepon, duguet and mairesse ( 1998 ). esser, villalba and tarantola ( 2007 ). forsling & lindstrom ( 2004 ). organisation important for productivity growth it is available all around the world at roughly the same price, but the differences are substantial with regard to how different countries and sectors use this technology to make their production more efficient ( see figure 5 ). the united states and europe have experienced a similar productivity growth in the it - producing sectors, but the americans have had stronger growth in sectors with intensive use of it. this includes, for instance, the wholesale and retail trade sectors and financial services. studies indicate that one of the explanations for the united states β relative productivity advantage over europe is that the us companies have been quicker and better at adapting their organisations to the new technology. 7 one factor that might contribute to this difference is that the stricter regulations in the labour market in europe mean that it takes longer time and costs more money to reorganise. sweden is an exception in this context. we have seen a strong growth in productivity in the sectors using it at the same time as we have a relatively regulated labour market. given this, the riksbank has initiated a research project to obtain more information on how investment and use of it as well as reorganisation affects productivity growth in sweden. the project is in two parts. the first sub - project is a micro study which examines whether companies that have reorganised and invested in it will have higher productivity growth. the second part of the project is based on an own survey study in collaboration with statistics sweden, which covers the years 1997 - 2005. the first, preliminary results of this study were presented at a conference organised by the riksbank at the end of last year on the theme of productivity. 8 they indicate that the companies that made organisational changes at the same time as investing more in it than the average company experienced a substantial increase in productivity growth. 9 the study also shows that it was not possible to find any significant effects on productivity growth from it investments in the companies that had not reorganised. it is therefore important to take into account investments in " organisational capital β when analysing productivity growth. other investments in knowledge capital such as staff training and r & d should also be important to productivity. this is also confirmed by studies | there has recently been a debate on the objective of monetary policy. some have said that we should have several objectives, while others have considered that we already strive to achieve too many. this indicates that we have not quite succeeded in explaining how we work, despite the fact that we are considered one of the most open central banks in the world. let me therefore now be extra clear β there is one objective for monetary policy and that is to maintain price stability. however, this objective does not rule out taking into account the real stability of the economy. this possibility is allowed by the legislation on the riksbank β s activities and is something we always bear in mind. this is something that i and my colleagues will continue to work on explaining over the coming year. at the same time, it should be emphasised that this is a complex task and that it is therefore quite natural that there is a debate on monetary policy. nor are we executive board members always unanimous on which interest rate decision will be the best one in a given situation, despite the fact that we are agreed on the objective of our monetary policy. credibility demands openness and clarity in order to combine confidence in price stability in the longer term with flexible inflation targeting, it is important that we are open and clear when conducting our monetary policy. this is also a necessary condition for the legitimacy of the riksbank β s objective, independence and actions. important elements of this endeavour include publishing the analyses on which interest rate decisions are based in the form of inflation reports. in addition, after every monetary policy meeting a press release is published, which gives an account of the reasons behind the decision made. moreover, when an inflation report is published or the repo rate is adjusted, the riksbank holds a press conference. the executive board β s monetary policy discussions are reported in separate minutes of the monetary policy meetings, which are published around two weeks after each meeting. in this way, all those who wish can closely follow our reasoning and a basis for evaluating our assessments and decisions is created. i can also mention that the governor of the riksbank appears before the riksdag committee on finance twice a year for a discussion on monetary policy. in addition, we executive board members hold around thirty speeches a year, in which we present our own views of the economic situation. all this means that there is ample opportunity for the general public to obtain an understanding of how monetary policy decisions are made and it creates conditions for a serious debate. | 0.5 |
people to prosper and to enrich their lives more broadly. thank you. 1 see tomaz cajner, tyler radler, david ratner, and ivan vidangos ( 2017 ), " racial gaps in labor market outcomes in the last four decades and over the business cycle, " finance and economics discussion series 2017 - 071 ( washington : board of governors of the federal reserve system, june ). 2 see, for example, stephanie r. aaronson, mary c. daly, william l. wascher, and david w. wilcox ( 2019 ), " okun revisited : who benefits most from a strong economy? ( pdf ) " brookings papers on economic activity, spring, pp. 333aβ¬ β 75. 3 see joshua montes, christopher smith, and isabel leigh ( 2021 ), " caregiving for children and parental labor force participation during the pandemic, " feds notes ( washington : board of governors of the federal reserve system, november 5 ). 3 / 3 bis - central bankers'speeches | complicated interaction of people and places. solutions are found through the cycle of experimentation and adjustment. successes look easy but they mask hard work and, often, failed attempts. transformational changes in communities rarely happen without the involvement and support of a network that includes residents, business owners, community organizations, financial institutions, and local government. sustained interaction among these stakeholders is what makes the opportunity known and the solution successful. the city of rochester, new york, put these principles to work and managed to weather the bankruptcy of the city β s largest employer. eastman kodak once employed some 61, 000 rochester residents and invested significantly in the city β s educational and cultural institutions ; three decades later, it employs fewer than 7, 000 people and recently filed for bankruptcy protection. 7 this is not an uncommon story, except for the fact that rochester managed to gain a net of 90, 000 jobs during the three decades of employment decline at kodak. how did rochester manage this transition so successfully? the city recognized early on the need to diversify its economic base and, some 20 years ago, created a network of private and nonprofit partnerships to leverage the city β s assets, the same universities and cultural institutions kodak had supported. together with local government, this network trained entrepreneurs and supported new business ventures, many of which are in optics and wilkinson, amy ( 2011 ). keynote address ( pdf ), delivered at the small business and entrepreneurship during an economic recovery conference, federal reserve board of governors, november 10. applebome, peter ( 2012 ). β despite long slide by kodak, company town avoids decay, β new york times, january 16, www. nytimes. com / 2012 / 01 / 17 / nyregion / despite - long - slide - by - kodak - rochester - avoids - decay. html. bis central bankers β speeches photonics. through foresight and the collaboration of government, private and nonprofit partners, and committed citizens, rochester was able to build on the kodak legacy, effectively turning lost jobs at kodak into new local opportunities. healthy communities in addition to housing and employment, residents need communities that support their health and well - being in a variety of ways. community developers play a critical role in supporting healthy lifestyles by planning for sidewalks, parks, and other open spaces connecting housing and commercial areas in ways that also provide places for people to meet and children to play. renovation and new construction plans increasingly adhere to standards that incorporate β green β materials and technologies not | 0.5 |
losses effectively in a crisis. this is necessary to protect depositors, reduce risks to the real economy, and safeguard our financial stability. the experience of countries at the centre of the crisis in europe and the u. s. showed that the total cost of a financial crisis to the economy and the public can be substantial. ( ii ) second, common equity tier 1 capital requirements that are significantly above basel iii will not result in a large reduction in economic output but would be beneficial in reducing the likelihood and cost of a crisis. several empirical studies confirm this. notably, the basel committee β s assessment of the long - term economic impact of basel iii was that the economic costs of going above basel minimums were still lower than the costs arising from banking crises. in deciding on the levels appropriate for singapore, mas carefully weighed the costs of additional capital against the benefits. banks that are well - capitalised, prudently regulated, and located in stable financial centres such as singapore, present an attractive value proposition to depositors and investors. holding systemicallyimportant banks to a higher solvency standard reduces both the likelihood of failure and impact to the real economy if one of them runs into difficulties. ( iii ) third, the impact on banks β capital structures will be manageable. this is, in part, due to the already high internal capital buffers held by the banks and also due to the transition arrangements that will apply. in short, the locally - incorporated banks are in a good position to meet the higher capital adequacy requirements and will emerge stronger in a post - basel iii world. institutional structure of banking one strand of the regulatory debate that is still ongoing relates to whether reforms to how banks structure themselves can help promote financial stability. there are several dimensions to this. i will focus on the dimension that is most relevant to singapore as a financial centre. this relates to the merits of the universal branching model compared to a subsidiary model for retail banking. most foreign banks in singapore operate under a universal branching model. branches here undertake a combination of retail, commercial, and investment banking activities, without the need to legally separate these activities. some other regulators prefer that banks operating in their jurisdictions operate as subsidiaries, or separate the retail and wholesale activities into different legal entities. mas has a long history of permitting the universal branching model and we continue to support it. the universal branching model provides significant efficiency benefits for banks. it permits a bank to take advantage of economies of scale by sharing management resources and | capital across its business lines, in addition to pooling its risks across the banking group. a branch can rely on the capital of the parent bank to borrow from the interbank market for funding purposes. this may not be possible for a local subsidiary with a smaller capital base. a branch structure can also give the banking group a greater ability to withstand idiosyncratic shocks to part of the group, because excess liquidity and capital from one part of the group can be redeployed to the parts in need. this, of course, is provided that the shock is not so large as to overwhelm the group as whole. bis central bankers β speeches during periods of severe stress, however, the close linkages between business functions in a single, integrated entity make it difficult to isolate and contain problems. the provision of essential services by a branch such as domestic lending and deposit - taking, as well as payment transactions, could be disrupted. local depositors would be exposed to possible contagion or a crisis of confidence arising from problems in the bank β s home market, or from problems related to its wholesale banking activities. mas imposes a number of regulatory requirements on the locally - incorporated banks to protect depositors, including the higher capital adequacy requirements that i mentioned earlier and a minimum paid - up capital of $ 1. 5 billion. however, there are qualified full banks ( qfbs ) and foreign full banks which operate as branches and accept retail deposits without any capital in singapore. mas β approach has been to closely supervise these branches. they are also required to be members of the deposit insurance scheme, which provides a safety net for all non - bank depositors by insuring their deposits up to $ 50, 000 per depositor per bank. there are clear benefits, however, for foreign banks with a large retail presence to operate their retail business from a locally - incorporated subsidiary. where the banks have corporate or investment banking businesses, these activities can continue to operate as part of their existing branches. this will allow banks to continue to benefit from cost efficiencies associated with a branch structure and minimise changes to their business models. moreover, by conducting retail activities from a separate locally - incorporated entity, the bank will be seen by local retail customers as being strongly committed to the local market for the long - term. international discussions on this topic are ongoing and mas is monitoring the debate closely. conclusion to conclude, singapore has built a reputation for credibility and prudence | 1 |
