text1
stringlengths 1
3.21k
| text2
stringlengths 1
3.21k
| label
float32 0
1
|
|---|---|---|
to make them safer, rather than more hazardous. wonderfully named features as abs and esc are only possible because of innovation driving growing complexity in car - making. this is the kind of complexity that keeps drivers safe every day. the finance industry also offers us some wonderfully names symbols of complexity, such as rmbs and cds. unfortunately, unlike their counterparts in the car industry, these are not currently associated with safety and reliability. so it is clear that innovation and complexity may have improved the system β s ability to allocate capital efficiently in many cases, but certainly not in all. this implies we should go back to the drawing board to improve the resilience of the financial system. but it does not mean we should go back to the past. innovation cannot be undone and the idea that tomorrow β s problems can be solved by yesterday β s regulation strikes me as overly simple and even dangerous, as it could constrain the possibilities for financial system to allocate capital around the world and transfer risk efficiently. while we are at the drawing board, we also need to address the issue of containing systemic risk. the new financial system as a whole, as well as its individual institutions, will need to be more resilient to shocks. the present - day financial system is a complex system, characterized by a high level of interconnectedness. therefore, monitoring the financial system as a whole, and the linkages between its elements, has become all the more important. such β macro - prudential β supervision mechanisms help to spot sources of financial instability at an early stage. a positive development in this regard is the establishment of the european systemic risk board next year. but changes are also at hand to strengthen each financial institution individually. and some of these changes will have a profound effect on the balance between banks and supervisors. managing complexity this brings me back to our topic of discussion. the balance between banks and supervisors. what changes are necessary for individual banks and supervisors, in order to strengthen the resilience of the financial system and manage its complexity? let β s start by looking at changes for individual banks. some policy proposals have received ample attention in the debate. in order to make the financial system more resilient to shocks, each individual bank will need to hold a bigger capital buffer than before. this can be achieved through higher overall buffers, increases in capital charges for specific activities, or a combination of the two. furthermore, the quality of capital buffers needs | system. the exchanges where cryptos are bought and sold are where the β new β and the β old β financial systems overlap, and where we will focus our supervisory efforts. conclusion you still have a full schedule ahead, and i β d like to have some time at the end for questions, so now i β ll conclude. i have tried to highlight some possible benefits of dlt and blockchain for the financial system. the technology is nascent, yet there are several interesting use cases that signify its potential. central banks are keeping a close eye on new developments, and many of them are experimenting themselves. they also do this to assess and monitor risks stemming from new technologies. we should be especially vigilant about developments in cryptos. while they, too, could represent opportunities, there are considerable risks both for individual investors and in time, possibly the financial system at large. an appropriate regulatory response should be formulated, commensurate with these risks. central banks and regulators need to find the right balance between seizing the benefits of technological innovation on one hand, and coping with possible new risks on the other. for us, blockchain β s evolution in the financial system is ultimately a balancing act. | 0.5 |
timely, given the subpar performances of many caribbean economies in the wake of global economic and financial crisis. i am confident that finding the right mix of solutions to these challenges we face is within our reach, notwithstanding the structural rigidities imposed on our economies associated with small size, the high degree of openness to external trade and financial shocks, as well as the destructive effects of natural disasters. as you are all aware, barbados is currently in the process of implementing a home - grown programme of renewal and transformation supported by an extended fund facility arrangement with the imf. therefore, i am sure we will be listening intently not only to the nature of the challenges, but also the viable opportunities and solutions that may be pursued to enhance our economic circumstances. in closing, it would be remiss of me if i didn β t mention that sir alister mciintyre, a distinguished 1 / 2 bis central bankers'speeches regional academic, development economist and statesman in his own right, was the first coordinator of the regional programme of monetary studies and fate would have it that his son is delivering this distinguished lecture in the 50th year of that ground breaking programme. it appears the stars are aligned for what is expected to be a stimulating and provocative lecture. therefore, without further ado, i invite our distinguished speaker dr. arnold mcintyre to address you. 2 / 2 bis central bankers'speeches | , the lengthening of the maturities of long - term refinancing operations. β’ fourth, the provision of liquidity in foreign currencies. β’ and finally, financial market support through outright purchases of covered bonds in order to stimulate a market that has traditionally been an important source of funding for banks. this is the only decision we have taken which directly affects a market segment other than the money market, and the total sum allocated to the programme β β¬60 billion β may appear modest compared with asset purchases performed by some other central banks. our planned purchases amount to about 5 % of the eligible outstanding covered bonds. let me emphasise that we have very deliberately refrained from buying government bonds, so as to safeguard our independence from political influence. for the same reason, we have implemented our measures without any form of government guarantee. the implementation of the non - standard measures has led to a significant increase in the size of the eurosystem balance sheet. by the end of august 2009, the simplified balance sheet of the eurosystem stood at around β¬1, 500 billion β about 16 % of euro area gdp. compared with its size in july 2007, shortly before the outbreak of the financial turmoil, the balance sheet is currently about two - thirds larger. it is difficult to assess the impact of our measures precisely, but we are satisfied that spreads in the money market have declined significantly since last autumn and are now back to the levels seen before the bankruptcy of lehman brothers. together with the policy rate cuts, this has contributed to a substantial decline in lending rates to households and firms. for example, the interest rate offered by monetary financial institutions ( mfis ) on loans to households for house purchase with a floating rate and an initial rate fixation of up to one year has about halved since october last year. the subdued developments in lending have attracted some attention, particularly given that our measures were designed to support lending activity. however, if we consider how credit has developed during economic downturns in the past, the recent developments in credit appear to be broadly in line with the recent developments in economic activity and the current outlook. in particular, in the past loans to firms have tended to lag turning points in the business cycle. one explanation for this may be that firms tend to use their own funds first and only afterwards resort to external financing, which leads to low demand for credit around the turning point. based on past experience, the current levelling - off of loans to households | 0 |
and a large balance sheet : first experiences | thomas moser | Β© swiss national bank longer - term outlook for monetary policy implementation currently, two approaches to the longer - term implementation of monetary policy are being discussed internationally floor system corridor system supply % % central bank lending rate supply central bank lending rate demand market rate market rate central bank deposit rate demand structural demand reserves structural demand 09. 11. 2023 implementing monetary policy with positive interest rates and a large balance sheet : first experiences | thomas moser | Β© swiss national bank reserves several important questions must be answered before central banks potentially return to implementing monetary policy in a corridor system how precisely can money market interest rates be controlled? how will trading in the interbank money market be affected? how important to banks are reserves as high - quality liquid assets? how will banks β ability to make payments be affected? 09. 11. 2023 implementing monetary policy with positive interest rates and a large balance sheet : first experiences | thomas moser | Β© swiss national bank thank you for your attention Β© swiss national bank | play an even greater role in maturity - matched refinancing of mortgages in switzerland in the future. in addition, banks can improve their liquidity by holding portfolios of swiss mortgage bonds themselves. mortgage bonds could be converted into liquidity quickly and simply, as required, by means of repo transactions β either in the swiss franc interbank market or at the snb. | 0.5 |
bank are transferred to another bank ; a financially assisted merger of the failing bank with another bank ; or the provision of financial assistance to the failing bank to avert its failure as happens during statutory takeover by the regulator. page 6 of 8 mindful of the risk that deposit insurance would stoke moral hazard through encouraging banks to take greater risks, i want to assure you that the bou is committed to effective supervision of bank risk - taking, with particular attention to the quality and types of assets that banks acquire as well as the amount of capital that banks hold relative to the risks they take. in addition to the risk - based micro - prudential supervision, the bou also undertakes macroprudential regulation and supervision to ensure the stability of the entire system, including stress testing to ensure that the sector is resilient to various shocks. effective deposit insurance can contribute to financial stability, only with strong bank regulation and supervision in place. deposit insurance is no substitute for effective regulation and supervision of banks. through a risk - based supervision framework, the bou is committed to spotting problems well before insolvency occurs and compelling banks to take prompt and preemptive corrective action. as i come to the end of my remarks, i must stress the need for the nascent deposit protection fund ( dpf ) of uganda as an autonomous institution to prove its credibility and fitness for purpose before it gets tested in a period of difficulty. page 7 of 8 the dpf must be well funded, capably staffed, and should maintain the support of the central bank as well as that of the government as partners in ensuring the stability of the financial system. the dpf must also maintain strong links with regional and international peers so as to learn from the diversity of experiences and to maintain best practices. i look forward to working with the dfp as it plays its role within the africa regional committee of the international association of deposit insurers by contributing to the stability of financial systems through international cooperation and maintaining such a virtuous network as has gathered here for this conference. it is now my distinct privilege to invite the honourable minister of finance to address this audience. i thank you all for listening to me. page 8 of 8 | the need for effective deposit insurance was exposed during the resolution of several local banks that failed during the late 1990s and early 2000s. indeed, the bank of uganda ( bou ) has recently been the subject of a parliamentary probe seeking final closure of the numerous issues and contested claims that arose out of the associated receivership and liquidation processes. notably, the depositors of those failed banks were fully compensated, for the most part, using taxpayers β funds as the government sought to preserve public confidence in the banking system. needless to say that such implicit deposit insurance by the government imposed an unanticipated financial burden on the limited fiscal space. page 4 of 8 seeking to foster financial sector soundness, several reforms were undertaken in the banking system. these reforms included but were not limited to : tightening banking laws and regulations designed to constrain undue bank risk - taking and inappropriate insider dealings ; upgrading bank supervision and examination systems ; providing liquidity through the central bank to prevent bank illiquidity problems from turning into insolvencies ; and intervening to resolve failing banks. of specific relevance was the introduction of a deposit insurance scheme that was initially operated within the bou. an effective deposit insurance system is expected to yield faster, smoother, and more predictable resolutions of failing banks, not least because it follows predetermined β rules of the game, β rather than being discretionary and ad hoc. and it stands to reason to say that a more rules - based deposit insurance scheme operates best when it is autonomous. therefore, in 2016 the financial institutions act 2004 was amended to provide for the establishment of an autonomous deposit protection fund of uganda, among other reforms. page 5 of 8 another vital reform, worth highlighting here, is the recent increase of the deposit insurance threshold to ush 10 million from only ush 3 million previously. the higher threshold is likely to enhance public confidence and encourage greater customer deposits, thereby expanding the funds available for financial intermediation by the banking sector. larger pools of deposits would reduce the cost of loanable funds for banks, spur credit expansion, and ultimately support faster economic growth. at this point, it is necessary to address any concerns about the safety of the deposits that exceed the insurance threshold of ush 10 million. the protection of large uninsured depositors of failing banks, will continue to take place through various forms including : a purchase and assumption transaction, in which all of the deposits ( insured and uninsured alike ) of the failing | 1 |
users, concrete testimonials about the transformative power of embracing change. recognizing the intended gains we have achieved thus far, we acknowledge that there is, however, still a lot of ground to cover. based on the 2017 financial inclusion survey, only 18 % of filipino adults with an account used this for payments and 64 % cited a preference for cash payments. a significant 20 % are not even aware of the electronic payment option. the foregoing statistics reveal where business, as well as financial inclusion opportunities, lie. our goal is to democratize access to a transaction account, and make every transaction account useful not only as a store of value but also as a convenient and affordable means to pay, remit and receive funds. in this regard, we provide an enabling regulatory environment that encourages increased use of affordable digital channels for payments, fund transfers and remittances. this include allowing the participation of convenient and non - intimidating third parties like grocery stores, pharmacies and other retail outlets as banks β cash agents. just yesterday, we have yet witnessed another milestone that can exponentially push forward our financial inclusion digitalization agenda. the philippine id system ( philsys ) act was signed into 1 / 2 bis central bankers'speeches law by the president. republic act 11055 establishes a biometric based, foundational national identification system that aims to provide every filipino and even foreign residents with a trusted and verifiable digital identity. philsys, therefore, addresses the key barriers to opening a bank account, particularly the cost of on - boarding as well as the lack of acceptable identification particularly for low - income and vulnerable sectors of our society. access to this account is an essential requirement to fully participate in and benefit from the digital finance ecosystem envisioned under the nrps. it can also remove friction points and catalyze key use - cases for digital payments such as government cash transfers. down the road, it can make possible convenient fund transfer using an individual β s philsys number as the identifier. ladies and gentlemen, we often hear the saying that β change is the only constant β. change is certainly inevitable as we witnessed and continue to witness evolving trends in technology and digital innovations. ultimately, these developments cascade to business models and processes, including a consumer β s payment process and behavior, whether that consumer be a government, corporate or individual. dear friends from the media, we hope that you can be our partners in communicating how pesonet, as well as other | chuchi g fonacier : opening remarks - pesonet media forum opening remarks by ms chuchi g fonacier, deputy governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the pesonet media forum, manila, 7 august 2018. * * * ppmi chairman justo ortiz, our partners from e - peso headed by chief of party mamerto tangonan, deputy governor chuchi fonacier and fellow bsp colleagues, representatives from the participating financial institutions, with their pilot corporate users, friends from the media, guests, ladies and gentlemen. good afternoon and welcome to the pesonet media forum. three years ago, we had a vision : for every filipino to have easy access to accounts to safely make payments and receive or transfer funds to other accounts anytime, anywhere, at a reasonable price, from any digital device. thus, the national retail payment system or nrps was envisioned to create an interoperable payment ecosystem that is safe, efficient, and affordable. through collaborative efforts of the bangko sentral and the industry, we have achieved significant progress. in november 2017, we have transitioned batch interbank fund transfer service of the philippine clearinghouse corporation ( pchc ) into pesonet, allowing funds to be received by the beneficiaries, in full amount, within the day. tagged as a viable electronic payment alternative to paper - based checks, pesonet is one of the achs prioritized for implementation by the bangko sentral. pesonet holds a lot of promise, given its potential to be an efficient channel for collections and disbursements by government and corporate users. with pesonet, we can achieve lower cost, better liquidity management and increased economic activity through immediate availability of funds. for corporates, in particular, some use cases are supplier payments, payroll and loan and dividend payouts. since the launch of pesonet, the bsp has turned over the reins to the industry through the philippine payments management inc. or ppmi, which includes the pesonet steering committee. in support, the bangko sentral now provides active oversight and guidance through a regulatory environment that promotes the growth of electronic payments and, ultimately, the development of a safe and efficient national payment system. in today β s forum, we shall have the opportunity to listen to progress updates from the industry and learn from the stories of pilot pesonet | 1 |
monetary union depends on their causes, size and persistence. what are the facts about the relative macroeconomic performances of euro area member countries? and what is the diagnosis about the causal factors and the underlying processes that explain them? i would like to point out two interesting facts that are contrary to popular perceptions. the first is that during the first six years since the creation of the euro, the growth and inflation differentials observed between member countries have not been greater than those recorded in the 25 years before the establishment of emu. on the contrary, according to some measures, the dispersion in growth rates has recently reached a historically low level. the second fact is that both growth and inflation differentials in the euro area since the introduction of the euro have been broadly of the same order of magnitude as the corresponding differentials observed across regions and metropolitan areas in the united states. these facts would seem to suggest that, at least on the basis of size, the heterogeneity observed in the macroeconomic performance of euro area member countries is not exceptional and thus need not be a cause of alarm. nevertheless, there are certain other developments that suggest caution and point to the need for a deeper and more comprehensive analysis. one such development relates to the significant and persistent divergences in measures of competitiveness between member countries. the diverging competitiveness is a consequence of various factors and policies as well as of market adjustment mechanisms, which in some cases reflect rigidities in labour markets and the low degree of integration and competition in certain product markets, particularly for services. the persistence of these developments suggests that adjustment mechanisms are functioning slowly and that self - equilibrating forces are not sufficiently strong. the extent and the cumulative effects of differences in competitiveness between some euro area countries raise concerns about their impact on growth. in addition, other factors β some exogenous, such as competitive pressures resulting from globalisation, and some internal, influencing consumer sentiment β affect economic activity and tend to compound the adverse effects of the erosion of competitiveness in some countries or partly offset the benefits from the increased competitiveness attained in other countries. a better understanding of the factors and processes that determine economic fluctuations, inflation persistence and competitiveness developments across the euro area countries will contribute to the diagnosis of the present situation and the assessment of future trends. two papers in this workshop provide insights and useful results to this end. the extent of synchronisation of economic activity in europe is examined in the paper by domenico giannone | and lucrezia reichlin, which evaluates long - run tendencies and cyclical fluctuations. different growth trends may be due to different patterns of specialisation, which can be desirable within the monetary union provided that countries can share risk through capital market integration. this study and other recent research show that european financial integration has resulted in increasing opportunities to share risk. the paper by ignazio angeloni, luc aucremanne and matteo ciccarelli concentrates on determinants of inflation dynamics in different euro area countries, notably the evidence on the price - setting behaviour of firms and on factors explaining inflation persistence. a thorough analysis of aggregate inflation dynamics and of the inertia characterising core inflation is of direct relevance to the formulation of monetary policy and also contributes to the diagnosis of the causes of growth fluctuations and of the high unemployment in europe. one general conclusion that emerges from the papers prepared for this workshop is that the divergences observed in the euro area are fundamentally the consequence of structural and not of conjunctural factors β even if current divergences may also have been influenced to a certain extent by conjunctural events. the policy implication of this general diagnosis is that more economic reforms are needed to address the structural impediments to growth and the causes of growth and inflation divergences. of course, structural reforms are not always easy to implement, they may be politically costly, and their positive effects may not be immediately visible β which makes it difficult to communicate them and convince the public at large about their benefits. nevertheless, only the implementation of appropriate economic reforms can address effectively and permanently the root causes of the euro area β s economic problems. consequently, the focus of the public debate should be how to speed up the reform process and its beneficial effects and thus strengthen consumer and business confidence. the role of the euro in fostering reforms in product, labour and financial markets has the euro been of help in pushing the reform agenda? at the time of the launch of the single currency, some observers had seen the euro as a β reform whip β that, together with the completion of the single market, would push in the direction of increased competition, higher productivity growth and greater market flexibility, which are essential for the smooth functioning of monetary union. after all, in a single currency area, the adjustment of domestic imbalances cannot be corrected by exchange rate policy any longer, but rather has to take place via prices and costs. the paper by romain duval and j | 1 |
burhanuddin abdullah : reflections on the changes in the region a decade after the asian crisis speech by dr burhanuddin abdullah, governor of bank indonesia, at the international symposium β ten years after the asian currency crisis : future challenges for the asian economies and financial markets β, hosted by the center for monetary cooperation in asia ( cemcoa ), bank of japan, tokyo, 22 january 2007. * * * honorable governor of bank of japan, mr. toshihiko fukui, honorable managing director of the imf, mr. rodrigo de rato, fellow governors, ladies and gentlemen, good morning. first i wish to join others to express our appreciation to thank the bank of japan for organizing this important event. it is indeed an opportune time to reflect on the recent developments and progress that we have achieved following the crisis. i believe that through a frank and candid discussion we can share from each others β experience during this symposium in the spirit of cooperation especially on how we have fared through the turbulence period of unprecedented economic crisis of the late nineties. we expect that we can capitalize on the recent progress and cope with the future challenges for the benefit of our economies. in this session, allow me to briefly express my reflection on the changes in the region a decade after the asian crisis to identify factors that would influence the economic dynamism and prospects of east asia in general and asean in particular. fellow governors, in my observation, i notice that a number of remarkable changes have occurred in the region. first is the heightened regional cooperation with the objective of establishing a regional self - help. unlike most of their counterparts in other parts of the world, the latest financial crisis, among other factors, provides strong impetus for the monetary and financial cooperation in east asia. the initiative to create a set of bilateral swap arrangement, to develop asian bond markets, and to conduct regional surveillance are our collective means to maintaining greater stability in the region, particularly in the face of highly volatile flows. i surely hope that this kind of cooperation will continue and be widened in the future so as to positively affect the economic dynamism in east asia. second, in the aftermath of the asian crisis, countries in east asia have become more conscious in protecting their own national interests and of strengthening their sense of security amidst greater global economic uncertainties. this is shown by the fact that countries in east asia have accumulated the bulk of the world's foreign - exchange reserves. in the past | year china added more than $ 250 billion to its stash, breaking the usd1 trillion record level. by november last year, ten east - asian countries plus india have amassed some usd3 trillion of foreign - exchange reserve. such a huge accumulation of international reserves certainly entails opportunity cost and exchange rate risk especially amid the looming global imbalances. however, the build - up of these reserves in a way also provides cushion against unanticipated reversal of capital flows given the openness of the foreign exchange regime and financial market the integration. in connection to this, more and more countries have settled their obligations to the fund. indonesia, one of the crisis - hit - countries, closed the final chapter of the asian crisis following the last prepayment of its obligation in october last year. such a prepayment reflects the strength of economic recovery and the balance of payments positions of the crisis hit countries, which in a way provide an evidence of the fund β s success in asia. yet it may also suggest that countries tend to prefer executing their own self - formulated programs when conducting reforms. in addition, indonesia β s recent experience with the fund during the crisis suggests that turning back to the fund in case of another crisis will be politically much more difficult than in the past. third, while asian economies have fully recovered from crisis, investments as percentage of gdp have been well below the pre - crisis level. other non - crisis asian economies except china also exhibited a slowdown in the growth of their investments. after showing a slight recovery in 2004, the ratios moderated in 2005. the slump in investment in asia mainly reflected a sharp fall in private investment. many economists shared the view that the low level of investment cannot be explained by changes in fundamentals. with the exception of china, aggregate saving has been stable over more than 10 years. among key factors responsible for the slump include investor β s perceptions that the investment environment is riskier. i would appreciate it if fellow governors would share their experience on this issue. finally, many emerging countries in asia were forced to abandon their traditional dollar - peg system and to allow their exchange rates to float in the summer of 1997 amidst intense currency attacks by speculators. after a period of sharp depreciation accompanied by high volatility, exchange rates in these countries bottomed out against the us dollar in the autumn of 1998, thanks to a return of confidence in the economic prospects of these countries. however, simply turning to flexible exchange rate regime | 1 |
ishrat husain : the health challenge in pakistan - prognosis and prescription chief guest address by mr ishrat husain, governor of the state bank of pakistan, at the launch of the human development report of south asia, organised by mahbubul haq center for human development, islamabad, 30 may 2005. * * * there is a strong theoretical and empirical evidence that economic growth causes improvements in human development which, in turn, increases economic growth. the improvement in health results in enhancement of basic capabilities that adds value to human life. the transmission to growth takes place through impact on worker productivity, through demography and through trade and investment. health has a positive effect on poverty reduction too. poor households are hit by major illness and fall into poverty trap. lower earnings due to withdrawal from full time employment increases the risk of illness for the rest of the households. risk of falling below poverty becomes acute in case of death of the bread winner of the family. thus, investment in health, particularly preventive health such as availability of clean drinking water and sanitation can contribute to growth and minimize the risk of falling below the poverty line. there is no doubt that pakistan β s social indicators are not something we can feel proud of. pakistan β s competitiveness in the future knowledge based economy of the world will critically depend upon how well we are able to harness and increase the productivity of labor force for meeting future challenges. it is no longer a cliche that those lag behind in human development are going to become marginalized. it is all the more surprising to note this poor state of affairs at a time that there is almost unanimity on the intellectual front and broad consensus on the political front on the importance of human development in attaining national prosperity. both the economists and non - economists have converged their views on the critical role education and training, health and nutrition play in economic development. those on the left, those in the center and conservatives also have identical views though due to different reasons. all political parties in pakistan are committed to human development as a policy objective. why is it then that the progress in this area has been so unsatisfactory and what can be done to remedy this situation? in my view there are four cogent reasons for lack of progress in human development in pakistan. first, there is a structural ambiguity in the allocation of responsibilities between the federal, provincial and local governments in the whole endeavour of human development. the overlap and duplication in | zhou xiaochuan : anti - money laundering in china - the status quo and prospects speech by mr zhou xiaochuan, governor of the people β s bank of china, at the first meeting of the ministerial joint conference on aml, beijing, 27 august 2004. * * * approved by the state council, the people β s bank of china ( pbc ), as the leading ministry in the ministerial joint conference on anti - money laundering ( aml ), invites today the member ministries to review the current aml situation, to draw up the plan for the aml work in the next stage, to determine the working procedure for the ministerial joint conference on anti - money laundering ( aml ) and the responsibilities of the relevant ministries. i. the significance of aml money laundering is the practice of legitimizing the illegally obtained gains and proceeds through a series of transactions, transfers or conversions in order to evade legal punishments. money laundering helps criminals to evade legal punishments as well as puts a premium to the spawning of new crimes, distorts normal economic and financial orders, damages credibility of financial institutions and corrupts public morality. with the deepening integration of china β s economy into the world economy and new changes in social conflicts, strengthening aml is of great significance. first, sound aml work is an objective necessity for safeguarding china β s national interests and the fundamental interests of the masses. aml involves efforts in the diplomatic, economic, judiciary and security fields etc. the performance of aml is closely related to the public image of china β s government both at home and abroad, to the economic stability and to the social justice. a sound practice in aml also constitutes the concrete measure for safeguarding the order of china β s socialist market economy and the fundamental interests of the masses and for practicing the important thoughts of β three represents β. the work stands for an important move for honoring the commitments of the chinese government to the outside world and for creating the image of a responsible big country with respect to aml. it is also a necessary step for speeding up the opening of the financial industry and promoting the internationalization of the chinese banks. therefore, we shall, from the vantage point of β stressing political awareness β and based on the significance of safeguarding china β s economic and financial security, sharpen the awareness of the importance and urgency of aml, establish effective aml system, and bring aml onto the track of standardization and institutional arrangement. second | 0 |
benjamin e diokno : unlocking opportunities at the local level speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the investment forum on energy transition, 19 may 2021. * * * his excellency daniel robert pruce, british ambassador to the philippines, department of finance ( dof ) secretary carlos g. dominguez, department of energy ( doe ) secretary alfonso g. cusi, governor dakila carlo cua, national president of the union of local authorities of the philippines ( ulap ), distinguished speakers, expert panelists, and participants, good afternoon! i would like to take this opportunity to thank the british embassy manila, the dof, doe, ulap and securities and exchange commission, for co - organizing this dialogue among our key stakeholders and leading the discussion on how the country can address the challenges in its energy transition and accelerate the action moving forward. this dialogue comes at an opportune time as the country has recently submitted its nationally determined contributions ( ndc ) 1 to the un framework convention on climate change, vowing to reduce its projected carbon emissions by 75 percent by the year 2030. indeed, this development provides us a clearer direction and a greater impetus to work together in combatting climate change and ensuring sustainable development for the filipino people. in the same light, the bsp joined the β green force β to support the creation of a harmonized and cohesive plan in mainstreaming green and sustainable finance in the country. last march 15, 2021, the philippine financial sector regulators and authorities led by the dof signed a memorandum of understanding with the british embassy to collaborate on the implementation of proposed interventions under the united kingdom prosperity fund β s asean economic reform programme and the asean low carbon energy programme. respectively, these programs aim to promote economic and sustainable development as well as improve energy security and access to clean energy in the country. the program likewise supports the green force β s initiatives in building capacity of relevant government agencies and industry players with regards to sustainable finance implementation and in crafting a sustainable finance roadmap and principles - based taxonomy. the development of the taxonomy is a key initiative aimed at providing guidance on identifying economic activities that contribute to sustainable development, with special focus on addressing climate change impact. central to the climate change mitigation goal is the need to reduce greenhouse gas concentrations by shifting fossil fuels to renewable sources. we should note | , however, that a successful transition is not just a matter of isolated changes in the energy sector. we must also consider the potential risks associated with this transition given the interplay among economic activities. according to some experts, β transitions are systemic in nature, characterized by coevolution between different actors, institutions, supply and distribution chains, β among others. a low - carbon transition could trigger a chain reaction that might affect the performance and viability of various loan and investment portfolios, which eventually could pose risks to the stability of the financial system and to the real economy. in this light, a progressive approach to transition must be considered without compromising environmental sustainability. the finalization of the principles - based taxonomy will play a critical part here, particularly in opening the door for the inflows of capital to relevant economic activities. the bsp β s sustainable finance framework which was released in april 2020 encourages the offering of green and sustainable finance instruments to support such economic activities. but at the same time, the framework safeguards the stability of the financial system against potentially 1 / 2 bis central bankers'speeches significant and protracted impact of climate change and other environment related risks. leveraging on good governance and effective risk management systems, the framework also expects banks to embrace sustainability principles and take strategic, concrete, and progressive actions in response to the climate call. the bsp will be issuing its second - phase regulation to enable the banking industry to make safe and sound response to risks arising from the transition to a low - carbon economy. this supplementary issuance will provide granular expectations on the integration of climate change and other environmental and social risks in banks β credit and operational risk management frameworks. banks may gradually consider the future implications of β stranded asset risk β in their credit portfolio. no doubt, the energy transition is a complex issue and comes with both risks and opportunities. we are, however, fortunate to have a remarkable set of expert panelists who are at the frontlines of energy transition to provide us with insights on the opportunities, challenges, and potential solutions to accelerate renewable energy and energy efficiency in the country, including financing thereof. on this note, allow me to end this remark by wishing you a successful and meaningful conversation. thank you and stay safe. 1 www4. unfccc. int / sites / ndcstaging / publisheddocuments / philippines % 20first / philippines % 20 - % 20ndc. pdf 2 / 2 bis central bankers'speeches | 1 |
sureyya serdengecti : financial stability and implications of basel ii opening speech by mr sureyya serdengecti, governor of the central bank of the republic of turkey, at the conference on β financial stability and implications of basel ii β, istanbul, 16 may 2005. * * * financial stability minister, governors, academicians, guests etc., i would like to welcome you to istanbul today and thank you all for your participation in this conference. it is an honor for me to host such distinguished speakers and participants in istanbul. one of the features of the world economy back in the 90 β s was the financial liberalization of economies. the ambitious macroeconomic policies of many countries aiming at liberalizing capital accounts, started in fact with developed countries in the late 70 β s and spread to developing countries in the late 80 β s and 90 β s. another feature of the world economy in the 90 β s was the acceleration of capital movements around the world, which i would say is also an outcome of the financial liberalization policies. the comprehensive technological progress in areas of information, communication and computing also highly promoted this active movement of capital across national borders. this impressive change in the global economic environment since the 80s has resulted in important changes in global financial markets. as the figures indicated, during this period, the global financial sector in general and the banking sector in particular developed much more than the real sector did. new financial instruments that were designed for firms β financing needs provided new opportunities for companies. hedging markets developed rapidly. all in all, financial engineering emerged as a new area of knowledge. dear guests, the aggressive capital movements among countries and developments in financial markets generated a number of economic benefits at the global level. when borders between countries have disappeared in favor of capital flows, funds flew to regions where capital had the highest return. so, it has been observed that competitiveness and productivity of capital in global scale increased considerably in the 90s. there has been also a substantial rise in the volume of global merchandise trade. however, all developments that i mentioned now represent only the front side of the medallion. the back of the medallion has not been as bright as the front. in the 90 β s, not only the scope, timing and speed of the financial liberalization varied across countries, but also the consequences of economic policies had various effects on national economies, depending on the initial conditions and country specific factors. hence, the rapid increase in capital movements among countries shook the financial | ##fs available, we can also see how it has evolved over the years. as you know the strategies which can be delivered through an etf offering is impressively wide being subject only to the important safeguard of the ucits requirements. over time, we have seen the trends in etfs seeking authorisation change considerably. these have moved from being simple market cap weighted index 1 / 6 bis - central bankers'speeches tracking etfs to a full complement of strategies β a lot of them index based which reflect investor needs. ranging from so - called " smart beta " etfs, to thematics, to etfs delivering volatility or commodity exposure. we have also seen other etf products often tailored towards the latest topic of focus. present today, a prevailing trend is the rise in actively managed etfs seeking authorisation. some factors behind this include ease of access for investors, investor demand for targeted active strategies, fee compression and the ability to capitalise on existing scale by the creation of an etf share class to facilitate an additional distribution strategy. we are seeing etf providers continuing to adapt to changing demands and a changing environment to serve investor needs. as a regulator, the central bank must also be cognisant of the changing environment that we all operate in. i am aware that portfolio transparency is an important issue that has been raised by industry, particularly in relation to active etfs and for further innovation in the sector. while this is still a relatively small part of the market, we note the increasing interest in europe in these products. as a leader in europe for etfs, the central bank is open to engaging with industry to develop a proportionate and effective approach to different models of portfolio transparency in our domestic framework. we are likely to settle on a principles based approach rather than focusing on one particular model. another topic that garnered interest recently is the move of us securities settlement to t + 1. in the lead up to implementation of the new settlement requirement, which became effective on 28 may 2024, there was much discussion about its potential impact on etfs. this was particularly focused on ucits cash and borrowing limit breaches. there was engagement on the topic at both an eu and local level. locally, we engaged with industry to ascertain preparedness for the new settlement cycle and to inform our view on potential impacts or risks. we saw that much of industry is preparing for this change and that t + 1 is already a feature of many primary market settlement cycles. this would | 0 |
also reminded us that stories are the core of our lives and that they are not something that is planned, but something that is created and won every day aβ¬ β just like the freedom. therefore, the national bank will continue to write and add to the monetary chapter of our story, working professionally and responsibly for the benefit of the citizens, guided by the european central banking principles. congratulations on the anniversary and the celebration of the stable denar which is something that belongs to all of us, the citizens, the present and future generations! 4 / 4 bis - central bankers'speeches | prize - winning architectural offices which participated in the revision phase of the competition. over the past 11 months, they have gone into substantial depth to elaborate the details of their design proposals. the high quality and professionalism of the work done in the revision phase was very much appreciated by the governing council. the governing council β s decision on the design of the ecb β s premises was reached after extensive discussion and careful evaluation of the prize - winning designs. as a public institution, we are committed to performing our tasks effectively and to using our financial resources prudently. therefore, it was essential to have a thorough and comprehensive assessment - even if that prolonged the process somewhat - so as to make the right decision on a matter of such symbolic and financial importance. let me now explain briefly the main reasons why the governing council chose coop himmelb ( l ) au β s design. i am delighted that the architect, prof. wolf prix, and his colleagues, mr dreibholz and mr halm, have joined us for this press briefing today. the design chosen the governing council judged the revised design concept of coop himmelb ( l ) au not only to be superior from an overall aesthetic and urban planning perspective, but also to be the one that best met the functional and technical requirements specified by the ecb. it was felt that this expressive, dynamic and appealing design would serve as a unique landmark, and result in the ecb β s new premises having a strong identity. in the governing council β s view, this design concept had features that reflected the ecb β s values - in particular, unity and transparency - and translated them into architectural language. furthermore, the way in which the three elements of the design - the high - rise building of a twisted shape, the β groundscraper β and the grossmarkthalle - formed a harmonious and well - proportioned ensemble was assessed very positively. we also considered that the integration of the grossmarkthalle into this ensemble was addressed in an excellent way, while at the same time respecting the fundamental appearance of this historic building. the design concept also met, in principle, the ecb β s functional and spatial requirements. the governing council appreciated especially the good connection of the different functional areas and the excellent workplace quality, guaranteeing natural light for all members of staff. using the atrium as a large communicative zone within the two tower buildings was also welcomed. the governing council noted that all requirements for the energy | 0 |
sector. it can take time before such a deterioration translates into lower output and employment. but when the turnaround does occur, it tends to be swift and hard - hitting. it now appears that a new period of downscaling is under way. several factors point to this : first, productivity growth is higher in manufacturing than in other industries. this has resulted in a trend decline in the numbers employed in manufacturing in norway, as it has in other oecd countries. second, manufacturing costs have increased sharply since 1998. up to the summer of 2000, this cost increase was to some extent offset by a weaker krone. the appreciation of the krone has highlighted and exacerbated the deterioration in cost competitiveness. on balance, it appears that cumulative wage growth in norway will be a good 15 per cent higher than in other countries from 1998 to 2003. the krone is now about 7 per cent stronger than the average for the 1990s. third, as a result of the fiscal guideline, the internationally exposed sector is subject to additional pressure. over time, the phasing in of petroleum revenues will lead to restructuring and the transfer of resources from the exposed to the sheltered sector. fourth, the response patterns in stabilisation policy function in a different way from previously. under the β solidarity alternative β, the response pattern consisted of countering labour market pressures and strong wage growth by reducing growth in public spending ( or, if appropriate, by strengthening government revenues ). this had a beneficial impact on manufacturing industry. today, monetary policy shoulders more of the burden. this may sometimes result in a strong krone exchange rate. fifth, growth in the global economy is sluggish while, at the same time, oil prices are high. the fall in share prices curbs economic growth among our trading partners. markets for norway β s export industries are stagnating, but at the same time high oil prices are providing a stimulus for some sectors of the norwegian economy. interest rates were assessed by the executive board of norges bank yesterday. interest rates were left unchanged. norges bank β s key interest rate, the sight deposit rate, therefore remains at 7 per cent. according to norges bank β s assessment, with an unchanged interest rate, the probability that inflation two years ahead will be higher than 2Β½ per cent is the same as the probability that it will be lower. a sharp rise in labour costs is contributing to a relatively high rise in prices for goods and services | wider acceptance and legitimacy to make sure that the basis for strong multilateral cooperation and collective action is also in place when policies for reform and prevention are implemented. truly global challenges call for truly global solutions anchored in a multilateral and statutory - based system of representation like the bretton wood institutions. all countries, large and small, rich and poor, should be represented, even if only indirectly through constituencies. general government fiscal balances as a percentage of nominal gdp, 2000 β 2011 projections from oecd for 2010 β 2011 these are some lessons learned from the crisis. still, several unresolved questions remain. the chart shows general government fiscal balances as a percentage of gdp in selected countries. many countries had negative fiscal balances through the last decade despite moderate to high economic growth. spain seemed to be in a different position with a positive fiscal balance, though this was mainly due to unsustainable high growth in the construction sector. this illustrates the first question, which is how to solve time inconsistency in fiscal policy. it is easier to follow the prescriptions of keynes in bad times than in good times. this asymmetry may lead to an increase in budget deficits and sovereign debt over time, also referred to as the fiscal bias. as a result, many countries ( piigs, uk, ) have to tighten policy in a period when the real economy would certainly benefit from further stimulus. the crisis caused fiscal balances to deteriorate by 8 β 10 percentage points. there is an immense difference between encountering a shock of this magnitude from a positive fiscal balance of 4 per cent and encountering it from a negative fiscal balance of 4 per cent. from a negative balance of 4 per cent, fiscal balances end up at a 12 per cent deficit! then it is imperative to tighten policy. a similar time inconsistency problem, the inflation bias, has been a much debated issue in monetary policy. the solution has been central bank independence. so the question is, is there something to be learnt from monetary policy? ragnar frisch the fiscal bias is not a new phenomenon. and a number of possible solutions have been tried. as far back as in the early 1930s, the norwegian economist and nobel prize winner ragnar frisch had the following suggestion : β it might be an idea to establish a cyclical council to make such decisions, a council that could operate with an independent status similar to that of the supreme court. the council should comprise members | 0.5 |
jerome h powell : brief remarks on the us economy speech by mr jerome h powell, chairman of the board of governors of the federal reserve system, at rhode island business leaders day, washington dc, 27 september 2018. * * * good afternoon. thank you, senator reed, for the kind words and the opportunity to be a part of the annual rhode island business leaders day. and thank you, all, for sticking with the program for the last speaker of the day. the federal open market committee, the body within the federal reserve that sets monetary policy, just concluded a meeting yesterday. i plan to talk briefly about how my colleagues and i see the economy evolving and our role in keeping it healthy. importantly, i want to hear from you. i very much appreciate your views, as business people, of economic conditions where you live and work. and, of course, i will be happy to respond to questions. our economy is strong. growth is running at a healthy clip. unemployment is low, the number of people working is rising steadily, and wages are up. inflation is low and stable. all of these developments are very good signs. of course, that is not to say that everything is perfect. the benefits of this strong economy have not reached all americans. many of our countryaβ¬β’s economic challenges are beyond the scope of the fed, but we are doing all we can to keep the economy strong and moving forward. that is the best way we can promote an environment in which every american has the opportunity to succeed. each time we meet, we face the same question : how can we set monetary policy to best support job growth and low, steady inflation? for many years, this question called for very low interest rates to help an economy that had been damaged by the deep financial crisis that gripped the world 10 years ago. as the economy has steadily gained strength, the fed has been gradually returning interest rates closer to the levels that are normal in a healthy economy. we took another step on that path yesterday, with a quarter - point increase in short - term interest rates. these rates remain low, and my colleagues and i believe that this gradual return to normal is helping to sustain this strong economy for the longer - run benefit of all americans. as i mentioned, 10 years have now passed since the depths of the financial crisis a painful part of our history that cost many americans their jobs, their homes, and, for some, their hopes and dreams. in addition to holding interest | money, credit and banking 12 ( 3 ) p. 513 - 26. lane, philip ( 2008 ) : emu and financial market integration. oenb : 36th economics conference β towards the first decade of economic and monetary union : experiences and perspectives β p. 91 - 95. mcguire, p and g von peter ( 2009 ) : the us dollar shortage in global banking. bis quarterly review ( march ) p. 47 - 63. michaud, f - l and ch upper ( 2008 ) : what drives interbank rates? evidence from the libor panel. bis quarterly review ( march ) p. 47 - 58. mundell, robert ( 1961 ) : a theory of optimum currency areas. american economic review. pisani - ferry, jean and adam posen ( 2008 ) : the euro at ten : the next global currency? bruegel. rey, helene ( 2001 ) : international trade and currency exchange. review of economic studies 68 ( 2 ) p. 443 - 64. rose, andrew ( 2008 ) : emu, trade and business cycle synchronization. oenb : 36th economics conference β towards the first decade of economic and monetary union : experiences and perspectives β p. 97 - 106. | 0 |
