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quality are therefore clearly sub - optimal from a monetary policy perspective. m y third reason for why real convergence matters is related to the second point : just as institutional quality matters for monetary policy and closing income level gaps, so do integration and risk - sharing. deeper integration will help smooth consumption through asymmetric shocks, rather than amplifying those shocks, and will support the process of real convergence. for example, labour mobility between countries is low and, as we have seen in recent years, is unlikely to be a major source of adjustment once a crisis hits. although there was an increase in labour mobility in crisis - hit countries, the overall adjustment was limited. similarly, financial integration has come to a halt. 7 on slide 7 you can see that the latest level of the ecb β s quantity - based financial integration composite indicator is comparable to the level in 2004, and the latest level of our price - based composite indicator is roughly comparable to levels observed between 2000 and 2004. 9 / 15 bis central bankers'speeches as a result, and in the absence of large - scale fiscal transfers between regions, the degree of risk - sharing in the euro area is lower than in other currency unions. one recent estimate finds that between 1999 and 2014, total risk - sharing through both public and private channels in the united states smoothed 57 % of country - specific shocks, compared with just 29 % in the euro area. 8 this greater degree of risk - sharing derives not just from federal fiscal transfers, but also from greater risk - sharing through credit and financial channels. credit provision dried up in certain countries during the crisis at precisely the moment when it was needed to smooth income shocks. clearly, deeper financial integration is needed. and as i said elsewhere, convergence is also a political prerequisite to engage in a discussion on any new public risk - sharing mechanisms β just like john rawls pointed out with his concept of the β veil of ignorance β. 9 10 / 15 bis central bankers'speeches convergence and the need for efficient economic institutions all this means that if we want to achieve sustainable economic convergence β if we want to reap the full potential of our economies β then we also need to strive for convergence towards high institutional quality and strengthen the integration of our economies and markets. this is also in the interest of monetary policy as i have just explained. and i want to be clear here, i am talking about convergence in institutional quality, rather than convergence in institutions. in other words, what matters is not | country - specific to sector - specific risk assessment. in the banking sector too, the changeover to the single currency seems to have intensified the trend towards consolidation. although most mergers have been domestic, they have often been instigated and influenced by euro area - wide market developments and the integration of financial markets following the introduction of the euro. moreover, there is no doubt that the introduction of the euro has encouraged the internationalisation of banking activities. in particular, the rapid integration of the wholesale banking and capital markets, as well as large - value payment systems, has already created closer links between banks at the euro area level. overall, these new economic and financial conditions in europe are creating new investment opportunities, encouraging industrial restructuring and promoting sound competition between economic agents in a new, enlarged market. for sure, the beneficial effects of this new environment on economic structures will only be felt gradually, but there is no doubt that these effects are deep and lasting. meanwhile, other economic policies are needed to accompany this restructuring process. this is not to deny that important progress has already been made. over recent years, wage settlements have been relatively moderate, public finances have improved, deregulation and liberalisation have been initiated in a number of sectors, and there are signs that labour markets are gradually becoming less rigid. employment grew by 1. 8 % in 1999 and by over 2 % in the first half of 2000, and since the start of monetary union, the unemployment rate in the euro area has fallen by 1. 5 percentage points. however, further efforts are required in order to create the best conditions for turning the current upswing in economic activity into a period of sustained growth in an environment of price stability. with regard to fiscal policies, the overriding objective for governments should be to shelter their budgets not only from normal cyclical fluctuations, but also from unexpected shortfalls in revenues and interest rate increases. in the current favourable economic conditions, it is crucial that any loosening of fiscal policy be avoided and that further progress along the path towards fiscal consolidation is made. in parallel, governments β budgetary policies also urgently need to address longer - term issues, such as the structural reform of social transfer systems. significant reductions in unemployment can only be reached through resolute measures to improve the functioning of labour and product markets. the successful experience in some countries of the euro area has shown that such reforms can rapidly provide important benefits for the economy and for society. finally, looking at the process of regulatory reform, although | 0.5 |
of the asset purchase program by adjusting the program in a flexible manner. h. is a substantial increase in risky asset purchases a viable option? on the other hand, it has been argued that the bank should substantially increase its purchase of risky assets. in line with its comprehensive monetary easing in october 2010, the bank has been purchasing risky assets such as corporate bonds and cp and β with government approval β exchange - traded funds ( etfs ) and japan real estate investment trusts ( j - reits ). among major central banks, the bank is the only central bank that purchases such risky assets for its own account. however, the bank β s intention in this operation is not to employ large - scale intervention in the asset markets but to work as a catalyst for the financial markets. some argue that it is a viable option for the bank to increase such purchases substantially by intervening in the markets on a large scale. i consider the efficacy of this sort of policy initiative to be doubtful, as it contains the risk of eroding the bank β s capital base. if the prices of risky assets held by the bank declined and the bank incurred a loss, this would result in a reduction in its payments to the national treasury. if the size of the risky assets was sufficiently large compared with the size of the bank β s net capital, the bank might fall into capital deficiency. the first outcome, reduction of payments to the national treasury, would be equivalent to an increase in fiscal spending, and because of this risk the bank must obtain authorization from the government based on article 43 of the bank of japan act in order to purchase etfs and j - reits. the second outcome, capital deficiency, could lead to a larger issue, affecting the credibility of the bank and the bis central bankers β speeches yen as well as the autonomy of monetary policy, if the bank asked the government for recapitalization or compensation for its loss. given these issues, whether the bank should substantially increase risky asset purchase from the current limit is a matter that involves not only the bank but also the government. it might therefore be effective to set ex ante policy rules for loss sharing, in order to prevent purchases of risky assets from influencing the autonomy of the bank β s monetary policy. i. are foreign bond purchases a viable option? at a press conference in july 2012 after becoming a policy board member, i remarked that foreign bond purchases might be an option for the bank but a number of conditions must be met. for example, | policy interest rates % s. a., 2008 / q2 = 100 japan united states euro area united kingdom japan - 1 cy 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 united states euro area united kingdom cy 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 note : for japan, for the period when no target interest rate was adopted, figures for the policy rate are the interest rate applied on excess reserves. sources : bank of japan ; federal reserve ; european central bank ; bank of england ; cabinet office ; haver. chart 4 central bank assets % of nominal gdp japan united states euro area cy 95 note : figures for japan and the euro area for 2017 / q3 are calculated using their nominal gdp figures for 2017 / q2. sources : bank of japan ; federal reserve ; european central bank, etc. chart 5 natural rate of interest and real interest rate % natural rate of interest real interest rate - 1 - 2 cy 95 note : based on boj staff estimations using 10 - year jgb yields, etc. for details of the estimation procedures of the natural rate of interest, see kei imakubo et al., " the natural yield curve : its concept and measurement, " bank of japan working paper series, no. 15 - e - 5 ( 2015 ). the shaded area indicates the 95 percent confidence interval for the natural rate of interest. sources : consensus economics inc., " consensus forecasts " ; bloomberg ; bank of japan, etc. chart 6 japan's economy corporate profits output gap and prices y / y % chg. % - 2 - 1 unemployment rate s. a., % 6. 0 s. a., % unemployment rate - 4 5. 0 4. 5 4. 0 3. 5 3. 0 2. 5 - 2 - 6 - 8 5. 5 ratio of current profits to sales ( all industries and enterprises ) - 3 output gap ( left scale ) - 4 cpi ( all items less fresh food and energy, right scale ) - 10 cy 05 06 07 08 09 10 11 12 13 14 15 16 17 - 5 cy 05 06 07 08 09 10 11 12 13 14 15 16 17 2. 0 cy 05 06 07 08 09 10 11 12 13 14 15 16 17 notes : 1. the output gap is based on boj staff estimations. 2. the cpi figures are adjusted for changes in the consumption tax rate. 3. figures for corporate profits | 0.5 |
for further cooperation. however, some cross - border matters are still unresolved and urgently need to be addressed. major differences between the us and eu regulations can be found, for instance, in the methods used to compute the initial margin coverage of ccps. and they can also be found in the scope of reporting requirements to trade repositories. let us take a brief look at these two examples. first, the rules used for calculating the minimum initial margins of ccps differ between the us and the eu. generally speaking, ccps ask for initial margins in order to hedge the market risk of a derivatives position during the liquidation period in case a clearing member defaults. under the existing eu and us regulation, risk managers at ccps have to take into account different minimum liquidation periods and confidence intervals when calculating adequate initial margins. as a result, the initial margins requested by ccps may vary considerably, depending on the location of a ccp. this might eventually drive business bis central bankers β speeches towards those ccps with less strict initial margin calculation requirements. to prevent such regulatory arbitrage from happening, it might make sense to agree on consistent and strict international standards in detail and thus reduce national leeway. second, the mandatory reporting rules differ significantly in terms of timing and scope. in the us, only cftc - registered β swap dealers β and β major swap participants β are required to report their transactions to trade repositories in real time. in the eu, meanwhile, transactions have to be reported by the end of the next business day by both contracting parties. furthermore, exchange traded derivatives, market prices and collateral levels have to be reported in the eu, but not in the us. it remains to be seen whether these differing reporting rules can be recognised as being equivalent. and β more importantly β it also remains to be seen how a meaningful and accurate global aggregation of trade repository data can be brought about. laying the groundwork β cooperation and harmonisation ladies and gentlemen, i have briefly discussed the too - big - to - fail problem, the shadow banking system and the market for otc derivatives. each of these issues highlights the need for international cooperation. if we do not coordinate our approaches towards regulation we will create a fragmented financial system. a financial system with vast opportunities for regulatory arbitrage and ample sources of systemic risk. against this backdrop, recent regulatory initiatives in the us worry me. they seem to contradict the need for international cooperation. a β balkanisation | andreas dombret : regulatory reform β unresolved issues and the need for international cooperation speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the harvard law school symposium on β building the financial system of the 21st century β an agenda for europe and the united states β, armonk, new york, 28 march 2014. * * * introduction ladies and gentlemen thank you for the opportunity to speak today at the harvard law school symposium on building the financial system of the 21st century β an agenda for europe and the united states. it is a great pleasure to be here. in november 2008, just a few weeks after lehman brothers failed, the leaders of the g20 met in washington d. c. in their meeting they took far - reaching decisions β not only to combat the current crisis but also to prevent future crises. a central passage of their declaration was as follows : β we pledge to strengthen our regulatory regimes, prudential oversight, and risk management, and ensure that all financial markets, products and participants are regulated or subject to oversight, as appropriate to their circumstances. β today, more than five years later, we have made good progress. nevertheless, we must be aware of what mark roe from harvard university calls the β regulatory confidence cycle β. he writes : β regulators react to an explosion by creating new rules. the economy recovers ; the regulators conclude that they did their job well, and the regulated then resist further tightening. [ β¦ ] as the recovery continues and the memory of the financial crisis grows faint, the appetite for regulatory change dissipates. why fix something that is no longer broken? β. on a superficial level it appears that the financial system has been mended. however, we have to ensure that it will not break again β and this is an objective we have not yet achieved. there are still issues we need to address in order to create a stable financial system. in my speech today, i would like to highlight three of these issues : the too - big - to - fail problem which has already been discussed this morning, the shadow banking system, and the market for otc derivatives. let us begin with the too - big - to - fail problem. taming the beast β the too - big - to - fail problem leaving aside all the nitty gritty, there is one thing we have to do to resolve the too - big - to - fail problem : we need to introduce more | 1 |
the monetary policy decision - making process. it is time for the fed to explicitly adopt the flexible inflation targeting framework and in doing so take three steps to strengthen its approach to policymaking. first, clarify and make explicit that our long - run inflation objective is 2 percent year - over - year pce inflation. second, publish information about the individual fomc participants β assessments of the appropriate monetary policy that underlie their economic projections in the fomc β s summary of economic projections. third, provide information on the fomc β s reaction function. that is, communicate policy decisions in terms of changes in the economic conditions that the fomc is using to formulate policy. by helping the public to better understand the policymaking process and better anticipate policy changes, these three steps can make monetary policy more effective in promoting economic stability in accordance with our dual mandate. references kydland, finn e., and edward c. prescott. β rules rather than discretion : the inconsistency of optimal plans, β journal of political economy, 85 ( january 1977 ), pp. 473 β 91. plosser, charles. β the benefits of systematic monetary policy, β speech to the national association for business economics, washington economic policy conference, march 3, 2008. plosser, charles. β credible commitments and monetary policy after the crisis, β speech to swiss national bank monetary policy conference, zurich, switzerland, september 24, 2010. bis central bankers β speeches | ##makers will adopt a specific reaction function in the near term. yet, there are numerous examples of such systematic approaches or reaction functions that can help us to gauge the stance of policy. some of these reaction functions have been shown to be robust in a variety of circumstances and useful in describing past monetary policy behaviors. they can, i believe, provide useful guidelines for assessing the stance and the likely path of monetary policy. they can also be useful in communicating policy to the public. i frequently consider such reaction functions as i think about policy. these are typically taylor - like rules named for the stanford university economist john taylor who first proposed them in the early 1990s. these policy rules typically call for the targeted funds rate to respond to deviations of inflation from some desired target and to deviations of output from some measure of potential β sometimes referred to as economic β slack β or the β gap. β sometimes such gaps are translated into deviations from full employment. these policy rules can offer useful guideposts for policymakers and the public in assessing the stance of monetary policy, and communicating more about such guideposts would enhance transparency and help make policy more systematic. thus, there is no need to mechanically follow any particular rule, and judgment will always be required. yet, policymakers and the public should be very cautious when they call for policy rates to deviate in important or significant ways from these guideposts. making such judgments should require careful analysis, and the justification for deviating from such guidelines should be clearly communicated to the markets and to the public. a monetary policy strategy such as i have just described could be communicated through a regular monetary policy report, perhaps published quarterly. the report would offer an opportunity to reinforce the underlying policy framework of the committee and how it relates to current and expected economic conditions. publishing a monetary policy report with an assessment of the likely near - term path of policy rates, in conjunction with its economic forecast, would also provide added discipline for policymakers to stick to a systematic, rule - like approach. communication about that path, in turn, gives the public a much deeper understanding of the analytical approach that guides monetary policy, thus making policy more transparent and predictable. in the current environment, an assessment of a variety of these robust rules suggests that the funds rate target is no longer constrained by the zero lower bound. these rules indicate that liftoff of the funds rate target from zero should have already occurred or should occur in the very near future. it is important to point out that | 0.5 |
arrived, we need to be especially cautious about a premature scaling back of these crisis measures. that could inflict more severe damage to the economy and pose larger risks to the financial sector. the cost of winding measures down too early as yet outweigh the potential cost of leaving them in place for too long. it is important that the support measures are in due course rolled back in a gradual and predictable way to prevent cliff - edge effects. in a severe shock such as this, which originated entirely outside the sector, it is only logical for the government to absorb a large part of the shock. the netherlands can also afford a temporarily higher public debt. the fact that the government has now laid down its support measures for a longer period of time will help reduce uncertainty for firms and households. the netherlands of course also depends on what happens in other countries. our economy and financial sector are closely interconnected with those of other european countries. the creation of a european recovery fund during the summer was therefore a positive move. we must prevent this crisis from leading to even greater economic growth imbalances in europe. as for dnb, we have given banks additional leeway to continue lending and absorb any losses by adjusting the buffer requirements for the major banks. in view of the current uncertainty we will be continuing these crisis measures. at any rate, the floor for the risk weighting of mortgage loans and the countercyclical capital buffer will not come into force before the end of 2021. in summary, we are still in a historically deep economic crisis. fortunately, this has not so far sparked a financial crisis. but with the pandemic flaring up, economic uncertainty is yet again increasing. the main challenge in this next phase is therefore to limit the damage to the economy and prevent the crisis from spreading to the financial sector. this concludes my introductory statement. i would be happy to answer any questions you may have. | olaf sleijpen : investing in the future speech by mr olaf sleijpen, executive board member of monetary affairs and financial stability of the netherlands bank, at the apg global investors day, amsterdam, 16 november 2023. * * * even for the international participants at this event, it can hardly have escaped your attention that we have national elections next week. we will elect our new house of representatives, and there are 26 (! ) political parties clamouring for our attention. always an interesting time, because elections are about choices. and choices can be made based on many different considerations. i think that in this time of transition, in this time of aging and migration, in this time of climate change and energy transition, disruptive new technologies and devastating loss of biodiversity, the most important consideration is the choice between today's wishes and tomorrow's needs. the choice between instant gratification and sustainable development. and that proves to be a difficult one. not only for votersbecause it proves difficult to look further than your own backyard, further than one election, one period of government. and that is not only true in politicsin the financial sector we also know how difficult it is to look beyond risk and return, to take broader environmental and societal impact into consideration, and to look at the impact on the future instead of the proof of the past. like in politics, that attitude, that ingrained short - sightedness, has to change. because as apg says on its website : " what is the use of a good pension, if the world around you has become unliveable? " the question i want to address today is : how can we, how can the financial ecosystem play its part in the transition towards a sustainable future, towards sustainable prosperity? because it's undeniable that policymakers, regulators and the financial sector all have their part to play, and they all depend on each other. it's undeniable that the transition needs to be funded, and that it is the financial sector that can allocate resources, that can fuel the transition towards a carbon - neutral society in harmony with nature. towards a world where environmental, social and governance criteria are in balance. this impact - driven mindset has to be the basis of our decision - making, especially because it is squarely within all of our mandates and responsibilities. as frank elderson, ecb board member, said earlier this year : " destroy nature | 0.5 |
make a direct contribution in its fields of competence, e. g. through the provision of the pertinent infrastructure. to be more concrete we are, as i am sure you are aware, replacing the euro area β s current decentralised payment system with a single technical platform, target2, which is due to go live in 2007. target2 will further improve financial integration. it will increase cost - effectiveness and allow for the provision of a harmonised level of services across europe, supported by the implementation of a single price structure for domestic and cross - border payments. target2 will also offer new functionalities in terms of banks β euro liquidity management and consolidated information β which should make it one of the most sophisticated payment systems in the world. beyond such a direct contribution, the ecb sees itself predominantly as a catalyst for change, seeking to enrich the debate in the relevant eu - wide fora and through dialogue with market participants. in this endeavour we wish to support and complement the activities of the private sector and public authorities, notably the european commission. one such field of activity relates to retail payment systems, particularly the initiative to create a single european payments area ( sepa ) as from 1 january 2008. the sepa is important, not least because it represents a very tangible benefit in the everyday lives of europeans. european citizens and enterprises will be able to make payments throughout the euro area from a single bank account using a single set of payment instruments, as easily and safely as they do today in the national systems. in addition, national infrastructures should migrate to a pan - european payments infrastructure by the end of 2010, which means that investments in the next generation of national systems should be made from a pan - european perspective in order to ensure compliance with the sepa. of course, all of this concerns the investment decisions in individual banking establishments, but i am confident that banks which can offer payment services of the quality envisaged by the sepa will have competitive advantages. as outlined already, for the ecb, as a supranational institution, the cross - border dimension of the banking sector in the eu, and the related regulatory and supervisory issues, are of particular interest. at the ecb, we see the ongoing consolidation of the european banking sector as a predominantly market - driven process. what public policy at the eu level can and should do is to remove potential prudential and supervisory obstacles to cross - border m & as. for example, in 2004 | jean - claude trichet : interview with weser - kurier interview with mr jean - claude trichet, president of the european central bank, in weserkurier, germany, conducted by ms annemarie struΓ - von poellnitz on 11 february 2011 and published on 13 february 2011. * * * weser - kurier : is this your first time in bremen? trichet : yes, indeed. i β ve been to lubeck and hamburg, but i β m really eager to get to know bremen. weser - kurier : in 1978 bremen was the setting for the launch of the virtual single currency, the ecu. we β ve now had the euro for 12 years. although most germans accept the euro, they don β t love it. can you understand that? trichet : it is important to look at facts and figures. the euro is a stable and credible currency, and the european central bank is here to ensure that our currency serves its purpose well β namely ensuring price stability β for the german people and the 331 million citizens of the euro area as a whole. the euro has held its value remarkably well in the 12 years since it was launched, with an average annual inflation rate of below 2 % ( 1. 97 % to be precise ). that β s better than anything achieved by the national central banks before the introduction of the euro. our primary mandate is to maintain price stability, which we have done. weser - kurier : but fears of inflation are currently increasing. according to the german figures for january, which have just been announced by the federal statistical office, the inflation rate rose to 2 %, compared with 1. 7 % in december. this worries people. trichet : the average annual inflation rate in germany in the last 12 years has been 1. 5 %, which is even lower than the euro area average. i β ll say it again : that β s better than in the 50 years before the introduction of the euro. of course, we β re not the masters of the price of oil or other commodities. we β ve also witnessed large swings in the price of oil and other commodities in the past, mainly driven by strong demand from emerging economies. but people can rest assured that we β ll continue to do everything in our power to avoid the second - round effects of external shocks, thereby ensuring price stability in the medium term. weser - kurier : it β s not just commodity prices, but | 0.5 |
there are two main upside risks to inflation. it is possible that the momentum in household expenditures and residential investment could be greater than currently expected. internationally, a faster - than - expected global recovery could stimulate external demand for canadian exports and improve the terms of trade. on the downside, the global economic recovery could be more protracted than currently projected. a second downside risk is that the combination of the persistent strength of the canadian dollar and canada β s poor relative productivity performance could exert a larger - than - expected drag on growth and put additional downward pressure on inflation. in response to the sharp, synchronous global recession, the bank lowered its target rate rapidly over the course of 2008 and early 2009 to its lowest possible level. in addition, in april 2009, the bank committed to hold it at that level, conditional on the outlook for inflation. this unconventional policy provided considerable additional stimulus during a period of very weak economic conditions and major downside risks to the global and canadian economies. with recent improvements in the economic outlook, the need for such extraordinary policy is now passing, and it is appropriate to begin to lessen the degree of monetary stimulus. that is why on tuesday, 20 april 2010, the bank removed its conditional commitment. the extent and timing of any additional withdrawal of monetary stimulus will depend on the outlook for economic activity and inflation, and will be consistent with achieving the 2 per cent inflation target. with that, i would be pleased to take your questions. | mark carney : summary of the latest monetary policy report opening statement by mr mark carney, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, 22 april 2010. * * * good morning. i am pleased to be here with you today to discuss the april monetary policy report, which the bank published this morning. global economic growth has been somewhat stronger than projected, with momentum in emerging - market economies increasing noticeably and moderate recovery underway in most advanced economies. global growth is now projected to average slightly above 4 per cent a year through 2012. in canada, the economic recovery is proceeding somewhat more rapidly than expected in january. it is supported by continued fiscal and monetary stimulus, improved financial conditions, the rebound in global economic growth, more favourable terms of trade, and increased business and household confidence. this year should mark the turning point when the private sector takes over from the public sector as the primary source of growth. gdp is now projected to grow by 3. 7 per cent in 2010 before slowing gradually to 3. 1 per cent in 2011 and 1. 9 per cent in 2012. this profile reflects stronger near - term global growth, very strong housing activity in canada, and the bank β s assessment that policy stimulus resulted in more expenditures being brought forward in late 2009 and early 2010 than expected. at the same time, the persistent strength of the canadian dollar, canada β s poor relative productivity performance, and the low absolute level of u. s. demand will continue to act as significant drags on economic activity in canada. the bank estimates that gdp in the first quarter of 2010 was about 1 per cent below its peak in the third quarter of 2008 and some 2 per cent below its potential. the economy is expected to return to full capacity in the second quarter of 2011, one quarter earlier than projected in january. the outlook for inflation reflects the combined influences of stronger domestic demand, slowing wage growth, and overall excess supply. core inflation, which has been somewhat firmer than projected in january, is expected to ease slightly in the second quarter of 2010 as the effect of temporary factors dissipates, and to remain near 2 per cent throughout the rest of the projection period. total cpi inflation is expected to be slightly higher than 2 per cent over the coming year, before returning to the target in the second half of 2011. despite the firming of the global and canadian recoveries, there are considerable risks around the bank β s outlook. | 1 |
countercyclical macroeconomic and prudential policies may be relied upon to tackle a slowdown in capital inflows. where there is less room for manoeuvre, tightening monetary and fiscal policies may be required to lower financing needs and attract additional inflows. where foreign reserves are adequate, they may be used to moderate or smoothen exchange rate depreciation. let me now move on to the second point of my intervention : how inflation targeting has evolved in response to the post - crisis global economic and financial environment. the nbr, the same as the central banks of poland, czech republic and hungary, is an inflation targeter. in romania, we have remained loyal to inflation targeting since 2005, but inflation targeting itself is quite different now from 15 years ago. indeed, it is rather difficult to say at present what is left of its underlying principles. the outbreak of the global crisis and the post - crisis developments have naturally led to the tailoring of the strategy to the new realities. some departures from the old orthodoxy are almost unavoidable in 1 / 3 bis central bankers'speeches the present context, marked by a changing global financial and economic landscape. for instance, after the crisis, forex interventions re - entered the arsenal of many central banks, including some of the previously more purist floaters. a case in point is the czech national bank, which resorted to the so - called β exchange rate commitment β from november 2013 to april 2017, intervening whenever necessary without time or volume limits to prevent the appreciation of the koruna below a publicly announced floor. i find relevant what agustin carstens, general manager of the bis, said in his lecture held at the london school of economics in may 2019 : β the textbook version of the inflation targeting framework, which prescribes pursuing inflation stability with floating exchange rates through adjustments of a short - term interest rate, is obviously too narrow for eme central banks. in particular, the financial channel of the exchange rate gives rise to difficult trade - offs for monetary policy, while at the same time complicating the conduct of monetary policy by weakening its transmission. eme central banks have risen to this challenge through their innovative use of additional policy instruments. they have turned to fx intervention to deal directly with the financial channel or insure against undesired exchange rate swings, and to other non - orthodox balance sheet policies as well as macroprudential tools to deal with specific imbalances or vu | the issue of perceived inflation, in contrast to the reality, was also apparent in slovenia, just as it had been in the first wave countries. here slovenia did not fully succeed where others had failed, and thus did not avoid the perceived inflation rate from being higher than the actual rate during the changeover. the perception that some retailers saw the introduction of the euro as an opportunity to put up prices remained. and while this certainly happened in some instances, the statistical evidence shows that this was more the case for services than for goods, although consumers did not make that distinction. i must admit i do not know what the expectations are for inflationary pressures in croatia with the adoption of the euro, so i can only hope that the authorities have managed to combat idea that the introduction of the euro is inflationary. it is a statistical 2 / 6 bis - central bankers'speeches fact that the effect of adopting the euro on inflation was just 0. 3 % points in slovenia, even though public perceptions might have been very different. for a comparison, the introduction of vat in 1999 had significantly stronger effect on inflation, up 2. 5 % points in the first year. turning to a more topical consequence of adopting the euro, this development will further increase croatia's integration with the eu, even though the country had already de facto lost its sovereign monetary policy well before this. this implies that despite a remaining idiosyncratic component, the overall monetary policy will be the same for croatia as it is for other economies in the monetary union. there is a question, of course, of how such economic policies will react to the specific situation in croatia. what we found in these last 15 years in slovenia is that the euro is in fact a good anchor in terms of inflationary pressures. nevertheless, a common monetary policy does constrain the economic policy spectrum, and many, including in the general public, might argue that with the adoption of a single currency an important part of national sovereignty is lost. this is in a way true, but, to be honest, a small open economy cannot act as if it were an isolated island, even if it has its own monetary policy. in reality, however, there are still some economic policies at the disposal of national authorities, some also at the disposal of national central banks, which can be used to help smooth local economic cycles. let me focus next on two sets of policies, macroprudential and fiscal. the experience of the first 20 years of economic | 0 |
njuguna ndung β u : consolidated bank of kenya β s new look remarks by prof njuguna ndung β u, governor of the central bank of kenya, at the unveiling of the consolidated bank of kenya β s new look, nairobi, 4 june 2010. * * * eunice kagane, chairlady, consolidated bank of kenya ltd ; mr. david ndegwa wachira, chief executive officer, consolidated bank of kenya ltd ; board members ; management and staff ; distinguished guests ; ladies and gentlemen : 1. i am delighted to have been invited to this auspicious occasion of unveiling the new look of consolidated bank of kenya. allow me at this early juncture to commend the board, management and staff of consolidated bank of kenya for their contribution in the growth of the institution from the reigns of the failed institutions of the 1980 β s to where it is currently. it is a stark reminder of our failures in the past and how we have managed to turn it into an opportunity. the re - branding identity is a significant development aimed at achieving this goal. 2. i am aware that consolidated bank of kenya has come a long way since it was incorporated in 1989 under the financial sector reform program established by the government with the objective of taking over and re - structuring various troubled institutions. the process of rationalising, reorganising and re - structuring of the failed institutions into a viable professionally managed commercial bank was initially expected to take about five years and thereafter its shares were to be sold to the public. however, the institution β s mandate was changed in 2001 to operate as a fully fledged commercial bank offering a full range of both retail and corporate banking services. 3. the banking industry has become very competitive in the recent past and for you to compete effectively within your market niche you need to keep abreast of various innovative technological advancements that will support the service platform of your market niche. it is therefore important that this re - branding is seen not only in terms of a corporate identity but should also reflect an improved service delivery by the institution as well. 4. the government of kenya unveiled the country β s development blueprint, β vision 2030 β in 2008. the vision for the financial sector is to β create a vibrant and globally competitive financial sector, driving high levels of savings and financing kenya β s investment needs β to achieve this, the banking sector is expected to increase efficiency and | . the central bank of kenya through its capacity building arm β the kenya school of monetary studies ( ksms ) intends to develop a certified agricultural finance program in collaboration with compete β usaid. this program will be suitable for agricultural officers as well as credit officers. this is important in developing the critical mass of human capital that fully understands agribusiness, such as agribusiness cycles, risk management practices, farm cash - flows and finance and insurance. this will support farmers and also develop a strong drive to lift the policy paradigm in this area. but the wider scope of monetary policy support is not in doubt. finally, distinguished guests, ladies and gentlemen, i would like to conclude my brief remarks by wishing all of you fruitful deliberations this morning. thank you very much for your kind attention. | 0.5 |
due to the varying liquidity of the papers issued. currency risks or divergent monetary policies no longer disturb the euro - area - wide diversification. in terms of outstanding amounts, the euro - denominated bond market is still significantly smaller than that denominated in us dollars. but in terms of new issuance, both markets are on a par. one reason for that is the sharp rise in the new issuance of corporate bonds. here again, diversification within the euro area has increased. the issuers'nationality, as a determinant of the yield and performance of bonds, has been superseded by other factors, especially by a sectoral view. accordingly, investors in the equity markets have shifted their perspective from country benchmarks to pan - european sector benchmarks. european equity markets are still small compared with those in the usa. the market capitalisation of domestic shares, as a ratio of gdp, reaches about 90 percent. the matching figures for the usa and japan are 152 percent and 68 percent, respectively. equity markets in the euro area are growing fast. the ratio of new issuance to market capitalisation averages over 4 percent. this is twice as much as has been achieved in the usa or japan. further integration of equity markets in europe is being hampered by the segmentation of both stock exchanges and clearing and settlement systems. a consolidation process has started, and should be fostered by legal harmonization in the field of financial services. the degree of integration in the banking sector is mixed. on the one hand, wholesale markets and investment banking are largely integrated. on the other hand, commercial credits and retail banking still operate in national, segmented markets. however, a few european banks created by cross - border mergers are slowly starting to offer retail services at a standardised level for customers in more than one country. the financial system in the euro area is still highly bank - dominated. at the end of last year, credit financing totaled about 108 percent of gdp. this is about as much as in japan, and twice as much as in the usa. the picture is similar with deposits. in the euro area, they account for 80 percent of gdp, and for 110 percent in japan, while the us figure is only about 40 percent. however, capital markets are increasing in importance in the euro area. disintermediation is gaining ground. financial markets have boomed in recent years and investment banks ( as well as non - bank financial firms like institutional investors, pension and | counterparties have become systemically important financial players. the commonly used term " too big to fail " is synonymous with this importance and, at the same time, serves as a call to all of us to take precautions to avoid the failure of the critical functions performed by these fmis. second, we should be aware that central counterparties are embedded in a very complex and highly interdependent ecosystem of clearing members, clients, markets, financial and technological service providers, to name only a few. and third, we have observed that there has been a constant progression when it comes to the clearing landscape. clearing services and risk models keep evolving, learning lessons from the past as well as anticipating potential future periods of volatility in the financial markets as a result of geopolitical tensions and climate - related effects. 2 / 5 bis - central bankers'speeches and these three aspects are what makes further development and enhancement of regulation so crucial. which is why i very much welcome the strides taken by the fsb in their efforts to further strengthen trust in the clearing ecosystem. first in 2022, the fsb together with cpmi - iosco delved into the complexities of ccp financial resources and conducted a quantitative and qualitative exercise, laying the groundwork for the fsb report that's now been produced. the heart of the present fsb report is the expansion of our existing toolbox to incorporate new features for resolution purposes. the fsb is offering jurisdictions an additional footing to set up instruments to deal with crisis situations severe enough to trigger resolution. existing, but also new funding instruments are presented and analysed in this report, such as statutory or contractual variation margin gains haircutting for resolution and equity in a first - loss position. but we need to remember that access to tools is not an end in itself. they must be fit for purpose. so, whenever we're talking about tools for resolution planning, there's a couple of questions we have to bear in mind : can these tools contribute to an effective resolution strategy? and do the advantages of using them outweigh the disadvantages? in this regard, i applaud the fsb's foresight in choosing to design the toolbox in a flexible way. this allows the jurisdictions discretionary scope to address the individual specifics of the supervised ccps, the local situation of the financial market and, finally, to select the best and appropriate tools for overcoming a crisis. 4 global collaborations : | 0.5 |
, were submitted by the bis committee on payments systems and market infrastructures ( cpmi ) in collaboration with the bis innovation hub ( bisih ) in side events of the g20 indonesia digital economy and finance festival ( fekdi ) in bali, july 2022. indonesia leads the asean - 5 ( indonesia, thailand, malaysia, singapore, and the philippines ) in payment system cooperation for the use of quick response ( qris in indonesia ) and retail fast payments ( bifast in indonesia ) with using local currency transactions. meanwhile, important progress in indonesia β s presidency of the g20 was achieved in the development of cbdcs with a focus on 3 ( three ) important aspects, namely : cbdc design ( wholesale and / or retail cbdc ), the use of cbdcs in financial inclusion ( directly or through digitalization of payments system ), and cbdc cooperation between countries ( regional asia and multilateral through the bis and also the imf ). to realize these three focuses, indonesia in collaboration with bisih successfully held the g20 techsprint 2022 as an annual competition for practical and feasible solutions for cbdc development on three issues, namely : ( i ) robust and effective publishing, distribution, and transmission ; ( ii ) capacity for financial inclusion ; and ( iii ) connectivity and interoperability. competition enthusiasm was very high with almost 100 ( one hundred ) participants from all over the world where the jury selected 21 ( twenty one ) participants as finalists and then determined 3 ( three ) winners for each of the aspects of the above cbdc development. moreover, indonesia β s presidency of the 2022 g20 strengthens coordination of bis cpmi, bisih, imf, and the world bank in the preparation of integrated assessment reports and recommendations for options in cbdc access and interoperability for cross - border payment systems, while maintaining the stability and integrity of the international monetary and financial system. in addition, the fsb has also issued a consultative report to achieve greater convergence in reporting and handling cyber incidents. indonesia β s presidency in the g20 2022 has also succeeded in encouraging the economic and financial inclusion development program by displaying the progress of indonesia β s msmes development. the covid - 19 pandemic has had an impact on increasing inequality among the poorest and most vulnerable groups of society, especially for msmes, women and youth. to that end, the g20 agreed on the β g20 financial inclusion framework in harnessing digital | form of hardwares and softwares which securities have to be assured. 5. in implementing the function of cash payment system, bank indonesia has money storage treasury that highly needed for ensuring the availability of cash in sufficient nominal amounts as well as fractions to meet the public needs. this treasury is also bis central bankers β speeches highly required for storage of the state foreign exchange reserves in the form of gold. 6. meanwhile, to support non - cash payment system, bank indonesia also has various vital payment system instruments such as real times gross settlement ( rtgs ) system, sistem kliring nasional - skn ( national clearing system ) and data centre which must function safely, smoothly and efficiently. 7. how important the roles of the various assets or system can be seen, among others, from the value of the transaction or money deposited. the rtgs system currently serves transaction settlements with an average value of rp 469 trillion per day and sknbi serves banking clearing transactions with an average value of rp 11 trillion per day. meanwhile, the amount of cash money ready for circulation both in the treasuries of bank indonesia β s head office and representative offices in the regions in the month of january has reached approximately 222 trillion. 8. another important activity of money circulation that requires escorting is the distribution of money. this activity includes among others the delivery of money fit for circulation from peruri to bank indonesia β s head office and delivery of money from bank indonesia to the centres of public economic activities such as clean money policy program or money distribution in order to maintain the availability of cash money in remote areas. 9. disruption and threats against various assets, system and smooth distribution of money, which naturally can harm the economy in the republic of indonesia. 10. therefore, bank indonesia requires personnel support from the state police of the republic of indonesia that capable to implement the duties of securing and escorting with qualification and competency in confronting disturbances and threats of security with high intensity, which in this case owned by the brimob ( mobile brigade ) corps of polri. 11. this good cooperation and coordination needs to be poured into a clear and transparent mechanism, in accordance with the duty and authority of bi and polri, and shall refer to the applicable laws and regulations by considering the principles of justice, benefit and legal certainty. 12. we welcome the signing of the work guidelines concerning the β procedures for implementation of securing bank indonesia and escorting state - owned valuables β. this work guidelines | 0.5 |
. at the same time, the bot is expecting that the thai economy will return to a positive growth of 3. 3 β 5. 3 percent in 2010. ladies and gentlemen, i believe we have a consensus that the worst of the global economic crisis is already behind us. at this juncture, policymakers and businesses are starting to look beyond the crisis and gauging what lies ahead. at the bank of thailand, we envisage the following three challenges for the post - crisis era. first, the outlook for thai export market will not be as good as the pre - crisis period. this is because the global financial crisis is likely to reduce both the purchasing power and the potential growth of thailand β s major trading partners, especially the industrialized economies. moreover, as the unemployment rates continue to increase in the g3 countries, protectionist sentiment may be intensified in an attempt to protect jobs at home. it is a common knowledge that, since the 1997 financial crisis, thailand has relied on exports as our primary engine of growth. this dependency is expected to continue for quite some time as our domestic demand is not large enough to substitute the purchasing power from abroad. therefore, exporters need to be more adaptive, while policymakers need to ensure supportive policies. having said that, it does not mean we will abandon our efforts in rebalancing our growth engine more towards domestic demand going forward. this can also be done as the balance sheet of the private sector is still in good shape. now i would like to turn to our second challenge : as the world economic recovery begins to find more solid footing, the exit from the unconventional measures and the return of monetary policy towards the normal level becomes an increasingly important issue. israel, australia and norway are already leading the way. however, it is a great challenge for policymakers to exercise an exit strategy with appropriate pace and time so as to ensure that the exit does not create unwarranted impacts on the economic recovery. on the one hand, a premature exit can derail the recovery. on the other, a delayed exit can lead to rising inflation and asset price bubbles. on top of this, the coordination of exit policy among countries is also important. for instance, the removal of deposit guarantees should be simultaneously implemented in order to avoid a disruption which may be caused by the shifting of deposits from a country that has lifted the guarantee to another country that has not. on balance, it is expected that emerging economies including asia are likely to recover | a great supporter of our investment programs, an example of which is your thailand means business 2008 report which is very relevant in terms of attracting new or re - investment from british businesses. i hope that this long relationship will continue to be as good as ever or even better in the coming years. thank you. | 1 |
www. boz. zm. allow me to reiterate that the intention of the balance of payments regulations are merely to monitor the flow of funds in and out of the republic with the ultimate aim to provide more accurate data to facilitate decision making on the national economy. managing director, the bank of zambia will continue to implement and monitor various regulatory measures aimed at enhancing the operations of the banking sector and efficiency in the wider economy and remains committed to support all efforts to reduce the cost of doing business in zambia. distinguished ladies and gentlemen, allow me to conclude my remarks by reminding commercial banks that they must become proactive in identifying new markets and developing appropriate new products and services, especially for the excluded population if they have to remain competitive and relevant in our fast growing banking sector. as has been echoed at various meetings, the bank of zambia has financial inclusion as one of its strategic objectives and initiatives by market players to make this vision a reality are always highly commended. the bank of zambia will play its own role and make every effort to create an environment that supports innovation and market developments by financial institutions. managing director, distinguished ladies and gentlemen, it is therefore, the bank of zambia β s expectation that zanaco and other banks will take advantage of opportunities arising from the general positive economic outlook on account of improving macroeconomic conditions and improvements so far recorded in various sectors of the economy and foster greater developments in the financial sector. finally, let me extend my gratitude to the board of directors and the managing director of zanaco inviting me on this occasion to mark the official launch the ndola west branch. it now my honour and privilege to declare the ndola west branch officially opened. i thank you. bis central bankers β speeches | niklaus blattner : financial market infrastructures facing technological, economic and regulatory challenges summary of a speech by mr niklaus blattner, deputy chairman of the governing board of the swiss national bank, at the xi awk group financial services lunch, zurich, 20 september 2006. the complete speech can be found in german on the swiss national bank β s website ( www. snb. ch ). * * * smoothly and efficiently functioning financial market infrastructures form the backbone of the international financial centre of switzerland. the future of these infrastructures will largely hinge on trends in europe, which point to stronger consolidation. however, healthy competition is the prerequisite for investment and innovation incentives in a consolidated stock market and settlement environment. this would also contribute to reducing the existing inefficiencies, in particular with regard to the processing of cross - border transactions. yet a competitive environment will develop only if market participants can choose freely among the different providers and if the infrastructures are interoperable, i. e. if the providers grant each other and their participants mutual non - discriminatory access. at present, competitive obstacles exist at the technological, economic and regulatory levels. for instance, costs for changing providers are high. moreover, financial market infrastructures are often operated in β silo β mode β either explicitly or implicitly β with clearing and settlement being handled by only one provider. but silos impede competition. a suitable regulatory framework must therefore be created to strengthen competition. the eu β s new markets in financial instruments directive ( mifid ), for example, is expected to bring about important changes and intensify competition in the european financial market. this development will also influence the future of financial market infrastructures in switzerland. against this background, it is certainly crucial for the swiss financial market infrastructures to persistently foster their competitiveness. they have pursued this strategy so far, and will need to continue doing so in the future. | 0 |
