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involved in. it also highlights the rapidly growing proportion of maori in new zealand β s workforce. quite spectacularly, since 2013 the maori population in new zealand has grown by 30 percent, while the number of maori in employment increased by 47 percent. however, the report also identified several challenges, with access to capital highlighted as one of the primary challenges inhibiting progress. maori customers and entities report lower rates of capital accessibility than non - maori. we are now researching the significance and root causes of the lack of access to capital. our first finding was simply the dearth of quantitative data on the topic. however, qualitative interviews with both maori capital seekers and providers suggests there are unique barriers to financial resources, which has implications for the efficiency and effectiveness of capital allocation in new zealand more generally. our work is ongoing with the publication of an issues paper on the near horizon. we are looking to identify any issues around accessing capital that may arise due to market failures, gaps in the new zealand financial system, or unintended consequences of current behaviours. international literature generally highlights that minority and indigenous people and businesses face barriers to raising capital. our own quantitative research highlights that maori are underrepresented when it comes to business ownership. in addition, this work shows that maori firms face persistently higher interest rates compared to other new zealand companies. there are parallels with other indigenous peoples due to the challenges with collectively or tribally owned land. the inability to use property as ref # x567560 v1. 17 in confidence embargoed until 11. 00pm 13 june collateral has limited the opportunities for maori to accumulate financial wealth and grow businesses. a scan of the market shows there has been little in the way of financial innovation for maori. our consultation with stakeholders has shed further light on these issues, which can be summarised across the following themes : scale and coordination ; capability ; asymmetry of information and lack of data ; myopia in decision - making and leadership ; and missing markets and products this work will help us move towards more equitable access to capital for maori. conclusion in summarising, we are late to investigating the issues and adopting a te ao maori view of our work. but we are committed and transparent in our activities and aspirations, while working within our legal mandate. embedding te ao maori in our approach and learning from the different perspectives and knowledge it brings, we will be a great team building a better central bank for new zealand. w | needs to be addressed in the future through the adoption of a clear fiscal rule that should serve as a guide to and determinant of fiscal policy behaviour in the medium run and beyond. the growth of foreign demand and the more favourable exchange rate position fuelled our exports, which grew 62 % in the first five months of 2010. in parallel, the weak domestic demand has led to a low annual increase of imports, hence causing the balance of trade deficit to narrow 16. 2 %. consequently, net exports provided a more positive contribution to aggregate demand. they also led to the continuous correction of the current account deficit, hence stabilizing the national currency further. the downward correction of the current account deficit by 2. 7 percentage points of gdp provides an encouraging signal for the sustainability of albania β s external position. however, net financial inflows into the capital and financial account reduced 62. 9 % y - o - y in the first quarter of 2010. in addition, remittances, which make up a major source of trade deficit financing, are down 6. 7 % y - o - y. both these concerns re - accentuate the fact that the external position of the albanian economy remains a structural weakness that calls for further correction. foreign direct investments, which grew 25. 8 % in the first quarter of 2010, represent the safest source of current account deficit financing. they need to be further boosted with attractive policies for foreign investors and structural reforms in the albanian economy. annual inflation marked 3. 2 % in june. the slowdown in annual inflation, which commenced in march this year, was triggered by the low demand - side pressures, the lower prices in agricultural products and a more stable exchange rate. against a background of non - utilized capacities in the labour and capital markets, the low core inflation rates attest to the low inflationary pressures balance. the contracted demand will determine the downward inflation pressures in the coming period, whilst the performance of monetary indicators shows weak inflationary pressures of a monetary nature. as expected, supply - side shocks on consumer prices were transitory and did not affect economic agents β expectations of inflation, which remain well - anchored around the bank of albania β s target. price stability has been achieved as a result of an adequate monetary policy decision - making, though amid substantial uncertainty over the future prospects and absence of timely statistical data. over the stated period of time, our monetary policy was stimulating, maintaining low interest rates and injecting the required liquidity | 0 |