in a short space of time we have overcome formidable political, legal, economic and organizational difficulties. today the european reform process is still struggling to make headway. although the debate is ongoing and the key problems have been identified, there is a deadlock between those who would prioritize action to reduce macroeconomic and financial risks in the individual member states and those who are calling for the rapid adoption of common safeguards against the consequences of such risks, given the absence or paucity of national tools. this deceptive dichotomy, however, rooted in misunderstandings and scant mutual trust, has come to condition the drafting of european rules for managing bank crises and to impede the completion of banking union. the result is a system without a safety net, one that lacks the new european financial backstops for the single resolution fund and the deposit insurance scheme, while the national tools and procedures used by many countries for the management of bank crises, even in recent years, are now out of bounds. in a context such as this, stricter rules and common supervisory and resolution mechanisms cannot prevent the outbreak of crises β even just of liquidity β nor can they adequately limit the consequences. this needs to be acknowledged and the necessary adjustments devised. the experience of recent years has demonstrated how important it is to leave an opening that will allow situations with the potential to disrupt financial stability to be successfully managed. risk reduction and risk sharing are complementary first and foremost in relation to public finance. a high debt - to - gdp ratio is a source of vulnerability : it discourages investment and impedes growth ; it exposes countries to a loss of market confidence and financial contagion. budget flexibility is essential in a cyclical downturn, but further progress, i. e. strong lasting growth of output, is impossible with a large deficit. italy cannot delay setting in motion a steady and tangible reduction in the debt - to - gdp ratio. the reduction of the time needed to achieve this requires budgetary discipline above all else. structural reforms to increase the economy β s growth potential are essential. we should bear in mind, however, that in the absence of adequate safeguards, a country β s recovery efforts can be rapidly thwarted by negative shocks. to avoid this happening, risk - sharing measures could be considered in order to reduce the sensitivity of national budgets to macroeconomic conditions, thereby avoiding the rapid accumulation of debt during adverse economic cycles and the adoption of procyclical policies in an attempt to limit it | as the sdrm is a more debtor - friendly mechanism, it could induce more fiscal discipline, strengthening the financial markets early warning function. in my opinion, this is not a secondary aspect. the key to an efficient approach to preventing sovereign distress lies in strengthening market pressure while also making it operate more gradually than is usually the case. an example is the cf. reinhart, rogoff and savastano ( 2003 ). cf. giordano and tommasino ( 2009 ). greek crisis. the spread between 10 - year greek and german bonds was less than 30 basis points in 2007. it widened to about 150 at the end of 2008 in the aftermath of the lehman brothers collapse and then fluctuated between 100 and 250 basis points until the beginning of this year. after that it skyrocketed, surpassing 900 basis points in the summer, and only in recent weeks has it fallen back somewhat to below 700. of course, any institutional reform that forces governments to become more sensitive to the warning signals coming from financial markets is welcome. with the stability and growth pact ( sgp ) the eu decided to use fiscal rules rather than market constraints, which were considered ineffective and slow in imposing fiscal discipline. as early as 1989, the delors committee had remarked that : β the constraints imposed by market forces might either be too slow and weak or too sudden and disruptive β 4. a solid fiscal framework can improve budgetary coordination over time by removing the built - in bias towards fiscal profligacy that is often attributed to democratically elected governments. a medium - term fiscal framework is particularly important, especially in the current situation, which requires credible plans to anchor expectations and, at the same time, a degree of flexibility in implementation so as not to hamper economic growth. however, it does not follow from this that market forces necessarily have to work only ex post and continue to be β too slow and weak or too sudden and disruptive β. we must strengthen β gradual β market pressure. for that, i believe having pre - defined procedures for debt - restructuring and a well - designed crisis management framework would help greatly. defaults are certainly β unnecessary, undesirable, and unlikely β, as cottarelli et al. ( 2010 ) assert. but we should not only be ready in case they take place but also have institutions capable of conveying to the market the message that they are in fact possible. the sovereign debt crisis and the institutional setup in the eu i | 0.5 |
hit a trough earlier this year at nearly five percentage points lower β the lowest in almost 20 years. if we could return the youth participation rate to its level before the global financial crisis, more than 100, 000 additional young canadians would have jobs. of course, this is not only a problem for youth. we know of people in all age groups who are working part - time when they would prefer a full - time job. we also know people who cannot find jobs that match their skill set and are underemployed. and we know there are people who have lost the job they held for years when their factory closed, and have faced extreme difficulty in finding new work in a similar field. these are all serious concerns. but i want to concentrate on young people, for whom a long period of unemployment can leave a scar that could last a lifetime. i know there are legitimate explanations for why more young canadians are staying out of the labour force. enrolment in post - secondary schooling has increased in recent years, and we expect some of this rise will be permanent. some of these youth are looking to gain the skills that will match what employers are demanding. there are more than 250, 000 job vacancies in the economy today, the highest on record. canadian business leaders say that most of these vacancies are unfilled because they cannot find workers with the right skills. let me suggest that responsibility for addressing this skill mismatch rests with all of us, not just the students and the education system. there surely is room for more ambitious on - the - job training programs in this picture. this issue is taking on greater urgency because the economy is reaching the stage where moreefficient job matching and increased workforce engagement will be our main means of building economic capacity. with more economic capacity comes the opportunity for more noninflationary growth and a permanently higher level of canadian gdp, and more income for everyone. clearly, that is something worth having. let me elaborate. right now, we are at a point in the economic cycle that i think of as the β sweet spot. β we know that a majority of canadian companies are running flat out. they may have been hesitating to invest in new capacity until now, perhaps because of lingering economic uncertainty, or concerns over the future of nafta, for example. but, despite these uncertainties, companies are moving to expand their capacity now, which augurs well for the future. most expansion | like to emphasize that we are being prudent in our outlook. in fact, total investment as a share of gdp is flat over the projection horizon. i β ve been in the forecasting business long enough to know that one of the toughest things to call is when intentions will translate into investment decisions. structural factors affecting investment i also don β t think the trade war is the only reason for the disappointing investment in canada and globally. even before the latest slowdown, a downbeat outlook among firms about the strength of future demand contributed to weakness in global business investment in the years that followed the crisis. 9 a couple of structural issues are contributing to this. the first is demographics. population aging is limiting the growth of the workforce in canada and many other economies. this reduces the future returns to any investment by limiting 7 for an excellent discussion of this theme, see j. haskel and s. westlake, capitalism without capital : the rise of the intangible economy, princeton university press ( 2017 ). 8 this assumes a constant relative price for investment in the oil and gas sector. 9 see r. fay, j. - d. guenette, m. leduc and l. morel, β why is global business investment so weak? some insights from advanced economies, β bank of canada review ( spring 2017 ) : 56 β 67. - 6the economy β s potential growth rate. 10 the second issue is that the boost to world trade and investment that came with china joining the world trade organization in 2001 has run its course. governor poloz spoke about this last month in iqaluit. 11 these longer - term structural issues aside, canada is trailing on a number of indicators that we know increase productivity and competitiveness. 12 among these are investment in information and communications technology and in research and development because other countries have been investing even more than we have. and, companies across the country tell us that a number of other competitiveness issues are holding back decisions to upgrade or expand capacity in canada. these are wide - ranging and include business costs, such as electricity, and the regulatory burden as well as uncertainty around approvals for projects. and when i β m talking with business leaders, i often hear about the costs and lost opportunities because of barriers to interprovincial trade. so, as business leaders and policy - makers, together, we have our work cut out for us. these issues can β t be resolved by central banks. still, to do | 0.5 |