such hard times worldwide, it is necessary, now more than ever, that the romanian authorities should exert caution and wisdom as concerns both public spending and specific promises. the run - up to elections is usually a period when hard to keep promises are easily made. at present, however, despite the most difficult international economic conditions in the post - war period, the pre - election public promises seem far more unrealistic. i would like to reiterate the fact that the nbr policies focus on the euro adoption in 2014. in the medium run, we envisage not only the resumption of disinflation and bringing price hikes in line with the european standards, but also the alleviation of imbalances, especially the gradual narrowing of external deficit, in order to render disinflation sustainable. in terms of monetary policy, it is crucial to foster savings with a view to narrowing the current gap in relation to investment. the increased contribution of the domestic component, amid the rise in saving ratio, can ensure the same high investment rate. in fact, the increase in interest rates, which is part of the current monetary policy stance, was aimed at fostering savings. the results are visible, even though β for statistical reasons β the nbr calculations appear to give a different picture. in order to avoid possible confusions, allow me to present several technical details. the data released indicate a faster dynamics of demand deposits compared to time deposits, apparently hinting at the emergence of additional inflationary pressures. we are dealing in fact with two developments related to statistical evidence rather than real economic substance. one such development is the transfer, since 2007, of forex - denominated demand deposits from β quasi - money β, which is part of m2, into m1 ( narrow money ). this is merely a matter of compliance with eu definitions. the economic substance has not changed : the romanians do not resort to foreign currency accounts for current transactions, but rather as a means of saving. another development weighs heavier and it is also manifest in the case of forex - denominated current accounts, while being extremely significant from a quantitative perspective for ron - denominated ones. since deposit accounts are subject to income tax, while current accounts are not, banks have developed a way to attract customers : current accounts whose yields are higher than deposit rates. this led to massive portfolio shifts to the detriment of traditional deposits, as households placed their savings in the so - | called current accounts, or even card accounts, which are highly remunerated conditional upon maintaining a balance higher than a certain floor. central bank experts have adjusted the figures based on the assumption that actual demand accounts should see a growth similar to that of currency in circulation, as it was the case in previous years. hence, it would appear that quasi - money rose over 80 % december 2004 through august 2008 versus only 40 % as indicated by statistical data. in other words, both household and corporate savings in domestic currency expanded at a pace much faster than that of time deposits. these statistics led the media to comment on a would - be stalemate in ron - denominated savings. the nbr specialists will make sure these developments are explained in further detail. this is how a fiscal policy slippage entails both a contraction in budget revenues and potential errors in assessing monetary developments. given the heightened turbulences on the international financial markets in the last few weeks and the fact that the nbr is vigilantly monitoring these developments, i believe we should refer to their potential impact on the domestic financial system and on the romanian economy as a whole. the romanian banking sector is still affected mainly by increased external financing costs. the limited impact is due to domestic financial environment characteristics, as well as to the prudential monetary policy and financial stability strengthening measures adopted by the central bank over the years. let me highlight the most important of these measures. first and foremost, credit institutions in romania do not have exposures to subprime instruments, which lie at the root of the turmoil. this is particularly due to the profitability given by wide interest rate margins on the domestic market as well as to the fast - paced increase in lending via traditional banking products. secondly, the overwhelming majority of banks operating in romania, including those with foreign capital, are legal entities subject to nbr licensing, regulation and prudential supervision. similarly to foreign bank branches having their main office in other eu member states, these banks abide by the basel ii prudential and capital adequacy standards. thirdly, some regulations issued by the national bank of romania have often proved more restrictive than the basel ii standards. more specifically, initial capital requirements for licensing a credit institution in romania are almost twice as much as the minimum level laid down in eu regulations. moreover, it is worth mentioning that the nbr representatives are part of the competent eu structures involved in the review and improvement of eu regulations governing the financial system architecture. | 1 |
introduction of a regulatory framework for the introduction of a credit reference bureau ; ( v ) development and issuance of anti money laundering guidelines and the establishment of a financial intelligence unit ; bis central bankers β speeches ( vi ) development and issuance of the corporate governance guidelines by the regulators ; and, ( vii ) strengthening the autonomy and enhancing the supervisory capacities of the three financial sector regulatory authorities. through the fsdp, the boz is also working with stakeholders like the institute of directors ( iod ) in enhancing corporate governance among various stakeholders within the financial sector. under the first phase of the fsdp, iod conducted seminars on core principles of corporate governance targeted at executives and senior officials in the financial and business sector. in addition, the iod provided input into the corporate governance model board charter which has been developed with technical expertise from mtn special engagements led by ms mary ncube. the outcome of this work is what will be presented to you today. the presentation will focus on the significant position that boards of directors occupy in the whole corporate governance process and how their role, functions and operations may be reduced into a charter that might guide their work., including ; powers, functions and delegations of the board ; board composition and mix β and the challenge in state - owned institutions ; the chairperson and ceo β and whether they should be different persons and why ; rights and duties of directors β and that ultimately the buck stops here ; the role of the board secretary β and how they can help drive the right agenda ; disclosure of conflict of interest and the challenge of ethical standards ; members β remuneration and expenses β and what is morally right? corporate social responsibility ; and, evaluation of the board β s performance, etc. but why do we need a board charter one may be tempted to ask? i think it is correct to say that second only to the articles of association, a board charter is probably the most important corporate governance policy document which defines the respective roles, responsibilities and authorities of the board and management in setting the direction, the management and control of an organisation. it is a document that is useful to both old and new directors, particularly those who may not be familiar with how a company conducts its business and what is expected of them as directors. in this respect, the charter serves the following functions among many ; one - source reference β a board charter is a one - source document which clearly sets out how the board and directors are to perform their roles. as an induction | unchanged. we expect them to remain at their present or lower levels until we have seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2 per cent within our projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics. we will continue to conduct net asset purchases under the pandemic emergency purchase programme ( pepp ) with a total envelope of β¬1, 850 billion until at least the end of march 2022 and, in any case, until the governing council judges that the coronavirus crisis phase is over. based on a joint assessment of financing conditions and the inflation outlook, the governing council expects net purchases under the pepp over the coming quarter to continue to be conducted at a significantly higher pace than during the first months of the year. we will purchase flexibly according to market conditions and with a view to preventing a tightening of financing conditions that is inconsistent with countering the downward impact of the pandemic on the projected path of inflation. in addition, the flexibility of purchases over time, across asset classes and among jurisdictions will continue to support the smooth transmission 1 / 4 bis central bankers'speeches of monetary policy. if favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the pepp, the envelope need not be used in full. equally, the envelope can be recalibrated if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of inflation. we will continue to reinvest the principal payments from maturing securities purchased under the pepp until at least the end of 2023. in any case, the future roll - off of the pepp portfolio will be managed to avoid interference with the appropriate monetary policy stance. net purchases under our asset purchase programme ( app ) will continue at a monthly pace of β¬20 billion. we continue to expect monthly net asset purchases under the app to run for as long as necessary to reinforce the accommodative impact of our policy rates, and to end shortly before we start raising the key ecb interest rates. we also intend to continue reinvesting, in full, the principal payments from maturing securities purchased under the app for an extended period of time past the date when we start raising the key ecb interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. finally, we will continue to provide ample liquid | 0 |
rundheersing bheenick : becalmed β but still on course welcome address by mr rundheersing bheenick, governor of the bank of mauritius and vice - chairman of the association of african central banks ( aacb ), at the opening ceremony of the 2013 symposium of governors preceding the 37th assembly of governors of the aacb, balaclava, mauritius, 22 august 2013. * * * it is an immense privilege for me to welcome you all today on the occasion of this symposium on financial inclusion on the eve of the 37th assembly of the aacb β the association of african central banks. this is an historic occasion both for mauritius and for the bank of mauritius. we are hosting the assembly meeting and the symposium of the association for the first time in the history of our small island - state. there are indeed many firsts : this is the very first time the aacb is meeting off - shore β away from the african mainland. it is the first time that aacb annual meetings are witnessing such a record attendance ; and also the first time that we are having in our midst the general manager of the bank for international settlements, the president of the african development bank, and the secretary - general of the islamic financial services board. we have all of africa here, and when we include the flagship institution of the g - 20, we have almost all the world represented under one roof, bearing testimony to the growing interest in the happenings on this great continent. and from africa itself β just to give you an indication of the representation β from north africa we have our chairman, governor laksaci of algeria ; from the west we have governor sanusi of nigeria ; from central africa, we have governor nchama of banque des etats de l β afrique centrale ; from the east we have governor mutebile of uganda, and from the south we have governor marcus of south africa β a grand total of 32 governors and heads of central bank delegations representing 44 countries. i welcome you all here today. i wish the meeting great success and hope your stay here will be fruitful and worthwhile for you all. we are here to discuss what is emerging from the g20 financial inclusion action plan to improve the livelihoods of the poor, and to support micro small and medium enterprises, the engines of economic growth and job creation β in much of the world, and not just in africa. at the time governors decided upon the theme of | as sars, and over a longer period of time. quite apart from its effects on individuals and families, negative equity has broader economic implications. it has an enervating effect on spending. and it adds to the pressures on the banking system, although it should be added that the delinquency ratio on mortgages continues to be very low. this is, i think, attributable partly to the fortitude with which homeowners in negative equity have borne the problem, and partly to the willingness of most banks to restructure loans in cases of difficulty. the community and the banking sector have coped with this problem extremely well. it is to be hoped that stabilisation in property prices will help to contain and gradually reduce negative equity. nevertheless, the problem is likely to be with us for some time to come. the role of the hkma the question arises of what is the role of a central bank - or, more specifically, of a central banking institution like the hkma - in an environment such as this. in my view, the role is quite straightforward : it is to sustain a monetary and banking environment that is conducive to resolving the economic and fiscal problems that face our community - not just in the public sector, but also in businesses and households. this is not the passive, static role that it may seem, as the maintenance of a rule - based monetary system in the form of the link misleadingly suggests. indeed, there is the scope - and often the need - for an active and imaginative use of financial, supervisory, communication and other skills. the degree of openness and the relatively small size of hong kong's financial system, against the background of globalisation, mean that the maintenance of monetary and banking stability is a particularly difficult task. there is also the requirement, implicit in the basic law, to look ahead, and in particular, to develop the financial infrastructure that will secure hong kong's position as an international financial centre and provide it with the means to build on that position. and there are other important tasks, such as seeking to help the government in its efforts to contain the fiscal deficit by achieving a favourable return on the fiscal reserves deposited with the exchange fund - subject always to meeting the other investment objectives of the fund. all of these tasks present challenges to keep me and my colleagues busy enough. but there have also been suggestions that the hkma should take further steps to help stimulate growth. i have already mentioned | 0 |
of lower oil supplies, this contributed to a strong krone in 2002. as we reduced interest rates, the krone depreciated considerably. the weakening of the krone came to a halt in winter 2004. again we started seeing signs of a stronger krone. at the same time, inflation remained low. we therefore placed emphasis on interest rate developments in other countries, and in may 2004 norges bank thus stated : β the inflation outlook in norway implies that norway should not be the frontrunner when other countries increase interest rates. β 3 at the monetary policy meetings between september 2004 and february 2005, after key rates had been raised in several other counties, the formulation was changed to the following : β that we should lag behind other countries in adjusting interest rates to a more normal level. β 4 see norges bank press release of 26 may 2004. see press releases following the monetary policy meetings in the period between 22 september and 2 february 2005. in february, we no longer used this formulation. the background for this is that central banks in other countries such as the us, canada, uk, australia, new zealand and switzerland had raised their key rates. our closest neighbouring countries β sweden and the euro - area countries β and japan have left their key rates unchanged. on average, the key rates among our trading partners have increased by 0. 3 percentage point during this business cycle. after reducing the key rate to 1. 75 per cent, we indicated that the uncertainty associated with previous monetary policy easing and the unusually low interest rate implied that we should be cautious with regard to further interest rate reductions. at the same time, the prospect of continued low inflation for a period ahead implied that wide deviations from projected economic developments would be required before the interest rate should be increased. economic developments in the latter half of 2004 were broadly in line with expectations. the interest rate was left unchanged in line with our statements. we gradually experienced that the monetary policy easing was effective. the uncertainty diminished. the krone exchange rate the first signs of the effects of the interest rate cuts appeared in the foreign exchange market. the interest rate differential against other countries narrowed. it became more attractive to borrow and less profitable to invest in the norwegian krone. the movement in the krone exchange rate was reversed and the krone depreciated through 2003 and into 2004. the depreciation of the krone contributed to restraining the fall in prices for imported goods. the effect occurred gradually. higher prices for oil | the age group 55 β 64 and people with a physical disability which reduces their capacity to work. bis central bankers β speeches themself outside of the labour market suffers not only personal loss and a feeling of isolation, they also find that their skills become outdated after a while, which makes it more difficult to get a new job. a high rate of unemployment over a long period of time can become entrenched and requires a very large demand for labour so that the long - term unemployed can find work. one says that unemployment becomes persistent. the longer unemployment has been high, the more difficult it is, the longer it takes and the larger the labour demand that is needed to bring down unemployment. the fact that unemployment has been high for a long time and that long - term unemployment has increased, is also an argument now for a more, rather than a less, expansionary monetary policy. temporarily high inflation is needed to reduce unemployment one consequence of high unemployment over a long period of time and of unemployment tending to become entrenched at higher rates, is that inflation will be higher for a given rate of unemployment. this means that a sufficiently large demand for labour to bring down the high unemployment towards a long - run sustainable rate will lead to higher inflation than normal for a period of time. it is therefore important to allow inflation to overshoot the target for a number of years. this would be a necessary cost that should be weighed against the gain of bringing down unemployment. as inflation on average has fallen below the target, an inflation rate above the target would at present also have the advantage that average inflation over a long period would come closer to the target, something that would contribute to avoiding the unnecessarily high average unemployment that earlier policies have caused. according to prospera β s surveys, inflation expectations have stabilised at 2 per cent from 1997, despite average inflation being lower. inflation expectations would thus probably be stable even if inflation were to overshoot the target for a period of time. summary : monetary policy too tight my conclusion is that monetary policy in sweden is and has been too tight. real short interest rates are much higher in sweden than in the euro area, the united kingdom and the united states from 2010 onwards, despite the fact that inflation in sweden is significantly lower than in these economies and it is now well below the target at the same time as unemployment is as high as, or higher than, in the united kingdom and the united states. the cost of the tight monetary | 0 |
per cent and cpif inflation was + 0. 4 per cent. we have been able to observe that it is a broad - based decline in inflation, to the extent that all major components are affected. 6 low inflation has come to be a widespread phenomenon and many countries and regions have recently reported inflation rates clearly below their targets. inflation has fallen particularly sharply in the euro area. the fact that this happens in a situation where there is plenty of spare capacity β which is the case in large parts of the euro area β is not particularly surprising. however, the downturn in swedish inflation is larger and has been going on for longer than in other countries. and the question is why... one possible reason, which was also discussed in an article in the latest monetary policy report in february, is that swedish companies have not been passing on their cost increases to consumers as much as is normal. 7 they have thus not increased their prices to the extent that one might expect, given the historical relationships with unit labour costs and import prices faced by producers. there may be several reasons for this, but one is that margins may decline when economic activity is weak, which is also noted in the article. current research using us data implies that price mark - ups vary positively with the business cycle. 8 another reason may be that the weak development in the euro area has hit swedish exports hard and that this has contributed to resource utilisation being lower than normal over a long period of time. with low resource utilisation one can expect that inflation will be pushed down as the pressure on wage and price increases will be low. the weak international demand is of course one factor that is beyond the riksbank β s control and in this sense monetary policy housing market. in the case of australia, there are no clear signs that they have faced this kind of trade - off during the period following the financial crisis. this is clearer for the period 2002 β 2004, but then inflation stayed within the target interval of 2 β 3 per cent and was only close to the lower interval limit for one quarter. see sveriges riksbank ( 2014a ). see sveriges riksbank ( 2014a ). see nekarda and ramey ( 2013 ). bis central bankers β speeches cannot be blamed for the low inflationary pressure. at the same time, it is the role of monetary policy to counteract this type of downward pressure to stabilise inflation around the target. monetary policy may have | structural unemployment cannot be affected by monetary policy. however, my impression is that one can at least partly determine how much of unemployment is structural by looking at wage increases. since the wage increases are small, it is reasonable to assume that there is spare capacity in the labour market. this means there is also scope to use monetary policy to try to reduce unemployment. household indebtedness nevertheless remains high the actual purpose of a monetary policy that leans against the wind is to counteract a buildup of debt that is perceived as risky. when one assesses whether the policy conducted has been appropriate, one wants to know how far one has succeeded in this. in this context, it is important to note that the household debt ratio has remained relatively stable since autumn 2010. in 2010 three things happened that may have affected developments ; the mortgage cap was introduced, the riksbank began to raise the repo rate, and after a period of silence there were suddenly lots of statements and initiatives from the political side referring to the housing market and household indebtedness. 10 it would have been interesting to be able to distinguish the separate effects of these events on indebtedness, but this is of course very difficult. one piece of the puzzle is finansinspektionen β s conclusion that the mortgage cap has had an effect. they note in their mortgage report in march 2013 that the mortgage cap is continuing to work and that the loan - to - value ratios for new mortgages are no longer rising. 11 for me as a monetary policy - maker, the decisive question is to what extent monetary policy has contributed to limiting household debt recently. if one looks at the estimates of the determinants of indebtedness used as a basis for our forecasts, one sees that the effect of the repo rate on households β debt ratios ( that is, their debts in relation to disposable income ) is very small. 12 a repo rate that is 0. 25 percentage points higher during one year is expected to reduce the debt ratio by at most 0. 3 β 0. 4 percentage points ( see figure 4 ). for example, in november 2010 anders borg warned of the risk that a housing bubble would build up, comparing developments in sweden with those in ireland and iceland, and emphasising the importance of putting an early stop to it ( borg, 2010 ). the liberal party then proposed cutting the deductions for interest payments in january 2011 ( hamilton, 2011 ). | 1 |
and the fiscal authorities. what objective for japanese monetary policy? before setting off on a trip, one should know one's destination. in that spirit, a discussion of japanese monetary policy should begin with some discussion of the policy objective. i leave until later how the objective can be achieved. the bank of japan law, passed in 1998, sets price stability as a primary objective for the central bank. as with our own federal reserve act, price stability is not, however, precisely defined in the law. currently, the boj has promised that the zero - interest - rate policy will be maintained until deflation is brought to an end, a policy that might be deemed consistent with the price stability objective. two objections to this conclusion might be raised, however. first, the boj's statement seems to imply that the current level of policy stimulus might start to be withdrawn as soon as measured inflation returns to zero ; in particular, no explicit commitment has been made to maintain inflation at zero, much less at some positive rate, in the longer run. but the presence of measurement bias in japanese price indexes suggest that a measured inflation rate of at least one percent is likely required in order to achieve true price stability in the long run. moreover, inflation above zero will be needed if real interest rates in japan are to be negative for a period, as many observers think is necessary for full recovery. in short, it would be helpful if the zero - interest - rate policy were more explicit about what happens after the deflationary period ends. second, over the past five years, since the onset of the current deflationary episode - and, incidentally, since the passage of the new bank of japan law - the price level has trended down, registering a cumulative decline ( depending on the price index ) of between 4 and 9 percent. for example, over this period the gdp deflator has dropped nearly 9 percent, the private consumption deflator has fallen 51 / 2 percent, and wages and salaries are down 4 - 1 / 2 percent. one might argue that the legal objective of price stability should require not only a commitment to stabilize prices in the future but also a policy of actively reflating the economy, in order to restore the price level that prevailed prior to the prolonged period of deflation. as you may know, i have advocated explicit inflation targets, or at least a quantitative definition of price stability, for other leading central banks, including the federal reserve. a quantitative inflation | international economic and price developments. another cause may well be unconventional monetary policy measures, in particular the extensive qe programmes, which have caused bond and equity prices to rise simultaneously. ultimately, large - scale securities purchase programmes lead to lower interest rates and reduce the supply of risk - free assets. this, in turn, leads investors to rebalance their portfolios towards riskier asset classes such as equities β which, from a monetary policy transmission standpoint, is certainly desirable. 10 in the end, rising asset prices should stimulate consumption and investment, as well as consumer prices. a related issue is the degree to which higher equity prices in the current situation can be interpreted as a sign of an improving economic and profit outlook. it is intuitively obvious that corporate earnings and equity prices move in unison β at least in the longer term β and are therefore positively correlated. however, for some time now, we have observed a negative correlation β while both actual profits and expectations have declined, equity prices have risen to new record levels, as depicted by the yellow lines. chart 6 shows the us s & p 500 equity lower interest rates also lead to higher equity prices as they reduce the discount factor for future dividends. page 7 / 8 index ( blue line ) and the corporate earnings per share expected for the next 12 months ( red line ). on the basis of these observations, it is occasionally concluded that some financial market prices have become completely disconnected from the real economic environment and, as it were, react only to monetary policy. as a result, unexpectedly bad news from the economy is received as good news for the equity markets because investors interpret the unexpectedly weak economic data as an indicator of continued expansionary monetary policy. however, this phenomenon is only marginally more common today than it was before the financial crisis. you can see this in the following chart, which shows the deviations of new jobs in the us each month ( non - farm ) from the respective consensus expectations of market participants and the immediate reactions of the equity markets ( chart 7 ). the horizontal axis depicts the surprises in employment figures in thousand jobs, and the vertical axis the reaction of the equity market. the panel on the left shows the situation during the upswing from 2001 to 2007, and on the right, you can see the same picture for the upswing from 2009 to 2016. the top left quartile is key. it depicts the proportion of observations in which unexpectedly bad us labour market data coincide with positive equity market reactions. | 0 |
of labor productivity, defined as output per worker, and the ratio of workers to total population, and calculate the former for each of the four comprehensive sectors of the economy : agriculture, manufacturing, nonmanufacturing industry ( mining, utilities and construction ), and services. in the most recent worst - performing period, with available data for 1980 β 2005, three basic observations are noteworthy. first, meager per - capita gdp growth during these years was the net result of an increase in the ratio of workers to population, whose effect slightly surpassed that of a fall in aggregate labor productivity. second, aggregate labor productivity fell because, relative to total labor in the economy, production dropped in agriculture and nonmanufacturing more than it grew in manufacturing and services. in other words, the increasing role of manufacturing and services in the mexican economy did not sufficiently compensate for the diminishing influence of the other two, smaller sectors. table 1 third, sectoral labor productivity increased only in the least and in the most productive sectors : agriculture, mainly because of labor emigration, and manufacturing. in the other two sectors labor productivity declined at roughly the same pace. table 2 it seems that if some aspects are highlighted as obstacles to economic expansion, they should be proven to have a significant influence on those sectors identified as negative contributors to productivity growth. specifically, the fall of labor productivity in the services sector should be given more importance than that observed in nonmanufacturing, when the relative sizes of these two sectors in the economy are considered. at a conjectural level, one might identify a possible common characteristic between the two, given that the fall in nonmanufacturing labor productivity has been concentrated in construction and that in services has been generalized, with the only exception being transport, storage, and communications. a large part of both construction and services exhibits a high degree of informality. it is well known that informality is linked to small - scale production, low investment in new technologies, and poor incentives for human capital accumulation. additionally, a prominent feature of large service segments, such as education and health, is a lack of or limited competition among providers, lowering incentives to seek efficiency. on the other hand, one must find possible reasons as to why manufacturing has not registered more robust labor productivity growth. it might be the case that the opening up to foreign competition has taken many years and until recently allowed a certain degree of protection, especially from competition with countries not covered by free trade agreements. | from 96 to 13 per thousand live births ; the illiteracy rate fell from 43 to 8 percent ; and average schooling increased from 2 to 9 years. a similar message could be distilled from other indicators, such as access to tap water, power and sanitation. also, without ignoring that ample segments of the population still live in poverty, today most people enjoy the basic benefits of modern life, such as televisions, refrigerators and other electronic appliances, which in the past were either nonexistent or of lower quality and relatively more expensive and thus reserved for only the wealthiest. and according to some human development measures, notably those regarding health, mexico has reached levels close to those of rich societies. in contrast to this advancement, the long - term expansion of income per capita, which summarizes the population β s capacity to satisfy its desires, has been less impressive. bis central bankers β speeches specifically, during the same six decades β 1950 to 2010 β the average annual growth in per - capita gdp was 2 percent, a rate which is disappointing, at least, for two reasons. first, it is similar to that registered during the same period by some mature economies, such as the united states. since mexico is a developing country, presumably exhibiting a wider set of basic unexploited investment opportunities, output growth should have been higher, narrowing the development gap with the most industrialized nations. furthermore, mexico β s economic evolution compares unfavorably with leading emerging economies which five decades ago were either below or at its own level of income. for instance, while in 1960 mexico had roughly the same per - capita gdp as singapore and more than double that of south korea, now, some fifty years later, this indicator for mexico is only one - fifth that of singapore and less than one - half that of south korea. even the so - called stabilizing development era of 1958 β 1970, which posted the most impressive record in mexico β s modern history, looks inferior when contrasted with these economies, which have converged to developed - nation standards. second, the referred overall growth rate covers a significant slowdown in the last thirty years, when per - capita gdp grew, on average, only 0. 6 percent per year. this anemic pace, which would take about 116 years for doubling income, occurred in spite of the implementation of market - oriented reforms, including the opening up of the economy to foreign trade and investment, the privatization of state - owned enterprises | 1 |
financial intermediaries, public intervention is since last fall also aiming to support banks β financing and own funds. this is a significant shift. needless to say, restoring liquidity remains a pressing priority. inter - bank markets have shown gradual signs of improvements. yet, there is still some way to go. to this end, central banks have mobilised considerable ammunition. a process underway for over a year has culminated in the central banks having adjusted their operational frameworks in various areas. the maturity and currency of their facilities have been expanded. the range of eligible counterparties has been broadened. the tender procedures have been modified with a view to ensure unlimited amounts of central bank money. the list of collateral for refinancing has been widened. as for the eurosystem, they have been providing liquidity at a fixed rate for unlimited amount. enhanced international coordination between monetary authorities is ensuring that their actions are part of a consistent overall strategy. these measures are highly exceptional with indeed unprecedented monetary easing leading key policy rates to historically low levels and the adoption, in certain cases, of unorthodox monetary policy actions. as such, they should greatly contribute to restoring confidence and a smooth functioning of money markets. governments have moved aggressively to support banks'solvency and resilience. since the paris declaration by euro area member - countries, europe, under the leadership of france until year end, has been acting according to what i consider a sound and consistent action plan. i won β t enter into the details. just bear in mind the three following elements. first, authorities are extending guarantees to banks β refinancing so that they can, in turn, properly finance the economy. second, significant reforms of accounting rules are now being implemented. basically, these reforms allow banks to transfer instruments previously marked to market to portfolios where that will no longer be the case. they also provide for greater flexibility in methods used to value assets whose market has shut down. third, and lastly, governments have confirmed their willingness, when warranted, to step in and support banks β capital. what about france β s actions? government and parliament very quickly put meat on the bones of the european principles. a new bill has been passed, which provides for two things. first, it sets up a eur 320 billion funding vehicle to guarantee banks β medium - term refinancing ( i. e. up to five years ). this vehicle is strictly supervised by the french government and the banque | products which until then were deemed of the highest quality. the demise of the β new β securitisation chain highlights two fundamental realities. the first one is that far from being spread across the whole system, credit risk was implicitly or explicitly concentrated in the hands of specific institutions, foremost among which were the major investment banks. hence the successive waves of depreciations of structured products, imposed by accounting rules, with these depreciations in turn fuelling doubts about counterparty risks and solvency, liquidity constraints and further falls in asset prices. the second reality is that recent financial innovation served mainly to increase leverage in the system. signs of this are many. banks β balance sheets became overstretched. off - balance sheet vehicles without any equity proliferated. monoline insurers guaranteed volumes of structured products way beyond what their equity position could bear. as you know, leverage works both ways. it amplifies gains as well as losses. amplified gains took the form of the us property boom. amplified losses are with us now. the whole deleveraging process still underway has meant, since its start, that financial institutions unable to raise capital had to suffer very considerable depreciations on some products, which in some instance wiped out their net worth, bringing them to failure. against this background, what about french banks? of course, they are not immune to the crisis. direct or indirect exposures to toxic assets implied that they too had to record writedowns ; sometimes substantial ones. the liquidity shortage is also hurting and the prolonged market disruptions have raised their refinancing costs. that said, our banks are sound and robust and still exhibit high solvency ratios, above minimum prudential requirements. overall, they remain profitable. this is so not least because they benefit from regular sources of income. they are universal banks ; and as such much less vulnerable to funding market conditions. sound and revolving sources of profits are a vital asset at the current juncture. in this context, french banks can play an active role in the ongoing restructuring of the international financial sector. all in all, beyond sometimes serious tensions and incidents, french banks are now reaping the benefits of the major advances in productivity and innovation they have made over the last two decades. public policy during the crisis both from a public and a private sector perspective past months have seen a marked change in public policy. having been in a first phase geared exclusively to providing liquidity to | 1 |
pointed out that labor productivity in japan is lower than in other advanced economies. for example, jorgenson et al. ( 2016 ) made a comparison between japan and the united states in the levels of labor productivity, showing that productivity in japan was around 40 percent lower than in the united states in 2012. however, factors that had lowered labor productivity are now being addressed. as supply - side constraints materialize in tandem with labor shortages, firms are proactively making fixed investment aimed at saving labor and increasing production capacity as well as addressing the training of employees. firms are also streamlining inefficient business processes such as unrequested re - delivery services and late - night services where sales are low. according to the oecd, japan's labor productivity, though remaining at a low level, has recently been improving at a relatively fast pace by catching up with that of other economies ( chart 7 ). ii. factors of a more structural nature sluggish growth in wages and prices is also attributable to factors of a more structural nature. the following section will consider some examples, since these factors are also important from the viewpoint of the theme of today's session. a. labor force participation of women and the elderly in japan, where the population is rapidly aging and the birthrate is dropping sharply, the government and firms have been promoting the active participation of women and the elderly in the labor market. for example, steady progress has been made in increasing the number of nursery schools and nursing homes as well as moves to extend or abolish the mandatory retirement age ( chart 8 ). as a result, the number of women and the elderly participating in the labor force has been increasing. the aging of baby boomers has also contributed to the rise in the ratio of the elderly to the overall workforce. since wages for women and the elderly have tended thus far to be relatively low, these changes provide firms facing labor shortages with low - cost labor, thereby easing upward pressure on wages ( chart 9 ). besides, although most women used to engage in jobs with simple and routine tasks, an increasing number of talented women have shifted to more professional occupations, leading to an increase in productivity. it has been noted that the easing of labor market conditions is also brought about by the diminishing of slack in terms of quality. b. future anxiety a possible decline in long - term growth potential of the economy and anxiety over future income in anticipation, for example, of cuts | interest. needless to say, the effects of monetary policy will be determined by the difference between real interest rates and the natural rate of interest. thus, there are two ways for monetary easing to be effective : first, lower real interest rates, given that the natural rate of interest is unchanged, or, second, increase the natural rate of interest, given that real interest rates are unchanged. the bank of japan β s qqe seems to have started to exert effects both in terms of lowering real interest rates and an increase in the natural rate of interest. let me explain this in order. lowering real interest rates first, let me consider the effect of lowering real interest rates. when lowering real interest rates as a policy, a central bank normally lowers nominal interest rates. of course, for such policy to be taken, there should be sufficiently large room for reduction in nominal interest rates. for example, in the united states, based on the assumption that inflation expectations were anchored, it can be interpreted that real interest rates have been lowered as a result of reducing nominal interest rates. in japan, as nominal interest rates were already at low levels, there was limited room to lower real interest rates by reducing nominal interest rates. another way was needed to lower real interest rates. namely, an increase in inflation expectations. while the purpose of lowering real interest rates itself was the same as in the united states, there was a stark contrast in terms of a strategy to achieve that purpose. the bank aims to achieve the 2 percent price stability target with a time horizon of about two years and implement measures toward achieving the target, which would be effective in overcoming the policy constraints. with the implementation of the qqe, inflation expectations have actually been edging up, as i mentioned earlier, and thus the bank β s policy has started to exert its intended effects. bis central bankers β speeches an increase in the natural rate of interest as the second issue for discussion, let me consider the relationship between unconventional monetary policy and the natural rate of interest. this issue has been little discussed, and thus might be controversial to some extent. to begin with, the natural rate of interest corresponds to expected returns from firms β capital investment. the bank β s qqe aims at conquering the β deflationary sentiment β that has been entrenched among the public and restoring what had been the intrinsic dynamism of japan β s economy. as a consequence of the policy, if japan β s growth potential recovers | 0.5 |
mario draghi : ecb press conference β introductory statement introductory statement by mr mario draghi, president of the european central bank, frankfurt am main, 15 april 2015. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. based on our regular economic and monetary analyses, and in line with our forward guidance, we decided to keep the key ecb interest rates unchanged. as regards non - standard monetary policy measures, on 9 march we started purchasing euro - denominated public sector securities as part of our expanded asset purchase programme, which also comprises purchases of asset - backed securities and covered bonds. purchases are intended to run until the end of september 2016 and, in any case, until we see a sustained adjustment in the path of inflation that is consistent with our aim of achieving inflation rates below, but close to, 2 % over the medium term. when carrying out its assessment, the governing council will follow its monetary policy strategy and concentrate on trends in inflation, looking through unexpected outcomes in measured inflation in either direction if judged to be transient and to have no implication for the medium - term outlook for price stability. the implementation of our asset purchase programmes is proceeding smoothly, with volumes in line with the announced figure of β¬60 billion of securities per month. in addition, there is clear evidence that the monetary policy measures we have put in place are effective. financial market conditions and the cost of external finance for the private sector have eased considerably over the past months and borrowing conditions for firms and households have improved notably, with a pick - up in the demand for credit. looking ahead, our focus will be on the full implementation of our monetary policy measures. through these measures, we will contribute to a further improvement in the economic outlook, a reduction in economic slack and a recovery in money and credit growth. together, such developments will lead to a sustained return of inflation towards a level below, but close to, 2 % over the medium term and will underpin the firm anchoring of medium to long - term inflation expectations. let me now explain our assessment in greater detail, starting with the economic analysis. real gdp in the euro area rose by 0. 3 %, quarter on quarter, in the last quarter of 2014. domestic demand, especially private consumption, continued to be the main driver behind the ongoing recovery. the latest economic indicators, including survey data up to march, suggest that the euro area economy has gained further momentum since the end of | in individual member states. we are now at your disposal for questions. bis central bankers β speeches | 1 |
important lesson is the need to seek external assistance and to adopt corrective policies before problems reach the crisis stage. an early policy response can be more accurately targeted to the underlying causes, and the macro - economic consequences can be less severe. one of the clearest lessons of the experiences both in mexico and in east asia is the role of weaknesses in the financial system in propagating economic disturbances. this is a consequence of the growing integration of international capital markets, and will certainly not be reversed. if anything, markets are likely to be even more closely tied together over time. there are several more specific lessons to be drawn from this recognition. in the first place, liberalisation in the domestic financial system, and in the openness to the world capital market must be accompanied by measures to strengthen prudential regulation and supervision. for those countries that still have capital account restrictions, this means that the dismantling of capital controls will have to be carefully phased and sequenced. it may also mean that existing prudential safeguards, such as liquidity ratios, reserve requirements, exposure limits and controls over currency and maturity mismatches in banks β portfolios, may have to be strengthened. [UNK] more generally, however, the recent crisis has revealed that many banking and financial systems continue to embody practices that make them vulnerable. these practices relate to inadequate internal controls, non - transparent accounting standards, weaknesses in loan approval procedures, lax licensing provisions, insufficient capital adequacy requirements, and uncertain closure procedures, among others. because these weaknesses are widespread, and because there was no internationally accepted standard of banking prudence, the basle committee on banking supervision promulgated last year a set of 25 β core principles β for banking supervision. implementing these principles should make an important contribution to strengthening banking and financial systems around the world. the core principles represent an important new step in the work of the basle committee. for that reason, i would like to draw your attention both to certain aspects of the philosophy underlying their preparation, and to some of the specific recommendations. in the first place, the core principles are intended to be comprehensive in their coverage. that is to say, they apply to all phases in the life of a bank, from initial licensing, through continuing supervision, through closure procedures for institutions that are unable to meet minimum standards. they are also comprehensive in their institutional scope : they are intended to apply to both domestic and internationally active banks, coming from industrial, emerging and less - developed | index, which marked a year - on - year increase of 1. 6 percent in july, the largest since the latter part of the bubble period. higher crude oil prices are also affecting the cpi through the rise in prices of gasoline and other petroleum - related products. we should also pay attention to the effects of the increase in crude oil prices on economic activity. the steady expansion of the world economy including the united states may be adversely affected. at home, higher crude oil prices may have a negative impact on corporate profits and households β spending behavior. conduct of monetary policy let me turn now to the conduct of monetary policy, bearing in mind the current situation in which prices are not increasing together with the economic recovery. the bank has made a commitment to continue the current quantitative easing policy until the year - onyear change in the cpi registers zero percent or higher on a sustainable basis. such a commitment is unusual for a central bank. since the cpi is still on a declining trend, the bank is determined to pursue an easy monetary policy even as the economy continues to recover. the positive impact of the current easy monetary policy on economic activity is strengthening as the economy recovers. the bank β s policy commitment allows firms to continue enjoying low funding costs through the stability of expectations about future interest rates. as the economic recovery raises the expected rate of return on new investment with interest rates remaining low, firms will become more inclined to undertake investment. we expect consumer prices to continue declining slightly year on year due to the decrease in rice prices in the fall as a flipside of the increase of last year, despite higher crude oil prices. so far, we have not observed any major changes in the discrepancy between economic activity and prices, productivity, and wages. it is our judgment that we remain at the stage where we should maintain the current commitment and firmly continue the quantitative easing policy. eventually, we must return to the conventional monetary policy of using short - term interest rates as an operating target, from the current policy of using the current account balance at the bank as an operating target. the process of returning to the conventional monetary policy consists of two elements. one element is how to reduce the current account balance at the bank of japan. financial institutions have a legal obligation to hold about 6 trillion yen in the current account at the bank as required reserves. at present, given the ample provision of liquidity by the bank, they are holding 30 to 35 trillion yen in their current accounts, far exceeding the required | 0 |
a difference. we will also learn about other sources of energy from which we can tap on and strengthen. this is the challenge of the new generation of leaders if they will truly be able to make lasting and meaningful changes in their environment. on this note, let me wish you an enriching and highly energised summit. bis central bankers β speeches | this relatively simple measurement, which requires only minimal modeling effort, the risk manager can flag the most illiquid positions as a special concern and can monitor changes in the portfolio β s aggregate liquidity over time. of course, as i discuss below, this simple measurement may not identify the full range of potential liquidity risks. this example of measuring liquidity risk shows how important market transparency is to efficient risk management. that is, judging liquidity risk is easier in a transparent market like the equity market, from which the foregoing example is actually taken, than in a non - transparent market like the corporate bond market. however, as this audience knows well, the transparency of the corporate bond market will improve next year when the collection and dissemination of data on secondary market trading begin. i suspect this new source of data will improve the ability of fixed - income risk managers to measure and manage the liquidity risk of corporate bond portfolios. although a number of methods for measuring liquidity risk are already used, the quantification and modeling of market liquidity remains a relatively new area in which i expect to see, and i encourage, further growth. another weak spot of risk - management models is the risk associated with unknown common positions. that is the risk that several firms are holding the same positions, and all of those firms are basing their value - at - risk estimate on the assumption that these positions could be liquidated more quickly than they actually could. this circumstance is also known as a β crowded trade. β examples include the fixed - income relative - value arbitrage in autumn 1998. in autumn 1998, simultaneous liquidations by many market participants, some of them forced because of collateral or margin calls, caused liquidity spreads to widen far beyond the limit that a risk - management model using historical data would have deemed possible. in the wake of this experience, market participants reported that they had not fully understood the balance sheet of long term capital management ( ltcm ) and other large players, and hence, in some cases, their risk - management models had underestimated their own portfolio β s risk. prudent risk managers are probably aware of this limitation in their models - - more aware now than they were before the ltcm crisis, perhaps - - and all risk managers should try to manage this risk as best they can. unfortunately, there are no easy ways to account for it in a typical risk model. essentially what risk managers can do is to forecast other investors β needs for | 0 |