the bank - sovereign nexus, have plagued the euro area for a long time. given the importance of banks for credit provision to the real economy, the ecb employed a wide variety of unconventional instruments to address impairments in monetary transmission. at the same time, deposit insurance schemes and macro - prudential policies are still a national responsibility and the banking sector remains fragmented along national lines. financial frictions may therefore also emerge along national lines. this creates additional uncertainties and interdependencies for the ecb. before i conclude, let me say some more words about the design of emu in light of these ecb - specific challenges i just mentioned. in the aftermath of the crisis, emu β s functioning has been enhanced, for instance, by the establishment of the european β knows and unknowns of monetary policy instruments : implications for monetary policy strategies β, speech at the european banking institute β s policy conference, frankfurt, 14 november 2019. stability mechanism and the steps towards a european banking union. such enhancements help align the incentives for policy action by other players with those of us, monetary policymakers. this is helpful for monetary policy in two ways. first, it reduces the likelihood of adverse shocks hitting the economy to which monetary policy would need to respond. and where monetary policy would need to respond to risks to price stability, the risk of undesirable side - effects is reduced. there is however no room for complacency. future steps to complete the emu could provide further comfort to the ecb that monetary policy will not be the only game in town. fostering more risk - sharing, would for instance entail developing a capital markets union and completing the banking union by means of a european deposit insurance scheme. this, by the way, was already foreseen by han de jong as early as in 1980, when he joined the european commission to work on proposals for harmonizing deposit insurance schemes in europe! conclusion so let me conclude. today i discussed what i see as the main challenges for central banks worldwide and the ecb in particular. these challenges underline the need for a review of the monetary policy strategy under the new ecb - presidency. and, as i have also tried to illustrate, some of these challenges imply that elements and lessons from other central banks cannot always be transposed onto the ecb. a discussion is therefore warranted on the merits of increased flexibility. the ecb has to navigate its policy in a world characterised by | . i wonder how han reflects on this quote today, looking at the current calibration of monetary policy on both sides of the atlantic. whereas by now the fed has unwound the bulk of its qe - portfolio, the ecb restarted net purchases under its qe - program as recently as in september. but today, i will not dwell on the merits of the policy package that was adopted in september and has been discussed extensively afterwards. instead, i will focus on longer - term challenges for monetary policy. in my view, these challenges constitute a point of departure for the review of the ecb β s strategy that is anticipated to start formally in the new year. earlier this week, han remarked in the dutch newspaper het financieele dagblad that a new captain is in charge of developing a new strategy for his team. 1 well, this is also the case for the ecb. i will focus on three challenges affecting central banks worldwide. i will also discuss two challenges related to the specific context in which the ecb operates. i will argue that these challenges warrant a discussion in the upcoming review of the monetary policy strategy on the merits of increased flexibility with respect to our inflation aim. three challenges for central banks worldwide let me start by outlining three challenges that are not unique to the ecb, but apply more broadly to central banks worldwide. the first challenge, of course, is the fact that in the current environment, inflation is persistently low, and no one knows exactly why β¦ different possible explanations for this phenomenon have been put forward, of which i would like to mention four : 1. we now see a weaker relationship between real economic activity and inflation than in the past. 2. inflation may be subject to more negative shocks than in the past. 3. inflation expectations are increasingly backward - looking. 4. and, finally, inflation may be subject to a declining trend in some of its underlying components. this explanation has been confirmed by recent dnb research. 2 to be more precise, i am not talking here about a secular declining trend that will inherently go on forever. some of the underlying drivers of this trend, like globalization or ageing, might fade away or reverse, as was also stipulated by carl tannenbaum. the process of globalization of the past decades for example might reverse due to an ongoing escalation in protectionism. the various explanations for persistently low inflation are interrelated and may to some extent co - exist. in terms | 1 |
make the tough choices that will shape detroit β s future. let β s turn to detroit. as the video illustrates, detroit is finding new solutions to the decades - long problem of stabilizing its neighborhoods and attracting new residents. the detroit works project aims to reimagine the city β s geographic footprint and service range, based on the current smaller population. detroit β s story reminds us that when ideas are controversial and hard choices must be made, community input and buy - in is critical for success. to this end, the project has hosted extensive community meetings and created a leadership taskforce to map out future growth and investment areas. conclusion at the federal reserve, we have been working to understand the issues, help craft national policies, and collect data that can be used by government agencies and nonprofits. but sometimes a research paper or a speech doesn β t give you a true picture of what the foreclosure crisis really looks like. when i began my role as a governor, i travelled to the 12 reserve bank districts to see firsthand what was happening across the country. it was an eye - opening experience β one that has informed my perspective as a governor. and these stories from around the country can help provide the same