jameel ahmad : the state bank of pakistan's vision of financial inclusion through financial literacy keynote speech by mr jameel ahmad, governor of the state bank of pakistan, at the pakistan financial literacy week 2024, karachi, 8 march 2024. * * * deputy governors and esteemed colleagues, presidents and chief executives of banks, distinguished guests, ladies and gentlemen! assalam o alaikum and good morning! it is with great pleasure that i am inaugurating the first ever pakistan financial literacy week. this is a first - of its kind endeavour in pakistan to champion financial literacy and inclusion on a national scale. i am really looking forward to the series of events, competitions, and public engagements during the week. these activities aim to promote a better understanding of the financial system and highlight the importance of encouraging responsible financial behaviour in the general public, especially in youngsters. financial inclusion is a cornerstone of a thriving and equitable economy. as the central bank of pakistan, our commitment to fostering financial inclusion is unwavering. we recognize that access to financial services is a fundamental right, and our mission is to empower citizens by providing them with the tools and knowledge needed to participate fully in the economy. when more people have access to financial services, it creates a broad base of consumers, savers, and entrepreneurs, and helps stimulate economic growth. it is our duty to dispel common misconceptions about formal financial services, and to engage the public in an informed, yet non - technical manner, to build their trust in the financial system. this is all the more important in developing economies like pakistan, where the informal economy has a substantial share in overall economic activity and contributes to widespread prevalence of informal and unsafe savings and investment avenues. better knowledge about financial services and products will help channelize resources towards productive use. ladies and gentlemen! financial literacy is our collective responsibility. the government, financial institutions, non - profit organizations, and educational institutions all have a role to play in promoting financial literacy in pakistan. i am happy that state bank of pakistan has been on the forefront in spreading financial literacy in the country. in collaboration with the banking industry and academia, we are proud of leading two iterations of the national financial literacy program, one for adults and one for youngsters. 1 / 3 bis - central bankers'speeches these initiatives are instrumental in disseminating financial literacy to more than 2. 9 million individuals, with more than 50 % female participation | . in addition, an impressive 80 % account opening rate of beneficiaries was witnessed under nflp. i congratulate all of you, who served in this cause and made this initiative a success by transforming it into industry owned initiative. ladies and gentlemen! our more recent major initiatives have focused on expand financial services to the unbanked and underbanked segments of the society. a. first, sbp is moving in a more targeted manner to devise policies to better integrate the female population with the formal financial system. sustained economic growth is not possible if half of the population is systematically excluded from the workforce. to plug this historical gap in the financial services industry, sbp has introduced the banking on equality policy. it supplements our national financial inclusion strategy and other initiatives to provide better access to financial services to women in our country ; b. second, sbp is spearheading multiple initiatives, in partnership with banks, to provide an equitable and easy access to drive usage of a range of financial services. they include raast, asaan digital account, asaan mobile account and more recently digital banks. c. finally, sbp has introduced specialized schemes to enhance access to finance. these schemes include the sme asaan finance or saaf scheme, refinance and credit guarantee scheme for women entrepreneurs, line of credit for msmes, and prime minister's youth business and agriculture loan scheme. i am happy to share that these initiatives have made an impact on advancing financial inclusion in pakistan. as of june 2023, there were around 177 million bank accounts in pakistan. of these, 83 million are unique accounts, which is 60 % of the 137 million adult population. it is also important to note that the total number of accounts owned by women are 49 million, of which unique accounts are 29 million. these 29 million unique accounts represent more than 43 % of the female adult population. although the financial inclusion indicators have shown improvement over the past few years, significant efforts are still required to catch up with regional and peer economies. in our strategic plan for the next five years " sbp vision 2028 ", we aim to strengthen the financial inclusion framework through targeted policy initiatives with enhanced focus on digital means. ladies and gentlemen! true financial inclusion requires individuals to understand how to leverage these services to improve their lives. this is where financial literacy plays a pivotal role. by providing individuals with the necessary knowledge and skills to manage their finances wisely, we empower them to break | 1 |
are to the upside. that said, we continue to observe that longer - term inflation expectations remain well anchored. i do not think we have evidence of inflation pressures persisting beyond the near term. over the longer term i see price stability being maintained in line with our mandate. this hump in inflation is largely due to the food and energy price pick - up that we have seen and that has become worse in recent months. however, at the moment, we have no reason to believe this would be more persistent. the growth situation maybe a little bit trickier to analyse. the events in japan and the continuing events in the middle east and north africa could be interpreted as a downside risk on growth. at the same time, we see continued evidence of rather robust growth in some parts of the euro area, so i would not say that the overall growth outlook has shifted downwards despite the negative events i mentioned earlier. the risks may be to the downside, but my baseline scenario has not shifted. bis central bankers β speeches q. how would you describe the monetary policy stance. is it appropriate now? when it comes to interest rates, i would say that monetary policy is accommodative. in my view, it is appropriately accommodative. it is appropriately accommodative in the sense that we still have some way to go towards repairing the damage that has been experienced as a result of the crisis we have been living through during the past three years. q. does that mean that you don β t see interest rates going up for, say, over the next three months? as you know, the governing council of the ecb never pre - commits on interest rate policy decisions. and personally i believe that it β s not useful to try to forecast the evolution of policy rates. what is more important is to monitor the evolution of the real economy and try to continuously monitor and form an assessment of the inflation risks. if the evolution of the economy over the next few months is such that there are greater upside risks to inflation, i believe that would justify removing some of the accommodation that is currently in place. if, on the other hand, some of the more negative scenarios with respect to the economy materialise and we see inflation risks abating, then that would not be the appropriate reaction. q. could you phase out more non - standard measures soon? as the liquidity needs of the banking system become less pressing and as the transmission mechanism of monetary policy | can be confident that they know the answers. what we do know so far is that there has been a sharp downwards inventory correction and a contraction of investment notably in ict which was so buoyant before, with associated declines in equity prices and in us imports. consumption growth, supported by a strong housing market has so far held up rather better than might have been expected. looking forward, on the positive side, one could point to the strong monetary policy response to the slowdown, and to the recent tax rebate, which have yet to have their full effect. there were some suggestions in recent capital goods orders figures that the rate of decline in investment spending may now slow. and the rate of inventory liquidation had stabilised pointing to a turn at some point so long as consumption continued to be reasonably well sustained. consensus opinion, or so it seemed to me, had become modestly optimistic. at least that was the prospect until tuesday and the appalling terrorist attacks in new york and washington. the immediate impact of those events was a sharp fall in already weak equity prices worldwide, and fears that the trauma would undermine confidence - including consumer confidence in the us, already vulnerable to rising unemployment. even before the terrorist attacks, the pessimist could point to the imbalances within the us economy, including the weakness of private sector savings, the overhang of past investment excesses, and the us external deficit, which would, at some point, need to be corrected. on that view one could envisage a gradual adjustment over time in which case the us might face a protracted period of nearstagnation ; or - if you were really pessimistic - the adjustments might be more abrupt, implying a period of negative growth and possible further financial instability. the tragic events on tuesday will have encouraged such pessimism. for what it is worth, while i recognise the downside risks, i remain - perhaps stubbornly - cautiously optimistic. on the immediate situation, i was immensely impressed that the federal reserve and other us agencies have been able to keep essential payments and settlements services functioning as they have, which has allowed markets internationally to continue to function. and i was encouraged that equity markets in europe yesterday recovered some of their immediate losses. of course it is much too soon to assess the lasting impact of the events of the past two days. but the fundamental forces affecting the us economy have not changed. and in terms of confidence effects, it would be a mistake to underestimate | 0 |
the time he was living at home. adam smith, suspected of passing forged Β£20 notes, had a fixed address in edgbaston and was picking up benefits β. so i hope the introduction of one adam smith will hinder the activities of the other. i am proud of the new Β£20 notes, but i cannot say the same of our Β£5 notes. there has been much, and in my view justified, criticism of their availability and condition. over the past ten years, the value of bank of england notes in circulation has doubled, from around Β£20 billion to around Β£40 billion. but none of that is accounted for by the Β£5 note for which the value in circulation has remained constant for fifteen years at some Β£1 billion. and the average lifetime of the note has doubled. as a result, many more notes are noticeably soiled and scruffy. atms account for over 60 % of all cash obtained by the public. few issue Β£5 notes. it is more economical for banks to stock atms with Β£10 and Β£20 notes. the problem is not at the production end β we have an ample supply of new Β£5 notes waiting to be used. we want to see them in circulation. there is a need for an adequate supply of low denomination notes that can be used for small transactions where cash is the predominant means of payment. such mutual convenience is a public good, and may not correspond to the private interest of commercial banks. that is why we must not let this situation continue any longer. the public need Β£5 notes. the solution may involve some alteration in the incentives for banks to obtain different denomination notes from the bank of england, new arrangements to increase the availability of notes to retailers, and an improvement in the durability of the notes that we print. so the bank will be initiating discussions to see what methods might ensure greater access by the public to new Β£5 notes. your reforms, chancellor, encompassed not just monetary policy β through the bank of england act β but also financial regulation β through the creation of the fsa and the 1997 memorandum of understanding between the bank, fsa and treasury. there was, however, some unfinished business in that memorandum. the bank of england was given responsibility for the oversight of payment systems. but it was given no formal powers to discharge that responsibility. instead it relies heavily on the influence afforded by its operational role at the centre of the high - value payment system. but that influence extends only so far. the time has come to | in asset prices - both stock markets and exchange rates - when expectations come back into line with the underlying increase in productivity. my final question was what does this mean for the economic see - saw in the uk? at present domestic demand is up and external demand is down. one way or another the imbalances in the world economy will be corrected. that is likely to go hand in hand with changes in exchange rates and other asset prices. whether this will happen gradually or through a sharp adjustment is impossible to know. but those changes will have a major influence on the speed at which the economic see - saw in the uk will move back to balance. the message for policy is that it is important not to let domestic demand grow too rapidly for too long. the longer the correction is left, the sharper the required adjustment will be. the higher one end of the see - saw, the greater the subsequent lurch will be. the trade deficit cannot continue to widen indefinitely. hence, at some point domestic demand will have to grow at below its sustainable trend level rather than significantly above as it has done now for some time - over 4 % a year on average over the past four years. by acting preemptively, and trying to anticipate developments, the mpc has been able to maintain overall stability in the economy, but the sharp rise in sterling led to a lurch in the economic see - saw. in one of the most influential contributions to monetary policy in the post - war period, milton friedman wrote that the characteristic of most central banks was that β too late and too much has been the general practice β. preemptive action to slow domestic demand growth to a more sustainable level is the key to avoiding a larger and more painful adjustment at a later date. that is why the mpc has raised interest rates by 100 basis points since september. i hope you now understand why our ambition is to be so boring. our aim is to maintain economic stability. a reputation for being boring is an advantage - credibility of the policy framework helps to dampen the movement of the see - saw. if love is never having to say sorry, then stability is never having to be exciting. miss prism should not have to tell future cecilies to omit the chapter on the activities of the monetary policy committee. | 0.5 |