dining out & takeaway - 5 insurance & financial - 5 rents clothing & leisure motor vehicles household goods fuel electricity alcohol & tobacco administered gas holiday travel fruit & vegetables avc * * groceries new dwellings * average from 1993 to december quarter of 2019 ; volatile & administered items are 37 per cent of the cpi basket, selected goods are 32 per cent and selected services are 26 per cent ; administered excludes utilities ; groceries excludes fruit & vegetables. * * audio, visual & computing equipment. sources : abs ; rba. the second indicator that inflation is being driven by domestic demand is that it is increasingly underpinned by services ( graph 4 ). hairdressers and dentists, dining out, sporting and other recreational activities β the prices of all these services are rising strongly. this reflects domestic economic conditions and is an indication that aggregate demand is sufficiently greater than aggregate supply to sustain these price increases. r e s e r v e b a n k o f au s t r a l i a graph 4 cpi inflation year - ended with contributions % total services * rents % selected goods * * other - 2 * includes market services and administered items ; excludes rents and holiday travel & accommodation. * * includes groceries, alcohol & tobacco, consumer durables and new dwellings. - 2 sources : abs ; rba. the cost of these services is also typically driven by the price of domestic inputs, since labour and domestic nonlabour costs comprise most of the inputs used in supplying them. the bank β s liaison with firms indicates that these domestic cost pressures are proving persistent. labour costs have risen, especially when we incorporate the effect of weak productivity growth, and the price of domestic non - labour costs such as energy, business rents and insurance has increased noticeably ( graph 5 ). on the other hand, imported cost pressures are starting to subside. graph 5 change in firms β non - labour costs * net balance, firms reporting in liaison ppt ppt domestic costs imported costs - 50 - 50 - 100 * - 100 share of firms reporting above - average increases less share reporting below - average increases or decreases ; average increase indexed to 0 ; smoothed with a 13 - month henderson trend. source : rba. the third signal is the continuation of limited spare capacity, most evident in high rates of labour utilisation. there continues to be a clear link between services inflation and measures of spare capacity, since it is easier to raise prices when firms cannot keep up with customers β demands ( | , starting from february 2024 β’ longer board meetings β’ an internal staff meeting at the beginning of the board cycle that board members would be able to attend β’ board oversight of the research agenda β’ changes to communication, including the post - meeting statement being issued by the board, rather than the governor, and media conferences after each meeting. since that announcement, we have expanded and sharpened our thinking on these issues. in doing so, we have focused on the recommendations of the review. but we have also engaged with peer central banks and drawn on expertise from outside the bank. in building out these changes, we have been mindful of two key aims highlighted in the review β providing more opportunity for deep and informed deliberation, and providing a clearer explanation of monetary policy decisions to our various audiences. deep and informed deliberation the starting point for deep and informed deliberation is to allow time. the first step will involve board members attending a β policy issues meeting β around 10 days before each board meeting. currently, board members receive the material for the board meeting four days prior to the meeting. the new process will therefore engage board members with the policy issues earlier. this new meeting will assemble a group of staff with the right experience and expertise to give the members insights and diversity of perspectives on the key issues relevant for policy. it will provide analysis of issues that are relevant to a few upcoming meetings, not just the immediate one. for example, staff could provide deeper analysis on issues that members have been grappling with in previous meetings. they could discuss longer run issues that potentially affect monetary policy well into the future. or they could cover topics that the staff believe will equip the board to consider the different options for policy β for example, scenario analysis. i envisage that members would be active participants in the meeting, asking questions and requesting follow - up analysis as required. the second step is to hold longer board meetings. meetings will start on the monday afternoon. discussion in the afternoon will involve presentations from staff on the state of the economy and markets, along with the outlook. this will mean that the board spends around 3Β½ hours discussing these issues β about twice as much as now. the idea is not for longer presentations but for members to have more time to discuss, probe and deepen their understanding of the issues. my own experience in the current meetings is that there is never any shortage of questions β just a shortage of time to address them all in the meeting. the board | 1 |
speech by frank elderson, at the ` climate is big businessΒ΄ conference β san francisco, 24 may i have a confession to make. i β m a banker. not just a banker, but a supervisor of banks. a central banker. so what on earth is someone like me doing at a conference about sustainability? after all, my industry has a reputation for being grey, not green. concerned with greenbacks, rather than green banks. pinstripes, not pine trees. but today i β d like to talk to you about why the smart money is on green finance. why we have to take on the challenges together. why we need to make the sustainable development goals work. why bankers should act today i want to reach out and share with you some of the insights we have learned as a central bank. because most of these issues are not just confined to the financial sector. first i β d like to explain why you should focus on sustainability. twenty years ago a company often would only β go green β for reputational reasons. but today there are other reasons why you cannot afford to ignore sustainability. sound risk management means the financial sector needs to worry about sustainability risks. we simply cannot sit back. because we have reached the stage where the cost of inaction is greater than the cost of action. suppose you have major investments in high - carbon assets. these assets have retained their value for many years in the past. but can we just assume that these assets will retain their value in the years to come as well? of course not. during the transition to a low - carbon economy, these assets could become unwanted or obsolete, as new, cleaner and cheaper energy replaces them. this audience is full of disrupters that work day and night to bring about that very transistion. under new laws limiting the use of fossil fuels, β old β forms of energy may even need to stay in the ground. these valuable assets could become stranded. in the financial sector we call this the carbon bubble. and we must make sure that the big green bang does not cause this carbon bubble to burst. so be aware of the risks and manage them properly. but besides risks, a more sustainable economy also offers us opportunities. we are seeing this happening right now in the financial sector, where the issuance of green bonds is growing fast, but it is of course evolving across all sectors in all continents. how β and where to start while it is clear that the business community needs to take on | real house price in the u. s. increased by more than 40 percent between 2002 and 2006, while u. s. loan growth, particularly mortgage loans, accelerated during the same period. these signs were also present in east asia before the 1997 crisis. in the current crisis, the securitization boom and the easing of monetary policy in the us helped fund the loan growth, while in the case of the asian financial crisis, it was the large capital inflows in the form of direct borrowing that funded the credit boom. in both cases, however, poor underwriting standard by banks was an important common contributing factor. looking back, the asian financial crisis has been an important turning point for policymakers in the region, as the lessons learned from the crisis had led to many important policy reform initiatives, all of which aimed at strengthening the robustness and the risk management discipline of the domestic financial systems, and this brings me to my second point. in the case of thailand, after having restored financial stability in the early 2000s, financial reform became a top priority, with emphasis on instilling prudent regulations and strong risk management. we adopted a macro - prudential approach in the early 2000s, in recognition of the systemic linkages between the financial system and the increasingly opened macroeconomic conditions ; utilizing our natural institutional advantage as we continue to oversee both monetary policy and financial institutions supervision. hence, from 2003 to 2006, a series of macro - prudential measures were introduced, aiming at restraining then the rapid growth of credit, especially credit card loans and mortgage loans. the preventive measures that were introduced included placing limits on the loan - to - value ratio for luxury mortgage, raising minimum repayment requirements for credit cards and personal loans, and strengthening npl provisions by fair valuation standards of ias39. looking back, these measures have been useful in curtailing excessive leverage and household indebtedness, thus helping to maintain stability in our domestic financial system. risk - based supervision was a key driving force to strengthen risk management practices of our financial institutions. financial institutions and central bank laws have been overhauled to keep up with the increased complexity of the financial system. the new financial institutions business act, enacted last august, empowers the bank of thailand with the authority to regulate banks and non - banks under a consolidated supervision regime. furthermore, risk management and governance practices of financial institutions have also been strengthened. board of directors are now held accountable by law for setting the strategic and | 0 |
levels of safety, security and reliability. perhaps the most significant contribution of technology has been in attempting to bring down the cost of financial services by using economies of scale. technology has also been used in removing geographical barriers and reaching out to the unbanked β the poor are unreached but not unreachable. the use of electronic payment modes to disburse the governments social benefit transfers illustrates this point. technology should be used in such a manner that you have a diversified product range to bridge the supply gap at the same time keeping in view the customers convenience in mind. bis central bankers β speeches has it delivered in india in terms of reducing the costs? if not why? is the government / regulatory intervention the best way forward? what are the advantages or dangers to such an approach? channel security to compete successfully in today β s tough market place, financial institutions need to retain the trust of their customers β a trust which relies not only on their capacity to deliver good value services, but also on their ability to protect people, assets, premises and the highly sensitive data they hold. there is always an element of hidden fear as far as it based operations are concerned, the fear of the unknown. banks need to ensure that the best of controls and security measures are in place. customer education is the key to customer trust. are there steps taken towards customer education as far as it based service delivery channels are concerned? are these adequate? how to bridge the gap? having identified some of the gaps, let me now try and offer suggestions to bridge these gaps. it and business alignment alignment can be described as the timely and appropriate application of it in harmony with business objectives, strategies and requirements. alignment occurs when the respective strategies are interwoven in such a way that the right things are done to deliver greater value to the organisation. after all, a successful alignment is a two way relationship, a give and take between it and business. though it has the capability to reduce costs, standardise processes, the benefits of successful it - business alignment are beyond these i. e. increased efficiency of implementation & integration, reduced cycle time, increased enterprise agility and the ultimate benefit of improving the bottom line. until recently it played a docile role in business planning. it is now time for banks to move over from being merely an implementation tool to shaping business strategy. the principal difficulty is that there are few instances of business oriented it strategies as most are focussed on technology products of one shape or another | own funds. these limitations come from the bank recovery and resolution directive ( brrd ) which, in my view, is the most crucial regulatory change in europe of late, applicable to all 28 eu member countries, and will significantly contribute to breaking the bank - sovereign nexus. let me explain. the brrd implements a true paradigm change, ending the culture of bail - out and ushering in a culture of bail - in. as of 2016, in all resolution cases, the brrd will impose to the resolution authorities, a bail - in of shareholders and creditors equal to at least 8 % of total liabilities including own funds of a given bank. this amount of 8 % is very substantial if we compare it to the losses which banks faced in the recent crisis. to give you an idea : between 2008 and 2010 only one bank had losses exceeding the 8 % threshold, and the average for all other banks was slightly less than 3 %. if we look further back to the nordic financial crisis in the 90s, none of the banks affected by this crisis faced losses of more than 8 % of its total liabilities including own funds. let me first briefly describe what happens once a bank enters into resolution and how the socalled β bail - in tool β works under the new framework. the bail - in tool follows a sequential approach. before any resolution fund can be tapped, shareholders and creditors have to first absorb losses amounting to at least 8 % of total liabilities including own funds. although uninsured deposits from individuals and small firms come last among liabilities possibly subject to bail - in, they would be included if needed to attain the 8 % total. according to the new rules, only insured deposits are totally excluded from the bail - in tool. only after the 8 % amount is bailed - in from shareholders and creditors, can money from the resolution fund be used and for a maximum amount of 5 % of total liabilities ( including own funds ) of the bank under resolution. public resources can then be used only in case this is not enough ( which, based on past crisis experience would be exceptional ). public money, either from national governments or from direct european recapitalisation of banks, can only be used at the very end of the process which, in practice, should happen exceedingly rarely. bail - in of shareholders and creditors plus the use of the resolution fund should in most conceivable cases, be enough to ultimately cover for the losses incurred by the | 0 |
to national decision - making, increased risk - sharing in the policy fields affected will undermine the stability foundations of the euro area. let me give you a specific example. as long as member states can have a major say on the quality of bank balance sheets, such as through national insolvency legislation, then a european deposit protection scheme would not only be premature but would also create incentives to shift risks to the banking system ; these would then have to be borne by all. a european deposit protection scheme, moreover, would be justifiable only if banks were less dependent on the solvency of their home countries. however, since the banks are currently holding large quantities of their own countries'sovereign bonds, a european deposit protection scheme would be tantamount to communitising sovereign debt. without the willingness to extensively relinquish sovereign rights, there is only one way to weatherproof the structure of the euro area : we need to reinforce individual national responsibility by making the " no bail - out " clause enshrined in the maastricht treaty more credible. after all, the only way this " no bail - out " clause can exert its disciplining effect is if financial market players also believe it to be in force. in order to lend credibility to the " no bail - out " rule, sovereign debt restructuring would need to be possible without jeopardising financial stability. as things now stand, were one euro - area member state to become insolvent, this would threaten the entire euro - area financial system owing to the close nexus between sovereigns and banks. member states, fearing contagion bis central bankers β speeches effects, were therefore willing to provide fiscal assistance to greece and other euro - area countries in crisis. but it's not just the recipient countries that benefit from the esm firewall, the private creditors are, too, as, thanks to the esm loans, they get back all the funds they lent to the crisis countries, for which they will, in most cases, have collected a sizeable risk premium. only in greece have private creditors taken a voluntary haircut, but that wasn't until 2012, two years after the first fiscal assistance was granted. this practice is not compatible with the liability principle propounded by walter eucken ( " those who enjoy the benefits must also bear the costs " ). against this background, the bundesbank presented a relatively simple proposal a number of years ago that is designed to | janet l yellen : semiannual monetary policy report to the congress testimony by ms janet l yellen, chair of the board of governors of the federal reserve system, before the committee on banking, housing, and urban affairs, us senate, washington dc, 21 june 2016. * * * chairman shelby, ranking member brown, and other members of the committee, i am pleased to present the federal reserve β s semiannual monetary policy report to the congress. in my remarks today, i will briefly discuss the current economic situation and outlook before turning to monetary policy. current economic situation and outlook since my last appearance before this committee in february, the economy has made further progress toward the federal reserve β s objective of maximum employment. and while inflation has continued to run below our 2 percent objective, the federal open market committee ( fomc ) expects inflation to rise to that level over the medium term. however, the pace of improvement in the labor market appears to have slowed more recently, suggesting that our cautious approach to adjusting monetary policy remains appropriate. in the labor market, the cumulative increase in jobs since its trough in early 2010 has now topped 14 million, while the unemployment rate has fallen more than 5 percentage points from its peak. in addition, as we detail in the monetary policy report, jobless rates have declined for all major demographic groups, including for african americans and hispanics. despite these declines, however, it is troubling that unemployment rates for these minority groups remain higher than for the nation overall, and that the annual income of the median african american household is still well below the median income of other u. s. households. during the first quarter of this year, job gains averaged 200, 000 per month, just a bit slower than last year β s pace. and while the unemployment rate held steady at 5 percent over this period, the labor force participation rate moved up noticeably. in april and may, however, the average pace of job gains slowed to only 80, 000 per month or about 100, 000 per month after adjustment for the effects of a strike. the unemployment rate fell to 4. 7 percent in may, but that decline mainly occurred because fewer people reported that they were actively seeking work. a broader measure of labor market slack that includes workers marginally attached to the workforce and those working part - time who would prefer full - time work was unchanged in may and remains above its level prior to the recession. of course, it is important not to overreact | 0 |
. the transition plans of financial intermediaries ( banks and institutional investors ) can represent a powerful tool both for managing climate risks and for steering the economy on a sustainable path. however, we are moving our first steps in this area. in what follows i will discuss two issues and draw some conclusions. 2. current vs expected emissions an intermediary can implement a net zero transition plan in many ways. to simplify, consider two opposite alternatives. the first would entail changing the composition of its portfolio by moving from high to low carbon intensity sectors / firms, identified based on their current emissions. this is the so - called β exclusion β strategy, according to the usual taxonomy of sustainable investment. 4 the second ( the so - called β best - inclass β strategy ) would entail overweighting firms that, despite being carbon intensive, have committed to an ambitious and credible decarbonization plan over the coming decades. the first approach, if applied on a vast scale, would suffer from a fallacy of composition : it would be feasible for the individual intermediary, but not at the aggregate level, short of a β miracle β in the form of a technological breakthrough allowing carbon intensive firms to transition without financial support, or a quick and radical change in households consumption patterns that causes a fall in demand for high carbon products and services. the second approach avoids this problem and appears capable of providing carbon intensive firms the finance they need to implement their transition plans. figure 1 reports data for eu listed non - financial companies, aggregated by sector. for each sector, the horizontal axis measures the current carbon intensity ; the vertical axis reports the expected decline in carbon intensity over the next decade, as envisioned in each firms β published commitments. the figure shows that firms in the more carbon intensive sectors plan to reduce their emissions relatively more aggressively. this suggests that these firms, arguably the most exposed to transition risk, will need substantial flows of finance in the coming years for their transition plans to succeed. the figure also highlights that financial firms could face a difficult choice : in the short - to - medium term financing the transition might even entail an increase in the carbon footprint of their portfolios. while this might seem at odds with a net zero pledge, it could be worth doing. consider e. g. firms operating in the business of power generation, often characterized by very high emissions. their investment choices will global sustainable investment alliance ( 2021 ), β global sustainable investment review β. be key to | quarter of 2003. in industry, following the moderate expansion recorded between 2000 and 2002, employment began to contract again in line with production. the unemployment rate fell in 2004, mainly owing to the decline in labour force participation. the diminution in the supply of labour interrupted the decade - long process of convergence towards the average european participation rate. there was a decline in labour force participation by young people in the south, especially women. more systematic action, including training programmes, is needed to raise labour market participation rates. bank lending was 6. 7 per cent greater in december than a year earlier. there was a slowdown in the north and centre, while the growth in lending accelerated further in the south to 10. 5 per cent. credit to consumer households, essentially for the purchase of houses, increased by 16 per cent. the value of new bad loans remained limited. qualitative and quantitative indicators show that credit supply conditions continue to be easy. interest rates are still extremely low. secondary market yields on italian corporate eurobonds are in line with those on the bonds of other international issuers. 5. the banking system and the corporate sector since the early 1990s the italian banking system has undergone a transformation on an historic scale. initially, 68 per cent of total assets were held by banks controlled by the state or by foundations ; today the figure is close to 10 per cent. most of the banking groups are controlled by a core group of investors comprising intermediaries, foundations and, in some cases, firms with minority interests. important international financial intermediaries are present in a higher proportion than in other european banking systems. foreign banks and financial institutions currently hold an average of 17 per cent of the capital of the four largest banking groups ; for the 10 largest groups, the share held by foreign intermediaries is 11 per cent. on the basis of bankscope data, foreign intermediaries hold 7 per cent of the capital of the four leading banking groups in germany, 3 per cent in france and 2. 6 per cent in spain. in the privatization process, foundations β and public entities β sales of shareholdings were facilitated in the second half of the 1990s by buoyant share prices. in disposing of their holdings in banks, the foundations and public entities fostered the creation of stable core groups of controlling shareholders. mergers and acquisitions have resulted in the number of banks operating in italy falling from 970 in the mid - 1990s to 785 ; 443 are mutual banks. | 0.5 |
main roles for the eurosystem in this regard : first, as an operator, to ensure that we provide the right services for the settlement of payments and securities ; second, as a catalyst, to facilitate standardisation and interoperability ; and third, as an overseer and supervisor, to safeguard financial stability and ensure a level playing field. some of you may say that there is another challenge, namely the need to cope with the many changes in the regulatory framework. while i fully agree that we should provide stable framing conditions in terms of regulatory certainty, we should not forget where we have come from : the transition from the β old normal β to the β new normal β was accompanied by the biggest bail - out in history, costing european taxpayers almost two trillion euros. 3 in response, the european union ( eu ) has strengthened and harmonised the regulatory framework with the single rulebook and by introducing a paradigm shift from β bail - out β to β bail - in β. in the euro area, we went even further with the establishment of the banking union. the banking union was a game - changer in the crisis as a way to weaken the banksovereign nexus. it was also an unprecedented step towards deeper integration of europe β s banking sector. the single supervisory mechanism ( ssm ) is the basis for independent, tough but appropriate supervision across the banking union. it is also an open project where non - euro area member states can join through close cooperation. speech by yves mersch : distributed ledger technology β panacea or flash in the pan?, 25 april 2016. around 5 trillion euros of aid ( including state guarantees ) have been approved by the commission between 2007 and 2015 of which 1. 7 trillion were used at the peak of the crisis. state aid scoreboard 2015 > aid in the context of the financial and economic crisis. bis central bankers β speeches deposit insurance and effective resolution tools it is important in the β new normal β not only to strengthen regulation and supervision but also to establish a framework in which it is possible for banks to fail without challenging the stability of the whole financial sector. here the frameworks for resolution and deposit insurance are central. at the eu level, beyond the establishment of the single resolution mechanism, the directive on deposit guarantee schemes has already harmonised important provisions in deposit insurance, such as the coverage level and the payout period, and thus strengthened depositor protection. but ultimately we have to go further in the banking union to ensure that depositors | rundheersing bheenick : review of the year gone by and reflections on the present and future outlook statement by mr rundheersing bheenick, governor of the bank of mauritius, port louis, 8 october 2012. * * * this year, the bank celebrates its 45th year in the service of the country, which itself prepares to celebrate the 45th anniversary of its accession to independence in march 2013. looking back over these eventful 45 years, i can see a country that has radically transformed itself and its economy, with the bank of mauritius ( bom ) having continuously reinvented itself to be part of this change process. at the bank β s foundation in 1967, there was one major industry, sugar. today, the economy is well - diversified, with many pillars of growth. we have lived through times when the import cover was less than a week, unemployment hovered around 20 per cent, and our countrymen were emigrating in large numbers in search of jobs, and inflation reached 42 per cent. today, our reserves represent 5 months of import cover ; we have an unemployment rate of around 8 per cent, with 23, 000 migrant workers in our country ; inflation has declined to less than 5 per cent today. at the time of independence, the rupee was tied to the british pound at a fixed parity under the β sterling exchange standard β. it was then pegged, first to the imf β s special drawing rights, and subsequently to a basket of currencies reflecting the trade pattern of the country, before moving to a floating regime. prior to the late 1980 β s, monetary policy was implemented through reserve requirements, ceilings on commercial bank credit and administered interest rates. today, after a free float for nearly two years, we have a managed float, with bom interventions limited to smoothing excess volatility of the rupee and, since june 2012, also combating unwarranted currency appreciation. the monetary policy committee ( mpc ), set up in 2007, formulates and determines our hybrid inflation - targeting monetary policy. our financial sector was underdeveloped at the time of independence when we had only five banks. today, our banking sector has 21 banks and 216 bank branches, eight non - bank deposit taking institutions, ten money - changers and six foreign exchange dealers. we now have a radically different financial landscape, with parallel changes in the supervisory, regulatory and oversight functions of the bank of mauritius. let me come back to | 0 |
##e taught for thirteen years in the prestigious columbia university in new york. there he mainly focused on development economics, earning a great reputation as an international advisor on the subject. he died unexpectedly and still relatively young at only 51. the view of ragnar nurkse of the time notes his thorough knowledge of economic theory and practice, his original ideas, and his clear vision. he was the sort of man who is clearly needed in the world today. when estonia regained its independence it chose the path of reform, with a unique combination of conservatism, innovation and a recognition of its own limitations. estonia chose once again the road to europe. eesti pank concentrated on stabilising the economy and on earning and maintaining confidence in the estonian currency. today the european union and its member states are estonia β s main partners both economically and politically. working together with the european system of central banks has become a matter of course for eesti pank, be it in monetary policy, financial stability or economic analysis. we are in an unprecedented position to engage in defining the economic world around us, and our input is listened to. evidently there are limits on how much a small country can contribute in the functioning of the european union, because smaller countries have fewer resources. but we can widen bis central bankers β speeches those limits by making the best use of our resources, by learning from our own experience and that of our partners, and by working well together. working together is particularly important right now, at a time of geopolitical tensions in and around estonia and of deepening insecurity. it is right now that we need to find the ideals, the ideas, and the goals that can bring us together, and we must work together to achieve them. i wish us strength and good luck in all of this. thank you again. bis central bankers β speeches | ardo hansson : working together for the good of the eu and estonia opening speech by mr ardo hansson, governor of the bank of estonia ( eesti pank ), to the ragnar nurkse lecture for the 95th anniversary of eesti pank, tallinn, 4 november 2014. * * * professor balcerowicz, president of the riigikogu, chair of the supervisory board of eesti pank, excellencies, ladies and gentlemen, thank you for being here today to mark the 95th anniversary of eesti pank and to honour ragnar nurkse, the world's best - known economist from estonia to date. eesti pank was founded when the republic of estonia was only a year old and ragnar nurkse was a model eleven - year - old pupil at the tallinn cathedral school. in the words of juhan kukk, the minister of finance of the time, founding eesti pank as the issuer of the national currency and tying the currency to gold showed the same great β bravery and belief in national and economic independence β as engaging in the war of independence did. ragnar nurkse started his studies in the university of tartu, but he soon moved to continue them in the school of economics of the university of edinburgh and later in vienna. he was recognised in his home country for his work, as is shown by the worried letter that juri jaakson, governor of eesti pank at the time, sent him in spring 1938. nurkse was working in geneva at the time for the league of nations, the forerunner of the united nations. the letter says : β the rise in the cost of living in the past three years has been larger than has been seen in many other countries that compete with us in foreign markets. when the cost of living rises, so wages should also rise and consequently so too production costs, with the result that our competitiveness declines. do we not have to fear this? β unfortunately we do not know what advice nurkse gave to jaakson, and within only a couple of years the question was no longer of any great relevance for eesti pank. during the second world war, ragnar nurkse focused in his work on inflation and exchange rates. the research that he published on these topics has led many writers to call nurkse one of the main architects of the bretton woods system. after the war nurks | 1 |
problems in many countries, the imf's advice is worth taking seriously. many factors contribute to sweden β s access to potential swap lines being uncertain. the fact that sweden is in global terms a small economy is of course one such factor. one cannot assume that it is always in the interests of an individual country to help another country, particularly not in cases that concern a largely domestic crisis. the tendencies towards a more introvert policy that can be discerned in some economies do not exactly give hope for greater helpfulness in the future. perhaps the conditions would be better in a global financial crisis, when it may be in one's own best interests to help others. but the hopes of bringing about a swap agreement could be dashed if the borrowing country β s own buffer, the foreign currency reserve, has been weakened. on the contrary, there may be doubts that the country is capable of managing its own risks. who would want to come to the rescue of a country that is not prepared to pay the cost of a reasonable insurance? let me make a comparison. some years ago, sweden chose to re prioritise within its defence forces, and the compulsory military service system was abolished. now that uncertainty in global policy has increased, the swedish defence budget has increased, and compulsory military service is being considered again. it is quite simply safer to have, for instance, a number of jas fighter planes on standby than to rely on being able to rent them if one needs them, partly because in an acute situation it would probably take too long and because it would be difficult and expensive. foreign currency reserve β part of sweden's economic defence similarly, we can regard the foreign currency reserve as part of sweden's economic defence. the advantage of having a foreign currency reserve is that it can quickly be made available for liquidity support to the banking system if an acute need were to arise. a foreign currency reserve can also prevent a financial crisis by creating confidence in the central bank β s ability to take action when necessary. this is particularly important in a situation where market confidence in the country β s credit and payments systems is under pressure. if you say it could never happen to sweden, let me remind you of ireland and iceland. prior to the global financial crisis, these countries were assessed to be in good condition with healthy public finances and consequently high credit ratings. but in connection with the crisis, both ireland and iceland suffered serious confidence crises. their credit ratings were cut rapidly, at | for instance, a new production technique can affect capital stock and industrial structure. many of the disturbances that occur affect both the supply and the demand in the economy. according to some calculations, which were presented in the inflation report, production capacity during the slowdown could have declined from approximately 3 per cent at the beginning of 2000 to 1 per cent at the end of 2001. at the same time, it is important to emphasise that production capacity cannot be measured in a reliable and simple manner, which means that this type of calculation is characterised by uncertainty. gdp growth in sweden is estimated to amount to 1. 5 per cent this year, 2. 7 per cent in 2003 and 2. 6 per cent in 2004. an important issue is whether production capacity will increase when the economy picks up. after all, it is the long - term production capacity that determines whether growth is compatible with low inflation and can thereby provide a sustainable positive development in income and welfare in the economy. the most important factors with regard to developments in the near future are the labour supply and productivity. the labour force has increased considerably in recent years, mainly thanks to increased employment in trade and industry. at the same time, a reduction in the average working hours has had a counteractive effect. the decline in the average working hours over the past year is partly due to the economic downturn, as overtime has fallen. however, there also appear to be structural factors, such as a rising level of absence due to sickness and central agreements on shorter working hours, behind the decline. this indicates that the reduction in the labour supply could be at least partly of a more lasting nature. the decline in productivity during 2001 was limited in comparison with the declines in 1977, 1980 and 1990. greater openness towards the world around us, a higher level of education during the 1990s and certain improvements in competitive pressure indicate that productivity will continue to be higher than in the 1970s and 1980s. however, this also presupposes that productivity in the information and telecommunications sector will return to a good level. there are also other risks : inflation rose more than expected last spring, which was only partly due to price increases of a more temporary nature. the rest was primarily due to wage developments in the services industries. when employment begins to rise once again, while the labour market is strained, there is a risk that the new central wage agreements signed over the coming years will be affected by the fact that others have previously received high wage increases. to summarise | 0.5 |
to reduce vulnerability to climate impacts is particularly critical in africa. that's why it is so important to discuss how to scale up adaptation finance in africa. i found it very interesting to hear about challenges, possible solutions and how central banks and supervisors β and the ngfs β can support the mobilisation of adaptation finance. 2 / 4 bis - central bankers'speeches in a moment, we will look more broadly at the role of central banks and supervisors in addressing climate - related challenges. against a backdrop of increasing political fragmentation and polarisation, cooperation and collaboration are more important than ever. because our planet is heating up fast. last year was the warmest on record. 5 the implications of climate change for central banks, monetary policy and financial supervision are profound and multifaceted. central banks and supervisory authorities around the globe must adapt to and tackle these challenges. as independent institutions, we can best do so by communicating the facts clearly and transparently! our work can help to ensure that climate risks remain a top priority β in africa and globally β despite the many headwinds. our upcoming, final panel discussion will round off a very productive day. today's outreach meeting helped us to identify and discuss issues that are particularly relevant to economies in africa. the ngfs is about sharing knowledge, experiences and best practices. about learning from one another. personally, i learned a lot today, and i hope you did too. before we move on to the panel, i would like to thank yann marin and the team at the ngfs secretariat as well as everyone from the sarb for organising the meeting today. thank you for being great partners in steering our global network. and most importantly, thank you, everyone, for your contributions. i look forward to continuing our exchange and i am sure there will be plenty of opportunities throughout the year. in fact, tomorrow will already be our next opportunity. i am sure i will see some of you at the meeting of the basel committee on banking supervision and the financial stability institute where we will also discuss the role of supervisors in addressing climate change. and beyond that, i will be back soon in the context of the south african g20 presidency. moreover, i recommend that each and every one of you attend the ngfs plenary meeting in delhi in march, where we will need your perspectives as well. so, let's keep in touch and, together, let's all continue the success story of the ngfs! thank you. 1 | sunil mendis : a brief look at financial information technology keynote address by mr sunil mendis, governor of the central bank of sri lanka, for the financial information systems seminar, colombo, 8 september 2004. * * * his excellency akio suda, the ambassador for japan in sri lanka, mr yoshihisa onishi, executive director, fisc, other officers from the fisc in japan, ladies and gentlemen, the central bank of sri lanka is happy to co - sponsor this programme together with the fisc of japan ( center for financial industry information systems ), in view of the importance of financial information technology in the financial services industry. sri lanka is no exception to continuous changes in the technology used by its financial services industry. in a market driven financial system, for information to be effective, there should be two vital ingredients, that is system integrity and timeliness - both of which are crucial. the more dependable your information systems are, the more efficient and competitive banks can be as a player in the financial services industry. that is why we see banks investing heavily in it. globally too, with the interdependence of markets their integration is facilitated through information systems which link these markets which make the world a very small place indeed on a pc monitor where the whole world is virtually at your doorstep. the fisc, therefore, has contributed significantly, over the last 20 years, to making information systems more efficient and dependable through their research activities and technical co - operation programmes which have been extended to asian countries such as sri lanka. of particular interest to banks would be the security guidelines on computer systems and audit guidelines for information systems of financial institutions, which they have issued. some of these can be used as guidelines by our banking industry. government and the people of japan have contributed immensely to the development of this country for many decades in the past in different fields and their support in sharing their knowledge on financial information system with the sri lankan financial sector is greatly appreciated. in this connection i wish to thank the fisc who has devoted so much of its time and effort to bring in expertise in this area to market participants in sri lankaaβ¬β’s financial system. this would also provide a good forum for our banks to exchange ideas on specific security features adopted by the fisc. i have no doubt that this seminar will provide an excellent opportunity for useful interaction amongst participants, and i would like to convey my best wishes. | 0 |
levels. looking ahead, the slowing economy is likely to lead to some increase in the unemployment rate. fiscal support measures to cushion the impact of higher energy prices should be temporary and targeted at the most vulnerable households and firms to limit the risk of fuelling inflationary pressures, to enhance the efficiency of public spending and to preserve debt sustainability. structural policies should aim at raising the euro area β s growth potential and supporting its resilience. inflation inflation rose further to 9. 1 per cent in august. energy price inflation remained extremely elevated, at 38. 3 per cent, and it was again the dominant component of overall inflation. market - based indicators suggest that, in the near term, oil prices will moderate, while wholesale gas prices will stay extraordinarily high. food price inflation also rose in august, to 10. 6 per cent, partly reflecting higher input costs related to energy, disruptions of trade in food commodities and adverse weather conditions. while supply bottlenecks have been easing, these continue to gradually feed through to consumer prices and are putting upward pressure on inflation, as is recovering demand in the services sector. the depreciation of the euro has also added to the build - up of inflationary pressures. price pressures are spreading across more and more sectors, in part owing to the impact of high energy costs across the whole economy. accordingly, measures of underlying inflation remain at elevated levels and the latest staff projections see inflation excluding food and energy reaching 3. 9 per cent in 2022, 3. 4 per cent in 2023 and 2. 3 per cent in 2024. resilient labour markets and some catch - up to compensate for higher inflation are likely to support growth in wages. at the same time, incoming data and recent wage agreements indicate that wage dynamics remain contained overall. most measures of longer - term inflation expectations currently stand at around two per cent, although recent above - target revisions to some indicators warrant continued monitoring. risk assessment in the context of the slowing global economy, risks to growth are primarily on the downside, in particular in the near term. as reflected in the downside scenario in the staff projections, a long - lasting war in ukraine remains a significant risk to growth, especially if firms and households faced rationing of energy supplies. in such a situation, confidence could deteriorate further and supply - side constraints could worsen again. energy and food costs could also remain persistently higher than expected. a further deterioration in the global economic outlook could be | growth, which have been revised down markedly for the remainder of the current year and throughout 2023. staff now expect the economy to grow by 3. 1 per cent in 2022, 0. 9 per cent in 2023 and 1. 9 per cent in 2024. the lasting vulnerabilities caused by the pandemic still pose a risk to the smooth transmission of our monetary policy. the governing council will therefore continue applying flexibility in reinvesting redemptions coming due in the pandemic emergency purchase programme portfolio, with a view to countering risks to the transmission mechanism related to the pandemic. the decisions taken today are set out in a press release available on our website. a separate technical press release on the remuneration of government deposits will be published at 15 : 45 cet. i will now outline in more detail how we see the economy and inflation developing and will then explain our assessment of financial and monetary conditions. economic activity the euro area economy grew by 0. 8 per cent in the second quarter of 2022, mainly owing to strong consumer spending on contact - intensive services, as a result of the lifting of pandemic - related restrictions. over the summer, as people travelled more, countries with large tourism sectors benefited especially. at the same time, businesses suffered from high energy costs and continued supply bottlenecks, although the latter have been gradually easing. while buoyant tourism has been supporting economic growth during the third quarter, we expect the economy to slow down substantially over the remainder of this year. there are four main reasons behind this. first, high inflation is dampening spending and production throughout the economy, and these headwinds are reinforced by gas supply disruptions. second, the strong rebound in demand for services that came with the reopening of the economy will lose steam in the coming months. third, the weakening in global demand, also in the context of tighter monetary policy in many major economies, and the worsening terms of trade will mean less support for the euro area economy. fourth, uncertainty remains high and confidence is falling sharply. at the same time, the labour market has remained robust, supporting economic activity. employment increased by more than 600, 000 people in the second quarter of 2022 and the unemployment rate stood at a historical low of 6. 6 per cent in july. total hours worked increased further, by 0. 6 per cent, in the second quarter of 2022 and have surpassed their pre - pandemic | 1 |
the united states, for example. in sweden savings are also high to start with, unlike the united states where they have fallen to historically low levels. there is always a risk that house prices, and also other asset prices such as shares, which have been pushed up by exaggerated optimism or speculation, could plummet. it would appear that swedish price movements can be explained by fundamentals, and that the speculative element has happily been conspicuous by its absence. as property often functions as collateral for loans, a large fall in prices would affect the banks. in addition, developments in the property market affect demand in the economy. rising house prices mean that households can take on new loans to increase their consumption. correspondingly, falling house prices can contribute to subduing demand in the economy. an imf study of twenty property crises in different countries shows that they entailed a fall in prices of 30 per cent. the countries β gdp was on average four per cent lower three years after a property crisis had started than it would have been without the fall in prices. 1 the scars in the real economy may well be considerable and given this it is interesting to discuss how a central bank should react to changes in asset prices. in the international debate on asset prices and monetary policy there are several different points of view. a common view is that monetary policy should only react to changes in asset prices to the extent that these affect the central bank β s inflation and growth forecasts. one should thus not have a separate strategy for dealing with changes in property prices. others think that a central bank can improve the outcome for inflation and production by reacting to changes in asset prices over and above their consequences for the inflation forecast. two main arguments have been put forward. firstly, monetary policy can alleviate the effect of the price change on the real economy. secondly, the actual knowledge that the central bank will react should reduce the probability of exaggerated price movements occurring. the difficulty lies in determining whether or not prices are increasing at an exaggerated rate. it is not necessarily so that a central bank is better qualified to make such an assessment than the market participants. in addition, there is uncertainty over how monetary policy affects asset prices. the riksbank conducts what is known as flexible inflation targeting. the objective is that the annual change in the consumer price index ( cpi ) shall be 2 per cent, but we also attach some importance to attaining a balance in production and employment. asset price movements are normally included within the scope of flexible inflation targeting | of these challenges perhaps a little earlier than many other european countries. and because we share similar experiences β still fresh in our memories β of major banking crises in the nordic countries, we have perhaps a head start when it comes to recognizing and trying to deal with these challenges on a nordic level, even if much worksstill remains. here, i might add that integration on a pan - nordic level has also come a long way in the area of securities exchanges and clearing and settlement facilities. of course, the integration of the financial infrastructure poses similar challenges for authorities to cross - border banking and some additional complications as well. however, today i will focus on the challenges posed by cross - border banks. and i must stress that these challenges are not merely a regional problem. due to the dynamic changes in the banking landscape, they will indeed require solutions on a european level. my main message today is that increased coordination is imperative, and, in this, it is vitally important that future arrangements for supervision, crisis management and crisis resolution of cross - border banks must be dealt with jointly as a package, and not in isolation from each other. it is apparent that the solutions in any one of these areas will depend on the solutions in the other areas. in particular, it will be necessary to address the issue of burden - sharing arrangements for the eventuality that a border - crossing bank becomes insolvent. if we don β t, there is a great danger that crisis management fails and valuable time will be lost. it will not be easy to achieve the necessary coordination and not least to deal with some potentially complicating conflicts of interests, and much more analysis is needed. however, i will at the end of my speech try to sketch some possible routes ahead. coordination issues to make my points clear, i think a crisis scenario could be a useful starting point. consider a large cross - border bank encountering some financial troubles, and suppose the bank is systemically important in at least one of the countries in which it operates. the number one concern for authorities would be to limit the social costs of a potential banking failure and to stop contagion to other parts of the financial system. for this, efficient crisis management is key. the successfulness of the crisis management, in turn, critically depends on a number of factors, such as coordination of information and decision - making, which in turn depend on how well conflicts of interests can be managed. information first of all, you need access to relevant | 0.5 |