type of context for researchers and policymakers. here at the federal reserve we are learning more each day about the complex task of stabilizing communities in the wake of the crisis, and research and analysis of what is working is critical. from these video β reports from the field, β we β ve learned that bis central bankers β speeches collaborations and partnerships help achieve success ; strategic targeting of limited resources may be necessary ; data can help focus a strategy ; community input and buy - in are critical for long - term planning ; and different approaches will work for diverse challenges and places. the fed will continue to identify the needs and challenges facing communities by fostering a dialogue for a better understanding of community development practices. as the research conference unfolds over the next two days, we β ll learn more about what community development may look like going forward. while research and evaluation remain central to the fed β s contribution, the system is equally well positioned to share best practices and foster partnerships : connecting at the local level, building networks, raising awareness of successes, and using data and research to evaluate what β s working and to suggest improvements. we are looking forward to a lively conversation, and we thank you for joining us. bis central bankers β speeches | labor costs is quite elevated, further encouraging firms to reach for market share as well as providing scope for workers β real wages to rise without pushing up inflation. overall, the tenor of the inflation outlook has shifted over recent quarters. solid growth in economic activity, higher prices in some sectors, and hints of the stabilization of overall inflation, along with perceptions by businesses that β pricing power β may be returning, are marking a transition from asymmetric risks of additional disinflation to more nearly balanced risks of rising and falling inflation. this transition is another key piece of the backdrop for monetary policy. monetary policy strategy as i noted at the outset of my talk, the federal funds rate is quite low : it is low relative to interest rates associated in the past with sustained high employment and stable prices ; and it is low relative to recent rates of economic growth - a disparity that has attracted increasing attention from some observers. in fact, the low funds rate has been necessary to promote growth that, to date, has been just sufficient to begin reducing substantial margins of slack in resource utilization. still, as my analysis indicates, the unusual shocks that have impinged on demand and bolstered potential supply over the past several years are abating, or should soon do so. as the output gap closes, economic stability will require that interest rates eventually move up from unusually low levels if we are to preserve price stability. the fomc stated again last week that it believes it can be patient in removing its policy accommodation. one set of reasons for patience in my view can be found in the levels of inflation and resource utilization likely to prevail for a while. as i have already noted, a considerable gap exists today between actual and potential output, and consumer price inflation is very low. in addition, the transitions i have discussed in aggregate demand, potential aggregate supply, and inflation are gradual processes. the move to solid growth of demand and some easing in the growth of potential supply are unlikely to lead to a rapid closing of the gaps in resource utilization or a marked rise in inflation. the risks around the likely course of the economy, and the costs and benefits of erring to one side or the other of the anticipated outcomes, also support a strategy of patience. given our uncertainty about the rate of growth of potential supply, actually observing a closing output gap will be particularly important for policymakers. given our uncertainty about the level of potential supply and thus the level of the output gap, observing stable inflation | 0.5 |
and the international finance corporation. my personal observations show that many of us, in asia, could study and learn from the public policies in mauritius relating to high coverage and quality of primary education, efficient delivery of health services and protection of environment. yes, we have a lot to learn from each other and there are many areas in which we can cooperate. the two central banks will, i am sure, strengthen the traditional ties. we will carry forward a continuous dialogue to strengthen cooperation between the bank of mauritius and the reserve bank of india. as a reciprocal gesture, let me extend an open and standing invitation to governor bheenick to visit india soon and, in addition, participate in the celebrations of 75th anniversary of the reserve bank, which is due soon in a couple of years from now. thank you all, ladies and gentlemen. | pass - through has remained roughly stable and intact. [ 15 ] our economists estimate that a 1 % rise in wage costs in germany increases consumer prices by around 0. 3 %. but the analysis also shows that the transmission can take several years. with that in mind, the slow strengthening of inflation shouldn β t really come as a surprise to us. an ecb study suggests that this is also the case for other major euro area economies. in a low inflation setting, the transmission could even take longer than under normal circumstances. the governing council has deliberately geared its policy aim towards the medium term without further specification. this allows us to take lags into account, such as the passthrough from wages to prices. our strategy also gives us the leeway not to respond to every slight revision in the inflation outlook mechanistically or even with full force, as long as the overall trajectory is still intact and the relevant inflation expectations remain anchored. but it is also true that near the effective lower bound of interest rates, fiscal policy is less at risk of crowding out private demand. under current conditions, this makes it a potentially powerful instrument if economic developments were to take a marked turn for the worse β which, just to be clear, is not what is generally expected. 