sada reddy : promoting microfinance in fiji opening speech by mr sada reddy, governor of the reserve bank of fiji, at the third microfinance expo, labasa, 24 september 2010. * * * the commissioner northern, lieutenant colonel inia seruiratu labasa town administrator mr. vijay chand microfinance clients and entrepreneurs representatives of banks and financial institutions government agencies and ngos people of labasa distinguished guests, ladies and gentlemen introductory remarks bula si β a and a very good morning to you all. it is a real pleasure for me to be here today in labasa on this occasion. the reception we received since arriving yesterday has been overwhelming. indeed the people of this region live up to your reputation as β the friendly north β. i am sure that the macuata province is still celebrating its rugby team β s successful challenge and promotion to play amongst the big boys in the 2011 digicel cup, after the win over the namosi rugby team last weekend. congratulations and well done! we have been monitoring with much anticipation the developments that have been taking place here in the north. we want to be part of it and this is the reason we are here today. i wish to acknowledge the tremendous support we have received from the commissioner northern β s office and all the stakeholders here today in organizing this event. thank you very much! this is the third microfinance expo organized by the reserve bank this year. the support and co - ordination that we have received in all three have been fantastic. our partners are here again today β the banks, financial institutions, the non - bank financial institutions, investment agencies, government agencies, mobile network operators, ngos, mfis, the ncsmed and the micro enterprises. all combine their efforts to promote greater awareness about financial inclusion and microfinance. it is a good example of the public, private sectors and civil society partnership towards common goals. results are produced through such coordination and understanding. at the end of the day, it is the general population that will benefit from such collaboration. why promote microfinance? some of you may be wondering why the reserve bank of fiji is so keen on promoting microfinance. various studies on microfinance around the world have shown the significant improvement in the lives of people through the outreach of microfinance. it has : contributed significantly in tackling poverty ; seen improvements in housing, health & sanitation ; resulted in better access to education ; and more particularly the | professional chefs, or budding home based caterers. to support local value adding and small business development we have also collaborated with the ministry of women and the indonesian government in facilitating a training workshop for women on making handcrafts utilizing batik, bamboo and coconuts. we hope that the two workshops today will enable participants to learn about creating income generating activities that could be used to start a small business. we also have on hand commercial banks and microfinance institutions that offer free financial literacy trainings and advice on their products and services. of course, we have also invited the micro entrepreneurs to come and sell their wares at this expo. you can extend your support to these entrepreneurs. conclusion we hope that you will invite and encourage as many of your friends and families to come down and enjoy the wide variety of goods and services available from the different stakeholders. ladies and gentlemen, this is a rare opportunity ; we have brought microfinance and financial literacy to your door - step. i hope you will grab this opportunity. this occasion is also meant to be educational and fun. apart from the abundance of useful information and products by the institutions represented, there are also lots giveaways for the children and the entire family. with these words i declare the labasa 2010 microfinance open. thank you. | 1 |
##fold in a manner which will prove that the mpc β s decision was right. but that is not the point i am trying to make and only time will tell how the situation evolves. when we took the pause, the mpc very clearly recognised that monetary space is available, and it will use this space as per requirement, keeping in mind the incoming data regarding inflation and growth. this can be construed as an example of forward guidance wherein the reasons for the pause have been very elaborately explained in the mpc resolution and in the statement which i made during the press conference. it is available on the rbi website. in our decision to take a pause, while we have said that there is space for further monetary policy action, we have very carefully and very definitively also said that the timing will have to be decided in a manner that its impact is optimum and maximised. 33. we have, in fact, in other policy measures also, tried to bring about a lot of transparency, showing our focus on communication. to explain the power of communication, let me mention the 2008 global financial crisis and the expansionary policy that the us fed adopted at that time. the communication at that time was very powerful ; therefore, it was accepted by the international markets and the analysts. everybody understood exactly what the fed was going to do. in 2013, during the so - called taper tantrum, the us fed β s communication was not as powerful β a mere mention that they are perhaps going to roll back or unwind the expansionary policy β created a huge havoc and volatility in the international financial markets. communication, therefore, is a powerful tool. any decision that is taken by the central bank has to be backed by communication. of course, communication should be backed by action and it should never be empty words. 6 / 7 bis central bankers'speeches conclusion 34. let me conclude by saying that in a complex and interconnected economy such as india, challenges emanate from the spheres of monetary policy, regulation and supervision of financial markets as well as detection of frauds, risk management functions and internal control systems of banks and non - banks, amongst others. 35. consequently, there is never a dull moment in the central bank. it is always full of challenges ; what is important is that we should respond to these in time. recently, an old timer in mumbai told me that you have winds blowing from two different directions in the top floors of the reserve | countries should not overtake or should not stifle the recovery process. for example, even though quarterly growth ( annualised ) in the euro area ( ea ) has been stable in the last two quarters β it was 0. 8 per cent in q2 and q3 of this year β it is not what the ea would like to have. we find that there is space for fiscal policy action in many of the larger european economies, but we are yet to see any traction on that front. these countries may have their own reasons for holding back fiscal action, but as an outsider and after my interaction with central bank governors of other major economies, it is felt that fiscal action in europe is somewhat delayed and we are yet to see the kind of fiscal action that we saw in 2008. in fact, it is noteworthy that the new chief of european central bank, ms. christine lagarde, has stressed the need for some amount of fiscal expansion by countries in the ea which can afford to do so. 16. talking about the world growth scenario, we find that there are some marginal signs of pickup in the us economy, with growth in q3 being 2. 1 per cent in comparison to 2. 0 per cent in q2 of 2019. the uk, which recorded a surprising growth of β 0. 8 per cent in q2, has reported a 1. 2 per cent annualised growth in q3. growth in china has decelerated. south africa has witnessed a decline in growth from 3. 2 per cent in q2 to β 0. 6 per cent in q3. brazil has shown some marginal improvement. the overall picture, however, remains unclear. 17. fortunately, for india, both government and the reserve bank have acted in time. with regard to the rbi, i can say that the markets were somewhat surprised by rbi β s action a little ahead of time, in terms of reduction in policy rate as early as in february 2019, when we anticipated that a momentum for a slowdown is building up. the government, on its part, has also announced several policy measures in the last five to six months. 18. i would like to conclude this part of my intervention by saying that a synchronised slowdown across countries necessitates coordinated policy action by major economies. domestic economic growth 19. coming to domestic economy, it is imperative that we recognise and highlight the growth drivers of the past and the present. what led the indian growth story in | 1 |
hands of the industry itself. thank you for your attention. bis central bankers β speeches | will be important validation tools and will encourage the diffusion of best practices throughout the industry both during the initial, more - qualitative interval and later, when more quantitative approaches are used. in addition to learning what we can from the qis4 results, we will also assess comments on the trading and banking book proposals released jointly by the basel committee on banking supervision and the international organization of securities commissions. we intend to incorporate those treatments and revisions into the interagency notice of proposed rulemaking for implementing basel ii in the united states and hope to complete our efforts in a timely manner. although the agencies have decided to delay the notice of proposed rulemaking while we review the qis4 results, we remain committed to basel ii. we recognize that we must continue to give institutions as much information as possible to help them with their preparations. and we remain committed to providing helpful information to institutions as soon as it becomes available - for example, the draft supervisory guidance documents that are now under development. we do, however, recognize that certain time pressures exist for institutions wishing to implement the new framework at the earliest possible date. on the one hand, those institutions are encouraged to start preparations as soon as possible ; on the other hand, we leave open the possibility that elements of the framework could change. i recognize that this is not a trivial matter, and i sympathize with the challenges you face in deciding which investments and upgrades you should make to your systems and personnel. when it comes to basel ii, we recognize that certain details relating to systems and processes will depend on what the final u. s. rule and guidance contain. accordingly, we are available to discuss your implementation efforts at any time, and we want to hear specifics about which elements of the proposal you think will demand the greatest investments or generate the greatest uncertainty. with that information, the agencies can then determine where best to target resources to assist institutions during the transition to basel ii. we certainly hope that many upgrades made for basel ii are those that would have been made anyway. conclusion these are challenging times both for banks and for bank supervisors. on the one hand, new technologies and markets afford us exciting opportunities to meaningfully strengthen the risk - measurement and - management capabilities of our financial institutions. on the other hand, the risks of getting it wrong - of failing to keep banks'risk - management practices up - to - date - can only grow as banking becomes ever more complex and sophisticated and as banking systems become more concentrated. this | 0 |