strong cooperation and collaboration among the central banking community from both islamic and non - islamic countries. moving forward, it is essential for this strong cooperation to continue given the dynamic nature of the industry. in addition, the pace of internationalization can be expected to gain further momentum. as the international integration of islamic finance intensifies, cross border financial flows and its associated challenges will also increase. this will call for an even greater degree of international cooperation and coordination. while this new decade beckons the prospect of immense opportunities in islamic finance, our ability to realize this potential will be determined by the ability to recognize the shared responsibility it demands and to collectively advance forward the agenda of financial stability and resilience to achieve our ultimate goal of a shared prosperity. bis central bankers β speeches | confronted with an even greater task, of keeping abreast with the pace of innovation, taking into account the bis central bankers β speeches uniqueness of islamic financial contracts in addition to the universal scope of islamic banking business. this warrants supervisors to recognise the different aspects of risk management in islamic finance. islamic financial institutions in most jurisdictions have evolved within the confines of the conventional system and have been accustomed to business practices in their respective jurisdictions. this could result in distinctly different business and risk taking activities. collaboration among supervisory authorities of such internationally active islamic financial institutions thus needs to become part of the overall supervisory framework. these efforts would require regular engagement between home and host supervisors to ensure alignment of the supervisory oversight. this will allow for a more holistic evaluation of risks and vulnerabilities for islamic finance businesses that operate across borders. effective sharing of surveillance information and assessments of other supervisory issues on islamic financial institutions is already taking place through bilateral cooperation between supervisory authorities and other informal arrangements. going forward, a more structured framework for collaboration among supervisors is needed so as to enhance supervisory informational efficiencies, and ultimately, contribute to an effective assessment and early detection of any cross - border risk - transmissions from the group - wide activities. the homehost information sharing can be facilitated through the supervisory college arrangement as an institutionalised mechanism for greater cooperation. the recent financial crisis has also revealed the failure to understand the inter - relationship between financial and the broader sector, particularly in understanding the potential spill - over and second - round effects that are transmitted between sectors. post - crisis regulatory efforts have focused on macro - prudential measures to complement micro - surveillance and supervision. this entails horizontal assessment of risks across institutions, sectors and national borders, as well as risks in asset markets across time. this is particularly relevant for the islamic financial services sector. given the close ties of islamic finance with the real economic sector through the various modes of islamic financing contracts, a complete understanding of the entire risk spectrum often encounters much difficulties. it is therefore important for the regulators to also establish an integrated framework of macro surveillance for islamic financial activities across jurisdictions. the global database for prudential islamic finance statistics to be initiated by the ifsb, would therefore need to go far beyond ensuring standardised data collection among jurisdictions, but also to enable the generation of various macro and financial indicators, and global sharing of best practices in macro surveillance. the engagement by supervisors would also contribute towards the understanding of the systemic risk and its origins and would | 1 |
activity slows. the official sector, including supervisory authorities, continues to work nationally and collectively to promote an orderly deleveraging process. we also need to develop a coordinated strategy to put the banking system on a sound footing over the longer term. such efforts will further reinforce near term confidence - building measures and provide a long term target around which national and global policy making efforts can converge. they also will provide the basis for an exit strategy from the increased official sector engagement in the banking sector. i would like to focus the remainder of my remarks on how we can go about achieving this longer term strategy. the basel committee β s response the primary objective of the committee β s strategy is to strengthen capital and liquidity buffers and help contain leverage in the system arising from both on - and off - balance sheet activities. it also will promote stronger risk management and governance practices and limit risk concentrations within and across banking institutions, and strengthen market transparency. ultimately, our goal is to help ensure that the banking sector serves its traditional role as a shock absorber to the financial system, rather than an amplifier of risk between the financial sector and the real economy. the committee will promote multiple and reinforcing lines of defence in supervisory and risk management frameworks to enhance bank resilience. let me discuss in more depth the key building blocks of our strategy. strengthening capital buffers i will start with the committee β s initiatives to strengthen the regulatory capital framework. i would note up front that regulators need to be extremely cautious about adding to the already severe procyclical behaviour in the market place. as such, we do not propose to raise global minimum capital ratios during a crisis. however, banks need to ensure they have adequate buffers above the current regulatory minimum that reflect the nature of their portfolios and their exposure to a plausibly severe economic downturn scenario. with that background, i will now provide you with more clarity about the committee β s approach to strengthen the capital regime, building on the three pillars of the basel ii framework. any enhancements will be introduced in a manner that promotes the near term resilience of the banking sector and its ability to provide credit to the economy. moreover, we cannot set long term capital requirements on the basis of market reactions in the midst of the most severe deleveraging process we have seen in our lifetime. this effort needs to be carried out as part of a considered process that balances the objective of maintaining a vibrant, competitive banking sector in good times | against the need to enhance the sector β s resilience in future periods of financial and economic stress. risk capture let me begin with the issue of the risk capture of the basel ii framework. the move to basel ii addresses many of the risks that were not captured under the basel i framework and helps reduce a number of the perverse incentives that contributed to the crisis. the three pillars of basel ii will help ensure that capital regulation is better positioned to handle periods of rapid innovation and the new products that such periods produce. moreover, basel ii will ensure that all contractual exposures to off - balance - sheet vehicles are subject to regulatory capital requirements. non - contractual exposures and implicit support will be addressed through enhancements to the pillar 2 framework. last april, the committee announced a number of steps to enhance the risk capture of the basel ii capital framework. these measures are an important part of the financial stability forum β s response to the crisis that was set out in its april 2008 report on enhancing market and institutional resilience. for example, the basel committee β s efforts strengthen the capital treatment for off - balance sheet exposures and securitisations. the committee expects to issue proposals for the capital treatment of these exposures in early 2009. the proposals are subject to public consultation and we will carefully consider all comments received. we also have issued a proposal to strengthen the capital framework for the trading book. in particular, we will address the risks of less liquid credit products, which have produced the majority of losses in the banking sector to date. while the proposals reflect the inherent risks already embedded in banks β trading books, they will be phased in over an appropriate period to give the banking sector time to adjust to the new requirements. we are strengthening the disclosure requirements for banks β risk exposures and the adequacy of capital to support these exposures. we are focusing in particular on trading, securitisation and off - balance sheet activities. finally, we will review the role of external ratings in the basel ii framework. i should point out that the use of external ratings is limited to the simple standardised approach for credit risk and the securitisation framework. our review will include how any unintended consequences could be mitigated. quality of capital let me now turn to the issue of the quality of capital. the committee has been reviewing the key elements of tier 1 capital and the importance of ensuring strong core capital. a strong, high quality capital base is critical for | 1 |
the second reason is economic feasibility. considering the growth of income and prices, ukrainians essentially have no need for low - denomination coins, instead there is demand for a banknote with a denomination higher than 500. the structure of cash in circulation has also changed. at present, 500 hryvnia banknotes account for over 55 %, and 200 hryvnia banknotes account for one third. considering global experience, the 50 % threshold is indicative of the need for a higher denomination. 1 / 2 bis central bankers'speeches thus, a new 1, 000 hryvnia banknote is long overdue. the third reason is saving costs for the state and business. the costs of the state and cash circulation participants on producing, processing, transporting, and storing banknotes and coins will be reduced. thus, when and how will these decisions be implemented? the 1, 2, and 5 kopiika coins will cease to be means of payment in ukraine from 1 october 2019. from that time onwards, these coins will no longer be accepted for cash payments for goods and services, and the nbu will commence the withdrawal of these coins from cash circulation. at the same time, the public will be able to exchange these coins without limitation and free of charge for coins and banknotes of other denominations during the next three years. furthermore, we intend to gradually withdraw 25 kopiika coins. unlike 1, 2, and 5 kopiikas, 25 kopiikas will for now remain in cash circulation. you can use them to pay for goods and services. but these coins, if received by banks, will not be returned into circulation. with time, their number in circulation will decrease. the new banknote denomination ( uah 1, 000 ) will be put into circulation on 25 october 2019. and now i present to you the new highest denomination banknote. ( pause, the governor takes the tube in his hands ) according to the procedure for disclosing classified information, i have to open this tube and show you an uncut sheet of the new banknotes. ( opens the tube, demonstrates the banknote sheet and gives one minute for filming ) as you can see, the design of the new banknote is similar to the designs of the upgraded 20, 100 and 500 hryvnia banknotes. the front of the banknote features a portrait of volodymyr vernadskyi. the building of the presidium of the national academy | sidestep the conventional crises often faced by small, open economies. while it may seem that the recent global inflationary wave has been effectively tackled, with central banks successfully navigating the challenge, a new set of challenges arises due to the high stakes of losing control over inflation. according to the imf projections, global inflation is expected to decelerate to 6. 9 % in 2023 from 8. 7 % in 2022, further dropping to 5. 8 % in the following year. the anticipation is that most central banks will achieve their inflation targets by 2025. even in ukraine, amidst a war and active military operations, we have managed to bring inflation close to our target of 5 %. however, can we afford to let our guard down? i am convinced that the answer is no. the noticeable slowdown in inflation sets the stage for nuanced discussions regarding the pace of monetary policy normalization and the support of economic growth across different countries globally. central banks find themselves at a crossroads : what is the greater risk aβ¬ β being too cautious or not cautious enough? what is the comparative cost of overly tight policies versus excessively loose ones? domestically, we are actively engaging in these discussions. overly strict monetary policy in a low inflation environment can detrimentally impact certain economic sectors and hinder overall growth, especially during times of war. simultaneously, inflation risks tied to resurging consumption and uncertainties in commodity markets remain elevated. given these circumstances, a premature shift to interest rate easing poses substantial risks to the entire macroeconomic system and the broader economy. we recognize that this challenge extends beyond ukraine and is relevant to the majority of central banks worldwide. each of us understands the potential cost of missteps and acknowledges that a return to high inflation poses risks of destabilizing inflation expectations, eroding trust, and reverting to an era of elevated inflation. complicating matters further is the difficulty in gauging the full impact of policy measures already implemented in individual countries, as policy transmission takes time. consequently, most central banks today adopt a cautious approach, characterized by vigilant observation and preparedness for active response. it appears that forward - thinking central banks in emerging markets are presently adhering to a strategy of prudent policy. the national bank of ukraine is also adhering to such a strategy. despite the temporary pause in inflation targeting, we remain steadfast in our commitment to ensuring price and financial stability and promoting sustainable economic | 0.5 |
- being, access to credit, and opportunities for homeownership of many of our fellow citizens. | advertising of mortgage products. as we did for our recently released proposed rulemaking on credit - card disclosures, we will be doing extensive consumer testing to evaluate the effectiveness of current and proposed disclosures required of all mortgage lenders. of course, the information provided by even the best - designed disclosures can be useful only when it is well understood. accordingly, the federal reserve produces a range of consumer education materials, including information to help potential borrowers understand adjustable - rate and other alternative mortgages, and we actively promote financial education by partnering with outside organizations. however, combating bad lending practices, including deliberate fraud or abuse, may require additional measures. under the home ownership equity protection act ( hoepa ), the board has the responsibility to prohibit mortgage lending practices that it finds to be unfair and deceptive. in 2001, the board banned several practices for high - cost loans, such as loan flipping β a practice characterized by frequent and repeated refinancing to generate fees for lenders. we will consider whether other specific lending practices are unfair or deceptive and should thus be prohibited under hoepa. next week we are holding a public hearing to gather input about potential abuses in mortgage lending. we will also continue to seek input from consumer and industry groups, the federal reserve β s consumer advisory council, our fellow regulators, and others who may have useful insights about mortgage lending practices. we have also used, and will continue to use, supervisory guidance to help mitigate problems in nonprime lending. last year, together with other federal banking regulators, we issued guidance concerning so - called nontraditional mortgages. we have also issued draft supervisory guidance concerning underwriting standards and disclosures for subprime mortgages. the agencies are now reviewing the many responses to the draft proposal. the patchwork nature of enforcement authority in subprime lending poses a special challenge. for example, rules issued by the board under hoepa apply to all lenders but are enforced β depending on the lender β by the federal trade commission, state regulators, or one of the five federal regulators of depository institutions. to achieve uniform and effective enforcement, cooperation and coordination are essential. we are committed to working closely with other federal and state regulators to ensure that the laws that protect consumers are enforced. together with other regulators and the congress, we have much to do and many issues to consider. we undertake that effort with utmost seriousness because our collective success will have significant implications for the financial well | 1 |
, we kept our oil price assumption constant at 44 usd for 2016, and increased it to 54 usd for 2017. on the food front, food inflation remained far below the level envisaged in the july inflation report due to unprocessed food inflation in the third quarter of 2016. taking account of the current trend of unprocessed food inflation as well as the decrease in the demand for food stemming from the fall in tourism revenues, food inflation, which we assumed to be 8 percent by end - 2016 in the july inflation report, was revised downwards to 6 percent. due to the ongoing weakness in food demand owing to the tourism sector that will persist in 2017 coupled with the measures taken by the food and agricultural products markets monitoring and evaluation committee ( the food committee ), we expect food inflation to be lower than its historical average in 2017 as well. accordingly, we revised our assumption for food inflation downwards from 8 percent to 7 percent for end - 2017. our medium - term forecasts are based on an outlook that adjustments to taxes and administered prices will be consistent with the inflation target and automatic pricing mechanisms. for medium - term fiscal policy stance, we use the mtp projections covering the 2017 β 2019 period. 3. inflation and the monetary policy outlook esteemed guests, now, i would like to present our inflation and output gap forecasts based on the outlook i have described so far. given a cautious policy stance that focuses on bringing inflation down, we estimate inflation to approach gradually to the 5 - percent target. inflation is likely to be 7. 5 percent in 2016, falling to 6. 5 percent in 2017 and stabilizing around 5 percent in 2018. accordingly, we expect inflation to be, with 70 percent probability, between 7 percent and 8 percent ( with a mid - point of 7. 5 percent ) at end - 2016 and between 5 percent and 8 percent ( with a mid - point of 6. 5 percent ) at end - 2017 ( chart 17 ). 8 / 10 bis central bankers'speeches the turkish lira fluctuated following the july inflation report, while oil prices increased. we revised our assumptions for tl - denominated import prices upwards for the upcoming period compared to the previous reporting period. on the other hand, we envisage that the latest domestic developments will curb domestic demand particularly in the short term. accordingly, we revised our output gap forecasts downwards. the year - end consumer inflation forecast for 2016 remained unchanged as downside effects and upside | be provided via one - week repo auctions, while the 2 / 10 bis central bankers'speeches share of our marginal funding decreased ( chart 4 ). our weighted average funding rate dropped to around 7. 8 percent in october. interbank overnight repo rates remained on the decline in line with the reductions in the upper band of the interest rate corridor. i would like to underline that our monetary policy stance will continue to depend on the inflation outlook in the upcoming period. as cbrt, we will maintain our cautious monetary policy stance by taking into account the developments regarding inflation expectations, the pricing behavior and other factors affecting inflation. amid continued expectations for a prolonged low interest rate environment across advanced economies as well as the favorable course of domestic macroeconomic indicators and monetary policy simplification, the yield curve shifted downwards in all maturities from the previous reporting period, as shown on the slide ( chart 5 ). the fall was more pronounced in short - term interest rates due to the decline in our funding rate. 3 / 10 bis central bankers'speeches the slide in the annual growth rate of loans extended to the non - financial sector came to a halt in the third quarter of 2016 owing to reduced tightness in monetary conditions, macroprudential measures that support the financial system and government incentives ( chart 6 ). commercial loans continued to grow faster than consumer loans in this period as well. although the gradual fall in our marginal funding rate partially passed through to loan and deposit rates, loan standards remained partially tight in the third quarter. however, i would like to state that consumer loans have recently rebounded on the back of the favorable effect of our liquidity policies on banks β domestic funding conditions and emerging effects of macroprudential policies ( chart 7 ). 2. macroeconomic developments and main assumptions 4 / 10 bis central bankers'speeches estemeed guests, now, i will talk about the macroeconomic outlook and our assumptions on which our forecasts are based. first, i will summarize the recent inflation developments. then, i will continue with the domestic and external demand outlook upon which we based our projections. consumer inflation ended the third quarter at 7. 28 percent, remaining consistent with the lower bound of the july inflation report forecast ( chart 8 ). the fall in inflation was mostly driven by prices of core goods and unprocessed food, whereas annual inflation in tobacco and energy was up. thus, inflation excluding unprocessed food and tobacco posted a smaller decline, | 1 |
##ised economies from a longer - term perspective, shows that europe has scope to better develop its growth potential. 4 one of the principal factors behind the euro area β s disappointing performance in the past is the low trend growth in labour productivity. indeed, the growth in labour productivity in the euro area has significantly slowed down over the past 30 years. during the 1980s hourly labour productivity in the euro area grew on average by 2. 3 %, while in the 1990s, it declined significantly to 1. 8 % and further decreased to 1. 2 % between 1999 and 2007. in contrast, hourly labour productivity growth in the us accelerated from 1. 2 % to 1. 6 % and 2. 1 % over the same periods. 5 what lies behind these disappointing developments? the impressive rise in the overall employment rate in the euro area over the past decade, which partly reflects the progress made on structural reforms, wage moderation policy and immigration flows in some most euro area countries have benefited from significantly more favourable financing conditions than in the 1990s, which has supported private and public investment, as well as fiscal consolidation. for instance, in the euro area in the nine years following the introduction of the euro, real gross capital formation grew on average by 3. 0 % per year, compared with only 1. 7 % during the nine - year period preceding the introduction of the euro. exports and imports of goods and services within the euro area rose from about 31 % of gdp in 1998 to around 40 % of gdp in 2007. the completion of a single market for services will further facilitate trade in services. the rate of increase in extra - euro area exports and imports of goods and services even exceeded that in intra - euro area trade, rising from about 32 % of gdp in 1998 to almost 44 % of gdp in 2007. extra - euro area trade has, of course, also benefited from a period of strong external demand and increasing integration at the global level. since 1999, for instance, the annual growth rate for the euro area has averaged 2. 2 % per year compared with 2. 7 % in the united states. source ameco database. data on hours worked per worker for the euro area for 2007 are assumed to be constant. data on hours worked per worker for the us are estimated using the oecd data for 2006 and 2007. european countries, has undoubtedly constituted a source of growth. 6 at the same time, specific policies aimed at increasing employment, particularly in the unskilled segment of the labour | the financial stability forum, which has been set up by the g7, under the proposal of hans tietmeyer, to draw the lessons of the asian crisis, is in an ideal position to identify the areas where appropriate improvements could be introduced. i encourage very strongly the financial stability forum and all the committees that are actively working at a global level, including the basel committee, to draw all the lessons of the present turbulences and to examine the situation without any complacency. in my view no single area should be put aside from this review which should concentrate on the ways and means to foster financial stability, prevent propagation of disturbances and contagion, improve risk management at all levels, and diminish procyclicality, in particular, in the domains of accounting rules and accounting practices of rating agencies, of supervisory banking rules β the first duty being to implement globally basel ii which is largely superior to basel i β including harmonisation of liquidity rules and requirements, of supervisory insurance rules, of market supervisory authorities regulations, of regulated and non regulated private institutions ( whether highly leveraged institutions or so - called s. i. v. and conduits ), and of market practices. this does not mean necessarily dramatic changes of rules and overloading of new regulations. i am of the firm opinion that voluntary code of best practices, the set up of voluntary β principles β and the working out of voluntary benchmark best practices are most of the time preferable to the addition of new layers of rules and regulations. but we have, in any case, the duty to be effective in working out the lessons of the present market correction. this is no time for complacency in any respect. thank you very much for your attention. | 0.5 |
close and constant contact with credit institutions gives them a thorough understanding of banking systems, β they are responsible for ensuring that payment systems operate smoothly, β and they contribute to banking supervision. i thank you for your attention. | validation, to intermediaries. moreover, it is clear that some functions should remain under the sole responsibility of intermediaries. in particular, i believe that the eurosystem should not have the role of managing digital euro holdings : the banque de france closed its last private customer accounts over 20 years ago, and does not intend to reopen any. customer relationship management is best handled by financial intermediaries, as they have the experience in this field. they would also ensure compliance with the related regulatory requirements, including kyc and aml / cft. such a design would allow them to preserve the role of financial intermediaries in the retail payment system, and would ensure the high level of privacy required by the public. finally, regarding the possible risks of banks β deposit conversions, we must and will ensure that a digital euro remains a means of payment rather than a saving / investment asset. this could be achieved by capping the maximum amount of digital euro in circulation, at a low enough level. in a completely other field, regulated savings, ceilings for the livret a have proven an efficient tool, without requiring the intervention of a big brother to check on them. page 5 sur 7 ii. building on our experiments with the private sector on a β wholesale β cbdc to be ready for the future by comparison, the topic of a wholesale cbdc is less contentious and of less concerns to stakeholders ; but it should not be perceived as less important. we central banks have been very proactive here, as demonstrated by the β wholesale cbdc focus β of the bis innovation hubs. the banque de france is at the forefront here, and we have especially identified two critical use cases for improving the payments ecosystem. first, the tokenisation of securities. a wholesale cbdc could be used for the settlement of such securities issued on dlt, which is essential to prevent market and liquidity fragmentation. this technology also streamlines the information flows in financial markets, from trading to exchange procedures and settlement. second, a wholesale cbdc could enhance cross - border and crosscurrency settlements. over the past year, we have successfully completed the first phase of our experimentation programme, comprising 9 experiments, hand in hand with the private sector and with other public actors. thanks to these experiments, we have developed a direct technical expertise including two key innovative assets born in the banque de france : a proprietary dlt technology, called dl3s. this blockchain has been entirely | 0.5 |
whereas the labour market is expected to remain resilient. however, the relative contributions of supply and demand conditions are likely to change over time. in particular, the release of pent - up demand largely explains the recent contribution of demand to inflation. this is different from a cyclical upswing that β feeds on itself β [ 12 ], or a sustained increase in consumption as seen in the united states as a result of a highly expansionary fiscal policy and rapidly rising wages ( chart 4, panel a ). that is why, in the euro area, the demand - driven contribution to core inflation has emerged more slowly over time ( chart 4, panel b ). but forward - looking indicators point to a significant weakening in demand, which suggests that its contribution is likely to fade out ( chart 5 ). chart 4 evolution of private consumption and demand - driven contributions to core inflation in the euro area and the united states ( percentage points contributions ) sources : panel a ) : eurostat, fred and ecb staff calculations. panel b ) : frsf / adam shapiro, eurostat and ecb staff calculations. notes : panel a ) : the latest observation is for the third quarter of 2022, except for euro area household and non - profit institutions serving households ( npish ) final consumption expenditure for which the latest observation is for the second quarter of 2022. panel b ) : seasonally adjusted series ; based on an application of shapiro, a. h. ( 2022 ), β how much do supply and demand drive inflation? β, frbsf economic letter, no 2022 - 15, federal reserve bank of san francisco, 21 june ; and shapiro, a. h. ( 2022 ), β decomposing supply and demand driven inflation β, working papers, no 2022 - 18, federal reserve bank of san francisco, october. for euro area results see goncalves, e. and koester, g. ( 2022 ) : β the role of demand and supply in underlying inflation β decomposing hicpx inflation into components β, economic bulletin, issue 7, ecb. the latest observations are for august 2022 for the euro area and september 2022 for the united states. chart 5 euro area household expectations and purchasing managers β index sources : panel a ) : dg - ecfin and ecb staff calculations. panel b ) : s & p global. notes : panel a ) : expectations for the next 12 months, standardised | mario draghi : euro area economic outlook, the ecb β s monetary policy and current policy challenges statement by mr mario draghi, president of the european central bank, prepared for the thirty - first meeting of the international monetary and financial committee, washington dc, 17 april 2015. * * * the economic situation and the short - term outlook for the euro area are currently brighter than they have been for several years. various factors are helping to boost confidence that the weak and uneven recovery experienced up to now will gain strength and breadth. the ecb has pursued its price stability mandate with determination so that inflation will return to a level below, but close to, 2 % over the medium term. a strengthened financial sector, an accommodative macroeconomic policy setting, sound fiscal policies and a determination by euro area governments to pursue structural reforms should allow the euro area to embark on a sustainable growth path in a context of price stability. the ongoing recovery, which started almost two years ago, is now more firmly taking hold. euro area real gdp rose by 0. 3 %, quarter - on - quarter, in the last quarter of 2014, driven mainly by domestic demand and especially private consumption. the latest data and survey evidence suggest that the euro area economy has gained further momentum since the end of 2014. looking ahead, the economic recovery is expected to broaden and strengthen gradually. domestic demand should be further supported by the ongoing improvements in financial conditions resulting from our monetary policy measures, as well as by the progress made in fiscal consolidation and structural reforms. moreover, the lower level of the price of oil should continue to bolster households β real disposable income and corporate profitability. euro area labour markets are gradually improving. employment continued to grow in the fourth quarter of 2014 and the level of unemployment is continuing to fall gradually from elevated levels. at the same time, the euro area recovery is likely to continue to be dampened by necessary balance - sheet adjustments in a number of sectors and the sluggish pace at which structural reforms are being implemented. while remaining on the downside, the risks surrounding the euro area growth outlook have become more balanced on account of the recent monetary policy decisions, the fall in oil prices and the lower euro exchange rate. hicp inflation in the euro area turned negative in december 2014 mainly on account of the sharp drop in oil prices observed last year. looking ahead, inflation is expected to remain very low or still negative in the coming months. however, supported by | 0 |
that the effects of the financial crisis on banks β profitability and capital position have been sizeable. banks β efforts to deleverage their balance sheets and build capital and liquidity buffers are constraining, other things being equal, their lending to the private sector. so far, by early may 2009, write - downs on the securities and loans of large euro area banks amounted to usd 179 billion, which corresponds to just over 18 % of the total write - downs of major banks globally ( usd 986 billion ). 9 euro area banks have successfully raised capital from both private and public sources, amounting to usd 192 billion, which exceeds the recorded write - downs. 10 of course, a key issue is the amount of potential further write - downs that could be faced by global and euro area financial institutions and the additional capital that should be raised by them to safeguard their solvency. recently the imf has estimated that the total amount of potential future write - downs of euro area banks could be around usd 750 billion, largely on their loan exposures. 11 this estimate, however, is based on assumptions and methodology that can be challenged and it is subject to a high margin of error. estimates based on alternative methodologies and assumptions yield a much lower, yet sizeable, figure. the 3 - month euribor rate is very close to the 3 - month gbp libor rate ( 1. 28 % ) but considerably higher than the 3 - month usd libor rate ( 0. 66 % ) while the 6 - month euribor rate virtually the same with the six - month gbp libor rate ( 1. 49 % ). for example, the short - term ( i. e. below one year ) bank lending rate was 3. 52 % in march 2009, some 2. 5 percentage points below its peak value ( 6. 03 % ) reached last october. this is still somewhat higher than the corresponding us bank lending rate at 2. 04 % in march 2009. of this overall figure of eur 790 billion, usd 130 billion refer to the writedowns of euro area large and complex banking groups ( lcgbs ) ; while usd 49 billion relate to other euro area banks. of this total amount of usd 192 billion in capital raised, almost usd 155 billion refer to euro area lcbgs while over usd 37 billion have been raised by other euro area banks. see international monetary fund ( 2009 ). independently of the total potential impact of the | standard measures, it will be essential to strike a balance between, on the one hand, responding in a timely and effective manner to incipient risks to price stability as the economy recovers and market conditions normalise, and, on the other hand, winding down in a proportionate manner the support schemes and non - standard measures that have been implemented to mitigate the adverse effects of the crisis on the banking system and certain financial market segments. with regard to the latter, gradualism and clear communication by the central bank of any changes to the operational framework with sufficient lead time to allow market participants to prepare and adjust their liquidity management will be essential. the ecb and the eurosystem are committed to pursuing such a gradualist approach as well as a timely and transparent communication policy. vi. conclusion i started my remarks by pointing to the relevance of heraclitus β insight for the last two years, namely that β all is in flux β. he developed further his theory of continuous change and reasoned that all that exists, in fact, β simultaneously forms and dissolves β. this line of philosphical reasoning led him to argue that β the way up and the way down are one and the same β. 14 i doubt, however, that bankers and investors would share this particular view of the philosopher, especially in the light of developments over the past few years. let me conclude, however, on a reassuring note and a wish concerning the exit from the current crisis on the basis of the logic of heraclitus that led him to the conclusion that β out of discord comes the fairest harmony β ( Ρκ ΟΟΞ½ διαΟΞ΅ΟΞΏΞ½ΟΟΞ½ καλλιΟΟΞ·Ξ½ Ξ±ΟΞΌΞΏΞ½ΞΉΞ±Ξ½ ) β which, in the context of the discussions in this conference and in relation to our policy aims, would be translated into achieving sustainable growth in an environment of price stability and financial stability. thank you very much for your attention. see kahn ( 1979 ). references european commission ( 2009 ), spring economic forecast, may. heider, f., m. hoerova and c. holthausen ( 2008 ), β liquidity hoarding and interbank market spreads : the role of counterparty risk, β available at http : / / ssrn. com / abstract = 1362113. international monetary fund ( 2009 ) β global financial stability report β, april. kahn, c. ( 1979 | 1 |
cope with the ever changing economic and financial environment. the level of corporate governance of macao banks remains sound in general, as evidenced by their ability to survive the various economic downturns and financial crises in the past decades, and the results of past assessments initiated by international regulatory bodies, such as the international monetary fund ( imf ). the macao financial system act, promulgated in 1993, established the essential elements of corporate governance for credit institutions. among all these requirements, fit and proper reviews of shareholders and managers, preventive procedures for conflicts of interests and restrictions on exposures to shareholders and managers form the framework of proper standards of ethical conduct. in the internal control guideline introduced by the monetary authority of macao in 2002, a benchmark of best practices was suggested to promote corporate governance for all credit institutions, including the emphasis of high moral and integrity standards to be applied to the board of directors and senior management, appropriate measures for checks and balances as well as segregation of duties, in line with the corporate governance principles promoted by the organization for economic cooperation and development ( oecd ) as well as the basel committee on banking supervision ( bcbs ). corporate governance is not a new issue at all. the asian financial crisis exposed the longterm consequences of incompetent corporate governance. the recent fiascos of some major international financial institutions arising from subprime fallout again signify the importance of maintaining high standard of corporate governance. this seminar is both timely and relevant against contemporary global economic and financial backdrop. in the coming three days, i hope that experts and delegates could make use of this opportunity to exchange their precious experiences and views on this topic. in conclusion, i wish this seminar a tremendous success and may all of you have good health and enjoy a pleasant stay in macao. thank you! | to the bank β s most recently published data, it increased its holdings of loss - absorbing capital by roughly three - quarters in the second half of 2012. in addition to retaining profits, this increase is mainly attributable to the capital measures announced in july, which have already been implemented to a large extent. in addition, as part of their strategic reorientation, both big banks announced measures which will further enhance their resilience. for instance, both institutions are planning to further expand their loss - absorbing capital, to reduce their risks and, in particular, trim their balance sheets as well as to pursue a policy of dividend restraint. the national bank welcomes the increase in the big banks β resilience achieved thus far, as well as the announced measures to further improve their capital situation. the consistent bis central bankers β speeches implementation of these measures is important for two reasons : first, leverage has remained high despite the improvement in the capital situation. second, the risks in the environment β and thus the associated potential losses for the big banks in the event of a further escalation of the european debt crisis β remain considerable. situation at domestically focused banks i would now like to turn to the situation at domestically focused banks. the risks associated with the environment in which these banks operate increased during the past six months. indeed, the isolated signs of a slowdown of growth in the mortgage and real estate markets observed in the second quarter did not materialise in the third quarter. in particular, prices in the different segments of the residential real estate market continued to rise at a sustained pace. at the same time, growth in the mortgage loan volume was still considerably higher than gdp growth. imbalances have therefore grown. as far as risk appetite and capitalisation are concerned, the situation of domestically focused banks has not changed significantly during the last six months. on the one hand, banks β risk appetite has not diminished overall. this is substantiated by the following : first, in the case of new mortgage loans, both the loan - to - value ratios and loan - toincome ratios have remained at a high level. second, interest rate risk has not declined and remains high. third, the already low margins on interest income have continued to decrease. there are nevertheless considerable differences from one bank to another, in particular as to how their risk appetite has evolved. certain banks have reduced their risk - taking significantly during the last quarters, while others have increased their exposure to risk | 0 |
sector β s loans and assessing ability of debt repayment of the private sectors, especially the middle and the low income groups. second, on exchange rate policy, the main challenge is that the thai baht has been on an appreciating trend due to various factors, including capital inflows surge into the region, structural change in the world economy, growth differential between advanced and emerging economies as well as accommodative monetary policy in advanced economies. generally, allowing the exchange rate to be determined by the market can serve as an automatic stabilizer in the short - term and as an important price signal and catalyst for structural change in the long term. so, as the first line of defense, the exchange rate should be determined by market mechanism and from both the market and our own assessment, the thai baht still remains broadly in line with economic fundamentals. however, the bot stands ready to use policy instruments at our disposal to prevent and manage dysfunctional market conditions, excessive speculation or exchange rate overshooting. it should be noted also that, the baht appreciation at this juncture provides an opportunity for businesses to upgrade their technology and productivity. given scarce labor and increasing wages, productions in thailand need to shift from labor intensive to a more capital intensive industries and thus more import of capital goods and machinery are made cheaper during this investment up - cycle. third, on capital flows management. in october 2012, the bank of thailand launched the capital account liberalisation master plan. this master plan aims to facilitate thai companies to diversify their investments abroad, especially in neighboring countries. this would encourage private companies to operate their businesses more efficiently by expanding their markets and production bases, which in turn will help strengthen their competitiveness. facilitating outflows also helps capital flows to be more balanced. the bank of thailand, for instance, has removed the limit for thai individuals β outward direct investment, raised the limit per investor, and eased regulations for transfers of foreign currencies to facilitate investment in foreign securities. recent surge of capital inflows to the region is likely to continue as long as advanced countries continue their extra - loose monetary policies and as long as the prospect of this region remains much more positive than advanced economies. there is no one - size - fits - all measure to deal with impact of short term capital inflows on the economy. the bank of thailand thus utilizes policy combinations, namely : allowing exchange rate adjustment as a first buffer ; liberalising outward investments by residents ; exercising | wide support to deal with procyclicality problems includes the followings. first, there is a proposal on the build - up of capital buffer in the good times to be run down in the bad times and to prevent excessive credit growth. second, as being discussed with accounting standard setters, provisioning should be linked with expected loss rather than incurred loss, which is the prevailing practice. finally, the primarily simple and transparent β leverage ratio β should be applied as a complement to risk - based capital requirement under basel ii. implementation of many such policies is still subjected to significant work on calibration as well as qualitative issues such as consistency with risk - sensitive capital framework, and international level - playing field. such problems magnify in the case of emerging markets, which face constraint on data and institutional capacity. moreover, much of the work done on calibration would tend to serve the need of irb rather than sa banks that are the core in emerging market. thus, the reform agenda will need to pay proper attention to capacity building of banks and regulators. nevertheless, there are warranted rationales for its use in financial stability tool kit in an appropriate manner, given national context. in terms of measures to address systemic risk, the proposed ideas include systemic capital charge, capital for otc derivatives, and cross - border bank resolution framework. again, the same emerging market issue and dimension should be properly recognized. turning to the key microprudential policy framework currently being discussed at the international forums to ensure individual financial institution β s stability, the bcbs has proposed a package to address previous shortcomings in risk - based supervision as follows. for pillar i, regulatory capital for securitisation exposure is enhanced. in addition, the quality and transparency of capital is strengthened especially tier i capital, which would consist mainly of common equity and retained earnings. for pillar ii, supplemental guidelines are issued by requiring banks to manage firm - wide, concentration and reputational risks more effectively. valuation and stress - testing practices are also improved. moreover, compensation and bonus scheme should be aligned with longterm risk taking behaviour and performance. turning to pillar iii, focus is given to disclosure requirements to reduce uncertainties associating with securitization exposures. additional requirements include, for example, sponsorship of off - balance sheet vehicles, and resecuritisation exposures. on top of these, a new regulation on liquidity risk management, namely the so - called liquid | 0.5 |
for every mission : β leaders need to work with others and build coalitions if they want to get things done. β he said. what things do we want to get done? and why are we concerned with financial inclusion at de nederlandsche bank? financial inclusion relates directly to sustainable prosperity. and that's definitely an area that concerns us at the central bank. because contributing to sustainable prosperity is an issue at the top of our agenda. that is why, six years ago, we added the word'sustainable'to our mission statement. although that's just one word. it can make a big difference. our mission statement now reads : we seek to safeguard financial stability and thus contribute to sustainable prosperity in the netherlands. we don't just do this by focusing on ourselves, following the principles of corporate social responsibility, however important that is. we also focus on the outside world, considering how we can incorporate sustainability in our role as central bank and supervisor of the financial sector. this is what our stakeholders ask us to do : use that influence, use your influence, your convening power, use the leverage that you have. international and national that is why, in the sustainability debate, we act as a catalyst, and bring our convening power into play. because we're committed to sustainable prosperity, we're also concerned with raising awareness of financial inclusion. and we aim to do this both at home and abroad. on the international stage, we share our knowledge and insights of payment systems. many countries do not have the same level of basic efficiency in this area as we do here in the netherlands. we do what we can to help improve these systems around the world. we did so in indonesia, macedonia and aruba, for instance. we visit these countries to help them develop a stable and secure payment system. i'm sure you're fully aware of the challenges facing many countries. as members of this platform, you are active in over 90 countries and together you invest almost 2. 8 billion euros in the financial inclusion sector. praiseworthy efforts indeed. but we also still face challenges here in the netherlands. although these challenges are of a very different order to those in many other parts of the world. that's because in the netherlands, a lot is already very well arranged. for example, we have a stable system of payments, and everyone has access to financial products and services, such as bank accounts, insurance and pensions. over 99 % of | person a loan to set up a small business. but there is also another darker to this coin, also in the netherlands. in addition to the potential violation of privacy, data analysis can also lead to the exclusion of some customers. they may, for example, be excluded from certain financial services, if, by shrewdly combining various databases, it becomes clear that they have a high risk profile, or low profit expectations. national issue # 3 : understanding the third and final aspect of financial resilience i'd like to discuss concerns people's understanding of financial products. getting a mortgage or choosing a pension is not an easy process. the information provided is often highly complex. if someone takes out a mortgage they can't afford, or chooses the wrong pension, it can lead to serious financial problems. the combination of honest communication and understandable products is an important concern in this respect. β consider the vulnerable people β i'm sure you're familiar with these examples. but i've mentioned them for a very good reason. when you're designing a product or a service, i urge you, as representatives of the financial sector, to please always stop and ask yourself the question : " have i considered the more vulnerable people among us? " examples systemic dnb approach at dnb, we don't just consider the impact on individuals or groups, we also look at the bigger systemic structures in society. and how they could affect financial inclusion. let me give you a couple of examples of these. starting with pensions. now you may be thinking : isn't that actually a great example of inclusion? and you're right β it is. the way pension schemes are organised in the netherlands β with mandatory participation β means a large group of dutch citizens will be provided for in their old age. the flip side of this is that we currently have a system which makes a substantial number of people feel non - included. our pension schemes leave relatively little room for people to make their own choices. there's a large group of people out there, who don't really know what's going into their pension pot. and they may only realise their pension does not meet their expectations when they retire. this may negatively impact people β s confidence in the system. this is the kind of systemic vulnerability we need to address. that's why we're committed to a modern pension system, that engages people with their own financial future. long household balance sheets are a | 1 |
##nt policy. as it turned out, being an independently run, supranational institution, the bank was well placed to take decisions swiftly, when the political process was fraught with difficulties. here, all of you probably see some similarity to the role of the eurosystem during the recent crisis. quite often the eurosystem had to take the lead, e. g. with the smp or omt, until the governments managed to agree on long - run arrangements like the esm or banking union. that war is the greatest threat to financial and monetary stability became again painfully clear when the first world war broke out in 1914. the four years of war proved catastrophic, for the population, which suffered death and hunger, for the monarchy, which fell apart after centuries of existence, and for the currency, which by november 1918 had lost 95 % of its pre - war value. but worse was to come. the new republic of austria, found itself in a bis central bankers β speeches horrendously difficult position. in the post - war chaos, austria was cut off from the supply of food and coal and its traditional markets. the only way to finance the burgeoning government expenses was to print money. it is therefore not surprising that those parts of the monarchy, like czechoslovakia, that found themselves in a better economic and political condition created their own currencies. czechoslovakia, i. e. today β s czech republic, by the way, is the only part of the former empire that to this day uses the name β crown β for its currency, the name introduced by the austro - hungarian central bank in 1892. by 1919, the monetary area governed by the austro - hungarian bank for more than hundred years did no longer exist. in the meantime, austria faced the worst inflation in its history that could only be stopped when the newly founded league of nations arranged a loan for austria in 1922. the league loan, which was the first international support scheme of its kind, came with severe conditions attached. for several years, austrian fiscal policy was under direct supervision of league commissioners. in 1923, the oesterreichische nationalbank was resurrected from the ashes of the defunct austro - hungarian bank. here again, a representative of the league sat on the board. the stabilization succeeded and the republican schilling replaced the crown of the old monarchy. the new bank, however, soon had to face a banking system that was weakened by hyperinflation and the need to | ewald nowotny : β central bank policies β past challenges and future perspectives β β session 1 speech by prof dr ewald nowotny, governor of the central bank of the republic of austria, at the ceremony to mark the 200th anniversary of the central bank of the republic of austria, vienna, 2 june 2016. * * * mr. president of the republic heinz fischer, prime minister christian kern, dear president mario draghi, ladies and gentlemen, it β s a great pleasure for me to welcome you today to the commemoration of the 200th anniversary of the oesterreichische nationalbank and we are very grateful and proud that such an eminent audience has followed our invitation to this celebratory event. in the two hundred years of its existence, the fate of the nationalbank has always been closely entwined with the fate of austria, for better and for worse. it is not by accident, that it was schumpeter, the great economist and short - term finance minister of the republic of austria, who said that the condition of the monetary system of a nation is a symptom of all its conditions, or in german, β der zustand des geldwesens eines volkes ist ein symptom aller seiner zustande. β if there is one lesson to be drawn from the eventful monetary history of austria, then it is that the greatest threat to financial and monetary stability has been, and continues to be, war. in fact, it was also war, which triggered the foundation of the nationalbank in 1816. when on june 1, 1816, emperor francis i signed the decrees establishing the privilegirte oesterreichische national - bank, he did so almost exactly one year after the conclusion of the congress of vienna, which marked the end of more than twenty years of war in europe. ultimately, the austrian empire emerged as one of the victorious powers, but the price of victory had been steep. a significant part of the war effort had been financed by issuing paper money, which resulted in high inflation. in addition, the austrian state had to declare default on its debt in 1811. as is always the case in periods of high inflation, the consequences for the population were disastrous. the agenda for the new bank can thus be summarized quite briefly : get the monetary system back in order. the most important ingredient for stability was the reestablishment of trust. the austrian people had lost their faith in | 1 |