5 conclusion ladies and gentlemen, dennis gabor, the british physicist who invented holography and won the nobel prize in 1971, noted that the future cannot be predicted, but it can be created. it is worth investigating which monetary policy approaches allow the eurosystem to respond vigorously in an economic downturn. but these policies have to be evaluated carefully in light of both potential benefits and costs. in my short remarks today, i have only been able to highlight a few issues on forward guidance. i fully agree with christine lagarde. the monetary policy strategy should always evolve in a way that best serves our mandate. [ 18 ] since our strategy has been in place since 2003, it may be worth collecting lessons from the financial crisis and the more recent past at the appropriate time. in my view, this should include, among other things, the question how to handle long - term risks to price stability arising from financial imbalances. as claudio borio once warned us, economic lessons β are learnt, forgotten, re - learnt and forgotten again β. laplace β s demon would know better. thank you for your attention. footnotes : 1. laplace, p. - s. ( 1814 ). | 0 |
alongside financial stability comes another topical issue in development debates across the globe, financial inclusion. for the financial system to be relevant to society, it needs to ensure that as much of the eligible target population has opportunity to access a variety of financial services ranging from credit, savings and payments, transfers, pensions, capital markets and insurance services. inclusion is an essential pre - condition to enhancing wealth creation and poverty reduction and ultimately broad based economic development. the consultative group to assist the poor ( cgap ) defines financial inclusion as a β state in which all people who can are able to have access to a full suite of quality financial services, provided at affordable prices, in a convenient manner, and with dignity for the clients β. these financial services are bis central bankers β speeches delivered by a range of providers, most of them private, and reach everyone who can use them, including disabled, poor, rural, and other excluded populations. ladies and gentlemen : why should we, as regulators, be concerned about the levels of financial inclusion in our respective jurisdictions? individuals and households lacking adequate access to a full range of responsibly delivered, affordably priced, convenient, formal financial services would be severely constrained in participating fully in the economy. as an entity, the financial sector would also face bleak prospects in terms of expansion and longevity, which holds back overall economic development. but more importantly, financial inclusion is supported by financial stability. in kenya, the proportion of the population totally excluded from formal financial services, as revealed by the finaccess 2006 and 2009 surveys, stood at 38. 3 % and 32. 7 % respectively. the proportionate reduction between the years is largely attributable to the advent of mobilebased financial services which have indeed revolutionized the provision of formal financial services and availed these to the market affordably and conveniently. for us to bring costs of financial services down, we need full inclusion. ladies and gentlemen : given the statistics above, as financial sector regulators, we share common aspirations of making the financial sector more stable, efficient and accessible. though these objectives may at times appear competing, they are for the most part complementary. stability is a pre - requisite for efficiency, while both are in turn required to raise inclusion. in cognizance of this, the central bank, jointly with other players, has undertaken several initiatives and reforms aimed at boosting overall inclusion. these include : licensing of deposit taking microfinance institutions ( dtms ), focusing | from 35 to 27 percent and the excluded falling from 38 to 33 percent, access to finance for rural areas is still low, with 64 percent of the rural populace not accessing formal financial services and 21 percent being excluded from any form of financial services. this is a huge drag to development that is driven by financial access. we know from established wisdom that poverty is very rural based in countries we come from. access to finance allows the poor to escape poverty by building their assets through savings and credit. at the central bank of kenya, we remain committed to promoting innovations that will enhance financial access and inclusion for the people of kenya. these reforms we believe will inevitably enhance access to finance in rural areas. my colleagues will be alluding to these reforms in the course of this conference. ladies and gentlemen : the size of credit to the agricultural sector in kenya by the banking sector has risen over the last five years from usd335 million ( ksh. 28. 1 billion ) in december 2007 to usd620 million ( ksh. 52. 7 billion ) as at february 2011. this growth is explained bis central bankers β speeches partly by the outcomes of the initiatives enumerated above. the level is expected to increase once the reform initiatives take root. to conclude my remarks, ladies and gentlemen, let me take this opportunity to reiterate the commitment of central bank of kenya to contribute to the fulfillment of afraca β s vision. it is my hope that this conference shall provide participants with key lessons on how to achieve a rural africa where people have access to sustainable financial services for economic development. i also reiterate that it is only through the concerted efforts of all players, governments, development agencies, donors, regulators and service providers that we will be able to deliver on this vision. with those few remarks, ladies and gentlemen, it is now my honour and pleasure to welcome the deputy prime minister and minister for finance, hon. uhuru kenyatta to deliver his keynote address and to officially open the 3rd afraca central banks forum. thank you. bis central bankers β speeches | 0.5 |