sa mga bangko na'yan na bumabagsak?'very easy answer : reported exposures, zero. and the [ philippine ] banks that have exposures, it's the funds they manage for their clients that are exposed. in other words, the client told them to invest. therefore, it's not bank loss. so, that's the typical question i use to get. over time, the questions became more sophisticated,'hindi ba'yung source [ of the collapse ] sa silicon valley [ bank ] ay pagtaas ng policy rate?'ang sagot naman namin : the philippines is different. we are not starting from a severe zero policy rate. our banks are heavier on the portfolio side, the local portfolio side, and the security side. and on top of that, their placements in bsp are also quite large. so, if you take out the placements of bsp with the non - loan assets, the remaining share is only 30 percent. finally - this is where being primitive [ younger bond and capital markets ] is an advantage because the us has such a developed bond market that they have 30 - year bonds. so when the rates change, literally, the impact on the price is huge. to begin with, the hit [ from recent global banking developments ] is smaller and our banks are well - capitalized, well - managed, and well - governed. give yourself a round of applause. and the exceptions, please leave the room. banks lend support to domestic recovery because of that, when we [ the economy ] did recover, the banks played a major role because they are able to lend. when mobility restrictions were lifted, the banks were there to lend. of course, we do see that real estate loans are lagging behind, but maybe for the better, right? because, that's always a question of financial stability, which is : did real estate overdo it? because, historically, a lot of the crisis [ occurs ] because real estate prices kept rising, nobody defaults. because all you had to do was sell what you bought. in other words, the quality of lending was never tested until prices dropped. in a sense, i do not necessarily see the slowdown in real estate lending as a bad thing. maybe it's a correction. as you can see the leading borrowers are information and communication ; real estate is large but in terms of growth rate, | banks during the crisis, and the minimum reserve requirement policy. for example, let us take rediscount lines, which have historically represented as asset with a high risk of recovery for the central bank. banks β settlements on the basis of incentives by the monetary authority, both through the payment of monthly installments and through payments made in advance, have acted as an extraordinary money absorption mechanism in recent years. in turn, through weekly auctions of bills and notes, we have sterilized around ars 32 billion since 2005, thus increasing the diversity of instruments and the portfolio β s average duration. furthermore, we are developing the repo market, in order to turn the interest rate into an effective monetary policy tool, widening the modality of authorized operations so as to enhance the efficiency of banks β liquidity management. in short, the monetary policy adopted by the central bank has made it possible to keep the growth of means of payment under control, within the self - imposed targets set year after year. in this way, the growth of the means of payment was, for the first time since the end of the crisis, below nominal gdp growth, reflecting the prudential bias in our approach. uncertainty about the potential power of transmission mechanisms requires the monetary prudential stance to be gradual but persistent. thus β given that the current inflationary phenomenon has many causes and is derived from an economy in transition that has undergone an unprecedented crisis, with formidable structural changes ( including the destruction of the financial system and many economic institutions ), and where monetary policy transmission channels are still under recovery β, prudence and gradualism positively contribute to achieve intertemporal stability. in turn, and just as most emerging countries have been doing, the central bank continues to implement a prudential international reserve accumulation policy. the current stock of over usd 40 billion is a record high figure and more than triples the lowest amount in early 2003. thus, the central bank generates a true insurance against crises that reduces external vulnerability, lends certainty to public and private investment and develops a domestic capital market in local currency, ensuring macroeconomic equilibrium. international reserves are an indispensable pillar for central bank monetary and financial policy. therefore, they are also the basis for monetary regulation operations to strictly control the balance between supply and demand in the monetary market. with a growing stock of foreign currency, the requirements for an adequate management are greater. thus, during 2006 and so far this year, we got the highest return ( around | 0 |
up and dance β as one financier famously put it. but they are nervous and this nervousness is causing them to react to short - term developments and any sign that could signal that the music is about to stop. note for example, the obsession of the financial markets with when the fed is going to increase its interest rate by a quarter percentage point! frankly, i do not think any one of the qe central banks is thinking of putting down its fiddle just yet. but the anticipation is certainly creating instability and over - reaction in the global financial markets, with em currencies experiencing a high level of volatility. it is also not inconceivable that having run out of profitable opportunities in other parts of the markets, portfolio funds are now making currencies the next game in town. implications for malaysian economy and financial system these global developments obviously have implications for malaysia. first, the volatility in the global financial markets will continue to wash on to our shores and create a challenging environment for both policymakers and participants in our financial markets. such volatility does have an economic cost. second, the fact that for the first time all the major economies are showing positive growth will provide support to growth of the malaysian economy. however, until global growth can become self - reinforcing, the weak nature of external demand will remain a challenge. the significant contribution of domestic demand to growth in the face of the adverse external environment over the past several years is a tribute to the resilience of our economy and financial system. it is an outcome of not only the policies that were implemented during these years but also in the years before. the adverse global environment since the onset of the crisis in the aes has reduced the contribution of the external sector to growth. since 2007, the contribution of net exports to real gdp growth has been negative with the sole exception of 2014. this is in large part the outcome of the weak global growth which has reduced global demand for our exports, combined with strong domestic demand that has increased imports. over the longer term, the contribution of the external sector will need to expand to support a healthy and sustainable economy. with respect to this, we need to continue focusing on strengthening our economic relationships with other countries. the asean economic community is one opportunity for us to do so. the trans - pacific partnership agreement that is current being negotiated by 12 countries, including malaysia, is another. bis central bankers β speeches conclusion in conclusion, it seems to | risk management standards issued by the ifsb would serve as a guide to bank supervisors in this regard. notwithstanding the significant progress made so far, there are still outstanding issues confronting the islamic financial system today, particularly the different interpretations of the shariah injunctions. internationally, there continue to be debates among shariah scholars on the compliance to the shariah principles. in malaysia, the national shariah council on islamic banking and takaful has invited prominent international shariah scholars to participate in the deliberations as its members. the move is expected to help bridge the gaps in the interpretations of shariah injunctions in relation to the conduct of islamic banking business among the shariah scholars in different parts of the world. another forum through which the differences in the interpretations is being addressed is regular and continuous dialogue sessions by the scholars. a rm200 million endowment fund has been established by malaysia to support the role of the international community of shariah scholars in developing global islamic banking and finance. the development of a vibrant islamic banking sector cannot be achieved without the support of appropriate human capital development. underpinning the success of islamic banking system is the strengthening of research and intellectual capacity in the sphere of finance and shariah. the islamic banking industry needs to be equipped with a new breed of innovators, risk managers, regulators and supervisors who have the right blend of knowledge of finance and the understanding of the shariah. for this purpose, malaysia has established the international centre for education in islamic finance ( inceif ), which will commence operations in march 2006, aimed at developing talents in islamic finance. inceif will offer professional certification programs in islamic finance and will forge strategic alliances with domestic and foreign institutions of higher education to offer masters and phd. programs in islamic finance in specific areas of specialisation. as we advance forward, changes in the financial landscape will continue to accelerate and the level of complexity and sophistication in the financial markets will further intensify. islamic banking institutions will need to reinvent themselves to meet the emerging issues, challenges and opportunities. the regulatory and supervisory approach and the methodologies to be applied must continue to evolve in order to remain effective and relevant. in addition, given the global dimension of the islamic financial products and services, and the increasing interdependence of financial markets, efforts by individual countries to strengthen risk management practices needs to be matched by efforts to enhance the safeguards at the international level. the future | 0.5 |
mohd razif bin abd kadir : malaysiaaβ¬β’s position as an international islamic financial centre closing keynote address by mr mohd razif bin abd kadir, deputy governor of the central bank of malaysia, at the malaysian islamic finance - issuers and investors forum 2006, kuala lumpur, 15 august 2006. * * * it is my pleasure to be here at the end of the two - day malaysian islamic finance - issuers and investors forum 2006. the joint hosting of this forum by bank negara malaysia, the securities commission, labuan offshore financial services authority ( lofsa ) and bursa malaysia is testimony to the strong cooperation and close collaboration of the key regulatory and market authorities in the financial services sector in malaysia. i would regard the forum as a successful one. the 14 sessions and the 54 distinguished panellists and 8 moderators from various backgrounds and experience have deliberated and focused on issues that are relevant to both the issuers and investors, who are among the key stakeholders of islamic finance. my closing remarks today will centre on summarising the issues and suggestions that have been put forward to further enhance malaysia's position as an international islamic financial centre, and to reiterate and reaffirm the strong commitment of the government and the relevant regulatory agencies to spearhead this mifc initiative. in many of the sessions, malaysia has been recognised as having in place a strong foundation and the right pre - requisites to become an effective and efficient islamic financial hub. among them are : i. 23 years of experience in regulating and developing the islamic financial system. ii. strong islamic financial institutions comprising 12 islamic banks. of this, 3 are foreign islamic financial institutions and 7 are islamic subsidiaries of banking groups. there are also several islamic windows of conventional banking institutions which are also lead arrangers of islamic financial instruments. in the takaful industry, there are 9 takaful operators. iii. a strong islamic capital market with 89 islamic unit trust funds, 85 percent of bursa malaysia's counters are shariah approved counters and 46 percent of the corporate bond market are islamic bonds or sukuks. iv. a well established and comprehensive regulatory and shariah governance framework in accordance with