slightly or not at all. the nbs cannot reduce the global price of oil or other energy products, nor can it impact the prices of all those agricultural products that are traded in commodity exchanges. what the nbs can and does do is to prevent that the effects of these elevated prices spill over, via inflation expectations, onto the prices of other products and services to a large degree. it is also important to point out that the president and the government of the republic of serbia have ensured that our country pays one of the lowest gas prices and that electricity hike for the corporate sector, while relatively high, is still one of the lowest in europe. the prices of basic foodstuffs were also capped and some of the market segments responded favourably to commodity reserve interventions. the government β s decision to cap petroleum product prices will also exert an important effect on market developments. on our part, by preserving the stability of the exchange rate of the dinar against the euro, we managed to ensure that the spillover of growing import prices of energy and food to other prices is not additionally heightened by the effects of dinar depreciation, as was the case in prior episodes of the high growth of these prices. for the sake of comparison, during the previous crisis and the price shock in the period from 2010 to 2012, the adverse effect of the price hike in the international environment on serbian prices was tripled, as a consequence of the strong depreciation of the dinar against the euro. let me simplify : two thirds of the problems with imported inflation we had struggled with from 2010 to 2012 originated from the dinar β s depreciation against the euro, and only one third from the price rise in the international environment. we have not allowed that to happen this time and, thanks to that, we still keep core inflation under control, and indicators of business and investment confidence at high levels. chart 11 contribution of individual components to y - o - y rate of import price growth ( in pp ) growth rate of import prices in rsd rowth rate of import prices in eur - 3 - 6 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 import prices of other products 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 import prices of services import prices of oil import prices of food source : destatis, fao, bloomberg, eurostat, sors and nbs calculation. in the coming period we will continue to carefully monitor and assess factors in the | the most vulnerable. in particular, microinsurance can protect the hard - earned gains of our microentrepreneurs. for this reason, starting in 2011, the prizes of cma winners include microinsurance. indeed, challenging times call for stronger partnerships. and to show our support and solidarity to our microentrepreneurs, we conducted here at the bangko sentral last week a three - day event which we called microfinance partnerships during challenging times. fellow advocates of microfinance, let us continue to enhance and strengthen our partnerships in support of our microentrepreneurs who have improved the lives of their families and generated employment for millions of filipinos. it is also noteworthy that our microentrepreneurs are also known for their generosity in helping other would - be entrepreneurs. they would readily share their stories and mentor others. last month for instance, the bangko sentral β s financial education lectures for 1, 700 teachers and principals of the department of education in kabankalan, negros occidental was made more memorable and inspiring by the sharing of local microentrepreneurs from negros. indeed, our microentrepreneurs have developed a culture of sharing. in words and in deeds, they inspire others who aspire to better their lives through microfinance. across our country, our microentrepreneurs prove that humble beginnings can lead to success beyond their dreams and sometimes even beyond our borders. once again, congratulations to our cma winners this year. mabuhay ang microfinance! mabuhay ang ating mahal na bansang pilipinas! maraming salamat sa inyong lahat! bis central bankers β speeches | 0 |
best aid the process of moving to these new instruments without pre - empting private sector creativity and problem solving. federal reserve as regulator i β ve focused my comments thus far on the federal reserve β s operational role in the payments system. in addition to the reserve banks β role as provider of payment services, the federal reserve board also regulates aspects of the payments system. while our role as provider of payment services goes back to the inception of the federal reserve, our authority to regulate the interbank collection or execution of payments not processed by the federal reserve is only about a decade old. in exercising this regulatory authority, the board has focused in large part on improving the competitiveness of the market for interbank check collection. the board β s 1994 same - day settlement rule enhanced the ability of correspondent banks to compete with the federal reserve banks in collecting checks. the board adopted this rule because it believed it was in the best interest of the payments system, even though it knew the rule would reduce the reserve banks β check volume. our goal was competition in the check collection market, not preserving federal reserve market share. as i mentioned earlier, even with the same - day settlement rule, correspondent banks may still have difficulty competing with federal reserve banks in some check collection markets due to their more limited presentment abilities. several weeks ago, the board issued an advanced notice of proposed rulemaking designed to assess market experience under the sameday settlement rule. the comments we receive will be helpful in assessing whether further reductions in the legal disparities between the federal reserve banks and private - sector banks would further enhance competition and the overall efficiencies that could result from that competition. this analysis is a complex one. i believe that in principle reduction in legal disparities between the federal reserve and private - sector banks will enhance market competition. the benefits of regulatory change, however, have to be balanced with a potential increase in costs to paying banks and their check - writing customers. in other words, we should continue to look for ways to reduce legal disparities between the federal reserve and privatesector banks, but some of these changes may not reduce costs for all participants in the system. the federal reserve β s role should also include identifying and reducing regulatory burdens that unreasonably inhibit innovations that improve the efficiency, security, and convenience of payment methods. regulation may reduce uncertainty for some, but it may also discourage investment in new products or technologies by others. this is particularly true if the product is | abs. and let me add that transparency requirements are doubly - effective because it is investors who are tasked to perform the due diligence on abss and verify that lenders comply with risk retention requirements. so we see that the worry about underlying asset quality is likely to be confined to a number of increasingly - verifiable cases. abss in this speech denote both abss and rmbss. bis central bankers β speeches the second source of abs risk is at the level of the structure itself. it is true that abss are complex instruments, involving many parties to a transaction and a range of possible constructions. many in this room will be well aware of terms such as re - securitisations, synthetic transactions, and revolving structures. these arrangements indeed add complexity, but i must emphasise that the majority of current eu abss are static pool, true sale structures, especially the sme abss we are interested in. let me also add that senior european sme abss generally have consistently greater credit enhancements than nearly all other senior eu abss, certainly so in relation to the delinquencies in their asset pools. in addition to credit enhancement, i cannot avoid mentioning the role played by the eurosystem collateral eligibility criteria in influencing the abs structures we see today. the criteria impose strict conditions, for example requiring a proper legal true sale, allowing only publicly listed senior bonds with a minimum rating, and collateralised by granular homogeneous asset pools. obtaining eurosystem eligibility, and thus the prospect of access to funding in an emergency, acts as a powerful incentive for abs issuers to structure relatively high - quality deals. given these asset pool and structural safeguards, it is not surprising that there have been very few european abss β defaults. depending on the study and starting date, since the start of the 2007 / 08 financial crisis defaults range between 0. 6 β 1. 5 % on average, against 9. 3 β 18. 4 % on average for us securitisations. what is more, european sme abss are far below both broader eu and us securitisation default rates, with defaults occurring on about 0. 1 % of instruments. and, even more convincingly, our internal analysis suggests that abss eligible for eurosystem operations have historically had impairment rates even lower than non - eligible abss. this suggests again that sensible asset and structural safeguards can go a long way to mitiga | 0 |
if ever a situation existed in which the fabric of business and consumer confidence, both here and abroad, was vulnerable to being torn, the shock of september 11 was surely it. in addition to the horrific loss of life, enormous uncertainties accompanied the unfolding events and their implications for the economy. indeed, for a period of weeks, u. s. economic activity did drop dramatically in response to that shock. in the immediate aftermath of the strikes, the federal reserve engaged in aggressive action to counter the effects of the shock on payment systems and financial markets. we provided a huge volume of reserves through open market operations, the discount window, and other means to facilitate the functioning of the financial system. we worked closely with many market participants, industry groups, and other government officials on a broad range of financial infrastructure problems that needed to be resolved quickly and in the common interest. still, market functioning was impaired for a time. the substantial damage to trading, settlement, and communications facilities forced many market participants to their backup sites. owing in part to careful and thorough contingency planning, many firms, markets, and exchanges were able to resume business within a few hours or days of the attacks. nonetheless, the episode did reveal threats to, and vulnerabilities of, the operations of financial institutions that had not been previously considered and illustrated the significant interdependence of the modern financial infrastructure. institutions will need to continue to work diligently toward ensuring that their backup capabilities are adequate. we at the federal reserve have been reexamining intensively our own contingency capabilities to ensure that our central banking functions can be performed in the most pressing of emergency circumstances. in the weeks following the attacks, along with the drops in activity and confidence, equity prices fell markedly, and lenders became more cautious, boosting risk premiums, especially on credits already considered to be weak. in response, the federal reserve reduced short - term interest rates considerably further. longer - term yields, including mortgage rates, fell to extraordinarily low levels. the monetary stimulus that we provided was visible not only in interest rates but also in a rapid growth of liquidity over the final months of the year, as gauged by the broad monetary aggregates. as the fourth quarter progressed, business and consumer confidence recovered, no doubt buoyed by successes in the war on terrorism. the improved sentiment seemed to buffer the decline in economic activity. indeed, in the past several months, increasing signs have | of y2k and the extraordinarily low cost of equity capital available to many firms. nonetheless, if the recent more - favorable economic developments gather momentum, uncertainties will diminish, risk premiums will fall, and the pace of capital investment embodying new technologies will increase. even a subdued recovery beginning soon would constitute a truly remarkable performance for the american economy in the face of so severe a decline in equity asset values and an unprecedented blow from terrorists to the foundations of our market systems. for, if the tentative indications that the contraction phase of this business cycle is drawing to a close are ultimately confirmed, we will have experienced a significantly milder downturn than the long history of business cycles would have led us to expect. crucially, the imbalances that triggered the downturn and that could have prolonged this difficult period did not fester. the obvious questions are what has changed in our economy in recent decades to provide such resilience and whether such changes will persist into the future. doubtless, the substantial improvement in the access of business decisionmakers to real - time information has played a key role. thirty years ago, the timeliness of available information varied across companies and industries, often resulting in differences in the speed and magnitude of their responses to changing business conditions. in contrast to the situation that prevails today, businesses did not have real - time data systems that enabled decisionmakers in different enterprises to work from essentially the same set of information. in those earlier years, imbalances were inadvertently allowed to build to such an extent that their inevitable correction engendered significant economic stress. that process of correction and the accompanying economic and financial disruptions too often led to deep and prolonged recessions. today, businesses have large quantities of data available virtually in real time. as a consequence, they address and resolve economic imbalances far more rapidly than in the past. the apparent increased flexibility of the american economy arguably also reflects the extent of deregulation over the past quarter century. certainly, if the energy sector were still in the tight regulatory fetters of the 1970s, our flexibility today would be markedly less. that the collapse of enron barely registered in the relatively recently developed markets for natural gas and electric power was encouraging. although the terrorist attacks hit air travel especially hard over the past few months, deregulation of that industry has demonstrably increased the quantity and flexibility, if not the profitability, of air travel over the past twenty years. truck | 1 |
##economic perspective. then comes a presentation by jaime caruana, who will draw some lessons from the recent crisis and the international financial integration. in the afternoon we will feature sujit kapadia and prasanna gai with an analysis of financial contagion using a network model. in addition, there will be two panels that will review financial risk management with two important nuances : its incidence in emerging economies on one hand, and on systemically significant financial institutions, on the other. the economists invited to these panels include michael bordo, paul mcculley, martin redrado, jose dario uribe, martin wolf and roberto zahler. finally, charles calomiris will share with us his vision on the current crisis and the implications of the works presented in this conference. two intense days that hold in store enormous technical content that, without any doubt, will make a fundamental contribution to our future view of macroeconomic and financial phenomena. i want to finish by thanking rodrigo alfaro, dale gray and jorge selaive for their work in putting together this conference. also mauricio calani, monica correa and soledad gallardo, and our institutional affairs management for their help in organizing this event. i also want to thank the many authors and discussants of the papers for their dedication to preparing their valuable presentations. to all of you, dear participants, i wish you two days of fruitful discussion. thank you. | system itself will shape eventual outcomes. our analysis shows that tighter credit conditions imposed on a widespread and persistent basis by the banking system would lead to worse macro - financial outcomes than would otherwise be the case. banks should use the extraordinary policy support being provided to maintain a sustainable supply of credit to businesses and households through the recovery. so, uncertainty remains high, but the benefits of resilience built up in recent years is most evident now. among the factors that led to the better starting position as we entered the covid - shock is the enhanced policy framework that has been put in place in recent years, covering prudential supervision, recovery and resolution, and macroprudential policy. today we are announcing the outcomes of our latest regular reviews of our macroprudential tools. before turning to the mortgage measures, i would note that the countercyclical capital buffer ( ccyb ) rate remains at zero per cent. given the current outlook, we do not expect to announce a change in the ccyb rate through 2021. we are giving explicit guidance on this because we want to provide as much clarity as possible to banks and facilitate the usability of those buffers. just to emphasise, again : buffers that have been appropriately built up in recent years are now there to be used to absorb losses and support the economy through this period of uncertainty. i will focus my policy remarks on the outcome of the annual mortgage measures review. the mortgage measures have the twin objectives of strengthening borrower and lender resilience and reducing the likelihood of an adverse credit - house price spiral emerging. this year the review focused on understanding the impact of the covid - 19 shock on the housing and mortgage markets. it drew on extensive analysis and stakeholder engagement on the effectiveness of the measures. at our most recent meeting, the commission of the central bank agreed that the measures β as currently designed and calibrated β continue to meet their objectives and decided that they will remain unchanged for 2021. the implications of the covid - 19 shock continue to feed into housing demand, supply, market activity and prices. housing supply is likely to remain below pre - pandemic levels, and indeed below estimates of medium - term demand, for an extended period. house price developments have been relatively stable and market expectations are tilted toward minimal change over the next year. housing transactions and mortgage activity have recovered since the summer, but still have some way to go to reach pre - pandemic levels. that | 0 |
, in fact, willing to act. 6. conclusion ladies and gentleman, β europe is like a bicycle. if it stops, it will fall over. β this phrase was coined by former president of the european commission jacques delors, and it aptly describes the dynamics that we have seen so far in the storyline of the european union. since it was founded, the eu has steadily continued to develop, constantly taken over new tasks and policy areas and created new institutions. but the uk β s sudden decision to dismount has made the bicycle lose its balance. so now it is high time that we stop the european bicycle for a moment and take stock of where our journey is taking us. we might even have to change direction. aimlessly pedalling on cannot and will not be the solution. what will be decisive over the medium to long term is that we find good solutions to counter the near - chronic sense of dissatisfaction with europe β s institutions. any deficiencies we identify must be tackled in a decisive manner. europe needs to demonstrate its ability to embrace credible political reform. we germans, especially, need to be aware of our responsibility for making the european project a success, just as our partners in europe contributed to the success of german unity, which we are celebrating here today. and i firmly believe that european unity deserves to be celebrated and defended as proudly as germany β s. the unification of europe is a wonderful peace project β it was not for nothing that the eu was awarded the nobel peace prize in 2012 β and there could not be a more appropriate location for this celebration than munster, a city of peace. thank you for your attention. 5 / 5 bis central bankers'speeches | large companies but also for small and medium sized enterprises ( sme ), which have a significant share in the area of innovation. the increasing number of innovative companies operating in financial areas and the rapid pace of developments in this areas, are already reaching into areas of activity that until recently were the exclusive domain of the traditional financial entities, and are undermining their status. however, it should be remembered that innovation and technology are also an opening to many diverse challenges, and we should take care to mange risks in a controlled manner. in israel, we can find leadership of certain elements of innovation. for example, in fintech, israel is among the world leaders β today there are more than 500 fintech startups in israel, and they have grown rapidly in recent years and have generated a lot of interest among foreign investors. thus, in 2019, investments in israeli fintech companies reached $ 1. 8 billion, making up approximately 5 percent of total investment in fintech worldwide. israel leads research and development areas in high - tech, and in fintech in particular, and a large part of investment in the economy is dedicated to that. 1 / 4 bis central bankers'speeches the bank of israel also promotes innovation in its areas of activity, and we set it at the top of the strategic plan we formulated. leadership in innovation in our areas of activity is a central target from the bank β s perspective, we are continuing to integrate and enable innovation in banking and payment services, development of the capital market and credit market and their integration into the changing environment : as such, the bank of israel has been working a lot to update the existing payment system in israel. the switch to a world of advanced and modern payments is a necessity. payment systems that are convenient, efficient, secure, and stable are an important component of every advanced economy. the israeli economy lags compared with other economies in the world in terms of integration of advanced means of payment and the steps we are promoting will help to bridge over part of this gap. for example, implementing the emv standard β the first stage in companies switching to it was last week β is an initial step for the entry of advanced payment technologies and of other players, both domestic and global. the process will expand the range of possibilities available to businesses and consumers, such as executing smart transactions, contactless transactions, transactions via mobile phones, and it will accelerate the integration of electronic wallets and advanced payment applications. the bank of israel supports the development of | 0 |
mechanism or at least a reliable model for forecasting medium to long - run inflation. the announcement of inflation targets communicates the central bank β s intentions to the financial markets and to the public, and in doing so helps to reduce uncertainty about the future course of inflation. many of the costs of inflation arise from this uncertainty or variability rather than from its level ; for example, uncertainty about inflation exacerbates the volatility of relative prices and increases the riskiness of non - indexed financial instruments and contracts set in nominal terms. by making explicit the central bank β s medium - term policy intentions, inflation targets improve planning in the private sector, enhance the public debate about the direction of monetary policy, and increase the accountability of the central bank. under an inflation targeting regime the central bank would be forced to calculate and publicize the long - run implications of its short - run actions, thus ensuring that they would be subject to public scrutiny and debate. to the extent that the central bank governors dislike admitting publicly that they may miss their long - run inflation targets, the existence of an inflation targeting framework provides an incentive for the central bank to limit its short - run opportunism. the advantage of the inflation targeting regime is its great emphasis on the regular communication with the public and transparency. this property plays an important role in the success of inflation targeting, particularly in the industrialized countries. the policy makers in the developed countries use every opportunity to communicate with public speeches, and takes a step further by way of inflation reports. transparency and openness of the operating framework of monetary policy can bring important credibility gains, and institutional arrangements such as greater independence of the central bank can be helpful in this regard. european central bank and central banks in the eu zone are good examples for a model. hence, it is perhaps not surprising that in many countries the adoption of official inflation targets has been accompanied by moves toward central bank independence and accountability. nowadays, central banks are increasingly publishing information on their policies that they would have considered state secrets only twenty years ago, like minutes of board meetings and policy models. the key for the success of inflation targeting is the existence of a strong institutional commitment to price stability. this is particularly important in emerging markets that have had a past history of monetary mismanagement. the institutional commitment involves having a central bank that : 1 ) is insulated from political interference ; 2 ) has full and exclusive control over the setting of monetary policy instruments and 3 ) has a mandate to achieve price | last ten years, both as regards their own national responsibilities and as regards their collegial responsibilities of peer surveillance in the eurogroup. this period is over. we expect from governments strict respect for the principle of budgetary discipline and effective mutual surveillance. the purchases made on the secondary market cannot be used to circumvent the fundamental principle of budgetary discipline. the securities markets programme strictly aims at correcting malfunctioning of markets. the prohibition of monetary financing underlines precisely the fact that budgetary discipline is of the utmost importance. we have taken note of the commitments of euro area governments to take all measures needed to meet their fiscal targets. we have also taken note of the precise additional commitments taken by some euro area governments to accelerate fiscal consolidation and to ensure the sustainability of their public finances. it is crucial that governments implement rigorously the measures needed to ensure fiscal sustainability. it is in the context of these commitments only that we have embarked on an intervention programme in the securities markets. the securities market programme is an extraordinary action, which was undertaken in the situation of severe tensions in financial markets. i would like to stress that the rigorous application of the adjustment programmes by governments is essential to guarantee the progressive return to a more normal functioning of financial markets. conclusion let me conclude. recent experience, since 2007, has demonstrated how important it is for all decision - makers to analyse lucidly the unexpected situations that they are facing and to act in a timely manner when needed. as soon as it became clear that the intensity of recent market disruptions could have implied very serious consequences for price stability in the euro area, we took firm action. as i have said time and again : we are permanently alert and always prepared to act when necessary. price stability is the central contribution, which monetary policy makes to economic growth, to job creation and to financial stability. our successful track record since the inception of the euro β both in terms of low inflation rates and well - anchored inflation expectations β is remarkable. since the inception of the euro, more than 11 years ago until april this year, the average annual inflation in the euro area was 1. 98 %. this is exactly in line with our definition of price stability and it is better than the achievement of any major central bank over a period of many decades, including the bundesbank. but the ecb β s measures cannot substitute for the actions required to address more deepseated and fundamental problems. it remains for others β national governments, regulators | 0 |
, based on comparative advantage and fuelled by trade preference, with sugar, textiles and tourism as the three main pillars of the economy, has given way to a new strategy. we are now building competitive advantage in targeted sectors. the new strategy is based on β’ the development of a high - tech, innovative financial and business services hub, with new activities such as ict, bpo, biotechnology, as well as financial and medical services, β’ manufacturing activities such as printing and publishing and light engineering and β’ restructuring and consoliding the existing sectors, which can adapt to the brave new postwto world. the strategy also provides for the development of mauritius into a regional platform for a variety of activities, ranging from the storage, processing and distribution of seafood, and the repair and maintenance of fishing vessels, to warehousing and distribution. as regards the traditional sectors, their restructuring is in full swing. the sugar industry, hit by a 36 per cent cut in the price of sugar exported to the european union, is undergoing a complete transformation into a β cane cluster β producing special sugars, bagasse for electricity generation, and molasses for distillation into ethanol and value added spirits. the dismantling of the multifibre agreement in 2005 forced the textile and apparel sector to downsize. this sector now revolves around a core of firms that have invested heavily in sophisticated design and fabrication machinery which enable mauritian products to reposition away from the commodity end of the market. as for tourism, which was always built on its underlying competitive strength, the strategy is to double its bed capacity to capitalise on the liberalisation of air access. the objective is to attract two million tourists in the next 10 years. this multi - pronged strategy is expected to inject still greater resilience into our economy to enable us to face further external shocks that are beyond the horizon. allow me to dwell briefly on monetary policy in mauritius. over the years, the bank of mauritius, like most central banks on the continent, went through a phased programme of monetary policy reforms. it switched from direct to indirect monetary control. this was in line with the general move towards increased reliance on market forces, economic liberalisation and regulation and away from directives, controls and subsidies. exchange controls disappeared more than twelve years ago. after using reserve money programming and liquidity forecasting as its framework for the conduct of monetary policy for more than ten years, the bank introduced a new framework in december last year | financial intermediaries and microfinance institutions. a country with a less diversified financial sector is more vulnerable to credit risk. a fall in commodity prices, with adverse impact on exports, can rapidly impair bank loans. hence, the need to have a high capital adequacy ratio and prudential ratios on exposure to any single customer. another characteristic of banks in our region is the high operating costs and high net interest margins. this reflects low efficiency. banks with high operating costs need a high spread to cover these costs. what can we do to make our financial sector more resilient? first and foremost, macroeconomic stability should be consolidated. if this is lacking, there is no growth, no rise in incomes and no reduction in the incidence of poverty. an increase in investment is also required. gross domestic investment as a share of gdp is very low in africa. we attract only a marginal share of world fdi to africa, and it tends to go into extractive industries. global investors will only be interested in the rest of our countries in africa if we can offer peace, stability, good governance, the rule of law and the absence of corruption. africa needs to strengthen its financial systems. weak banks should be restructured through measures to address the stock of nonperforming loans and accumulated losses. bank regulation and supervision should be improved through greater compliance with the basel core principles for effective bank supervision. help is at hand as our own experience in mauritius shows. the financial sector assessment program, initiated by the imf and the world bank, aims at strengthening financial systems and providing a comprehensive framework for identifying strengths and weaknesses in a country β s financial system. i can confirm that we have used the fsap to good effect to achieve institutional strengthening and to build a more robust financial and banking sector. to stay within the theme of financial systems and financial stability, allow me to share with you some preliminary thoughts, not to say emerging preoccupations, on the quality of fdi. the volume of foreign direct investment flowing into mauritius has increased very fast in recent years, and stood at rs 6. 4 billion in 2006, having risen more than sixfold since 2002. we are doing nicely on this score and i certainly do not want to sound like a carping critic. normally, one would have expected the central bank to busy itself with ways and means of sterilising these inflows. but β and i am not here talking only about mauritius β i am | 1 |
the minimum requirement for tier 1 capital is only 4 per cent of the total riskweighted assets. however, this comparison is not entirely valid, for two reasons. firstly, the new regulations entail much stricter requirements regarding what is accepted as tier 1 capital. in future a much larger share of this capital must be of the highest possible quality. this β common equity tier 1 capital β is made up of equity capital and withheld profits ( the red part of the columns in the figure below ). this capital can immediately and without complication be used to cover losses. in addition, one must have additional capital β what is known as other tier 1 capital β of good quality, which can also be used to meet losses in going concern ( orange colour in the figure ). one must also have further capital in the form of, for instance, subordinated loans ( yellow colour in the figure ). this part of the capital differs from the other two in that it can only be used once the bank has gone bankrupt. secondly, one will to a greater extent assume that the asset values are overestimated. so the risk adjustments in the value of the assets that i mentioned will be much tougher. quite simply, one will now assume that the values of many asset classes are more inflated than was previously assumed. so despite the increase in sweden being only around 2 percentage points for tier 1 capital, it actually entails a much tougher minimum requirement. but above all, it means that the global minimum level is raised substantially. especially with regard to common equity tier 1 capital. but not only that. the banks should also hold buffers over and above the minimum requirements. one such buffer is what is known as the capital conservation buffer. the further a bank is from meeting the capital conservation buffer requirement, the more limited its capacity to pay dividends to shareholders. the reason is that one wants to prevent the banks from showering its owners with riches in the good times, and then being caught unprepared when the economic climate changes. if one adds this buffer, the requirements for common equity tier 1 capital is 7 per cent. moreover, national authorities will have the opportunity to force the banks to build up extra buffers during economic upturns, so that they can more easily weather difficulties when there are downturns. the swedish banks already comply with the capital requirements stipulated in the new basel regulations. and this is an important condition for them to be able to fund themselves on the | donald joshua jaganathan : digitization of remittances for migrant workers in malaysia welcoming remarks by mr donald joshua jaganathan, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the project greenback 2. 0 kota kinabalu dinner, kota kinabalu, 3 november 2018. * * * yang berbahagia datuk yeo boon hai, datuk bandar, dewan bandaraya kota kinabalu, dr. firas raad, country manager for malaysia, world bank group, it is a pleasure for me to be here this evening. on behalf of bank negara malaysia, i would like to express my appreciation to dewan bandaraya kota kinabalu for hosting project greenback 2. 0 in this beautiful city ; our project partner, the world bank, for your continued support and commitment to this important initiative ; and to all of you who are gathered here today, for your hard work and dedication to ensure the project achieves its objectives. i am also delighted that we have representatives from bangko sentral ng pilipinas and bank indonesia with us tonight. migrant remittances and project greenback 2. 0 mr. juan somavia, the former director general of the international labour organization based in switzerland once said β migrants are an asset to every country, where they bring their labour. let us give them the dignity they deserve as human beings and the respect they deserve as workers β. malaysia is a land of opportunity for many. close to 1. 8 million foreign workers, men and women, have left their loved ones behind to earn better income here. for many, they are simply chasing the β malaysian dream β. often, the money they send home is a critical lifeline for their families. malaysia is also a major remittance sending country to other asean nations. last year, migrant workers in malaysia sent 2 billion usd to indonesia and the philippines alone. for the recipient countries, these funds lifted many households out of poverty. in a way, they also supported the countries β socio - economic developments. a new game plan : digitalisation as gateway to greater financial inclusion this is where our work in project greenback 2. 0 comes in. we started project greenback here in sabah 8 months ago, with a new game plan β digitalisation. we considered the following factors β around 70 % of the migrants here work in the agriculture and plantation sectors ; they are scattered across the remote areas ; | 0 |
growth, edited by aghion & steven durlauf. king & levine ( 1993 ), finance and growth, schumpeter might be right, quarterly journal of economics 108 ; king & levine ( 1993 ), finance, entrepreneurship and growth, journal of monetary economics 32. anderson and joeveer ( 2012 ), bankers and bank investors : reconsidering the economies of scale in banking, cepr discussion paper 9146. bis central bankers β speeches the events of the financial crisis have led to also consider the malign diagnosis of the massive size of the financial sector and of the single financial institutions that dominate the banking sector. some recent research at the bis suggests that finance does contribute to economic growth but only up to a point. 4 too large a financial sector may imply too high risk - taking, which results from over - investment and too much leverage in some sectors of the economy, typically the real estate related sector. this increases the frequency of crises which involve heavy output losses. too large and a very well paid financial sector may also deprive other sectors of some of the most productive human resources. what makes the financial sector grow too big? researchers have suggested reasons ranging from banks β failure to internalize systemic risks that stem from growth in leverage and ballooning balance sheets to rent - extraction in opaque otc markets. 5 however, the most natural explanation may be the explicit and implicit public guarantees which have led to lower funding costs to the largest institutions which the markets expect to be β too - big - to - fail β. pursuing such a status in the eyes of the market, and the ensuing cheaper funding, can give a strong incentive to grow. given the size of the largest banks β balance sheets, even a relatively small advantage in the funding spread means a big hidden flow of subsidy from the taxpayers to those banks. 6 recent research at the bank of england suggests that the increasing returns to scale in banking, beyond a certain size range, may largely result from the cheaper funding costs of the presumed too - big - to - fail banks. 7 an interesting aspect of the research is also that the social cost of too - big - to - fail banks, due to increased systemic risk, appears to be significantly higher than the benefits from the economies of scale. 8 however, not only the size of the financial sector and that of the banks is important, but also what the sector actually does. in the run - up to the crisis there was a trend among the biggest | banks to strengthen their focus on investment banking, including trading operations. [ slide 3 : shifts in focus of operations as illustrated by shifts in assets structures ] part of this trend was driven by the growing demand by corporate customers for risk management services. to a significant extent, however, the growth in investment banking activities was driven by the banks themselves in search for new revenue streams and higher profitability. in many banks the proportion of trading assets in the balance sheet increased substantially as securities and derivatives trading provided a relatively fast and flexible way to grow. 9 cecchetti and kharoubi ( 2012 ), reassessing the impact of finance on growth, bis working paper 381. stein ( 2012 ) and bolton, santos, and scheinkman ( 2012 ), respectively. noss and sowerbutts ( 2012 ), bank of england fs papers series, fs paper no 15. davies and tracey ( 2012 ), too big to be efficient? the impact of implicit funding subsidies on scale economies in banking. bank of england mimeo. boyd and heitz ( 2012 ), the social costs and benefits of too - big - to - fail banks : a β bounding β exercise, university of minnesota working paper, february. boot and ratnovski ( 2012 ), banking and trading, imf working paper 12 / 238. bis central bankers β speeches the relative importance of customer loans fell over time and the importance of interbank lending grew. moreover the customer loan business transformed as many banks particularly in the us moved away from the β originate and hold until maturity β model to the β originate and distribute β model where granted loans are pooled, then securitized and sold to investors, including european banks. securitization was motivated by the desire to economize on capital buffers, but it turned out later that the assumed benefits of diversification were vastly outweighed by the increasing propensity to contagion. big risks followed, also at the systemic level, as balance sheet growth was often matched with dramatic changes in the liability side of banks β balance sheet. firstly, banks became increasingly leveraged as the solvency rules allowed this to happen without a proportionate addition of fresh capital. the loss absorption capacity weakened. second, banks relied increasingly on short - term wholesale funding, typically from the repo market, which made them more vulnerable to market disruptions. thirdly, the rapid balance sheet growth also required more interbank financing, | 1 |
an announcement would be made in november with regard to the decision on the public relations agency selected to prepare and execute a europe - wide information campaign for the introduction of the euro banknotes and coins on 1 january 2002. in this regard, i am now pleased to announce that the governing council has decided to negotiate the contract with publicis. further information on this matter can be found in a separate press release which will be issued this afternoon. finally, i should like to draw your attention to the fact that the second meeting of the governing council to be held in december has been rescheduled. as announced yesterday, the meeting has been brought forward from thursday 16 december 1999, to wednesday 15 december 1999, in order to enable several governing council members to attend a first gathering of a new forum consisting of ministers of finance and central bank governors ( the so - called β g20 β ), which is to be held in berlin on 16 december 1999. | mr duisenberg reports on the outcome of the latest meeting of the ecb governing council introductory statement given by dr willem f duisenberg, president of the european central bank, to the press conference, held in frankfurt on 4 november 1999. * * * ladies and gentlemen, the vice - president and i are here to report on today β s meeting of the governing council of the ecb. the outcome of today β s meeting was that the governing council has decided to increase the ecb interest rates. the forthcoming main refinancing operations of the eurosystem will be conducted as fixed rate tenders at an interest rate of 3. 0 %, starting with the operation to be settled on 10 november 1999. this increase implies an upward adjustment of 50 basis points from the rate of 2. 5 % applied to previous such operations. in addition, the interest rate on the marginal lending facility will be increased from 3. 5 % to 4. 0 % and that on the deposit facility from 1. 5 % to 2. 0 %, both with effect from 5 november 1999. overall, on the basis of prospective developments, the governing council considers that today β s decision will counter the upward trend of the balance of risks to price stability. this decision will therefore contribute to sustaining non - inflationary economic growth in the euro area over the medium term. the main argument for raising the interest rates was the fact that since around the beginning of the summer the balance of risks to future price stability has gradually been moving towards the upside. in fact, the economic situation in spring 1999 had given rise to concern about downward risks and had led to a precautionary interest rate reduction by 50 basis points on 8 april 1999. however, the current economic environment is far more favourable. moreover, several indicators, including monetary growth, suggest that there is ample liquidity in the euro area. inflation rates are expected to increase gradually in the months ahead, mainly as a result of the increase in energy prices earlier this year working its way through to consumer prices. the latest data on industrial producer prices confirm this pattern. over the medium term, however, it is important to prevent the availability of ample liquidity from translating into upward pressure on prices. in particular, an increase in interest rates now should help to counteract further liquidity growth over the medium term and contribute to maintaining inflation expectations safely below 2 %. with regard to the perception that an increase in interest rates now would endanger the resumption of | 1 |
prices and demand, relative to the may - implied scenario path. this is of course not the only news about the uk economy since may. and nor am i inviting too literal an interpretation of my thought - experiment. i offer it simply as a means of sizing the upside news to the economy since may, illustrating its presumptive implications for monetary policy and providing a baseline against which downside risks to the economy can be judged, including from higher unemployment. it was this judgement that lay behind my decision to leave the monetary stance unchanged at the june meeting. looking ahead, risks to the economy remain considerable and two - sided. although these risks are in my view slightly more evenly balanced than in may, they remain skewed to the downside. of these risks, the most important to avoid is a repeat of the high and long - duration unemployment rates of the 1980s, especially among young people. like the rest of the mpc, i stand ready to adjust monetary policy, at speed, if needed to support the economy and return inflation to its target on a sustainable basis. at the same time, it is important to recognise the limits to what monetary policy can achieve. monetary policy can help to deliver the monetary and financial conditions necessary to support households and businesses β and is doing so. but monetary policy can do relatively little to avoid problems caused by structural or sectoral shifts in the economy, such as structurally high rates of unemployment. with interest rates along the yield curve close to zero, there is also simply less room for monetary manoeuvre than in the past. before the covid crisis, i expressed concerns about the growing β dependency culture β around monetary policy. 21 recent events have done nothing to allay those concerns. price stability is an anchor on which all societies and economies depend for their stability and success. at this time of momentous uncertainty about the health of our societies and economies, it is more important than ever that central banks are not over - burdened and that the anchor of price stability is not disturbed. thank you. haldane ( 2019 ). all speeches are available online at www. bankofengland. co. uk / speeches references aaronson, d, brave, s, butters, r, sacks, d and seo, b ( 2020 ), β using the eye of the storm to predict the wave of covid - 19 ui claims β, federal reserve bank of chicago working paper, no. 2020 - 10. barro, r | by bill mcdonough, president of the new york fed, unveiled its'second consultative package'which sets out the details of a new accord. the intention is that this should be agreed by around the turn of the year, in order to allow implementation by 2004. we warmly welcome the new proposals and have played a major part in their negotiation alongside the uk financial services authority and other g10 central banks and regulators. we particularly support the proposed use of banks internal ratings to calculate capital. banks should know more about the riskiness of their individual borrowers than, for example, external rating agencies or supervisors and the new accord will provide them with the proper incentive to do so. the new accord also recognises that in today's complex banking markets, a focus on capital adequacy alone is not enough. this has to be reinforced by a rigorous review of banks'internal risk management processes, and also by greater transparency and market discipline. together, these three mechanisms - which are intended to be mutually reinforcing - are known as the three'pillars'of the new accord. a fundamental change within the first pillar - capital levels - compared to the original accord is that improved risk management in banks has allowed the proposed new accord to incorporate greater sensitivity of credit risk capital charges. there will be a menu of approaches, depending on the sophistication of the bank. a'standard'approach differentiates between credit exposures on the basis of external ratings. a'foundation'internal ratings based approach will allow banks to differentiate between credit exposures on the basis of their internal estimates of borrower default probabilities ; and an'advanced'approach allows other inputs required to assess credit risk also to be provided by the bank, rather than the regulator. in addition to all this, there will be for the first time an explicit capital charge for operational risk. systemic implications of the revised accord what i have described so far is how the accord is intended to be applied to individual banks. but given the bank of england's responsibilities for the stability of the financial system as a whole, our principal concern is with the overall impact on the system. the basel committee has said that the new accord is intended broadly to deliver the same level of bank capital on average across banks as at present. how should we assess the adequacy of this from the viewpoint of overall financial stability? as i suggested earlier, the role of bank capital is to provide a buffer sufficient to cover unexpected losses. | 0.5 |
assess how our earlier decisions have been influencing monetary conditions, aggregate demand, and inflation. we will also consider how quickly supply - side constraints have been weakening and, accordingly, what level of the key rate is needed to bring inflation back to the target. according to our revised forecast, the average key rate next year will equal 6. 0 β 7. 0 % per annum. further on, as inflation expectations go down and inflation decelerates, the key rate will return to its long - term neutral range. we still estimate this neutral range to be at 5 β 6 %, provided that inflation is close to the bank of russia β s target of 4 %. thank you all for your attention. 3 / 3 bis central bankers'speeches | a series of steps, totalling 1. 75 percentage points, to 6. 5 per cent. the setbacks were not long in coming. last year the value of the nasdaq exchange was virtually halved. profit warnings have been pouring in, firms are shedding labour, banks have tightened their lending, consumer confidence is weakening and unemployment is tending to rise. manufacturing output has virtually stopped growing. in the course of a month the federal reserve has lowered the interest rate 1 percentage point to 5. 5 per cent and market agents are counting on further cuts this spring. we now have to consider what is actually happening. is this just a temporary correction after a period of undue optimism that has led, for example, to surplus investment and will now be followed by a fairly mild and gradual slowdown? or has the major long - term and painful correction of the imbalances in the u. s. economy now begun in earnest? after some months of unpredictable data, even the most experienced and qualified observers find it difficult to say anything definite. so let me outline three conceivable paths β one optimistic, another less so, a third pessimistic β and then discuss them. three scenarios the optimistic scenario β the v the alternative most observers, particularly in the united states, believe in just now is that the fall in the united states is an unpleasant but innocuous β air pocket β in the flight path of the american economy β s soft - landing to lower growth rates. the air pocket is attributed to a temporary output surplus, so that unduly large stocks and rather too much it investment have to be adjusted downwards during one or, at most, two quarters. the profile of this development is commonly described as a capital v ; consumption and investment slacken initially and then pick up again, bringing growth back up to its presumed potential rate of around 3 to 4 per cent. underlying this version is the recent years β exceptional technology - driven improvement in productivity, which helps to inject new life into the optimistic mood. the concern generated by the correction is brushed away by the active monetary policy and the promise of massive tax cuts in the coming years. the optimists set great store by it β s impact on growth and productivity, as well as by a quick improvement in expected profits. the less optimistic scenario β the u some observers see a risk of the upturn occurring more slowly than the v scenario assumes. they see a path that instead resembles a capital u, | 0 |
free and open to support its status as an international financial centre, providing financial services that mobilise us savings to the rest of the world and attracting foreign investments, and servicing domestic financial intermediation at the same time. london, of course, has much of the european economy in addition to the united kingdom economy. hong kong has the mainland of china, the third largest trading partner, the fourth largest economy, the largest foreign reserve holder and home to participants in the key financial markets that collectively form the largest player in the world. the second point i wish to make is that, under " one country, two systems ", there are two financial systems in china, both in a position to serve the interests of the country in the allimportant function of financial intermediation. this is unique and there are no relevant precedents in the financial history of the world. because of the uniqueness of this arrangement, there is understandably considerable scepticism both internationally and within china on how it might work. let me tell you. the two financial systems are different in a variety of ways, with the financial system on the mainland operating in the developing environment of a socialist market economy and the one in hong kong operating in the familiar environment of a capitalist free market economy. we all know that where there are differences, there are opportunities for exploiting relative strengths, addressing relative weaknesses and maximising synergies between the two systems, remembering always the national interest of making financial intermediation more efficient for the country as a whole. in other words, there is a need to develop a complementary, mutually - assisting and interactive relationship between the two financial systems. this incidentally is national policy, articulated by premier wen on the occasion of the national finance working meeting held early last year. given, however, that there are considerable controls in the financial system on the mainland, including capital controls, and that the financial system in hong kong is among the freest in the world, to develop the complementary, mutually - assisting and interactive relationship between the two financial systems there is a need first to establish channels to promote the mobility in an orderly manner between the two financial systems of ( 1 ) money, ( 2 ) investors and fund raisers, ( 3 ) financial instruments and ( 4 ) financial intermediaries. given also the increasing use and the clear prospects of the renminbi as a medium for international financial transactions there is also a need secondly to develop the ability of the financial system in hong | . people were interested in each other and took time to greet each other, like bikers still do now. you see that a lot less these days. 5 / 5 bis central bankers'speeches | 0 |