us as an industry to consolidate the gains so far achieved. ladies and gentlemen, let me acknowledge the commitments that the bankers association has made in the revised code of banking practice relating to the provision of β no frills account β to certain segments of our population. as the central bank we will be interested to receive information on how you are performing in this important area for financial inclusion. on our part, we have issued a β practice note β to assist commercial banks overcome some of the know your customer challenges faced with when dealing with some segments of our society. chairperson, let me conclude by reiterating the important role that a healthy and stable financial system plays in an economy. this objective cannot be achieved by the bank of zambia alone but through collective efforts including the government and yourselves. my expectations are that although the role of chairperson has changed, the association will remain true and steadfast to its values and objectives. we look forward to continuing working with the association on many issues that still require attention and on - going dialogue. i thank you. bis central bankers β speeches | gent sejko : albania's economic and financial developments in 2019 speech by mr gent sejko, governor of the bank of albania, during the presentation of the annual report of the bank of albania for 2019 in the albanian parliament, tirana, 2 july 2020. * * * honorable mr. speaker of the assembly, distinguished ladies and gentlemen, let me thank you for the invitation and the opportunity you have given me to present to you the annual report of the bank of albania for 2019. in general, i find that the work of the bank of albania has had a positive contribution to strengthening the monetary and financial stability of the country. this stability is a necessary precondition for the sustainable and long - term development of the country. also, the bank of albania has fulfilled its other legal duties, has made progress in the implementation of the medium term development strategy, and has implemented the recommendations left by the albanian parliament. * * * in accordance with the legal framework in force, the main objective of the work of the bank of albania is to achieve and maintain price stability. 1. albanian economy and monetary policy during 2019 2019 was a challenging year for the albanian economy. economic activity continued to benefit from rising private consumption and the rapid expansion of tourism. however, the foreign environment proved to be unfavorable, while the decline in electricity production, the gradual termination of investments in major energy projects, and the november earthquake had strong negative effects. as a result, the economic growth of 2019 resulted in the level of 2. 2 %, down from the level of 4. 1 % recorded in the previous year. the shocks we suffered slowed down the growth rate, but did not divert the albanian economy from the positive development trend. this performance was reflected in the reduction of the unemployment rate, in the increase of employment and wages, as well as in the reduction of the foreign debt and the public debt of the country. in parallel, the main indicators of the health of the banking sector remained at satisfactory levels. the average inflation of 2019 resulted in the level of 1. 4 %. the performance still below the inflation target, required the maintenance of the stimulative direction of monetary policy during 2019. for this reason, the bank of albania kept the key interest rate unchanged at 1. 0 %, oriented the market on maintaining the easing direction of monetary policy in medium - term horizon, as well as supplied banks with the necessary liquidity. in response to our monetary policy, financial | 0 |
##ra and not permitting households to use fx - denominated or fx - indexed loans encourage the private sector to borrow in turkish lira. the foreign exchange net general position arrangement for the banking sector and allowing the issuance of tl bonds by banks in a controlled manner can also be considered in this context. the fourth and last pillar of the policy framework is to promote the risk management concept. in this respect, steps to be taken regarding financial training assume importance for the smooth functioning of the system. we welcome the efforts towards increased recognition of turkish derivatives exchange, more diversified products and more widespread use of forward transactions. in addition, we believe that the floating exchange rate regime that has been in implementation since 2001 has significantly contributed to the embedding of awareness of exchange rate risk. in short, given the current conjuncture, the avoidance of excessive borrowing both by the public and private sector ; preference of longer maturities in all borrowings, opting to borrow in tl as much as possible and managing risks efficiently will considerably strengthen the resilience of turkish economy against external shocks. the monetary policy adopted by the central bank is composed in a way to make price stability and financial stability complementary. in this context, i would like to evaluate how the cbrt will use policy tools in the upcoming period within the framework of possible scenarios provided in the inflation reports. as also demonstrated on the slide, the current