entries continue to rise gradually ; and the composite state - of - the - economy index for the first few months of the year was retroactively revised upwards last week by the bank of israel. hence, the picture that emerges regarding economic activity in the first few months of the year does not justify changing the bank of israel's forecast of 4 percent growth for 2005. this situation of a growing economy with economic and financial stability did not come about by chance. it is the result of a correct macroeconomic policy, in particular of monetary policy that focuses on stability, and without jeopardizing it, helps growth, combined with fiscal policy that operates within the framework of long - term fiscal discipline alongside structural reforms that support growth. as far as fiscal policy is concerned, i am in favor of the ministry of finance program to reduce taxes ; care must be taken to ensure that during its implementation special attention is paid to the welfare aspects of the program, and that the government debt and its high share in gdp continue along their downward path. i would like to turn now to two important issues facing us, and which the finance committee will also have to deal with : the recommendations of the bachar committee, and the bank of israel law. with regard to the bachar committee, i would like to make it perfectly clear that i support the proposed reform of the capital market along the lines recommended by the committee. the high degree of concentration in the capital market has an adverse effect on economic growth and efficiency. it is very difficult to pursue a policy of economic reforms without dealing with this issue in a thorough and comprehensive manner. the proposals of the bachar committee offer a good solution to the problems of concentration afflicting israel's capital market. most of the credit market is in the hands of the banks, and although nonbank credit has been expanding recently, the rate at which this is happening still leaves the bulk of credit within the banking system. there are certain detailed aspects of the reform that are still being addressed. but the question to be asked is whether after the reform the situation in the capital market will be better than before. if the answer is " yes, " then we must go ahead and implement it. in this case my answer is a definite " yes. " the second vital issue, and to the bank of israel this is the first issue, is the bank of israel law. i would like to state at the outset that despite the fact that the bank has been operating for 50 years | own and they do not represent the official position of the national bank of poland. second, my economic background allows me to speak in terms of standard economic variables : output, consumption, prices etc. on the other hand, i do not feel competent to speak about highly immeasurable values like national pride. notwithstanding the fact that people might derive utility from the pure fact of having in their wallets banknotes with polish kings instead of european bridges, i have no idea how to measure this utility and how to compare it to the utility derived from more standard arguments of preference functions like consumption. for this reason i will speak in terms of standard macroeconomic variables, bearing in mind that this is certainly not the whole story. if economists speak about the advantages and disadvantages of joining a common currency area, they ultimately end up comparing the costs and benefits of accession. this is also the way i would like to proceed. however, bearing in mind that many issues have already been described in several voluminous reports ( nbp 2004 for poland, csajbok, csemerly 2002 for hungary, hm treasury 2003 for the uk ), i will try to focus on issues which are less familiar to the general public or which are potential risk factors. the nature of these issues is that they are mainly concentrated on the cost side of the analysis. thus, it might seem from my lecture, that i mainly care about the costs or that costs outweigh benefits. let me, in the very beginning, stress that this is by no means the case. as stated by the president of the national bank of poland, mr sΕawomir skrzypek, an in - depth assessment of the costs and benefits of the euro adoption in poland needs to be periodically repeated in order to make sure that we take into account all important factors of the fast changing global economy. the national bank of poland is willing to play a key role in stimulating the public debate about the costs and benefits of the euro adoption. today β s conference is a good moment to contribute to this debate, and i would like to thank the organizers for offering this opportunity. let me begin with the benefit side. economists typically concentrate on the following sources of economic benefits related to monetary union. these are : β’ lower transaction costs, β’ lower interest rates, β’ financial integration, β’ trade creation. elimination of transaction costs incurred by companies and households in relation to the zloty / euro exchange rate is among the most obvious benefits of the | 0 |
mr backstrom reports on the swedish economy and monetary policy speech given by mr urban backstrom, governor of the sveriges riksbank and chairman of the board of directors and president of the bank for international settlements, to the foreningssparbanken, in malmo on 16 february 2000. * * * the repo rate increases in order to understand why the riksbank has raised the repo rate in two steps from 2. 90 % last november to 3. 75 % less than a fortnight ago, it is necessary to consider the situation in 1998. the mood at that time, in the global economy as well as in sweden, was coloured by the asian crisis, the suspension of russian payments, the problems with the hedge fund long term capital management and falling stock - market prices. it was considered that in addition to direct problems, the financial crisis in the autumn of 1998 would have negative effects on real economic activity. forecasters altered their assessments and the prospects for global output and inflation were revised downwards. central banks around the world did likewise and the riksbank was no exception. instrumental rates were reduced in many countries. between the early summer of 1998 and the spring of 1999 the riksbank cut the repo rate by a total of 150 basis points, bringing it down from 4. 40 to 2. 90 %. the actions of central banks probably mitigated effects of the various shocks. they helped to check the signs of panicky behaviour in the market and then to restore a more optimistic assessment of the future. at the same time, the process displayed some ability to heal itself. all this has contributed to a rapid recovery in the global economy as well as in sweden. the current picture of many economies is thus very different from the uneasy situation that prevailed during 1998 and the early part of 1999. global growth prospects are appreciably better and the risks connected with inflation have changed. that is also why instrumental rates were adjusted upwards by many central banks last autumn and early this year. in principle it can be said that inflationary pressure follows a cyclical pattern. when economic activity is strong, demand growth tends to exceed the expansion of capacity and this normally leads in time to an accelerating rate of price and wage increases. conversely, weak demand may lead to the prospect of inflation being below the target one to two years ahead. as a rule, the repo rate should be raised in the former case and lowered in the latter. in this way, the rep | managing financial crises and alternative courses of action proliferate. politicians, whether or not they have the authority over the decision to intervene, want to satisfy themselves that intervention is justified and what is proposed is the right way forward. often the process of arriving at a consensus takes time and meanwhile the problem worsens and the effectiveness of the actions to be taken is eroded. i believe therefore that those responsible for the maintenance of monetary and financial stability should have the necessary emergency powers to do what is required independently and promptly. there is of course the need for transparency and accountability when exercising these powers to ensure appropriate checks and balances. at a time when many jurisdictions and international forums are reviewing the financial regulatory structure, the ability or inability of the financial authorities to take unusual action, independently and promptly, to protect the public interest should be addressed. my fourth and last issue is an involvement. this concerns the extent to which the authorities should be involved in the development of the financial infrastructure. i am sure you are aware of the huge amount of public money spent in all jurisdictions in the development of the physical infrastructure, building highways, bridges and airports to take people and goods from one place to another safely and efficiently, thus facilitating the conduct of economic activities for the benefit of all. authorities, however, seem to devote only disproportionately small amounts of resources to the development of the financial infrastructure to move money and financial instruments from one entity to another safely and efficiently for the purpose of enhancing financial efficiency that promotes economic prosperity. to some extent, the development of the financial infrastructure can be left to the market, with swift being a sterling example of private sector initiative in this area. but many of the important elements of the financial infrastructure are public goods, the provision of which, in a form that serves the public interest best, may not be financially viable for the private sector. furthermore, the conflict i mentioned earlier often comes in, affecting the willingness or the enthusiasm of the financial intermediaries to develop and use a financial infrastructure that promotes financial efficiency. i believe this is one of the main reasons why x in t + x in the settlement of some financial transitions is still a number other than zero, or why t + x is still not replaced by rtgs dvp even though the technology to do so has been available for some time. very simply therefore there is a case for the authorities to get involved, as a developer or a service provider, when a private sector solution that is in the public interest | 0 |
at manageable levels is essential to ensuring sustainable economic growth. we will maintain our policy of a market - determined exchange rate, with official action only to keep volatilities at bay. we will stick to the policies that have allowed us to sustain a strong external position. we will continue to review our banking reform agenda. the banking system strength that we have seen thus far has been made possible by the reforms that we have put in place. we will continue to enhance risk management standards, improve corporate governance and accelerate compliance with basel 2 principles. the recent events in the financial markets highlight the critical importance of efficient price discovery, transparency and investor protection. in line with this, our issuance of regulations aimed at further broadening the array of financial products available in the market will continue to include a review of existing rules to ensure that appropriate risk disclosure and client suitability procedures are in place for new risk - taking activities. in addition, the bsp will continue to work together with the private sector and other government agencies to further enhance both the infrastructure and the regulatory framework for capital market transactions to further promote efficiency in trading, settlement and delivery of government securities. finally, we will pursue our legislative agenda. as you must be aware, the credit information system act and the personal equity and retirement account act have both recently been approved. these are two very important pieces of legislation, particularly as we face the challenges brought about the current financial turmoil. the cisa will help address the lack of comprehensive and credible credit - related information. this will in turn improve access to credit and reduce its cost. pera, on the other hand, is expected to promote voluntary savings and therewith provide a new base for stepping up capital market development. it is also expected to be complementary to our public pension system. the bsp will continue to work with congress on key legislation that would further enhance protection for investors, improve bsp β s oversight capabilities and minimize costs of resolutions. concluding remarks ladies and gentlemen, the challenges that we face are enormous. although much has already been revealed in terms of the problem areas of the global financial market turmoil, we are very much aware that more could be forthcoming. i said earlier, β the rules of the game are changing β. fortunately, at the uaap, the rules have not changed, the best still prevails. i can almost hear some of you say underneath your breaths β if indeed that is the case, then we should β throw the playbook out the window. | amando m tetangco, jr : recent market developments β impact on the philippine banking and finance sector speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the joint membership meeting of mart, toap, aci and ihap, makati city, 3 october 2008. * * * distinguished officers and members of the money market association of the philippines ( mart ), trust officers association of the philippines ( toap ), association cambiste internationale ( aci ) philippines, the financial markets association, investment house association of the philippines ( ihap ), esteemed guests, ladies and gentlemen, good evening. thank you for inviting me to be your guest speaker at tonight β s joint general membership meeting. it β s always good to engage the prime movers of the country β s financial markets in an open discussion such as this. but especially during these times of great financial turmoil in major markets overseas. i would certainly welcome the questions and your comments during the open forum after my brief talk. as you are well aware, the bsp β s approach to supervision and reform has always been consultative. about the same time last year, if you recall, i was also your guest speaker at your general membership meeting. at that time, i spoke about the increase in global liquidity and the temptations that it introduced. i alluded to the changing nature of financial risk and how in this era of financial globalization, risks have transcended national borders. i also said that the international rules of the game are changing. ah... the time we live in is indeed interesting, isn β t it? the rules of the game are further evolving. this time around, there seems to be a crunch in global dollar liquidity as the us market has rapidly de - leveraged. and events are showing that the magnitude of financial risks that have crossed national borders has been beyond most market participants β and regulators β expectations. stunningly, we are witnessing rapid turnover in some of the marquee names in the global financial stage. in fact, the market developments are moving so fast that the observations that i will be sharing with you tonight are not the same as those that i would have shared with you, had i delivered my talk on tuesday as was originally scheduled. but i want to assure all of you here tonight, that my overarching message remains the same β | 1 |
on the deficit reflecting the unsustainability and transient nature of a large part of the tax system, for me there is a lesson here from banking regulation. just as banks are required not only to make provision for expected loan losses in their accounts, but also have to hold capital reserves to meet unexpected losses, the sgp targets should make allowance for the risk that unexpected fall - offs in revenue may occur. finally, a word on the taxation of financial intermediaries, which is back on the policy agenda. i see that financial transactions taxes are being discussed again, though i suspect that the conclusion will be that they do little for improving the efficiency or safety of the financial system ( they would have done nothing to discourage derivatives related to sub - prime lending, for example ), and also would not generate as much revenue as some suppose. nevertheless, it does seem possible to use some form of pigouvian corrective taxation as a kind of graduated type of regulation, potentially better than outright banning of products, and a useful complement to the regulation - by - ratio that has become the norm over the past quarter century. with such a long list of researchable topics, i look forward to seeing a large international attendance again at infiniti, and i declare the 2010 conference open. | in brussels. the third pillar β the european deposit insurance scheme ( edis ) β is less advanced, with the proposals published by the commission in november 2015 still under discussion at the eu level. * * * current issues compared with the pre - crisis situation, the domestic banking sector is now slimmed down. this has also resulted in a more concentrated banking sector, notwithstanding the decline in lending volumes since the start of the crisis. three of the five retail banks are majority state - owned ( irish and uk ), with the state an important minority shareholder in a fourth. this is atypical compared to most other euro area members. the banking system and more specifically the mortgage market have seen a material improvement over recent years. within our mandate, the central bank remains focused and committed to putting in place measures to address the fundamental causes of the ongoing issues. as i have noted earlier, once risks have been identified, the jsts both require firms to take corrective actions and take supervisory measures to mitigate risks and enhance resilience. in addition to these micro - supervisory actions, systemic risks can be addressed through macroprudential measures taken by the central bank. examples of the former are the range of supervisory actions taken on mortgages that i have referred to earlier ; examples of the latter are the borrower - based mortgage measures enacted in 2015, and recently reviewed in november 2016. the mortgage measures have helped to ensure that those who buy homes now are better prepared to manage their mortgage payments in the event of a future downturn in the economy. following the review, the framework is broadly unchanged, with some limited refinements. the 3. 5 times ceiling on the loan to income ( lti ) ratio remains the anchor of the framework. requirements for buy - to - let borrowers and the exemptions for negative equity mortgage 4 / 6 bis central bankers'speeches borrowers from the measures also remain unchanged. mortgage arrears and how the market is currently functioning are consequences of the crisis, and while a significant part of our work is focused on this, the bank is also mitigating emerging risks and enhancing resilience. one example is identifying weaknesses in new lending practices in some of the retail banks. among these weaknesses found during recent supervisory activity were : a need for better oversight and challenge from boards in relation to the risk appetites of banks, which are used to govern and quantify lending decisions across sectors and borrower types ; strategies focused on driving increased volumes without sufficient | 0.5 |
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Ψ±ΩΨ²Ω means the lockdown period spans a whole six months. as a result, many private sector companies are facing great liquidity and cashflow difficulties, causing financial solvency issues as severe as bankruptcy. and in view of the inter - connectedness of all economic sectors, the damage threatens to quickly reach even the most stable sectors. as shown by mobility data and business impact surveys, the number of visitors of retail outlets dropped by 75 %, with 45 % of all companies forced to suspend business or shutdown altogether, and many more to follow suit most probably in the future. meanwhile, 44 % of landlords also reduced rent as a result of the overall situation, while 64 % of those polled reported sentiments of fear, anxiety, and uncertainty. in general, forecasts suggest a drop in private sector revenue as high as 42 %, causing cashflow and liquidity difficulties for corporate bodies. this could cause an increase in default rates, and companies failing to pay would trigger high loan - related losses in the banking sector. companies are expected to need a total of kd 2. 4 - 3 billion to cover their working capital requirements ( such as salaries and rent payments ). it is also expected that the prolonged lockdown would bring about layoffs and increase unemployment in the private sector. amongst all nationals employed in the private sector, 86 % of them ( 62, 000 kuwaitis ) work in economic sectors negatively impacted by the crisis. furthermore, 79 % of non - nationals employed by the private sector ( 1. 3 million workers ) also work in affected sectors. closing these companies would disrupt supply chains and cause shortages in both the supply of basic goods and services. the drop in spending and the prevalent uncertainty will also deter future investments. any failure to take swift and unwavering action in response to working capital requirements would have grave economic repercussions on companies, particularly on small and medium enterprises ( smes ). the impact would continue to grow as the crisis persists, since the cash flow crunch would force companies β including those previously in a good liquidity position - to shut down for failure to secure financing ; either due to increasing financing costs or the banks β reluctance to finance amid fears of growing default risk during the crisis. this could lead to companies β bankruptcies, which, due to the chain effect between economic sectors could thus result in a contraction in non - oil | safe and sound banking sector to ensure effective financial intermediation for economic growth. key among the reforms was the increase in the minimum capital requirement of banks to ghΒ’400 million from ghΒ’120 million. the recapitalization ended on a solid note with a more consolidated banking sector as weaker and under - capitalised banks that posed risks to financial stability were removed. this has enhanced the efficiency and profitability of the remaining banks and helped restore confidence and resilience in the banking sector, with the banks now better positioned to support private sector - led growth in the ghanaian economy. 5. for the past two decades, the bank of ghana has taken steps to improve the payment systems infrastructure, alongside strengthening the regulatory page | 3 frameworks to support the expanding financial technology space. the overall objective is to broaden the scope of financial services access and deepen financial inclusion, while taking advantage of the increasing digital revolution in the financial sector. 6. in 2018, the bank of ghana, working with other stakeholders, successfully completed the mobile money interoperability ( mmi ) project which established an integrated and interoperable payments ecosystem. in this regard, all the three ( 3 ) key national payment pillars in ghana, namely ; mobile money, e - zwich and gh - link are now interoperable to facilitate seamless movement of funds across these systems. 7. globally, the rapid growth in technological advancement has transformed the payment landscape with far reaching impacts. with this global drive, the bank of ghana has taken full advantage of recent technological advances to promote a cash - lite economy within the context of the current existing digitization policy. these tie in with the government β s agenda to promote social inclusion drive for a more formalized economy through digitization and automation of business processes. the core part of the strategy is to first develop a national identification system that will facilitate efficient delivery of public and private services, including financial services, mobile banking, social safety nets, health insurance, and revenue collection, among others. 8. in collaboration with other stakeholders, the bank of ghana is working to change financial services delivery to support the emerging digital society. accordingly, the bank has revised the payment system act 2003 ( act 662 ) and the electronic money issuers and agents guidelines ( 2015 ) and page | 4 consolidated these into a draft payment systems and services bill, which will soon be passed by parliament. the purpose of consolidating the several pieces of legislature is to take | 0 |
tiff macklem : central banking - navigating in a new world remarks by mr tiff macklem, governor of the bank of canada, at the 30th conference of montreal " international economic forum of the americas ", montreal, quebec, 12 june 2024. * * * good afternoon. it's always great to be back in montreal, my hometown. and i could not be more pleased to be here with joachim nagel, president of the deutsche bundesbank. thank you for visiting us in canada. since i'm on my home turf, let me start us off with a few words about where we find ourselves in economic history. key lessons from high inflation canada and germany have just come through the biggest inflation we've experienced in 40 years. and as painful as this has been, it has highlighted some lessons. i will focus on three in the canadian context. first, we ignore the supply - side of the economy at our peril. as central banks, we tend to focus on the demand side because that's what we influence with interest rates. but coming out of the pandemic, we learned that it is much easier to restore demand than supply. high inflation was a stark reminder that supply shocks can cumulate and persistand when they intersect with periods of strong demand, the inflationary consequences can be large. looking ahead, technological change, geopolitical tensions, climate change, and shifting trade and investment flows all suggest we may experience more supply shocks than we did in the past. businesses and central banks need to be ready. second, inflation is painful - that's not a new lesson, but for many of our citizens it was their first experience with high inflation. and it has been painful. inflation harms people and the economy, and it corrodes trust in our market - based system. the rising cost of living made life harder for everyone, especially those who had less to start with. people were working hard, but their paycheques didn't buy what they used to. that made people feel cheated and angry. recent history has been a stark reminder that inflation is our common enemy. the third lesson is the value of central bank credibility and public trust. we did not have that in the 1970s, and the costs of unwinding inflation were very high. this time, our track record on inflation control combined with our forceful monetary response brought inflation back down at much lower economic cost. but public trust and central bank credibility | lynn patterson : adjusting to the fall in commodity prices β one step at a time remarks by ms lynn patterson, deputy governor of the bank of canada, to the edmonton chamber of commerce, edmonton, alberta, 30 march 2016. * * * introduction good afternoon. thank you for inviting me here today. it β s a pleasure to be in edmonton and speaking to the chamber of commerce. when i accepted this invitation, it took me all of about 10 seconds to decide what my topic would be : the impact of lower commodity prices on canada β s economy, which is important to all of us. as business leaders in alberta, you know this better than most because you are experiencing it first - hand. at the bank we have committed a lot of resources to understanding the impact on the economy of the drop in prices, and so i thought it would be helpful to share some of our insights, from a macro perspective, into the adjustment we are facing. oil prices alone are down by well over 60 per cent since the highs we experienced in mid2014. given the supply dynamics that we are currently faced with, it is highly unlikely that we will see those levels again in the coming years. while this price drop is affecting all canadians, it is being felt most acutely here in alberta and other oil - producing regions. we at the bank are well aware of the toll this is taking on firms and the hardship it means for many individuals and families. yet the message that i want to share with you today is that canada β s economy is diverse and dynamic enough to achieve, in time, a new balance of economic growth. while energy and other commodities will continue to play a very important role in the domestic economy, we don β t expect that they will account for as large a share of our exports as they did in the recent past. 1 i want to focus on three key questions that are top of mind for us at the bank and, most likely, for many of you. first, how do we assess the impact of this shock? second, how will the economy adapt and how long will it take? and third, what will the economic landscape look like when it β s done? in answering these questions, i will highlight a simulation of the commodity price shock that we ran through one of our economic models to help us understand the implications for the economy. i will also describe in some detail the insights into the adjustment process that the model gave us. let me begin with some context. as | 0.5 |
narayana kocherlakota : further thoughts on making monetary policy speech by mr narayana kocherlakota, president of the federal reserve bank of minneapolis, to the harvard club of minnesota, minneapolis, minnesota, 21 october 2011. * * * i thank doug clement, david fettig, terry fitzgerald and kei - mu yi for their helpful comments. thank you very much for that generous introduction. it is a special pleasure to meet with this group so soon after the announcement that two of your fellow alums have been awarded the 2011 prize in economic sciences in memory of alfred nobel. i am referring, of course, to thomas sargent and christopher sims, and i would like to begin my remarks by congratulating tom and chris on this well - deserved honor. in the 1970s, in independent research, they developed systematic approaches to distinguishing between cause and effect in macroeconomic data. now, almost 40 years later, their thinking informs the making of macroeconomic policy around the world. i am especially pleased to acknowledge chris and tom β s achievement because of their connection to the state of minnesota. after earning their ph. d. s in economics at harvard, where chris also received his undergrad degree in mathematics, tom and chris went on to do much of their prize - winning work right here in minneapolis, as professors at the university of minnesota and consultants at the federal reserve bank of minneapolis. i β m sure that many of you in the room today followed that same career path, from an education at one of america β s oldest colleges to accomplishing great things here in the north star state. in my remarks today, i β d like to touch on several topics. i β ll begin with a quick description of the structure of the federal reserve system and the deliberative process of the federal open market committee β the committee that makes monetary policy for the nation. then i β ll describe the fomc β s objectives and discuss how the fomc makes decisions so as to achieve those objectives. i β ll close with a discussion of my dissents on recent fomc decisions and some perspectives on monetary policy going forward. after that, i β ll be pleased to answer any questions you may have. and before i begin, i should remind you that my comments here today reflect my views alone, and not necessarily those of others in the federal reserve system, including my fomc colleagues. some fomc basics the federal reserve bank of minneapolis is one of 12 regional reserve banks | technological productivity, job market efficiency, unemployment insurance benefits, entrepreneurial credit access and social norms all influence what we might consider β maximum employment. β trying to offset these changes in the economy with monetary policy can lead to a dangerous drift in inflationary expectations and ultimately in inflation itself. over the past year, the fomc has communicated through its statements that it perceives the current unemployment rate to be elevated relative to levels that it views as consistent with its dual mandate. in this situation, there is a trade - off involved in the making of monetary policy. on the one hand, adding monetary accommodation reduces unemployment. on the other hand, adding accommodation increases the risk of generating inflation markedly higher than the committee β s objective of 2 percent for a significant period of time. in choosing whether to add monetary stimulus or not, the committee must resolve this trade - off between the fall in unemployment and the increase in the risk of inflation. i β ve described the relevant trade - off in the traditional way as being one between employment gains and inflation risks. this description emphasizes a tension between the two mandates of the federal reserve. but, as i explained earlier, if the public observes inflation running at more than 2 percent for multiple years, their inflation expectations may drift upward. this increase in expectations can give rise to a need for monetary tightening that may generate large employment losses. in other words, when thinking about adding monetary the discussion in this paragraph is largely consistent with the following quote from chairman bernanke β s response to a reporter β s question in april about the fed β s ability to lower the rate of unemployment more rapidly : β even purely from an employment perspective β that if inflation were to become unmoored, inflation expectations were to rise significantly, that the cost of that in terms of employment loss in the future, as we had to respond to that, would be quite significant. β ( see transcript of chairman bernanke β s april 27, 2011, press conference, p. 14. ) bis central bankers β speeches accommodation, the federal reserve confronts a basic trade - off that can be framed without reference to its price stability mandate : a trade - off between short - term employment gains and the risk of larger longer - term employment losses. making monetary policy : responding to a mandate dashboard the fomc β s dual mandate, as i β ve said, is to keep inflation at 2 percent or a bit under and to promote maximum employment β that is, to keep unemployment low. but how | 1 |
whether the business owner gained or lost wealth. families with businesses primarily engaged in mining or construction β among small businesses in the survey, this was overwhelmingly construction - related businesses β were the most likely to see a substantial decline in net worth ( figure 11 ). in contrast, families with a wholesale or retail business were more likely to see a substantial gain. those involved in utilities, transportation, and services β in the survey, this was predominantly services β saw the largest gains and the largest losses, but losses exceeded gains for the group. only 82 percent of the consumers who reported owning a business in 2007 also reported owning a business in 2009. and some of those who remained business owners may have scaled back their operations while awaiting recovery. we do not have the detail necessary to assess the importance of reduced operations directly, but we have some suggestive bis central bankers β speeches evidence. for businesses that were in operation in both 2007 and 2009, we see decreased median and mean business incomes for owners who saw their wealth fall and the reverse for owners whose wealth rose. some of the decrease in activity may be driven by a decline in demand for services, but some may come from credit constraints. for a variety of reasons, we cannot look directly at changes in credit availability for business owners and their businesses, but we can look at two indicators for the owners who had a continuing business in 2009. some business owners use proceeds from personal loans for business purposes or use personal assets to secure business loans. in other cases, the business itself may apply on its own. if the business is a sole proprietorship, there is no legal distinction between business and personal borrowing, but business owners still may view their personal and business debt separately. the 2009 scf panel interview asked participants to report separately whether they had applied for personal and business loans during the two - year period. if they had, it asked whether they had been turned down for a loan. the survey also asked whether they had wanted to borrow for personal or business purposes but had been so convinced they would be turned down that they did not apply. the data show a substantial level of personal and business applications both for owners whose wealth rose and for those whose wealth fell over the period of the scf panel. the level of personal applications was slightly higher for those whose wealth increased over the period, and their applications were more likely to have been approved ( or they were less likely to have believed they would have been denied ) ( figure 12 ). the pattern of personal loan denial | keep real interest rates below r * will eventually face rising inflation and inflation expectations, while a central bank that seeks to keep real interest rates above r * will eventually face falling inflation and inflation expectations. 3 my own and others'research suggests that the failure of the fed to respect this principle contributed to the great inflation of the 1970s, while the incorporation of this principle into fed policy in the 1990s and 2000s contributed to the achievement of stable and low inflation during and since those years. 4 so, even though estimates of r * are imprecise, i do not believe they should be ignored. instead, when thinking about monetary policy, i believe it is best not to ignore entirely an admittedly imprecise estimate of r * today, but instead to update that estimate as new data on inflation, inflation expectations, employment, growth, and productivity arrive. moreover, because monetary policy operates with a lag, and with inflation presently close to the 2 percent goal, it will be especially important to monitor inflation expectations closely using both surveys and financial market data to best calibrate the pace and destination for policy normalization. it will also be important to monitor both model - based and financial - market based estimates of expected future inflation - indexed real interest rates ( for example, 5 - year real rates 5 years forward ) suitably adjusted for term premium and liquidity effects as one indicator of longer - run r *. before the financial crisis, these 5 - year real rates 5 years forward averaged around 2 percent after a term premium and liquidity adjustment. since 2015, they have averaged about 0. 50 percent but recently have approached 0. 75 percent, also after a term and liquidity premium adjustment. given that real interest rates and economic growth tend to move together over the longer run, one possible source of these upward revisions in forward real rates could be that financial market participants may have become more optimistic about the growth potential of our economy. evidence also suggests that the term premium that investors require to hold longermaturity bonds has risen as well. the way forward if the data come in as i expect, i believe that some further gradual adjustment in the federal funds rate will be appropriate. as i mentioned earlier, i believe monetary policy today remains accommodative, and that, with the economy now operating at or close to mandate - consistent levels for inflation and unemployment, the risks that monetary policy must balance are now more symmetric and less skewed to the downside. raising rates too quickly could un | 0.5 |
change for monetary policy transmission and price stability. second, the ecb will introduce environmental sustainability disclosure requirements for eligibility for collateral and asset purchases. third, we will adapt our risk assessment framework, our corporate sector asset purchases and the collateral framework for climate - related risks. during our review, we also addressed the communication of our monetary policy. we heard directly how our policies affect the lives of european citizens and their desire to better understand those policies. our last review took place well before smartphones were around, so there was a strong case for enhancing our communication with the outside world. you will notice some changes in the coming weeks relating to our regular communication. for example, a new, 2 / 3 bis central bankers'speeches more narrative - based, and more concise monetary policy statement will replace the introductory statement at our monetary policy press conferences. but also, our monetary policy communication geared towards the wider public will be adapted through a more visualised and more accessible approach. and, reflecting the successful experience with the listening events, the governing council intends to continue to interact on a regular basis with the public via eurosystem outreach events. the review of our strategy that we have just completed took place 18 years after the previous one. looking ahead, the rapidly changing world that we live in means that we cannot wait for another 18 years before undertaking the next review. a regular review cycle, with the governing council periodically reassessing the appropriateness of its monetary policy strategy, will ensure that the strategy remains fit for purpose. it will also further enhance the ecb β s transparency and accountability to european citizens. we intend to carry out the next assessment in 2025. the governing council yesterday also endorsed a longer explanatory overview note on the ecb β s monetary policy strategy, which will be published after the press conference. we are now ready to take your questions. 3 / 3 bis central bankers'speeches | growth - model based on over - savings, was, in conjunction with accumulating deficits in a number of consumption - driven economies, a major source of concern in the years which preceded the global financial crisis. such imbalances were coupled with β twin gluts β in global liquidity and planned savings which led to historically low risk premia β the main symptom that systemic risk was escalating in the presence of easy finance accommodating complacent borrowers. even the global financial crisis and the policy responses have reduced the imbalances only partly and temporarily over the most recent years. the fact that these imbalances have persisted for so long exposes a key weakness of the system, namely the inadequacy of the adjustment mechanisms. let me explain this in more detail by looking at the various stakeholders : national authorities in deficit and surplus countries had little incentives to depart from their growth model and policy course. indeed, prior to the crisis the economies with the largest external imbalances were often outperforming their peers in terms of gdp growth : the larger the imbalance, the higher was the growth rate over the short run. moreover, the deficit and surplus countries, rather than exerting policy discipline on each other, in fact accommodated the other in the pursuit of their respective growth models ( see dooley et al. 2003 ). market discipline also proved partly unreliable for a number of reasons. firstly, markets frequently do not function in line with fundamentals as expected, leading to mispricing and undue volatility in, for example, exchange rates and credit risk premia. this may be explained in part by factors such as herding behaviour, but also the lack of a shared view on the relevant fundamentals. secondly, market behaviour has also been constrained by structural factors and policy regimes. on the deficit side, the fact that the united states provides the deepest and most liquid financial market β and issues the dominant reserve currency β provides it with an unparalleled platform to offer β safe β debt instruments. the insatiable demand for such debt instruments puts strong pressure on the us financial system and its incentives ( caballero 2009 ). at the same time, the us derives its β exorbitant privilege β from this situation. the demand for us assets constrains the growth in credit and exchange rate risk premia charged by markets on rising us debt. this effectively limits the increase in external borrowing costs | 0.5 |
to say that there are not big differences across our country. there clearly are, and i will come to some of these in a moment. but, on average, the growth of the services industries has meant that the differences in industrial structures across regions have narrowed over time. i would expect that this would continue. as i have spoken about on previous occasions, the growth of services and increasing investment in technology mean that investment in human capital is critically important to the country β s future success. this needs to be a national focus. we are making progress, but there is more to be done, with investment in human capital central to building comparative advantage. this next graph shows the distribution across regions in the share of the population with an advanced qualification, defined here as a certificate iii or higher ( graph 12 ). there has been a marked shift to the right in the distribution. by 2016, there were only a few regions in which less than half of all 25 β 44 year olds held an advanced qualification. this is a noticeable change from the early 2000s and suggests the lift in qualifications is broadly based across regions. if anything, the dispersion across regions has also lessened over time. 12 / 16 bis central bankers'speeches so far i have spoken about the commonalities in the cyclical and structural stories. it is important, though, to recognise that there are significant differences across regions. one illustration of this is the different average level of wage income across the country, which we can calculate from individual tax returns ( graph 13 ). there is considerable variation across the country, with some regions having average wage income more than 50 per cent above the national average. wage income also tends to be higher in the capital cities than elsewhere. in part, this is explained by the types of jobs available in larger cities. for example, the capital cities are home to over 80 per cent of all it, business, hr and marketing professionals, while only around 65 per cent of people live in these cities. on average, these business - service roles attract higher wages than many other occupations. 13 / 16 bis central bankers'speeches another notable difference across regions is the level of housing prices. this reflects not just differences in average incomes, but the underlying demand and supply dynamics. this next graph shows the standard deviation in housing prices across the country, using data for around 330 separate regions ( graph 14 ). the picture is pretty clear : the dispersion in housing prices is currently larger than it has been in | philip lowe : regional variation in a national economy address by mr philip lowe, governor of the reserve bank of australia, to the australia - israel chamber of commerce ( wa ), perth, 11 april 2018. * * * i would like to thank james bishop and andrea brischetto for assistance in the preparation of this talk. i would like to thank the australia - israel chamber of commerce for the invitation to speak at this lunch today. it is great to be back in perth again. i look forward to learning more about how the western australian economy is going. later this year, the full reserve bank board will be here for our monetary policy meeting on the first tuesday in september. when i was in perth six months ago i gave a speech titled β the next chapter β. in that speech i explored some of the likely plot lines in the next chapter of australia β s economic history. i would like to continue that broad theme today. for most of the past decade, a common shorthand description of the australian economy was that it was a β two - speed β economy. for some time, western australia and queensland were growing very quickly on the back of investment in the resources sector, but growth in the other states was subdued. and then things turned around : growth was weak in western australia and queensland, and stronger elsewhere. so it β s understandable that people have talked about a β two - speed β economy. in a country as large and diverse as australia, it is not surprising that we experience differences like this from time to time. it is important that the reserve bank understands these differences and, indeed, we devote considerable resources to doing this. but today, rather than focus only on the differences across regions, i also want to focus on the similarities. i would like to do this from two perspectives. the first is from a cyclical perspective and the second is from a structural perspective. from the cyclical perspective, the good news is that conditions have improved across most of australia over the past year. and from a structural perspective, over time the differences in the structure of output and employment across regions are tending to become smaller, rather than larger. so i would like to talk about this. there are, of course, still important differences across the country and i will discuss some of these as well. finally, i will finish with some comments about the recent monetary policy decisions of the reserve bank board. the cyclical perspective over the past year, when discussing the national economy, the reserve | 1 |
fritz zurbrugg : financial markets, the management of swiss currency reserves and interest rate benchmark reforms introductory remarks by mr fritz zurbrugg, member of the governing board of the swiss national bank, at the media news conference of the swiss national bank, berne, 12 december 2013. * * * i will begin today by looking at the situation on the financial markets. then i will talk briefly about developments in our foreign exchange holdings. i will close with a few comments on the progress that has been made in reforming interest rate benchmarks at both international and national level. situation on financial markets since our last media news conference in june, the positive risk sentiment on financial markets has been largely maintained, as is evident from the soaring share prices, among other things. in the past few weeks, the key us indices dow jones and s & p 500 have reached new record levels, thereby exceeding the peaks attained prior to the global financial crisis. in addition, japan β s nikkei index and the most important western european stock exchange indices, including the swiss smi, have again recorded significant gains in recent months. despite all the euphoria on the stock exchanges, we must not forget that it is not only the improvement in the economic outlook but also the continuation of the very expansionary monetary policy around the world which is behind this positive risk sentiment. in may and june we saw what could happen if expectations of a less expansionary monetary policy course become widespread in the market. at that time, the announcement by the us federal reserve of a possible reduction in its bond purchase programme caused share markets to plunge temporarily. the wave of selling did not recede until the beginning of july, when the federal reserve, the european central bank and the bank of england reassured markets that key rates would remain at very low levels until the recovery of the individual economies was on a firm foundation. on bond markets, interest rates continued rising in june and july. since then, they have largely moved sideways. this applies to us, uk, german and swiss government bonds, in particular. until the beginning of september, yields on ten - year confederation bonds rose to almost 1. 2 %. they are currently at around 1 %, which means that they have increased by about half a percent year - on - year. government bonds in the emerging economies were particularly strongly affected by the rise in interest rates, since the expectation of an impending monetary policy normalisation in the us led to significant capital outflows from these countries | it β s clear to see why the markets value their service and it is fortunate that, in the london clearing house, london has a first class central counterparty. but clearing houses concentrate risk at a single point. and, by serving multiple markets, they provide a route for disturbance to be transmitted between markets. so the way they manage their risk, particularly as they expand their activities, is important to you, i hope, as much as to us. diversifying across products can provide benefits, particularly if this simultaneously diversifies a clearing house β s exposures across existing clearing members. and expansion into new markets where existing members are already active provides clearing houses - and potentially regulators - with more information on members β overall trading books which they can use to manage their risk more effectively. diversifying across markets does not, of course, help when, for some reason, the markets all move together. and it is vital, in any case, that clearing houses continue to have robust arrangements for monitoring and controlling risk, including proper margining procedures and adequate financial resources, and that their procedures and ownership structure gives members the incentive to ensure that risk is adequately controlled. that suggests to us that control and ownership of the clearing house should reside with clearing members, who are, in any case, likely to contribute a major part of any mutual guarantee fund. so we welcome the fact that the product of the lch / clearnet discussions is intended to be a non - profit mutual organisation which gives ownership to its users and look forward to as productive a relationship with the new body as we currently have with lch. the topic of this week β s conference - putting the dot. com into derivatives - presents challenges but also opportunities. if we can address both, the derivatives industry will be better placed than ever to meet the needs of users world - wide. i wish you all an enjoyable week. | 0 |
e. they will help to avoid the build - up of economic imbalances and financial vulnerabilities that have led to the present crisis. setting out a strong commitment and a clear framework for improved future governance also facilitates crisis resolution and crisis management. at the same time we should not put the cart before the horse in the transition period and responsibilities must be clearly defined. this applies in particular to the main elements needed for a banking union. a single supervisory mechanism ( ssm ) ensures effective supervision and a level playing field across the euro area, underpinning financial integration and safeguarding financial stability. the ssm regulation is nearing adoption subject to the necessary parliamentary approvals in a number of jurisdictions. a single resolution mechanism ( srm ) is essential to break the link between banks and their respective sovereigns and to ensure that non - viable banks can be wound down in an orderly manner. a draft regulation for the srm is expected from the commission by the summer. ssm and srm are like siamese twins, on cannot survive without the other. a supervisor can only credibly do his job if liquidation is possible without undue risks to financial stability. conversely, the resolution mechanism must be able to rely on the well - founded and impartial judgement of the supervisor before putting any funds at his disposal. while a common fiscal backstop is needed for the srm, resolution funds could come from the private sector, namely the financial industry and the banks eligible for the srm. to achieve fiscal neutrality this could be done via private sector pre - funding or via a mechanism that would re - reimburse any loans from the srm ex post via a bank levy. in this way recourse to taxpayer funds could be limited and remain temporary for the srm. the european council has decided to entrust the ssm to the ecb. this has been seen by some as a testimony to the credibility that the ecb has built up as an institution. others regard it as a poisoned chalice, which might put into doubt the very credibility and independence that the ecb has earned itself in the monetary domain. with the ecb set to assume supervisory responsibilities, indeed much has been made of possible conflicts of interest between monetary policy and financial stability, and supervisory tasks in particular. to my mind, such conflicts are pertinent and should not be ignored. hence it is essential that the ssm and all reporting lines for supervisory functions to the bis central bankers β speeches | bandid nijathaworn : risk management and pillar ii implementation opening address by dr bandid nijathaworn, deputy governor of the bank of thailand, at the fsi - seanza regional seminar on the implementation of the supervisory review process ( pillar ii ) of basel ii, bangkok, 21 - 24 april 2009. * * * distinguished speakers ; and colleagues from seanza central banks and regulatory authorities, let me begin by extending a warm welcome to all of you to bangkok, and on behalf of seanza members, i would like to express our appreciation to all the speakers, as well as the fsi, for their contributions to make this fsi - seanza regional seminar on the implementation of the supervisory review process possible. this is all the more so as this seminar had to be rescheduled from last year, and in this regard, let me express our commitment that the bank of thailand stands ready to facilitate you and ensure that your experience here will be a fruitful and enjoyable one. ladies and gentlemen, the current global financial crisis underscores the need to strengthen risk management and risk - based supervision, so that we can deal more effectively with the increased complexity arising from both financial product innovation and increased interconnectedness between financial institutions. as for the current crisis, while many causes have been identified, what has become very clear is that financial institutions, capitals were not adequate given their risks, and this had allowed over - leveraging by financial institutions as well as by their customers, leading to over - indebtedness and asset price bubbles. the issue, therefore, underscores the inadequate risk management, covering the entire process : from the lack of proper risk measurement, especially with regard to complex product, as well as liquidity risk, to inadequate risk management and control, and to micro - prudential risk - based supervision. in addition, there is now greater attention being paid to the importance of macroprudential approach, in recognition of the risk from procyclicality and interconnectedness of institutions, especially the large and highly complex financial institutions. also, greater recognition is given to the problem of the unregulated shadow banking sector, like the hedge funds, which are also key in systemic risk process. all these issues pose a major policy challenge, as indeed the various working groups and committees of the bis are now working on the guidelines, and on the key issues such as accounting, valuations, procyclicality, and | 0 |