to be inclusive and financial system can play significant roles in promoting inclusive growth, starting with financial inclusion. the people at large must have access to basic financial products including payment, savings, credit, and insurance. the pricing has to be lower, choices wider, and access better. products that we should see more of are, for example, basic savings account with no minimum balance to cater for the low - income group, low - fee payment and transfer services, micro insurance for farmers, and increased information - based lending to small businesses complementing to collateral - based lending. despite the high level of access to finance in thailand relative to other emerging asian countries, the bank of thailand regards financial inclusion as one of our top priorities. in collaboration with both banks and non - banks, we have continually put our efforts to promote financial access in many areas. they include, for instance, smes β credit guarantee scheme, free - of - charge fund transfer through our new faster payment system for any amount up to 5, 000 thai baht ( approximately equivalent to 145 us dollar ), no - fee bank savings account, nano finance to accommodate small borrowers, as well as the new business securities act to widen the scope of eligible collateral for secured lending. in addition, we will soon launch an unsecured debt restructuring scheme for individual borrowers with multi - creditors to address the household debt overhang. to ensure a β good quality β financial inclusion, financial literacy and financial technology literacy are crucial life skills for both households and small businesses. effective financial literacy would help increased consumers β financial discipline and understandings of financial products and their risks. thus, deepening such basic knowledge and turning concepts into changing behaviour would be particularly helpful to shelter vulnerable businesses and households from getting themselves into over indebtedness or stuck with unsuitable financial contracts. besides, as technology advancement permeates into all businesses, all lifestyles, and all sectors, if we also could ensure that households and small businesses that make up the majority of our economic agents can practically apply and benefit from the new technology, while being aware of its associated risks, then we could significantly raise their standards of living. ladies and gentlemen, that brings me to the end of my talk today. to aspire for a better standards of living for all citizens of asia for the next half century and more, we, all of us, must collectively do our part to ensure inclusive and sustainable growth. in so doing, banks and financial institutions, as the blood vessels of | and funding. strengthening of private sector definitely would have positive signal to potential foreign investors, who will be able to start business by using local comparative advantages. 1 / 2 bis central bankers'speeches numerous examples show that foreign investors are still facing complex bureaucratic procedure and inadequate legal framework. 3 however, after overcoming initial problems and period of adjustment to local conditions, foreign investors successfully run businesses for a long time and we are very proud that most of investors are staying and reinvesting in the country. potential of our country has been recognized during the recent ebrd annual meeting and business forum, which was held in sarajevo and which produced large success regarding future investment in the country. i would like to thank eu institutions, ecb and the escb for working with us on reforms. experience of these institutions is of very important for us in process of building of our system, which should be aligned with eu regulations. also, financial assistance from eu institutions and member - states make possible to carry out and complete these essential reforms. thank you 2 / 2 bis central bankers'speeches | 0 |
##a rulebook contains 638, 000 words β 77, 000 words longer than war and peace in english translation. the complexity of the language used can make the text difficult to read. another layer of complexity is added because of cross - references and links between different parts of the rulebook, requiring the reader to refer backwards and forwards, disrupting reader flow. figure 2 is a visualisation of the rulebook. each node is a part the pra rulebook. each line between the nodes is a cross - reference in the text. when parts of the rulebook are linked together, tweaking one part can have unintended consequences for others. we can quantify the interconnectedness of different parts of the rulebook using the pagerank algorithm, the same algorithm used by google β s search engine. a higher score implies greater connectivity of a particular part to other parts. happily, most parts of the rulebook are self - contained and β β structurally simple β. β looking further into the future, a bigger win might be to automate the rulebook entirely. regulated banks are required to submit large quantities of data to regulators. the cost of collecting and reporting data to meet regulatory requirements is a significant burden to both regulators and regulated firms. regulatory data collections also have significant time lag s, normally 4 to 6 weeks. one solution is to make the data reporting process better tailored to the needs of supervisors. digital regulatory reporting ( drr ) is the automation of regulatory data collection, and could potentially lead to significant improvements in both the cost and timeliness of data. the idea is based on machine readable reporting requirements that firms β systems could automatically interpret and satisfy via a secure regulator - firm digital link. this would allow regulators to collect data on an ad hoc basis from firms as required, in close to real time without any manual intervention at either end. that would enable amadxarif, z, brookes, j., garbarino, n., patel, r., and walczak, e ( n. d ) [ forthcoming ] all speeches are available online at www. bankofengland. co. uk / speeches supervisors to specify the data they needed to solve a particular puzzle β exposures to a particular country, for example β and transmit that data request to firms in a machine readable form. the data would then be β grabbed β directly from firms β systems and sent back to supervisors automatically. the fca and bank of | used to improve the quality of underwriting by making use of nontraditional data. for example, natural language processing of annual reports and social media can give firms useful information on the quality of the credit. 5 but the increased use of ml and ai may also increase some risks to the safety and soundness of firms. implementing ml and ai at scale is likely to require considerable investments by firms in their data and technology capabilities. while in the long - run these investments could increase revenue, in the shortterm they are likely to increase costs. they will also amplify execution and operational risks. and even if firms eventually are successful in embedding new tools and techniques, these may make their businesses more complex and difficult to manage. for example, while ml models could alter banks β trading and retail businesses β enabling them to make better decisions more quickly β the opacity, however, of these models may also make them more difficult for humans to understand. boards, senior management and staff in firms may consequently need different skills to operate an effective oversight, risk and control environment. breslow, s., hagstroem, m., mikkelsen, d., robu, k arnold, m sirignano, j., sadwhani, a., and giesecke, k institute of international finance all speeches are available online at www. bankofengland. co. uk / speeches iii. changing the methods by which we supervise advanced analytics are also likely over time to lead to changes to the way we do our jobs as supervisors. to see how, it is perhaps easiest to go back to the basics of what prudential supervision actually is. our approach to promoting safety and soundness is based upon forward - looking judgement - based supervision, in which we identify the key risks facing firms and set supervisory strategies to mitigate them. described as a business process, it can be broken down into a number of simple steps : 1 ) rulesetting and reporting ; 2 ) analysis and monitoring ; and 3 ) setting and communicating a supervisory strategy to mitigate identified risks. each of these aspects of supervision is amenable to automation, machine learning or ai to some extent. with respect to rule setting, for example, a project is underway to use advanced analytics to understand the complexity of the pra rulebook. 6 we hope to use the results to identify ways to simplify our rules to make them easier to comply with. the pr | 1 |
is, banks'activities to monitor their loans and maintain their credit operations β are also being watched carefully. examiners are looking for signs of imprudent renewals, excessive waivers of terms without compensation, or other activities which might mask recognition of poorly performing credits. we are emphasizing that banks employ appropriate internal controls that will ensure that borrowers meet their obligations under credit agreements β not only obligations for payments, but also obligations to furnish up - to - date information such as financial statements β which allow the bank to properly assess credit risk. we also continue to regularly review internal bank reports and meet with bank management to discuss underwriting and credit performance in order to identify problem areas early and while they are still manageable. supervisory strategies for going forward the u. s. banking industry is facing serious challenges ; the federal reserve, working with the other u. s. banking agencies has acted β and will continue to act β to ensure that the banking system continues to be safe and sound and able to meet the credit needs of a growing economy. our initial assessment of the weaknesses at individual firms indicates that risk management systems and senior management oversight at some institutions were not sufficiently robust. as supervisors, we must redouble our efforts to ensure risk management practices and controls keep pace with changes in financial markets and business models, providing both positive incentives and clear consequences. supervisors have emphasized for several years the concept of enterprise - wide risk management. however, problems stemming from recent events indicate that bank management in many cases was not fully aware of the latent risks contained in various structures and financial instruments, and how those risks could manifest themselves. supervisors, therefore, will be enhancing their focus on the capacity of a firm as a whole to manage risk and to integrate risk assessments into the overall decision - making by senior management. additional emphasis on enhancing stress - testing is also appropriate to focus more bank attention on risks that have a low probability of occurrence but unacceptably high potential costs. as part of an international effort, we have also been developing a set of preliminary " lessons learned " from banking organizations'experiences with recent market events, containing examples of both stronger and weaker practices, to share with the banking industry as well as our own examination staff. finally, as part of a responsible and proactive supervisory approach, and as we have done in the past, we are conducting critical assessments of our own supervisory programs, policies, and practices. this is a prudent step and is consistent with long - standing federal reserve | . canner, β mortgage market conditions and borrower outcomes : evidence from the 2012 hmda data and matched hmda - credit record data, β federal reserve bulletin 99 ( november 2013 ). in addition, a study of mortgage loans originated between 2003 and 2006 as part of a cra targeted, low - to moderate - income homebuyer program found that they performed nearly as well as community β s needs and priorities in the hands of local stakeholders : financial institutions that lend and invest, community organizations that deliver services and develop real estate, and state and local governments that direct incentives and subsidies. the enactment of other laws around the same time supported the cra β s success, including the home mortgage disclosure act, which requires lenders to report the location of their home mortgage lending and the race and income of borrowers. much has changed in the years since the cra was enacted, including technology - driven changes in the delivery of financial services, and it is high time to consider corresponding improvements to the regulations. both banks and community organizations have offered a variety of suggestions for improving the cra regulations and their implementation in the last several years. we are undertaking discussions with the office of the comptroller of the currency and the federal deposit insurance corporation, with which we have traditionally issued joint rulemakings on the cra. the federal reserve has long been interested in engaging in an interagency review of the cra regulations, so we are pleased to participate in this process. in addition, the treasury department recently completed an extensive outreach effort related to modernizing the cra regulations. cra is a vital tool to address the credit needs of low - and moderate - income communities, and i believe the time is ripe for a refresh to make it even more relevant to today β s challenges. there are five principles that can help guide our efforts. prime loans and much better than subprime mortgage loans through the financial crisis ; see lei ding, roberto g. quercia, janneke ratcliffe, and wei lei, β risky borrowers or risky mortgages : disaggregating effects using propensity score models, β journal of real estate research 33 no. 2 ( 2011 ) : 245 β 77. another analysis found evidence of a substantial increase in mortgage lending due to the cra - - especially among low - income borrowers - with no measurable rise in the likelihood of default ; see daniel ringo, β mortgage lending, default, and the community rein | 0.5 |
also be possible to do so. in belgium the debate on the reform of corporate tax, for example, has been going on for quite some time. there is still a heavy reform agenda. much still needs to be done and not everyone agrees on how to go about it. the risk is that the appetite for reform will wane as the economy improves. people have a tendency to lean back and take a break. is that what β s happening in belgium now? not only in belgium. there is a sort of honeymoon atmosphere. times have been hard and people would like to take a break from reforming and enjoy the improvements for a while. there β s a kind of reform fatigue. but not everyone is enjoying the recovery because unemployment is still too high and there are differences in contracts between insiders and outsiders, etc. but it has to happen, because monetary policy can β t fix everything. france is a good example. the financial situation there was not much different to that in germany. there was no banking crisis in france. but growth has been weaker in france than in germany, because german industry was able to adapt, to focus on new markets β first china, then the united states. they have more smes that are export oriented, whereas french industry is much more dependent on a number of national champions. this shows that there are limits to what monetary policy can do. critics are saying that the ecb β s low interest rate policy is reducing the incentive to reform. governments should have made more use of the low interest rates. but the fact that there has been too little reform isn β t because low interest rates are making it easier for them to muddle through. rather, it β s because they aren β t managing to sell the reforms. i talk to politicians regularly and they all know what needs to be done. but they are also afraid that they won β t get elected again afterwards. i hope that the general public, through seeing better and better results, will start to grasp the importance of reforms. will the [ rise of the far left ] ptb party in wallonia have a major impact? yes, i β ve seen it. but take macron : he β s been able to build a movement because there was a window of opportunity to go for reforms. but that has nothing to do with the interest rate. in france the public voted for macron because they want changes, but we have yet to see which ones will actually get through. in belgium the government | pandemic, russia β s invasion of ukraine and geopolitical tensions. there are severe downside risks due to disruptions of supply chains, higher prices for energy and commodities, and the reshoring of global production. economic uncertainty is extremely high. additionally, we need to manage β and in fact speed up β the climate transition. this requires structural adjustments to our economies and our lifestyle. dealing with these challenges at the same time is asking a lot from our modern societies. but transitions have been managed successfully in the past. learning from the experiences of the transition economies can be a source of inspiration and encouragement. one main lesson that i see in estonia β s transformation process is that stable institutions are key. they are especially important in times of crisis and structural change. stability - oriented central banks are a key element of our institutional infrastructure. they are sometimes criticised for being not flexible enough to help resolve the problems facing society. if central banks argue that they need to act β within their mandates β, this is not because they do not want to take responsibility within and for society. it is not because they define their role in a legalistic way. on the contrary : acting within the mandate that society has assigned to β powerful β institutions like central banks is precisely the responsibility that we have. it is only through that mechanism that the power of central banks can be used in a democratically legitimate way. this, in turn, requires transparency and accountability vis - a - vis society. the specific tasks of central banks may change over time β but such changes should be based on a societal and democratic consensus. thirty years ago, the introduction of a national currency was seen as an integral part of nation building, a symbol of the return to europe, and an instrument to achieve financial stability. this brings me to my second point : stable institutions need society β s support. economic decisions β like the introduction of a currency and of a currency regime β are not technocratic, economic decisions. they are decisions about the direction a society will take. they reflect the commitment of a society to support the direction of travel and its willingness to endure the potential hardships this entails. they require democratic consensus on how to deal with negative shocks and how to allocate the associated costs. [ 52 ] this is a lesson that is highly relevant for many future economic decisions that are needed to master the structural change that lies ahead. and there is a third important lesson : cooperation and international coordination are crucial. international cooperation allows | 0 |
the view that the prospects for domestic demand remain firm, to be supported by a projected recovery in household spending and the continued implementation of the government β s infrastructure program. in addition, the mb observed that the global economic growth momentum has slowed down in 2019. meanwhile, indications of slower growth in domestic liquidity and credit require careful monitoring. at the same time, the mb also noted that the risks to the inflation outlook remain broadly balanced for 2019 amid risks of a prolonged el nino episode and higher - than - expected increases in global oil prices. for 2020, the risks continue to lean toward the downside as weaker global economic activity could temper commodity price pressures. looking ahead, the bsp will continue to monitor developments affecting the inflation outlook to ensure that the monetary policy stance remains consistent with its price stability objective. on the other hand, the passage of republic act no. 11211, or an act amending republic act no. 7653, known as the β new central bank act β ( signed on 14 february 2019 ) is a significant milestone for the bsp. our three pillars of central banking, that of price stability, financial stability, and an efficient payments and settlements system, were further strengthened with the expansion of the bsp β s policy toolkit. the law restored the central bank β s authority to issue its own debt papers as part of its regular monetary operations, establishes a stronger prudential regulatory framework to promote a safe and sound financial system through the expansion of supervisory coverage, and authority to prescribe metrics attuned to international standards and practices. the amendment likewise empowers further the bsp to oversee the country β s payment and settlement systems ( pss ), including critical financial market infrastructures that are vital components of the pss. additional notes : the amended bsp charter restores the central bank β s authority to obtain data from any person or entity from the private and public sectors for statistical and policy development purposes in line with the pursuit of our triad mandates. the law authorizes the increase in the capitalization of the bsp from php 50 billion to php 200 billion, which shall be sourced from dividends declared by the bsp in favor of the national government. under the amended charter, the bsp is also exempt from paying taxes on income derived from its governmental functions. these reforms place the bsp on a stronger position to pursue its mandate amidst a growing economy and the increasing sophistication of the financial system. looking ahead, we will continue | in the overnight reverse repurchase ( rrp ) volume offering β this encourages counterparties to lend in the interbank market or re - channel funds into loans or gs ; p300 billion worth of repurchase agreement with the national government ; a 200 - basis - point cut in the reserve requirement ratios of universal and commercial banks, as well as non - bank financial institutions with quasi - banking functions ( nbqbs ) ; counting of loans to micro, small, and medium enterprises ( msmes ) as part of banks β compliance with reserve requirements ; suspension of the term deposit facility auctions for certain tenors ; temporary reduction to zero in the term spread on the peso rediscounting loans relative to 1 / 2 bis central bankers'speeches the overnight lending rate ; time - bound relaxation of various regulations pertaining to compliance reporting, calculation of penalties on required reserves, and single borrower limits ; and the bsp stands prepared to use its full range of monetary instruments and to deploy regulatory relief measures as needed in line with its price and financial stability mandates. with all these measures, the bsp, as the country β s monetary authority, together with fiscal authorities and other departments, aim to manage a soft landing for the philippines and to ensure that an economic takeoff begins quickly once the pandemic fades. the market seems to be responding favorably. the peso is fairly stable, the stock market has bounced back from recent lows, and cds spreads of philippine government bonds remain competitive. if financial markets β which are sometimes inclined to have kneejerk reaction β are showing some signs of confidence at this challenging time, then there is basis for everyone to be ( cautiously ) optimistic as well. in closing, i would like to highlight that the philippines has entered this difficult time with sufficient tools and buffers. we have sound macro economic fundamentals, a stable banking sector, and the much needed fiscal and monetary space, which allow us to roll out significant relief and mitigating measures while keeping the economy afloat. these buffers, plus the relief and mitigating measures from the bsp and the national government, allow us to look forward to the time when the philippines will be firing on all cylinders again. thank you very much, and i look forward to answering your questions. 2 / 2 bis central bankers'speeches | 0.5 |
. with that, i will pass you to my colleague. 2 / 2 bis - central bankers'speeches | 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 ' | 0 |
strategy. incumbents are also migrating, although more cautiously, to the public cloud. however, the cloud computing market is highly concentrated and amazon web services has built a dominant position. as the core financial functions lift and shift to the cloud, the risk of a single point of failure will emerge, and yet cloud providers are unregulated and out of the direct reach of financial supervisors. this raises questions about the effectiveness of the strategy followed so far by regulators vis - a - vis financial institutions β third party service providers, which in essence consists in setting requirements on financial intermediaries regarding their contractual relationships with their service providers. the evolving balance of power to the benefit of dominant bigtechs service providers may challenge the effectiveness of such a strategy going forward. second, the question of conduct. our regulation deems certain practices acceptable and others not. technological developments are making it possible to use information that was previously out of reach of a financial intermediary. this could potentially allow a more accurate assessment of risk or a more β responsive β pricing of service. but what is possible may not be ( socially ) acceptable β to take one example, the current development of β social network informed credit scores β raises questions about financial intermediaries β governance and risk control frameworks, when privacy concerns or discriminatory bias are at stake. ( b ) let me now turn to new risks, which are non - financial in nature but closely intertwined with the digitalisation of finance. in my view, two in particular merit financial supervisory scrutiny. first, the strategic independence of incumbent banks. if incumbents depend on bigtechs for key infrastructure such as cloud computing, if they rely on the same bigtech to distribute their products through their platforms and then compete with bigtechs on certain segments, they will see their strategic independence challenged in the same way as hotels and retailers did. this process of commoditisation of incumbents may lower credit standards to compensate for higher pressure on margins and exacerbate their funding gap because of lower customer stickiness. second, the development of cyber - risk. with greater interconnections between technologies and the financial system and the opening up of information systems, the banque de france observed in its financial stability report of december 2017 that cyber - risk is moving from an idiosyncratic risk to a potential source of systemic risk which needs to be addressed. this perspective is widely shared among public and private decision makers and it should not come as a surprise | β, comparable to the financing of growth and major infrastructures in the 19th century or the management of great financial crises in the last 100 years. the progress report of the ngfs, released in october is hence an important step. indeed, for the first time, this coalition of the 21 v willing central banks and supervisors, has unanimously agreed that climate - related risks β as a source of financial risk β are within a central bank β s mandate. the ngfs will not stop there and next year will publish its first comprehensive report, which will provide β on a voluntary basis only β policy recommendations for central banks and supervisors. this will take place at the upcoming ngfs conference, at the banque de france in paris, on 17 april 2019 : you are all most welcome! to prevent the airplane from crashing, we can help by shedding light on climate risks in order to take accurate and timely decisions, and by seizing opportunities while aligning incentives and mobilising capital. ii. anticipating climate - related risks 1 / our first priority should be the disclosure of existing exposures in the financial sector, what i call β the snapshot of risks β. the recommendations of the task force on climate - related financial disclosures ( tcfd ), chaired by mr. bloomberg with sponsorship from the financial stability board ( fsb ), have been groundbreaking as they provide a practical framework allowing companies to disclose their climate - related financial risks. however, an accurate and consistent vision of the risks requires a wider implementation of the tcfd β s recommendations. significant room for progress remains in this area. to enable markets to price risks, we need comparable metrics β thanks to a common taxonomy β and better access to higher quality and more consistent data. i therefore fully page 3 sur 6 support the work of the technical expert group on sustainable finance of the european commission which is concretely developing a taxonomy ; our first ngfs workstream is also working in this field. we should then gradually move towards compulsory transparency based on a β comply or explain β principle. article 173 of the french energy transition law β as it sets the environmental social governance ( esg ) - climate approach as a new market standard β could usefully serve as a reference studied at the european level. 2 / beyond the " snapshot of risks ", the ngfs is working on a " video of risks ", with long - term forward - looking stress tests to assess the dynamic effects of climate change on the economy and financial stability | 0.5 |
bankers'speeches excluding the effects of temporary factors ) has been on a decelerating trend on the whole. specifically, with respect to general services prices, firms'moves to pass on personnel expenses have been widely observed ; in contrast, particularly for goods prices, the pressure on firms to pass on raw material cost increases has waned. if we focus on factors affecting future price developments, possible upswings in the cpi, led by higher import prices, require attention ( chart 10 ). the rise in import prices to date could affect the cpi with a time lag, although commodity prices have declined and the excessive depreciation of the yen has subsided. as upward pressure on wages due to tight labor market conditions remains in overseas economies, inflation abroad could persist, exerting upward pressure on import prices. there are also uncertainties stemming from geopolitical risks. on this basis, as i will mention later, it is necessary to closely monitor how developments in financial and capital markets at home and abroad affect prices. ii. outlook for and risks to economic activity and prices a. outlook i would like to turn to the outlook for japan's economic activity and prices ( chart 11 ). as presented in the outlook for economic activity and prices ( outlook report ) decided by the bank at the july 2024 monetary policy meeting ( mpm ), the real gdp growth rate is projected to be 0. 6 percent for fiscal 2024, and 1. 0 percent for both fiscal 2025 and fiscal 2026, in terms of the median of the policy board members'forecasts. japan's economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions. in the corporate sector, exports and production are likely to return to an uptrend, as overseas economies continue to grow moderately. in the household sector, employment is likely to continue rising during the course of economic recovery. however, as i mentioned earlier, since it becomes more difficult for labor supply to increase and labor market conditions tighten, wage growth will increase as a trend, which also reflects price rises. in this situation, for the time being, although private consumption is expected to be affected by the price rises, it is projected to increase moderately on the back of higher wage increases. private consumption is also projected to be underpinned, | , and the risk that wages and prices will rise beyond the price stability target warrants attention. the second is downside risks to overseas economies. inflation rates in the united states and europe, which were at high levels, have been steadily declining recently. however, there are uncertainties as to how the past policy interest rate hikes by overseas central banks will affect the real economy and financial activity over time. moreover, at the beginning of august 2024, data suggesting a possible slowdown in the u. s. economy triggered market developments over concerns of a sharp economic downturn, or a hard landing. attention is warranted over the risk of continued excessive movements and adjustments in financial markets - - stemming from these concerns over a slowdown in overseas economies - - exerting further downward pressure on overseas economies and eventually spreading to japan's economy. the third risk is that delayed improvement in consumer sentiment will disrupt the virtuous cycle from income to spending. households have so far been defensive about spending, mainly because the rate of increase in the price of everyday goods such as food and daily necessities has been relatively high and growth in real income has been negative. it is true that private consumption has shown resilience thanks to improvement in the income situation, with the year - on - year rate of change in real wages turning positive recently, together with firms'initiatives and the effects of various government measures. however, i believe it is still necessary to monitor this situation carefully, as the previous prolonged negative growth in real income may hamper future improvement in consumer sentiment. iii. the bank's conduct of monetary policy 5 / 7 bis - central bankers'speeches next, i would like to talk about the bank's decisions made at the july 2024 mpm and share my views in this regard. the first point concerns the change in the bank's guideline for money market operations ( chart 12 ). specifically, the bank decided to raise the target for its policy interest rate, the uncollateralized overnight call rate, from the previous level of " around 0 to 0. 1 percent " to " around 0. 25 percent. " at the july mpm, the bank assessed that, while japan's economic activity and prices had been developing generally in line with its outlook presented in the outlook report, upside risks to prices required attention given that, for example, the year - on - year rate of change in import prices had recently turned positive again. in view of | 1 |
dimitar radev : no stone has been left unturned on the topic of euro adoption in bulgaria statement by mr dimitar radev, governor of the bulgarian national bank, during a hearing at the 48th national assembly, sofia, 27 october 2022. * * * mr. speaker, ladies and gentlemen members of parliament, let me begin with this. the true debate today is for or against the euro β the euro as a symbol of the european project and our commitment to this project. in the item on the agenda where we are considering this issue, this topic is placed below'expert questions '. in the next item, this topic comes up directly. however, in both cases the topic is the same. let me say it squarely, the question about the euro area is first and foremost a political one, not an expert one, and the answer to this question must be given by the national assembly. actually, in my opinion, the question is whether bulgaria will stay indefinitely in the future anchored in europe's deep periphery, with the poverty, corruption, institutional impotence and external dependencies inherent to this periphery, or a joint effort will be made to change all this by speeding up the already greatly delayed process of joining the euro area. a few words about the expert analyses supposed to inform this process. this is the third discussion in parliament on the topic of analysis of the implications of the euro area accession, in which i have taken part over the last six months. during the previous discussions i had the opportunity to point out that these questions had been raised at least twenty years before, and they have been answered repeatedly, even in the last months and weeks. for example, just a few months ago the economic and social council to the national assembly approved an analysis about the implications of bulgaria's euro area accession for the economic development, inflation and incomes in the country. this analysis was conducted at the request of the speaker of the national assembly and was brought to the attention of the members of parliament. let me highlight that by law the economic and social council is a consultative body expressing the will of civil society organisations regarding the economic and social development, with its members representing trade unions, employers, industry organisations, organisations of pensioners, the socially weak and the disabled, women's organisations, as well as distinguished independent scientists who are specialists on the issues of the economic and social policy. the conclusion made by the economic and social council, which represents such a wide variety | including those made via internet or through other it devices. we expect that the new law would reduce the number of disputes between providers and users of payment services, as well as the number of cases where the bnb should get involved directly. please allow me to thank you and to once again congratulate you on this year β s very good results. i wish you joyful celebrations, a happy banker β s day, and very happy christmas and new year, as well as good health and success in the new year! thank you for your attention. 2 / 2 bis central bankers'speeches | 0.5 |
on 12 january 2021. the ecb will publish a comprehensive analysis of the public consultation in the spring. see ecb ( 2021 ), β ecb digital euro consultation ends with record level of public feedback β, press release, 13 january. 17. of course, the opposite risk also exists and would need to be taken into account to ensure that the digital euro would be seen as an attractive means of payment by end users. 18. brunnermeier, m. k. and niepelt, d. ( 2019 ), β on the equivalence of private and public money β, journal of monetary economics, vol. 106, pp. 27 - 41 ; committee on payments and market infrastructures β markets, march. 19. this may lead to collateral scarcity issues, which could potentially committee ( 2018 ), central bank digital currencies have an impact on market interest rates for safe assets, although the central bank could address this risk ( see the eurosystem β s report on a digital euro ). https : / / www. ecb. europa. eu / press / key / date / 2021 / html / ecb. sp210210 ~ a1665d3188. en. html 12 / 14 10 / 02 / 2021 evolution or revolution? the impact of a digital euro on the financial system β, working papers, no 19 - 26, federal reserve bank of 20. keister, t. and sanches, d. ( 2019 ), β should central banks issue digital currency? philadelphia ; assenmacher, k. et al. ( 2021 ), β a unified framework for cbdc design : remuneration, collateral haircuts and quantity constraints β, mimeo. 21. andolfatto, d. ( 2020 ), β assessing the impact of central bank digital currency on private banks β, the economic journal, september ; chiu, j. β, staff working papers, no 2019 - 20, bank of et al. ( 2020 ), β bank market power and central bank digital currency : theory and quantitative assessment canada, may. β, staff working papers, no 22. see kumhof, m. and noone, c. ( 2018 ), β central bank digital currencies β design principles and balance sheet implications 725, bank of england, may. β, working paper series, no 2488, ecb, 23. ferrari, m. m., mehl | 10 / 02 / 2021 evolution or revolution? the impact of a digital euro on the financial system speech evolution or revolution? the impact of a digital euro on the financial system speech by fabio panetta, member of the executive board of the ecb, at a bruegel online seminar frankfurt am main, 10 february 2021 throughout history, innovations in money have challenged and altered the structure of the financial system. time and time again, innovations have given rise to debates about the risks they pose and the rewards they bring, as well as the role of central banks in building confidence in money. paper banknotes are a case in point. as they were easy to carry, they made commerce more straightforward. but their success did not come easily. attempts by central banks to issue banknotes in the 17th century resulted in too many being issued and even defaults, raising questions about their effects on stability and, ultimately, on the credibility of the sovereign. yet modern banknotes eventually enhanced the benefits of central banking for society at large. similar debates emerged with the rise of bank deposits in the 19th century. advances in recording and communication technologies helped deposits become popular, consolidating the role of banks in money creation. but this also raised awareness that confidence in money depends on the stability of bank deposits, leading central banks to take on the role of lender of last resort. in today β s discussion on the digitalisation of payments, these debates sound familiar. some fear that digitalisation, if not properly governed, could crowd out cash over time, create instability and even threaten https : / / www. ecb. europa. eu / press / key / date / 2021 / html / ecb. sp210210 ~ a1665d3188. en. html 1 / 14 10 / 02 / 2021 evolution or revolution? the impact of a digital euro on the financial system monetary sovereignty. central banks are therefore considering whether they should innovate themselves, by offering sovereign money in digital form to the public at large. at the ecb we are considering whether to issue β alongside euro banknotes β a digital euro : a digital form of money that, just like cash and unlike other means of payment, would be a claim on the central bank instead of a claim on a private intermediary. but we must fully understand the economic, financial and societal implications of issuing a digital euro : we should consider how we can achieve the benefits while preserving the stability of the financial system and meeting | 1 |
most households to afford to service their loans. i take some comfort from the fact that arrears rates on mortgages remain low. even in western australia, where there has been a marked rise in unemployment and where house prices have fallen by around 10 per cent, arrears rates have risen to around 1Β½ per cent, which is not all that high compared with what we have seen in other countries in similar circumstances and earlier episodes in australia β s history. we have provided some information in the latest smp on interest rate resets on interest - only loans. these can see the required mortgage payments rise by nearly 30 β 40 per cent for some borrowers. there are a number of these loans whose interest - only periods expire this year. it is worth noting that there were about the same number of loans resetting last year too. our assessment is that there are quite a few mitigants which will allow these borrowers to cope with this increase in required payments, including the prevalence of offset accounts and the ability to refinance to a principal and interest loan with a lower interest rate. while some borrowers will clearly struggle with this, our expectation is that most will be able to handle the adjustment so that the overall effect on the economy should be small. 8 this switch away from interest - only loans should see a shift towards a higher share of scheduled principal repayments relative to unscheduled repayments for a time. we are seeing that in the data ( graph 8 ). it also implies faster debt amortisation, which may have implications for credit growth. 10 / 13 bis central bankers'speeches there is a risk of a further tightening in lending standards in the period ahead. this may have its largest effect on the amount of funds an individual household can borrow, more than the effect on the number of households that are eligible for a loan. this, in turn, means that credit growth may be slower than otherwise for a time. to me, that has more of an implication for house prices, than it does for the outlook for consumption. finally, in thinking about the resiliency of household balance sheets to higher interest rates, it is important to think about the environment in which interest rates would be rising. that environment is highly likely to be one where wages and household incomes are also growing faster than currently, improving the ability of households to afford higher mortgage repayments. one final risk that i would like to touch on is the related risk stemming from low wages | - oos ), fortius ( for - tee - oos ) β communiter ( ko - moo - ni - ter ). faster, higher, stronger β together. maraming salamat at mabuhay ang mcpi. mabuhay ang pilipinas. 3 / 3 bis central bankers'speeches | 0 |
it β s a discussion we β ll have on the basis of the economic indicators. you know we are very pragmatic people, we look at the figures and then we β ll see how inflation is being passed on to what we call underlying inflation and also how inflation is being passed on to wages, i. e. we β ll see if wage negotiations are taking account of price increases. at the moment, that β s not really the case. in any case, it won β t be in 2017, there will be no increase in the ecb β s interest rate in 2017. it β s something we β ll examine in the light of the economic indicators, sorry to disappoint you. germany is becoming impatient. there β s talk of inflation which could exceed 2 % on an annual basis in germany this year. inflation which hurts german savers. wolfgang schauble, minister of finance, is calling on the ecb to act this year. what do you say to him? first, mr schauble has always been very respectful of the treaties and the independence of the central bank, so i am not too worried on that front. and in general, germans understand very well that the european central bank has an inflation mandate for the euro area. they understand that inflation in the euro area should return towards 2 % and i think they also understand that to have a strong economy in the euro area is in the interests of germany. and that β s what we are working on. doesn β t this difference, at least between germany and the rest of the euro area in respect of inflation, illustrate the inability of monetary policy to act when faced with a currency area which is still heterogeneous, the euro area? that β s quite true. that β s quite true. it β s a problem we had before the financial crisis, with a large divergence in labour costs in the euro area, which incidentally the central bank at the time, headed by jean - claude trichet, spoke out against ( without much of a result, but we did speak out ). as a central bank we can only work effectively if the economies of the euro area are sufficiently convergent. convergence is needed in the euro area for monetary policy to function well, but also if you want to pave the way for a further strengthening of the euro area, because the various member states have to trust each other, and for that their economies need to be comparable. this | to continue, unless we collectively take action to address it. now, we know that the situation in the challenge is complex. the decline isn't driven by one issue or one cause ; it's a combination of factors. one important driver is that the volume of correspondent banking flows is relatively small in this region. it's a combination of small populations dispersed over far - reaching and diverse geographical areas, and it often encompasses very remote locations, and that makes it difficult for correspondent banks, or even potential correspondent banks, to achieve economies of scale. so that's one driver. a second important issue is that some countries have found it challenging to meet international regulatory requirements because they're small, they've got lots of competing demands on their resources, and that's challenging. and the regulations, we know that the bar is going up, so it's not easy. but we do need to find a solution to this issue. 1 / 3 bis - central bankers'speeches the withdrawal of correspondent banking relationships poses large risks to economic and financial stability in the pacific region at the household, the business and the government level. remittances, as we know, can be an important source of incomes for households. businesses rely on the ability to receive payments for exports, including tourism flows, which for many countries is very important. and governments also need to be able to import key supplies for their people and their nations. so maintaining the ability to send and receive these flows internationally is essential. i'd have to say, pleasingly, there are some green shoots. we at the bank welcome the initiatives by the pacific islands forum secretariat and the world bank, including the correspondent banking relationships'road map and the strengthening correspondent banking relationships project. we at the bank have met with the world bank's team several times to provide comments on the proposal and we're really pleased to hear of the progress that they've made to date. it's also encouraging to hear of the wideranging commitment from the pacific island countries to participate in the project β that's really important β and we look forward to future conversations with all of our pacific island counterparts and the world bank as this project progresses. now, in conjunction with development partners, there's also a lot of technical assistance and capacity - building initiatives underway, and some are planned in the region. at times, in the past, these projects have tended to be run in isolation and that's led to | 0 |
closer to 2 % and safeguard the anchoring of medium to long - term inflation expectations. nevertheless, with policy interest rates close to the effective lower bound and persistently timid growth prospects, there is a small, but non - insignificant risk that any additional adverse shock may open the door to a more protracted period of low inflation. against this background, i would like to organise the rest of my remarks today around three issues. first, why do we find ourselves in the current, low inflation predicament? i sustain that inflation fluctuations have been somewhat surprising ever since the beginning of the great recession. in part, they were the result of adverse exogenous shocks. to some extent however, they were also connected with unwarranted variations in markets β expectations of the future stance of monetary policy. second, i will argue that the governing council meeting at the beginning of june is important not only for the decisions that were actually adopted. it is important also for the clear signal that we provided about the determination to do more in the future, in the event of additional downward pressures on inflation. i will develop these two points which deal with the way our recent policy decisions will produce effects. the third question is : how would the ecb react, should the risks of a protracted period of low inflation materialise? at this point in time, this is essentially a scenario analysis β and specifically an analysis of a low probability scenario. outright purchases of a range of financial assets would be effective in this situation, but structural reforms would also be essential to spur economic growth. see giannone, d., m. lenza, h. pill and l. reichlin ( 2011 ) : β non - standard policy measures and monetary developments β, ecb working paper series no. 1290 ; de pooter, m., r. f. martin, and s. pruitt ( 2012 ) : β the effects of official bond market intervention in europe β, federal reserve board of governors, mimeo ; eser, f., and b. schwaab ( 2013 ) : β the yield impact of central bank asset purchases : the case of the ecb β s securities markets programme β, ecb working paper series no. 1587 and ghysels, e., j. idier, s. manganelli, and o. vergote ( 2014 ) : β a high frequency assessment of the ecb securities markets programme β, ecb | to adapt the programme to further strengthen quality assurance, respond to the challenges, and safeguard against any β mis - education β of consumers. i urge members to continue using the website and trainers manual as the primary source of information in their training. it is important that our starting point in educating consumers is the same. when in doubt, please always refer to the financial literacy strategy that was launched in august 2013 by the honorable minister of finance, planning and economic development ( mofped ). on our part, we reiterate our commitment both in terms of financial and human resources to further bolster the financial and economic education agenda in uganda. we are also working closely with the requisite ministries, departments and agencies of government to ensure that the diversity and quality of institutions providing financial services expands, and that they are well regulated. to that end, i trust that once the amendments to the financial institutions act and the regulations for the tier - four institutions that are being considered are passed into law, we shall have more ugandans served and probably more efficiently. as i conclude my remarks, i once again thank the members present here today for the tremendous work thus far. however, we must not rest on our laurels as a lot remains to be done. i thank you all and wish you good deliberations in the meeting. it is now my pleasure to declare the financial literacy information sharing group ( flisg ) meeting open. bank of uganda statistics department. bis central bankers β speeches | 0 |
tiff macklem : staying the course to price stability remarks by mr tiff macklem, governor of the bank of canada, at the toronto region board of trade, toronto, ontario, 4 may 2023. * * * introduction good afternoon. i want to thank the toronto region board of trade for inviting me to speak today. i can't think of a better audience to speak with about price and financial stability, and i very much look forward to our discussion. the bank of canada began raising interest rates in march of last year, and 14 months later we can see that monetary policy is working to bring inflation down. in march of this year, consumer price index ( cpi ) inflation was 4. 3 % - or roughly half of what it was last summer when it peaked at just over 8 %. we expect inflation to decline further to about 3 % this summer. this is good news. but i'm not here to talk to you about the journey from 8 % to 4 % or even 3 %. i'm here to talk about staying the course to price stability and getting the rest of the way back to the 2 % target. monetary policy still has work to do. i want to talk to you about the challenges and risks in the journey back to target. i also want to discuss the recent stress we've seen in the global banking sector and how financial stability and price stability reinforce each other. restoring price stability early in the covid - 19 pandemic, inflation in canada was sparked by global forces, including supply chain disruptions and a spike in global demand for goods. russia's invasion of ukraine last year drove inflation even higher, particularly for energy and agricultural commodities. but domestic forces have increasingly contributed to inflationary pressures. the canadian economy began overheating as the economy fully reopened. people still wanted to buy goods, and demand for services soared as households tried to catch up on the many services they had missed out on through the pandemic. employers could not find enough workers to keep up, and businesses were quick to pass on increased costs to consumers. the bank responded forcefully to these inflationary pressures, raising our policy interest rate quickly. we did this to rebalance the economy - to lower demand and give supply a chance to catch up. this tighter monetary policy is working. demand for goods is slowing because higher interest rates are restraining household spending. and the supply of goods is improving as global bottlenecks ease and lower energy prices reduce shipping | duvvuri subbarao : a revolution in monetary policy welcome remarks by dr duvvuri subbarao, governor of the reserve bank of india, at the 15th c d deshmukh memorial lecture on β a revolution in monetary policy β lessons in the wake of the global financial crisis β delivered by prof joseph stiglitz, mumbai, 3 january 2013. * * * 1. on behalf of the reserve bank of india, i have great pleasure in welcoming prof. joseph e. stiglitz, who will shortly be delivering the c. d. deshmukh memorial lecture. also, a warm welcome to mrs. anya stiglitz who has accompanied him. i am delighted to acknowledge the presence here of the family members of sir chintaman deshmukh β shri atul deshmukh, smt. sheetala deshmukh, and their children, ashish and priyanka, prof. sunita chitnis and her son dr. ajay chitnis. your presence here means a lot to us. finally, and importantly, a warm welcome to all our invitees to this prestigious lecture. c. d. deshmukh 2. sir chintaman d. deshmukh has a special place in the history of the reserve bank. he was the first indian governor of the reserve bank, and served the institution with great distinction and dignity from august 1943 to june 1949. he presided over the transformation of the reserve bank from a private shareholders β bank to a nationalised institution and was the intellectual force behind the enactment of a comprehensive legislation for the regulation of banking companies which has stood the test of time. governor deshmukh participated actively in the establishment of the bretton woods institutions in 1945 and played a critical role in managing india β s nascent economy as we confronted the challenges of war financing following the second world war. 3. after leaving the reserve bank, shri deshmukh went on to become the finance minister of india, a career graph repeated by our current prime minister, dr. manmohan singh nearly forty years later. shri deshmukh brought to the office of the finance minister a passion for newly independent india β s development and a humane and inclusive vision for nation building. by all accounts, sir chintaman deshmukh was one of the finest public policy intellectuals of post - independence india. 4. the reserve bank instituted the c. d. deshm | 0 |