best practices, together with a tax neutrality policy. v. a comprehensive legal and shariah infrastructure. vi. well endowed with the critical mass and a wide array of islamic products and services. vii. talent development infrastructure. viii. a vibrant and | this integration process in asia. the bilateral trade and investment relationships between korea and malaysia over the recent years has continued to increase with trade now averaging rm45 billion per annum. both countries have already benefited from the growing production networks within the region as well as from the numerous trade and investment opportunities from an increasingly open and liberal business environment. investment linkages, though still relatively modest, have been on an upward trend since 2006. korean investment in malaysia is predominantly in the manufacturing sector, particularly the electrical and electronics sub - sector. the opportunity for further co - operation in this area is vast. korea, as a nation known for its knowledge - based and innovative capabilities, can leverage on the liberal investment climate offered by malaysia to diversify into new growth areas such as green technology and biotechnology. in the area of finance, malaysia now has a well - developed financial system, with deep capital markets including a comprehensive system of islamic finance. the malaysian bond market is the fourth largest in asia in terms of volume after japan, china and korea. more than 55 % of the outstanding bonds are shariah - compliant and the sukuk market is the largest in the world. in 2008, the export - import bank of korea and industrial bank of korea successfully raised a total of rm2 billion via bond issuance in the malaysian bond market. moving forward, the sukuk market represents an important channel to reinforce regional financial integration. it presents an opportunity for korean corporations to raise financing and issue sukuks out of malaysia. in addition, korean investors can also participate in the wide range of islamic financial instruments in the malaysian financial markets, including from more than 150 islamic unit trusts, islamic reits, wholesale mutual fund products and other islamic structured products. in addition to robust economic ties and potential financial links, korea and malaysia enjoy a growing mobility of talents. with the rise in korean investment in malaysia, this has led to an increase in korean expatriates. koreans are also coming to malaysia as students and to participate in our malaysia my second home programme. in addition, the korean wave, which spread to malaysia in early 2000s, has contributed to make our country more aware of the korean culture and traditions, thus promoting a better understanding between these two countries. prospects for the malaysian economy malaysia is an economy that is transitioning into a new phase of development. in the current environment, our economy is now firmly on the recovery path. this year, the malaysian economy is projected to grow in the region of 5 % | 0.5 |
been used so far, access to the sli should not be conditional on the implementation of an adjustment program. its design would be such that it does not involve a stigma for member states. the issue of governance brings me to a broader reflection on the idea of a european monetary fund ( emf ). an emf would only make sense if its scope of action and its governance went beyond those of the current esm. otherwise, why would we give it a different name? the scope of action of a potential emf should not be limited to crisis management. we should entrust it with the role of crisis prevention in a broad sense, including contingent lending through the sli. this would require decision - making processes that would not be tied up by veto - based governance. 2 / 4 bis central bankers'speeches as president of the eurogroup and member of the european commission, the finance minister of the euro area would logically chair the board of governors of an emf and play a stronger role in situations that require board level judgement. in due course, it would be beneficial to bring an emf into the fold of the community method, which means anchoring this institution in the framework of union law [ the commission has suggested proceeding on the basis of art. 352 of the tfeu ]. within this framework β and only within it β it would make sense to entrust an emf with a broader surveillance mission, including the task of monitoring compliance with the common rules, a role that is today assigned to the european commission. ii. a micro accelerator, including the completion of the banking union let me now turn to the micro accelerator for the economic union : a financing union for investment and innovation. the aim is to better steer the euro area β s eur 350 billion annual savings surplus towards productive investment, notably by shoring up equity which is the key to an innovation economy. thanks to unified governance, this financing union would help circumvent bureaucratic barriers and foster synergies between the existing building blocks : the juncker investment plan, the capital markets union and the banking union. yet, for this financing union to be effective, progress is still needed in four key areas : first, providing incentives for cross - border investments β mainly in equity β through accounting, taxes and insolvency laws ; second, developing pan - european long - term saving products β with a key role for the insurance sector β and investment vehicles like european venture capital funds ; third, completing | francois villeroy de galhau : the euro β which way to go? keynote speech by mr francois villeroy de galhau, governor of the bank of france, at the econpol europe ( european network for economic and fiscal policy research ) founding conference and first annual meeting " the euro - which way to go? ", brussels, 9 november 2017. * * * mr president, ladies and gentlemen, 1 it is a pleasure to be in brussels today, which doesn β t happen so often for a central banker β¦ who has just arrived from frankfurt. i welcome the fact that you at econpol europe have chosen the euro as the theme of your founding conference, and invited me to give this keynote speech. since maastricht 25 years ago, we have succeeded in building a monetary union. however we have not delivered on economic union. to avoid overburdening monetary policy, our union must stand on two feet rather than just one : that is why it is legitimate that we, as central bankers, propose ideas on this subject, even if we are not those who legitimately make decisions. it is now urgent to make concrete progress on economic union, all the more so as the economic context is now favourable, as confirmed today by the european commission. euro area growth of 2. 2 % in 2017 should be the highest rate in 10 years, and as strong as in the united states. it could be for france even slightly higher than forecasted ( 1. 6 % ), if we look at our banque de france forecast for q4 published this morning β at 0. 5 %. it will be sustained in the next two years thanks to strong investment and increased convergence among countries. these forecasts, including a positive but still subdued inflation, confirm the adequacy of the gradual normalisation of our monetary policy we are engaged in. there is a risk, however, that the debate will continue to revolve around two long - standing divisions : β german rules β vs β french expenditure β and β community methods β vs β intergovernmental methods ". too many fears and suspicions have been inherited from the past, but we are living in a new era β which is also thanks to the acceleration of reforms in france β and in a time of unique historic opportunity. in rome, on 25 march of this year, the member states all expressed their clear will for β the completion of the economic and monetary union ". we are in agreement on | 1 |
structure. in sum, it seems clear that growth in trend labour input will decline, and contribute less to the growth of potential output in future years. in the april monetary policy report, we said that we expect the growth rate of trend labour input to decline by 0. 1 percentage points in 2009. but from 2011 to 2020 we will see a more significant slowdown, as population growth continues to slow and the decline in the employment rate accelerates. remember that if there is a slowdown in trend labour input and the trend rate of productivity growth remains unchanged, the growth rate of potential output will also slow down. in other words, the economy will not be able to grow as quickly without sparking inflationary pressures. so it will be increasingly important that our economy uses the labour that is available in the most efficient way. what does this mean for policy - makers? to begin with, it means that we must remove any unnecessary barriers either to labour force participation or to labour mobility. governments should remove barriers to older workers remaining in the workforce. in this regard, we have seen some encouraging signs recently. mandatory retirement provisions have been eliminated in a number of provinces. and last year, british columbia and alberta reached an accord to harmonize labour credentials and business regulations and standards by early 2009. these are just a couple of examples of positive policy moves. canada's labour force has shown remarkable strength and flexibility, much more so than in previous decades. but more can be done to boost the flexibility of our labour markets. let me now talk briefly about productivity. the need for canada to focus on productivity is certainly not new. trend productivity growth has been subdued since the late 1970s and, unlike that of the united states, has failed to post a meaningful increase on a consistent basis over the past decade or so. there are a number of potential causes. canada appears to have taken less advantage of information and communications technologies and has invested less, not just in physical capital per worker but also in research and development, workplace reorganization, and worker training. and, most recently, the movement of labour and capital to take advantage of high prices for resources and strong domestic demand has likely led to some adjustment costs in the form of slower productivity growth. but while we don't fully understand the causes behind canada's productivity performance, it is absolutely clear that the record of the past few years has been very disappointing. on average, the annual growth in productivity since 2003 has fallen well short of our assumed rate of 1 | began to decline at about that time, while both countries began to import more from outside north america. i don't want to overstate the situation. the united states remains canada's most important import source and export destination by far. but despite these close ties, it is clear that developments in the global economy have affected the economic links between canada and the united states. to understand how these links are changing, it's important to understand the differences in how the structures of the u. s. and canadian economies have been responding to recent global developments. global cyclical and structural developments over the past decade, we have seen a number of economic shocks that have affected the u. s. and canadian economies differently. why has this happened? part of the reason has to do with the rise to prominence of economies such as china and india. because of their size and their growing share of world output, it is their influence, rather than the u. s. economy, that is increasingly shaping the global business cycle and determining the prices of traded goods, including commodity prices. the other, related, reason why our two economies have been affected differently is, of course, the fact that commodity - price shocks result in opposite movements in the terms of trade for canada and the united states. this means that when canada's terms of trade have improved β that is, when canadians receive higher prices for exports and pay lower prices for imports β the terms of trade for the u. s. economy have tended to deteriorate. and the situation has been the reverse when canada's terms of trade have deteriorated. what this negative correlation in the terms of trade tells us is that even though the two economies are integrated, they have very different structures that, quite naturally, respond in different ways to certain shocks. consider both the asian crisis of 1997 - 98 and the events of the past five years or so, as china and india have risen to economic prominence. both of these events have had significant implications for the economies of north america. in the case of the asian crisis, we saw a marked slowdown in global economic growth, which resulted in a sharp decline in the prices for many of canada's primary commodities. with canada's share of exports to the united states rose from 72. 8 per cent in 1988 to a peak of 87. 1 per cent in 2002, compared with 79 per cent in the first half of 2007. canada's share of imports from the united states rose from 65 | 0.5 |