assist firms in adapting to the effects of climate change. as the financial sector is dominated by the banks, climate change may result in physical and transition risks that could affect the safety and soundness of individual banking institutions, and have broader financial stability implications for the banking system. banks are potentially exposed to climate - related financial risks regardless of their size, complexity or business model. to the central banks, regulatory authorities, financial institutions and other policymakers, has emerged the needs to take actions in response to those challenges. central bank of the republic of kosovo is committed to strengthening its efforts to improve the resilience of the financial system to climate - related and environmental risks. to address climate - related financial risks within the banking sector, the central bank of the republic of kosovo supported by the program of world bank / finsac has drafted a strategy and established a cross - sectorial working group to contribute to strengthen the regulation, supervision and practices of banks. actions by the central bank of the republic of kosovo to address climate and environmental risk will be toward strengthening regulatory framework toward eu regulations and directives, and basel standards, strengthening supervisory practices, encompassing the assessment and full understanding of the banks'exposure to climate risks using scenario analysis, and where applicable, stress testing. central bank of the republic of kosovo will work on building internal capacities, increasing the cooperation with domestic institutions, responsible for climate change mitigation and adaption, considering the international commitments of the republic of kosovo. to help the contribute to this direction, financial literacy and broader communication through participating in international conferences β like this today β workshops, forums for broadening the expertise and knowledge in the area of climate risks, is part of the cbk strategic plan. addressing the esg aspects, has multiple benefits for the entire economy and contributes substantially to reducing or preventing the adverse impact of the current or expected future climate risks, promote foreign investment opportunities, attract new investments and financing and shift the current credit exposures from the traditional sectors toward green and sustainable financing. i wish for fruitful discussions, during the three panels of such very interesting topic, and enjoy the stay in prishtina. 2 / 3 bis - central bankers'speeches thank you! 3 / 3 bis - central bankers'speeches | vitor constancio : interview with bloomberg tv interview with mr vitor constancio, vice - president of the european central bank, and bloomberg tv, conducted by mr paul gordon on 17 may 2018. * * * i β m here with vitor constancio, a man who has been at the heart of ecb policymaking basically since the birth of the euro almost two decades ago. for the last eight years he β s been vice - president. his term expires this month, but over that period, dating back to the all - too - brief period of calm between two recessions, he β s been through the unfortunate rate hikes of 2011, quantitative easing, negative interest rates and the rescue of the euro area from deflation β or the threat of deflation at the very least. today, when the governing council is almost, but not quite, ready to talk about exiting stimulus, vice - president vitor constancio is with me today. it β s been quite an eight years, and here we are : you β re about to go at a critical moment, because the economy is slowing. how worried are you? just a slight slowdown so far β which, by the way, was expected. you may recall that the staff projections that were published, after the high growth of last year, already pointed to a certain deceleration. so, what is happening is still within the bounds of the staff projections for the whole year, which nevertheless forecast growth above 2 %. the deputy governor of the finnish central bank, olli rehn, who is tipped to, is likely to join the ecb, has been nominated to do so, he says the medium - term outlook is tilted towards the downside. that β s not quite the same as the ecb says. i have not read what he said, but let me remind you : the projections that have been published, they foresee a growth rate for next year around 2 % and then 1. 7 % for 2020. indeed, on a path of deceleration, because for demographic reasons and other reasons, potential growth is not very high in europe β by the way, not also in other advanced economies. we have been growing above potential, especially last year, this year also. of course, as the output gap closes, we are reverting to potential growth. are you still comfortable with market expectations, which are roughly for an end to qe β to net | 0 |
##shadowed sarbanesoxley. today, however, much of fdicia has been forgotten. the reason? at many financial firms, bankers struck the theme of β never again β. that conviction spurred them to identify lessons learned and institute stronger controls on commercial real estate lending and buyout lending and maintain them. one sign that the effort mattered appeared as the commercial real estate market heated up later in the 1990s and lending terms started to loosen. deal flow came to a near - standstill as the controls established in the early 1990s kicked in. the market only resumed when underwriting standards retraced their way back to higher ground. so, as we benchmark progress in the recovery of financial institutions from the recent financial crisis, one area stands out. the early 1990s supervisory program comprised strengthening capital and liquidity, identifying problem exposures and placing them in workout, and developing a new business plan β there is one area where more progress will need to be made. the international community of supervisors has done a great deal to address the need for more and better quality capital through new capital standards. the identification and workout of troubled assets has made significant progress, which we can observe in the recovery of markets for some troubled assets. but global financial firms are still working on the new business plan. from the financial press, it β s clear that many large financial companies have been rethinking their strategies, often along the lines of increasing the focus on nonfinancial businesses and households and reducing the focus on expanding capital markets businesses. but i believe we are more at the beginning than toward the end of that process of reconsideration. in my personal view, the reconsideration of business plans needs to incorporate the longterm macroeconomic and technology trends even as they incorporate the lessons learned from the financial crisis. those business plans need to look ahead five years or more to position the financial firms and, with them, the financial system for the opportunities and risks that lie ahead. we will need to meet the long - term challenges of changes in the global macroeconomy, the distribution of growth opportunities and the distribution of wealth, and the speed and power of technological change. bis central bankers β speeches since so much opportunity has developed elsewhere in the world, how will the public sector reform agenda impact the global banking activities of financial institutions? we do not know yet how the reform agenda will affect the international activities of g - sifis, although we can see some early indications. | to meet capital needs. another long - run macroeconomic force has gathered substantial momentum in the last decade : the shift of income, wealth and economic energy from the so - called advanced economies of the united states, japan and europe to the so - called emerging economies. ten years ago, the emerging market countries accounted for about 20 percent of world gdp β the advanced economies 80 percent. today the proportion is 40 / 60, and the emerging market countries continue to grow substantially faster than the large advanced economies. yes, china is an important component of that growth, but the trend reflects strong performance in recent years in many regions of the world outside the advanced economies. a further long - run force, seen as the most disruptive, is technology. at one time, the financial system, perhaps until the 1970s or 1980s, played an important role in searching for savers / investors to contribute to financing those major investments. much of the work of identifying and linking the sources and the uses of funds has been facilitated or even taken over by technology β just think of the ubiquity of trading platforms, screens, and financial news and, beyond that, the increasing automation and artificial intelligence applied to credit evaluation, financial analysis, and trading activities. i mention these three long - run forces because the financial industry has been and still is adapting to these trends. indeed, the major transformation in the u. s. financial industry that bis central bankers β speeches occurred in the course of the 1980s and 1990s β the development of over - the - counter derivatives markets, the shift toward a larger role for securities markets relative to banking markets β was just such an adaptation to the long - run forces of change. the shift reflected the growth of institutional wealth and the power of technology, ubiquitous information and expanded financial know - how. in 1986, the derivatives markets were still nascent and securitization had just begun to spread outside the mortgage markets in the united states. at that time, a task force of central bankers, the precursor to today β s committee of the global financial system, which reports to the global economy meeting of 31 central bank governors, published a volume titled recent innovations in international banking. 1 the report was notable for being among the first to describe what was then a set of new financial instruments, such as over - thecounter derivatives and the expanded use of financial options. the study noted the tremendous momentum behind the 1980s wave of financial innovation, the likelihood of those forces continuing, and the changes already | 1 |
bank which we bury tonight, have a common in - house culture of anonymous letters. if poison - pen letters and anonymous tracts were also, like field and track events, an olympic discipline, the bank of mauritius would have won a gold medal a long time ago! well before the current avalanche of sleaze allegations and malpractices targeting my person. it pains me to see the time and resources spent by some disgruntled staff in tarring management β s image. but i must say that i often admire the fertile imagination and creative instincts behind some of these concerted attacks. it is sadder still to see some of these smear reports being taken up by the mainstream press. your bank would probably have got home with a bronze medal for the preposterous allegation that an unnamed high official of the bank of mauritius has bribed your ceo for some unfathomable reason. you must be wondering what happened to the silver medal. let me tell you that this would go to an equally nasty piece of work alleging that a senior member of the political establishment and one family member are involved in money laundering. now all these crossed my desk in the last four weeks. this must have been the kind of thing which malcolm de chazal, a famous mauritian artist, writer, philosopher β and the closest we have had to a polymath β was referring to when he said that β a maurice on cultive la canne a sucre et les prejuges β. now, there β s a culture that we could do without. but these are mere diversions. they may detract us. but they certainly do not distract us from the mission and the mandate that are ours. we at the bank of mauritius have been advocating a culture of transparency for greater accountability. we have been canvassing the idea of establishing a select committee of the national assembly for hearings of the governor and his associates on the bank β s policies and strategies. we believe this will help to clear the air and expose the sensational headlines to more rational debate. indeed, we have plenty of reason to be satisfied with our record so far. this is not the time or the place to give you chapter and verse of all the changes that we have brought since assuming office in february last year. it will have to wait for another day. despite the gloomy tales from abroad of the demise of the banking sector here, in mauritius we can take some pride and comfort that, in | . and fifth is the need for further reforms to reduce bottlenecks and increase productivity. except for the much - needed increase in our domestic savings rate, now alarmingly below 15 % β or nearly half its historical peak β the measures are of a structural nature and not within the domain of monetary policy. the bank has long been fighting to normalise interest rates to induce a greater savings effort but much of the time, as you are aware, it has unfortunately been a losing battle. 14. to return to the question put, can the past mauritian β miracle β β be extended into the future? how are our institutions faring? are we getting the best from our state - owned enterprises? they command such a large chunk of our national resources that they impact national competitiveness. are we doing enough bench - marking with the best in the world? how far are our firms cutting costs, increasing competitiveness, and improving productivity? embarrassing as some of the answers may be, such questions must be confronted head - on so that β the miracle β, if such it is, can be projected for generations to come? 15. the message of the past is adaptation or disaster. in the last two decades, in both commerce and banking, we have been confronted by seeming miracles of technological change. we have had the microchip, the fibre - optic cable, the world wide web, satellite media, the smart phone, cctv systems, videoconferencing, call centres, on - line sales, nano - technology, and so on and on. some of you have been quick to pick up the kit and adapt it to your needs, but much of the old mauritius still surrounds us, with a reluctance to change. svirydzenka k., and m. petri, β mauritius : the drivers of growth β can the past be extended? β, imf working paper, october 2013 bis central bankers β speeches innovations in banking 16. in banking, i am pleased to report, we are in the midst of, not merely a spring cleaning, but a veritable banking reformation. it is a reformation that embraces the instant digital process of trade in bills of exchange, letters of credit, and the emergence of a global payments and settlements system. mobile payments, electronic wallets, and internet banking are here to stay. we are moving into paperless banking and, indeed, to a cashless society. a new digital currency, bitcoin, made | 0.5 |
the visayas region, the security thread of the 200piso banknote changes colors from green to blue. lastly, the 100 - piso was designed after an indigenous textile from the bicol region and with colors that shift from violet to bronze. all these banknotes also have three - dimensional and holographic features. in addition, the 1000 - piso and the 500 - piso banknotes feature design elements that use optically variable ink, which enables change in color when viewed at a different angle. the value panels of these two banknotes were added with a rolling - bar effect when tilted from left to right, and vice versa. finally, a distinct security feature will help us achieve our mission of bringing bsp closer to filipinos. we added tactile marks to the banknotes specifically intended to help the elderly and 1 / 2 bis central bankers'speeches visually impaired to quickly identify the value or denomination of the banknote. pairs of short horizontal bands are printed in intaglio or engraved at the extreme right and left sides of the note. a 1000 - piso has five pairs of this tactile mark ; the 500 - piso will have four pairs ; three pairs for the 200 - piso ; two pairs for the 100 - piso ; while a 50 - piso will have one pair of tactile marks. through this distinguishing feature, the elderly and the visually impaired will be more confident in using the banknotes for their transactions, paving the way for financial inclusion. needless to say, our banknotes are the treasure of our nation β as we always remind the filipino public, β ingatan natin ang ating salapi, salamin ito ng ating yamang lahi. β let us all do our part in preserving and safeguarding its value. maraming salamat at magandang hapon sa ating lahat! 2 / 2 bis central bankers'speeches | benjamin e diokno : launch of enhanced ngc banknotes speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the launch of enhanced ngc banknotes, manila, 29 july 2020. * * * to the members of the monetary board, bsp officers, our friends from the bsp press corps, ladies and gentlemen, good afternoon. today, we unveil the enhanced set of banknotes under the new generation currency series. these banknotes are equipped with the latest anti - counterfeiting technology and embedded with tactile marks that will make it easier for the elderly and persons with disabilities to differentiate each denomination. as you may remember, the bangko sentral ng pilipinas released in circulation the new generation currency banknotes series in december 2010. as a matter of practice, central banks regularly change the design and security features of currency to protect its integrity every 10 years, on average. while digital payments are on the rise, there are still some sectors in our society that use cash to purchase goods and pay for services. and it is equally our priority to ensure that banknotes and coins are accessible, recognizable, and easily authenticated. irish poet oscar wilde once said that when bankers get together for dinner, they discuss art. when artists get together for dinner, they discuss money. as a central banker, i consider our money as a piece of art β an artistic creation that reflects the soul of its nation. and the enhanced ngc banknotes are so art - fully made that even the security features are cleverly incorporated to become part of the overall design theme. for these enhanced ngc banknotes, we adopted four security enhancements that would help protect the public from counterfeiters and uphold the bills β integrity. the windowed security thread, which runs vertically across the banknote and shows the movement of designs and color when viewed from different angles, has an indegenous weave design. the thread also bears the alphanumeric denominational value and the text β bsp β in a repeated series. the 1000 - piso adopted the t β nalak weave design with the movement of design patterns, color, and micro - optic features. on the other hand, the 500 - piso took its weave design from the southern philippines. when viewed at a different angle, the color of the thread shifts from gold to jade, and vice versa. following an indigenous textile design from | 1 |
all these aspects in the running of the central bank. we also see diversity and inclusion as vital to ensuring we have the right mix of people to deliver our complex and diverse mandate and that all our people have the chance to reach their potential. conclusions let me conclude. in these remarks, i have pointed out that the development of the european and irish financial system in the coming years turns critically on major policy decisions. for the eu27, the potential gains from the deepening of banking union, capital markets union and monetary union require policy makers to move forward in taking the steps required to facilitate further cross - border integration. at the same time, the extent and nature of international trade in financial services between the eu27 and uk financial systems ( and vis - a - vis other parts of the global financial system ) will depend on the outcome of the current negotiations. under all scenarios, the central bank of ireland stands ready to fulfill our mandate to safeguard stability and protect consumers. the consistent application of a core set of principles will guide our regulatory and supervisory work, such that firms know that we will maintain our focus on ensuring that regulated entities meet our expectations and are subject to robust supervisory engagement. finally, let me congratulate the organisers of the european financial forum on putting together an excellent programme : it will be a fascinating and stimulating day for all participants. acknowledgements : i thank eoin battigan, lorna bowles, sean fitzpatrick and siobhan kirrane for their assistance in preparing this speech. 4 / 4 bis central bankers'speeches | removing this cloud. over the previous few months, we at the central bank have been making a careful assessment of the likely bank loan - losses that are in prospect over the next few years. this is over and above the valuation work being carried out by nama, and which gives us a good fix on the likely recoverable value of the larger property loans. we have been working on the non - nama loans and figuring out their likely performance as they suffer from the impact of the overall economic downturn β part of it of course attributable to the global crisis, and not just to the bursting of our own bubble. this exercise involved working with the banks, but challenging their estimates of loan - loss based on our own more realistic β some may say pessimistic β credit analysis. ( i am over - simplifying the exercise, as it also looked at other elements of the profit and loss account over the coming years ). the conclusions of this exercise are worth emphasizing. to my relief, and slight surprise, it turns out that most of the banks started the boom with such a comfortable cushion of shareholders β funds that they would be able to repay their debts on the basis of their own resources. this includes the two big banks. it is because of this fact β that their shareholders β funds will remain positive through the cycle β that one of them, bank of ireland, has already been able to tap the private market for an additional equity injection. of course they do need additional capital to move forward, but, as has happened in the us and elsewhere, the government β s capital injections of last year into these two institutions looks like being well - remunerated. this takes account of the low prices being paid β much lower than originally envisaged β for the loans being transferred to nama. the nama purchases replace risky property - related loans with risk - free nama bonds and are part of the process of putting them on a solid foundation. by the way, knowledgeable experts on the property market assure me that, at the low prices they have paid, that organization now has a good chance of breaking even over the coming years, as indeed has been its stated intention all along. having calculated their likely future losses, we have now required the banks to rearrange their affairs to ensure that they have ample capital reserves to ride out this period of losses. they are responding with plans that raise additional capital reserves and reduce the scale of their less central activities | 0.5 |
bostjan vasle : opening address for governor madis muller's lecture opening address by mr bostjan vasle, governor of bank of slovenia, for governor madis muller's lecture entitled " why is inflation so high and so different in different euro area countries? ", ljubljana, 3 march 2023. * * * the spoken word applies. ladies and gentleman, esteemed colleagues, good morning and welcome to banka slovenije, and also to all of you following us over the video link. it is my great pleasure today to have the opportunity to host my dear colleague mr madis mueller, governor of the bank of estonia. * * * the topic of his lecture will be inflation. more precisely, identifying the drivers of elevated inflation and why there are such big differences in the level of price growth rates between member states. according to the latest data, published yesterday, the lowest rate of inflation in february was recorded in luxembourg, 4. 8 %, and the highest in latvia, with 20. 1 %, while the average rate was 8. 5 %. estonia recorded an inflation rate of 17. 8 % and slovenia one of 9. 4 %. these are all - time - high inflation differentials within the euro area. needless to say, these are figures which are uncomfortably high, for households, enterprises and, sovereigns alike. and the increased public concern about inflation is also reflected in the results of the autumn eurobarometer survey, where more than 90 % of europeans ranked the rise in the cost of living as the number one issue of concern. and of course it is also a concern for us central bankers, whose mandate is price stability. * * * that is why we reacted already last year, when inflation increased further after the russian aggression on ukraine, with all its consequences for global markets and prices. let me briefly remind you that just one year ago our policy was still very accommodative, with our main interest rate at - 0. 5 % and expanding programmes of asset purchases, pepp & app. then in april, we changed course, firstly by ending net purchases under pepp, followed three months later with ending net purchases under app. 1 / 2 bis - central bankers'speeches in july, we raised our main interest rates for the first time in about a decade. firstly by 0. 5 percentage point to 0 %, followed by two increases of 0. 75 percentage point each, followed by two increases of | the number of business failures that usually follow an economic downturn. we helped to 1 / 3 bis - central bankers'speeches set the stage for the rapid economic rebound that has followed the reductions of pandemic - related restrictions in the third quarter last year and in recent months. * * * the economic recovery is strong, but new waves of the pandemic may slow it down. the priority of economic policies is to continue providing support to the economy until the recovery is set to last and uncertainty subsides. however, as the pandemic has been with us for quite some time now, it is important that policy support is targeted at the most affected and vulnerable households and businesses and that it does not hamper structural adjustment, as this could undermine productivity growth, which has slowed markedly in europe over the last 25 years. the main operational challenge is how to distinguish between viable and nonviable businesses. for those that have dismal chances of survival, it is necessary to prepare the ground for the most efficient liquidation process. it is important that capital is freed up and directed to promising activities and that workers who are likely to lose jobs are equipped with the skills for reallocation as soon as possible. the eventual unwinding of the remaining pandemic support measures should be gradual and guided by stable improvement in economic data. in the medium term, fiscal and monetary policy will need to begin rebuilding space to address future shocks. however, planning for necessary structural reforms, to the pension and healthcare system, for example, should start as soon as possible, as their implementation usually takes time. * * * the european banking system remains resilient, as shown by recent stress tests carried out by the eba and the ecb. its solid position reflects, among other things, the cleaning up of balance sheets, recapitalisations, and strengthening of regulatory and supervisory frameworks after the previous financial crisis. the path of strengthening the resilience of the banking system is not yet complete, however. it is therefore necessary to continue towards the completion of the banking union and bank resolution framework, including a common backstop, and with harmonisation of national insolvency laws. as the health and economic situation stabilises, additional attention should be paid to the long - term challenges of many european banks, namely low profitability and the issue of sustainability of bank business models. as the recovery continues, banks will continue to play an important role in financing businesses and households. | 0.5 |
the first category β to raise resilience β macroprudential action has especially contributed to strengthening bank capital positions. capital ratios of significant banking groups have already markedly increased from a median common equity tier 1 ( cet1 ) capital ratio of 7 % in 2008 to 12. 8 % at the end of 2014. this strengthening has been spurred by the preparations for the single supervisory mechanism and the conduct of the asset quality review last year. in addition, a number of macroprudential authorities in the euro area have activated three types of capital buffers : the buffer for global systemically important institutions ( g - siis ), the one for other systemically important institutions ( o - siis ) and the systemic risk buffer ( srb ). such buffers are intended to address the problems stemming from too - big - to - fail institutions, large, concentrated and interconnected banking sectors, as well as specific structural risks deriving for instance from exposures to areas affected by geopolitical tensions. bis central bankers β speeches as for the g - sii buffers, seven globally systemic banks from four euro area countries have been identified. 5 national authorities have overall also identified thirteen other systemically important banks building on the eba guidelines. 6 these are five for slovakia, four for the netherlands and four for finland. other countries will announce their global and other systemically important banks soon and capital buffers will gradually be phased in. in addition, estonia and the netherlands have already adopted systemic risk buffers to counter those risks emerging from groups of banks with similar business models. these three capital buffers address risks linked to the structural features of the banking system. they raise resilience and are applied in a static way. countercyclical capital buffers and dynamic loan provisioning, instead, can address cyclical features by increasing capital requirements when systemic risks build up. 7 until now, no ssm country has adopted positive countercyclical capital buffers given the prevailing subdued position in the credit cycle. but should stronger credit growth imply excessive risk - taking, the cyclical buffers are fully implementable in all ssm countries starting in 2016 to mitigate the upturn of a credit - driven financial cycle. in the second category, covering measures to address potential imbalances in the real estate sector, there have also been a number of initiatives. as mentioned, valuation metrics suggest that prices are generally still in line with fundamentals. estimates for the euro area as a | otmar issing : a framework for stability in europe speech by professor otmar issing, member of the executive board of the european central bank, at the university of london, european economics and financial centre, london, 19 november 2004. * 1. * * introduction the formation of economic and monetary union ( emu ) has created a framework for economic policy - making in europe which is unique in history. while the single monetary policy is oriented towards a union - wide objective, namely the maintenance of price stability, the other policy areas involving fiscal and wage policies - largely remain the competence of national governments and other national actors, such as the social partners. the combination of a centralised monetary policy and decentralised other policies has led to the evolution of a new set of rules and objectives for national and supranational policy - makers. the maastricht treaty and the secondary legislation, including the stability and growth pact, established the basic set of rules and objectives to lay out a framework for stability in europe. 2. responsibilities under the β maastricht assignment β with regard to monetary and fiscal policies, the assignment of responsibilities is defined by the maastricht treaty and the stability and growth pact, respectively. the treaty has assigned the maintenance of price stability as the primary objective to the single monetary policy conducted by the ecb for the euro area as a whole. without prejudice to its primary objective, the ecb shall support the general economic policies in the european community. for fiscal policies, which continue to be largely a national responsibility, the treaty sets out a framework of surveillance and disciplining mechanisms in order to maintain sound public finances. these indispensable cornerstones of the institutional framework agreed in maastricht have been confirmed by the constitution recently signed by the heads of state and government in rome. the stability and growth pact, which was agreed by all governments in 1997 after the signing of the maastricht treaty but before the launch of the single currency, sought to provide additional incentives for maintaining fiscal discipline at the national level by operationalising the excessive deficit procedure of the treaty. it also specifies a commitment to achieving medium - term budgetary positions β close to balance or in surplus β and incorporates multilateral surveillance procedures and the exchange of information in conjunction with medium - term stability programmes submitted by national governments. assigning the overriding objective of price stability to the single monetary policy is an example of the benefits of a clear division of responsibilities between different policy | 0.5 |
certain extent, a natural consequence of the function they perform in the economy, but is also a strategic decision in some cases. there are two main factors behind the income squeeze. first, higher - yielding legacy loans are maturing and being replaced by ones generating lower returns. second, profits are falling because the spread between short - term and long - term interest rates is currently relatively narrow. added to this is the fact that deposit - based funding is significantly less attractive than it once was. the reason? while market interest rates continue to dwindle β even dipping into negative territory for some shorter - term maturities β the fierce competitive environment makes it very difficult for banks and savings banks to pass negative interest rates on to retail customers. corporate clients, too, are anything but thrilled by this idea. we can therefore conclude that profitability is exceedingly weak among german banks and savings banks, even by international standards. that β s nothing new, but the low - interest - rate environment is exacerbating the situation. 2. 2 no silver bullet in sight but in the current situation, reversing the slow downward trend and putting income back on a more sustainable footing is no easy task. broadly speaking, banks have five levers that they can use to increase their profit margins. let β s briefly go through these five options and examine how well they would work in the current climate. the first lever is to utilise interest rates at the short and long end of the yield curve. typically, the interest rate on an investment will rise as its tenor increases. so banks can boost their returns by issuing longer - term loans or making longer - term investments. we are currently seeing this effect in germany in the case of mortgage lending. up until around three years ago, long - term mortgages β that is to say, those with terms of more than ten years β made up around 30 % of new business. by the end of last year, the share of long - term mortgages had already crept up to around 45 %. however, this move comes with two disadvantages. first, if banks use short - term funding but lend over the long term, they could run into difficulties as soon as interest rates rise again. longdated, mark - to - market assets would then lose value, while funding costs would mount on the liability side. in a nutshell, institutions would be exposed to heightened interest rate risk. second, 2 / 7 bis central bankers'speeches since long - | so they argue β could create market distortions and large risks for the eurosystem β s balance sheet. the eurosystem is taking this criticism seriously. however, it should be duly noted that, throughout the difficult times of the financial and sovereign debt crisis, the broad collateral framework was regarded as a great institutional strength of eurosystem β s monetary policy. while the pledged collateral has successfully protected the eurosystem from financial losses, at the same time the collateral framework has been flexible enough to preserve the eurosystem β s ability to support market functioning and provide liquidity to the banking system in times of stress. the eurosystem thereby fulfilled one of the core functions of a central bank. 3. 2 regulation as is apparent from the agenda of this conference, regulatory issues have become a crucial factor in financial markets, cropping up in almost every agenda item. in the aftermath of the financial crisis, national and european regulatory initiatives alike have mushroomed. in a nutshell, the regulations involve stricter rules for capital, stricter provisions for risky transactions, and higher administrative burdens. at the bundesbank, we are fully aware of these strains and the potential drawbacks of regulatory requirements. liquidity in the bond and repo markets has decreased, also β but not only β because of new regulations. moreover, the higher required capital ratios will increase banks β cost of capital while banks β earnings are currently compressed. this is making it difficult for banks to raise further capital, which is why they may respond to regulatory requirements by deleveraging. this, in turn, may well have negative effects on market liquidity. at the same time, it is evident that well - designed regulatory measures will help make the financial system more stable. the ultimate aim is to make financial markets more resilient and crisisproof in the future. higher resilience will restore market and customer confidence in banks. this 5 / 7 bis central bankers'speeches is intended partly make up for the higher costs of capital and allow banks to attract more customers and funds. in the long run, a stronger capital base can be expected to enhance banks β loan origination capabilities. these are thus positive effects of regulation which need to be recognised. i am convinced that we need effective and well - targeted regulation. this also means that we need to closely monitor all effects β intended and unintended β and consider making adjustments, if necessary. but even if targeted adjustments are made to the regulatory framework, i believe | 0.5 |
speak too soon for the wheel β s still in spin β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦. the loser now will be later to win for the times they are a - changin β. it is only some months ago that a lot of writers and critics β prophesized β that, in an era of globalisation, inflation is, and should not be, a cause for concern among monetary policymakers. with the benefit of hindsight, though, they should have followed bob dylan β s advice : β but don β t speak too soon, for the wheel is still in spin β, as inflation has reappeared on a global scale. moreover, in the face of the global financial turbulence of the past months, the debate in the media has switched from being about a β goldilocks environment β to the inherent risks of entering a period of perceived stagflation. considering that β the times they are a - changin β β, as bob dylan put it, a medium - to longerterm perspective is of the essence. taking such a medium - term view, i have always been one of the sceptics with regard to the β globalisation = low inflation β - paradigm, notwithstanding the fact that the notion of β more globalisation equals lower inflation β is shared by many observers β or was, at least, shared by them until a few months ago. what is the underlying reason for this widespread assumption? evidently, since the beginning of the 1990s, the ongoing advance of globalisation has coincided with a marked decline in inflation rates and inflation volatility worldwide. it is not surprising that a causal interpretation has been given to these parallel developments with increased globalisation being seen as the agent that has driven down inflation rates. and, indeed, over the past ten years, price rises in manufacturing imports in the euro area have been rather subdued, thus dampening β other things being equal β the increase in the overall consumer price index. at first sight, this seems to support the view of β opportunistic disinflation β according to which globalisation has been a key factor in lowering inflation rates. however, the past few months, in particular, have shown that there are obvious reasons why many observers should have been more cautious before drawing such conclusions. in fact, globalisation does not necessarily only have a dampening effect on inflation. to the contrary, the opposite might be the case as well ; globalisation might be a major driver of inflationary pressures. the | credit has slowed down, public - sector demand has accelerated. the european commission projects that the euro area government deficit will increase from 2. 0 % of gdp in 2008 to 6. 4 % in 2009 and 6. 9 % in 2010. the increasing deficit has been met by a strong supply of credit from the banking system. euro area banks have been buying considerable amounts of government bonds over the past few quarters. this has taken place against a steepening of the yield curve. in the third quarter of 2009 the difference between the yield on longer - term euro area government bonds and the threemonth inter - bank interest rate was on average 308 basis points. this is the largest gap since 1980. it suggests that the funding costs for banks have become favourable relative to the yield on longer - term investment such as government bonds. overall, the recent purchases of government bonds by euro area banks have not been out of line with what we would expect, given the current circumstances. historically, bank purchases of government debt securities have shown a strong correlation with the steepness of the yield curve. banks regard the purchase of government bonds as an attractive strategy, for when making such purchases they park liquidity while demand for loans remains subdued and at the same time they make their portfolios less risky. beyond the influence our policy has had on the yield curve, the available evidence does not indicate that our liquidity support has led to excessive purchases of government bonds by banks. to sum up, the divergence between slow credit flow and buoyant trading by the banking system seems to be in line with historical experience under comparable conditions. the current low level of interest rates is consistent with the analyses conducted under the economic and monetary pillars of the ecb β s strategy, which point to the absence of inflationary pressures. the question is : how long can low levels of interest rates be maintained without creating distortions in the efficient allocation of funds by the financial sector, and possibly endangering price stability? this is at the heart of the exit strategy. before turning to it, let me make a few remarks about the divergent behaviour within the financial sector, especially in banks. the challenge for other policies as i just mentioned, it is no surprise to see a slowdown in credit flows at the same time as a pick - up in trading. to some extent this divergence is desirable because a sound financial system is the key to a sustainable recovery. still, it might create undesirable volatility in financial markets | 0 |
fund crisis in 1998 illustrated not only the risks of the spill - over of crises in emerging areas but also the fragility created by the advent of new players and the development of financial derivative instruments. this fragility was further underscored by the failure of enron in 2001. what are the prudential issues at stake in the recent developments in financial markets, particularly in the greater interdependence of national markets, the emergence of new instruments and new categories of economic operators in a context of increasing trading volumes? to find answers to some of these questions, the last session will take the form of a round table bringing together speakers from mature and emerging economies at different stages of integration into international trade, be they central bankers and / or from the private sector. it will afford an opportunity to discuss the consequences of the increasing global imbalances on international financial stability. stanley fischer will then provide a summary of the day β s work. it remains for me, ladies and gentlemen, to express my wish for this symposium to enable the further development and convergence of assessments of the current state of affairs and of economic policies. i wish you a fruitful day of discussions and now give the floor to president jean - claude trichet. | of exports of products that are in high demand. second change : the advent of new players in international trade of goods and services and international division of labour. of course, this is not an unprecedented development β it has occurred several times since the second world war, with japan and also with the newly industrialised asian countries. it has nevertheless taken on a new dimension due to the newcomers β size and competitive edge, the liberalisation of capital flows and the decrease in transport and communication costs. the new international division of labour thus affects every stage of the production process ; it influences the localisation of added value and raises the question of the financing of the external imbalances of economies that focus on the design and marketing of products rather than their manufacture. the second session will deal with the impact of trends in productivity and competitiveness on international capital allocation and global imbalances. these trends may have contributed to the increase in global imbalances reflected in current account balances, and highlight several paradoxes. the first paradox is that of the us economy, which combines the structural surge in its productivity with a possible loss in competitiveness illustrated by the increase in its external deficit. this paradox is perhaps only apparent if we consider that the improvement in the us β relative productivity performance is mainly in the non - tradable sector and as compared to the industrialised rather than the emerging economies. in addition, while this pick - up in productivity does boost the profitability of investments, logically, it goes hand in hand with an excess of investment over national savings that calls for increasing foreign capital inflows. however, the predominant nature of capital inflows to the united states changed at the start of the 2000s, switching from mainly purchases of equities and foreign direct investment by the private sector to purchases of government securities by central banks, which are not motivated by the search for increased profitability. this leads us to the second paradox, a twin to the first, i. e. financing mature economies β expenditure with world savings. does this situation correspond to the efficient allocation of capital and if not how do we explain it? more generally, is there any likelihood that a chain that hinders balancing mechanisms has been established? the foreign exchange intervention operations carried out by several central banks help to finance the us budget and external deficits. in the united states, the corresponding maintenance of long - term interest rates at a low level fosters the us domestic savings - investment imbalance. in the asian countries, | 1 |
in underlying terms. when we look out to june 2000, our guess for the cpi is 2ΒΎ %, with 2ΒΌ % for underlying. on unemployment, we have also not changed our view. when we met last time, the unemployment rate had been averaging 7Β½ %, and we expected it to edge down over the remainder of the year. this is what it has done, so that now it has averaged 7. 2 % over the past three months. we expect that it will go down further so that we will see some numbers less than 7 by june next year. the balance of payments has also turned out very much as expected. for quite a while, we had been forecasting the quarterly current account deficit to reach 6 % of gdp, and it finally did so in the june quarter and will probably remain at about this level through this financial year. it was surprising that the current account did not deteriorate faster and further, given the disparity between our growth rate and that of our trading partners. while the slowness of the deterioration has been a pleasing development, we think that the improvement could be some time in coming. in summary, we are expecting that the current financial year will be another good one for the economy. growth will be a little lower than its recent peak, but still good, and inflation should be within the average we aim for. considering that this is the ninth year of the expansion, such a result would mean that no major imbalances had emerged. the aim, as usual, is to keep the expansion going and to avoid the emergence of problems that would threaten its continuation. monetary policy this brings me to monetary policy. the most important development here was the tightening immediately after our november board meeting when the overnight cash rate was raised from 4. 75 % to 5 %. while i think this adjustment has been quite well received by the community, it is still worth spelling out some aspects which lay behind the decision. i would like to start by putting it in the international context, not because we have to follow what other countries do, but because there are some international developments that are a common background to all countries. one such development was the changed perceptions about the world economic outlook in 1999 and 2000. if you remember, 1998 was a weak year for the world economy, largely because of the widespread fallout from the asian crisis. at the beginning of this year, things looked as though they were getting worse, and most forecasters β public and private β | to argue against it on the grounds that we should not act until our inflation forecast clearly exceeded 3 % would be to argue for a very β stop - go β approach to monetary policy. it would be equivalent to saying that the most expansionary setting reached during the downward phase of the interest rate cycle should be maintained until such time as a move to a clearly restrictive setting is required, and only then should a move be made. this would virtually guarantee that such a move would be a large one. what about the gst? not everyone will be convinced by the arguments i have used above. some people still cannot understand why you would tighten unless the economy was overheating, and assume that there must be a hidden agenda. others are keen to play the old game of trying to find a political dimension to monetary policy. this has led to claims that the real reason is our fear of the inflationary effects of the gst, but that we are too diplomatic to say so. i am sorry to disappoint the proponents of this view, but that is not the case. β’ if the gst was the reason for tightening monetary policy, why have the fed, the bank of england, the ecb, the bank of canada, the reserve bank of new zealand, etc. tightened monetary policy? as i have said elsewhere, i am not aware of the forthcoming introduction of a gst in any of these countries. β’ our starting point has always been that the imposition of the gst will affect the level of prices, but not the ongoing inflation rate. this will require that businesses do not engage in opportunistic pricing by raising their prices by more than is warranted by the net impact of the gst and reductions in indirect taxes. if that is the case, the gst should not have an effect on wages because wage earners will gain more from the accompanying fall in income tax rates than they will lose from the introduction of the gst. the net effect of the tax changes will be to increase the disposable income of wage earners by more than the increase in their expenditure, as is evidenced by the fact that the package involves a cost to the budget. β’ monetary policy is based on a view that inflation will be within the target immediately before the gst is introduced and that it will be back within the target a year later. this view, in turn, is based on the assumption that there will be no second round effects due to higher wage | 1 |
##ivating a culture of lifelong learning goes beyond setting aside a specific amount of budget for training every year. its ethos should be integrated with how the organisation operates β for example by featuring development as part of career progression, encouraging learning and exchange of knowledge in everyday workflows and processes, and creating opportunities for employees to reskill and upskill themselves. executive sponsorship is key and so the board and senior management must champion this agenda. equally important is the role of the board and senior management in preserving strong ethical standards and integrity throughout the organisation. fostering trust and credibility in our financial system is of the utmost importance to preserving public and investor confidence. our supervisory reviews over many years have found that institutions that are intentional and uncompromising in upholding high standards of governance and ethical conduct are far less likely to be exposed to financial and reputational risks. therefore, we expect the industry to be more deliberate in integrating strong ethics and sound risk culture throughout the organisation's operations to prevent abuse, misconduct and exploitation. to achieve this, the board and senior management must provide strong and visible leadership on the desired values and acceptable conduct not only for the institution, but also the industry that you are a part of. leaders must take direct ownership of the process for assessing and managing culture, and send a strong, clear signal that they do not tolerate fraud or predatory conduct. this must include the robust screening of prospective employees to prevent individuals that have defrauded 3 / 4 bis - central bankers'speeches institutions or customers from re - surfacing in the industry. this industry is built on trust and that trust depends on staff of financial institutions acting with integrity, honesty, transparency, fairness and empathy towards the public they serve. ladies and gentlemen, today's launch marks a major step in our journey to realise the vision for the fsf which we set out in the financial sector blueprint 2022 - 2026. but the work has only started. i hope that the fsf will inspire talent ecosystem stakeholders into action, not just to meeting today's needs but also the future skills required for tomorrow. my goal is for all to join us in this effort to develop a workforce that continues to better support the needs of the country. in keeping with a whole - of - nation approach, we will need the support of many stakeholders : equip individuals with skillsets that can ease entry into the financial sector through relevant offerings by tertiary education providers ; development of future skills taxonomy and job - skills matching platforms that | their dealings with customers. in a few months β time, the bank will be issuing an exposure draft on fair treatment of financial consumers which will set out heightened regulatory expectations for all players. agents will need to exercise greater care, skill and diligence in their dealing with customers. but rules and regulations are in themselves not sufficient to create a pool of agents trusted by customers : that would require all - round, holistic professionalism β an agent who is technically qualified, fully committed and uncompromising on ethical standards. to me, it is this integrity and calibre that will ultimately guarantee the continued success of agents into the next decade, more so than any other factor. faced with a more demanding and complex business environment, agents must continuously develop and equip themselves with skills and knowledge that are relevant, and that will continue to remain relevant well into the future. there are plenty of formal programmes available to help agents progress in their technical competencies. there is also a whole host of open online courses which can be accessed anytime, anywhere, with the desire to learn is the only prerequisite. it is encouraging that various professional training courses are already being offered through namlifa β s financial and life practitioners council, and that one of the programmes has been accredited by the financial accreditation agency ( faa ). going forward, i hope that we will see more industry - driven standards and protocols that will assure customers that they can only expect consistent, top - notch quality service from their agents β putting to rest any public doubts that may have been caused by the few β bad apples β in the sector. conclusion the three areas that i have just described will require, at its core, a strong willingness to learn and adapt. the uncertainties of the future may appear to loom large over the horizon. but if we take the time to consider the lessons of our past and circumstances of our present β which i am sure will be robustly discussed today β we are likely to be surprised by how much we already know of what we need and ought to do. in this regard, namlifa is well - positioned to play a proactive role in facilitating ongoing, constructive dialogues on important industry issues that will certainly demand a concerted response by all parties. new skills and capabilities must be developed, processes need to be redesigned, and assumptions need to be revisited. would the industry be better served were it to move away from the existing β tied agent β model? how should entry requirements and training offerings | 0.5 |
in our arsenal. then we would have location - based measures. let me tell you that i β m still a bit sceptical about focusing only on real estate prices. why? firstly, we must keep in mind that we have a mandate to ensure the stability of the entire financial system. secondly, stability in the real estate sector is not sufficient enough for financial stability in general. yes, trends in the real estate sector are extremely important. for prudential policy they are important to the extent that they relate to developments in credit, balance sheets of financial institutions and, the financial system as a whole. but at the same time β the real estate sector is not the only one to keep an eye on. imbalances in other asset markets, vulnerabilities in the banking sector β these also demand our equal attention. let us look at the expansion of credit which is most likely the culprit of β speeding β prices. some colleagues distinguish between β productive β and β non - productive β credit, because not every credit contributes equally to economic growth. a loan to finance a business is much more productive than a mortgage to buy an old apartment. non - productive credit instead of fuelling the economy might be felt as a heavy load. so should macroprudential policies be active in steering credit structure towards some desirable levels? for example, imposing different risk weights on different types of credit? what measures do we already have in order to start implementing such policy? today we will hear about prudential policy experiences in different countries. and i β m excited to open the floor to needed and well - targeted discussions. 2 / 3 bis central bankers'speeches i wish you an interesting day and fruitful exchange of views. and now i gladly pass the microphone to our keynote speaker, our good friend governor ingves. please, stefan, the floor is yours. 3 / 3 bis central bankers'speeches | speech by gediminas simkus at the joint webinar β investment in the baltics : from pandemic to war β 2022 - 05 - 20 joint bank of lithuania, bank of estonia, bank of latvia, and european investment bank webinar β investment in the baltics : from pandemic to war β 20 may 2022 welcome and opening remarks good morning, dear vice president ostros, governor muller, governor kazaks, dear colleagues and webinar viewers, a warm welcome to this joint webinar organised by the bank of lithuania, the bank of estonia, the bank of latvia, and the european investment bank ( eib ). 1 of 1 we are living in extraordinary times : just as the pandemic pressures started to ease, we got hit by another huge shock β the war in ukraine. let me stress that we stand in full solidarity with ukraine. to date lithuania welcomed some 51, 000 ukrainian refugees and is one of the largest donors of bilateral aid to ukraine in percentages of gdp. while we hope for a swift end to this unjustified war, currently the risks that the war in ukraine escalates remain high. we are experiencing an unprecedented degree of uncertainty. this is worrying, as numerous surveys and reports show that uncertainty is the largest barrier for private corporate investment in the baltics. fortunately, policymakers can address this. as we witnessed in the months following the outbreak of the covid - 19 pandemic, high quality and well - targeted public investment in times of high uncertainty enhances output. it also crowds in private investment, rather than crowding it out. the covid - 19 pandemic offered an opportunity for firms to become more digital. demand for electronic services rapidly increased, creating perfect conditions for expansion of electronic payment service providers. growth in electronic payments created value in the lithuanian financial sector. for instance, one of the lithuanian payments start - ups recently attracted an impressive 65 mln us dollar series a funding. the growing fintech sector also contributes towards solving the structural problem of concentration in the lithuanian financial sector. at the same time, business funding through crowdfunding platforms also gained traction. as pointed out in the eib investment survey that will be presented here shortly, total investment in lithuania rose to 5 % above pre - pandemic levels by the end of 2021. a similar pattern was observed in latvia, while in estonia investment in 2021 stood at staggering 30 to 40 % above pre - | 0.5 |