their status as a credible and efficient financial intermediary and able to meet private sector demands. these efforts included encouraging financial institutions to rationalize their transaction fees structure, introducing digital cheque - imaging system, and relaxing certain measures related to financial institutions to alleviate financial burdens of flood - affected victims. economic conditions and challenges for 2012 the path towards the future is not a smooth one. ongoing challenges from the past and new challenges will increase obstacles for the thai economy. domestic issues still remain an important hurdle while emerging external issues have created new challenges. these challenges are inherent parts of the mega trends, which include the crisis facing western economies and advancing regional economic integration. currently, thailand appears to be at a transitional gateway of these mega - trends, where the future looks blurry. the persistent economic slowdown plaguing the advanced economies of bis central bankers β speeches united states and europe leading up to sovereign debt crisis and continued financial system stresses do not yet have a clear resolution in place. many observers, however, view that after this transitional gateway, asia will be under the spotlight with china as the new leader, leading the economic expansion for other countries in the region. despite this optimism, countries in asia cannot afford to relax, sit back, and enjoy the ride, as economic volatility could arise intermittently via trade and financial channels from western economies. the degree of such impact depends on how well each economy is prepared for the potential disruption. another aspect of the transitional gateway is the asean economic community ( aec ) in 2015. this regional integration will bring not only changes in the regional investment and trade landscape, but also changes in people β s attitude as an asean citizen where travel and contact will become more frequent. nonetheless, we should not view aec as the final destination, but rather a stepping stone towards enhancing economic resiliency in the region by creating a single asean market and production base. this would help foster value - added characteristics of the thai economy and increase opportunities for our people, businesses, and everything else that will bring about a better standard of living for all. the two mega - trends i have outlined, when combined with the flood crisis at the end of last year, mean that thailand needs to quickly upgrade infrastructure to improve competitiveness. in particular, public investment in effective natural resources management system and improved governance of public administration will serve as an important driving force for sustainable economic growth. evolution of economic activities in line with the changing environment while the immediate obstacles may have changed, the | ( a token - based cbdc would imply a better protection of privacy ) 22 or the organization of the central bank. in particular, managing an account - based system with millions of account balances, each potentially changing every day, would require an incredible effort by the central bank. the implementation of a token - based system, instead, would be easier and could be delegated to a private party. in both cases the security and resilience of the cbdc to cyber - attacks must be assured, in order to preserve trust in the currency. digital hacking of the currency can reap very large rewards, in all likelihood larger than counterfeiting banknotes β the recent attack on the central bank of bangladesh comes to mind. 23 undoubtedly hackers everywhere are dreaming about how to violate the digital currency system! the number of questions related to cbdcs is enormous and the public debate about them is only in its infancy. i cannot address all the issues today. but i do wish to emphasize one last point before concluding my remarks. if central banks decided to make an asset β the cbdc β free of credit and liquidity risk, possibly remunerated, and available to anybody at no cost, their role in the economy would fundamentally change. the size of their balance sheets would likely increase, and with it their footprint in the economy. if the cbdc were account - based, central banks would start to interact directly with the private non - financial sector. are central banks ready to play this new role and to deal with the attendant complexities? in the short term my answer is no. beyond the short term, greater investment in new technologies and human capital would be necessary to address the challenges associated with issuing a cbdc. see for example mersch, y. β digital base money : an assessment from the ecb β s perspective β, speech at suomen pankki, january 2017. for instance, a malware installed on the bangladesh central bank β s computer successfully diverted around $ 80 million from its accounts. 5. conclusions the technological revolution is pushing us towards a digital representation of many objects in our daily lives. banknotes might be next in line. however, there are still many uncertainties on that front. some of them are economic in nature, such as the efficiency of the payment system and financial stability. others are related to individual rights, such as the right to privacy. society as a whole would do well to decide on how to tackle the latter before the central | 0 |
in the prices of primary commodities. since such commodities are traded on world markets, lower demand from asia is reflected in lower prices world - wide, which benefit us producers that use commodities as inputs. this development serves as a short - run boost, a positive supply shock, to the us economy, one that also helps contain inflationary pressures, as does the more general decline in import prices as the us dollar appreciates. but the asian crisis can be expected to continue to have an adverse impact on trade - sensitive industries. some evidence of a deterioration of our trade balance with the region β s economies has already appeared. with little historical guidance to draw from, however, considerable uncertainty prevails regarding the extent to which the present asian situation may contribute to slower us growth as well as the timing of such a slowdown. for instance, despite expectations that the crisis would have contributed to a slowdown in economic activity earlier this year, the economy β s growth in the first quarter of this year exceeded even the remarkable performance of 1997. however, more recent data reflecting developments in the second quarter, including survey information, do give some evidence of a slowing in the overall economy, especially the manufacturing sector, perhaps due to asian financial turmoil. as you might suspect, we will continue to watch incoming data quite closely as the year progresses to get a better handle on this situation. to be sure, uncertainties such as these have loomed large at times in the past, and we can learn much from those experiences. the uncertainties faced by policymakers during the 1970s about the economy β s potential provide an enlightening perspective on the present situation. following a period of rapid productivity gains during the 1950s and 1960s, the economy β s performance during the 1970s appeared out of line with previous experience. starting in 1973, in particular, inflation rose more than expected, at times considerably β so, while economic growth tended to disappoint expectations for a number of years. at first, it appeared reasonable to assume that the observed productivity β slowdown was temporary. reflecting this assumption, for instance, the council of economic advisors gave a 4 percent estimate of potential output growth in the 1974 economic report of the president, as would have been consistent with the earlier trends. increased uncertainty regarding this estimate was evident in the 1975 and 1976 reports, but not until 1977 was the point estimate of potential output growth revised downward, to 3. 6 percent. as the economy β s performance continued to disappoint, further downward revisions | proponents of this view considered 6 percent a reasonable estimate of the nairu. since 1995, however, the unemployment rate has been below this level, and substantially below of late, while inflation has continued to progress toward our price - stability objective. in response, over the past few years, many observers have revised their estimates of the nairu down by half a percentage point or more. yet considerable uncertainty remains about the confidence with which the new estimates can be relied upon for evaluating inflationary pressures. the nairu never was measured with precision ; statistical inference has always provided a distribution of likely values around a point estimate. and several factors, for instance the demographic composition of the labor force, have long been known to introduce systematic variation in its value over time. nonetheless, the uncertainties about how structural forces may be changing the nairu seem unusually large at present and cannot be ignored. and for some the present uncertainties have called into further question the basic usefulness of the concept, or at least of a point estimate held with any confidence. a related uncertainty concerns the underlying trend growth of labor productivity. until fairly recently, this trend had seemed to have been about constant since the mid 1970s. but there are many that believe that a pickup may have occurred in the last few years, and a faster productivity trend would help to explain the unexpectedly favorable economic growth - unemployment - inflation nexus in recent years. unfortunately, much as with the nairu, our understanding of the forces that drive the productivity trend is less than perfect. certainly, the investment boom of the current expansion has raised the amount of capital for each worker and contributed to an increase in labor productivity, and it may be that advancing technology is making the capital stock and workforce more productive. however, some of the recent pickup in productivity is the normal response to the faster output growth of late, so the degree to which there is a new higher trend remains an open question. another difficulty in assessing the current amount of slack in the economy, and a third uncertainty, concerns the divergent patterns in alternative measures of excess demand. capacity utilization in manufacturing and the rate of unemployment have historically moved together over the cycle. unexpectedly, they have diverged in the current expansion, in part as the surge in investment has kept capacity utilization in the manufacturing sector near its historic average while labor markets have become tighter and tighter. recent developments in south - east asia also have contributed to uncertainty about the current monetary policy environment. one place where the effect of the crisis is being felt is | 1 |
relative to the trajectory expected in december last year, the projection for headline inflation for 2019 has remained largely unaltered. by ensuring accommodative financing conditions, monetary policy will continue to support domestic demand by mobilising idle resources. this will lead to a build - up of domestic price pressures and ultimately pull underlying inflation up as remaining slack in the economy is gradually reabsorbed and the output gap narrows further. in turn, this will facilitate a durable return of inflation back to a level that is below, but close to, 2 % over the medium term. today, an important element keeping underlying price pressures subdued is muted wage dynamics, which are shaped by many factors. at this stage, besides weak productivity developments, there is still a significant degree of labour market slack that keeps a lid on wage growth. furthermore, the process of setting wages is to some extent backward - looking in a number of euro area countries, reflecting formal and informal indexation mechanisms. 2 additionally, the timing of wage negotiations plays a role in postponing the point in time when growing confidence that inflation is approaching the ecb β s intended medium - term level starts to become more visible in aggregate wage figures. moreover, weak wage growth could also reflect previous downward wage rigidities : difficulties in reducing wages during earlier stages of the crisis may result, symmetrically, in a slower upward adjustment of wages as labour market conditions improve. 3 overall, while we are certainly seeing a firming, broadening and more resilient economic recovery, we still need to create a sufficiently broad and solid information basis to build confidence that the projected path of inflation is robust, durable and self - sustained. underlying inflation pressures still give scant indications of a convincing upward trend as domestic cost pressures, notably wage growth, remain subdued. importantly, the economic recovery and the outlook for price stability are still predicated on the very favourable financing conditions that to a large extent depend on continued monetary policy support. absent that quantum of support, the progress towards a sustained adjustment that we see in our projections is likely to be slower or even stall. therefore, we need to look through the recent surge in inflation, which is driven by transient factors that will probably fade before long. our conclusion that a very substantial degree of monetary accommodation is still needed for underlying inflation pressures to build up and support headline inflation in the medium term remains valid. of course, monetary policy cannot be the only source of support for growth : action from other 2 / 3 bis | fallen by around 110 basis points. lending rates for very small loans, which can be taken as a proxy for loans to small and medium - sized enterprises ( smes ), have declined by around 180 basis points. the significant improvement in funding conditions for smes is especially encouraging as they provide two - thirds of total private sector employment in the euro area. the sharp reduction in bank lending rates has been accompanied by easier access to funding, as recent surveys have shown1 these positive developments have been supported by the second series of targeted longer - term refinancing operations, as a result of which banks are passing on the favourable funding conditions to their customers. moreover, these improvements are not limited to interest rates : bank lending volumes have also been gradually recovering since early 2014. market - based funding conditions, too, have improved significantly in response to the corporate sector purchase programme launched in june 2016. looking forward, we are confident that the ongoing economic expansion will continue to firm and broaden. incoming data, as well as improving consumer and business sentiment indicators, suggest that the cyclical recovery is gaining momentum. private consumption growth continues to be a key driver of the ongoing recovery, which is underpinned by improvements in labour 1 / 3 bis central bankers'speeches market conditions, with unemployment steadily falling despite a rise in participation. these developments increase households β real disposable income, which in turn boosts their spending. business investment is also expected to continue recovering amid support from better corporate profitability and the very favourable financing conditions. as for price developments, after hovering at levels well below 1 % for three years, with occasional dips into negative territory, euro area headline inflation edged higher towards the end of last year and reached 2 % in february. this upward movement of inflation mainly reflects increases in energy and food prices. underlying inflation β which relates more to domestic price pressures β continues to remain very subdued and has yet to show clear signs of trend inversion as unutilised resources still weigh on wage and price growth. for example, the annual rate of hicp inflation excluding food and energy has mostly remained below 1 % since late 2013. concerning the outlook for price developments, our latest staff macroeconomic projections suggest that the strong upward pressures on headline inflation from recent increases in energy and food price inflation are not expected to fundamentally change the medium - term outlook for price stability. in fact, while the staff projections indicate that the recent price pressures will cause a hump in the inflation path in 2017 and 2018 | 1 |
like to add a few comments on possible minimum wage hikes in mexico. minimum wages are a feature common to most countries, and mexico is no exception, with the level set by a national commission for all jurisdictions. what is particular to our country is a notable deterioration of this indicator in the 1980s and 1990s due to high and unstable inflation. this process yielded lower purchasing power for all salaries and underscores the vital necessity of protecting the significant ground gained in the last decade in the battle to control inflation, and of consolidating this progress. what effects would minimum wage hikes have in mexico? the economic literature on competitive labor markets suggests that rises in real minimum wages can hurt employment and training, especially of young and unskilled laborers, and promote informality. also, there may be some pass - through from these increases to prices of final goods and services. the degree of these and other impacts remains an empirical issue. 3 in the case of mexico, these effects could be material, for at least two reasons. first, negotiations of private - sector contractual salaries have tended to take into account minimumwage revisions as a floor reference, although the two are not automatically tied. the wage contagion could reflect partly a substitution effect away from less - skilled workers, a phenomenon observed in many countries. 4 second, the minimum wage serves as an index for myriad legal purposes, including fines, tax exemptions, public pensions, government - sponsored mortgages, and many private contracts. wage contagion and indexation would broaden the possible negative real effects on the economy. furthermore, significant minimum wage hikes may contaminate the process of price formation. these adjustments could trigger a chain reaction on inflation expectations, complicating the challenges for the bank of mexico in getting inflation to converge to its permanent target. to handle the risk from indexation, complicated legal changes and cumbersome contract revisions would be called for. 5 for empirical evidence on the possible effects of minimum wage increases, see, for example, neumark, d. and w. wascher ( 2008 ), minimum wages. cambridge, ma : the mit press ; neumark, et al. ( 2013 ), β revisiting the minimum wage - employment debate : throwing out the baby with the bathwater? β nber working paper 18681 ; and meer, j. and j. west ( 2013 ), β effects of the minimum wage on employment dynamics. β nber working | and progress on financial inclusion in mexico there are several factors that may explain the low level of financial inclusion in mexico. the greatest problem for financial intermediaries appears to reside in the high costs of servicing low - income communities, especially those in isolated locations. see bis ( 2012 ), statistics on payment, clearing and settlement systems in the cpss countries, january ; the world bank, enterprise survey ; and central banks. according to recent data, 36 percent of mexican adults save in the formal system, while 44 percent save in the informal system. at the same time, 28 percent have formal credit, while 34 percent seek loans in the informal sector. see inegi ( 2012 ), encuesta nacional de inclusion financiera. analisis de los resultados, inegi, pp. 20 β 27. bis central bankers β speeches in fact, geographic distances, low population density, and the small size of the market make it more burdensome for banks to open branches and other service channels. additionally, low balances and high - volume transactions make accounts expensive to administer. where loans are concerned, limited information on individuals and firms as well as poor guarantees and recovery mechanisms can make lending unprofitable. on the other hand, product designs inadequate to the needs of users also limit financial inclusion. from the perspective of potential customers, practical reasons and cultural barriers exist, as manifested by distrust in banks. many people cite as reasons for not using financial institutions the facts that fees are high and interest rates on savings low, excessive requirements are demanded, and branches are far away. definitely, the benefits of formal financial intermediation have not been well communicated, nor has a more effective response been offered by financial intermediaries to certain potential customer needs. 3 nevertheless, in recent years, mexico has continued to increase the availability of financial services for ever greater numbers of families and businesses. for example, intermediaries have expanded their physical infrastructure to provide services, and to widen and diversify product offerings. similarly, the use of electronic transactions has increased significantly, substituting less efficient means of payment such as checks. one piece of remarkable progress has been the growth of commission agents, through which businesses can provide financial services on behalf of banks, allowing them to take advantage of already built infrastructure, lower their costs, and promote inclusion in faraway populations. to highlight the contribution of this phenomenon, it is enough to say that currently, in more than 10 percent of the nation β | 0.5 |
and systemic effects. clearly, these tools are important and helpful in preventing and managing systemic risks. but are they sufficient? this seems questionable given the high level of complexity that has arisen in globally integrated financial markets. this complexity leads to non - linear dynamics in the system which are very difficult to handle both for the risk management of financial institutions and for supervisors. the complexity is also characterised by a phenomenon known as β knightian uncertainty β, named after the famous chicago economist frank knight. knight argued : β there are known knowns ; there are things we know we know. we also know there are known unknowns ; that is to say we know there are some things we do not know. but there are also unknown unknowns β the ones we don β t know we don β t know. β bis central bankers β speeches let me illustrate this theory. prior to the financial crisis a shadow banking system emerged which found itself at the centre of the crisis a few years later. this shadow banking system has aspects of β known unknowns β and β unknown unknowns β. as a consequence, risks stemming from this system were broadly ignored or underestimated. international macroprudential bodies like the esrb and the fsb are trying to fill this gap with knowledge, but progress in this area is made at a snail β s pace due to the lack of data. even if we are successful in the end we cannot be sure we have identified all relevant risks, because β unknown unknowns β could also exist in another area of the financial system which we do not observe. in my view, therefore, complexity reduction might be an effective instrument for preventing systemic crises. i can imagine that advice such as this could have been found in the lost sibylline books. again, let us be specific. there are a lot of regulatory target variables which involve the use of complex risk - adjusting methods. for example, the core capital ratio is the ratio of core capital to risk - weighted assets. but the models used for adjusting the risk did not perform perfectly and underestimated the true risks stemming from cdos. as a result, financial institutions were undercapitalised when lehman became insolvent. if, in addition, we had had a robust target such as a leverage ratio which is not risk - adjusted, financial institutions would have been better prepared on the eve of lehman. moreover, according to the concept of rwas, government bonds have zero weights. with a risk - robust measure | axel a weber : 7th bundesbank lecture 2010 β introductory remarks introductory remarks by professor axel a weber, president of the deutsche bundesbank, at the 7th bundesbank lecture 2010, berlin, 14 september 2010. * 1. * * introduction ladies and gentlemen i am very pleased to welcome you to this year β s bundesbank lecture, which is being held at the old town hall in the very heart of berlin. the old town hall was built between 1902 and 1911 as an extension of the β red town hall β, which is just a stone β s throw from here. from 1949 to 1990, the old town hall was the seat of the council of ministers of the then gdr, and, in 1990, the unification treaty between the two german states was negotiated in this very building. today, it serves as the seat of the senator for the interior of the federal state of berlin. the room we are in is the β bear hall β, named after the statue of a bronze bear in the middle of the hall. this statue β the bear is berlin β s heraldic symbol β had been exiled to east berlin β s zoo for four decades before it returned in 2001. it is in these historic surroundings that we have gathered for the 7th bundesbank lecture. i am particularly grateful that mr mark carney, governor of the bank of canada, will be our speaker today. mark, my special welcome to you and thanks a lot for accepting our invitation. it is an honour to have you here. let me say a few brief words about both this event and our speaker for today. 2. on the event when we established the bundesbank lecture in 2004 we had two objectives in mind : the first objective was to raise the bundesbank β s profile further in the german capital. the second aim was to provide a high - level forum for public debate on economic and monetary policy issues. especially this second objective seems to have gained in importance given our turbulent times and the intellectual uncertainty they have provoked. consequently, we are happy to look back on a long line of very distinguished speakers β including, of course, mark carney, but also alan greenspan, jean - claude trichet, tommaso padoa - schioppa, ben bernanke, mario draghi and dominique strauss - kahn. 3. on the subject it is no surprise that the financial crisis has dominated this event during the recent past. we have just entered the fourth year of the crisis | 0.5 |
forecast for this year to 0. 6 %. slide 6. wage growth is moderating in the euro area the euro area unemployment rate has remained at a record low and employment has increased, even though growth has been at a standstill since the end of 2022. this said, there are indications that labour demand is now adjusting downwards. recent euro area wage growth has been developing broadly in line with our expectations, slowing from 5 % to 4 %. importantly, a key driver of wage growth has been past inflation surprises rather than higher inflation expectations. 2 / 4 bis - central bankers'speeches slide 7. inflation expectations remain well anchored to the target inflation expectations have in fact been well anchored at around our 2 % target, as can be seen from this slide. referring to the ongoing weak demand conditions in the euro area, and in the spirit of the multilateral imf and world bank spring meetings this week, i would like to draw your attention to the developments in the euro area current account. in the march projections, the forecast for the current account surplus was revised significantly upwards, from 1 % to 3. 2 % of gdp for the current year and similarly for the two following years. as we know, the current account can be defined as the difference between investment and savings. this definition provides a useful viewpoint when assessing the effects of recent monetary policy tightening and its strong transmission. an increase in the current account surplus may reflect a lower level of investment or higher level of savings β or both, which seems to be the case in the euro area currently. an important factor contributing to a higher euro area current account is the low level of business and housing investment, which are expected to be very weak this year. this is reflected in the weak credit demand due to higher interest rates and also somewhat tighter credit supply. as bank profitability is not expected to remain as strong as before and credit risks are increasing somewhat, the supply factors may start to play a bigger role in credit extension, while credit demand is expected to start recovering. if weaker investments are contributing to a stronger current account, so too are higher savings. the savings rate increased to 14. 6 %, which is clearly above the pre - pandemic 13 %. of course, tighter monetary policy and higher interest rates play a major role in explaining the higher savings rate. however, uncertainty and low confidence also incentivise higher savings. the continuation of the russian war has probably had more complex and wide - ranging effects on confidence and | was perceived as asymmetric, effectively setting a 2 % ceiling for inflation. this asymmetry very likely contributed to lowering inflation expectations and thereby inflation itself. the new symmetric inflation target is expected to influence long - term inflation expectations and to anchor them more solidly to the 2 % inflation target. when we published our new symmetric inflation target in july 2021, the operating environment for monetary policy was changing dramatically. slide 5. inflation is converging towards the ecb's 2 % target the supply shocks, caused first by the pandemic and then by russia's unjustified and brutal war in ukraine, pushed the euro area inflation rate above 2. 5 % for the first time in nine years by the fall of 2021, and then all the way up to 10. 6 % in october 2022. thanks to the normalisation of energy prices and the determined but very consistent monetary tightening, euro area hicp inflation is now at 2. 4 %. it is expected to decline further, reaching our inflation target next year. when i addressed this forum a year and a half ago, in october 2022, the uncertainty related to energy supply in europe was extreme. rationing of energy supplies was widely discussed. so were the various risk scenarios, some containing severe stagflationary tendencies. at the time, energy was the key driver of euro area inflation, while moderate wage inflation was acting as an anchor. subsequently, europe reacted decisively and cut the energy crisis short. today, wages have replaced energy as the main inflation driver β but wage growth is now moderating and inflation declining. due to the energy price assumptions, our inflation forecasts overestimated actual inflation in the fourth quarter last year. for this year, our assumptions and inflation forecasts have been more accurate, although in march we did revise down our inflation forecast for this year to 2. 3 %. in september last year, our 2024 inflation forecast was at 3. 2 %, so we have in fact been approaching our target faster than we had expected at the time we raised the policy rate to the current level. however, disinflation is more than just a story of the reversal in energy price movements. monetary policy has played an important role in dampening demand since the rate hiking cycle started in july 2022. monetary restraint is continuing to reduce inflation and impact the real economy strongly, affecting the growth outlook, particularly for this year. in march, we also revised down our growth | 1 |
mortage in foreclosure process ( % of total credit ) ( % of total credit ) total prime subprime total prime subprime figure 5 monetary policy rates in g3 ( percentage ) us eu japan source : bloomberg. figure 6 spreads between libor and overnight index swaps ( ois ) ( basis points ) spread libor / ois 1 month spread libor / ois 3 months spread libor / ois 6 months - 20 jan. 07 apr. 07 jul. 07 oct. 07 jan. 08 may. 08 ago. 08 source : bloomberg. figure 7 real interest rates ( percentage ) - 1 us oecd ( 1 ) 10 year nominal bond return, minus same period expected inflation. ( 2 ) short term nominal interest rate minus cd. sources : bloomberg, oecd and survey of professional forecasters. figure 8 banking credit approval standards ( * ) corporate credits ( big and medium ) consumption credits - 10 - 10 - 20 - 20 - 30 - 30 - 40 - 40 - 50 - 50 - 60 - 60 - 70 1t03 1t04 us 1t05 euro area 1t06 1t07 uk 1t08 japan - 70 1t03 1t04 1t05 us ( credit cards ) uk 1t06 1t07 1t08 euro area japan ( * ) positive value is more flexibility in credit approval. sources : ecb, bank of japan and federal reserve. figure 9 oil wti prices and gsci grain and cereals and gsci energy ( dollars per barrel ; index 01 / 01 / 2007 = 100 ) jan. 07 may. 07 sep. 07 jan. 08 may. 08 sep. 08 gsci energy gsci grains and cereals oil wti source : bloomberg. figure 10 annual inflation ( * ) ( percentage ) jul latin america asia em europe em jul g3 economies ( * ) geometric average of countries each region. ( 1 ) latin america : brazil, mexico, chile, colombia y peru. ( 2 ) asia em : china, india, indonesia, south korea, malaysia, singapore, taiwan and thailand. ( 3 ) europe em : czech republic, hungary, poland, russia andturkey. ( 4 ) g3 : us, euro area and japan. source : ceic data. figure 11 inflation forecast for 2008 ( * ) ( percentage ) g3 latin america emerging asia emerging europe ( * ) geometric | and much learning. 5 / 5 | 0.5 |
bank of japan β s june report of recent economic and financial developments in japan bank of japan, communication, 16 / 6 / 98. the bank β s view1 final demand remains weak and production continues to decline in japan. as a consequence, employment and income conditions have recently shown a significant deterioration. with respect to final demand, public - sector investment seems to have bottomed out. growth in net exports, however, has virtually peaked out as exports to other asian countries declined. business fixed investment continues to be on the decline. private consumption shows little sign of recovery, although the deterioration has slowed. housing investment has decreased further. against the background of weak final demand, inventories have accumulated further and industrial production continues to decrease. as a result, corporate profits have worsened, and employment and income conditions have deteriorated evidently, as seen recently in the rapid rise of the unemployment rate. as for the outlook of the economy, the implementation of the supplementary budget for fiscal 1998 is assumed to boost demand through additional public works and special income tax - reduction, and cease the negative interactions of production, income, and expenditure. however, such positive effects of the fiscal policy may be weakened, if the ongoing rapid deterioration in employment and income conditions further dampens the overall economic activities. therefore, the overall economic activities, including corporate and household confidence, should be carefully monitored. with regard to prices, wholesale prices continue to fall and consumer prices ( excluding the effects of institutional changes ) have declined slightly below the previous year β s level. with respect to the factors affecting the outlook, the downward pressure on domestic prices induced by the decline in import prices including overseas commodity prices has already weakened. also, the expansion in the output gap in the economy is expected to slow in line with the implementation of the economic stimulus package. however, reflecting the present high inventory level and the relatively large output gap, prices are likely to be weak for some time. there may also be additional downward pressures if domestic demand weakens further. as for financial markets, rates on term instruments ( for both spots and futures ) have been generally steady in the money markets. yields on long - term government bonds recorded historical lows from late april to early june with the releases of weak economic indicators, and are recently showing a slight turnaround. stock prices have been slightly declining, indicating the weak market sentiment on the economy. market concern towards credit risk remains strong, and the yield differential between bonds issued by the private sector and those by the government has been significant | y v reddy : use of technology in the financial sector - significance of concerted efforts address by dr y v reddy, governor of the reserve bank of india, at the banking technology awards function 2006, at the institute for development and research in banking technology, hyderabad, 2 september 2006. * * * shri arvind sharma, director, idrbt, members of the governing council of the idrbt, fellow bankers and distinguished guests, it gives me immense pleasure to be here with friends from the banking fraternity. in fact, being here is part of my annual pilgrimage to the institute for development and research in banking technology ( idrbt ). at the outset, i would like to compliment the governing council, faculty and staff of the idrbt for continuing with their mission with distinction. the foundation for large - scale induction of it in the banking sector was provided by the recommendations of the committees headed by dr. c. rangarajan, in 1984 and 1989. subsequently, in 1994, the reserve bank constituted a committee on'technology upgradation in the banking sector '. the committee made a number of recommendations covering payment systems including setting up of an autonomous centre for development and research in banking technology. the idrbt was created as a sequel. the institute has established and operates the indian financial network ( infinet ), performs research in banking technology and provides consultancy services apart from providing educational and training facilities for the banking sector. in my remarks today, i would like to highlight the need for concerted efforts to enhance the use of technology in the financial sector to ensure efficiency, stability, competition and above all service to the common person. technology and the rbi i would like to enumerate for record a few technology - related initiatives of the rbi. first, the establishment of the mechanised cheque processing systems using the magnetic ink character recognition ( micr ) technology in india. these have been acknowledged the world over as systems which have stabilised well with overall reject rates of around 1 % while, i understand, that the international rates are around 2 %. those who operate these systems, therefore, deserve to be complimented. second, the technological infrastructure created by the idrbt since the establishment of the infinet in 1999. this was aimed at sharing expensive it resources so as to achieve the economies of scale. one of the notable achievements of the idrbt has been the implementation of public key infrastructure ( pki ) - based electronic data transfer with very | 0 |
defined strategy. finally, β pillar 3 β recognises that markets can serve as an ally to official supervision when participants have access to sufficient and timely information on a bank β s risk profile. together, the three pillars are intended to complement each other and promote a more flexible, forward - looking and comprehensive approach to capital supervision. elements of all three pillars certainly already exist in the supervisory systems of leading economies : but basel ii represents a concerted effort to apply those pillars more consistently across countries within a common framework. that, in turn, will help to reduce the burden on internationally active banks and promote a more level playing field for global competitors. while basel ii is a large step forward for safety and soundness standards, in many ways it is building on the advances that banks have long been developing on their own. we believe that it is important to recognise those advances so that supervision remains relevant to banking activities today. likewise, adopting basel ii now will maintain banks β momentum in innovating and in strengthening their products and processes so that they can better serve as sources of credit and growth to businesses and consumers tomorrow. incentive - based approach it is clear then that basel ii is about much more than just setting better quantitative minimum capital requirements. it is about establishing incentive - based approaches to risk and capital adequacy management, within the framework of the three mutually supporting pillars. on a micro level, the new approach will promote better risk management, adequate capitalization and transparency. on a macro level, it will contribute to financial stability and the resilience of the banking system. let me expand a little on the latter point. i am convinced that when banks have the right incentives to manage their risks appropriately, to hold sufficient capital and to improve transparency, the banking system will become more resilient, more stable and better able to serve as a source for credit and growth. those characteristics matter greatly to the livelihood of our citizens, to the outlook for commerce and business, and more generally to the health of our economy as a whole. in order to reinforce its relevance as a macro standard, the new framework incorporates a number of elements such as the requirement to use longer time horizons in the design of internal rating systems and in the average calculations of key variables, and also the need to carry out stress tests and conduct calculations in downturn conditions. all these elements will ensure that bank managers are conscious of how risk - drivers change through the cycle and in stress conditions, and that they incorporate these elements into their | 27. 11. 2020 opening address of the 19th conference β club de gestion de riesgos de espana margarita delgado deputy governor introduction many thanks to the risk management club for their kind invitation to open this annual conference. we are now into its nineteenth edition that, inevitably, will focus on the new challenges in the aftermath of covid - 19. the title of this conference refers to the β new world β that will be awaiting us after overcoming the crisis caused by the pandemic. needless to say, we all wish that this happens as soon as possible. it may seem a little excessive to talk of a β new world β after the pandemic, but i believe to some extent it will be. we should remember that crises are periods of change, in which what is established is called into question. each crisis is certainly different from previous ones. or rather it should be different, at least if we supervisors, regulators and banks learn from the past and avoid making the same mistakes. in any event, it seems we have now been hearing the word β crisis β more than ever for over a decade. until relatively recently, when we referred to β the crisis β we had the global financial crisis in mind. now, sadly, we must clarify which crisis we are talking about. it could be said that the society we live in may be the result of how we have tackled and resolved each of the crises we have faced. with effort and sacrifice our society has overcome problematic situations, some not so distant in time. and the pandemic will certainly be no exception. as in other previous crises, it is vital that we should be able to draw lessons allowing us to improve those aspects that have fallen short, that have not worked as foreseen or that need to be strengthened. naturally, this need to draw lessons applies to banking regulation, but also to health, social insurance and economic aspects that have evidenced shortcomings. as you know, the banking supervisory and regulatory frameworks were overhauled to include the lessons we learned from the previous financial crisis. while unrelated, we could say that the situation caused by covid is the first test for this global reform and, almost inevitably, we will be assessing the functioning of the different components of the new framework after facing this global, exogenous, severe and totally unexpected shock. let me begin with a very swift reference to the supervisory framework. i believe we will all agree that the launch of the single supervisory mechanism ( ss | 0.5 |
emmanuel tumusiime - mutebile : the way ahead for central banking in east africa speech by mr emmanuel tumusiime - mutebile, governor of bank of uganda, at the opening of the 16th east african central banking course, entebbe, 3 july 2006. * * * ladies and gentlemen, on behalf of bank of uganda which is hosting the course and also on behalf of my fellow governors in the east african central banks under whose authority the course is held, i wish to welcome you all to uganda. i hope you had a comfortable journey to the pearl of africa. the east african central banking course that you are about to embark on has a long history. the first one was held in 1970 at makerere university following a decision in 1968 by the governors of the three central banks to introduce a joint training course to be held bi - annual and hosted on a rotational basis by the three central banks. they took that decision because, among other reasons, they wanted to create a forum for middle managers to interact, exchange ideas, enable them to gain more understanding of central banking particularly monetary and fiscal policies and prepare them for higher responsibilities. i am happy that the programme has been running on schedule since then save for the temporary suspension between 1978 and 1982 following the collapse of the east african community. it was, however, resumed in 1984. though the rationale for the central banking course is as noble today as it was at its inception, the concerns are more critical now than they were then. i believe that as central bankers, you are aware that in a world that is increasingly becoming more dynamic, complex and uncertain, countries that continue to operate individually will certainly be faced with more serious challenges than those that operate in regional economic groupings. a case in point are the challenges of globalisation and economic liberalisation facilitated by information communication technology. the gravity of this matter can best be appreciated if we assess the global economic panorama. it should be instructive to us to note that if developed countries in europe have seen it fit to operate in union, developing countries like ours have no option but to do likewise. under the treaty of the east african community, signed on 30 november 1999, the presidents of the east african countries undertook to fast track the establishment of a customs union, which will be followed by a common market, a monetary union and, ultimately, a political federation. progress towards these arrangements requires close co - ordination in the process of evolving the required institutional and policy frameworks | to detail the specific functions including the supervision and regulation of financial institutions. one of our major pre - occupations as a central bank is to control inflation, i. e. maintaining the value of the uganda shilling by keeping at a minimum, the changes in overall prices of goods and services. moderate changes in prices are supposed to enable households and businesses to save and plan long term, without fear of significant erosion of their monetary value. i wish not to discuss monetary policy today, as i believe it is one aspect of our mandate where we may have 1 / 3 bis central bankers'speeches consensus with most stakeholders to the effect that the bank of uganda has performed very well especially since the mid - 1990s, compared to what the economy experienced in the 1980s and 1970s. second ; let me speak briefly about our mandate with respect to the supervision and regulation of financial institutions. it is critical to note that not every financial institution falls under the regulatory purview of the bank of uganda. bank of uganda currently oversees deposit taking institutions that fall under three categories ; commercial banks, credit institutions such as postbank uganda limited, opportunity bank and brac uganda limited ; and the micro - deposit taking institutions like pride microfinance, finca and ugafode microfinance. bank of uganda also oversees the foreign exchange bureaus and licenses any entity wishing to engage in money remittance services. at the moment, the bank of uganda also oversees the mobile money services jointly with uganda communications commission. however, this is bound to change with the enactment of the national payments systems law that is in the offing that will have bank of uganda taking sole responsibility for regulation and supervision of the mobile financial services. money lenders and other microfinance institutions are therefore not the responsibility of the bank of uganda. non - deposit taking microfinance institutions and entities like saccos are regulated by other agencies such as uganda microfinance regulatory authority. with respect to saccos, i want to urge the members to reflect on the unutilised potential of these groupings in fostering job creation and wealth for our community. often, the saccos are only used by members as some form of safe custody or saving to spend on later festivities and sharing out the proceeds of any interest earnings. such operational modalities often result in returns that are so small to undertake any meaningful investment by an individual member. i wish therefore to request members to consider transiting saccos into producer cooperatives by utilising the pooled | 0.5 |
work reduces the hardships inflicted by difficult economic times and helps ensure that our economy is producing at its full potential rather than leaving productive resources fallow. in the longer term, minimizing the duration of unemployment supports a healthy economy by avoiding some of the erosion of skills and loss of attachment to the labor force that is often associated with long - term unemployment. notwithstanding this observation, which adds urgency to the need to achieve a cyclical recovery in employment, most of the economic policies that support robust economic growth in the long run are outside the province of the central bank. we have heard a great deal lately about federal fiscal policy in the united states, so i will close with some thoughts on that topic, focusing on the role of fiscal policy in promoting stability and growth. to achieve economic and financial stability, u. s. fiscal policy must be placed on a sustainable path that ensures that debt relative to national income is at least stable or, preferably, declining over time. as i have emphasized on previous occasions, without significant policy changes, the finances of the federal government will inevitably spiral out of control, risking severe economic and financial damage. 1 the increasing fiscal burden that will be associated with the aging of the population and the ongoing rise in the costs of health care make prompt and decisive action in this area all the more critical. although the issue of fiscal sustainability must urgently be addressed, fiscal policymakers should not, as a consequence, disregard the fragility of the current economic recovery. fortunately, the two goals of achieving fiscal sustainability β which is the result of responsible policies set in place for the longer term β and avoiding the creation of fiscal headwinds for the current recovery are not incompatible. acting now to put in place a credible plan for reducing future deficits over the longer term, while being attentive to the implications of fiscal choices for the recovery in the near term, can help serve both objectives. fiscal policymakers can also promote stronger economic performance through the design of tax policies and spending programs. to the fullest extent possible, our nation β s tax and spending policies should increase incentives to work and to save, encourage investments in the skills of our workforce, stimulate private capital formation, promote research and development, and provide necessary public infrastructure. we cannot expect our economy to see ben s. bernanke ( 2011 ), β fiscal sustainability β, speech delivered at the annual conference of the committee for a responsible federal budget, washington, june 14. bis central bankers β speeches grow | it anew. like their counterparts in the euro area, our banks have strengthened their balance sheets and capital positions in recent years, and this ensures that the sector is wellprepared to adapt to risks as, and when, they materialise. our stress tests also confirm that capital remains above regulatory requirements even under extreme scenarios, and that banks are operating with healthy liquidity buffers. profitability is also improving, so it is opportune to strengthen capital buffers rather than to have to re - build them in a potentially less benign environment at some point in the future. 3 / 5 bis - central bankers'speeches it is less painful to provide adequately for credit risks and the stock of doubtful loans through the cycle, rather than having to deal with a potential increase in non - performing exposures at some other time in the future. thus, an increase in forborne loans - mostly reflecting the expiration of pandemic related loan moratoria - need to be addressed at some stage or another. in this respect, i am pleased to note that banks have proven to be quite conservative when providing for risks during the pandemic. i encourage banks to be proactive in complying with micro and macro prudential policies when formulating distribution policies going forward. foresight is key, as the generation of resilience from within is ultimately what drives the long - term value of any firm's equity and its stability. of course, macroprudential policy has to do its part. efficiency demands of us to pinpoint specific sources of risks and, where possible, choose targeted measures over generic alternatives. in certain circumstances, specific tools such as adjusted riskweights, borrower - based measures or sectoral systemic risk buffers are better alternatives to a generic tool which affects all segments of credit indiscriminately, hindering the funding of the economy's productive capacity, which is much needed for the economy to keep growing. lastly macroprudential policy demands from banks a higher level of diversification and productive investment. as past financial stability reports indicate banks'loan portfolios are highly concentrated towards real estate. this is a structural characteristic which is very well documented, so is the fact that mortgages are the prime drivers behind this concentration. macroprudential policy has a role to play here to address systemic concentration risks. but, apart from policy prescription, the importance of portfolio diversification cannot be underestimated. similarly, banks have a crucial role | 0 |
broadly. conclusion in summary, the supervisory capital assessment program is an important element of broader and ongoing efforts by the federal reserve, other federal bank regulators, and the treasury to ensure that our banking system has sufficient resources to navigate a challenging economic downturn. a collateral benefit is that many lessons of the exercise can be used to improve our supervisory processes. in particular, the supervisory capital assessment has demonstrated the benefits of using cross - firm, cross - portfolio information and the simultaneous review of a number of major firms to develop a more complete and fine - grained view of the health of the banking system. whether the objectives of the assessment program were achieved will only be known over time. we hope that in two or three years we will be able to reflect on the banking system's return to health with a sharply diminished reliance on government capital. more immediately, we hope and expect that the public and investors will take considerable comfort from the fact that our largest financial institutions have been evaluated in a comprehensive and rigorous fashion ; and that they will, as a consequence, be required to have a capital buffer adequate to weather future losses and to supply needed credit to our economy β even if the economic downturn is more severe than is currently anticipated. | roger w ferguson, jr : central banks and markets speech by mr roger w ferguson, jr, vice - chairman of the board of governors of the federal reserve system, at the bond market association 2002 awards dinner, new york, 9 october 2002. * * * i thank the members of the bond market association for selecting me to receive the 2002 distinguished public service award. i am particularly honored to join the company of previous recipients, who have included my colleagues alan greenspan and bill mcdonough, former treasury secretary rubin, and senators christopher dodd and kay bailey hutchinson. i understand that the proceeds from this dinner will be used to support the work of the bond market foundation, whose mission includes advancing the financial literacy of disadvantaged americans. that this is a high purpose is beyond doubt. i know that i could speak for much longer than you care to listen about why the understanding of economics and finance is crucial for individuals in a market economy. knowledgeable and astute consumers can avoid making those investment errors that come from misunderstanding or being misled. they also promote competition among providers, which benefits us all. personal financial security enhances individual well - being. and, at a more fundamental level, our social fabric and national image are intimately connected to our material aspirations. the united states cannot be the land of opportunity unless all of our citizens have both the tools and the ability to use those tools to improve their livelihoods and lives. fortunately, the increasing supply of services provided by our financial system - and the increasing complexity and diversity of product offerings - have increased consumer demand for improved financial education. the bond market foundation, like the federal reserve, has been looking for new ways to meet that demand. there are numerous other ways in which the federal reserve and the bond market association, and the fixed - income markets more generally, work together to improve the well - being of our fellow citizens. obviously, the impulse of monetary policy is transmitted, in part, through interest rates set by the market. we target only the overnight rate, and traders and investors, such as those represented and serviced by those here this evening, determine longer - term interest rates on treasury and private securities. the resulting structure of rates and spreads in the fixed - income markets can in turn be a valuable tool that we can use when analyzing the current state of macroeconomic conditions and forecasting the future. clearly, however, the roles of the fixed - income markets and the federal reserve are complementary, not identical. your role is to allocate | 0.5 |