with a gradually increasing scope. the first comprehensive eu free trade agreement ( fta ) with an asian partner ( south korea ) has been in force since 2011, rendering 70 % of bilateral trade duty - free. at the end of 2012, the eu and singapore concluded a comprehensive fta, the first eu agreement with an asean country covering trade and services. talks on investment are on - going. fta negotiations with japan began in april 2013, while talks on a comprehensive investment agreement with china started in january this year. the stronger links between asia and europe which i just mentioned have deepened the interdependency of the two areas. the imf estimates that a β 1 % growth shock in emerging markets would have a negative impact on euro area output of β 0. 3 %. 1 internal estimates suggest that a shock of that size in china alone would bring down gdp in the euro world economic outlook, april 2013, chapter 2. bis central bankers β speeches area by 0. 1 β 0. 2 %. 2 however, these impacts could be larger if the shock was accompanied by confidence effects, a rise in global risk aversion and capital flow reversals since the financial crisis, growth in emerging markets has come down considerably, currently standing at about 4 % as compared with over 6 % in the period 2000 β 07. china has experienced one of the largest drops in its growth rate, from over 10 % before 2008 to 7. 7 % last year. external factors such as lower demand from advanced economies and tighter global financial conditions can probably explain a good part of this growth deceleration. however, the question remains whether we might not be witnessing a more structural change in asia β s growth potential. i would like to focus briefly on some examples concerning emerging asia β s two largest economies, china and india. in china, demographic developments and declining returns on very high investment in a number of heavy industries are likely to be behind some of the recent growth deceleration. in addition, high credit growth and increased leverage since 2008 has led to very high corporate debt, increasing risks in the financial system. it is clear that china β s new government is implementing a far - reaching programme of structural reforms, including in the financial sector. for instance, china has already made significant progress in liberalising interest rates. formally, only bank deposit rates are still controlled directly by authorities. but de facto liberalisation has progressed even further as non - bank institutions have recently offered consumers alternatives, for instance in | that have loosened the ties between lenders and borrowers. securitisation, which has enabled lenders to spread risk better, restructuring it and selling it to others, has however reduced the incentive to value it correctly, either by those who originated the product or those who acquired it. the sub - prime mortgages in the united states are an example of how certain risks can be underestimated if they are sold on to others, perhaps with opaque contracts. the loss of trust in certain kinds of financial contract, in particular in relation to their liquidity, has reduced the incentive to finance such operations, giving rise to chain reactions in all the markets. in this case too, the alarm was raised some time ago. i recall, for instance, a financial times article at the end of january 2007, six months before the start of the turbulence, which quoted a comment made by the president of the ecb at davos, namely that international markets were underestimating risks and had to prepare for a substantial adjustment in the prices of financial assets. the response of the market operators to these warnings, in particular from the other side of the atlantic, was : β we β ll keep dancing until the music stops β. one should not interfere with the market mechanism or lean against asset prices. financial innovation, also in mortgage markets, was a positive development as it allowed households, also the less well - off, to finance consumption and investment. not everybody shared this position. as early as february 2005, paul volcker, former chairman of the federal reserve had drawn attention to the imbalances in the us economy, ranging from the balance of payments deficit and the possible bubble in house prices to the excessive household indebtedness. in his view, a correction of these imbalances was inevitable. the third imbalance is the one that results from globalisation and from the escape from poverty of hundreds of millions of people, notably in china, india and elsewhere in asia as well as in africa, a change which is putting pressure on energy and agricultural commodity prices. the imbalance between growth in global demand and rigidity of supply points to scarcities that are reflected in prices. the uncertainties of the financial markets have in the end contributed to price tensions. also in this instance, the alarm was raised some time ago, although little notice was taken. the price of oil, for example, was around usd 20 a barrel in 1999 and in the eight years thereafter it rose fivefold ( | 0.5 |
he yielded to negative public sentiment about sita β s purity and banished sita into exile in the forest for a second time. sage valmiki provided shelter to a pregnant sita in his ashram ( hermitage ) where she delivered twin sons named luv and kush. sage valmiki trained luv and kush to be masters in archery so that no one on earth could defeat them in war. he also taught them about divine and celestial warfare. ram decided to perform ashwamedha yagna to enlarge his empire. the ashwamedha yagna is a ritual where an emperor sends out a horse accompanied by his army to various neighboring kingdoms. the local king has two options. he could either allow the horse to wander, signaling that his kingdom is annexed. or, he could tie up the horse, indicating that he was ready to battle the emperor β s army. the horse wandered into the forest where luv and kush lived and the twins tied up the horse, not knowing its significance. ram sent hanuman to retrieve the horse. hanuman recognized luv and kush as the sons of ram. he let them capture him and tie him up. worried, ram sent his brothers and his army to look for the horse. as they saw hanuman tied up and luv and kush guarding him, they thought the two boys had stolen the horse. bis central bankers β speeches so ram β s brothers started attacking luv and kush who defeated them all. eventually, ram himself came to confront them in battle and eventually learned that luv and kush were his children. once sita witnessed the acceptance of her children by ram, sita sought final refuge in the arms of her mother bhumi devi ( the goddess earth ), to receive her and as the ground opens, she vanishes into it. if you want to learn how it is ram did not know he had these two powerful sons, then i encourage you to read the ramayana. for me, luv and kush represent the future of central banking β¦ a strong approach of specialized, skills that can take on any force. at central bank, we are building capacity in specialized skills such as anti - money laundering, actuarial science, cyber security and operational risk. demand is also picking up for expert skills in strategic communications, international relations, and behavioral psychology. a decade ago, these skill sets were nowhere on the radar of central bank. like luv and | ewart s williams : opportunities available for business growth in trinidad and tobago address by mr ewart s williams, governor of the central bank of trinidad and tobago, at the employers β consultative association conference, port - of - spain, 21 january 2010. * * * i would like to commend the employers β consultative association ( eca ) for staging this conference that brings together the employer community to exchange ideas on how best they could build and sustain their competitiveness in today β s highly volatile environment. this discussion is most timely since the economy is now at an important inflexion point, at which we need to devise new strategies to maintain our growth momentum and living standards, over the medium term. it is worth noting that we are essentially a private sector economy and that real economic growth on a sustainable basis could only be generated by the private sector. i would go further to add that while the energy sector has brought us to where we are, given its future prospects, it is going to be the non - energy private sector, to take us the rest of the journey. the private sector now faces several challenges but a whole host of opportunities. as you know, the economy registered very rapid growth in the period 2001 β 2007, when real gdp increased at an annual rate of 7. 6 per cent. while growth in the period was driven by the expansion of the energy sector, reflecting in the main, the establishment of liquid gas and other petro - chemical facilities, the non - energy sector also expanded briskly β at a rate of 5. 4 per cent per year. what was interesting though was that the major growth drivers in the non - energy sector were construction, banking and real estate, and distribution ( wholesale and retail ). manufacturing did reasonably well but on the basis of domestic demand, with the data suggesting that there was a leveling - off of non - energy exports. i should note, ladies and gentlemen, that the behaviour of the economy in this period of surging oil and gas prices was not atypical for a resource - based economy and in fact, it was consistent with a thesis called β dutch disease β. in line with this β thesis β, the buoyant energy sector spawned a boom in government revenues and expenditures, high inflation and wage increases, a loss of competitiveness of the non - energy export sector and increased investment in non - tradable, such as, real estate and retail establishments ( stores, and restaurants and so on ) | 0.5 |
β s intentions, given its forecasts. the june sep shows that 15 of 19 participants see the first rate increase happening in 2015 or 2016. the path of rates will ultimately depend on the path of the economy, and the committee has said that the first rate increase will not happen until a considerable time has elapsed after asset purchases have been concluded. thus, to the extent the market is pricing in an increase in the federal funds rate in 2014, that implies a stronger economic performance than is forecast either by most fomc participants or by private forecasters. we have made significant strides in communication in recent years. the unemployment and inflation thresholds i discussed earlier, as well as the communication around asset purchases, are all designed to improve public understanding of the committee β s intentions. but communications are bound to be imperfect, and changes in the outlook can still lead to adjustments in asset prices. thus, some volatility is unavoidable, and indeed is a necessary part of the process by which markets and the economy adjust to incoming information. the path ahead for monetary policy last week, the chairman provided greater clarity about the path of asset purchases. specifically, the chairman noted that, if incoming data are broadly consistent with the committee β s sense of the economic outlook, the committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year. if the subsequent data remain broadly aligned with the committee β s current expectations for the economy, the committee could continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid - year. at that time, the unemployment rate would likely be in the vicinity of 7 percent, with growth consistent with further improvements and inflation heading back toward our objective. if unemployment reaches the 7 percent range, that would constitute a substantial improvement from the 8. 