call the quantitative individual liquidity guidance ( ilg ). 17. bank of england financial stability report, june 2018 18. for example, see pra supervisory statement 24 / 15'the pra's approach to supervising liquidity and funding risks ', section 4 β drawing down liquid asset buffers, june 2015 19. see speech by jon cunliffe β learning from the dash for cash β findings and next steps for margining practices β, february 2022 ; and speech by andrew hauser β seven moments in spring : covid - 19, financial markets and the bank of england β s balance sheet operations β, june 2020 20. speech by andrew hauser β why central banks need new tools for dealing with market dysfunction β, january 2021 21. see financial stability board analysis on covid - 19 support measures. 22. bcbs ( 2021 ), β early lessons from the covid - 19 pandemic on the basel reforms β, implementation report. 23. for example, gerba and katsoulis show evidence for the period 2016 - 2020 that where banks were increasing lcrs, they reduced longer - term reverse repo lending against lower quality collateral. 24. bcbs ( 2021 ), β early lessons from the covid - 19 pandemic on the basel reforms β 25. bis ( 2022 ), β market dysfunction and central bank tools β, implementation report., markets committee paper. 26. the scenario was severe enough to force banks to use their liquid assets, but most banks had taken enough liquidity raising actions to come out of the stress period at above 100 % lcr ( the average lcr level is 140 % at the start of the stress period and 105 % at the end ). 27. bcbs ( 2021 ), β early lessons from the covid - 19 pandemic on the basel reforms β, implementation report. 28. for example, see eba ( 2021 ), β guidelines on recovery plan indicators under article 9 of directive 2014 / 59 / eu β 29. diamond, d w and dybvig, p h ( 1983 ),'bank runs, deposit insurance, and liquidity ', journal of political economy, vol. 91, no. 3, pp. 401 - 419. 30. the β historical lookback approach β ( hlba ) used to compute the risk of future margin outflows, relies on the margin flows over the previous 24 months to determine the hq | household inflation expectations and the breakeven inflation rate in the market entails risk premiums. the effect that the real rate has on domestic demand and inflation depends on what the equilibrium real rate is considered to be at any given time ; that is, the real rate that neither stimulates nor dampens the economy. the equilibrium real rate has probably fallen in iceland, as it has in most economies in the wake of the financial crisis, but exactly where it lies is highly uncertain. one of the monetary policy committee β s tasks is to attempt to assess it. it is normal that central bank interest rate should rise above equilibrium when a positive output gap develops and inflation is above target, but neither is the case at present. that being so, it was appropriate to contain the rise in the real rate by lowering the bank β s nominal interest rates. bis central bankers β speeches some will surely ask : shouldn β t the bank have lowered interest rates earlier? hasn β t the monetary stance simply been too tight in the recent past? i don β t think this is the right time to dissect these questions, not least because many things look different in the rear - view mirror. as is said in njals saga, β everything is ambiguous in retrospect. β that said, i think there are solid arguments in favour of a negative response to both questions. as regards timing, it is worth mentioning that it was not until very recently that inflation expectations have moved as close to target as they are now. as regards the latter question, most measures of the monetary stance have been well within normal range for quite a while, and there are few other signs that it has been too tight, expect perhaps in the past few months. for example, nominal growth in broad money measures about 6 % after adjusting for factors that are largely unconnected to domestic economic activity, such as deposits of failed financial institutions in active ones. this growth is consistent with the situation that should exist when the economy is at equilibrium β when inflation is at target and output is at capacity. an examination of nominal gdp growth gives a similar result. based on forecasts for 2014, it will average 5 % in iceland over the period 2011 β 2014, as compared with just under 4 % in the us and the uk, about 2Β½ % in sweden β which is just above the inflation target alone β and about 1Β½ % in the euro area, which is even below the inflation target for the region. this has been used to support | 0 |
felipe m medalla : moa signing with participating retailers for the coin deposit machine project closing remarks by mr felipe m medalla, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the moa signing with participating retailers for the coin deposit machine project, manila, 16 august 2022. * * * sm retail inc. controllership and financial planning senior vice president jonathan h. ng, filinvest land inc. deputy chief finance officer janeth de los reyes, and robinsons retail holdings inc. β robinsons supermarket managing director stanley co. ; fellow bspers, partners, ladies and gentlemen, good afternoon. the phrase " barya lang po sa umaga " β suggests there's really a shortage of coins. i remember when i was growing up, as a 15 - year - old first - year student in a school nearby, i would take the bus from lipa to la salle taft, where my boarding house was nearby. i would wonder about the skill of the conductor. during those times, the buses did not have aisles ; they had continuous seats all the way to the side. in other words, one side of the bus is completely closed, and the other side is completely open. the conductor has no change. what he does is he swings from outside the bus, literally like an acrobat, moving from one side to the other, asking everybody where they're going. after having asked that, he punches all the tickets. alam niya kung ilan ang lipa, ilan ang batangas city, ilan ang malvar. fantastic memory. and then he will collect all the payments. a lot of people overpay because they don't have exact change. in the end, he will now get all the coins, and somehow, he's able to remember who to give the money back to. so, in other words, to solve the coin problem, you need a very smart bus conductor. we seem to have the same problem now : the problem of recirculating coins. when i look at this project, everyone is benefitting : us [ at the bsp ], we're going to save a lot of money on the cost of minting. let me give a small lecture on seigniorage : it's nicer to print p1000 [ banknote ] because the p6 gives you p1000. if | gent sejko : global money week 2023 in albania address by mr gent sejko, governor of the bank of albania, at the opening ceremony of the global money week 2023 in albania, tirana, 20 march 2023. * * * honourable minister of education and sports, dear chairman of the albanian association of banks, dear students and teachers, friends and banker colleagues, again this end of march, i have the pleasure to welcome you to the opening ceremony of the global money week, which from a decade now brings us together : bankers, teachers, students and pupils. alongside our efforts and work for enhancing financial literacy and inclusion of public throughout the year, the money week focuses entirely on the new generation, both in albania and globally. the oecd recommendation on financial literacy encourages governments and other policymakers " - to take measures for the development of financial literacy at an early stage " on themes and through channels adequate for the beneficiary. in compliance with this recommendation, the objective of money week, coordinated by the oecd - infe1, is to encourage children, to actively think since an early age, about money and finances, and gradually acquire the necessary knowledge, skills, positions and behaviours to take sound financial decisions which lead to the final goal : the welfare and financial sustainability. i am proud to say that money week is already globally known, particularly to young people. since its first edition in 2012, it has been involving an increasing number of central and local organisations, across more than 175 countries. in our country, the bank of albania, in collaboration with the albanian association of banks and with the precious support of the ministry of education and sports and other partners, has for many years organised educational and awareness - raising activities tailored for pre - university and university students. in this week, our goals, more than ever, converge with those of educational institutions and civil organisation, to enhance financial knowledge and awareness of the young generation to become financially responsible citizens in the future. " plan your money, plant your future " is the official theme of global money week 2023. this motto once more weighs the importance of a prudential approach towards money, to ensure the future well - being, by having the adequate knowledge on an increasingly innovative financial market. together with our partners, we have prepared a calendar of various educational and entertaining activities related to this theme, to teach children and young people how to generate profits from entrepreneurship, how to save and take care | 0 |
ravi menon : singapore's fintech journey - where we are, what is next speech by mr ravi menon, managing director of the monetary authority of singapore, at the singapore fintech festival - fintech conference, singapore, 16 november 2016. * * * ladies and gentlemen, good morning and welcome to the inaugural singapore fintech festival. we have more than 11, 000 participants from more than 50 countries, attending one or more of the many events lined up over these five days. technologies transforming finance financial technology or fintech is transforming financial services, in a way not seen before. we have unprecedented mobility. the smartphone is becoming our bank. people can consume financial services on the go. we have unprecedented connectivity. the internet has compressed time and space. interaction is real - time and unconstrained by physical boundaries. we have unprecedented computing power. the devices in our hands or on our wrists are literally pokemons β pocket - sized monsters that pack more data and more processing power than super computers just a couple of decades ago. digital payments are becoming more widespread, propelled by advances in near - field communications, identity authentication, digital ids, and biometrics. blockchains or distributed ledgers are being tested for a wide variety of financial operations, to make them faster, more robust, more efficient : to settle interbank payments ; to verify and reconcile trade finance invoices ; to execute, enforce, and verify the performance of contracts ; to keep an audit trail and deter money laundering. perhaps the biggest potential is in what is called big data. we are beginning to aggregate and analyse large data sets to : gain richer insights into customer behaviour and needs ; detect fraud or anomalies in financial transactions ; sharpen surveillance of market trends and emerging risks. big data is in turn being driven by advances in : sensor networks and natural language processing to gather information from a wide universe of sources ; cloud technologies to store and retrieve large volumes of information at low cost and ondemand ; learning machines and smart algorithms that can continuously adapt and improve on their decision making with every iteration. 1 / 9 bis central bankers'speeches smart financial centre vision be it countries, businesses, or people β those who are alert to technology trends, understand their implications, and harness their potential will gain a competitive edge. to be sure, many of these technologies are disruptive to existing jobs and existing business models. but if we do not disrupt ourselves β in a manner we choose β somebody else will | that encompasses green and transition activities. it adopts a β traffic light β system that helps market participants identify activities that are β green β, β yellow β ( or transition ) and β red β, with the intent of reaching net 1 / 2 bis central bankers'speeches zero as soon as possible. the calibration of thresholds is important, considering the feasibility and availability of alternative technologies in singapore and the region. the thresholds will need to be recalibrated at regular intervals to keep pace with technological innovations. second, innovative financing solutions. to meet asia β s green financing needs, it is not enough to rely on just the public sector or the banking sector. we need innovative platforms to catalyse capital flows to marginally bankable but worthy green projects. in singapore, one of our sovereign wealth funds, temasek, has partnered hsbc to set up a debt financing platform to invest in marginally bankable sustainable infrastructure projects in asia. we need new instruments such as blended finance to draw in different types of financers. government agencies and multilateral development banks can potentially help to derisk sustainability projects by taking on first loss equity or providing a guarantee, to help crowd - in more private sector financing. this includes not just commercial banks but also capital providers such as foundations and family offices. we need to deploy technical assistance alongside financing. this is to support a range of activities such as project preparation, project implementation, and even training and capacity building to achieve maximum development impact. third, financial supervision. regulators are in a strong position to steward the financial system towards net zero through supervising financial institutions β management of climate related risks. the network for greening the financial system, or ngfs, plays a key role in helping to mainstream climate - related risk management. the ngfs has just issued a report highlighting the different paths that supervisors can take towards a set of internationally aligned supervisory practices. we strongly support the ngfs declaration1 to green the financial system. the mas is progressively embedding climate risk considerations in its supervisory framework. we are setting out a roadmap for mandatory climate - related financial disclosures for all our financial institutions. next year, we will conduct stress tests for the financial industry under a range of climate scenarios. we are supporting capacity - building among central banks and supervisors in addressing environmental risks, such as through the cop26 climate training alliance initiative. a successful transition to net zero will require collective efforts across governments, businesses, and industry leaders globally. | 0.5 |
##located in an open economy. that's why we need to ensure that there are no unnecessary structural impediments to economic adjustment β impediments such as barriers to investment, to labour mobility, and to trade. in the past five years, the canadian economy has demonstrated increased flexibility. but, as i'll explain in a moment, more can be done. finally, i should point out that the adjustment process in the past five years has been helped a good deal by the favourable backdrop of strong growth in the global economy. robust demand for canadian goods has helped to offset some of the stresses and costs of adjustment. with this in mind, i think it's useful to point out that while canadians can control their monetary policy and fiscal situation, and can, through various measures, encourage flexibility, we have less control over the external environment. and it's only prudent to keep in mind the possibility that the external environment may not always be favourable. so, the question arises : what do we need to do so that canada remains able to respond effectively to the challenges of the future, in both good times and bad? meeting the challenges of future economic change all canadians have a stake in the national economy. and we all have a role in helping to promote policies and actions that foster sustainable economic growth β whatever the backdrop. for its part, the bank of canada will continue to work toward the goal of keeping inflation low and stable, and we will do our part in promoting a sound and efficient financial system. indeed, all policy - makers have a key role in promoting efficiency, productivity, and further economic flexibility. in an increasingly competitive world, the bar is always rising, so we cannot rest on our laurels. the policy areas in which we have more work to do will be familiar to you. in the financial sector, which i know best, securities regulation needs to be made simpler and more efficient. and generally, many business regulations need to be harmonized across canada and some across the nafta region. and barriers within canada to the free movement of goods, services and labour need to be removed. tackling this issue is especially important now, as shortages of skilled labour are becoming more pronounced. and it will become even more important as demographic challenges begin to intensify. it would be helpful if trades and professional designations were recognized and fully transferable across the country, and if we could resolve the difficult issue of recognizing the qualifications of many talented immigrants. | extraction. this, in turn, has prompted strong gains in both investment spending and employment in those sectors of the economy. most sectors with a low exposure to international trade ( such as personal services ) have also experienced relatively strong levels of profitability and solid gains in employment. on the other hand, with the substantial rise in the exchange rate and increased competition from many of the asian economies, many industries with a high exposure to international trade β typically manufacturers β have faced difficult adjustments since the end of 2002. this has been reflected in lower rates of profitability, modest gains in production, and declines in employment. but overall, canada has adjusted well to the challenges of the past five years. since 2002, our labour markets have performed well β the unemployment rate is now close to a 30 - year low. and our average annual economic growth rate has been greater than the average growth rate of the g - 7 countries as a whole. that's the national picture. in many respects, saskatchewan is a microcosm of these trends. real provincial gdp growth is solid and close to the national average. in the past five years, saskatchewan has seen its labour participation rate increase significantly β from 65. 7 to more than 70 per cent β and the unemployment rate has dropped from 5. 4 per cent in february of 2002 to 4. 1 per cent last month, indicating a robust labour market. of course, saskatchewan has been helped a good deal by the increase in world commodity prices that i mentioned earlier β especially for energy, potash, and uranium, while manufacturers here have faced challenges similar to those faced by manufacturers elsewhere in canada. to summarize, the past five years have been a time of large and significant economic adjustment. despite the stresses and strains that such a change can cause, canada has done very well, all things considered. the economy is strong, canadians are working, and they have seen increases in wealth and income. what are some of the factors that explain this successful adjustment? what explains the success of the adjustment process? in an open economy like canada's, the most important factor is flexibility. by flexibility, i mean the ability of the economy to adjust to changes in circumstance β that is, for resources to shift from areas of weakening demand to areas of strengthening demand β and for the economy to return to its production potential quickly, with as little cost as possible. but flexibility doesn't just happen β it's a function of structural policies, human capital, and our business | 1 |
least three specific concerns. first, market illiquidity may result from a leading dealer's exit and that illiquidity has the potential to adversely affect fannie and freddie and other hedgers of mortgages and mbs. second, meeting the demands for options by mortgage hedgers involves market risk to dealers, a concern that has been heightened by the fact that the notional value of options sold by dealers significantly exceeds the notional value purchased. third, the failure of a leading dealer could result in counterparty credit losses for market participants. the extent to which these concerns are valid depends on how effectively market participants manage market risk and counterparty credit risk. to obtain information on participants'risk - management practices, members of the federal reserve staff last summer interviewed some of the leading market participants, including fannie and freddie and half a dozen leading derivatives dealers. the potential for a dealer's exit to adversely affect mortgage hedgers is dependent upon hedgers'diversification of counterparties, the way in which hedgers use options, and the underlying reason for such an exit. fannie and freddie have about twenty dealers as options counterparties, including investment banks and foreign banks as well as u. s. commercial banks. however, only about five or six of them have direct access to the supply of options from debt issuers ; the others must depend on the interdealer market for a substantial portion of their supply. the exit of one of these five or six may or may not adversely affect market liquidity, depending on the reason for the exit and on the way in which other dealers react. if a dealer is forced to exit because of a credit problem unrelated to its options dealing, other dealers are likely to take its place quickly. if the exit is the result of losses from options dealing, possibly in difficult market conditions, other dealers with similar positions are likely to be pulling back as well, which could leave the options markets quite illiquid. in any event, fannie and freddie and other mortgage hedgers do not rely on continuous liquidity in the options markets. rather, they purchase options periodically and opportunistically. provided that options market illiquidity is not protracted ( say more than a month ), they could postpone transacting in those markets until liquidity returns, without exceeding their internal risk limits. by contrast, mortgage hedgers do rely on continuous liquidity in the swaps market because they currently use swap | jerome powell : welcoming remarks " expanding the impact : increasing capacity and influence " welcoming remarks by mr jerome h powell, member of the board of governors of the federal reserve system, at " expanding the impact : increasing capacity and influence ", the 2017 interagency minority depository institution and community development financial institution bank national conference, los angeles, california, 5 april 2017. * * * thank you, donna. good morning and welcome to the federal reserve. we are honored to have you here today as we host the biennial interagency minority depository institution ( mdi ) and community development financial institution bank conference. my colleagues from the federal reserve bank of san francisco and i are especially honored to be hosting you in los angeles. as you probably know, all of the previous interagency mdi conferences have been held on the east coast, mainly in washington, d. c. however, because the largest concentration of minority banks is located here in southern california, it seemed natural to bring this conference west. the federal reserve seeks to support mdis in a number of ways, including our partnership for progress, our program for outreach and technical assistance to mdis. both the office of the comptroller of the currency and federal deposit insurance corporation share our goal of preserving and promoting mdis because you are critical institutions to the communities you serve and the larger u. s. economy. and i note that congress has also recognized your importance, mandating our respective agencies to help support mdis. from the perspective of someone who sits on the federal open market committee, i see many ways that the federal reserve can not only support mdis but is itself also supported by them, and i would like to talk about four of these ways today. first, half of our monetary policy mandate is maximum sustainable employment. that means that we need to be aware of employment trends across all communities in america, not just the top - line averages, since unemployment rates vary significantly across races and geographies. for the first time, last year, we put into our monetary policy report to congress a section that detailed how post - recession economic gains have been distributed across races. 1 you, as mdis, are committed to understanding and serving these diverse communities. i know that, for example, your small business loans to minority business owners make a difference in the employment rates of minority communities. i thank you for that work, and we will continue to work closely with you to better understand the employment dynamics of underserved | 0.5 |
jan f qvigstad : outlook for the norwegian economy address by mr jan f qvigstad, deputy governor of norges bank ( central bank of norway ), at sparebank 1 fredrikstad, 4 november 2009. the text below may differ slightly from the actual presentation. the speech is based on the assessments presented at norges bank β s press conference following the executive board β s monetary policy meeting on 28 october and monetary policy report 3 / 09. * * * the operational target of monetary policy in norway is low and stable inflation, with annual consumer price inflation of close to 2. 5 per cent over time. in recent years, average inflation has been close to, but somewhat below 2. 5 per cent. consumer price inflation has generally been somewhat below target since 2003 and monetary policy was then oriented towards pushing up inflation. in 2007 and 2008 inflation picked up to slightly above target. inflation expectations were firmly anchored and the key policy rate was gradually raised to a more normal level. inflation close to target and firmly anchored inflation expectations were essential for monetary policy to be effective when substantial cuts were made in the key policy rate in autumn 2008 and the beginning of 2009. it has been a year since financial turbulence developed into a full - blown crisis and resulted in the most severe downturn in the global economy since the second world war. the financial crisis eroded confidence in banks, counterparties and contractual partners. the measures implemented by central banks and governments have had a stabilising effect on financial markets. credit and money market premiums have decreased and activity has picked up. daily fluctuations have become less pronounced. with the improvement in financial markets over the past six months and the increase in the credit supply, global trade is now picking up slightly, albeit only gradually and from a low level. manufacturing output has recently risen in the us, japan and many emerging economies, while it continues to fall β albeit at a slower pace β in many euro area countries. manufacturing output in japan and the us is still at a very low level. despite the pickup in growth, capacity utilisation in advanced economies will remain very low for the next two - three years. uncertainty in equity markets has eased and risk premiums are lower, reflected in a rise in leading us stock indices of more than 50 per cent since equity markets bottomed out at the beginning of march 2009. oslo bΓΈrs has risen by about 70 per cent since the beginning of march. the price of oil has risen somewhat since the june report | also stepped up its supply of liquidity to banks in the form of short - and long - term loans. the arrangement whereby banks could exchange covered bonds ( omf ) for government securities made a contribution to securing long - term funding for banks. strong growth in government spending fuelled demand for goods and services. the authorities supply risk capital to norwegian banks through the norwegian state finance fund to strengthen banks β solidity. the government has also provided increased loans and guarantees to norwegian export industries, and has raised lending limits for state banks. in addition, folketrygdfondet ( the government pension fund β norway ) has been permitted to increase its purchases of bonds. the extraordinary monetary and liquidity measures implemented were tailored to a situation in which financial markets no longer functioned. in norway, it has been appropriate to start winding down the unconventional measures earlier than in other countries : in recent months, norges bank has not supplied liquidity through the currency swap lines or liquidity in foreign currency. loans in nok at long maturities have not been provided since february. surplus liquidity in the banking system was increased to more than nok 100 billion, but is now close to a more normal level. this motivates banks to revert to money market funding. the swap arrangement involving covered bonds ( omf ) in exchange for government securities has made an essential contribution to securing banks β long - term funding. the first signs that the covered bond market was beginning to function appeared in spring. the minimum price in the swap arrangement has been raised by 0. 9 percentage point, from nibor - 0. 2 percentage point to nibor + 0. 7 percentage point. use of the arrangement is currently being phased out. norges bank eased its collateral requirements to enable banks to increase their borrowing in the central bank. this measure is now being reversed. norges bank has also announced that the share of a bank β s borrowing facility that can be based on collateral in the form of bank bonds will gradually be reduced. covered bonds will continue to be eligible as collateral. mainland gdp increased in q2 after two quarters of negative growth. growth was somewhat higher than expected, reflecting solid growth in public sector demand and private consumption. in september, norges bank β s regional network contacts reported that activity had edged up in q3. the main contribution came from industries providing goods and services to households and the public sector. despite a moderate rebound in both domestic and international activity, prospects for manufacturing and the building | 1 |
sharon donnery : the importance of data - statistics during the pandemic and beyond opening remarks by ms sharon donnery, deputy governor of the central bank of ireland, at the central bank of ireland webinar " the importance of data : statistics during the pandemic and beyond ", 7 october 2021. * * * i would like to welcome everyone this afternoon to our conference on the important role of statistics in economic analysis and policymaking, and what lessons we can take from the pandemic period to support us in our future challenges. evidence - based policymaking is key for the central bank and, of course, high quality data provides the foundation for this approach. in addition, part of our statutory role involves producing high quality financial statistics, both for our own analysis but also as a public good. we disseminate our data and analysis through various publications, seminars and through ongoing interactions with government departments, academia and commentators. it is highly important to us to be a trusted and credible source for our users domestically and further afield. improvements to statistics in recent years one of my very last pre - pandemic speeches was at the sixth household finance and consumption conference in december 2019. 1 my focus then was very much on marking the significant progress made by the statistical community over the previous decade in response to the financial crisis. we saw substantial national and international efforts to build better quality, more comprehensive, flexible and integrated statistics. international cooperation is crucial for further progress including identifying data gaps, building areas of speciality and developing platforms to share ideas in a world that is becoming ever more interconnected. within the central bank we have being developing key skills to integrate granular data into our decision making and existing risk assessment frameworks. local initiatives covering credit risk and borrower resilience such as the central credit register and european initiatives such as anacredit along with insights on capital market financing from securities statistics have emerged as important tools in supporting decision making within the central bank. our data and analyses also support decisions and public policy on a range of topics impacting households and businesses, most notably with the establishment of irish national claims information database in 2019, as well as ongoing data sharing with the central statistics office for the purposes of national accounts, amongst other things. to future - proof our data as the economy and financial sector evolves, we were also feeding into work on establishing harmonised statistics on distributional financial accounts, occupational pensions and the innovations in payments at the european level, amongst others | ##uter does not bear the costs it inflicts on others, a fee should be imposed on the polluter. the financial system is also exposed to such external effects, which we could perhaps call pollution. the external effects can be classified by the resulting symptom ; excessive risk or excessive credit. moral hazard arises when a bank β s owners take a big gamble with creditors β money. while the owners might earn a huge profit by investing depositors β savings, depositors will never earn more than the interest on their deposits. as long as the owner takes the upside and the depositor is left with the downside, the bank has an incentive to take greater risk than socially desirable. the distortion is amplified by deposit guarantees or public guarantees. when many banks or big banks play moral hazard, risk in the financial system becomes excessive. thomas kuhn uses in his book the structure of scientific revolutions ( 1962 ) this statement from max plancks scientific autobiography and other papers ( 1949 ). jorda, oscar, moritz schularick, and alan m. taylor, β when credit bites back β, journal of money, credit and banking, 2013, 45, pp 3 β 28. bis central bankers β speeches contagion effects between banks can also lead to a vulnerable financial system. banks lend each other money in interbank markets and can become more closely intertwined than is socially desirable. losses at one bank can spread through the system, creating a domino effect. the contagion effect can also be indirect. when a bank has to sell assets to redeem debt, the value of equivalent assets of other banks decline, as many experienced during the financial crisis. individual banks do not have an incentive to take into account a fall in value that it inflicts on its counterparties. contagion effects are externalities between banks that can lead to a situation where the risk in the financial system becomes greater than the sum of what individual banks believe their risk to be. over the past years, i have travelled around the country and visited many savings banks in norway, and without exception they report that risk management has improved considerably at their banks. that is no doubt true, but i cannot without a doubt conclude on that basis that systemic risk has been fully eliminated. herd behaviour amplifies risk in the financial system. the more banks β portfolios are alike, the more they are exposed to indirect contagion through a fall in the market value of their portfolios. when banks have similar | 0 |
of the total ; β’ more than 700 eu companies use hong kong as regional headquarters or regional offices ; β’ the eu is the 2nd largest source of visitors and 4th largest source of tourist earnings for hong kong ; β’ there are over 50 licensed banks and other authorized institutions in hong kong from the eu countries, the largest concentration in asia. clearly, what happens in the eu matters to hong kong. what therefore will be the impact of the euro on the participating countries? there should certainly be a number of economic benefits, including in particular : β’ a huge increase in transparency from the single currency which will make it easier to compare prices across national frontiers. this will boost competition, bring down costs and prices, and improve efficiency ; β’ a reduction in transaction costs, in particular from the elimination of foreign exchange commissions. this will encourage trade and cross - border investment flows ; β’ lower interest rates in individual countries from the elimination from the foreign exchange risk premium. this will reduce financing costs and stimulate investment and output ; β’ the development of larger and more liquid debt and stock markets across the euro zone. this will create a vast new pool of capital for companies, thus giving a further stimulus to investment ; β’ tighter fiscal discipline on the member countries under the stability and growth pact and monetary discipline exercised by the new european central bank. both these should ease inflationary expectations and produce a more stable financial environment for the euro zone. in summary, the single currency should be able to deliver higher economic growth and therefore increased demand for imports by the euro countries. as one of the eu β s major trading partners, this should benefit hong kong. hong kong may also be able to take advantage of the increased flow of funds for global investment which may be forthcoming from a greatly enlarged european capital market. furthermore, to the extent that an offshore euro market develops, hong kong would be an obvious location for this in asia. this reflects the existing large presence of european banks in hong kong and our role as a bridge between europe and mainland china. finally, hong kong is one of the world β s largest holders of foreign exchange reserves and the euro will provide interesting opportunities for diversification of our portfolio. of course, the advent of the single currency also brings with it certain risks. the discipline imposed by the single currency will not always be comfortable, particularly when the business cycles diverge in different member countries. this could set up tensions which could at worst lead to a break - up of monetary union or at least undermine confidence in the euro. the | eddie yue : climate business forum - asia pacific keynote address by mr eddie yue, chief executive of the hong kong monetary authority, at the climate business forum : asia pacific, hong kong, 27 february 2024. * * * good morning everyone, it is my great pleasure to welcome you all to the climate business forum : asia pacific, co - hosted by the international finance corporation ( ifc ) and the hong kong monetary authority ( hkma ). for those of you coming to hong kong from overseas, i would like to extend a very warm welcome to you all and i hope that apart from this forum you can find time to enjoy our lively and vibrant city. today's forum is the anchor event of the first hong kong green week. it brings together top executives and thought leaders in asia pacific and provides a platform to facilitate the exchange of ideas and knowledge, and the building of new networks and relationships. we hope that all these will help incubate new business opportunities and contribute towards addressing the bigger issues of climate change and sustainability. sustainability has always been a very complex and challenging issue. but sometimes, as we live in a complex world, we are distracted by other more eminent issues, whether it is market volatility, a pandemic, or the complex geopolitics we are facing. but climate change is not a problem that will go away on its own. in fact, it has become increasingly pressing and also intertwined with other global challenges that we face. the apac region is highly vulnerable to the impact of climate change. according to a report by the united nations development programme, asia - pacific countries experienced, on average, six natural disasters a year over the last 30 years aβ¬ β which is about twice as many as developing countries of latin america and the caribbean, and about three times as many as in sub - saharan africa. the region has seen an escalation in the intensity and frequency of extreme weather events, a decline in biodiversity, rising sea levels, and an increase in climate - induced disasters. asia pacific is also a key contributor to the problem, as we are producing more than half of the world's carbon dioxide emissions. and for the region as a whole, we need to reduce emissions, adapt to climate change, build resilience, and embrace innovation. it is not just about addressing a global issue that affects everyone, but also about protecting and helping our own people in asia. this need does not suggest a regression in our developmental | 0.5 |
part to a large volume of public guarantees on bank bonds, which will mature in the next few years, however. going forward, the supply must be maintained by increasing the share of eligible assets, among other things by adding new types. great care must be taken to ensure that loan granting procedures meet the requirements for eurosystem refinancing. in the coming weeks we will call on the banks for an examination of the steps to be taken. in several cases italian banks not only provide finance, they also participate directly in the capital of firms. this can lead to a more accurate assessment of a firm β s growth prospects and a better evaluation of its financial needs. however, a participating interest can sometimes distort lending decisions ; as the size of shareholdings and loans increases, there is the risk of collusion or of actions designed to delay the surfacing of difficulties. the banks β governing bodies must properly safeguard against these risks : to maintain loan quality and keep banking profitable, in the banks β own interest ; to protect the value of the savings entrusted to them, in the interest of their customers ; and above all to ensure the efficient allocation of savings and boost the competitiveness of the productive economy. in january the legislation on related - party transactions came into force. it aims to protect banks from potential conflicts of interest with closely connected parties ; it provides a necessary counterweight to the european rules easing the restrictions on the links between banks and industry. the limits on exposure to each related party are calculated in relation both to the amount of credit granted and to the size of the bank β s shareholding in the company. the decision - making process on these matters must be transparent and correct and the outcome suitably motivated. the banks must be scrupulous in applying the new rules. the bank of italy will evaluate the effectiveness of the measures they adopt ; when necessary, it will intervene, possibly by setting stricter limits and conditions for related - party transactions. the difficulties besetting the credit system highlight once again firms β overdependence on bank lending. by international standards italian firms are undercapitalized, make very limited use of the capital market, and tend to limit scrutiny by investors. the credit market tensions will persist in the months to come. bank loans cannot be the sole source of external finance, as they are at present for most firms. the financing of investment must also tap new resources as well. it is in the banks β interest to encourage this process by | such instrument is not accidental : it reflects the unwillingness of many european countries to consider the possibility that the taxpayers of country a may pay, even temporarily, for the crisis of a bank in country b. according to this view, banks, although now supervised and subject to resolution by european institutions, must ultimately remain a national matter. the single deposit guarantee scheme the second key pillar of the banking union ( the european deposit insurance scheme ) seems to be still a long way in the future. the last five presidents β report of june 2015 underlined the need to continue moving ahead in relation to the single deposit insurance, because without it the euro runs the risk of being unable to absorb generalised confidence shocks ; the report recalled that β in comparison to national systems β a common guarantee scheme is more likely to be neutral over time for public finances, because risks are more spread and contributions are levied on a wider range of intermediaries 4. the european commission recently made a proposal β submitted to ecofin last december β to change the srm regulation in order to create a european deposit insurance scheme ( edis ), fully funded by private resources provided by all banks in the euro area. the proposal was submitted for consideration to the council, which set up a special working group. the edis is intended to establish a mutual system of private deposit insurance based on the deposit insurance fund ( dif ), to which the already existing national funds would gradually transfer the resources collected by the participating banks. the scheme would guarantee the same protection in all the countries participating in the ssm ; it would increase confidence in the european banking system on a level playing field. the edis should be established in three stages. in the first one ( reinsurance, until 2019 ) the dif would cover up to 20 per cent of the financial requirement or the losses of national funds. in this stage the dif would provide assistance only after the national funds have used all the available resources ( both ex - ante contributions and ex - post ones, in case additional funding is needed ). in the second stage ( co - insurance, from 2020 to 2023 ) the share of the financial commitment and of the cost of the assistance borne by dif would gradually increase ( up to 80 per cent ) ; in this stage the intervention by the dif and by the national funds would occur in parallel. in the third and last stage ( full insurance, from 2024 ), the dif would provide all funding. thus, we | 0.5 |
finance : 9. the first measure is a three - phased approach to promote green and sustainable banking in hong kong. initially, to develop a common framework to assess the existing baseline of individual banks to establish how β green β they are, by talking to the industry to identify the parameters to be included in the assessment ; secondly, to engage and consult the industry on whether supervisory requirements are needed ; and if needed, how the hkma should develop our supervisory expectation or requirements ; and thirdly to focus on implementation, monitoring and evaluation. 10. the second measure relates to responsible investment by the exchange fund. the exchange fund now adopts a guiding principle that priority will be given to green and esg investments, if the long term return is comparable with other investments on a risk - adjusted basis. 11. our third measure is the launch of the centre for green finance under the hkma β s infrastructure financing facilitation office, focusing on capacity building to facilitate the equipping of financial institutions with the knowledge, skills, tools and other resources in green finance. 1 / 2 bis central bankers'speeches 12. in fact, we β re now in our developmental plan to prepare banks for the upcoming changes. a working group on the assessment framework has been in place since august, and today β s seminar marks the beginning of the capacity building programme for the centre for green finance. on the other hand, the assessment framework will help banks understand their readiness for change, while the capacity building events will equip practitioners with the necessary knowledge for the changes. 13. for today β s seminar, we will first invite the ifc to provide an overview of the opportunities and challenges to green banking, and introduce some case studies on their approach to assisting banks in β greening β their operations. this afternoon, several banks will share their initiatives and practical experience on their green journey, including governance, risk management, disclosure and green products and business policy. 14. and here i would like to extend our special thanks to the ifc for their dedicated support for this workshop. their expertise will surely benefit our audience today. i would also like to thank hsbc, standard chartered bank, citibank, boc and bnp paribas for sharing their experiences with everyone later today. 15. ladies and gentlemen, i wish you all a fruitful workshop and i look forward to working closely together with the industry to develop green and sustainable banking in hong kong. thank you very much. 2 / 2 bis | central bankers'speeches | 1 |
situation, the underlying reality was that government finances were often buoyed artificially by cyclically sensitive revenues. with the deterioration of the economic situation the structural weaknesses in the underlying fiscal position became evident culminating in the current sovereign debt crisis in some euro area countries. these developments highlight important shortcomings not only at the level of national policymaking but also with respect to the institutional framework at the european level. the stability and growth pact ( sgp ) was watered down in 2005 and has been ineffective in preventing the build - up of significant fiscal imbalances. peer pressure has not worked and the changes in the fiscal rules in 2005 have led to excessive political interference and the lack of effective implementation. moreover, the institutional framework so far lacks any effective tools for macroeconomic surveillance which could prevent the emergence of bis central bankers β speeches macroeconomic imbalances. the broad economic policy guidelines have proven not to be an effective tool. before turning to the necessary policy responses i would like to stress that the fiscal and macroeconomic policy challenges are not problems which some euro area countries face in isolation but are also evident in many other advanced economies outside the euro area. government deficit and debt levels have reached historically high levels. concerns about the soundness of fiscal policies are a broader phenomenon, as, for example, discussed in imf research and highlighted by the recent lowering of the outlook for the u. s. sovereign debt rating. also issues of competitiveness and external imbalances are global in nature and not specific to the euro area. but this is not an excuse for the europeans not to bring their house in order. what has to be done? a number of policy implications for the euro area follow from this analysis. the main objective has to be a smooth functioning of emu which implies that countries follow a path of sustainable and balanced growth. the strategy to achieve this consists of two key elements : first, to unwind the imbalances that had arisen during the first decade of emu ; and second, to ensure an adequate institutional framework and sufficient structural flexibility of individual member states so that the risk of such imbalances occurring again is minimised. the first challenge is to restore price and cost competitiveness. in a monetary union such as the euro area, with a single currency and a single monetary policy, the main adjustment mechanism is the competitiveness channel which works via an adjustment in relative prices and costs. over the next few years, the restoration of competitiveness will require significant further adjustments | . g. gopinath et al. 2017, highlighting deteriorating factor allocation in italy and spain ). a recent paper by bils et al. suggests, however, that if one corrects for measurement error, the entire increase of allocative inefficiency in us manufacturing since the late 1970s disappears. it may therefore be advisable to wait until measurement errors are also accounted for in the literature on non - manufacturing sectors and on europe before drawing clear - cut conclusions. regarding innovation jones argues that their contribution can either be driven by the impact of new ideas and processes on total factor productivity ( β ideas tfp β ) or the research effort pushing new ideas ( such as the number of researchers employed ). gordon ( 2016 ), for example, suggested for the us that ideas with the same productivity benefits are harder to discover today than in history. jones β in joint work with bloom, van reenen and webb ( 2017 ) β finds that this is a rather general phenomenon across different sectors and products, detecting significant reductions in β ideas tfp β. over many decades, however, this was compensated by overproportionate increases in research effort. as research employment growth has slowed down since the early 2000s β mostly in japan, significantly in the us and to a lesser extent in the european union ( see figure 1 ) β the phenomenon has become more harmful today than it used to be. this can explain the productivity slowdown and is consistent with gordon β s thesis. but it 1 / 16 bis central bankers'speeches puts the emphasis on ways on how to maintain a sufficiently high research effort. on historical grounds, joel mokyr ( 2017 ) challenged the view that it is the nature of today β s innovations that accounts for the productivity slowdown and staged a forceful rebuttal of β technopessimism β. first, economists β primary measures of innovation β estimations of total factor productivity and counting of patents β both underestimate their productivity effects. second, in history humans have overcome the fact that the technological fruits that can still be picked are hanging higher and higher through building β taller and taller ladders β. this β arboreal metaphor β illustrates a feedback from technology to science. the technological tools detected over centuries that made that possible included the telescope, the microscope, the eudiometer or, more recently, x - ray crystallography. two prominent and powerful tools today are laser technology and computers. the β hot technology of the day β is machine learning | 0.5 |
bonds eligible for the corporate sector purchase programme ( cspp ) at its inception. excluding these bonds would have limited the cspp β s coverage, making it less effective. in other words, the exclusion of these sectors would limit the tool β s suitability for its primary purpose of ensuring price stability. moreover, focusing purchases on green bonds would run counter to the requirement to respect the workings of an open market economy and be tantamount to industrial policy. the app is a tool for macroeconomic stabilisation, not for microeconomic reallocation. deviating from market neutrality and interfering with economic policy risks exposing the ecb to litigation. it is not up to the central bank but to elected governments to decide which industry is to be closed and when. as central bankers, we have to respect and implement legitimate decisions in this context. and the effectiveness of monetary policy has been bolstered by abstaining from normative judgments on the morality of markets and industries. of course, under the principle of market neutrality, we have also purchased green bonds. we currently hold around 24 % of eligible publicly - issued green bonds and around 20 % of private sector green bonds. in both cases, the proportion is in line with our share of holdings in the total cspp - eligible universe. beyond our primary mandate for price stability, it is worth remembering that we are not regulators, neither for financial markets nor for banks. the ecb carries out banking supervision within the single supervisory mechanism ( ssm ) under the capital requirements regulation and 4 / 6 bis central bankers'speeches directive, adopted by the council of the eu and the european parliament, with further regulations set by the european banking authority. we are not free to vary the capital requirements of supervised banks to take into account their climate risks, or to encourage climate finance. indeed, when ecb banking supervision, acting within its supervisory mandate, issued guidance on non - performing loans earlier this year, this generated tensions with regulators, who felt the guidance strayed into the territory of legislation. but we are ready to bring in our experience if so requested, in particular if it were suggested to strengthen or broaden disclosure obligations, for example. nonetheless, climate risks have been identified in ecb banking supervision β s risk assessment for 2019 and will be among the topics covered in the qualitative discussions held with banks on an individual basis. the ecb will continue to carry out our democratically delegated functions as set out in the treaty. should a greater | groundswell of support for environmental action cause bank regulators to modify the regulatory framework under which the ssm operates, supervisors must of course adjust their actions and implement the legal requirements accordingly. conclusion let me conclude. climate change poses the risk of considerable social costs and economic disruption. the challenges of climate change are social issues. the analysis and choice of possible solutions, including suitable instruments and their financing, require rigorous political debate. and no matter which path a society takes, the potential changes can have serious effects on sectors, regions, the distribution of income and wealth, and generations over time. economically, there will be relative winners and losers. it is therefore the responsibility of elected representatives to decide on the best solutions. central banks are explicitly excluded from such political debates. in view of the central banks β almost limitless financial power, politicians would come under too much temptation to use monetary policy to achieve short - term political goals, a situation that could undermine the task of preserving the purchasing power of money. that is why, in most jurisdictions, monetary policy has been transferred to technocrats who are independent of politics and are bound to fulfil a strict and unambiguous mandate to guarantee price stability. in the case of the ecb, this β depoliticisation β has constitutional status. at the same time, even an independent central bank does not operate in a vacuum. technological progress, innovations, geopolitical tensions and, of course, regulatory requirements by legislators influence the environment in which monetary policy operates. however, monitoring and analysing the extent to which climate change or other shocks may affect the transmission of monetary policy, the economic cycle, the soundness of individual banks and financial stability as a whole, and how they interact, is part of our forward - looking approach. 1 goethe, j. w. ( 1808 ), faust. eine tragodie. 2 goethe ( 1808 ), ibid. 3 world economic forum global risks report 2018. 4 stern report : unionsforenergydemocracy. org / wp - content / uploads / 2015 / 08 / sternreview _ report _ complete. pdf 5 noy, i ( 2009 ), β the macroeconomic consequences of disasters β, journal of development economics, 88 ( 2 ) : 221 β 231. 5 / 6 bis central bankers'speeches 6 strulik, h & t trimborn ( 2018 ), β natural disasters and economic performance β, environmental and resource economics, forthcoming. 7 | 1 |