conjuncture supports the cbrt β s stance of keeping policy rates constant for some time, and at low levels for a long period. on the other hand, developments in the aggregate demand composition necessitated that instruments other than the policy rate be brought to pre - crisis levels. in this respect, we have largely completed the exit strategy measures that we announced in april 2010. in the october inflation report, we stated that our baseline scenario was based on an outlook where domestic demand is stronger compared to the previous reporting period, external demand continues to restrain economic activity, and thus aggregate demand conditions continue to support disinflation, albeit to a lesser degree. this baseline scenario assumes a policy framework that the measures outlined in our exit strategy are completed by the end of the year, and that policy rates are kept constant at current levels for some time followed by limited increases starting from the last quarter of 2011, with policy rates staying at single digits throughout the forecast horizon ( in other words, 3 years ). in this respect, noninterest instruments will be actively used in order to address the risks | exchange rate being among the first contracts to be operative in the turkish derivatives exchange, as well as its significance within the context of risk management, which is the primary function of derivatives markets. as we have emphasized at all times since the first day of the floating exchange rate regime in turkey, under this regime exchange rates are determined by supply and demand conditions. the level of the exchange rate is shaped by economic developments, external shocks, and expectations and fluctuations in the risk premium are applicable to all of them. neither the central bank nor any other authority has any commitment or target whatsoever as regards the level of exchange rate. bank for international settlements ( 2004 ), β triennial central bank survey of foreign exchange and derivatives market activity in april 2004 β. chinese proverb. at this point, i would like to underline two points missed by those who held the opinion from the start that the floating exchange rate regime could not be implemented in turkey, as the risk in this regime was too high, there would be too much volatility in the foreign exchange markets, and the economy, especially the foreign trade would be adversely affected as a result of these. the first point is that when fixed or foreseeable exchange rate regimes are implemented - like we did in the past -, in economies similar to our economy, where capital movements are free the exchange rate risk does not disappear, but is assumed by the public sector or by the central banks, as the monetary authority. considered as a whole, in environments where the economy has a relatively fragile structure, further elevated by the loose fiscal policies of governments, this may be even more costly than each economic unit assuming its own exchange rate risk under the floating exchange rate regime. the second point is that the presence of derivatives markets would enable foreign trade firms, under the floating exchange rate regime, to act as if exchange rates were fixed. in other words, with the development and widespread use of derivatives markets, the level of foreign trade would not differ under the floating exchange rate regime from that under the fixed exchange rate regime, and exchange rate risk would cease to be a factor influencing the level of foreign trade5. although these markets are being newly founded in turkey, i would like address a point, which often comes up in international literature and which i believe might arise in turkey in the coming periods. leaving aside the fact that speculative transactions are frequently made in derivatives markets, and especially in the foreign exchange market, these markets are alleged to increase risk and volatility in | 0.5 |
lopes, mrs. chaukos, and mr. cova. we encourage you to make the most of this opportunity to engage and interact with these experts. we will cap our day with presentations and a panel discussion on central bank digital currency ( cbdc ). new global or regional trends and policies have helped push innovation and technology to the forefront. an example of this is the increasing number of central banks carefully considering entering the cbdc space. we are excited to welcome mr. kiff, of the imf and one of the co - authors of the discussion note of the imf on the development and implementation of cbdc. mr. kiff will provide a short update of this important and dynamic discussion note. we will also have mrs. welsh provide an overview of the implementation of the cbdc by the eastern caribbean central bank, and subsequently, we will have mr. pietersz of the cbcs provide an overview of the status of our own consideration of cbdc. afterwards, mrs. luis of ibis management will share the results of a whitepaper issued on the potential implementation of a cbdc in curacao and sint maarten. let me say that we as regulators feel more vibrant than ever in our ability to keep evolving with the changes in our markets. ladies and gentlemen, once again i thank you for being here at the β reinventing central banking : supporting inclusive growth and financial innovation β conference of the cbcs. i wish you a successful second day of the conference and look forward to fruitful dialogue and discussion! thank you for your attention. | , and it expands the financial sector and promotes the use of cost - effective financing instruments. however, while the corporate bond market has been gaining new momentum elsewhere, the development is being viewed with apprehension here. we embarked on this policy to develop a corporate bond market in 2009 when we acquired the so - called aqualectra bonds. in 2012, we participated in the bond issue of the sint maarten harbour company. the case