1 percent unemployment rate that prevailed when the committee announced the current program of asset purchases. i want to emphasize the importance of data over date. if the committee β s economic outlook is broadly realized, there will likely be a moderation in the pace of purchases later this year. if the performance of the economy is weaker, the committee may delay before moderating purchases or even increase them. if the economy strengthens faster than the committee anticipates, the pace of purchases may be moderated somewhat more quickly. the path of purchases is in no way predetermined ; we will monitor economic data and adjust our purchases as | jerome h powell : thoughts on unconventional monetary policy speech by mr jerome h powell, member of the board of governors of the federal reserve system, at the bipartisan policy center, washington dc, 27 june 2013. * * * views expressed in this speech are mine and may not represent those of the fomc or any of its members. i would like to thank members of the board staff, including james clouse, dan covitz, jon faust, john maggs, raven molloy, karen pence, jeremy rudd, and brad strum. it is great to be back at the bipartisan policy center. i will comment briefly on the outlook for the economy and then turn to monetary policy. near - term outlook our economy has grown at an average annual rate of only about 2 percent since the recovery began exactly four years ago. that modest pace is notably weaker than the experience of past recoveries would have predicted, even accounting for the depth and duration of the great recession. 1 since 2009, the question has been when the recovery will decisively take hold and begin to deliver the higher levels of growth that are needed to put people back to work more quickly. against that background, the federal open market committee ( fomc ) met last week, and, among other tasks, each of the 19 members of the committee submitted individual economic projections for growth, unemployment, and inflation for 2013 through 2015. these forecasts are combined into the summary of economic projections ( sep ), a high - level outline of which was released at the chairman β s press conference last week. fomc participants generally expect an acceleration of the recovery through 2013 and 2014 and continued strong growth in 2015. while i make no claim to special forecasting skills, my individual projections are within the so - called central tendency of the projections. of course, the economy has looked to be poised for a breakout several times since 2009, only to disappoint. will this time be different? there are, in my view, good reasons to believe that the economy will continue to gain strength. i would point in particular to the housing sector, which in prior recoveries has been an important engine of growth. for the first two years of the current recovery, housing contributed nothing to growth, as housing investment hovered at extremely low levels. house prices declined sharply through most of 2011, wiping out about half of home equity and restraining consumer spending. but the housing market finally began to recover in early 2012, and that | 1 |
t preceded by an unsustainable boom in output. in the five years leading up to the crisis, overall gdp growth remained close to its long - run average and inflation differed from the 2 % target on average by only 0. 2 percentage points. diverting monetary policy from its goal of price stability risks making the economy less stable and the financial system no more so. to argue that monetary policy should be directed to counter inadequately priced risk is to argue that unemployment is a price worth paying to tame the banking system. inflation targeting is a necessary but not sufficient condition for stability in the economy as a whole. when a policy is necessary but not sufficient, the answer is not to abandon, but to augment, it. indeed, the overarching lesson from this crisis is that the authorities lacked sufficient policy instruments to take effective actions. nowhere was this more evident than in dealing with northern rock in the absence of proper resolution powers. for domestic institutions that particular issue was settled by the banking act 2009, and the new resolution powers were successfully deployed by the bank to deal with the dunfermline building society in march. what other powers are required? there is a broad consensus that our traditional policy instruments need to be augmented by a β macro - prudential β toolkit. but what are such β macro - prudential β instruments for? are they to increase the resilience of individual banks, or are they to protect the economy from the banks? the former implies a sensible extension of the current regime of capital requirements for individual institutions. the latter goes to the heart of the problems caused by the financial sector as a whole for the rest of the economy. we need to reflect more deeply on the nature of the failures before designing a regulatory response β after all many financial markets continued to function well. but banks entered the crisis with historically low levels of liquid assets, and inadequate levels of capital with which to absorb losses. moreover, in the united kingdom, the financial sector became too big and too highly leveraged. first, the size of our banking system was, as a proportion of gdp, five times that in the united states, and the risks to the uk taxpayer correspondingly greater. second, the process of reducing very high leverage is doing great damage to the rest of the economy. and the required adjustment still has a long way to run β few of the largest banks in the united kingdom managed to reduce their leverage ratios through 2008, which remain at historically high levels. third | this is the case, each policy area can take the other for granted. macroprudential policy is aimed at counteracting risks in the financial system as a whole, and is a policy area for which many countries are now trying to set the framework. 2 exactly how these frameworks will look is still somewhat unclear, but a few general principles have crystallised as regards both appropriate institutional structures and which instruments it may be appropriate to use. 3 finansinspektionen already has instruments at its disposal that are focused on the health and behaviour of individual participants and companies. but one important lesson of the crisis is that this is not enough. our toolkit needs to be complemented with tools that can focus on the system as a whole. today, i will discuss what such a swedish toolbox for macroprudential supervision could include. the speech β macroprudential policy and clear communication contribute to financial stability β was held at the swedish bankers β association on 30 march 2012. see www. riksbank. se. for more detailed analyses of macroprudential policy and its ability to counteract systemic risk, see, for example, borio ( 2010 ), galati and moessner ( 2011 ) and vinals ( 2010 and 2011 ). see, for example lim, c., et al., ( 2011 ), β macroprudential policy : what instruments and how to use them? lessons from country experiences β, imf working paper, 11 / 238. bis central bankers β speeches different types of risk β¦ before i go into the different types of tools that could be used to manage systemic risks, i will explain what is meant by systemic risk. the riksbank usually defines systemic risk as the risk that a shock will occur in the financial system, leading to substantial costs for society. 4 such risks can arise for various reasons. the crisis and the period before the crisis clearly illustrate the tendencies towards exaggerated cyclical behaviour that often characterise the financial markets. in periods of strong growth, there is usually an increase in demand for loans for corporate investments and property purchases. it also seems to be common for awareness of risks to decrease during such an upturn. lenders often relax requirements for creditworthiness at the same time as they often take on too much debt themselves. when problems subsequently arise as a result of some borrowers finding it difficult to repay their loans, there can be an overreaction in the other direction, with | 0 |
offset any potential benefits, and markets, one way or another, always find a way to circumvent them. consequently, this has not been considered a sensible course of action in the mexican case, and the country remains one of the most open to capital flows among emerging market economies. the approach i just described has allowed a flexible implementation of monetary policy in mexico with satisfactory results. let me illustrate this with the experience of recent years. in the aftermath of the global financial crisis, as in other emes, significant downward pressures on economic activity emerged in mexico. as a result, the central bank embarked on an aggressive cycle of cuts to the policy rate, which during the six - month period from january to july 2009 declined by nearly 400 basis points. external developments also played an important role in this outcome. in particular, the federal reserve β s lowered the target for the federal funds rate by about 500 basis points over the 15 months between september 2007 and december 2008. subsequently, following a relatively prolonged period with an unchanged monetary policy stance, the reference rate in mexico was reduced by an additional 150 basis points between march 2013 and june 2014. the combination of a negative output gap, easy external financing conditions3 ( barring the β taper tantrum β episode of mid - 2013 ) and a generally stable exchange rate, allowed the simultaneous achievement of record - low inflation the federal reserve adhered during most of this period to an accommodative monetary policy stance, as the target for the federal funds rate remained in the 0 - 0. 25 % range from december 2008 to december 2015, and several rounds of quantitative easing measures were implemented in this lapse. and policy interest rates. in particular, the reference rate remained constant at its lowest historical level of 3 percent for slightly over a year and a half, while overall inflation fell below the 3 percent target. 4 more recently, with the beginning of the normalization of interest rates in the united states in december 2015, an upward trend in interest rates in mexico has started. this has responded to a combination of factors, including of course the higher federal funds rate, but also a preventive response by the banco de mexico during 2016 to the potential impact of the significant depreciation of the peso on domestic prices and, since early this year, the need to avoid second round effects from an inflation spike deriving from the liberalization of energy prices, an adjustment of the minimum wage and a more evident pass - through from the exchange rate to | 12 months up through august 2012, the amount of lending increased by a total of approximately 15 trillion yen for financial institutions that saw a rise in their lending. going forward, if financial institutions manage to increase their lending more aggressively, the amount of funds that the bank can provide will rise accordingly. at present, the bank is in the process of making the necessary arrangements, and we plan to release the details of this facility before the end of the year and start its operation as soon as possible. the bank β s aggressive monetary easing, which consists of its virtually zero interest rate policy and its purchases of financial assets through the program, coupled with measures including the government β s intervention in the foreign exchange market, has fended off the yen β s appreciation to some extent. nonetheless, we have heard the opinion that the bank β s monetary easing is not enough because japan β s economy has yet to overcome deflation. this opinion often refers to the amount of β money β supplied by a central bank. looking at the monetary base β which is the amount of β money β supplied by a central bank, percentage point changes in its ratio relative to gdp since the lehman shock have been more or less the same as in europe and the united states, where the monetary base is thought to have been increased aggressively during this period ( chart 12 ). furthermore, as japan experienced its financial crisis much earlier than other economies, the ratio of the monetary base relative to gdp also started rising in earlier years and has now reached the highest level among the advanced economies. 2 now the question is, how can we further strengthen the effect of monetary easing? in order to answer this question, i would like to discuss the monetary transmission mechanism. this can be divided into two stages. the first stage is the transmission of monetary easing effects from the realm of monetary policy to the financial environment, where firms can raise sufficient funds at low costs on the back of monetary easing. the second stage is the transmission of effects from the financial conditions to economic activity and prices ; in other words, the extent to which firms and households actually take advantage of the accommodative financial conditions to increase their investment and spending ( chart 13 ). as for the first stage of the transmission, the effect of aggressive monetary easing has thoroughly permeated the financial environment, and extremely accommodative financial conditions have been achieved both in terms of interest rates and access to financing. if the effect of aggressive easing permeates the second stage of the transmission | 0 |
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