problem will not be helpful for small and medium size enterprises only. during our visit today we have found yet another evidence that there are successful entrepreneurs in our country. the good news is that banks are willing to grant loans and the β bad β news is reserved for the italian government : stand ready and start arranging yet another credit line! | radovan jelasic : effects of the financial crisis on central and eastern europe speech by mr radovan jelasic, governor of the national bank of serbia, at the " global crisis in europe and central asia " panel discussion of the imf and wb spring meeting, washington, 24 april 2009. * * * dear ladies and gentlemen, central and eastern europe has gone through an unbelievable development during the last two decades in all aspects : politically, economically and socially. but the financial crisis has thrown much of that progress into doubt. some brave but at the same time unpopular steps urgently need to be taken by the governments of the region. if these choices are not made immediately, the region β s macroeconomic and social stability will be at risk. democracy, during the next couple of months, will undergo its first major test since the beginning of transition. first, most cee countries, including serbia, greatly underestimated and are still underestimating the problems they will face in 2009 and 2010, as our economic models β built on foreign direct investments, foreign borrowing and, for the regional members of the european union, additional funds from brussels β need a complete overhaul. today β s problems cannot, and should not, be solved just by relying on financing from the imf, wb and eu. instead we need a long overdue adjustment, with fiscal and structural reforms, including pension, healthcare and education reform for which imf and wb should play a key role. β premature welfare states β as janos kornai would call it, based on now scarce and expensive foreign funding, nose - diving fdis and reduced budgetary incomes, are going to face an abrupt end all over the region. second, banks that are majority owners of the cee β s banking sector are hesitating to take the support of their respective governments as well as the ifis. the level of exposure in the cee region is definitely not commensurate with the level of recapitalization carried out up till now. in the meantime, the banking sector was never ever more important than at this crucial junction of the transition process. now its time to prove if mark twain was right by saying that bankers are people who offer you an umbrella when the sun is shining and want it back when it is raining. the so - to - say β taking away of the umbrella β is taking place despite the fact that margins are at the level not seen during this decade! third, regulators in | 0.5 |
european action plan, the paris declaration. at this very moment, important changes in the european supervisory architecture are being discussed, notably based on the recommendations of the de larosiere report. these include the recommendation to transform the so - called level three committees of national supervisors into european authorities. in the field of macro - prudential supervision, moreover, a european systemic risk council ( escr ) is recommended to be established, under the auspices of the ecb / escb. allow me to take a brief look at an aspect that has moved somewhat into the background of the policy debate at present. the policy initiatives should be coupled with a further striving for financial market integration in europe. history has shown that a tendency towards national retrenchment may increase in times of uncertainty. the recent crisis has indeed confirmed this. our current measurement of the state of financial integration shows some signs of segmentation along national borders, particularly for the interbank market. 3 it is thus important not to forget that integrated financial markets can help financial stability. they offer their participants a more efficient environment than a market divided by national borders ever could. integrated markets are more liquid and offer better opportunities for risk diversification, and therefore reinforce the shock - absorption capacity of the system. therefore, financial integration is directly linked to our objective of improving the resilience of markets and contributes to financial stability in the long term. cross - border financial risks are becoming more and more important in europe. therefore, while we need to remain firmly committed to financial integration in europe, the european financial architecture, i. e. the supervisory and regulatory framework, needs to adjust to this evolution and reflect a more integrated market with more cross - border activities. therefore, the recommendations of the de larosiere report form a good basis for discussion. the role of the ecb let me turn to the ecb β s role in this regard, specifically with regard to macro - prudential supervision. what the current crisis shows us is that we must attach greater importance to systemic risks. the creation of a european systemic risk council under the auspices of the ecb / escb β as proposed in the de larosiere report β would be an important step in the right direction. systemic risk is something that by nature reaches beyond the consideration of individual institutions and tries to capture interlinked risks in the financial system as a whole. this is clearly in the global public interest, and public institutions must address it. for this reason the see | the effective coordination of all policy initiatives is key for ensuring global consistency and success. europe can play an important role in defining the steps towards a new global financial architecture. integrated european financial markets β and let me emphasise at this point that the process of integration must continue to be pushed forward β mean that coordinated european solutions must be found for the supervision of cross - border banks and the monitoring of systemic risks. the next step is now the publication of a concrete proposal by the european commission for discussion in the ecofin council in june. i would therefore like to stress once more that the ecb in collaboration with the national central banks, the supervisory authorities and the european commission stands ready to assume the new tasks in macro - prudential supervision that i have mentioned. we will need to identify and analyse systemic risks and make precise and concrete suggestions to the relevant authorities. this must be done at a european or global level! thank you for your attention. | 1 |
is a condition, in which an economy β s mechanisms for pricing, allocating, and managing financial risks are functioning well enough to contribute to the performance of the economy β 1. this definition implies that the financial system is capable of accomplishing appropriately its three main roles. firstly, the financial system is capable to achieve effective distribution of economic resources over time. secondly, it identifies and manages appropriately financial risks. thirdly, it can softly absorb shocks and surprises that occur in the financial system and the real economy. i think that the goal of this conference is to analyze financial markets concentrating on these three aspects, and to steer our efforts towards evaluating and guaranteeing the achievement of financial stability in our region. our economies are quickly developing, and they are experiencing rapid changes, and we, as representatives of central banking in our countries, must adapt to these changes and promote growth without losing sight of prudential supervision. latest trends towards expansion, liberalization and privatization of the financial system in the context of a fast - paced globalization of the world economy have put the goal of financial stability on top of the priorities in our region. during the last few years, the financial sector has recorded positive growth rates in all countries in our region. however, i think that the merit for such a growth goes to the most vital segment of the financial safeguarding financial stability, theory and practice ( 2005 ), international monetary fund, page 83, last paragraph. system, that is, the banking system. the key factor to the successful growth and consolidation of the banking system has been the rapid privatization of banks, which is, at present, almost complete. this process has opened the way to the arrival of well - known international banks that have brought foreign capital, expertise and confidence in the region. the entry of those banks, besides the positive aspect of fostering growth and development, calls for higher prudence in the supervisory role of the central banks. as a result of the above developments, the degree of financial intermediation in our region has further increased. credit to economy has played a considerable role towards the deepening of financial intermediation. albania has recently joined the group of countries experiencing a credit boom, as annual growth rates have been in the range of 60 - 70 per cent in the last two years. an interesting indicator of banking system transformation is the ebrd indicator regarding β banking system reform and liberalization of interest rates β, which combines the quality of supervisory and regulatory base, the ownership structure of banking | . recently we have made some concrete steps in this direction. therefore, the banking system is more extended geographically and richer in products. increase of assets, rise in the number of clients, modern infrastructure and other developments have made our contribution to cash reduction in the economy be significant. i believe that the above accomplishments, combined with determined administrative measures, will contribute to the closure of informality gates one by one in the economy. however, i observe unexploited space particularly in terms of : increasing opportunities for more electronic payments ; the last year overturned the ratio in the favour of electronic payments, when their level reached the figure of 320 thousand as compared to the number of 300 thousand of payments effected at the windows. this is an encouraging sign, urging us to better focus on this direction. channelling periodic settlements for utility services through bank accounts ; more concretely aec, alb telecom and water supplying should be related to the banking system so that their services are settled electronically. compulsory transfer of salaries of private sector β s employees through the banking system ; the so - far experience with the private sector resulted successful, while even some big private operators are applying this method efficiently. i think that the obligation to transfer salaries through the banking system will significantly decrease the evasion existing on income tax and social insurance contributions. i personally think that it is just the time to enhance popularity for imposing the creation of a banking culture and education. the obligation of each individual for opening a bank account in addition to an important massive service the state does to the population, is more than necessary. more concretely, i propose that new cards be associated with a bank account number. in conclusion, it is understandable that for being successful in the long run, more focus is needed on all the problems i briefly treated above. more loans, more prudence in the supervision, more qualified services, more free prices, less cash in the economy, more banking business, will all lead to more access of the population into your business. i deem that this is an essential prerogative that ensures sustainable long - term development of the albanian economy. | 0.5 |
produced a sizable drain on the treasury β s coffers over time. as you are well aware, programs can be easy to initiate or expand, but extraordinarily difficult to trim or shut down once a constituency develops that has a stake in maintaining the status quo. in closing, i want to commend chairman domenici and the committee for your insistence on fiscal responsibility and for years of persistent effort. your work has contributed importantly to shrinking the budget deficit and bringing surpluses within sight. these projections of surpluses, which are based on an extrapolation of steady economic growth and subdued inflation over the coming years, implicitly assume that monetary and fiscal policymakers will remain attentive to potential sources of instability. if this is the scenario that, in fact, unfolds and the budget moves into surplus within the next few years, the increase in national saving will pay off handsomely in preparing our economy and our budget for the challenges of the twenty - first century. | bank of india are : ( 1 ) the nascent stage of development of the credit derivatives market ; ( 2 ) regulatory guidelines on securitisation do not permit immediate profit recognition ; ( 3 ) perseverance of prudential policies which prevent institutions from excessive risk taking and financial markets from becoming extremely volatile and turbulent ; and ( 4 ) close co - ordination between supervision of banks and their regulation. future challenges to banking from the regulatory perspective i would like to bring to the fore four issues that i consider very important for the future regulatory reform process not only in indian context but in the context of many emerging markets as we move ahead. first is the issue related to β know your customer ( kyc ) β in banks ; second, from a central banker β s perspective whether the banks are according β fair treatment β to their customers β ( ftc ) ; third, is the issue of β risk management β and its proper understanding and fourth is the leveraging technology for greater financial inclusion. let us discuss these four important issues in some detail now. know your customer ( kyc ) in all its manifestations first is the issue of kyc in banks and its importance in the overall enhancement in the functioning of the banks. sound kyc policies and procedures not only contribute to a bank's overall safety and soundness, they also protect the integrity of the banking system by reducing the likelihood of banks becoming vehicles for money laundering, terrorist financing and other unlawful activities. there are three components here. β knowing their customers β is not enough for banks, they should also know the β business β of their customers ; ( kybc ) and if the banks know the business of their customers, the banks must understand and assess the risks associated with each of their customers β businesses ( kycbr ). the banks should realize that these parts of know your customer in all their manifestations, viz. know your customer ( kyc ), know your customers β business ( kycb ) and know your customers β business risk ( kycbr ) is not only an integral part of elementary risk management process but it also makes a good business sense. regulatory intervention in this area is going to increase in future. fair treatment to customers ( ftc ) second issue is with regard to affording fair treatment to customers ( ftc ) by banks. this requirement is key to the operation of an efficient retail market for financial services. ftc is also central to consumers having confidence in the financial services industry. this principle | 0 |
about by the pandemic are a significant step not only to kick - start recovery, but also to make further progress in the institutional design of the european union. safeguarding the welfare of the β next generation eu β requires european funds to be made available promptly and efficiently allocated in order to promote sustainable growth. the policy measures adopted in the past months have contributed to mitigating the costs of the crisis, supporting the real economy and preventing the unfolding of a credit crunch. without them, the strengthening of productive activity observed globally over the summer would not have been possible. tackling the situation created by the pandemic, still an international emergency, remains our most urgent priority until a vaccine is distributed to a substantial fraction of the population. as the impact of the pandemic has unfolded, the entire scientific community has worked tirelessly to understand, predict and suggest ways to contrast its negative effects. new studies have benefitted from a revitalisation of the interdisciplinary approach and strengthened interactions among researchers across various fields. in economics, for example, the 1 / 3 bis central bankers'speeches incorporation of key features from basic epidemiological models into otherwise standard macroeconomic frameworks have produced new insights into the interactions between health and economic decisions. some of the papers included in this workshop provide good examples of our attempts to answer key questions about the consequences of the pandemic. the first invited lecture, in particular, will propose an innovative way to quantify the welfare cost of policy responses, accounting for their distributional impact and discussing trade - offs and complementarities between public health objectives and economic results. the first session of the workshop will feature both theoretical and applied works on the impact of the pandemic on several features of the economy, such as productivity, production networks, employment, inflation and income inequality. while not directly related to the pandemic, the other two sessions will touch upon important issues that the current crisis has brought into the spotlight and that are most likely to remain at the heart of the policy debate in the coming months. i would like to briefly touch on three of them. the second session considers the role of fiscal and monetary policy in macroeconomic stabilisation, their interdependences and the extent to which they should coordinate. there is a fair concern that if monetary policy were to end up replacing fiscal policy by using money, instead of taxes or debt, to finance fiscal measures, then it would compromise the independence of central banks, with a substantial | a possible solution for processing individual data. 4 the bank of italy has begun experimenting with these technologies. see'calibrating noise to sensitivity in private data analysis β, cynthia dwork frank mcsherry, kobbi nissim, 2006. see β a fully homomorphic encryption scheme β, craig gentry, 2009. it is important to note that there is no one - size - fits - all approach to data ethics. the specific ethical considerations will vary depending on the type of data being collected and used, the purpose for which it is being used, and the potential impact on individuals and society. looking ahead as we are nearing the conclusion of this workshop, let us bear in mind that our journey with data science in central banking has just begun. the knowledge and skills we have acquired here are tools that we can wield to drive innovation and excellence in our institutions. it is our responsibility to apply what we β ve learned, adapt to the everevolving landscape of technology and data, and lead the way in shaping the future of central banking. i encourage all of you to stay connected, collaborate, and continue the dialogue beyond this workshop. the relationships we have built here can be the foundation for future partnerships and collaborations that will drive progress in our field. the bank of italy is firmly committed to carrying out further research on these issues and cooperating with other institutions to strengthen methodologies and applications. finally, let us not forget the significance of our work. central banking plays a key role in the stability and prosperity of our countries. data science can help us navigate the complex waters of modern finance. together, we can steer our institutions toward greater resilience, transparency, and effectiveness. we have had the privilege of learning from distinguished experts and practitioners in the field, who have shared their knowledge, experiences, and insights. these interactions have enriched our perspectives and deepened our understanding of the intricate relationship between data science and central banking. i would like to extend my heartfelt gratitude to all the speakers, instructors, and organizers who have made this workshop a resounding success. thank you all for your dedication, your commitment, and your thirst for knowledge. it has been an honour and a privilege for me to be a part of this workshop with you. i wish you all continued success in your endeavours, and may the insights gained here guide us toward a brighter future in our profession. | 0.5 |
##s, but generally subject to other objectives, such as inflation and financial stability considerations. while there are good arguments for forward guidance, particularly during times of crisis, providing forward guidance to the markets has not been plain sailing, and has been challenged on both theoretical and practical grounds. as argued by prof marcel fratzscher, formerly of the ecb and currently president of the german institute for economic research bis central bankers β speeches in berlin, there are major risks and costs from over - reliance on communication strategies. his concerns are three - fold : first, the dominance of the voice of central banks in financial markets has resulted in price movements becoming a reflection of responses to their statements and action, rather than to changing economic and financial realities. second, central bank communications dominance could β crowd out β private sources of information or analysis, depriving the monetary authorities of an independent view of trends that sound policy - making would find helpful. and third, central banks risk losing credibility, when overcommitment to a specified path of action turns out to be a misleading assurance. he argues against central banks giving forward guidance, including announcements about when they will begin to tighten monetary policy and by how much. rather, β they need to reintroduce true two - way risk, so that asset prices again reflect underlying fundamentals β¦ central bankers need to communicate more clearly how they think about risks and opportunities in the economy and financial markets, and then let private investors decide the balance of risks and reward for themselves. β other critics have focused on the usefulness of forward guidance. charles goodhart, for example has been skeptical of its usefulness, particularly over longer horizons, where guidance is most needed. specifying paths is only as good as the forecasts upon which they are based. his research shows that while central bank forecasts are very good up to two quarters ahead, they are β dire β at longer time horizons. furthermore, he finds that existing empirical studies have failed to show that markets coordinate on the published forward guidance of central banks. his own research in fact found that in sweden and norway, the official path adjusts to the market rather than vice versa, except on short horizons in sweden where a two - way relationship exists. similarly, his review of state - contingent forward guidance concludes that while it has been largely successful in influencing the short end of the yield curve, they have no effect over longer horizons. in general, where state contingent guidance has been given, it is clear that the conditional | illustrate these points with the example of central banking which, of course, is the example i know best. there is a broad global consensus on the model of central banking that we use in south africa. in that model, a central bank is independent, but independence does not mean that the central bank can do whatever it pleases. the central bank is given independence to achieve specific mandates. those mandates are things most people agree are in the interest of society. our mandates, in common with many other central banks, are for price and financial stability. we have a toolkit to achieve these mandates. we can set interest rates and we can enact a range of regulations, supervise financial institutions and intervene in the financial market to counter dysfunction and instability. central bank independence came about because we tried central bank dependence and it did not work. in countries where central banks are captives of the political process, they tend to be willing to fund whatever government wants, or to adjust monetary policy to suit election timetables. ultimately, these come at a huge cost to the economy, paid with an inflation tax, which is levied disproportionately on the poor and vulnerable people in society. this discussion draws on paul tucker, unelected power, 2019. you also get central banks that let banks misbehave, take huge risks, then extract bailouts from the public purse to save the financial system. in the short term, central banks can make themselves popular by providing cheap money and encouraging credit sprees. conversely, central banks can also make themselves deeply unpopular by interrupting the ruling party by insisting on protecting price and financial stability. but ordinary people want stability. they do not want the currency crashing ; they do not want prices in the shops spiralling ; and they do not want to worry if their money in the bank is safe. simultaneously, most citizens do not have the time or the power to enact policies to protect price and financial stability. what they have is us. this is not to speak disparagingly of our stakeholders, but we cannot expect citizens to master these issues. they have their own priorities ; they have their own projects. there is too much information for them to understand everything and it is not their job to do the things we are responsible for. this is a phenomenon economists call β rational ignorance β. just like with smartphones or cars, you want to be able to leave the technical details to someone else and rely on the system to work. of course | 0.5 |
country in the world to use this new security feature. on the 50 and 20 dollar notes, we have retained the β multi image hologram β or the round silver foil, but instead of having both of them of the same shape we have different shapes β the 50 dollars have the shape of a turtle and the 20 dollars the shape of a fan. on counterfeits, i wish to clarify that in relation to the total value of currency in circulation, the combined value of counterfeits is extremely negligible at. 0009 percent. we obviously cannot completely eradicate counterfeits. however, we are well aware of the importance of safeguarding at all times public confidence in our currency. the bank will therefore continue to work with the fiji police force to renew media awareness on the security features of our currency notes. for the first time, fiji β s banknotes will vary in length to help the visually impaired. the 100 dollar note will be the length of our existing banknotes. the length of the lower denomination will progressively reduce by 5 millimetres. this means that the two dollars will be the shortest note being 25 millimetres less than the 100 dollar note. the notes will all have the same width as the current notes. i am confident that we will be proud of our new banknotes. in the next two weeks, we will be starting a public awareness campaign to inform the public of the new notes. the new banknotes will go into circulation from 10 april. the new and the β existing β notes will circulate side by side until the existing notes go out of circulation. both designs are of course legal tender. with the introduction of the 100 dollar banknote, we have the same highest denomination with developed countries like the united states, australia and new zealand. the united states has stated that it is not raising its highest banknote above 100 dollars. i believe that it would be a very, very long time before fiji will think again about raising its highest bank note. once again, i express our sincere thanks to his excellency, the president for agreeing to be our chief guest. we are indeed honoured that you have graced the occasion with your presence today. i now have the pleasure of inviting his excellency to address us. | the notes. this currency design committee was chaired by our board director, mr. kanti tappoo obe and members of that committee were dr. dick watling, mr ikbal jannif of, mr. radike qereqeretabua of and ms. saqale buadromo. another committee was formed to examine the technical elements of the notes which include the choice between paper and polymer, the security features, the sizes and the colour. this technical committee was chaired by deputy governor, mr. sada reddy and the members were the bank β s executive management. the bank also conducted a nationwide survey to gauge the views of the general public. we kept cabinet informed and obtained the necessary approvals as we went along. in 2005, we went out to tender. four out of nine reputable banknote printers in the world responded to the bank β s β expression of interest β and were invited to tender for the production of the notes. after a comprehensive evaluation, the tender was awarded to de la rue currency & security print, a company in the united kingdom. this company has been printing fiji β s banknotes since 1914. we are pleased that three representatives of the company are able to be here with us today. i extend a warm welcome to mr. tim jones, ms. maria atkinson, and ms. brooke banks to fiji and to this ceremony. the new bank notes have arrived and are safely stored in our vault. i take this opportunity to thank everyone who has contributed to this project. a special appreciation goes to the members of the two committees. let me mention a few specific features of our new notes. we decided to stay with paper rather than change to polymer or plastic. this decision was based on our public survey and improvements made over the years by the printers to make paper money last longer. for durability, we have coated all denominations except the new 100 dollar with a substance called β platinum β which will virtually double the life of these notes. let me say a few words on the security features. almost all of the security features which are in our current banknotes like the watermark will remain. but at the same time, we have taken the steps to improve them. in addition, we have also introduced the state of the art security technology. on the 100 dollar bill, we have included what is called β optiks β which is de la rue β s top security feature. fiji would be perhaps the first or the second | 1 |
economic downturn has not significantly eroded the capital of most financial intermediaries, and the terms and availability of credit have not tightened to such an extent as to be significant factors in deepening the contraction or impeding the recovery. the use of a growing array of derivatives and the related application of more - sophisticated methods for measuring and managing risk are key factors underpinning the enhanced resilience of our largest financial intermediaries. derivatives have permitted financial risks to be unbundled in ways that have facilitated both their measurement and their management. because risks can be unbundled, individual financial instruments now can be analyzed in terms of their common underlying risk factors, and risks can be managed on a portfolio basis. concentrations of risk are more readily identified, and when such concentrations exceed the risk appetites of intermediaries, derivatives can be employed to transfer the underlying risks to other entities. as a result, not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient. individual institutions β portfolios have become better diversified. furthermore, risk is more widely dispersed, both within the banking system and among other types of intermediaries and institutional investors. even the largest corporate defaults in history ( worldcom and enron ) and the largest sovereign default in history ( argentina ) have not significantly impaired the capital of any major financial intermediary. likewise, record amounts of home mortgage refinancing and accompanying declines in mortgage asset durations have not imperiled the principal intermediaries in the mortgage markets, in substantial part because these institutions were able to use derivatives to transfer a significant portion of the convexity risk associated with prepayments of fixed - rate mortgages to investors in callable debt and issuers of putable debt. risks associated with the use of derivatives if derivatives and the techniques for risk measurement and management that they have facilitated have produced all these benefits, why do they remain so controversial? the answer is that the use of these instruments and the associated techniques pose a variety of challenges to risk managers. inevitably, risk - management failures occur, and in two instances - - the highly publicized cases of barings and long term capital management - - they proved destabilizing. those that question the net benefits of derivatives see daunting risk - management problems and thus foresee catastrophic outcomes. in particular, they fear that common deficiencies in risk management will result in widespread failures or | there is no long - run tradeoff that monetary policy can exploit. monetary policy is generally thought to be able to control inflation over the long run. in contrast, the maximum level of employment depends on structural forces and economic policies beyond the influence of monetary policy. in the short run, the two mandates often suggest the same course of action. this is particularly true in the presence of demand shocks. for instance, a negative demand shock in the economy will tend to raise unemployment and also put downward pressure - 7on inflation. in this case, both mandates suggest a need for monetary stimulus to increase demand in the economy, bring down unemployment, and keep inflation from falling significantly below target. however, a negative supply shock ( like a rise in oil prices ) will tend to increase both inflation and unemployment at first, which creates a short - run tradeoff for monetary policy. stimulus to bring down unemployment could push inflation even higher, but responding aggressively to inflation may have significant employment costs. the fomc lays out our approach to this potential tradeoff in its annual statement on longer - run goals and monetary policy strategy, which says the following : the committee β s employment and inflation objectives are generally complementary. however, under circumstances in which the committee judges that the objectives are not complementary, it takes into account the employment shortfalls and inflation deviations and the potentially different time horizons over which employment and inflation are projected to return to levels judged consistent with its mandate. 10 in 2022 and into 2023, with unemployment near historical lows but inflation at its highest level in four decades, it was clear that this approach to meeting the dual mandate implied forceful tightening of monetary policy. more recently, with inflation having fallen substantially, even as the labor market has remained strong, it is worth considering how economic developments may have shifted policy tradeoffs and associated risks. inflation indicators how do we evaluate whether we are meeting our dual - mandate goals? starting with inflation, we look at the 12 - month change in the pce price index, which rose to more than 7 percent in mid - 2022 ( slide 1 ). as economies around the world gradually see paragraph 6 of the statement on longer - run goals and monetary policy strategy, which is available on the board β s website at https : / / www. federalreserve. gov / monetarypolicy / files / fomc _ longerrungoals. pdf. - 8reopened after pandemic - related shutdowns, demand picked | 0.5 |
and profits. 3 consequently, formal financial institutions that rely on audited financial statements and wellarticulated project and financial proposals to disburse loans assume that most smes are mugume, a. ( 2008 ). profitability, concentration, and efficiency in uganda β s banking industry. ( d. a. kihangire, c. a. abuka, & j. o. apaa, eds. ) the bank of uganda staff paper journal, 2 ( 1 ), 5 β 35. world bank database 2013. kasekende, l. and opondo, h. ( 2013 ). financing small and medium scale enterprises ( smes ) : uganda β s experience. bou working paper wp / 03 / 01. bis central bankers β speeches high risk borrowers whose credit worthiness is not easy to establish due to information asymmetry. in addition, formal financial institutions assume that extension of credit to these smes would require high monitoring and enforcement costs. both these supply and demand related factors remain major handicaps to the development of medium to long term financing. as a result, the government of uganda ( gou ) in collaboration with its development partners alongside bank of uganda has had various attempts in the past to remedy the structural bottlenecks in credit allocation. these attempts took the form of low interest rate credit schemes 4 such as ( 1 ) apex private sector loan scheme ( apex ) ; ( 2 ) export refinance fund ( erf ) ; ( 3 ) distressed flower project fund ( dfpf ) ; ( 4 ) export promotion fund ( epf ) ; and ( 5 ) development finance fund ( dff ). other schemes have included ( a ) investment term credit refinance fund ( itcrf ) ; ( b ) cotton sub - sector development project ( csdp ) ; ( c ) rehabilitation of public enterprises ( rpe ) project ; and ( d ) export credit guarantee scheme amongst others. more recently, the agricultural credit facility ( acf ) was introduced in 2009 to deal with the second round effects of the global food price hike of 2007 and promote value addition in agro - processing. the performance of these schemes has been varied. the timing of introducing the schemes, mechanism of delivery and quality of business cases from smes for these loans partly explains the variance in performance. ultimately, the sustainability of these credit schemes has been and will be dependent upon low defaults of the loan portfolio and low overall administration costs. | begin by considering how to promote solvency and liquidity, taking into account the unique structures and activities of each type of nonbank. liquidity challenges vary across nonbank firms and activities. in some, the issue is whether a firm can fund itself in a distressed situation. for example, a broker - dealer that relies heavily on short - term wholesale funding may find its funding evaporating at the first sign of trouble β a situation that could force the sale of assets at fire sale prices. one way to mitigate such problems is by having direct restrictions on the structure of liabilities, such as on their duration or on the use of wholesale funding. analogously with banks, one could also imagine requiring some nonbanks to maintain buffers of highly liquid assets that are sized according to the risk that their liabilities will run off quickly in a stress situation. in other nonbanks, withdrawable liabilities are part of the structure of the entity or activity, and what varies is the degree of mismatch between the liquidity of assets and liabilities. for example, some open - ended mutual funds offer daily withdrawal privileges but invest in assets that take longer to sell and settle, giving investors an incentive to withdraw quickly when distress arises. the fire sales of assets that may result can depress asset prices and increase volatility, with knock - on effects on other institutions and markets. concerns have grown about this liquidity mismatch as the aggregate value of less liquid assets in such funds has grown. in part because of this concern, in a december federal register notice last year, the financial stability oversight council ( fsoc ) requested public comment on potential systemic risks posed by asset manager activities and products. to promote solvency, one could impose ratio - type capital requirements, such as leverage ratio requirements or risk - based requirements. an alternative is to require that firms perform regular stress tests to demonstrate that they can remain solvent and continue to lend even under stress. in the fed β s case, it has chosen to impose all of these requirements on banks, but these requirements cannot simply be applied, as is, to nonbanks. see gorton and metrick, β securitized banking, β in note 4, op. cit. ; jeremy stein ( 2012 ), β monetary policy as financial stability regulation, β quarterly journal of economics, vol. 127, pp. 57 β 95 ; robin greenwood, samuel hanson, and jeremy stein ( 2014 ), β a | 0 |
duvvuri subbarao : impact of the global financial crisis on india β collateral damage and response speech by dr duvvuri subbarao, governor of the reserve bank of india, at the symposium on β the global economic crisis and challenges for the asian economy in a changing world β organized by the institute for international monetary affairs, tokyo, 18 february 2009. * * * global outlook the global economic outlook deteriorated sharply over the last quarter. in a sign of the ferocity of the down turn, the imf made a marked downward revision of its estimate for global growth in 2009 in purchasing power parity terms β from its forecast of 3. 0 per cent made in october 2008 to 0. 5 per cent in january 2009. in market exchange rate terms, the downturn is sharper β global gdp is projected to actually shrink by 0. 6 per cent. with all the advanced economies β the united states, europe and japan β having firmly gone into recession, the contagion of the crisis from the financial sector to the real sector has been unforgiving and total. recent evidence suggests that contractionary forces are strong : demand has slumped, production is plunging, job losses are rising and credit markets remain in seizure. most worryingly, world trade β the main channel through which the downturn will get transmitted on the way forward β is projected to contract by 2. 8 per cent in 2009. policy making around the world is in clearly uncharted territory. governments and central banks across countries have responded to the crisis through big, aggressive and unconventional measures. there is a contentious debate on whether these measures are adequate and appropriate, and when, if at all, they will start to show results. there has also been a separate debate on how abandoning the rule book driven by the tyranny of the shortterm, is compromising medium - term sustainability. what is clearly beyond debate though is that this great recession of 2008 / 09 is going to be deeper and the recovery longer than earlier thought. emerging economies contrary to the β decoupling theory β, emerging economies too have been hit by the crisis. the decoupling theory, which was intellectually fashionable even as late as a year ago, held that even if advanced economies went into a downturn, emerging economies will remain unscathed because of their substantial foreign exchange reserves, improved policy framework, robust corporate balance sheets and relatively healthy banking sector. in a rapidly globalizing world, the β decoupling theory | pace and content of capital account liberalisation will depend upon the future events, but the regulatory regime has to be clear and transparent. a regulatory regime that creates uncertainty and obfuscates imposes tremendous cost on the economy and the society. e. finally, the issue of fair pricing. forex customers, especially from small and medium enterprises and retail segments, have approached us on several occasions highlighting β high β charges levied by authorised dealer banks on their forex transactions. not only there appears to be a wide variation amongst the banks in the charges levied on the smaller customers, there appears to be a complete lack of transparency regarding the information on charges levied for such customers. i am aware that fedai has issued a special circular in this regard but i once again urge all banks assembled here to pay due attention to this aspect before calls for regulation of forex rates become more vocal. 33. i wish the conference, whatever is left of it, all success. i also wish each one of you all success in the years to come. as i leave the stage, rather than singing along with frost that we have miles to go before sleeping, i would rather echo tennyson β s brook ( read markets ) that will surge along irrespective of men ( like me or any other ) who may come and go. i shall of course continue to watch the developments from the sidelines. good bye. bis central bankers β speeches | 0.5 |
the other, real interest rates will be lowered, thereby generating the effect of powerfully stimulating economic activity. as the real economy improves due to such stimulus, the actual inflation rate will rise, which will lead to a further rise in inflation expectations : such a virtuous cycle can be expected to operate. is such a mechanism actually at work? so far, the qqe has been steadily exerting its intended effects. surveys on various economic entities and break - even inflation rates have suggested a rise in inflation expectations on the whole. as for nominal interest rates, in contrast with other advanced economies in which long - term interest rates have been rising in tandem with economic recovery, japan β s long - term interest rates have been hovering in a stable manner at an extremely low level of around 0. 6 percent. under such financial conditions, japan β s economy has continued to recover moderately in association with a virtuous cycle among production, income, and spending. on the price front, the year - on - year rate of change in the cpi excluding fresh food was negative when the qqe was introduced but has since improved, registering a positive figure of around 1ΒΌ percent in the latest data. one year has passed since the introduction of the qqe, and we have reached the midpoint of β about two years β that we specified. so far, japan β s economy has been following the path toward achieving the 2 percent price stability target as expected, and we have become increasingly confident that the anticipated transmission mechanism of the qqe is actually working. in japan, two rounds of consumption tax hikes are scheduled. based on the experience of the economy going into recession when consumption tax was raised last time, in 1997, there are some concerns that the same might happen again. however, looking at the economic conditions of that time, the economic growth rate plunged immediately after the tax hike but subsequently showed signs of recovery. the economy seemed to have instead been affected substantially by a series of failures of japanese major financial institutions and by the asian currency crisis that took place just when the economy showed nascent recovery. by contrast, at present, japan β s financial system has been maintaining stability and emerging economies have become more resilient against negative shocks. the current conditions are quite different from those in 1997. taking these differences into account, the bank believes that, even assuming two consumption tax hikes, the virtuous cycle in the economy will not be interrupted and japan β s economy will | markets for such instruments as corporate bonds and cp. on the other hand, credit demand of private firms continues to lack momentum as corporate demand for external funds is subdued, since firms β cash flow is at a high level. moreover, firms continue to reduce their debts as part of their balance - sheet restructuring measures. as a result, credit demand in the private sector has continued to be basically stagnant. in view of this, the underlying tone of private banks β lending remains sluggish. the amount outstanding of corporate bonds issued continues to be above the previous year β s level but the growth rate is slowing somewhat. meanwhile, the amount outstanding of cp issued remains at a high level. recently, the growth rate of money stock ( m2 + cds ) is increasing reflecting the inflow from postal savings. funding costs for firms continue to decline as both short - and long - term prime lending rates were lowered, reflecting the decrease in market interest rates. in this financial environment, the lending attitude of financial institutions and corporate financing conditions remain easy. for the time being, attention should be paid to the effects of the additional monetary easing measures taken by the bank, while careful monitoring is still required for the effects of stock price developments on the behavior of financial institutions and the fund - raising conditions of firms. | 0.5 |
appropriate haircuts on collateral, and avoiding the purchase of risky private - sector assets. third, and important even when we move away from the zero lower bound, the expansion of central bank responsibilities to include macroprudential policy and, in the case of the bank of england, responsibility for regulating the banking system, has made independence much harder to define. the deployment of responsibilities outside monetary policy cannot be divorced from the government in the same way as is possible for monetary policy. for example, in the area of financial stability and banking supervision, there will be times when public funds may be put at risk when rescuing or resolving a failing institution β and that decision is properly one for the finance ministry. it is far from straightforward for a central bank governor to be completely independent in terms of monetary policy, somewhat independent in terms of financial stability, and not at all independent in terms of operations that risk taxpayers β money. the financial crisis has challenged our understanding of the objectives of monetary policy and exposed its limits. and, through the proliferation of instruments and resulting increase in responsibilities, it has complicated the question of central bank independence. so how should we respond to this more complex environment? we must keep sight of three important principles. first, although they should be realistic about what can be achieved, it is right that elected politicians and parliaments decide on the objectives of policy. second, as we learned in the 1970s, if the central bank is to achieve price stability β its fundamental role β it must be sufficiently independent. and third, in order to protect that independence, its limits should be very clearly circumscribed, and we should be exceptionally careful with decisions that put public funds at risk. the challenge remains, as it was twenty years ago, to make β constrained discretion β work in practice. but it has got harder. bis central bankers β speeches chart 1 : uk inflation and output gap variances inflation variance 1958 - 1992 1993 - 2007 output gap variance chart 2 : the uk β s pre - crisis trade - off? inflation variance stylised β taylor frontier β 1958 - 1992 1993 - 2007 output gap variance bis central bankers β speeches chart 3 : the β great stability β and crisis periods inflation variance 1958 - 1992 2008 - 2012 1993 - 2007 output gap variance chart 4 : the true trade - off for the uk over 20 years? inflation variance 1958 - 1992 1993 - 2012 2008 - 2012 1993 - 2007 output gap variance bis central bankers β speeches chart 5 : a preferable outcome? | that the squeeze on real household incomes will ease, providing some support for consumer spending. even so, real income growth will still only be moderate and high levels of indebtedness may weigh on the spending of some households. moreover, the uncertainties associated with the euro area are likely to persist, retarding growth there. not only will that weigh on our exports, but funding conditions may also remain difficult, while british businesses are likely to remain cautious about investing and hiring. at its october meeting, the monetary policy committee agreed that the outlook for uk output growth was markedly weaker than it had believed earlier in the year. without action, and despite the present excessive level of inflation, the extra margin of slack meant that inflation would consequently be more likely to undershoot, rather than overshoot, the 2 % target in the medium term. so it was against that background that we decided to re - start our asset purchases, buying another Β£75 billion of gilts. as you will no doubt know, quantitative easing aims to depress a range of longer - term yields and raise asset prices, so boosting demand. our analysis suggests that our first Β£200 billion of asset purchases reduced the yields on gilts and corporate bonds by around a percentage point2. studies for the united states, using a similar methodology, find comparable effects from the federal reserve β s large - scale asset purchases, which is comforting. the asset purchases also have the effect of boosting banks β holdings of the most liquid asset, central bank reserves, which may be of particular value at the current juncture. while one cannot be confident about the impact of our earlier purchases on the real economy, our analysis points to a peak effect on output of 1Β½ β 2 per cent and of ΒΎ β 1Β½ percentage points on inflation. at this juncture at least, we have no reason to believe that, suitably pro - rated, the current phase of purchases will be greatly different in their effect on either asset markets or on the real economy. for a summary of the evidence, including references to related studies, see michael joyce, matthew tong and robert woods ( 2011 ), β the united kingdom β s quantitative easing policy : design, operation and impact β bank of england quarterly bulletin, 51 ( 3 ), 200 β 212. bis central bankers β speeches several commentators have suggested that the effectiveness of quantitative easing could be enhanced by spending the newly created money on something other than government debt. conceptually, one can always think | 0.5 |
and approved the building of 500, 000 housing units in all regions of the kingdom over the coming five years with allocations of rls 250 billion. the limit of housing loans extended by the real estate development fund was increased from rls 300, 000 to rls 500, 000 which will hopefully provide more houses for citizens and constrain the inflationary pressures stemming from the increase in house rents. you also ordered setting a minimum wage of rls 3, 000 for all saudi government employees, allocated a monthly amount of rls 2, 000 for job seekers, and raised capital of the saudi credit and saving bank by rls 30 billion. the number of family members covered by the social security was increased from 8 to 15 with an allocation of rls one billion for that purpose. the government subsidies for charity associations rose by 50 percent to rls 450 million annually, and needy families β sons and daughters were supported to join bis central bankers β speeches universities through allotting them a portion of seats, facilitating their admission requirements, and exempting them from some tuition fees. this package of honorable royal decrees will enhance the standard of living of the least - income segment of population and promote its ability of saving and, thereby, raise its future productivity and income, and reduce poverty, to which you always attach considerable attention. in the health care arena, you ordered supporting the ministry of health with rls 16 billion in order to carry out the expansion of a number of hospitals and health centers. you increased the maximum limit of the ministry of finance β s financing program of private hospitals from rls 50 million to rls 200 million. this would hopefully enhance health care services in the kingdom. under your wise leadership and continuous guidance, the supreme economic council continued to accomplish a number of development steps aimed at restructuring and reorganizing the economy and streamlining regulations and legislation in order to promote the rise of the level and competitiveness of the economy, achieve the optimum operation of the production factors and provide an attractive environment for domestic and foreign investment. as a result, the investment environment has improved. according to the β doing business report 2012 β issued by the world bank, the kingdom ranked twelfth among 183 world countries in terms of ease of business performance. the executive board of the international monetary fund noted that the kingdom was well posed to encounter the global financial crisis. however, the sound supervisory and regulatory frameworks significantly contributed to strengthening the capacity of the financial sector to withstand the crisis. the board stressed that | hamad al - sayari : financial planning and wealth management in saudi arabia speech by his excellency hamad al - sayari, governor of the saudi arabian monetary agency, on the occasion of the graduation of the 7th and 8th batches of the financial planning program and the 2nd and 3rd batches of the wealth management program, riyadh, 17 january 2007. * * * dear audience, i am really glad on this blessed day to be with you in this happy occasion to celebrate the graduation of the 7th and 8th batches of the personal financial planning program, and the 2nd and 3rd batches of the wealth management program. in pursuance of its key role in developing the banking and financial sector, sama has been very keen to develop human resources in all financial and banking specializations. to this end, sama has made many initiatives. it has instructed the iob to conduct a comprehensive study on the investment sector to determine the professional and educational criteria that must be satisfied by personnel involved in the various areas of investment. the findings of the study have showed that all staff working in investment and financial intermediation should have certain basic knowledge and skills in these fields. to meet these needs, the iob designed scientific subjects and standardized tests on the basics of investment and stock trading. moreover, the findings have indicated that banks β customers are in need of persons specialized in offering financial advisory services. therefore, the iob has worked on developing two programs, namely, β’ personal financial planning program. β’ wealth management program. these two programs have been designed according to the latest international scientific standards. they have been designed after the model of capabilities required in a successful and professional financial planner and wealth manager. a number of members of the training staff in the institute of banking have participated in this process, and experts have also been hired from prestigious universities and educational institutions outside the kingdom. as a result of this model, more than ten programs in financial planning and four programs in wealth management have been carried out. the programs have been commended by saudi banks. dear attendance, management of investment operations requires specialists enjoying necessary knowledge, required skills, and professional conduct. the role of a financial advisor has gained more importance, and it should be practiced by qualified professionals who care, in the first place, for the interests of their customers who have put their confidence in them, and they should comply with the application of the policies of the supervisory authorities and financial institutions to which they belong. the importance of transparency and | 0.5 |