of sint maarten is a special one. contrary to the aqualectra bond, the sint maarten harbour bonds have a much wider and broader participation as more market participants acquired the bonds. this increased participation is also thanks to the standby arrangement according to which the central bank stands ready to buy or sell bonds at all times as dictated by the monetary conditions of the union. however, a necessary condition for this arrangement to be successful is that our public enterprises have unconventional monetary policy measures : principles - conditions - raison d β etre. speech delivered at the ijcb conference β central banking : before, during, and after the crisis β held on march 23 β 24, 2012, at the board of governors of the federal reserve system in washington, dc. bis central bankers β speeches to be well managed and sound. in this regard, i concur with dr. age bakker2, chairman of the board of financial supervision β cft β who last november during the kingdom conference stated that, β the sint maarten economy has been performing well during the past decade. the budgetary challenges in sint maarten are less pronounced than in curacao, the netherlands, and aruba. the main reasons are that sint maarten has a younger population, well capitalized social funds, and sound public enterprises. β that the sint maarten harbour company is well managed, was another important consideration for the bank to facilitate the bond issue of the sint maarten harbour company. ladies and gentlemen, with a much broader set of policy instruments, we hope that the bank can continue to promote the stability of the guilder, thereby creating an environment conducive to more growth and prosperity. as recent policy measures of the bank demonstrated, we were able to reduce the current account deficit and turn the balance of payments deficit into a surplus. however, for these results to be sustainable, we have to strengthen our export - generating capacity by making sint maarten a welcome place | 0.5 |
have slowed amid tighter regulations by the us to safeguard national security and supply chains. both countries have stepped up domestic industrial policies. china has committed us $ 1. 4 trillion over five years to augment domestic technology and digital infrastructure. the us has passed the us $ 280 billion chips act to boost semiconductor research and production capabilities over the next ten years. these measures have led to not just reduced trade and investment between the two countries but is also shaping broader shifts in global trade patterns and supply chains. these shifts are most evident in the electronics industry. america β s share in china β s electronic exports fell by 4 % points between 2017 and 2021, while regional economies such as taiwan, vietnam, and thailand gained market shares. at the same time, these three economies exported more to the us market in 2021, compared to 2017. vietnam has seen the largest increase in its exposure to the us market, at 14 % points. looking ahead, increased domestic capacity for electronics production in both china and the us will likely lead to a substitution of imports. the us - proposed chip 4 alliance with taiwan, south korea, and japan for semiconductor production could potentially divert trade flows away from countries that are not part of this arrangement. at the same time, it is also possible that some trade could be diverted from china to lower cost regions such as vietnam, india and mexico, which are emerging as competitive assembly locations for final electronics products. the result of all this geoeconomic fragmentation is most likely slower global growth. several studies show that the long - term effects of receding globalisation are costly. according to an imf study, a scenario of limited trade fragmentation would reduce global gdp by 1. 2 %. a wto study found that under a more adverse scenario of a full technological decoupling from 2020 to 2040, the loss in gdp would be 8. 0 - 12. 0 % in individual countries during this period. ultimately, low - income developing countries furthest from the technological frontier will suffer most acutely from reduced knowledge diffusion from advanced economies. supply chain diversification will increase inflationary pressures. first, relocating operations will incur high upfront costs. even if governments have the fiscal resources to subsidise duplicate supply chains, there may be insufficient labour to sustain it. second, restrained global competition will increase the market power of larger firms or domestic oligopolies, resulting in reduced innovation and higher prices. third, reduced technology sharing and collaboration will hamper the widespread adoption of best practices | to pick up again as soon as the outlook improves. it may take some time, but we are on the right track to making singapore as a world - class financial centre. | 0.5 |
external, unbiased and credible assessments from one or multiple technically qualified bodies constitute a valuable input for domestic policymaking, as well as an important guidepost for directing international cooperation efforts, its combination with concrete proposals on the latter can enhance substantially the usefulness and effectiveness of the surveillance work. the challenges for surveillance are further compounded by the difficulties to compel participating countries to adhere to the derived policy and cooperation proposals. to this end, pure peer pressure, although desirable and indeed helpful, has proved to be insufficient. on the other hand, a compulsory approach would understandably be rejected in view of its implications for sovereignty. ex - ante agreed sanctions have been tried in regions with a strong political commitment to integration. however, as is well known, even in these isolated and difficult to replicate cases, the results have been so far unsatisfactory. the difficulties linked to efforts to furnish the surveillance function with β teeth β are illustrated by the reluctance of some multilateral institutions to use tools legally available to them but with potentially controversial implications. 