few would deny that where european institutions have been invested with executive power, they have used it well. competition policy has been effective with both large companies and large countries. monetary policy has achieved a high degree of policy credibility. and for the ssm it is perhaps too early to judge, though i am certain we would not have had such a rigorous clean - up of our banking sector without it. if we look at the rules - based approach, however, it is difficult to reach such a positive conclusion. the fiscal rules have repeatedly been broken and trust between countries has been strained. and for economic policies rules - based approaches β such as the macroeconomic imbalance procedure β have so far not attracted much ownership from national policy - makers. so in my view the conclusion from recent experience is clear : if we agree that further institutional convergence is needed in the structural domain, then our long - term goal must be to move from a rules - based system to one based on stronger european institutions. 9 i must stress however that to make such a step, we first have to respect and follow the rules we have now. if we look at monetary policy as an example, we did not begin by creating a new institution. this would have been impossible. we had a series of rules - based systems β the β snake β, the european monetary system, the exchange rate mechanism β the experience of which led us to create the single currency and the european central bank. these various stages were however essential, because they gradually built trust between countries and led to a convergence of views about how best to conduct monetary policy. so there is no question today that the rules can be ignored because institutions would be better. on the contrary, it is only by following our rules that we can establish the mutual trust on which future institutions can be built. it is essential that the european parliament makes this process its own and imbues it with democratic legitimacy. 5. conclusion the way forward for the euro area that i have described today may seem simple, but it isn β t. it requires vision and perseverance. all those involved have to play their part in a sustained economic recovery. see my speech at sz finance day 2015, frankfurt http : / / www. ecb. europa. eu / press / key / date / 2015 / html / sp150316. en. html. am main, march 2015, bis central bankers β speeches but i also recognise that, in the process, we must not lose | this enlargement, both in political as well as economic terms, are clear. however, this does not make it less of a challenge, also for the ecb and the national central banks. from mid april onwards, the national central banks of the acceding countries will participate - as an observer - in meeting of escb committees ( in extended composition ) and meetings of the general council. enlargement involves a number of technical efforts from the side of the ecb and the national central bank, in terms of adaptations to the infrastructure, but also creates a new dimension to economic convergence and monetary stability in the european union. i am, however, convinced that the eurosystem will also master this challenge, as it has done before, on occasions, which demanded even more breath - taking efforts. ladies and gentlemen, i should now like to conclude. again, my gratitude goes to his excellency carlo ciampi and governor antonio fazio. i am deeply convinced that this meeting of the governing council will contribute to the team - sprit of the eurosystem and hence will be one more step in the direction of a united europe. | 0.5 |
thomas jordan : switzerland β developments and challenges in 2012 from a monetary policy perspective speech by mr thomas jordan, chairman of the governing board of the swiss national bank, at the annual general meeting of shareholders of the swiss national bank, berne, 26 april 2013. * * * mr president of the bank council dear shareholders dear guests once again, the european financial and debt crisis has dominated events of the past year. and, once again, the swiss national bank has been faced with considerable challenges in the conduct of its monetary policy. the crisis in europe intensified in spring and summer and triggered strong upward pressure on the swiss franc. this was pressure we had to withstand. in an already fraught global economic environment, an appreciation of the swiss franc would have caused an inappropriate tightening in monetary conditions for switzerland. this in turn would have compromised price stability and had potentially serious consequences for the swiss economy. the snb therefore enforced the minimum exchange rate of chf 1. 20 per euro with the utmost determination. this called, at times, for a high level of activity on the foreign exchange market on the part of the snb. the extensive purchases of foreign currency were reflected on our balance sheet. in my remarks today, i would like to start by addressing the key developments and challenges in 2012 from a monetary policy perspective and, at the same time, present you with our assessment of the current year. i would then like to turn my attention to the subject of gold as part of our currency reserves. but first, let me begin with the key events in monetary policy. key events in monetary policy in 2012 and 2013 more than 20 months have passed since the snb introduced the minimum exchange rate against the euro under exceptional circumstances. in summer 2011, the swiss franc had appreciated to such an extent that we had to take action. it is the snb β s statutory mandate to ensure price stability, while taking economic developments into account. with money market interest rates already close to zero and conventional monetary policy options exhausted, we would have no longer been able to fulfil this mandate without the introduction of a minimum exchange rate. in taking this step, the snb averted the threat of adverse developments to price stability and the swiss economy. the minimum exchange rate provided the foreign exchange market with clear guidance and gave companies a sounder basis for their investment planning. notwithstanding the minimum exchange rate, conditions for the swiss economy remained difficult in the past year. global economic growth weakened, after having already lost momentum | jean - pierre roth : switzerland as an industrial location and national bank policy summary of a speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the europa forum lucerne, lucerne, 27 october 2003. the complete speech can be found in german on the swiss national bank β s website ( www. snb. ch ). * * * in a high - wage country such as switzerland enterprises can only maintain their position in the face of international competition by a process of ongoing innovation. the resulting structural change in the direction of highly technological and increasingly productive economic sectors is also a prerequisite for strong economic growth. in an international comparison, however, switzerland β s growth is poor. this weak perfomance in terms of growth highlights the need for action in economic policy. monetary policy cannot, however, fulfil this role. the primary task of monetary policy is to ensure price stability. price stability is an important locational advantage that switzerland has to offer. moreover, monetary policy can also contribute to stabilising the economy and warding off undesirable exchange rate shocks. it is, however, not in a position to bring about a sustained improvement in economic growth. the result of such an attempt would merely be economic overheating with the threat of a subsequent slide of the economy into recession. lasting effects on economic growth may, by contrast, emanate from education policy, research policy, policy on foreigners and fiscal policy. weak growth in switzerland, however, may be explained mainly by the conspicuous productivity gap between the innovative export sector and the domestic sector set in its traditional structures. the reason for this lethargy of the domestic sector is a dense network of regulations which limit competition and obstruct technical progress. the result is an excessively high domestic price level from which not only consumers but also exporters suffer. growth - promoting measures must therefore aim primarily at wedging impediments to competition in the domestic sector. | 0.5 |
of the above points. it is also important to promote structural reform in order to assure the economy β s sustained growth in the medium term. with regard to prices, import prices continue to rise due to the bottoming out of international commodity prices such as crude oil prices. the pace of decline in domestic wholesale prices is slowing due to a rise in prices of some products closely related to international commodities, such as those of petroleum products. on the other hand, corporate service prices continue to decline. consumer prices remain weak. in relation to price developments in the future, there is a possibility that prices overall, which have been on a downtrend, will temporarily level off reflecting the rise in import prices. however, distinct narrowing in the output gap is unlikely for the time being even though the economy has stopped deteriorating, and wages continue to decline. thus, downward pressure on prices is expected to remain. in the financial market, the overnight call rate has stayed at nearly zero, and many financial institutions have become confident about the availability of liquidity. interest rates on term instruments have declined further, reflecting the market β s view that monetary easing will continue for some time. the japan premium has almost disappeared. furthermore, the yield spread between government bonds and private bonds β β bank debentures and corporate bonds β β has narrowed. yields on long - term government bonds have risen since late may to the current level of around 1. 6 - 1. 7 percent. stock prices, which had generally been in the range of 16, 000 - 17, 000 yen, have recently risen and exceeded 17, 000 yen. the amount outstanding of funds in the call money market has continued to decrease. to date, this has not led to any difficulty in funds settlement, but close attention should be paid to future market developments. with regard to corporate finance, private banks have basically retained their cautious lending attitude. however, constraint that had been caused by severe fund - raising conditions and insufficient capital base has eased considerably. under these circumstances, major banks have gradually become more active than before in extending loans, especially for projects involving relatively small credit risks. however, credit demand for economic activities such as business fixed investment remains weak. in addition, firms β moves to increase their on - hand liquidity are apparently settling down. as a result, credit demand in the private sector has weakened further. money stock ( m2 + cds ) has recently been showing a slightly higher year - to - year growth rate, mainly because firms β curtail | ##ctioning, they could also reflect more structural underlying problems that monetary policy measures cannot resolve. if the central bank were to respond to the latter, it would intervene in areas where other players have a responsibility to act. the key challenge is therefore to assess which circumstances apply, before deciding on the most appropriate instrument or set of instruments to activate. for a discussion of these results in a broader context, see bonam, d., galati, g., hindrayanto, i., hoeberichts, m., samarina, a. and i. stanga ( 2019 ). inflation in the euro area since the global financial crisis. dnb occasional study no. 3. 5 see for instance gertler and karadi ( 2015 ), monetary policy surprises, credit costs, and economic activity, american economic journal, 7 ( 1 ), 44 β 76. it is important to note that, next to the higher level of uncertainty, employing unconventional tools will also likely carry larger risks, for instance in terms of longer - run side β effects. i have therefore argued before that policymakers should consider exercising more caution in deploying unconventional instruments. 6 in times of severe market stress with equally severe frictions, however, the advantages of more aggressive action might outweigh the disadvantages of higher uncertainty and larger risks. specific challenges for the ecb against this backdrop, let me focus on two additional challenges related to the institutional context within which the ecb operates. the first challenge here is provided by the observation that the ecb has to operate in an incomplete monetary union with a more convoluted process of policy coordination. the design of our economic and monetary union remains a compromise between limited risk - sharing and a large degree of national liability and control. this confronts the ecb with more institutional restrictions than other central banks. it has to deal with 19 different fiscal counterparts, for instance, all of which face different sovereign risk premia. this makes the purchase of government bonds more fraught than in other jurisdictions. to what extent further steps toward fiscal risk - sharing should be taken, is very much a political question. from my perspective, i can only note that more effective fiscal stabilization would have the potential to make the ecb β s job significantly easier. the second challenge specifically faced by the ecb relates to the euro area β s financial architecture. within the euro area, banks play a dominant role. pervasive banking sector weaknesses like non - performing loans and | 0 |
in most other countries, the cpi is published monthly, so the wait to get an assessment on current inflation is not so long elsewhere. more timely and more frequent estimates of output and inflation are not unambiguously desirable. there is clearly a trade - off between timeliness and accuracy. but, in the case of inflation, a more frequent estimate would help to identify changes in the trend in inflation sooner ; it probably comes with more noise, but we have ways to deal with that. any reading on inflation always contains varying degrees of signal and noise about the β true β inflation process. at the moment, we need to wait three more months to gain a better understanding as to whether any particular read on inflation is signalling a possible change in trend or is just noise. that is one of the reasons why the rba has long advocated a shift to monthly calculation of the cpi. that said, we do not depend solely on gdp and the cpi to assess the current state of the economy. we spend a lot of time and effort piecing together information from a large number of other sources. these include higher frequency and more timely data, including from the abs, but also from a wide range of other data providers. the information we obtain from talking to people, particularly through our business liaison program, is also invaluable. the question then arises as to how we can filter the information we receive from all these different sources to gain an overall picture about inflation and the state of the overall economy. take gdp as an example. some of the data released before the national accounts, such as monthly retail sales and international trade, feed directly into the calculation of gdp. so we have a direct read on those. we β nowcast β other components of gdp using data that are more timely. let me illustrate for household consumption. we get a good measurement of consumption of goods by looking at monthly retail sales and sales of motor vehicles and fuel. but there is very little timely information on household consumption of services, so the nowcast of this component relies more on statistical relationships. some of these relationships are pretty weak, so we also supplement this with information on sales from our regular discussions with our business liaison contacts. this then gives us an estimate of consumption for the quarter. to get a preliminary nowcast for gdp growth for the quarter, we aggregate our best estimate for each of the relevant components. we then ask ourselves whether this estimate is consistent with other information that we have, such as the monthly labour market | data, as well as predictions from our macro forecasting models. the nowcast can be then updated with new information as it comes to hand. that said, my observation from a couple of decades of forecasting is that your first estimate of gdp ( three months out ) is often the best, and that additional information is often noise rather than signal. measurement uncertainty aside from when data are published, uncertainty about the present also arises from how things are measured. this takes two forms. first, there is the methodology used to actually measure the variable in question. second, there are the revisions to data after they were first published. http : / / www. rba. gov. au / speeches / 2017 / sp - dg - 2017 - 10 - 26. html 2 / 16 27 / 10 / 2017 uncertainty | speeches | rba on the first, a good example is the cpi. the cpi measures prices for a large number of items purchased by households. when aggregating these to calculate the overall consumer price index, each item is assigned a weight based on its average share of household expenditure. that is, the aim is to weight each price by the amount households spend on it, on average, in the period in question. obviously, these weights can change through time. but the weights used in the cpi are only updated each time the abs conducts a household expenditure survey, which, in recent times, has been every five or six years. in between each household expenditure survey, a number of things can happen. first of all, some new goods and services can come along that weren't there before. one example you might think of is a mobile phone. though it's not quite that straightforward, as before mobile phones, households spent money on landline phone bills and on cameras. so often these β new β goods are providing similar services to something that was there before. nevertheless, the abs needs to take account of these new goods coming in, as well as some old items dropping out. secondly, households adjust their spending in response to movements in prices and income. in practice, households tend to substitute towards items that have become relatively less expensive, and substitute away from items that have become relatively more expensive. but the expenditure weights in the cpi are only updated every five or six years. over time, the effective expenditure weights in the cpi become less representative of actual household expenditure patterns. that is, they are putting more weight on items whose prices are rising than households are actually spending | 1 |
and the center for popular democracy listening session, β august 25, https : / / www. kansascityfed. org / publications / research / escp / symposiums / escpevent. ganong, peter, and daniel shoag ( 2015 ). β why has regional income convergence in the u. s. declined? β working paper. cambridge, mass. : harvard web publishing, january, https : / / scholar. harvard. edu / files / shoag / files / why _ has _ regional _ income _ c onvergence _ in _ the _ us _ declined _ 01. pdf. goetz, stephen, mark partridge, and heather stephens ( 2017 ). β the economic status of rural america in the trump era, β mpra paper 77830. munich : munich personal repec archive, march, https : / / mpra. ub. uni - muenchen. de / 77830. gorbachev, olga ( 2011 ). β did household consumption become more volatile? β american economic review, vol. 101 ( august ), pp. 2248 - 70. - 20 hellerstein, judith k., david neumark, and melissa mcinerney ( 2008 ). β spatial mismatch or racial mismatch? β journal of urban economics, vol. 64 ( september ), pp. 464 - 79. kain, john f. ( 1968 ). β housing segregation, negro employment, and metropolitan decentralization, β quarterly journal of economics, vol. 82 ( may ), pp. 175 - 97. katz, lawrence f., jeffrey r. kling, and jeffrey b. liebman ( 2001 ). β moving to opportunity in boston : early results of a randomized mobility experiment, β quarterly journal of economics, vol. 116 ( may ), pp. 607 - 54. katz, lawrence f., and alan b. krueger ( 2017 ). β documenting decline in u. s. economic mobility, β science, april 24. koo, kyong hyun ( 2016 ). β the evolution of earnings volatility during and after the great recession, β industrial relations, vol. 55 ( october ), pp. 705 - 32. looney, adam, and constantine yannelis ( 2015 ). β a crisis in student loans? how changes in the characteristics of borrowers and in the institutions they attended contributed to rising loan | small businesses ; in contrast, about onethird of respondents cited poor sales as their most important problem. commercial bank responses to the sloos continue to indicate reduced demand for loans from small businesses. similarly, a poll conducted by the independent community bankers of america on january 8 revealed that a lack of loan demand was the factor most frequently cited by member institutions as constraining small business lending. improving prospects for small business lending in 2010 improvement in a number of the conditions that depressed lending in 2009, however, lead me to be somewhat optimistic that we may begin to see an increase in bank loans later this year. first, economic conditions, the most important determinant in the demand for, and availability of, small business lending, have improved considerably since the early and middle part of last year. in particular, spending by businesses and households appears to have gained some momentum. however, unemployment remains high, and concerns about the pace of job creation this year may restrain the consumer spending that is essential to overall business confidence. encouragingly, financial market conditions have become more supportive of economic growth, with notable declines in many risk spreads, some resumption of securitization activity, and a rebound of equity prices since their market low in early 2009. while financing conditions certainly remain tight for many small businesses, conditions would be considerably worse were it not for the action taken by the federal reserve and other government agencies in response to the financial crisis. beginning in september 2007, the federal reserve sharply reduced its target for the federal funds rate, which influences interest rates throughout the economy, and since december 2008, the target has been near zero. to improve mortgage market functioning and support housing markets and economic activity more broadly, the federal reserve has purchased large amounts of debt and mortgage - backed securities issued by fannie mae, freddie mac, and ginnie mae in addition to purchasing long - term treasury securities to help improve conditions in private credit markets. in the context of the enormous stress in many markets that characterized the financial crisis, the federal reserve also established new lending facilities and expanded existing facilities to respond to the unusual absence of liquidity in important markets and thereby enhanced the flow of credit to businesses and households. in particular, the federal reserve has provided support to securitization markets, which had been an important source of funding for loans to households and businesses. securitization markets ( other than those for mortgages guaranteed by the government or government - sponsored enterprises ) essentially shut down in mid - 2008. | 0.5 |
if china indeed becomes the largest economy in the world, if it develops a market - based monetary policy, if it gradually liberalizes the capital account of the balance of payments and allows the exchange rate to float, and if it can develop the necessary legal framework for the efficient operation of the financial markets, then there would be very good reason for shanghaihong kong to blossom as a financial center. if that were to happen, we could imagine the yuan becoming a major international currency, along with the dollar and the euro. but that is likely to take a long time. and it is an interesting question as to what language will be spoken in that market β i would bet on english. some of these issues have their counterparts on the political side, for instance the debate over the reform of the united nations, especially the security council in this regard, it helps that china is already one of the permanent members of the council. mumbai has a language advantage, already has a market - based monetary policy and a flexible exchange rate, has a more market - based financial system, and a more developed legal system than has shanghai. but the potential size of the domestic economy will probably cause mumbai to develop more slowly than shanghai as an international financial center. nonetheless there is every reason to believe it will become an increasingly important player in the international financial markets. vi. the rise of asia : political implications so far the international economic system has dealt reasonably well with its changing economic geography. while there are major concerns about how the united states current account deficit will be unwound, about the failure of the doha round, about protectionism more generally, and about the effects of the entry of another billion low - wage workers into the international economy, the overall impact of the rise of asia on the international system seems to have been favorable for most other countries. in addition, the rapid growth of asian economies has contributed to an extremely rapid decline in global poverty in the last quarter century. it is easy to describe crisis scenarios, particularly with regard to the unwinding of the u. s. current account deficit β and many delight and profit from doing so. but overall it seems that the international economy and its market and governmental organizations have sufficient flexibility, and perhaps even the wisdom, needed to deal with the required adjustments. the potential political consequences of the economic rise of two more great powers, and the relative decline of others, could be more worrying. the economic rise of both germany and japan in the second half of the nineteenth century and | earlier. the relatively slow recovery in the services sector also delays the recovery in employment, which also increases the cost of the pandemic incurred by households. we can minimize all these negative consequences by remaining resolute in the struggle with the pandemic, abiding by the measures and continuing the vaccinations. employing all policy tools through this process, central banks will continue to achieve price stability and support the postpandemic normalization. like all central banks, we are closely monitoring the developments regarding the course of the pandemic and its impacts on the global economy. as a result, it is apparent that central banks play an important role both in the past lockdown and the current normalization processes. the recent past revealed that central bank policies were quite effective in ensuring the uninterrupted functioning of the financial system, minimizing the pandemic - led damage suffered by both the banking and the corporate sectors, and capping the economic and social costs of the lockdowns. to ensure that the normalization process continues properly, the central bank of the republic of turkey will take the necessary policy steps, as it has done so far. concluding my speech, i would like to thank you all for your participation. | 0 |
and approximately 7 per cent of gdp in 2011. however, it is still high in historical terms and in comparison with other countries. it is hard to see that there are any major advantages for the swedish households of a significant part of their incomes being used to fund investments abroad, which in reality is what this means. to me, this is another sign that demand is too low in sweden. low demand is restraining consumption so that saving is high, and is also restraining investment. my interpretation of developments regarding the labour market, inflation and the current account is thus that demand in the swedish economy has been far too low since sweden was hit by the fall in demand in the autumn of 2008. although both monetary policy and fiscal policy have been used to counteract the fall in demand, this has not compensated in full for weak economic development abroad and for the weakening optimism of the households and companies. the fact that unemployment was relatively high in sweden already prior to the financial crisis ( as can be seen in figure 2, unemployment has averaged just over 7 per cent since 1999 ) and that the current account surplus has been substantial since the second half of the 1990s, raises the question of whether aggregate demand has been weak in an even longer perspective. my colleague lars e. o. svensson has, for example, claimed that unemployment has been unnecessarily high since the mid - 1990s because monetary policy has not been used to a sufficient extent to counteract shocks that have pushed down inflation. 3 it is of course important to determine what the situation was with regard to resource utilisation before the financial crisis in order to be able to assess the level that unemployment should eventually fall to. but this is not the issue that i intend to focus on today : my focus see the paper β the possible unemployment cost of average inflation below a credible target β or the speech β monetary policy and inflation : monetary policy is too tight β, 16 january 2013. bis central bankers β speeches here is instead on the issue of how economic policy could be used more effectively to stabilise business cycle fluctuations in the future despite the risks to financial stability. limited stimulation from fiscal policy in contrast to the situation in many european countries and the united states, there was a significant surplus in public net lending in sweden when the financial crisis began. in the euro area and the united states, public net lending as a percentage of gdp had shown an average deficit of just under 2 per cent during the 10 years before the crisis. the corresponding figure for | same time as we conduct a policy to promote financial stability. i will discuss how this should be done towards the end of my speech. low aggregate demand since the financial crisis when sweden was hit by a collapse in the demand for swedish export products at the end of 2008, gdp fell heavily. however, it did not take long for gdp to rise again and in 2010 growth figures reached almost record levels. to a certain extent, these high growth figures were of course a natural consequence of the major fall in gdp in late 2008 and early 2009. but, in contrast to many other countries, gdp in sweden also began to exceed its pre - crisis level relatively quickly ( see figure 1 ). bis central bankers β speeches figure 1. gdp in sweden and abroad index, q4 2007 = 100 uk euro area usa sweden note. seasonally - adjusted data sources : statistics sweden and national sources. however, despite the relatively favourable development of gdp, it seems that unemployment has become entrenched at a high level. initially unemployment increased less than we expected given the substantial fall in gdp β it peaked at 9 per cent in early 2010 β but since then it has fallen no lower than 7. 6 per cent ( see figure 2 ). in my view, this is a level that is much higher than what can be considered a long - run sustainable unemployment rate. 1 figure 2. unemployment in sweden per cent of labour force average 1999 - 2012 unemployment note. seasonally - adjusted data source : statistics sweden. long - run sustainable unemployment rate here refers to the level of unemployment that is expected to prevail when all cyclical shocks have abated, when ongoing structural changes have had a full impact and when inflation expectations are equal to the actual rate of inflation. see for example β the long - term development of the swedish labour market β, monetary policy report, july 2012. see also β correction of the riksbank β s estimate of the long - run sustainable employment rate β, appendix 2 of the minutes of the monetary policy meeting, july 2012, for a discussion of the role of expectations in the assessment of the long - run sustainable unemployment rate. bis central bankers β speeches unemployment has also begun to increase again in recent months and our latest forecast predicts that it will increase further to reach 8. 2 per cent in the third quarter of this year. figure 3. cpif inflation in sweden annual percentage change note. the series refers to monthly data. source : statistics sweden. developments thus indicate that we | 1 |
lack of comparable historical data, so we should not overstate the precision of stress testing tools as of today, and be ready to examine multiple scenarios and assumptions and learn progressively. this would help to properly complement our regulatory and supervisory framework. 6 / 6 | reflected in the basel framework ( eg credit risk, market risk, liquidity risk, operational risk ) can be used to capture climaterelated financial risks. this conclusion is important, as it provides a strong conceptual foundation for the committee β s next phase of work. instead of treating climate - related financial risk as a new separate risk type, the committee will explore possible measures within the current structure of the basel framework to address such risks. and this is where we are now. we are analysing the extent to which these risks can be addressed within the existing basel framework, identify potential gaps in the current framework and consider possible measures to address any gaps. i view this as a key value - add to the various international initiatives that are underway. and when analysing the potential existence of gaps to the current framework, we are taken a very comprehensive approach, meaning that we will look in detail to the regulatory, supervisory and disclosure dimensions. i think we all agree that the topic of climate change is all - encompassing when it comes to the potential impact on banks, and therefore requires a holistic approach when considering potential responses. on disclosure, we are conscious that there are a lot of initiatives underway focused on developing a globally consistent approach to sustainability reporting. but across these initiatives, we still need to bridge gaps so as to build a common disclosure foundation. given the evolving initiatives and uncertainties related to the measurement of climate - related financial risks, we will consider in near term an appropriate basel committee response to support these initiatives. the pillar 3 framework is a powerful instrument when it comes to disclosure. it is designed in a modular way and can therefore can be easily updated and adapted to reflect additional risks. on supervision, both the basel core principles and pillar 2 framework are flexible to accommodate any additional supervisory responses. the committee is also exploring sound supervisory practices associated with climate - related financial risks. the target is to prepare a report for discussion with the committee in q3 and publish the report by year - end ( subject to the committee β s approval ). finally on regulation, i note with regret that far too often the discussion appears to focus solely on the notion of introducing so - called β green supporting factors β to seemingly β incentivise β banks to favour greener loans and investments. as i mentioned previously, 4 / 6 the committee will not pursue such an approach, but will rather be led by its mandate. accordingly, we will be focused solely on the risk profile of different asset classes when | 1 |
hold. higher interest rates, combined with lower purchasing power in house - holds, have contributed to the necessary dampening of demand. fiscal policy, both in denmark and abroad, should also contribute to dampening inflation. the looser the fiscal policy, the tighter the monetary policy. if there is a wish to provide compensation for higher inflation, it should be targeted at selected groups and fall within the framework of an overall tight fiscal policy. in denmark, we had a healthy economy to begin with, with sound public finances and a strong labour market. employment has risen sharply in the wake of the pandemic, more so than in many other countries. our starting point has been an economy at risk of overheating, and a slowdown in growth is therefore both expected and necessary. market fluctuations make demands on management of liquidity and funding risks this is the economic situation that the financial sector needs to navigate in. it may not be easy. liquidity has become less abundant and credit spreads have risen from very low levels. the high volatility across assets have led to increasing collateral requirements in the derivatives markets for interest rates, currencies and commodities. this has increased the need for liquidity among the market participants that rely on derivatives to hedge their risk. in the uk, in september, we saw an example of just how wrong things can go. here, rising interest rates led to large falls in the value of pension companies'interest rate derivatives and government bonds. the requirement for increased collateral was met by selling off large volumes of bonds in the market. this raised fears of a negative price spiral and prompted the bank of england to intervene. fortunately, a similar scenario is less likely for danish pension companies. all in all, the danish pension sector is markedly better equipped to handle the interest rate hikes we're seeing right now. in fact, danish pension companies differ positively from their british counterparts in several respects : they are less leveraged, if at all, they have more highly liquid assets and better liquidity management. 2 / 6 bis - central bankers'speeches i admit that the development has been very rapid in the past year. but it can hardly come as a surprise that interest rates and the accompanying collateral requirement have increased. however, some pension companies still have only one or a few repo counterparties for provision of liquidity. this may prove inexpedient. the demand for liquidity may arise from several quarters. the pension sector's increased liquidity need is | critical to society in a crisis situation. here, one of the key principles is that this can be done without the use of central government resources, unlike during the financial crisis. for the banks, we're in a good place with a fully phased - in mrel requirement. this ensures that the investors carry the risk, during both good and bad times. but - for there is a but. we're still not quite there yet when it comes to the handling of mortgage credit institutions. there is still no appropriate solution for how a mortgage credit institution should be handled if there are insufficient funds to cover the losses in a resolution situation. when we look into our crystal ball, the problem of insufficient funds will only grow larger as the new basel capital requirements are phased in. a solution must be found to this, and it must not involve leaving the mortgage bonds to bear the losses. our preferred solution remains that mortgage credit institutions should be covered by bail - in and mrel requirements. a bail - in allows for impairment charges to be made on the debt instruments that rank higher than mortgage bonds. the mrel requirement is risk sensitive, relatively inexpensive and comprehensible abroad. the housing market has also become more resilient. we have received both growth guidelines and good practice rules, and both contribute to fencing in credit risks. but there are holes in the fence. the rules are many, complex and, in many cases, indicative. this leaves room for interpretation, makes it harder for the institutions to navigate and reduces regulatory transparency. the price falls that we're currently seeing for houses and owner - occupied flats do not change our fundamental assessment of the housing market. the housing market is of fairly great importance to the danish economy, and the structures need to be improved. in this context, it's unfortunate that we have yet to see the introduction of a statutory general amortisation requirement for highly indebted homeowners. this would make the individual homeowner and the whole economy more resilient. and it would make many detailed rules and guidelines superfluous. the economic framework and structures have become more resilient over the past forty years. and if anyone asks whether banks and mortgage credit institutions are better 5 / 6 bis - central bankers'speeches prepared for a crisis today than when i took up my position as governor ten years ago, the short answer is yes. but, as mentioned, we're not quite there yet. however, i will safely leave | 1 |
climate change and geopolitical shifts : accelerating the sustainable transition speech at the eurofi financial forum 2022 prague | sabine mauderer 1 introduction 2 time to act β more reasons 3 financing the sustainable transition 4 enhancing market transparency 5 transition plans β from commitment to action 6 conclusion 1 introduction ladies and gentlemen, having just arrived from germany, i β m enjoying the pleasant, slightly cloudy weather in prague. it is very different from what we have experienced over the summer. this summer has been hot, unbearably hot β with temperatures reaching 40 degrees celsius or higher. scorching heat coupled with little to no rainfall has caused an unprecedented stress on water levels. two - thirds of europe is subject to a drought warning or alert, according to the european drought observatory. [ 1 ] this could be the worst drought in at least 500 years. the severe rainfall deficit is increasing the risk of fires. the wildfire in the bohemian switzerland national park was terrible, the smell of smoke even reached as far as prague. of course, such weather extremes are not entirely new, but their magnitude and frequency are frightening. it shows : the climate change is not a future problem. the climate crisis is at our doorstep. in addition to the human tragedy, the proliferation of extreme weather events has economic consequences. the european council estimates that the financial losses caused by extreme weather and climate - related events exceeded 487 billion euro in the eu ( european union ) 27 over the last 40 years. [ 2 ] on average, only around 23 % of the total losses were insured. and it is widely understood that climate - related extreme weather events will become more frequent. without mitigating action, they could result in even greater losses going forward. 2 time to act β more reasons ladies and gentlemen, there is simply no time left to hesitate or delay. we need to pull together and speed up the green and sustainable transition. even more so now that the russian war in ukraine is having global ripple effects. it has sent food, energy and commodity prices soaring across the world. in germany, the year - ahead price for electricity reached a high record at the end of august. prices briefly rose to 1, 000 euro per megawatt hour. before the war, they rarely rose above 100 euro. overall, the world bank expects global energy prices to increase by 50 percent on average in 2022. and, in a recent analysis, the world bank estimated that the energy shock could lower global output by almost | to play in mobilising the badly needed investments. however, again and again, we have seen that investors struggle to identify what qualifies as sustainable or green β and what does not. this ambiguity leaves the door open to greenwashing. investors need to be certain that their money is actually contributing to the transition. transparency is key for aligning investment with net zero objectives. 4 enhancing market transparency high - quality climate - related data are crucial for aligning capital flows with lowcarbon transition pathways. there is, however, room for improvement regarding the quality and quantity of data. acknowledging the need for better data, the global network for greening the financial system ( ngfs ( central banks and supervisors network for greening the financial system ) ) has recently launched a new data directory. it serves as a central catalogue of available climate - related data sources and supports stakeholders in finding the sources relevant to them. the data directory facilitates access to these data and, importantly, it is available to the wider public. currently, the data directory contains more than 700 links to relevant data sources. in this way, the ngfs ( central banks and supervisors network for greening the financial system ) is helping to identify existing data gaps. similarly, the ngfs ( central banks and supervisors network for greening the financial system ) β s widely recognised scenario analyses also contribute to greater transparency. they not only allow us to put a price tag on delayed policy action. they also highlight how transition and physical risks would leave a mark on the world economy. moreover, regulatory ambition to enhance transparency has increased in recent years. at the eu ( european union ) level, promising steps are being taken to enhance corporate sustainability reporting. eu ( european union ) rules require large firms and financial institutions to disclose the environmental and social impacts of their activities β namely the corporate sustainability reporting directive ( csrd ) and the sustainable finance disclosure regulation ( sfdr ). in addition, eu ( european union ) sustainability reporting standards are currently being developed. these should ensure consistency of reporting rules and are envisaged to become part of the csrd. the european financial reporting advisory group ( efrag ) has been tasked with drafting them. a first set of standards is expected to be adopted by october 2022. while those steps are laudable, it is important to bear in mind complexity and practicability. aligning disclosure standards globally must take priority. building on and contributing to international standardisation initiatives will be vital. in this regards, the | 1 |
and gale. as i noted in connection with variation margins, initial margin requirements would also improve transparency because derivative market participants will know that their counterparties are at least partially insulated from defaults. of course, these benefits need to be appropriately balanced against the burdens imposed by initial margin. but it seems highly unlikely that the status quo is consistent with achieving the goals of the g - 20 to reduce the potential for systemic risk in the otc derivatives markets that could threaten the financial system. finally, let me turn to data requirements. both the research that i have highlighted today and practical experience demonstrate that market, prudential, and systemic risk authorities need detailed information on derivatives transactions and bilateral positions to assess evolving market risks and to execute their financial stability responsibilities. indeed, the federal reserve has already used preliminary information from the depository trust & clearing corporation β s trade information warehouse to construct network graphs of the cds market such as the one illustrated in figure 4. the data enable identification, for example, of firms, such as a and b in figure 4, that are large net sellers of protection. such information can play a valuable role in supervision. moreover, the analyses for monitoring and measuring systemic risks suggested and described by gai, haldane, and kapadia and by cont, moussa, and santos require this kind of detailed data to gain a holistic view of systemic risk. title vii of the dodd - frank act requires that data on u. s. swaps transactions be reported to swaps data repositories regulated by the commodity futures trading commission or to securities - based swaps data repositories regulated by the securities and exchange commission. similar european regulations impose trade reporting requirements on swaps transacted in europe. but there is still no guarantee, due to confidentiality concerns and legal barriers to data sharing, that the data reported into these trade repositories will ultimately be accessible to all of the regulators who require the data to obtain a holistic view of the derivatives market. given that the derivatives market is global in scope, access to those data is essential for authorities with systemic risk responsibilities, such as the federal reserve, to monitor and respond to risks. to make this point concrete, it is unclear whether we will be able, on a regular and comprehensive basis, to produce the sort of analysis illustrated by figure 4. in order to effectively monitor market developments and systemic risks, it is crucial that regulators across jurisdictions and countries share data on | last year offset the pressure from rising compensation gains on labor costs per unit of output. and non - labor costs, which are roughly a quarter of total consolidated costs of the nonfinancial corporate sector, were little changed in 1996. owing in part to this subdued behavior of unit costs, profits and rates of return on capital have risen to high levels. as a consequence, a substantial number of businesses apparently believe that, were they to raise prices to boost profits further, competitors with already ample profit margins would not follow suit ; instead, they would use the occasion to capture a greater market share. this interplay is doubtless a significant factor in the evident loss of pricing power in american business. intensifying global competition may also be limiting the ability of domestic firms to hike prices as well as wages. competitive pressures here and abroad should continue to act as a restraint on inflation in the months ahead. in addition, crude oil prices have largely retraced last year β s run - up, and, with the worldwide supply of oil having moved up relative to demand, futures markets project stable prices over the near term. food prices should also rise less rapidly than they did in 1996 as some of last year β s supply limitations ease. nonetheless, the trends in the core cpi and in broader price measures are likely to come under pressure from a continued tight labor market, whose influence on costs will be augmented by the scheduled increase in the minimum wage later in the year. and, with considerable health - care savings already having been realized, larger increases in fringe benefits could put upward pressure on overall compensation. moreover, although non - oil import prices should remain subdued in 1997 as the sharp rise in the dollar over the past year - and - a - half continues to feed through to domestic prices, their damping effects on u. s. inflation probably will not be as great as in 1996. the lagged effects of the increase in the exchange value of the dollar will also likely restrain real u. s. net exports this year. in addition, declines in real federal government purchases should exert a modest degree of restraint on overall demand, and residential construction will probably not repeat the gains of 1996. on the other hand, financial conditions overall remain supportive to the real economy, and creditworthy borrowers are finding funding to be readily available from intermediaries and in the securities markets. moreover, we do not see evidence of widespread imbalances either in business inventories or in stocks of capital equipment and consumer | 0.5 |
april - may, thanks to its diversification. [ β¦ ] stay safe and let β s also stay in touch. β getting back to the theme of the conference, how do we reimagine banking in africa in a post - covid world? i will venture in three broad directions, setting the ground for what i am sure will be an insightful discussion over the next two days. first, people centricity will be the orchestrating theme for banks. people β s needs will be at the heart of all that banks do. the pandemic has had devastating impact on lives and livelihoods globally. by world bank estimates, over 130 million people could be pushed into extreme poverty by 2030. in particular, msmes have been pushed to the edge by the pandemic and will require significant support if they are to survive. msmes, as you are aware, are the engines of growth across africa. in 2018, before the pandemic, the international finance corporation had estimated a funding gap of usd331 billion for smes in sub - saharan africa. i expect that with the pandemic, this gap has increased substantially, with banks expected to fund a significant portion. beyond funding, banks will be expected to play a key role in providing business advisory services to msmes as they pivot their business models to the new normal. second, agility will define the playing field for banks. traditional business banking models will need to be refreshed to be fit for purpose in the world of anytime anywhere banking services. customer expectations were changing even before the pandemic for anytime anywhere banking services. the pandemic has only served to accelerate the trend towards on - demand services. this will require agile business models, that banks on their own, may not be able to deliver particularly through legacy information, communication and technology ( ict ) systems. partnerships with new, nimble players will be imperative. in this regard, banks will be akin to conductors in an orchestra bringing together many different players particularly fintechs to deliver what customers require. this will in turn require banks to scale up through additional capital injections, mergers and acquisitions. the third and final theme is on regulation that will require recalibration to fit in the new normal. the fast evolving digital ecosystem is spawning a new set of players and activities that mimic financial services. globally, there has been the proliferation of digital currencies that have been presented as payment instruments including cyptocur | ##ers encouraged banks to step up their lending to governments. that ultimately paved the way for the disastrous sovereign - bank nexus. as the crisis unfolded, many banks, notably in the euro - area periphery, raised their exposures to domestic government bonds. by doing so, they tied their fate even more closely to that of their national governments and made it almost impossible to restructure public debt. making the β no - bail out β clause more credible is therefore key when it comes to strengthening a decentralised emu design. what we need, then, is a procedure for restructuring debt in an orderly manner. this is where the bundesbank has proposed an automatic maturity extension for all bonds, which would be activated whenever a government applies for fiscal support from the european stability mechanism ( esm ). automatically extending maturities would allow the sovereign in question to tackle its fiscal challenges bis central bankers β speeches while preventing investors from bolting. if it turns out that the ailing country really is insolvent, legacy creditors could then be held liable. clearly, achieving a stable monetary union with a decentralised design is not an easy task, but it can be done if politicians are willing to implement the institutional reforms needed to strengthen individual responsibility. another project which will reduce fragmentation is the capital markets union, which is currently in the making. creating a single market for capital across all 28 eu member states by removing barriers to cross - border investment will make a key contribution to improving the absorption of macroeconomic shocks and lessening the impact of heterogeneous economic developments. the creation of a capital markets union could stimulate growth in the european union substantially. not just that : it could also boost the stability of european monetary union. integrated capital markets foster private risk sharing, which is a far more important shock absorber than public risk sharing. since equity has a much greater capacity to absorb shocks than debt, fostering equity markets should be the particular aim of the capital markets union. 5. conclusion let me conclude. during my speech i pointed out several pivotal decisions that lie ahead for europe. in the next week, we face the challenge that the next step in the eu β s history may well be not one of union, but one of separation. although it is neither the time nor the place to enter into this political debate, i really hope that the majority of the uk electorate will share our view that most of the current challenges europe is faced with need a european and not a national answer. i am | 0 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.