think the message should be pretty obvious. this process of establishing a global code of conduct for the fx market provides an opportunity for the industry to work with the public sector to improve the fx market and restore confidence in it, rather than having a ( possibly sub - optimal ) solution imposed on it. that said, an overall aim of the code is for it to be principles - based rather than rules - based. there are a number of reasons why we intending to proceed in this manner, but from my point of view, an important reason is that the more prescriptive it becomes the easier it is to get around. rules are easier to arbitrage than principles. if it β s not expressly prohibited or explicitly discouraged, then it must be ok seems to be the historical experience. the more prescriptive and the more precise the code is, the less people will think about what they are doing. if it β s principles - based and less prescriptive, then market participants will have to think about whether their actions are consistent with the principles of the code. the intention is to have this work of developing a single code to replace the various regional industry codes completed by may 2017, with a new framework for adherence completed at the same time. however, we intend to put out some parts of the global code, including drafts of material on order handling and execution, by may 2016. we recognise that there is a need for greater clarity around some of these issues sooner rather later. we will be providing this draft material to the various fxcs and other market participants for their input in the first quarter of next year. at the end of the process, for the code to be effective and for it to achieve what we want it to achieve, it will need to be accepted and endorsed by the fxcs and market participants more generally. that said, the process does not really end, because as the foreign exchange market continues to evolve, the code will need to evolve with it. β fx benchmarks β, address to the fx week australia conference, sydney, 12 february 2015. carney, m, β building real markets for the good of the people β, mansion house speech, 10 june 2015. available at < http : / / www. bankofengland. co. uk / publications / documents / speeches / 2015 / speech821. pdf >. potter, s. β trends in foreign exchange markets and the challenges ahead β, remarks at the 2015 fx week conference, new | zero ( or even slightly below zero ) in many advanced economies to support recovery and assist in balance sheet repair, and they still remain at those levels. in europe, significant institutional reforms are being made to strengthen the stability of the euro area ; these are aimed at getting banking and crisis - management arrangements across the area to function in a more unified way that makes them more robust to shocks in the future. and globally, there is an extensive program of reform underway, for example in banking and securities regulation, to build resilience in our financial systems. australia has been very much a part of that process. a related development in this period is that there has been a renewed interest in more proactive approaches to the management of systemic risk. partly this reflected the lesson from the gfc itself that financial crises are costly, and hence that there is a strong need for better risk management. in keeping with that, institutional arrangements have been strengthened in some jurisdictions to support more proactive risk management by supervisors, where that was found to be lacking. a related point is that, in a low interest rate environment, supervisors have seen a need to be particularly vigilant against a build - up of risk in interest sensitive sectors. a number of them have been taking measures in recent times to respond to developing risks, often focused on property lending. i will have more to say about that later. to summarise ( and oversimplify ) this picture somewhat, the after - effects of the gfc on the global economy have included : reinhart cm and k rogoff ( 2009 ), this time is different : eight centuries of financial folly, princeton university press, princeton. bis central bankers β speeches β’ an extended period of low interest rates β’ β search for yield β behaviour by investors in some interest - sensitive sectors, and β’ a strengthened focus on risk management by prudential supervisors. recent developments with all of that as background, i want to turn now to our assessment of the evolving risk environment over the past six months, and here i draw on some key messages from our recent review. it is useful to take that subject in three parts : β’ the global risk environment ; β’ possible implications of that environment for australia ; and β’ domestically generated sources of risk. the global risk environment as i have already mentioned, much of the attention from a financial stability point of view over recent years has been on europe. there has been a particular focus on greece, and on potential spillovers from greece to other parts | 0.5 |
variable remuneration below a conservative threshold. in the medium term, after the covid - 19 crisis, it will be important to look holistically at the capital framework with a view to simplifying it and removing potential obstacles to its effectiveness. the non - bank financial sector needs to be made more resilient through regulatory reforms, given the 2 / 3 bis central bankers'speeches growing role of non - bank financial institutions in financing the real economy and their interlinkages with the rest of the financial system. international crisis response as national authorities continue to take the necessary steps to fight the pandemic, global cooperation and resource and knowledge - sharing across nations remain vital. addressing international trade disruptions, preserving trade openness and ensuring universal access to vaccines and treatments will be of paramount importance for a durable global economic recovery. global cooperation has been instrumental in our response to the pandemic so far. on the central banking side, this includes the coordinated action by major central banks, including the ecb, to enhance the provision of us dollar liquidity at the onset of the crisis. in addition, the ecb β s agreements on bilateral euro swap and repo line arrangements with some eu and eu neighbouring countries β central banks to prevent euro liquidity shortages from morphing into financial stability risks and to support the smooth transmission of monetary policy. support to the most vulnerable countries, including through the g20 debt service suspension initiative and the establishment of the common framework for debt treatments, has also shown how the international community has stood together firmly to address the pandemic and its consequences. further international efforts will be needed to counter the effects of the pandemic, to maintain a well - functioning international monetary system and to support a global economy that is fit for the future. the ecb supports the crisis response measures taken by the imf and welcomes the recent progress made towards a general special drawing rights ( sdr ) allocation. it is a strong and important signal of constructive multilateral cooperation helping the global recovery. it should be accompanied by efforts to improve transparency and underpin the exchange of sdrs through a broader set of voluntary trading arrangements. given the high debt levels worldwide, we are also supportive of the imf β s comprehensive work agenda on debt issues, which will continue to be a key area of work. the upcoming review of imf surveillance is well timed to support a resilient global economic system during and after the recovery phase. bolstering the recovery to | namely that it would bring prosperity and opportunities, we need to step up our efforts at both national and euro area level to strengthen the architecture of the single currency. many of the failings that caused and perpetuated the crisis remain unresolved. at a time of heightened global uncertainty, completing the euro area β s architecture is also necessary for europe to be able to achieve its other objectives. europeans won β t be able to foster cooperation on security and defence, or to speak with one voice on international affairs, or to complete the single market if they repeatedly have to tackle economic crises which are largely of their own making. a sound and sustainable euro area will help redirect political capital where it is most needed. ensuring the political relevance and legitimacy of this process is in the hands of the european parliament and national parliaments. i very much look forward to today β s discussion. thank you. 4 / 4 bis central bankers'speeches | 0.5 |
, bis central bankers β speeches i. e. those for july and august, show a certain moderation in the rate of job creation in this period, albeit still in a positive vein. labour costs continued to moderate in the first half of the year, reflecting the greater flexibility with which firms can adjust their labour conditions to the macroeconomic environment. if the trend prevailing in the past year and a half continues, the rise in employment may put the unemployment rate at around 20 % in 2016 q4. in the realm of inflation, the recent energy price falls have interrupted the course of recovery of the cpi. after posting positive year - on - year rates in june and july, for the first time in nearly a year, the overall price index slipped back ( by β 0. 4 % ) in august. it is important, however, to emphasise the temporary nature of this new bout of disinflation, linked to the recent oil price fall in the international markets. in fact, the rate of change of the cpi excluding energy increased by 0. 9 % in august, growing slightly faster than in july, while the indicator which excludes unprocessed food as well, so - called β core inflation β, grew by 0. 7 %. the latest data have not invalidated the outlook for gradual recovery of inflation reflected in the most recent forecasts. budgetary policy in 2016 as i have said in previous appearances before the senate, the primary objective of budgetary policy is to ensure that the recovery is underpinned by lasting stability. in particular, it is indispensable to persevere with the strategy of fiscal consolidation leading to the stabilisation and subsequent reduction of the public debt ratio. the improvement in the cyclical conditions envisaged in the macroeconomic scenario used to prepare the draft budget has a positive effect on public finances owing to increased tax collection, a further drop in unemployment benefits and a progressive reduction of the average interest rates paid on public debt. all this means that the budgetary policy measures to meet the budget deficit targets are less costly. specifically, the draft state budget envisages economic growth of 3. 0 % for 2016, slightly below the 3. 3 % projected for 2015, with growth of domestic demand and a progressive recovery of inflation rates which would lead to an increase in nominal gdp of nearly 4 %. against this background, the overall general government deficit for the coming year will foreseeably stand below 3 %, the ceiling established in | to our interpretation of economic data. one way to deal with uncertainty is to choose an appropriate degree of gradualism in policy decisions. according to the so - called " brainard principle " ( introduced in brainard 1967 ), increased uncertainty would warrant a more gradual response. 3 / 5 bis - central bankers'speeches there is a recent case in point on applying this principle. noting the accelerating inflation in the winter of 2021 - 2022, many of us policymakers would have been ready to raise the rates in march 2022. however, russia's illegal, brutal invasion to ukraine on 24 february 2022 both turned us back to the era of raw geopolitics and created a massive cloud of uncertainty over europe's economy. at least my initial assumption then was that it would probably have serious stagflationary consequences β i. e. both hitting growth and generating inflation, " back to the 70s ". in that context, it made sense to take a timeout and once the clouds had somewhat cleared choose the policy stance. β this context should be taken into account in all post - mortems of the recent polycrises years. more recently, however, some have argued for a strong policy response when there is a lot of uncertainty, especially about future inflation. 3 this can be seen as a risk management approach to policymaking, where we aim at guarding against the worst outcomes. for instance, during the recent inflation cycle, when inflation started to accelerate, it was important to unwind the accommodative monetary policy stance fast to guard against the danger of de - anchoring of inflation expectations. this guided us in the ecb governing council to decide on consistent rate hikes since july 2022. what can we conclude from the last two examples? judgment matters. in other words, while advances in economics have enabled us to gain a much better understanding of the macroeconomy and price dynamics, human judgment is still necessary especially in the critical moments when elevated uncertainty dominates and several options are open. in science we trust, but the art of monetary policy cannot still be replaced by artificial intelligence β at least in the foreseeable future! to summarize, uncertainties in price dynamics have indeed challenged our policymaking. the silver lining is that we have gained a lot of understanding about the appropriate policy responses in these circumstances. for me, this has above all highlighted the crucial role of inflation expectations in the making of monetary policy, as well as the | 0 |
will follow the creation of the prudential regulation authority. the challenge facing monetary policy is obvious β the combination of high consumer price inflation and weak economic growth. both of these might seem surprising given the large amount of spare capacity in the economy. but the rise in world energy and other commodity prices, and the need to reduce both the external and budget deficits, are squeezing real living standards, pushing up on consumer price inflation and slowing domestic consumption. the big picture is that the uk economy is going through a major rebalancing of demand and output, from private and public consumption to net exports and business investment, which will take several years to complete. a necessary precondition for that rebalancing was a fall in the real exchange rate. markets anticipated that need. the nominal effective sterling exchange rate fell by around 25 % between the start of the crisis in 2007 and the beginning of 2009, since when it has been broadly stable. the monetary policy committee ( mpc ) decided to look through the first - round effects of this depreciation on the price level. we could have made a different judgement. we could have raised bank rate significantly so that inflation today would be closer to the target. but that would not have prevented the squeeze on living standards arising from higher oil and commodity prices and the measures necessary to reduce our twin deficits. and it would have meant a weaker recovery, or even further falls in bis central bankers β speeches output, despite our having experienced the worst downturn in output and spending since the great depression. to force nominal wages below their already depressed level would have meant much higher unemployment, a greater erosion of living standards, a marked degree of β undesirable volatility in output β ( contrary to our remit ), and a risk of inflation falling well below the target in the medium term. with the freedom granted from having our own currency, the mix of tight fiscal and loose monetary policy is necessary for a rebalancing of the economy. because of the measures taken to reduce the enormous fiscal deficit here at home, uk sovereign debt funding costs have actually fallen relative to those in germany since the start of last year. of course, there can always be differences of judgement about the overall stance of policy, but to change the broad policy mix would make little sense. of course, at some point, bank rate will need to rise to more normal levels in order to ensure that inflation returns to its 2 % target. there has been, | mr. george comments briefly on the global economy and on recent economic performance in the united kingdom speech by the governor of the bank of england, mr. e. a. j. george, at the dinner with the lord mayor for bankers and merchants of the city of london on 11 / 6 / 98. the past year, since we last enjoyed the generous hospitality of the mansion house, on this great city of london occasion, has been a testing time. it has been characterised by major imbalances in both the global economy and here in the united kingdom - which have complicated the task of policy - makers everywhere, including the task of the bank of england β s now legitimised monetary policy committee. internationally there has been good news in the enviable performance of the united states - goldilocks - economy, with continuing robust domestic demand growth and further falls in unemployment, with so far remarkably little inflationary pressure. to the extent that this performance can be sustained, it provides substantial underpinning for the global economy as a whole. and there has been encouraging news, too, in the re - emergence of domestic demand growth in the continental european countries as they prepare to take the final step to monetary union. that is a promising context for the launch of a strong, credible, currency and i wish the european central bank every success in its historic task. domestic expansion with monetary stability within europe is in the interest of us all. elsewhere though the international situation has been decidedly less benign. a combination of financial fragility and weak business and consumer confidence has weighed heavily on the japanese economy, and on the yen ; and the financial thunderstorms, which broke initially last year over a number of other countries in asia, are still intermittently rumbling around the region and elsewhere. the economic fallout from these developments poses a serious downside risk to the growth of world activity and threatens the emergence of potentially large international payments imbalances. it is a dangerous environment. all of this has prompted a far - reaching re - examination of the international monetary structure, and in the meantime it presents the international monetary authorities with some difficult immediate management challenges. it also, of course, represents an uncertain international background for the conduct of monetary policy in this country. our own overall economic performance over the past year was again very encouraging. output growth ( on the latest data, to the first quarter of this year ) was 2. 9 % significantly above the rate of inflation ( measured by the gdp deflator | 0.5 |
our recent policy announcements. to decide what type of action was appropriate, we had to make two key assessments. first, we had to diagnose precisely why the transmission was disrupted. and second, we had to identify the most effective policy tool to repair those disruptions, while remaining within our mandate to preserve price stability. in our analysis, a main cause of disruptions in the transmission was unfounded fears about the future of the euro area. some investors had become excessively influenced by imagined scenarios of disaster. they were therefore charging interest rates to countries they perceived to be most vulnerable that went beyond levels warranted by economic fundamentals and justifiable risk premia. clearly, it was not by chance that some countries found themselves in a more difficult situation than others. it was mainly those countries that had implemented inappropriate economic policies in the past. this is also why the first responsibility in this situation is for countries to make determined reforms and convince markets that they are credible. but many were already doing this, only for interest rates to rise even higher. there was an element of fear in markets β assessments that governments, acting alone, could not remove. markets were not prepared to wait for the positive effects of reforms to emerge. in our view, to restore the proper transmission of monetary policy, those unfounded fears about the future of the euro area had to be removed. and the only way to do so was to establish a fully credible backstop against disaster scenarios. bis central bankers β speeches we designed the omts exactly to fulfil this role and restore monetary policy transmission in two key ways. first, it provides for ex ante unlimited interventions in government bond markets, focusing on bonds with a remaining maturity of up to three years. a lot of comments have been made about this commitment. but we have to understand how markets work. interventions are designed to send a clear signal to investors that their fears about the euro area are baseless. second, as a pre - requisite for omts, countries must have negotiated with the other euro area governments a european stability mechanism ( esm ) programme with strict and effective conditionality. this ensures that governments continue to correct economic weaknesses while the ecb is active. the involvement of the imf, with its unparalleled track record in monitoring adjustment programmes would be an additional safeguard. the consequences of the ecb β s actions so what are the likely consequences of the ecb β s actions? before announcing the omt programme, we | , which brings down the credit score of the entrepreneur and hinders the ability of the formal financial system to lend to them. banks, on their part will need to leverage on modern technology algorithms and big data so that they can differentiate between a good borrower and a not so good one even in the absence of conventional documentation. 17. having analysed various impediments in finance to the sector let me dwell on some of the steps taken by rbi, government of india and other apex institutions in bridging these gaps. ( i ) access / availability rbi has initiated several measures to improve the availability of banking services, especially in the rural and far - flung areas where access to formal finance is arduous. 18. new institutions : as you are aware, two new universal banks have started operations while in - principle approval has been granted to 10 entities to set up small finance banks that would primarily focus on lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganized sector entities. these small finance banks have been mandated to extend 75 per cent of its adjusted net bank credit ( anbc ) to the sectors eligible for classification as priority sector lending ( psl ) by the reserve bank. at least 50 per cent of its loan portfolio should constitute loans and advances of up to rs. 25 lakh. many of the sfbs have prior experience of working with small bis central bankers β speeches businesses as mfis / nbfcs and we believe that they will be able to bring in technology backed innovative last mile practices to serve their customers. 19. increased branch penetration / specialized branches : rbi has advised banks to set up β brick and mortar β branches in villages with population of more than 5000 in a phased manner. coupled with a more mature banking correspondent mechanism, this would give considerable fillip in meeting the banking needs of the msmes particularly in rural areas. besides, creating presence of physical branch, there is also a need to have large number of bank officials with appropriate skill sets and knowledge to handle the life cycle needs of the small businesses. already, public sector banks have established specialized msme branches in every district to cater to the needs of the small businesses. we are already working towards improving the skill sets and entrepreneurial sensitivity of the field level functionaries. 20. p2p lending : new players have entered the msme lending landscape in form of p2p companies. these entities use an | 0 |
stability and financial stability in the euro area. the euro area banking sector is resilient, with strong capital and liquidity positions. in any case, our policy toolkit fully equips us to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy. economic activity 1 / 4 bis - central bankers'speeches growth in euro area gdp slowed progressively over the course of last year and stagnated in the fourth quarter. employment growth also slowed in 2022, but remained resilient in the fourth quarter despite the moderation in economic activity, while the unemployment rate remained at a record low level. survey data into the first quarter of this year suggested some improvement in activity and confidence in the first quarter of 2023. under the baseline scenario in the ecb staff projections ( which were finalised before the emergence of financial market tensions in mid - march 2023 ), the euro area economy looks set to recover over the coming quarters as the labour market remains strong, supply bottlenecks are resolved, and inflation moderates. risks to the growth outlook are tilted to the downside. persistently elevated financial market tensions could tighten broader credit conditions more strongly than expected and dampen confidence. russia's unjustified war against ukraine and its people continues to be a significant downside risk to the economy and could again push up the costs of energy and food. euro area growth could also be dragged down if the world economy weakened more sharply than expected. however, if companies can adapt more quickly to the challenging international environment, this, coupled with the fadingout of the energy shock, could support higher growth than currently expected. government support measures to shield the economy from the impact of high energy prices should be temporary, targeted, and tailored to preserving incentives to consume less energy. as energy prices fall and risks around the energy supply recede, it is important to start rolling back these measures promptly and concertedly. falling short of these principles can drive up medium - term inflationary pressures, which would call for a stronger monetary policy response. moreover, fiscal policies should be oriented towards making economies more productive and gradually reducing high public debt. finally, countries should implement structural policies for intensifying their efforts to green and digitalise their economies. inflation euro area headline inflation declined from its october peak, reflecting a drop in energy inflation. downward base effects, an easing of energy commodity prices, and the impact of government measures to shield consumers from high energy prices | all contributed to this decline. by contrast, food and core inflation rates continued to rise, partly as a result of the past surge in energy and other input costs still feeding through to consumer prices. pent - up demand related to the reopening of the economy and the lagged impact of supply bottlenecks also continue to push prices up. at the same time, employees demanding compensation for the loss in purchasing power amid tight labour markets has translated into higher wage growth, while many firms in sectors facing constrained supply and resurgent demand raised their profit margins. we expect euro area inflation to continue to fall, as lagged price pressures fade out and tighter monetary policy increasingly dampens demand. however, historically high wage growth, related to tight labour markets and compensation for high inflation, will support core inflation over the projection horizon, as it gradually returns to rates around our target. this outlook remains surrounded by considerable uncertainty, with both upside and downside risks. stronger than expected pipeline pressures or higher than anticipated increases in wages or profits could drive up inflation, while financial market 2 / 4 bis - central bankers'speeches tensions and falling energy prices could lead to faster disinflation. at the same time, most measures of longer - term inflation expectations currently stand at around two per cent, although they warrant continued monitoring. euro area banking sector, non - bank financial sector and financial stability euro area banks remain resilient in the current market environment thanks to strong capital and liquidity positions. since the start of the ecb's policy rate hiking cycle, euro area bank profitability has been boosted by higher interest margins, while the change in impairments and provisions has been rather muted so far. however, in the current environment of tightening financing conditions including for banks, credit risks have increased, and lending dynamics have substantially weakened, which may weigh on future bank profitability. the decrease in bank lending to firms has, in general, not been offset by an increased recourse of firms to market - based financing, despite a bout of corporate bond issuance in the fourth quarter of 2022. looking ahead, the decline in the asset purchase programme portfolio will increase the share of debt issuance that needs to be absorbed by investors. based on their past behaviour, investment funds appear able to absorb part of such an increase. at the same time, in spite of some reduction in exposure to higher - risk assets, structural vulnerabilities in the non - bank financial sector remain elevated. risks in that | 1 |
short term funding markets that were appropriate in view of the exceptional circumstances we were facing. as we have often said, central banks will continue to work together and are prepared to take whatever measures are necessary to provide sufficient liquidity in short - term funding markets. question : how long could the present crisis last? what are the most severe scenarios? how to tackle it? trichet : my assessment is that we are experiencing, since august 2007, an ongoing market correction of great dimension, at a global level, with episodes of turbulence, high levels of volatility and considerable strain in financial markets and institutions. it depends on all of us that we surmount the present situation. all institutions, whether private or public, must be up to their responsibilities. question : in your point of view how long could the present global recession last? trichet : well, as far as the euro area is concerned, we will see what the eurosystem macroeconomic projections, which we will publish at the beginning of december, will be. indications from all private and public entities are that following the intensification of the financial turbulence, in particular since mid - september, the impact on the real economy is more and more important. negative figures for growth in 2009 are gradually appearing. again, in the case of the euro area, we will see exactly what the macroeconomic projections are in the forthcoming days. that being said, to my knowledge, all forecasters are projecting positive growth in 2010. question : what has been the impact of the international crisis on egypt and emerging economies? what role could the emerging markets economies play to overcome the global financial crisis? trichet : i think that since the start of the turbulences in august 2007, emerging economies demonstrated a remarkable resilience, which has been quite impressive at a time when we could see the industrial economies heavily affected. having said that, it is clear that even the emerging economies at the present moment, and in particular since mid september, are affected by what has happened in the industrialized economies and what has now become a truly global challenge. we live in a global economy and are all interdependent. none of us can be out of the influence of the others. however, it is absolutely clear that for the global economy to get out of this difficult period we have to very much count on all major emerging economies, as the potential for global growth is there. i would like to add that there is a general consensus that emerging economies β taking into | it is a source of pride for us that these landmark books represent the collective output of the bangko sentral β s in - house team of lawyers from the office of the general counsel and legal services under the leadership of deputy governor juan de zuniga, jr. without question, they have no equal in terms of combined expertise and experience in the application and interpretation of banking laws and regulations. but beyond their expertise, it is their passion to serve our people that gave them the adrenalin to work on these legal books alongside their regular assignments. you can see the portraits of our writers and editors around this hall. and they will be happy to autograph your books. we also thank the former chief justice of the supreme court, the honorable reynato puno who graciously and generously accepted our request for him to write the foreword for the book on special banking laws annotated and to be our guest of honor in this book launch. it is our distinct honor and privilege to have with us today the man described by the magistrates at the supreme court as a β transformational leader β, β an intellectual aristocrat β and β one of the greatest chief justices of the supreme court of the philippines. β his book entitled β equal dignity and respect the substance of equal protection and social justice β was launched only last month. in other words, he continues his crusade for a level playing field and equality in our country. maraming salamat mr. chief justice. bis central bankers β speeches and so today, ladies and gentlemen, we present the complete set of the bangko sentral β s three books on banking laws of the philippines which we are certain will help fortify the foundation for the rule of law to flourish in the philippine financial sector. this should benefit our people, our economy and our country. once again, our congratulations to our lawyers who made these books a reality and our appreciation to chief justice puno and all of you who have joined us today for this legal milestone. mabuhay po tayong lahat! mabuhay ang ating mahal na bansang pilipinas! thank you and enjoy the rest of the evening. bis central bankers β speeches | 0 |
transpose the key attributes into national legislation. the financial stability board is closely monitoring this process. a recent peer review by the financial stability board4 showed that implementation is still at an early stage in many g20 countries. implementation efforts therefore have to be treated as an urgent matter in all jurisdictions. we would have to pay dearly for any delay. to summarise, we cannot accept any excuse for deviations from timely implementation. 3. 2 europe β s implementation of resolution rules : key issues in europe, the implementation of resolution rules has been carried out through ecofin β s agreement of 27 june 2013. 5 the council adopted its general approach on the draft directive for the recovery and resolution of credit institutions and investment firms. i welcome the general thrust of the recovery and resolution directive β or rrd. and i hope that the trilogue process with the european parliament can be completed swiftly, as planned. please allow me to look in more detail at three key issues relating to the rrd. first, the bail - in tool : this enables resolution authorities to write down the claims of shareholders and write down, or convert into equity, the claims of creditors of institutions which are failing or likely to fail. as predictability is crucial when it comes to allocating losses, i very much agree with the council β s general approach stipulating a clear pecking order. shareholders will be the first in line to bear losses, followed by clearly defined classes of creditors. very few classes of liabilities are permanently exempted from any bail - in, with covered deposits being the most important category. i also broadly agree with the council β s list of permanent exemptions β with only one reservation. excluding all inter - bank liabilities with an original maturity of fewer than seven days could have far - reaching consequences, as it may well foster an unwanted bias towards short - termism. i would therefore argue that these liabilities should be shifted from the permanent to the discretionary category of exemptions. in general, the bail - in tool should enter into force in parallel with the other resolution tools, that is, in 2015. second, i welcome the minimum requirement for own funds and so - called eligible liabilities. this will ensure that each institution has sufficient loss - absorbing capacity based on its size, risk and business model. third, i wish to comment on resolution funds. as a general rule, the draft rrd requires member states to set up resolution funds, which are to be funded ex - | jens weidmann : independent, stability - oriented central banks are the main anchor of confidence opening speech by dr jens weidmann, president of the deutsche bundesbank, at the deutsche bundesbank β s second cash symposium, frankfurt am main, 19 may 2014. * 1. * * introduction : unbacked currencies need anchor of confidence ladies and gentlemen, the austrian poet johann nepomuk nestroy is once said to have wittily remarked : β the phoenicians invented money β but why so little? β i cannot guarantee that we will have come up with an answer to this question by the end of the day. however, what i can say is that i am pleased to open today β s event and therefore wish to welcome you warmly to the bundesbank β s cash symposium. it is the second of its kind β the first was held in 2012 β and is intended to promote professional and personal exchange between the various cash handlers. the professional activities of most of the people in attendance here today revolve around cash. however, cash naturally accompanies the everyday lives of you as individuals as well as the general public β for it is one of the few things that nearly everyone is likely to have on his or her person at all times. sometimes more, sometimes less, but at least enough so as never to be completely out of money. cash not only continues to be the most popular and widely used medium of payment for shopping in germany, but is also a central bank β s most visible β product β. banknotes and coins have a concrete touch and feel to them and are physically tangible, which is not the case with other β central bank products β β such as monetary stability. ladies and gentlemen, in his satirical essay β brief outline of the national economy β published in 1931, kurt tucholsky noted sarcastically that β where money comes from is unknown. it is there, or not β mostly not. β the fact that banknotes are now almost always issued by central banks and circulated through commercial banks is easy enough for the average citizen to understand. but that does not exhaustively describe central banks β role in the cash cycle by any means. in order to understand this role, it is important to also answer the more fundamental question of what exactly money is. in economics terms, the shortest possible answer to this question is that money is what money does. all sorts of objects can function as money if they can be used as | 0.5 |
benjamin e diokno : data governance seminar speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the data governance seminar, manila, 14 june 2019. * * * to my colleagues here in bangko sentral and to our resource persons today, good morning. welcome to our data governance seminar. as we prepare ourselves with the data governance seminar this morning, let me start with some food for thought : it used to be that the problem of society is not having enough data and computing power. today, what we are facing is clearly an abundance of data and almost unlimited computing power. in a forbes magazine article, internationally best - selling author and strategic business and technology advisor bernard marr notes that there are 2. 5 quintillion bytes of data created each day. further, 90 % of available data across the globe was created only in the last two years. 1 on the other hand, according to the world economic forum, the entire digital universe is expected to reach 44 zettabytes by 2020, roughly 40 times more bytes than there are stars in the observable universe. going by this, data is the new currency. understanding of data as a strategic asset is now quite fundamental to every business and organization β the bsp included. in fact, in my recent policy pronouncements, i always say that the monetary board β s decisions are always data driven and evidence - based on market conditions. despite the significance of data, even highly technical and professional organizations still experience issues in data consistency, quality, and timeliness. this affects an organization β s ability to generate the data needed for high quality decisions and policies. these seem to indicate that many organizations have yet to reach that point of being able to effectively harness the power of their data assets. this is where data governance, our topic for today, becomes most relevant. dama, an international organization of professionals and standard setters in data management, defines data governance β as the exercise of authority and control over the management of data assets. β its purpose is to ensure that data is collected, processed, organized, protected, and consumed properly, according to agreed - upon policies and best practices. 2 it is about determining data strategy and policy, defining standards for data quality and delivery, as well as establishing oversight and issue management processes. this is to ensure that the reliable and actionable data are received by the ones | ph economy : harnessing the bright spots date : may 19, 2022 occasion : adbi featured speaker webinar series speaker : bsp governor benjamin e. diokno good day, everyone. it is my pleasure to join you today and share updates on the philippine economy. the philippines is well into the recovery process. after the pandemic - driven recession in 2020, the economy grew by 5. 7 percent last year and sustained its robust momentum with an 8. 3 percent growth in the first quarter of 2022. growth in the first quarter was broad - based. on the supply side, all sectors expanded, driven by industry at 10. 4 percent, followed by services at 8. 6 percent. on the expenditure side, growth was driven by private consumption which grew by 10. 1 percent. gross capital formation expanded by 20. 0 percent. growth of government final consumption was subdued at 3. 6 percent. the employment picture is close to pre - pandemic level. from a peak of 17. 6 percent in april 2020, unemployment rate is down to just 5. 8 percent in march this year. moreover, foreign direct investments grew 54. 2 percent to all - time high last year. in the first two months of the year, fdis grew by 8. 0 percent to usd1. 7 billion. manufacturing activity has also rebounded, with the purchasing managers β index hitting 54. 3 in april, the highest in over four years. both business sentiment and consumer outlook have improved. our business expectation survey show broad improvements in outlook for the coming months. all these came on the back of a whole - of - government approach to recovery. in tandem with the national government β s efforts, the bangko sentral ng pilipinas rolled out its own list of covid - response measures. first, we cut our policy rate by a cumulative 200 basis points to a record low of two percent, which helped stimulate provision of credit to productive activities. we also reduced our reserve requirement against deposit and deposit substitute liabilities. for universal - commercial banks and non - bank financial institutions with quasi - banking functions ( nbqbs ), we reduced the reserve requirement from 14 percent to 12 percent effective 3 april 2020. for thrift banks and rural / cooperative banks, we reduced it from 4 percent to 3 percent effective 31 july 2020. second, we extended time - bound liquidity support to the national government and purchased government securities to help finance its pandemic - | 0.5 |
important factor. we do not merely make an analysis, write a report and disappear. we are still here and can continue the discussion whenever necessary. the problems that were indicated in the evaluation were more of an administrative nature. for instance, it is difficult to find a place in a foreign aid context for low - cost projects like this, as they do not really follow the set patterns for other aid efforts. finally, i can mention that the riksbank has allocated resources in our internal business plan for next year to extend our cooperation with some of the central banks in sida β s cooperating countries. we consider that our work has been both interesting and rewarding and we hope that it has also helped some of our colleagues to make their own institutions stronger. | are always involved in various ways ( both here at the riksbank and at the other central banks ), which is important for giving the programmes adequate status. in our view, it is important that we are colleagues, not consultants. we are rarely able to stay longer than a week, as we have our own central bank to manage. we do not conduct large - scale investigations that we document and leave behind us ; we describe our own experiences and allow our colleagues to consider whether these experiences may be of any use in their own work. we in sweden and at the riksbank have achieved quite a lot that has turned out well over the years, but we have also done a lot that we feel with hindsight could have been done better. for instance, we are proud of how we came through the bank crisis at the beginning of the 1990s, but not of how we got into it. this is the type of experience that no textbooks or courses can convey in the same way as people who were there when it actually happened. our colleagues are usually interested in everything, but particularly in learning from others β mistakes. we also consider it important that the riksbank β s employees learn from the cooperation β that is one of the ideas behind a β staff exchange programme β. encountering activities that are similar to your own workplace β s, but are conducted under different external conditions always gives reason for consideration and reflection. our programmes are therefore of great professional interest to our employees and most of them return from their trips with new and often unexpected experiences. our cooperation with sida has been excellent, although we sometimes hear that we have not spent as much money as expected. a few experts and their trips do not cost very much. the cooperation with the embassies is also very important. we have seen that the links to the central banks work best when the staff at the swedish embassies in the respective countries are actively involved and regularly follow up what is happening in the respective banks. at the beginning of this year, sida commissioned an evaluation of the riksbank β s cooperation so far with sri lanka and vietnam. the evaluation showed that the riksbank β s efforts in these central banks had been both successful and appreciated by the recipients. the very fact that we are colleagues, that we do the same things, have the same responsibility, was one of the key factors. there are many consultants ; colleagues are harder to find. the long - term thinking behind the cooperation is also an | 1 |
derville rowland : launch of ireland's national payments strategy remarks by ms derville rowland, deputy governor of the central bank of ireland, at the launch of the national payments strategy, dublin, 15 october 2024. * * * i would like to welcome the minister for finance - minister jack chambers td - and everyone here today to the central bank's offices for the launch of the national payments strategy. let me also echo the minister's thanks to all involved in the development of the strategy. in particular, i would like to thank the department's strategy team for their collaboration over the past 16 months, and for providing the central bank with the opportunity to contribute to the development of the strategy. my thanks also to the members of the central bank's payments steering group and the internal expert group who has been supporting the our input into the strategy. call for collaboration the national payments strategy represents a significant milestone for the future development of the irish payments ecosystem. the central bank looks forward to contributing to the successful realisation of the strategy over the next 5 years and beyond. we see the strategy as an opportunity to : ensure that the irish market stays up - to - date with modern payment functionalities and technologies ; put in place initiatives that strengthen the security and resilience of retail payments ; and to ensure that the irish payments ecosystem remains interconnected with the rest of the europe. as the minister has referenced, the strategy outlines a number of ambitious actions that will lay the foundation for the future growth of the irish payments ecosystem. in terms of specific actions i would call out, i would highlight that : the strategy will require cooperation in the advancement of pay - by - account solutions built upon the effective implementation of instant payments and open banking ; and a role for the central bank around a research and insights programme that we will lead. enhancing our research and analytical capabilities is critical to understanding the direction and possible impacts of the future evolution of the irish payments ecosystem. fraud 1 / 3 bis - central bankers'speeches another area i will highlight and that relates to the issue of fraud. this is an issue which cuts right across the work of the central bank β from consumer protection, to our work in payments and to our financial integrity / aml work. whilst the volume of payments fraud is quite low in ireland as a percentage of total transactions, nevertheless it can have a detrimental impact on individuals and businesses. as payments evolve, so too do the techniques used by fraudsters. the rise of social engineering | scams has exposed consumers to increasingly sophisticated fraud schemes that can be difficult to detect and prevent. this is why individual firms must be proactive, ensuring they incorporate security by design when developing new payment solutions. innovation is required to keep pace with criminal elements seeking to disrupt the payments ecosystem, thereby undermining public trust in the broader financial system. the fight against fraud is not limited to any individual firm - the entire ecosystem, including both financial and non - financial stakeholders, must work together to meet the challenge of evolving fraud techniques and typologies. this is why β at the central bank - we have been engaging with a number of large tech firms since the start of the year, including google, encouraging them to do more to ensure they are not facilitating consumer harm. i am pleased that progress has been made in this regard and welcome google's announcement last week that they will introduce a verification process for financial services advertisers. an effective financial services verification policy is a key disruptive tool in the fight against online financial scams. for that reason, in particular, i want to welcome the establishment of the anti - fraud forum under the strategy. this forum will seek to enhance the formal cooperation between the financial sector, telecoms, and social media companies, whose networks and platforms are often utilised to propagate fraudulent activity. let me conclude. as minister chambers outlined, the overarching objective of the national payments strategy is to build and enhance public trust in the payment system, by ensuring that it works in the best interests of all consumers and businesses. ultimately, the success of the national payments strategy will be largely determined by the organisations in attendance today, and the degree to which we all engage in and support this multi - year programme of work. the department of finance has set out the roadmap for the future of the irish payments ecosystem, and it is now up to us, as a collective, to put our words into action. i would like to thank you all again for attending the event today. we have arranged a small reception which i hope some of you will be able to stay to attend. 2 / 3 bis - central bankers'speeches thank you. 3 / 3 bis - central bankers'speeches | 1 |
related to the balance between aggregate supply and demand. later i shall turn to concerns about imbalances in equity prices, the personal saving rate, the current account, and the household debt burden. a soft landing figure 1. a depicts a soft landing scenario, the graceful transition from the initial output gap to a sustainable growth path at full employment. a soft landing occurs if, as the level of output approaches potential, the growth of actual output slows to the growth of potential output just as actual output reaches potential. the line for potential output is, in effect, the runway. the line for actual output is like the path of a plane coming in for a soft landing - at least if you stand on your head while looking at the chart! steady inflation is generally one of the signs of sustainability. a simple model of inflation dynamics is that changes in inflation are induced by excess aggregate demand or supply, as reflected in the output gap. when actual output rises above potential, according to this model, the resulting excess aggregate demand leads to rising inflation. in the short run, supply shocks - including both relative price shocks and changes in trend productivity - can also affect inflation dynamics. but these effects are temporary. ultimately, inflation dynamics will be driven by the output gap. at some point in any expansion, therefore, a soft landing is the preferred path to preserve a healthy expansion. such a slowdown in growth is desirable because the alternative is higher inflation - indeed, continually rising inflation. looking back, most recessions have resulted from attempts by the policy authorities - yes, the fed - to reverse increases in inflation generated by overheating. a reverse soft landing figure 1. b depicts an alternative scenario in which the above - trend growth in the expansion phase has moved the economy beyond the point of its sustainable capacity to produce. policymakers in this case failed to execute a soft landing. what could they do in this case to best ensure the continuation of a healthy expansion? the answer is to engineer the closest possible approximation to a soft landing, one in which we glide to potential beginning from a position initially above rather than from below potential. because the convergence to potential is from above rather than below, i call this a β reverse β soft landing. in this case, because the economy is already operating beyond its sustainable capacity, the economy may not be able to avoid some acceleration in inflation as policymakers try to engineer the soft landing. therefore, the return to the potential output path has to be achieved in a sufficiently | . a reverse soft landing is the second - best option. otherwise, a hard landing may be unavoidable, despite the best efforts of policymakers. the upside of a hard landing is that it contributes to reversing imbalances and, afterwards, allows policymakers to aim once again at achieving a healthy, sustainable expansion, ultimately combining full employment, maximum sustainable growth, and price stability. it is useful to distinguish two broad classes of hard landings. the first involves the reversal of an imbalance between aggregate supply and aggregate demand. the classic example is the boom - bust scenario. the second class involves the unwinding of sector or market imbalances that either initiate a downturn in the economy or aggravate a downturn that would otherwise have occurred. a classic example of this genre is a stock market correction. i will focus first on the boom - bust scenario to complete my classification of paths to sustainable combinations of growth and the output gap. in the boom - bust scenario, depicted in figure 1. d, above - trend output growth during the expansion ultimately pushes output well beyond potential for a persistent period. the resulting overheating puts upward pressure on inflation. the monetary policy response to reverse the inflation often yields a decline in output, as depicted here, resulting in a period of economic slack and a reversal of the rise in inflation. this is the scenario from which we draw the lesson that timely, typically preemptive, policy restraint to avoid the excesses of a boom results in longer expansions and avoids unnecessary fluctuations in both output and inflation. where are we relative to potential and do we need to land? to identify whether the initial conditions today correspond to those in one of the panels of figure 1, we have to assess where output is relative to its potential and whether growth is above or below trend. this assignment is more difficult than usual because structural changes of uncertain dimension may have raised both the level and the growth rate of potential output. there is, for example, a consensus that the nairu has declined since the early 1990s. that decline translates into an increase in the level of potential output at any given time or a decline in the output gap for a given level of output. there is also a consensus that the rate of growth of potential output is higher today than during the twenty years preceding this expansion. however, the degree to which these two parameters have changed is not a settled issue. in particular, some think that the rapid growth and low unemployment rate of | 1 |
scale β. i also invite the ecb and ec to explore the possibility of adopting a β party β treatment for the entire see region, by adopting a specific program for a specific group of countries. the process of mergers and acquisitions has incorporated financial system of the region into the bigger european market. this market driven, business initiative of the financial community, calls for institutional integration as well. bringing central banks of the region into the appropriate european structures has the potential to minimize the probability of dangerous drifting apart into worthless initiatives and create positive energy. i encourage foreign partners as well as donor agencies to adopt the same logic of coordination in the process of the compilation and implementation of technical assistance in areas of integration, institutional building, and financial stability process. this approach and will benefit the region in several ways but most importantly it will avoid major economic and social disparities between our economies, which in the long run have the potential to develop into serious threats to stability. on the other hand, several differences emerge in certain areas of developments. yet, this provides further room for cooperation. it is a fact that our economies have adopted diverse approaches toward establishing macroeconomic and financial stability. we are at different stages of integration. it is probably due to these diverse characteristics that contagion has not been a prevailing phenomenon in see region. along the path of transition our economies have encountered distinct problems in different moments. just to point out a few examples : β’ credit has penetrated deep in the culture of some economies in the region while it still remains a fast growing new phenomenon in a few others ; β’ some of us have experienced high capital inflows while the others expect to have in the future ; β’ some pegged their currencies to euro ; the others have not. for the rest of the region it is very important to know what triggered such different choices. how did authorities respond to such problems, what to expect, how to react? due to these different paths that we have taken and nature of the problems that each economy has encountered, we are positioned in different parts of the learning curve. there is a great deal of learning by doing experience we have accumulated during this period of existence, and i believe that this knowledge must be shared. c. common achievements we have succeeded to establish a network of communication with all central banks in the region among governors. i have noticed that they have always expressed their enthusiasm to intensify regional cooperation in this context. i am also happy to say that during my contacts with respective international | gent sejko : the role of central banks and the banking sector on the path to eu welcome address by mr gent sejko, governor of the bank of albania, at the annual conference of the bank of albania, co - organised with the albanian association of banks, tirana, 13 november 2024. * * * honourable minister of finance honourable madam minister of state and chief negotiator, honourable chair of parliamentary committee on economy and finance, dear president of the albanian association of banks shella, dear fellow governors and guests it is a great honour and pleasure to welcome you all to the annual conference of the bank of albania. please allow me, in this occasion to congratulate the albanian association of banks for its 25th anniversary. the albanian association of banks, the co - organiser of this conference, has proven to be a serious collaborating and coordinating platform for the banking industry, in addition to being a visionary institution and our important partner on our journey towards development and modernisation. this conference, the 17th one, is a crucial moment in our annual business schedule as it always offers a solid ground for communicating with our institutional partners, field experts and the public at large. it enables us to look away from the challenges of the present, to consider issues of strategic importance for the sustainable and long - term development of albania, as well as to try - through open and constructive dialogue, to identify the policies and adequate instruments for addressing them. in this view, i would like to highlight that despite the rapid economic and political developments of the year we are leaving behind, the long - term headline from 2024 will be our receiving of a green light and the start - in october - of the official process of negotiations for membership in the union european. this new chapter poses a busy agenda ahead of regulatory, legislative and institutional reforms. their realisation is both a prerequisite for our membership, as well as a major and indispensable step on our way of progress. for this reason, we have decided to dedicate the proceedings of this conference to the role of central banks and the banking sector in the integration process. dear guests, before addressing my views on our conference's topic, i would like to focus briefly on the current status of the albanian economy and its financial system. 1 / 4 bis - central bankers'speeches albania of 2024 offers a completely different economic reality compared to a decade ago, when the country received the status of potential candidate for membership. despite | 0.5 |
). special attention should be paid to the residential real estate market, which is closely related to households β situation, where some exuberance has been observed in recent quarters. specifically, house purchases posted growth rates exceeding 20 % in 2022 h1 and new lending for house purchase rose by 15 %. also, the rate of change in house prices accelerated to 8 %, confirming the degree of price overvaluation that we estimated in previous quarters. however, counter to the argument that there is exuberance in the real estate market, loans to the construction and real estate sectors continue to decline, the percentage of gdp represented by the stock of lending to households for house purchase stands at 39. 7 % ( 21. 3 pp less than at end - 2010 ) and mortgage lending conditions in the wake of the global financial crisis remain at prudent levels, with warning signals only observed in the interest rate spreads on loans granted at a fixed rate, which stood at record - low levels. nonetheless, the most recent data could suggest a change in trend in this market stemming from the macro - financial setting that i have described. specifically, housing transactions contracted in july, which is significant given that this month usually has a positive seasonal component. also, house prices ceased to accelerate in q2, posting growth similar to the first three months of the year. in any event, we will have to wait for new information to assess this behaviour more accurately, meaning we will need to keep a close eye on this market. as for the public sector, fiscal policy has clearly played a key role since the outset of the pandemic to soften its impact on household and corporate income, thus avoiding more persistent negative effects. the corollary of this has been a significant increase in public debt relative to gdp, which was already high before the pandemic. this high government indebtedness and the likewise high structural budget deficit evidently represent vulnerabilities when faced with a tightening of financing conditions, as is the case at present, and reduce fiscal policy headroom to respond to future shocks. mitigating factors include most notably the higher - than - initially - forecast reduction in public deficit in 2022 and the significant lengthening of the average government debt maturity in spain, which stands at more than eight years and delays the impact of interest rate increases on the public debt burden. in any event, spain β s annual public sector financing requirements stand at high levels, around 20 pp of gdp. also, | if the current expectations for rising interest rates are incorporated, the public debt burden will increase from 2. 2 % of gdp at end - 2021 to 2. 7 % in 2024. against this backdrop, allow me to repeat the recommendation i have made on numerous occasions to adopt a medium - term fiscal strategy. this should include immediately setting out a multi - year fiscal consolidation plan for implementation once the economic impact of the pandemic and of the war in ukraine has been overcome. the plan should have broad a household is deemed to have a high financial burden when its financial expenditure minus financial revenue represents more than 40 % of household income. political consensus and be accompanied by an efficiency review of public spending and the tax system, including all tiers of general government. defining the plan early on would generate greater certainty and trust, which is particularly important against the current backdrop of monetary policy normalisation. the potential impact of the current climate of uncertainty on the banking sector calls for exercising extreme prudence estimating the impact of the current setting on the banking sector β s profitability and solvency is more complex. first, the rise in interest rates will mean higher returns on new loans and likewise on existing loans at a floating rate. thus, although the volume of credit will presumably moderate in the current setting, gross income will likely increase, particularly in the near term. however, financing costs will also be pushed up. this includes those relating to debt instruments issued in the financial markets and, albeit to a lesser extent, deposits. the volume of deposits can also be expected to rise owing to their higher remuneration and the climate of uncertainty. second, interest rate rises also immediately translate into a downward revision of the valuations of public and private debt securities in institutions β balance sheets. however, these lower valuations are only recognised in institutions β income statements when such assets become available for sale, but not if the institutions intend to hold them on their balance sheets to maturity. in this latter case, it should be borne in mind that institutions β returns on these securities will be lower than on any new issues that are put into circulation. less than half of spanish institutions β debt securities β holdings were classified as available for sale at end - 2021. the adverse effects of the current and foreseeable setting β which i have referred to previously β on households β and firms β ability to meet their financial obligations will chiefly become manifest over a broader horizon ( one or two years forward ). as a result, institutions will have | 1 |
incidentally, we will have the opportunity to hear one of these researchers tomorrow. the current crisis could even lead to a more significant increase in economic inequality than its predecessors, as it is more pervasive and profound than previous crises. unfortunately, ukraine is all too familiar with many of these problems we expect that unemployment in ukraine will peak at 11. 5 % in q2 2020 due to the corona crisis, compared to 8. 2 % last year. as the gradual easing of quarantine measures that has started in may continues and the economy recovers, unemployment will also decline in h2 2020, but will remain higher than last year. the job losses that hit ukrainians as businesses closed down have not only complicated job search efforts by increasing the workload per vacancy, but also have shown that there will be no easy solution to the labor migration problem in ukraine. some ukrainians working abroad did not even return home for the quarantine, as they in particular feared the prospect of becoming jobless in ukraine. they chose remaining abroad and being temporarily unemployed over coming home and struggling to find any work at all after the lockdown is lifted. and those who did return are now forced to compete against β local β laid - off workers for jobs that rarely pay as much as these migrants earned in other countries. for this reason, migrant workers have been leaving ukraine again in search of better pay since quarantine restrictions were partially relaxed. demand for ukrainian workers in poland, for example, has not disappeared. however, most of the problems in the ukrainian labor market are not related to covid - 19. first, one of the systemic problems of the ukrainian economy has for years been the mismatch between job seeker skills and employer requirements. late last year, a third of companies cited labor shortages as being one of the key factors limiting production, according to business surveys. this partially explains why unemployment in 2019 was quite high despite significant demand for labor from businesses. not the least role in this is played by the fact that the ukrainian education system does not keep 2 / 4 bis central bankers'speeches up with the changes in the modern labor market, which are taking place under pressure of globalization and technological progress. as a result, according to the state statistics service, in ukraine about a third of employees with higher education worked in a profession that does not require such. this is one of the highest rates in europe. β’ second, low productivity. despite having grown over the past 15 years, productivity is | ##y. to the extent this is done generally across those funds that are less transparent, have weak risk management disciplines and / or inadequate operational infrastructure, they will be able to take on less leverage, which would limit the potential risk they may pose in a disruptive event. as these points suggest, it is not enough to simply manage the firm β s direct potential future credit exposure to hedge funds within prudently low limits. this has to be complimented with a more exacting approach to the evaluation of a firm β s overall vulnerability to market risk that includes full consideration of the potential impact of a large shock, including one that involves hedge funds. alongside these enhancements to risk management practices, we believe that market participants should also intensify their efforts to improve the underlying infrastructure of the markets in which hedge funds are important. weaknesses in close - out procedures for otc derivatives were among the areas singled out by the crmpg for collective action in the wake of ltcm, and important progress has been made in this area since. in addition, there are potentially valuable efforts underway to standardize documentation and improve the confirmation and execution process in these markets. but looking forward, given the size of the otc derivatives markets and the participation of hedge funds in those markets, it is worth reflecting on whether central counterparty clearing arrangements for the more standardized portion of the otc derivatives market could play a useful role. certainly, there are many challenges associated with such a project, and its potential to mitigate risks effectively would have to be clearly demonstrated, but surely it is worth looking carefully at whether that or similar efforts could provide meaningful improvements to the core infrastructure of what is undoubtedly a systemically important set of markets. taken together, these areas of focus are important to ensure that there is adequate capital not just against growing direct exposures to hedge funds, but the indirect exposures that could affect market conditions and firms β positions in a more stressful environment. we believe that the dealers that act as major counterparties to hedge funds have a collective interest in improving market practice in these areas. this is a good time for them to reassess how practice has evolved against the standards set out by the crmpg in 1999, and to examine whether the bar established at that time is appropriate for the conditions that exist today. it took a major market event to expose the extent of weaknesses in market practice that prevailed prior to 1998 and to catalyze improvements across the financial community. those reforms have played an important | 0 |
cases lag behind and in other cases have large gaps. those of you who have read piketty's best - seller capital in the twenty - first century also know that one can give the question of distributional effects much greater room than i have scope for today. what i want to say with these reservations is that those of you who are expecting to hear exactly how great the distributional effects of monetary policy have been will 1 see, for instance, the bank of england ( 2012 ), oecd ( 2015 ), bindseil et al. ( 2015 ), deutsche bundesbank ( 2016 ), european parliament ( 2016 ), domanski et al. ( 2016 ) and amaral ( 2017 ). 2 dir. 2016 : 114 2 unfortunately be disappointed. my somewhat more modest aim is to make a contribution to the discussion by examining the distributional effects of the policy and adding shades of meaning to these effects. what i hope to convince you of today is that monetary policy also affects household income and wealth in ways that are more indirect, but probably more meaningful, than via asset prices. while an expansionary monetary policy entails rising asset prices in the short term, this is compensated by lower unemployment, higher employment and stronger growth. a monetary policy that succeeds in the task of attaining price stability also counteracts the negative distributional effects of inflation. an expansionary monetary policy to defend the inflation target but, as i said, rising asset prices have been an element of the economic upturn in recent years. and during periods when stock prices are rising, the income distribution is more uneven between households β this can be seen from standard measures of dispersion of the income distribution, such as the so - called gini coefficient ( see figure 1 ). figure 1. gini coefficient for disposable income and stock market movements 0. 32 stock index ( right scale ) gini, excl. capital gains ( left scale ) 0. 30 gini, incl. capital gains ( left scale ) 0. 28 0. 26 0. 24 0. 22 0. 20 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 note. the gini coefficient is a measure of statistical dispersion of, for instance, incomes. the gini coefficient can be between 0 and 1, where a higher value entails greater inequality. the figures are from statistics sweden β s surveys household finances 1995 - 2011 | . depending on how large the deviation is and its cause, the time horizon may be extended. this flexibility makes it possible for the riksbank to take into account developments in the real economy in its monetary policy considerations. in the short term, monetary policy can contribute to reducing the fluctuations in production and employment that arise during an economic cycle. as i will discuss today, however, the possibility of achieving this type of stabilisation is also dependent on inflation expectations being reasonably stabile. if inflation expectations are stable, a change in the policy rate will have a direct effect on the real interest rate, which corresponds to the nominal interest rate minus expected inflation. as it is the real interest rate that determines aggregate demand, monetary policy may in the short term have an impact on the real economy. today i shall take up the question of what monetary policy can affect in the short and long run. i shall use some examples to illustrate the balance that must be attained between the inflation target and developments in the real economy. functioning financial markets are of vital significance for the functioning of the whole economy. the riksbank β s other main task, beside monetary policy, is to safeguard financial stability. during the current financial crisis the riksbank has taken a number of measures to safeguard financial stability. this has been parallel to taking monetary policy measures. monetary policy and financial stability are closely linked. the possibility to conduct efficient monetary policy depends on the transmission mechanism functioning. i shall return to this question later in my speech. finally, i shall make some concluding comments. the influence of monetary policy in the short and long run β research at the end of the 1950s the economist a. w. phillips found a negative relationship between unemployment and inflation by studying data from the uk for the period 1861 - 1957 1, a relationship that is usually referred to as the phillips curve. this shows that higher employment can be achieved at the cost of higher inflation. it was thus long believed that one could " buy β long - term lower unemployment by pushing up inflation. however this relationship was empirically proved not to hold in the long run. in the 1970s, for instance, there were periods with both high unemployment and high inflation, what is known as stagflation. the relationship was also tackled from a theoretical angle. in a famous article from the late 1960s milton friedman discussed what monetary policy can and cannot achieve. 2 his view was that in the long run monetary policy is unable to affect real economic variables such as unemployment and gdp | 0.5 |
to guide our policy decisions. 1 / 2 bis - central bankers'speeches cpi inflation has been about 2 % since the summer, and we expect it to be close to target, on average, over the next couple of years. we thought elevated shelter price inflation would continue to ease, and it has. and the downward pressure on inflation from goods prices has also moderated as predicted. we expect the gst holiday to temporarily lower inflation to around 1Β½ % in january, but that effect will be unwound after the gst break ends in mid - february. we will be looking at measures of core inflation to help us assess the trend in cpi inflation. while the upward and downward pressures on prices have been moderating, risks to the inflation outlook remain. elevated wage increases combined with weak productivity could push inflation up. or the economy could keep growing below its potential, which would pull inflation down. in addition, the economic outlook is clouded by the possibility of new tariffs on canadian exports to the united states. no one knows how this will play out in the months ahead - whether tariffs will be imposed, whether exemptions get agreed, or whether retaliatory measures will be put in place. this is a major new uncertainty. to summarize, inflation is back to the 2 % target and lower interest rates are beginning to pass through to stronger spending by households. but the economy remains in excess supply and the growth outlook now appears softer than we projected in october. with inflation back to target, we have cut the policy rate by 50 basis points at each of the last two decisions because monetary policy no longer needs to be clearly in restrictive territory. we want to see growth pick up to absorb the unused capacity in the economy and keep inflation close to 2 %. the governing council has reduced the policy rate substantially since june, and those cuts will be working their way through the economy. going forward, we will be evaluating the need for further reductions in the policy rate one decision at a time. in other words, with the policy rate now substantially lower, we anticipate a more gradual approach to monetary policy if the economy evolves broadly as expected. our decisions will be guided by incoming information and our assessment of the implications for the inflation outlook. the bank is committed to maintaining price stability for canadians by keeping inflation close to the 2 % target. with that, the senior deputy governor and i would be pleased to take your questions. 2 / 2 bis - central bankers'speeches | tiff macklem : opening statement before the house of commons standing committee on finance opening statement by mr tiff macklem, governor of the bank of canada, before the house of commons standing committee on finance, ottawa, ontario, 18 april 2023. * * * good morning. i'm pleased to be here with senior deputy governor carolyn rogers to discuss our recent policy announcement and the bank of canada's monetary policy report ( mpr ). last week, we maintained the policy rate at 4aΒ½ % as we continue to assess whether monetary policy is restrictive enough to return inflation to our 2 % target. since the last time we were here with you, we've seen a steady improvement in inflation and modest economic growth. inflation is coming down quickly - data this morning show it fell to 4. 3 % in march. and we forecast it to be around 3 % this summer. we are encouraged by that, but we are also seized with the importance of staying the course and restoring price stability for canadians. several things still have to happen to get inflation all the way back to the 2 % target. inflation expectations have to come down further, services price inflation and wage growth need to moderate, and corporate pricing behaviour has to normalize. we are focused on these indicators, and the evolution of core inflation, to ensure that consumer price index ( cpi ) inflation continues to progress toward the target. if monetary policy is not restrictive enough to get us all the way back to the 2 % target, we are prepared to raise the policy rate further to get there. before i take your questions, let me give you some economic and financial context for the decision. the canadian economy remains in excess demand. gross domestic product ( gdp ) growth in the first quarter of the year appears stronger than we projected in january, and the labour market is still tight. the unemployment rate, at 5 %, remains near its record low, and wages continue to grow in the 4 % to 5 % range. employment growth has been surprisingly strong, reflecting continued demand and increases in labour supply. past policy rate increases are working their way through the economy and restraining demand. households are slowing their spending, particularly on big - ticket items. as mortgages are renewed at higher rates, more households will feel the restraining effects of monetary policy. taking these forces into consideration, we expect canadian gdp growth to be weak for the rest of this year before beginning to pick up gradually in 2024 and through 2025. what does all | 0.5 |
engagement helps us understand the issues faced by the businesses and households in the economy, the opportunities to enhance the performance of the nancial system, and any risks that may be developing. it also helps consumers and the nancial services industry understand what we do and why. https : / / www. centralbank. ie / news / article / speech - managing - risk - rebuilding - resilience - governor - gabriel - makhlouf - 11 - feb - 2021 5 / 7 11 / 02 / 2021 " managing risk, rebuilding resilience " governor gabriel makhlouf in the spirit of listening and learning, we are starting a consultation aimed at improving our engagement. we want to build on our existing arrangements including through our civil society roundtables12 and consumer advisory group13 to enhance our mutual understanding of cross - sector issues across the nancial system. for example, as part of the ecb strategy review, the central bank of ireland is hosting a listening event shortly. we want to better understand people β s expectations and concerns to nd the best way to ful l our mandate of price stability. we will also host an event on the multi - year mortgage measures review later in the year. our proposals include formalising the current industry roundtables by hosting a senior level, cross - sectoral industry stakeholder forum, bringing together key nancial sector industry stakeholders to engage with senior central bank people. we also want to provide an opportunity for the bank to engage with industry and with civil society and consumer representatives at the same time. and we want to enhance our engagement with business representatives and key actors in the economy. i look forward to the hearing views on the proposals set out in the consultation document. conclusion let me conclude by returning to the theme of resilience. in my rst speech as governor, i talked about economic resilience as the ability of an economy to manage change, whether it was to recover from the effects of a shock or managing a more gradual transition to a different state. some of the changes i talked about then β climate and technology in particular β have not gone away. addressing this forum last year, economic growth prospects were favourable but dark clouds were gathering on the horizon. in my remarks then, i said growth was not the same as resilience, and growth did not make us immune to risks. i used the old investment maxim : β past performance is no guarantee of future results β. twelve months ago we faced two immediate risks | , universal banking can be a very profitable business, not least because, when banks fail, their creditors are often bailed out by government. anticipating this, investors require a smaller premium to fund the bank. the value of this implicit government guarantee can be significant, especially during market turbulence. ireland in ireland for the past five years banking has not been profitable. this is largely because of the difficulty banks have had in coping with the legacy assets on their books. a large proportion of these assets yield little by way of interest because of the low euro area money market rates to which their yield is contractually set. a large and β at least until very recently β growing, share of the assets is also not fully performing. the irish banks have set aside, and will still need to set aside, sizable provisions to enable them to absorb the inevitable credit losses on some of this portfolio, as it becomes more evident what part of the loans cannot be paid in full, and since the property - related collaterals that backed the loans at the outset no longer suffice as a backstop. faced with these problems, some foreign - owned banks, whose parents also are weakened by the crisis, have decided to withdraw from the irish market, either altogether or from large segments of it. two significant irish - controlled banks β anglo and inbs β have been liquidated. two others, aib and ebs, have been merged. aside from the group of exportoriented banking firms operating in the export - oriented ifsc context, the banking landscape is now much sparser than it was. the ability of irish banks to make their full contribution to financial services needed for the recovery and into the longer term depends on their being fully repaired after the far - reaching damage wreaked in the boom and its aftermath. much has been done here already in terms of recapitalisation, deleveraging and reduction in the cost base. but the case - by - case resolution of impaired loans, both for the sme sector and the household sector, still has a long way to go. at last there are clear indications that the operational processes put in place bis central bankers β speeches to accomplish this goal are gaining traction and that the problem can finally be brought under control. what will irish banking look like at the end of the decade ; what would we like it to look like? for the sake of argument i will assume that the legacy issues will by then have been put behind us. official policies and the mandates and | 0.5 |
interest rates, the interest rate will be increased. if it appears that inflation will be lower than 2Β½ per cent with unchanged interest rates, the interest rate will be reduced. it is equally important to avoid an inflation rate that is too low, as it is to avoid an inflation rate that is too high. the expression " it appears that " refers to our best estimate of inflation two years ahead. norges bank publishes its inflation projections in the inflation report three times a year ( every four months ). the inflation reports include both a point estimate and an uncertainty interval around the projection. in the most recent inflation report which was published in june, we believed that there was approximately a 75 per cent chance that inflation would be between 2 and 3 per cent in 2003. we also believed that the probability that inflation would be higher than 2 Β½ per cent was about the same as the probability that it would be lower than 2 Β½ per cent. growth forecasts for the global economy this year have been lowered substantially. earlier, a decline in some regions has often been counteracted by an upswing in other regions. the changes now appear to be more concurrent than in 1975, 1982 and 1991. the summer months have brought a great deal of bad news from the global community. after the tragic events on 11 september, the uncertainty is even greater than before. industrial output is declining markedly in all major regions in the world economy. the situation has shifted rapidly in the us, following strong growth throughout most of the 1990s. the contagion effect from the us to europe has been more pronounced than expected. channels other than trade have probably had a greater impact than expected. expectations can be affected quickly. high correlation between share prices in different countries may be an important carrier of contagion. enterprises with worldwide operations may be another. the economic indicators show a clear slowdown in growth in europe β s industrial output. the effect on the swedish economy has been severe, resulting in a record - low exchange rate. one swedish krone now costs approximately 80 norwegian ΓΈre. this is 30 per cent less than 10 years ago. vulnerable emerging economies with high government debt must pay very high interest rates to borrow capital. many central banks have reduced interest rates, most recently 17 and 18 september. interest rates have been reduced because of the prospect of a downturn in each of these economies. real interest rates are low in many countries. the inflation component that is driven by domestic wage and price increases is still high. growth | randal k. quarles, β supervision and regulation report β ( testimony before the committee on banking, housing, and urban affairs, u. s. senate, washington, d. c., may 12, 2020 ). return to text 2 i have recently spoken on the broader strains in the financial system and the significant efforts made to address them. see randal k. quarles, β what happened? what have we learned from it? lessons from covid - 19 stress on the financial system β ( speech at the institute of international finance, washington, d. c. ( via webcast ), october 15, 2020 ). my remarks today principally describe interventions focused on the banking sector. return to text 3 for a full list of such actions, see board of governors of the federal reserve system, β supervision and regulation report ( pdf ), β november 2020. return to text 4 board of governors of the federal reserve system, sr 20 β 18 / ca 20 β 13 : β joint statement on additional loan accommodations related to covid - 19. " return to text 5 board of governors of the federal reserve system, federal deposit insurance corporation, office of the comptroller of the currency, national credit union administration, and state financial regulators, β interagency examiner guidance for assessing safety and soundness considering the effect of the covid - 19 pandemic on institutions ( pdf ), β june 2020. return to text 6 board of governors of the federal reserve system, federal deposit insurance corporation, and office of the comptroller of the currency, β community reinvestment act ( cra ) consideration for activities in response to the coronavirus frequently asked questions ( faqs ) ( pdf ), β may 27, 2020. return to text 7 deliberate outreach to community development financial institutions ( cdfis ) and minority depository institutions ( mdis ) has been a key aspect of these efforts. see lael brainard, β modernizing and strengthening cra regulations : a conversation with minority depository institutions β ( speech at the national bankers association ( via webcast ), october 15, 2020 ) ( noting preliminary data showing cdfis, mdis, and other community banks as source of 73 percent of all paycheck protection program loans to minority - owned businesses ) ; see also board of governors of the federal reserve system, β federal reserve board updates frequently asked questions to clarify the board and department of treasury β s expectations regarding lender underwriting | 0 |
area what the rationale for the historic process of establishing a highly integrated european union is. all in all, that process has proceeded remarkably successfully for more than half a century now. zeit : so, what is its rationale? trichet : european integration is essential for ensuring the peace, stability and prosperity of the nations of europe. all of the reasons we had to engage in this historic endeavour after the second world war are still valid. the balance of power is shifting at the global level. new powers are on the rise in asia, latin america and africa. we are experiencing a very rapidly changing new world with a lot of opportunities, challenges, risks and uncertainties. european unity is more important than ever. zeit : what role does germany play in that? trichet : germany played a decisive role in the establishment of the treaty of rome in 1958, the single european act in 1986 and, in particular, monetary union. germany has also bis central bankers β speeches succeeded remarkably well in regaining its competitiveness over the last ten years. your country is now reaping the rewards of its patient efforts, and the euro area is benefiting from this. a strong german economy is good for europe. zeit : in germany, of all places, eurosceptic voices are now being heard. are the germans even ready for europe? trichet : i travel a lot in germany, and my impression is that while the initial reaction may be sceptical, deeper down everybody is aware of the importance of our historic project, aware of the importance of close cooperation and friendship between the nations of europe. i believe people know that there is no other way of achieving peace, prosperity and stability. zeit : even germans are feeling anxious β they have the impression that monetary union is no longer what they were promised. rules were broken. people are apprehensive that the euro will become a soft currency. trichet : there are many ways of seeing things in a democracy. concerns like these were voiced even when i was involved in negotiating the treaty of maastricht with theo waigel, the minister of finance, horst kohler, staatssekretar, and the other members of the german delegation. but the facts are much more important. for instance, it was unfortunately germany and france which weakened the stability and growth pact in 2004 and 2005. it β s also a fact that price stability is greater today than during the period of the deutsche mark. the average | mario draghi : ecb press conference - introductory statement introductory statement by mr mario draghi, president of the european central bank, and mr vitor constancio, vice - president of the european central bank, frankfurt am main, 20 october 2016. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. we will now report on the outcome of today β s meeting of the governing council. based on our regular economic and monetary analyses, we decided to keep the key ecb interest rates unchanged. we continue to expect them to remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases. regarding non - standard monetary policy measures, we confirm that the monthly asset purchases of β¬80 billion are intended to run until the end of march 2017, or beyond, if necessary, and in any case until the governing council sees a sustained adjustment in the path of inflation consistent with its inflation aim. the information that has become available since our meeting in early september confirms a continued moderate but steady recovery of the euro area economy and a gradual rise in inflation, in line with our previous expectations. the euro area economy has continued to show resilience to the adverse effects of global economic and political uncertainty, aided by our comprehensive monetary policy measures, which ensure very favourable financing conditions for firms and households. overall, however, the baseline scenario remains subject to downside risks. looking ahead, we remain committed to preserving the very substantial degree of monetary accommodation which is necessary to secure a sustained convergence of inflation towards levels below, but close to, 2 % over the medium term. to that end, we will continue to act, if warranted, by using all the instruments available within our mandate. in december the governing council β s assessment will benefit from the new staff macroeconomic projections extending through to 2019 and from the work of the eurosystem committees on the options to ensure the smooth implementation of our purchase programme until march 2017, or beyond, if necessary. let me now explain our assessment in greater detail, starting with the economic analysis. real gdp in the euro area increased by 0. 3 %, quarter on quarter, in the second quarter of 2016, after 0. 5 % in the first quarter. the latest data and survey results point to continued growth in the third quarter of 2016, at around the same pace as in the second quarter. looking further ahead, we expect the economic expansion to | 0.5 |
in tax revenues was mainly on account of the buoyancy in direct taxes. on the expenditure front, while the total expenditure of the centre declined from 16. 8 per cent of gdp in 2002 - 03 to 14. 1 per cent in 2006 - 07 ( re ), the capital outlay rose from 1. 2 per cent to 1. 6 per cent of gdp. the movement in key deficit indicators reflects the progress made so far in fiscal consolidation. fiscal deficit of the centre and the states taken together has declined from 9. 2 per cent of gdp in 2002 - 03 to 6. 4 per cent in 2006 - 07 led by reduction in revenue deficit from 6. 7 per cent of gdp to 2. 1 per cent. apart from the quantitative improvement, a salient feature of the fiscal consolidation underway has been some qualitative progress made as reflected in the reduction in the proportion of revenue deficit to gross fiscal deficit. as a result, the dissavings of government administration declined from 5. 2 per cent of gdp in 2002 - 03 to 1. 3 per cent in 2006 - 07. the savings of the departmental enterprises improved marginally from 0. 5 per cent in 2002 - 03 to 0. 6 per cent of gdp in 200607. the major component of public sector savings, i. e., savings of non - departmental undertakings, has, interestingly, exhibited a steady improvement since the 1970s and this process has continued during the reforms period ( table 4 ). thus public sector enterprises have exhibited continued and steady improvement in their commercial functioning since the early 1990s. consequently, since 2003 - 04 onwards, total public savings have turned positive again. the savings rate of the overall public sector improved from ( - ) 0. 6 per cent of gdp in 2002 - 03 to 3. 2 per cent of gdp in 2006 - 07. notwithstanding the striking improvement over the past few years, it may be noted that the public sector savings rate at 3. 2 per cent during 2006 - 07 was still less than the peak of over five per cent touched in 1976 - 77. nonetheless, the turnaround of 5. 2 percentage points of gdp in public sector savings β from a negative 2. 0 per cent of gdp in 2001 - 02 to a positive 3. 2 per cent of gdp in 2006 - 07 β has been a key factor that has enhanced domestic savings from 23. 5 per cent to 34. 8 per cent over the same period. the public sector investment rate increased from | offering of customized products etc address the supply side factors while the financial literacy initiatives address the demand side factors by sensitizing the people of the need for and benefits of joining the formal financial system. ucbs, by their structure and nature of clientele, are well designed to cater to financial inclusion. the very basis of co - operative structure is mutual help and thrift. considering the specific features of ucbs such as their organizational structure ( member driven ), clientele, easy access and reputation as a friendly neighbourhood bank, these highly localised institutions have the potential for widening and deepening financial inclusion in their area of operation. measures undertaken to promote financial inclusion it has been rbi β s endeavour to remove all hurdles in the way of its regulated entities in achieving financial inclusion objectives. some of the salient measures undertaken in this regard are : bis central bankers β speeches introduction of new products ( i ) opening of β no - frills β accounts : a β no frills β account is one for which no minimum balance is insisted upon and for which there are no service charges for not maintaining the minimum balance, introduced as per rbi directive in 2005. banks have been advised to provide small over drafts in these β no frill β accounts. ( ii ) general credit cards ( gcc ) / kisan credit cards ( kcc ) : gccs / kccs help purvey credit where the credit facility is in the nature of a revolving credit entitling the holder to withdraw up to the limit sanctioned., limits are sanctioned without insistence on security or purpose, based on the assessment of household cash flows. interest rate on the facility is completely deregulated. relaxed regulatory requirements i. relaxed regulatory dispensation on know your customer ( kyc ) norms : kyc requirements for small accounts were relaxed in august 2005, by stipulating that introduction by an account holder, who has been subjected to full kyc drill, would suffice for opening such accounts, or, that the bank can take any evidence to its satisfaction as to the identity and address of the customer. during the year, it has been further relaxed to include job card issued by nrega duly signed by an officer of the state government or the letters issued by the unique identification authority of india containing details of name, address and aadhaar number as a valid identity proof. ii. simplified branch authorisation : to increase the reach of banking network, domestic scheduled commercial banks have earlier been permitted to | 0.5 |
financial sector hinges on the strength of the balance sheets of households, businesses, and financial institutions, as financial institutions'assets are the liabilities of these sectors. the federal reserve monitors and assesses potential vulnerabilities that may develop because of interactions among key participants. we do that by focusing on the safety and soundness of individual supervised institutions and by looking across the entire 1 / 4 bis - central bankers'speeches financial and nonfinancial system for potential risks and vulnerabilities. these risks and vulnerabilities can include elevated valuation pressures, excessive borrowing by households and businesses, excessive leverage in the financial system, and elevated funding risks. in other words, at the federal reserve, we use both microprudential and macroprudential approaches to monitor the health of financial institutions and the financial sector. the recent banking stress events remind us that risks and vulnerabilities in financial markets are continuously changing. that is why the staff at the federal reserve is constantly monitoring domestic and foreign financial markets and institutions, as well as the financial condition of households and businesses, with the goal of identifying current and future vulnerabilities. such forward - looking financial stability monitoring helps inform policymakers about ongoing vulnerabilities in the financial system that may amplify a range of potential adverse events or shocks. the u. s. financial system and economic outlook u. s. financial markets and institutions remain resilient even though financial stability risks and vulnerabilities in the u. s. financial system have increased since the recent stress events. conditions in the banking sector have stabilized thanks, in part, to decisive emergency actions taken in march by the federal reserve, the federal deposit insurance corporation, and the treasury. the federal reserve, using existing regulatory and supervisory tools, is working to ensure that banks improve and update their liquidity, commercial real estate, and interest rate risk - management practices. i expect spending and economic growth to remain quite slow over the rest of 2023, due to tight financial conditions, low consumer sentiment, heightened uncertainty, and a decline in household savings that had built up after the onset of the pandemic. inflation has come down substantially since last summer, but it is still too high, and by some measures progress has been decelerating recently, particularly in the core services sector. while it is reasonable to expect that the recent banking stress events will lead banks to tighten credit standards further, the amount of tightening and the magnitude of the effect such | stanley fischer : housing and financial stability speech by mr stanley fischer, vice chair of the board of governors of the federal reserve system, at the dnb ( netherlands bank ) - riksbank ( sveriges riksbank ) macroprudential conference series, amsterdam, netherlands, 20 june 2017. * * * i am grateful to elizabeth klee, andreas lehnert, mary tian, and alexandros vardoulakis of the federal reserve board for their assistance. views expressed in this presentation are my own and not necessarily those of the federal reserve board or the federal open market committee. it is often said that real estate is at the center of almost every financial crisis. that is not quite accurate, for financial crises can, and do, occur without a real estate crisis. but it is true that there is a strong link between financial crises and difficulties in the real estate sector. in their research about financial crises, carmen reinhart and ken rogoff document that the six major historical episodes of banking crises in advanced economies since the 1970s were all associated with a housing bust. 1 plus, the drop in house prices in a bust is often bigger following credit - fueled housing booms, and recessions associated with housing busts are two to three times more severe than other recessions. 2 and, perhaps most significantly, real estate was at the center of the most recent crisis. in addition to its role in financial stability, or instability, housing is also a sector that draws on and faces heavy government intervention, even in economies that generally rely on market mechanisms. coming out of the financial crisis, many jurisdictions are undergoing housing finance reforms, and enacting policies to prevent the next crisis. today i would like to focus on where we now stand on the role of housing and real estate in financial crises, and what we should be doing about that situation. we shall discuss primarily the situation in the united states, and to a much lesser extent, that in other countries. housing and government why are governments involved in housing markets? housing is a basic human need, and politically important and rightly so. using a once - popular term, housing is a merit good it can be produced by the private sector, but its benefit to society is deemed by many great enough that governments strive to make it widely available. 3 as such, over the course of time, governments have supported homebuilding and in most countries have also encouraged homeownership. 4 governments are involved in housing in a | 0.5 |
run and transitional floor periods before we move to full implementation without floors. this is consistent with the overall process we have laid out for implementing basel ii. we want to ensure that the minimum regulatory capital levels for each institution and in the aggregate for the group of basel ii banks provide an adequate capital cushion consistent with safety and soundness. probably the most important thing we learned from the qis4 analysis is that progress is being made toward developing a risk - sensitive capital system. in terms of the specifics of the analysis, we learned that the drop in qis4 capital was largely due to the favorable point in the business cycle when the data were collected. while the previous qis3 exercise was conducted with data from 2002, a higher credit loss year, qis4 reflected asset portfolio, risk - management information and models during one of the best periods of credit quality in recent years. we learned that the dispersion was largely due to varying risk parameters used by the institutions, which was permissible in the qis4 exercise, but also due to portfolio differences. that is, banks have different approaches to risk - management processes, and their models and databases reflect those differences. we also learned that some of the data submitted by individual institutions was not complete ; in some cases banks did not have estimates of loss in stress periods - - or used estimates that we thought were not very sophisticated - - which caused minimum regulatory capital to be underestimated. based on the results of qis4, the federal reserve recognizes that all institutions have additional work to do. in our view, the findings did not point to insurmountable problems, but instead identified areas for future supervisory focus. in that way, the analysis was critical in providing comfort to enable us to move forward. it is also helpful to remember that the qis4 exercise was conducted on a best - efforts basis. it was just one step in a progression of events leading to adoption of the basel ii framework. we certainly expect that as we move closer to implementation, supervisory oversight of the basel ii implementation methodologies by our examination teams would increase. indeed, during the qualification process we expect to have several additional opportunities to evaluate institutions'risk - management processes, models, and estimates - - and provide feedback to the institutions on their progress. so while the qis4 results clearly provided a much better sense than before of the progress in implementing basel ii and offered additional insights about the link between risks and capital, qis4 should not be | ben s bernanke : brief remarks β the fed β s efforts with respect to diversity speech by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the congressional black caucus foundation's annual legislative conference, washington dc, 25 september 2009. * * * good morning. thank you for the opportunity to speak during the congressional black caucus foundation's annual legislative conference. congresswoman waters, i appreciate the invitation and your leadership in this area. let me make a few brief comments about the federal reserve's efforts with respect to diversity, and i look forward to our dialogue afterward. as you know, in response to the financial crisis that began more than two years ago, the federal reserve has introduced various programs to improve the functioning of key financial markets, with the goal of helping to restore the flow of credit that our economy needs. usage of many of these programs has been winding down as markets improve, but one program for which an ongoing need still clearly exists is the term asset - backed securities loan facility, or talf. this program, which was implemented this year, has helped restart the securitization markets for various types of consumer and small business credit. securitization markets are an important source of credit, and their virtual shutdown during the crisis has reduced credit availability for many borrowers. since its inception, the talf has indirectly financed nearly 3 million loans to households ( excluding credit card loans ) and nearly 400, 000 loans to small businesses. investors participate in the talf by receiving loans from the federal reserve to finance purchases of asset - backed securities. talf was designed from the start to be available to a diverse set of participants : talf loans to purchase asset - backed securities are available to virtually any u. s. - domiciled firm, and firms can participate with investments as low as $ 500, 000. there have been 121 borrowers so far, including investors of all sizes. since talf is open to all investment firms, we needed agents to work with potential borrowers. in march, i participated in the tarp / talf access summit that you organized. at that summit, we heard that a more diverse set of talf agents would help bring in a more diverse set of talf borrowers. acting on that good suggestion, we recently announced the inclusion of four new talf agents, selected to increase the diversity of talf borrowers. three of the four are owned by | 0.5 |
intermediaries alike, the bank developed dedicated webpages for investors interested in the developments of the malaysian financial market. there are continuous updates on what is new in our markets, and important updates on foreign exchange administration rules that market participants may use as a point of reference in their ringgit dealings. many of these initiatives focus on increasing efficiency, access and transparency. however, the reality is that markets will always be imperfect. in the 1970s through to the 1990s, we were told that financial markets can be relied upon to be efficient, that prices will reflect all available public information and hence appropriately reflect the fundamentals of an instrument or asset. regulators were asked to leave markets alone. liberalisation and deregulation were the two key themes and policy push on emerging markets that would enable the development of liquid financial markets. then in the 1990s, the asian financial crisis happened. together with liberalisation and deregulation came excessive speculation and destabilising capital flows. the costs of adopting developed market policy approaches to developing and emerging markets proved high. in dealing with the crisis, we rolled back selected liberalisation initiatives and deinternationalised the ringgit. the latter enabled ringgit trading to be brought back onshore and protected it from the laissez faire offshore markets that were prone to such volatility and risks. this non - internationalisation policy remained intact through the years. yet markets found a way to circumvent it through the non - deliverable forward market. the 2016 enforcement reaffirmed the ringgit non - internationalisation and remains a strong prudential safeguard against excessive volatility and external risks. based on our experience and understanding of the market and its imperfections, there will always thus be a need for rules, regulations and the regulator to see to that market imperfections are not exploited or lead to instability, and that markets continue to be β fit for purpose β or serve their functions. in emerging markets, the industry also needs to come together to work for continued development. only then will we be able to continue progressively growing in a stable and healthy environment. charting the upcoming financial sector blueprint while we see continued growth, a greater understanding of what is to come is key to maintain such momentum. the operating landscape we are entering is expected to be equally challenging and heightened with unknown risks. global growth outlook is forecasted to remain subdued, with slow growth expected from advanced economies and this may inhibit advancement in emerging economies. financial market conditions are expected | role of market discipline in driving islamic financial institutions towards ensuring shariah compliance in the operations, but also contribute towards improving operational efficiency, strengthening risk management infrastructures and instituting sound and dynamic risk management practices. conclusion to harness the full potential of the islamic financial system, genuine endeavors to strengthen further the islamic financial infrastructure, to develop the islamic financial markets and to innovate islamic financial instruments and activities that are able to meet the changing requirements of the new economy and the contemporary global marketplace need to be continuously pursued. with the acceleration of the global integration of islamic finance, it will provide the synergies and opportunities for the islamic financial industry to evolve into an important component of the international financial system that can contribute to enhance the prospects for a more balanced global growth and global financial stability. on that note, i wish you a successful conference. thank you. | 0.5 |
bank of uganda key note address by louis kasekende ( phd ) deputy governor, bank of uganda at the 7th annual international leadership conference organized by makerere university business school ( mubs ) topic : governance in the financial sector : is the financial sector over regulated? entebbe, uganda november 29, 2017 heads of regulatory bodies within uganda β s financial sector, the principal, makerere university business school ( mubs ) invited guests, ladies and gentlemen, good morning. i would like to begin by commending the makerere university business school for organising this international leadership conference and by thanking the principal of the business school, prof. balunywa, for inviting me to give a keynote address. the theme of my address this morning is financial regulation. i want to explore the objectives and the economic rationale for regulating the financial sector. i will then address the question of whether the financial sector is over regulated in uganda. what is the rationale for regulation of the financial sector? throughout the world, in both developed and developing countries, the financial sector is one of the most heavily regulated sectors of the economy. many types of financial institutions are subject to a raft of regulations, such as capital requirements, restrictions on their business activities and financial disclosure requirements which are not applied to most other types of business. for the most part, non - financial sector businesses, such as manufacturing, construction or agriculture, are subject to health and safety standards to protect their employees and some minimum product standards to protect their customers. however, apart from that, the governance of their business activities is left to the market and is not subject to regulation by a public agency. why is the financial sector different? there are two fundamental reasons why the financial sector is much more highly regulated than other sectors of the economy : leverage and information. the combination of high levels of leverage in financial institutions and informational imperfections provide a prudential rationale for financial sector regulation which is not relevant for non - financial sector businesses. many types of financial institutions are highly leveraged ; their borrowings β their debt liabilities β are a multiple of their capital, in contrast to most nonfinancial sector businesses. the ugandan business sector as a whole has equity and reserves which are almost as large as its debt liabilities. 1 in contrast, the ugandan banking industry has debt liabilities ( mainly deposits ) which are almost five times larger than its equity and reserves. this means that if a bank fails, the consequences | savenaca narube : overview of fiji β s economy summary of a presentation by mr savenaca narube, governor of the reserve bank of fiji, to the 19th australia fiji business forum on the fiji economy, sunshine coast, australia, 9 october 2006. * * * 1. economic performance β’ economic growth has averaged around 2. 4 percent over the past 5 years and is expected to average around 2. 7 percent in the next 3 years. β’ investment performance has increased since 2001, with the momentum coming from the private sector. 2. what are our key challenges? β’ challenge 1 : underperforming resource based sectors β’ o gold production has performed poorly in spite of favourable international prices recorded in recent years o forestry showing signs of recovery in the medium term o fisheries sector has shown some growth but is still below potential o mitigating factors : a company restructure is underway at the vatukoula gold mine incentives are being offered by government for investment in agricultural production greater public - private partnership is being encouraged government is looking at ways to improve market access for these sectors value adding initiatives are also being promoted challenge 2 : sugar o sugar production is far below its potential with sugar exports performing poorly when compared to previous years o preferential pricing is gradually being withdrawn : o o 60 percent of fiji β s sugar is exported to the eu market eu preferential price will undergo a 36 percent reduction over a period of 4 years, beginning in 2006 expiring land leases also pose a challenge for the sector : around 2, 800 farm leases will expire by 2008 about 10, 300 farm leases will be expiring over the next 25 years mitigating factors : sugar reforms are underway with support from the indian government adb support through the alternative livelihoods programme is ensuring that those displaced by the reforms have assistance eu support has also been promised β’ β’ the multi - party system will facilitate the passage of land tenure legislation through parliament diversification within the industry to produce ethanol is also being considered challenge 3 : debt o increasing government debt is becoming an issue of sustainability o while, the higher fiscal deficits in the past worked well to raise economic growth, we now need to relook at our strategy to secure sustainability o mitigating factors : strategic development plan 2007 - 2011 has a strong commitment to lower deficits to around 2 percent in any year of the sdp plan period this is expected to help bring the level of government debt down to 49 percent of gdp by 2009 challenge | 0 |
##os ) tripled between 2001 and 2007 with particularly rapid growth of overnight repos. the financial firms were also excessively leveraged, with the leverage for many commercial and investment banks significantly going up from 2003 onwards. high leverage could be built up by financial institutions while being compliant with bis central bankers β speeches the capital adequacy requirement, pointing to serious deficiencies in risk measurement methodologies and models. for example, two large swiss banks, which were among the best capitalised, also came under stress during the crisis. lack of transparency in the otc markets was another major factor which led to build up of risks in the system. information about the position building was not available even with the regulators, leave alone the counterparties. the insurance giant, aig wrote huge credit protection ( to the tune of usd 400 billion ) collecting huge premium in return, believing that it would not be required to settle claims of protection buyers. the quantum of protection sold by aig was not known to the market participants due to which they went on buying credit protection from aig. when the system came under severe stress and aig was required to post higher margins, it found itself in deep trouble and had to be eventually bailed out by the federal reserve. burgeoning under / unregulated shadow banking system added to the forces which exacerbated the crisis. in the run up to the crisis, there was rapid growth in the shadow banking system. in the us, at the peak of credit boom, financing from this sector was much larger than that from the regulated banks. in many advanced economies including the us, the shadow banking system is still larger than the regular banking system. the hands - off approach to the shadow banking system from a regulatory perspective was based on a few assumptions and beliefs. one, the touching faith in market discipline and self regulation, β it was believed that shadow banks would be constrained by market discipline i. e. discipline imposed by banks and other market participants, and also by their own self regulation. two, it was believed that only banks were important from the financial stability perspective as they held deposits and were at the core of the payment and settlement systems. three, it was assumed that if banks β exposure to shadow banking system was regulated, it was easy to contain risks in the shadow banking system. four, it was also believed that regulation of shadow banking system would be very costly, reduce innovation and impede risk transfer. the compensation structure in financial institutions was | . the notification issued for compulsory amalgamation under section 45 of the act is also required to be placed before the two houses of parliament. 10. most of the amalgamations of the private sector banks in the post - nationalisation era were induced by the reserve bank in the larger public interest, under section 45 of the act. in all these cases, the weak or financially distressed banks were amalgamated with the healthy public sector banks. the over - riding principles governing the consideration of the amalgamation proposals were : ( a ) protection of the depositors β interest ; ( b ) expeditious resolution ; and ( c ) avoidance of regulatory forbearance. the amalgamations of the erstwhile global trust bank and the erstwhile united western bank with public sector banks are recent examples. even in such cases, commercial interests of the transferee bank and the impact of the amalgamation on its profitability were duly considered. the mergers of many weak private sector banks with the healthy ones, have brought us to a creditable stage today when not a single private sector bank in the country has the capital adequacy ratio of less than the minimum regulatory requirement of nine per cent. this now paves the way for effective implementation of the prompt corrective action ( pca ) framework by the rbi, which could not be invoked earlier when the banking system was populated by many weak banks, without creating confidentiality issues. ( c ) merger of public sector banks 11. the statutory framework for the amalgamation of the public sector banks, viz., the nationalised banks, state bank of india and its subsidiary banks, is, however, quite different since the foregoing provisions of the b r act do not apply to them. as regards the nationalised banks, the banking companies ( acquisition and transfer of undertakings ) act, 1970 and 1980, or the bank nationalisation acts authorise the central government, under section 9 ( 1 ) ( c ), to prepare or make, after consultation with the reserve bank, a scheme, inter alia, for transfer of undertaking of a β corresponding new bank β ( i. e., a nationalised bank ) to another β corresponding new bank β or for transfer of whole or part of any banking institution to a corresponding new bank. unlike the sanction of the schemes by the reserve bank under section 44 - a of the b r act, the scheme framed by the central government is required, under section 9 ( 6 ) of the bank nationalisation acts, to | 0.5 |
muhammad bin ibrahim : malaysia and turkey β the new silk route in islamic finance β strategies for collaboration, cooperation and smart partnership opening remarks by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at a business seminar on islamic finance istanbul : β malaysia - turkey islamic finance cooperation : new solution β preferred partner β, istanbul, 29 september 2011. * * * i have the honour today to welcome distinguished guests to the business seminar organised by bank negara malaysia, held in this beautiful and historic city of istanbul. the theme β malaysia and turkey : the new silk route in islamic finance β strategies for collaboration, cooperation and smart partnership β was chosen as a reflection of our desire to strengthen economic and business ties for the mutual benefits of both countries. the emergence of the β silk route β, a term coined by governor dr zeti in 2006 opens up exciting prospects for countries and businesses. the new β silk route β not only carries traditional trade of goods and services of old but also manufactured goods, technological innovation and know - how, portfolio flows, private equity investment and mobility of human capital and knowledge. today, islamic financial products and services are truly β new β additions to this trade. let me first express our heartfelt appreciation to his excellency tun dr. mahathir mohamad for accepting our invitation to speak at this event, sharing his thoughts on islamic finance. tun dr. mahathir needs no introduction. among his many achievements was the time he steered the country during the 1997 β 98 asian crisis. his unorthodox policies then have become mainstream now. under his leadership, malaysia experienced modernisation and economic prosperity, a development most profound for my generation. that modernisation included the early development of islamic financial system. from the seeds planted during tun mahathir β s time, we are now seeing the maturing of the islamic financial system in malaysia that is innovative, competitive and increasingly internationalised. what was once a novelty has become an alternative means of conducting business. we owe this very much to tun dr. mahathir β s foresight and wisdom. not many people today realised that one of the first actions that tun dr. mahathir took when he came to office in 1981 was to set up a national steering committee to implement islamic banking in malaysia. the report of this committee on the viability and strategy of the islamic banking, was the impetus for the creation and robust development of the islamic financial industry in malaysia. the rest they say is history | . global economic challenges and islamic finance the world is transforming and its transformation is way beyond what we had seen before. this is an era of radical change, new rules are being formulated, standards and best practices that were in vogue hardly 5 years are now considered insufficient. it is changing at a scale and speed we had never experienced before, that require us to accelerate our own pace of transformation, to enable us to survive and prosper under this β new normal β operating environment. the world is currently faced with wide - ranging challenges that include among others β excessive indebtedness, at household businesses and at sovereigns. many are grappling at finding the solutions to overcome the complex issues facing them today. some of the problems look uncannily similar to what we had faced in the 1990s, but the solutions might be different this time. but whatever that solution might be, we must never discount any probable answers including unorthodox measures. experience during the asian financial crisis had shown that unconventional measures could very well be the future best practices. but then, yesterday β s solution may no longer be adequate to address today β s challenges. therefore, we must endeavour to search for new alternatives bis central bankers β speeches and embark on new ventures that could mitigate the contemporary issues and challenges confronting us. and this is where islamic finance can fit in and play a meaningful role. as an objective, we need to build the foundations for a stronger and more inclusive global economy with sustainable growth and greater shared prosperity by all. this objective is in fact fundamentally in line with the role and relevance of islamic finance. islamic finance emphasises on attainment of socio - economic goals espoused on shariah objectives. it emphasises on a strong linkage to productive economic activity to generate legitimate income. it also emphasises on accountability, fairness and transparency. all these reflect the fundamental values propagated in islamic finance that could serve as a stable and resilient form of financial intermediation. when islamic finance is applied in an appropriate and structured manner, it has a strong prospect to serve as a contributor to a sustainable global economic growth and financial stability. the infrastructure already established in islamic finance today is ready to serve as an effective intermediary for the conduct of global business including promoting greater intraregional trade not only within asia but between the various regions of emerging markets. with more than 600 islamic financial institutions that now operate in more than 75 countries, growing at an annual rate of about 15 | 1 |
mr ferguson reviews the progress on year 2000 readiness and focuses on public disclosure and public confidence in the united states 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, before the george washington university y2k group in washington, d. c. on 29 july 1999. * * * as the countdown to the year 2000 continues, and with only five months to go until the new year, it is certainly prudent for us to focus now on the year 2000 readiness of our nation and, indeed, the entire global community. so i applaud the research program in social and organizational learning here at george washington university for sponsoring this wide - ranging conference. over the course of several days, this assembly has discussed important issues in many sectors of our economy. these year 2000 discussions, and others like them around the nation, will help to create public awareness and understanding, which are very important building blocks in the structure of public confidence. i will come back to the confidence issue in a few minutes, but i will commence with a review of progress to date. preparedness of the domestic banking industry first i want to provide today some perspectives on the year 2000 readiness of the us banking sector. at the federal reserve we are closely involved with preparations for the century date change in the financial sector here and around the world. we expect there will be glitches. nothing this complex can be completely without fault. however, i want to confirm at the outset that the federal reserve is ready for the year 2000, and every current indication is that the domestic banking system is, for all practical purposes, also ready for a smooth transition. much of my emerging confidence results from the fact that the federal reserve system is fully prepared for the year 2000 ; 100 % of the federal reserve β s mission - critical systems are ready. at the federal reserve board and the 12 district banks, we are using today the automated systems that we will use in the year 2000. in fact, we have been testing these systems for more than a year with banks and thrifts that are linked to us around the country for payments and related functions. these tests have gone extremely well. this is significant because the federal reserve banks operate the hub of the nation β s payments system, providing depository institutions with essential services in cash, checks, and electronic payments. thus, because of the federal reserve β s readiness, americans can have confidence that | and ensure public and investor confidence in entities. thus, along with high levels of technical competence, accounting professionals also need to have unquestionable and impeccable professional integrity. therefore, professional bodies have codes of ethics for their members and disciplinary procedures for those who infringe upon these rules. however, one of the causes of the recent financial crisis was also the poor adherence to ethics by some accounting professionals who exploited β form over substance β, rather than β substance over form β to hide weaknesses in their financial position and misstate profits. thirdly, adaptability and compatibility of existing it solutions used by banks to the new requirements imposed by ifrs convergence is also a major challenge. software which has been written keeping in mind indian gaap requirements may have to be modified substantially to incorporate features of ifrs requirements. similarly, compatibility between software and hardware would have to be addressed to take care of the new requirement. rbi has always believed in the fact that accounting standards and the integrity of its implementation has a very important role to play in the financial system as reflected in the report of the committee on financial sector assessment, wherein the importance of the convergence process of indian accounting standards with ifrss has been emphasized. rbi has set up a working group to address implementation issues in ifrs for non - disruptive migration of the indian banking system with members from icai, iba and the regulatory and supervisory departments of rbi. conclusion training, education and skill development is one of the cornerstones of a successful ifrs implementation. all the stakeholders including investors, accountants, auditors, customers, software and hardware vendors, rating agencies, analysts, audit committees, actuaries, valuation experts and other specialists would need to develop and understanding of ifrs provisions to varying degrees and what they need to do. educational institutions need to play a pro - active role and students must also strive to develop a strong conceptual understanding of the new framework and academic institutions should include it in their curriculum. it is not only the accounting issues but how we address the non - accounting issues that will determine how successfully we make a transition to ifrs. it is in this backdrop, and considering the ongoing changes in the standards both globally and in the indian context as well as the amount of work involved in the convergence process, that this national seminar on ifrs assumes importance. i wish the deliberations in this seminar all success. bis central bankers β speeches | 0 |
this may have for the appropriate future path of central bank balance sheets, including the pace and timing of any future unwind of asset purchases. but one conclusion is that it could be preferable, and consistent with setting monetary conditions consistent with the inflation target, to seek to ensure there is sufficient headroom for more potent expansion in central bank balance sheets when needed in the future β to β go big β and β go fast β decisively. that begs questions about when does the need for headroom become an issue? what are the limits? one way of looking at these questions is in terms of the stock of assets available for purchase. there is currently a large outstanding stock of government bonds which could be purchased. and if the state contingent effects of qe are driven by the need for holders of safe assets to exchange them for deposits, then it must always be possible for the central bank to purchase more assets. in other words, the central bank would need to own a high proportion of safe assets for that to become a constraint. but if negative shocks continue to arrive from time to time before any reversal of the stock of asset purchases takes place, and hence the stock owned by the central bank continues to rise, the odds of this situation arising go up. this effect may become more likely if the equilibrium real interest rate remains low for a prolonged period. expanding the range of assets purchased is another way for central banks to create more headroom. the covid crisis has seen a further broadening of the range of assets that central banks stand ready to purchase. in part, this has reflected another objective of central banks and governments, given the scale of the crisis and its economic effects, namely to direct and target funds to the corporate sector, and thus supplement the more normal role of banks and financial markets. but it also reflected a need to act on a broad front in terms of ensuring liquidity gets to the places where it is needed. where that requires larger purchases of a broader array of assets, it inevitably raises risk management questions for central banks. so, i think the covid crisis has demonstrated the need to ensure central banks have as many tools as possible in their box, of which expanded purchases of private sector assets is one, but given the issues it raises i would emphasise state contingency here in terms of when some tools may be more appropriate or necessary, given the severity or particular nature of the circumstances at the time. the mpc has considered its prospective approach to qe unwind | factor that will serve to prevent sudden price movements is the fact that the retirement of the baby - boomers can be anticipated. events that can be anticipated are not going to cause a collapse on the rationally based financial markets. thus, if the retirement of the baby - boom generation is seen to change the balance of supply and demand for financial instruments, the markets will already take this into account in their pricing years before the baby - boomers actually retire. the resistance of the financial markets will also be improved by a third factor. at least in those countries where pension cover is based to a considerable degree on private savings, there will be a mutual self - correcting interaction between the retirement of the baby - boomers and asset prices. if the approaching retirement of the baby - boom generation began to build up sales pressures on the asset markets and push down the prices of stocks, bonds and houses, this would reduce the value of the baby - boomers'own assets. many pension savers would then face a situation in which their pension assets would no longer allow them to maintain the standard of living they had hoped for in their retirement. some of those who had already planned to retire would then find themselves forced to stay on at work longer than they had intended. this would increase the level of pension savings and reduce the number of pensioners, improving the balance on the financial markets and preventing a price collapse. a study at the bank of finland by tuomas saarenheimo 1 on the financial market impact of ageing introduces another point of view that has received less attention in international discussion : the change in people's lifespan. this means higher life expectancy and, especially, longer retirement. from 1950 until the present day, the additional life expectancy of a person aged 60 has grown by around 5 years. it now stands at 22 years. by the year 2050 it is forecast to grow again by approximately another 5 years. the trend is more or less the same everywhere apart from those african countries that are suffering most from the aids epidemic. for the sustainability of public pension schemes it would be good if part of this longer lifespan could be devoted to remaining longer at work before retiring. so far, there exists only weak evidence of such a trend. the most likely outcome is that, in the future, most of these extra years will be spent in retirement. in the next few decades we can expect the time spent in retirement to increase by about a quarter. it is clear that an | 0 |
fuel the momentum of reforms moving forward. with the sustained positive developments in almost all sectors of the economy, the outlook in 2014 remains upbeat. we are optimistic that gdp growth will reach the government β s growth target of 6. 5 to 7. 5 percent for the year. we also expect inflation to settle within the target of 3 β 5 percent for 2014. in 2015, the inflation target is lowered to 2 β 4 percent, which is consistent with our desired disinflation path. external sector dynamics will remain favorable, as trade is expected to rebound in light of expected global turnaround while remittances are seen to remain on a steady growth path. let me now go to the second part of my presentation : macroeconomic issues. actual developments and prospects all look and sound like it is all good, doesn β t it? yes, so far β¦ all positive trends. but just like any shrewd investor, the bsp is mindful about the pockets of risks that could impinge on the country β s economic growth momentum. as they say, β the trend is your friend until it bends. β let me focus on three issues : 1. risks to price stability ; 2. impact of the gradual tightening of us monetary policy ; and 3. concerns raised on the rapid growth in domestic liquidity and credit which, nevertheless, remain consistent with fundamentals. the first issue is : what are the risks to price stability? we β ve been able to keep inflation within the government β s target for 5 consecutive years now. is that a trend we can keep? i know many of you are used to looking at charts and trends. the chart on the right side of the screen is something which you may not be that familiar with. it β s called a fan chart. it shows the projected path of inflation and the likely area this can stray about, given certain levels of confidence. inflation is seen to be manageable over the policy horizon, even as the inflation path has somewhat moved higher. the left hand side of the screen lists the potential price risks. potential price pressures are still coming mostly from the supply side, notably potential increases in power rates and higher food prices resulting from an expected bis central bankers β speeches el nino episode in the second half of 2014. these factors highlight the continued risk of second - round effects, which are thus far, not yet evident. the downside risks to inflation are associated with the potential growth slowdown in key emerging markets and risk of def | y v reddy : communications policy of the reserve bank of india address by dr y v reddy, deputy governor of the reserve bank of india, at the 150th anniversary of the reuters group, mumbai, 28 august 2001. * * * mr. green, mr. weetman, mr. new and friends, i am thankful to the organisers and in particular mr. new for giving me the honour of participating in the 150th anniversary celebrations of the reuters group. in all innocence, i accepted the invitation only soon to realise that there is no free lunch or free dinner in this world. i am assigned the task of inaugurating the evening and addressing the guests on this occasion. i pleaded for some draft from reuters, though informally. as you may be aware, as senior bureaucrats, we are good at reading out excellent speeches drafted by others. but, the organisers insisted on giving me a free hand. it was a polite way, i presume, of suggesting that we do our homework diligently. so, a visit to reuters website and websites of several central banks became necessary to select a subject and also to obtain some material for a suitable address on this occasion. of course, i consulted several of my colleagues in the reserve bank, including ms. alpana killawala, the points person in our relations with the media. reuters reuters is, perhaps, synonymous with online news but there is more to reuters than purveying news. in 1850 - 51, mr. paul julius reuter, the founder had used a fleet of forty five pigeons to deliver news and stock prices between brussels and aachen in germany. now, in 2001, besides serving the financial markets using state of art technology, reuters information is read by an estimated 73 million people each month. the reuters website provides a long list of its impressive achievements over the last 150 years. an aspect that is the most striking is the reach of its information to different parts of the world. reuters is a prime example of how the most modern available technologies can be harnessed to minimise information asymmetry. to quote from the reuters website : β over 5, 58, 000 professional users in 69, 700 locations access reuters information and news worldwide. data is provided on more than 9, 40, 000 shares, bonds and other financial instruments as well as on 40, 000 companies. financial information is obtained from 257 exchanges and over - the - counter markets. 5, 047 clients contribute prices, opinions | 0 |
much to price changes in the short run, the recent unexpected rise in oil consumption together with disruptions to supply can plausibly account for much of the increase in prices. however, the sharp increases and extreme volatility of oil prices have led observers to suggest that some part of the rise in prices reflects a speculative component arising from the activities of traders in the oil markets. how might speculation raise the price of oil? simplifying greatly, speculative traders who expect oil to be in increasingly short supply and oil prices to rise in the future can back their hunches with their money by purchasing oil futures contracts on the commodity exchange. oil futures contracts represent claims to oil to be delivered at a specified price and at a specified date and location in the future. if the price of oil rises as the traders expect - more precisely, if the future oil price rises above the price specified in the contract - they will be able to re - sell their claims to oil at a profit. if many speculators share the view that oil shortages will worsen and prices will rise, then their demand for oil futures will be high and, consequently, the price of oil for future delivery will rise. higher oil futures prices in turn affect the incentives faced by oil producers. seeing the high price of oil for future delivery, oil producers will hold oil back from today β s market, adding it to inventory for anticipated future sale. this reduction in the amount of oil available for current use will in turn cause today β s price of oil to rise, an increase that can be interpreted as the speculative premium in the oil price. many people take a dim view of speculation in general, and in some instances this view is justified. 7 in many situations, however, informed speculation is good for society. in the case of oil, speculative activity tends to ensure that a portion of the oil that is currently produced is put aside to guard against the possibility of disruptions or shortages in the future. true, speculation may raise the current price of oil, but that increase is useful in stimulating current production and reducing current demand, thereby freeing up more oil to be held in reserve against emergencies. speculative traders have no altruistic motives, of course ; their objective is only to buy low and sell high. but speculators β profits depend on their ability to induce a shift in oil use from periods when prices are relatively low ( that is, when oil is relatively plentiful ) to periods when prices are relatively high ( | data, is now estimated to have been about 3. 7 million barrels per day higher than the iea projected in july 2003. 6 ( for reference, total global oil consumption this year has averaged about 81 million barrels per day ). a significant part of this unexpected increase in oil consumption, about 2. 2 million barrels per day, reflected quickly growing oil demands in east asia, notably china. however, an ongoing economic expansion across both the industrialized and the emerging - market economies has also contributed to the world β s growing appetite for oil. on the supply side, the production of oil has been constrained by the available capacity and by geopolitical developments. with oil consumption and prices rising briskly, saudi arabia and other members of the organization of petroleum exporting countries ( opec ) have promised to pump more oil. however, the relatively limited increases in production delivered so far by opec members, together with non - opec production that has fallen a bit below projections, have raised concerns that the spare production capacity available in the near term may be severely limited, perhaps below 1 million barrels per day. interacting with the limits on capacity, and contributing to the exceptional volatility in oil prices of recent months, are uncertainties about the reliability and security of oil supplies. of course, the oil - rich middle east remains especially volatile. but political risks to the oil supply have emerged in nations outside oil futures and other oil - related derivatives are traded on the new york mercantile exchange ( nymex ) and the international petroleum exchange ( ipe ) as well as over the counter. i should acknowledge that oil futures prices have a less - than - stellar record in forecasting oil price developments, but they are probably the best guide that we have. chinn, leblanc, and coibion ( 2001 ) find that futures quotes are unbiased predictors of future spot prices, though not very accurate ones. saudi arabia and other opec members, like the iea and most participants in the oil markets, did not anticipate the surge in consumption we have seen this year either. opec actually reduced its production targets in 2003 and again in early 2004 out of concern that weak oil demand would cause price declines. the middle east as well, including russia, venezuela, and nigeria. weather also has taken a toll, as recent hurricanes affected the production and distribution of oil on the u. s. gulf coast. because neither the demand for nor the supply of oil responds very | 1 |
be generated while the risks were often regarded, wrongly, as negligible. this transformation of the financial sector was facilitated by the β light touch β regulation practiced especially in the usa and uk. light touch regulation was partly motivated by a belief in the efficiency of financial markets that now looks naive, partly by the desire of governments to attract globally mobile financial services to their own territories and partly by regulatory capture. however, rapid expansion of balance sheets and the assumption of risks that were not properly understood created financial fragility in many financial institutions, including those which had been bastions of the financial establishment. furthermore, the complexity of the modern financial system and opacity of many new financial instruments created enormous uncertainty among investors as to where risks were actually held. allied to the increasing importance of transactions in securities markets, for example to source funds for bank lending and the growth of a shadow banking sector, this served to increase the vulnerability of the financial system to systemic risk. it was the systemic risk to the financial system that forced governments in several countries to risk huge sums of public money to bail out distressed financial institutions, even though the problems faced by these institutions were largely of their own making. impact of the global crisis on africa in contrast to some of parts of the world, most countries in africa, including uganda, have not suffered direct contagion from the financial crisis in the developed economies. although there are substantial capital flows between africa and the rest of the world, banks in africa have virtually no exposure to the developed worlds β toxic assets. nor do african banks depend on wholesale securities markets for funding, unlike many banks in the developed world. as a consequence, neither the asset quality nor the liquidity of most african banks has been directly impaired by contagion from the financial crisis in the developed economies. furthermore, most african economies have not funded large current account deficits with short term external private borrowing. hence they are not at risk of a capital account crisis, in contrast to some of the transition economies in eastern europe. for these reasons most african economies have not suffered systemic failures in their financial systems as a result of contagion from the global crisis not have they been forced to adjust to sudden stops in their capital accounts through draconian expenditure reduction. nevertheless, the impact of the global crisis is being felt in africa, although it is somewhat more muted than in some other parts of the world. the sharp slowdown in global growth affects africa, including uganda, through its impact on demand for | weakens when investors leave the swedish market for ones considered a safer investment. this was particularly noticeable during the mexico crisis of 1995 and the asia crisis of 1997 - 98. the recent unrest on the financial markets in connection with uncertainty over the global business climate has once again had a negative effect on the krona. following the terrorist attacks in the usa we saw a further depreciation of the krona ( and for some other minor currencies ), as well as a weak development in the stock market. finally, the generally stronger dollar must be mentioned as one of the explanations for the weak krona. some of the dollar's strength can be attributed to higher productivity in the usa, but most economists still believe the dollar to have been overvalued on the basis of traditional economic theory. the krona has thereby been steered to some extent by factors that are not connected with the economic situation and developments in the real economy. this means that the weak krona does not function fully as a shock absorber against the outside world. sweden has an undervalued currency despite our economy developing as well as other countries'economies. the monetary policy problem is that a weak krona risks creating inflation via import prices, which in turn can force a tighter monetary policy stance than would otherwise be necessary. there are international examples of how the exchange rate, instead of acting as a shock absorber, has rather worsened the effects of an economic slowdown. japan and switzerland have experienced prolonged crisis periods during the 1990s, while their currencies have remained very strong and have thus caused problems for the export industry. one effect of the weakening of the krona that we have now is that the export industry and the competitive import industry should become more competitive in the short term. however, there are some structural problems here : an unmotivated weak exchange rate risks strengthening certain parts of the export industry that do not constitute expansive future sectors. sweden's future hardly lies in competing with low costs and prices, but rather with quality, cutting edge technology and know - how. when the krona eventually appreciates to a level more motivated on the basis of fundamental factors, sweden will have an industrial structure poorly equipped to meet the requirements of the future. conclusions the riksbank assumes that the krona will appreciate. it is possible that we have already seen the beginning of this development very recently. when the upturn does take place, it may prove even stronger than the riksbank estimated in its latest | 0 |
christine lagarde : financing a green and digital recovery speech by ms christine lagarde, president of the european central bank, at the brussels economic forum 2021, frankfurt am main, 29 june 2021. * * * thank you for inviting me to speak to you today. the economist rudi dornbusch once said that β in economics, things take longer to happen than you think they will, and then they happen faster than you thought they could. β that describes the situation we face today very well. the pandemic has accelerated pre - existing trends at a pace we could never have imagined. there are possibilities for our economy in 2022 which seemed at least a decade away in 2019. companies have digitised their activities 20 to 25 times faster than they had previously thought possible. one in every five workdays are expected to move to the home after the pandemic ends, compared with just one in every 20 before. and the call for greener lifestyles has become thunderous. having accepted tough restrictions to fight the pandemic, 70 % of europeans are now in favour of stricter government measures to fight climate change. europe has long wanted to shift towards a more sustainable, more productive economy β and we now have the very real opportunity to do so. if we capitalise on this moment, the pandemic could accelerate labour productivity growth by around 1 % a year by 2024 β more than double the rate achieved after the great financial crisis. so how can we capitalise on this opportunity? during the pandemic, we have mainly been acting to preserve the economy, which was the necessary thing to do. compensation of employees fell by 3. 5 % in 2020 compared with 2019, but household real disposable income only declined by 0. 3 % β mainly because government transfers compensated for the loss of income. but as the pandemic passes, we need to shift the focus from preserving the economy to transforming it. this will require us to redirect spending by both public and private sectors towards the green and digital sectors of the future. specifically, we need to see investment of around β¬330 billion every year by 2030 to achieve europe β s climate and energy targets, and around β¬125 billion every year to carry out the digital transformation. the nextgenerationeu ( ngeu ) programme will help channel public investment towards transformative sectors. but it is currently less clear whether the private financial sector can do the same. fragmentation | . the city has been the centre of a series of landmark global green bond issuances, from china β s first green covered bond β the country β s first ever international issuance of a green bond β to the first green masala bond worth inr 20bn. in our view, such local currency green bonds will be particularly important to the climate transition in emerging market economies ( emes ). however, while they are important catalysts, green bonds will not be sufficient to finance the transition to a low carbon future. they accounted for only 3 % of global bond issuance in 2018. achieving the transition will require mobilising mainstream finance. advances in reporting and risk analysis are paving the way for investors to realise the opportunities in climate - friendly investment by re - orienting their focus to broader, more sustainable long - term value creation. such investment approaches are becoming increasingly common. there are now almost 2000 signatories, with over $ 80 trillion in assets under management, to the un principles for responsible investment ( un pri ), an international network of investors committed to considering esg factors in their work. 21 this swell of support is driven by the expectation that sustainable investment can generate excess returns in three ways. for more information on the commission β s sustainable plan, see : https : / / ec. europa. eu / info / business - economy - euro / banking - andfinance / sustainable - finance _ en see : cbi https : / / www. climatebonds. net / about and icma https : / / www. icmagroup. org / green - social - and - sustainability - bonds / greenbond - principles - gbp / climate bonds initiative. ( 2018 ). green bonds : the state of the market 2018. available : https : / / www. climatebonds. net / resources / reports / green - bonds - state - market - 2018 by indonesia, belgium, lithuania, ireland and seychelles see : https : / / www. unpri. org / pri all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx first, companies that score well on esg metrics could better anticipate future climate - related risks and opportunities. this makes them more strategically resilient and therefore able to anticipate, and adapt to, the risks and opportunities on the horizon, generating true alpha from esg. second, strong esg | 0 |
recovery. an appropriate restructuring and consolidation of the banking sector should also play an important role. sound balance sheets, sound risk management, and transparent as well as robust business models are key to strengthening the financial soundness of banks and their resilience to shocks, thereby laying the foundations for sustainable economic growth and financial stability. we are now at your disposal for questions. | be supported in the short term by a number of temporary factors but is likely to be affected over the medium term by the process of ongoing balance sheet correction in the financial and the non - financial sector of the economy, both inside and outside the euro area. in the view of the governing council, the risks to this outlook remain broadly balanced. on the upside, there may be stronger than anticipated effects stemming from the extensive macroeconomic stimulus being provided and from other policy measures taken. confidence may also improve more quickly, the labour market deterioration may be less marked than previously expected and foreign demand may prove to be stronger than projected. on the downside, concerns remain relating to a stronger or more protracted negative feedback loop between the real economy and the financial sector, renewed increases in oil and other commodity prices, the intensification of protectionist pressures and the possibility of a disorderly correction of global imbalances. with regard to price developments, annual hicp inflation stood at - 0. 3 % in september, according to eurostat β s flash estimate, compared with - 0. 2 % in august. the current negative inflation rates are in line with previous expectations and reflect largely base effects resulting from the movements in global commodity prices a year ago. also owing to base effects, annual inflation rates are projected to turn positive again in the coming months. thereafter, over the policy - relevant horizon, inflation is expected to remain in positive territory, with overall price and cost developments staying subdued reflecting ongoing sluggish demand in the euro area and elsewhere. in this context, it is important to re - emphasise that inflation expectations over the medium to longer term remain firmly anchored in line with the governing council β s aim of keeping inflation rates below, but close to, 2 % over the medium term. risks to this outlook remain broadly balanced. they relate, in particular, to the outlook for economic activity and to the evolution of commodity prices. furthermore, increases in indirect taxation and administered prices may be stronger than currently expected owing to the need for fiscal consolidation in the coming years. turning to the monetary analysis, the latest data confirm that developments in broad money and credit growth remain subdued. in august, the annual growth of m3 and loans to the private sector declined further to historically low rates of 2. 5 % and 0. 1 % respectively. this parallel deceleration in money and credit growth confirms our previous assessment of a moderate underlying pace of monetary expansion and low inflationary pressures over the medium term. the ongoing | 1 |
ueda kazuo : the bank's semiannual report on currency and monetary control statement by mr ueda kazuo, governor of the bank of japan, before the committee on financial affairs, house of councillors, tokyo, 17 november 2023. * * * introduction the bank of japan submits to the diet its semiannual report on currency and monetary control every june and december. i am pleased to have this opportunity today to talk about recent economic and financial developments and about the bank's conduct of monetary policy. i. economic and financial developments i will first explain recent economic and financial developments. japan's economy has recovered moderately. exports and industrial production have been more or less flat, supported by a waning of the effects of supply - side constraints. corporate profits have been at high levels on the whole, and business sentiment has improved moderately. in this situation, business fixed investment has increased moderately. the employment and income situation has improved moderately. private consumption has increased steadily at a moderate pace, despite being affected by price rises. with regard to the outlook, japan's economy is likely to continue recovering moderately, supported by the materialization of pent - up demand, as well as by factors such as accommodative financial conditions and the government's economic measures, although it is expected to be under downward pressure stemming from a slowdown in the pace of recovery in overseas economies. the year - on - year rate of increase in the consumer price index ( cpi ) for all items excluding fresh food is slower than a while ago, mainly due to the effects of pushing down energy prices from the government's economic measures, but it has been in the range of 2. 5 - 3. 0 percent recently owing to the effects of a pass - through to consumer prices of cost increases led by the past rise in import prices. regarding the outlook, it is likely to be above 2 percent through fiscal 2024 and then decelerate in fiscal 2025. meanwhile, through fiscal 2025, the bank expects that underlying cpi inflation will increase gradually toward achieving the price stability target of 2 percent. concerning risks to the outlook, there are extremely high uncertainties surrounding japan's economic activity and prices, including developments in overseas economic activity and prices, developments in commodity prices, and domestic firms'wage - and price - setting behavior. under these circumstances, it is necessary to pay due attention to developments in financial and foreign exchange markets and their impact on japan ' | s economic activity and prices. meanwhile, japan's financial system has maintained stability on the whole. although attention is warranted on, for example, the impact of the tightening of global financial conditions, the financial system is likely to remain highly robust on the whole, even in the case of an adjustment in the real economy at home 1 / 2 bis - central bankers'speeches and abroad and in global financial markets, mainly because japanese financial institutions have sufficient capital bases. regarding financial risks from a longer - term perspective, while there is a possibility that prolonged downward pressure on financial institutions'profits may lead to a gradual pullback in financial intermediation, the vulnerability of the financial system could increase, mainly due to the search for yield behavior. although these risks are judged as not significant at this point, it is necessary to pay close attention to future developments. ii. conduct of monetary policy next, i will explain the bank's conduct of monetary policy. the bank considers that sustainable and stable achievement of the price stability target is not yet envisaged with sufficient certainty at this point, and that it is important to closely monitor whether a virtuous cycle between wages and prices will intensify. in this situation, it will patiently continue with monetary easing under quantitative and qualitative monetary easing ( qqe ) with yield curve control, aiming to support japan's economic activity and thereby facilitate a favorable environment for wage increases. in october, the bank decided to conduct yield curve control with the upper bound of 1. 0 percent for 10 - year japanese government bond ( jgb ) yields as a reference and to control the yields mainly through large - scale jgb purchases and nimble market operations. this decision was based on the assessment that it was appropriate for the bank to increase the flexibility in the conduct of yield curve control. the bank will conduct monetary policy with the aim of achieving the price stability target of 2 percent in a sustainable and stable manner, accompanied by wage increases. thank you. 2 / 2 bis - central bankers'speeches | 1 |
##tization requirements, a property tax, or restrictions on the tax deductibility of mortgage rates are examples of instruments that have much lower real costs and hence a considerable comparative advantage compared to the policy rate in affecting housing prices ( svensson 2010b ). flexible inflation targeting with mean square gaps ( msgs ) β another step towards increased transparency the adoption of numerical inflation targets has entailed great progress for practical monetary policy and made it possible to measure and evaluate the target fulfilment of monetary policy such considerations could include evidence of the β risk - taking channel β as in borio and zhu ( 2008 ). adrian and shin ( 2010a, b ) argue, in a model with such a risk - taking channel, that short interest - rate movements may have considerable effects on the leverage of securities broker - dealers in the market - based financial sector outside the commercial - banking sector. if we assume that the risk of a financial crisis increases as this leverage increases, and that policy rates affect leverage, then policy rates would affect the risk of a financial crisis ( woodford 2010b ). however, new regulation is likely to limit excess leverage and limit the magnitude of these affects. the size of the market - based financial sector may end up being smaller after the crisis. in europe, canada and the nordic countries, commercial banks dominate the financial sector. bis central bankers β speeches in a much more efficient manner than before. however, the fact that monetary policy is not just directed towards stabilising inflation, but also towards stabilising resource utilisation has, in the absence of quantitative measures of stability in these variables, made it difficult to measure and evaluate target fulfilment in this stability dimension. this makes it difficult to decide which policy - rate path best stabilizes both inflation and resource utilization. my suggestion is to use mean squared gaps for the inflation forecast and for the resourceutilization forecast as measures of the stability of inflation and resource utilization. 3 figure 1 provides an example, using graphs from norges bank β s inflation report of june 2005. figure 1 monetary policy with mean squared gaps ( norges bank, june 2005 ) in figure 1, the top left panel shows three alternative policy - rate paths, the main path chosen by norges bank at the time and two alternative paths, a lower and a higher path. the top right panel shows the corresponding forecast of inflation according to the index cpi - ate, the consumer price index adjusted for tax changes and excluding energy products | say a few words about the riksbank β s appraisal of the situation at the moment. the swedish economy is currently making a strong recovery. in the last inflation report the riksbank viewed that growth would be around 4 % this year and average almost 3. 5 % in the next three years. this seemed to be a higher rate of growth than the economy could sustain in the long run. as available resources are utilized, price pressure will grow. the task of monetary policy is to ensure that growth does not deviate too far from a rate that is sustainable, thus causing shortages and price pressure. diagram 6. the task of monetary policy function of the monetary policy growth new economy potential growth real growth time the riksbank was of the view that, in the next few years, the inflation rate would be lower than what might be expected with such strong growth. one reason for this was that the modest increase in underlying domestic inflation anticipated in our forecasts was offset by a stronger krona and lower oil prices. our assessments also took into account the fact that in recent years domestic price pressure had been lower than expected. we do not know exactly why domestic inflation has been so low in the last few years. deregulation of the electricity and telecom markets is one important factor. but competition has increased in other product sectors too, due to globalization in general and to membership of the eu in particular. our forecasts are also strongly influenced by our estimates of capacity utilization in the economy and of potential growth. there is some uncertainty in both cases. in the last few years we have changed our minds and become more optimistic when it comes to capacity utilization. the potential rate of economic growth may also have increased somewhat. the slightly higher rates of investment and productivity suggest that a somewhat higher rate of growth may be possible. nowadays, the riksbank assumes a potential rate of growth of between 2 and 2. 5 %, which is a slight upwards adjustment compared with the 1980s. however, uncertainty about these factors makes it necessary for the riksbank to keep a close watch on developments and revise conventional wisdom where necessary. one of the most important variables when it comes to assessing future inflationary pressures is wage trends. this is perfectly natural, since wage costs represent almost 70 % of the total value added in the economy and are therefore crucial to the development of costs and prices. historically, rising wage costs have covaried with inflation, even though substantial deviations can occur in some years since | 0 |
for controlling intermediaries and those with powers over markets. the growth of asset management, where the activities typical of institutions engaged in banking, insurance and securities investment services intersect, has fostered the rise of financial conglomerates. the presence of these complex organizations creates new channels for the spread of possible crises ; their international ramification and the existence of different types of intermediaries increase the difficulty of coordinating the supervisory bodies involved. generally speaking, the emergence of a small group of very large global operators with substantial capital and highly diversified portfolios strengthens the financial system ; the emergence of such a group nonetheless faces the international community with the problem of forestalling the possibility of an insolvency and defining instruments on an adequate scale for handling such an event. the supervision of financial conglomerates is hindered by the existence of unregulated entities, but problems also arise where all the components are subject to prudential controls. in the case of capital adequacy, it is necessary to avoid double and multiple gearing, which can result in the group as a whole failing to have adequate capital even though the individual units all satisfy their respective capital requirements. the ramification and strategies of groups can reduce the effectiveness of individual supervisory authorities β prudential controls and make it less easy to overcome company crises. risk control in the more complex financial conglomerates is often centralized in a single operating unit ; the correspondence between company structures and lines of business ceases to exist ; group activities are no longer covered by supervisory controls, which are divided by country, type of institution and product. regulators are likely to encounter greater obstacles to the effective performance of their tasks because functions that are crucial to the sound and prudent management of the undertaking subject to supervision are carried on in a different jurisdiction. awareness of these difficulties has led to an intensification of cooperative efforts in international fora. at the beginning of 1996 the basle committee on banking supervision, the international organization of securities commissions ( iosco ) and the international association of insurance supervisors ( iais ) set up the joint forum on financial conglomerates and charged it with the task of addressing the supervisory issues raised by these complex financial organizations. in particular, the joint forum has studied the practical means of facilitating the exchange of information among supervisory authorities, at both the national and the international levels, and has examined arrangements for facilitating the coordination of control activities both in ordinary circumstances and in crises. it has also drawn up a list of principles aimed at permitting | this is not the strategy β s only feature. also for the first time ever, we have changed the philosophy of our relationship with individuals and institutions as clients with which we interact and for which we work every day. paraphrasing what president kennedy said in his inauguration speech over 60 years ago, i would say, β ask not what your stakeholders can do for your central bank β ask what your central bank can do for its stakeholders. β 1 / 3 bis central bankers'speeches the need to be client - oriented sets a new and, let β s be frank, a high bar for the ability of central banks to build and maintain dialogue. it goes without saying that central banks use communications as an important policy tool. but it is important to remember that transparency must be effective. it must help central bank pursue its mandate, which consists in ensuring price and financial stability. during these two days, we will discuss this aspect of central bank transparency on more than one occasion. but it β s time for us to admit that this passive, one - way communication, when central banks used to make everybody listen with bated breath to whatever scanty and vague words they had to offer, no longer works. ultimately, this approach undermines the effectiveness of central bank policy. β if you don β t understand us, it β s your problem β is the rhetoric that is outdated and obsolete. today, if you β our clients β have difficulty understanding us, it β s our problem. institutions that make themselves heard and understood are the only ones that get public trust. institutions that have public trust are the only ones that receive support and commitment. institutions that have public support are the only ones that can withstand the pressure of populism, fake news, manipulations, and attempts to turn these institutions into instruments for certain business interests that run counter to the interests of the people. under these circumstances, the central bank should transform taking the corporate sector as an example and begin to finally listen to clients and seek two - way communication. when communicating with clients, the central bank should take an individual approach to every client, choosing words that are intelligible and important and ones that interest the client. at the same time, the central bank must choose communication platforms that are suitable for every party. long story short, the need to be client - oriented compels banks to transition to targeted communications. we at the nbu have been moving in that direction for five years running. the groundwork for greater transparency | 0 |
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