14 this is clearly a very complex subject, but we should continue to search for efficient enforcement mechanisms, and at least encourage international institutions to draw upon all instruments at their disposal whenever needed. to conclude, i only wish to note that in the face of a world economy which is improving but that still faces formidable challenges, the need to supplement any required policy efforts in emes with international cooperation should in my view not be the subject of much debate. there are many possible avenues to move in this direction, with a varying degree of complexity. unfortunately, notwithstanding the measures adopted as a result of the global financial crisis, as in previous similar episodes the drive towards cooperation has lost considerable force. the consequent risks are obvious. i hope that we are not witnessing again the historical experience of swings in international cooperation that will make us wait for another crisis to achieve perceptible progress towards the results we need. for instance, the imf has resorted to special bilateral surveillance procedures with member countries ( currently in the form of ad hoc article iv consultations ) in only very few occasions, in spite of this being a measure that has been in place for nearly 40 years. | the major financial crisis ; iii ) the revolution in information technologies and its impact on labor and daily life ; and, iv ) the growing gap between citizens β expectations and their development opportunities. while long - term policies and structural reforms are much needed, escalating geopolitical and trade tensions have put pressure on central banks β aggregate demand management responsibilities, increasing the challenges and trade - offs for monetary policy. regarding monetary policy, it is essential to note that its role in smoothing the business cycle has become more complex. 1. advanced economies ( aes ) operate in the β new normal β of lowinterest rates. lower r * and the lack of inflationary pressures pose serious challenges to monetary policy : first, a more limited policy space when facing the downward phase of the business cycle. second, it may lead to excessive risk taking, thus posing financial stability risks at the national and international level. an abrupt risk - off episode could expose financial vulnerabilities accumulated during years of low - interest rates and depress global growth as highly leveraged borrowers could find it difficult to roll over debt. as you will be discussing in one of the sessions, this requires a better integration of monetary and financial stability issues. 2. in emerging markets, even though we have more policy space, central banks must be mindful that global risk appetite and portfolio adjustments in response to idiosyncratic risk factors pose serious constrains for monetary policy. thus, making it harder to focus on domestic cyclical conditions and making it necessary to better integrate monetary, capital flows and financial stability considerations. in this context, central banks face the challenge of both fulfilling their objectives and communicating more effectively the benefits that can be attained with, their mandates, their independent status and their actions on the wellbeing of citizens and on development opportunities. now let me comment on some of the other issues that will be discussed in the conference. regarding the interaction of monetary policy and financial stability, around the world, albeit under different institutional arrangements, central banks have renewed their critical role in addressing financial stability challenges. the benefits of attaining monetary policy and financial stability goals tend to mutually reinforce each other. thus, the instruments to achieve such goals are characterized by a certain degree of interaction, but also by clear differences that must be considered. along this line, a central bank must take three elements into account : 1. separability between monetary policy and financial stability goals. although monetary policy actions can contribute to stabilize the economic cycle, it | 0.5 |
##ilience of our economy during the global financial crisis. far be it for me to trumpet this, but let us never forget that this happy state of affairs is the result of the strong regulatory and supervisory framework put in place by the bank of mauritius. let me say a word about our relations with kenya. last year, i was in nairobi to sign a memorandum of understanding with governor ndung β u of the central bank of kenya to enhance mutual co - operation in the supervision of our financial institutions. it is a little - known fact that our relations with kenya in the financial sphere go back to preindependence days. the kenya - based jubilee insurance invested then in an operation in mauritius, which is still present today. more recently, i & m bank of kenya joined forces with a mauritian conglomerate, with diversified interests in agriculture, hotels, tourism and manufacturing to take over a local bank. in the other direction, another large mauritian multinational conglomerate, involved in diverse activities ranging from insurance and leasing to banking and distribution, invested as a minority partner in one of the rapidly - growing kenyan banks, equity bank. the same conglomerate ended the year with another joint venture in kenya, this time in the furniture retail business. so kenya and mauritius are living examples of increased south - south cooperation and south - south investment, which mean more fdi flows among the southern countries. it seems that the wish i had expressed at the signing ceremony with my kenyan counterpart that the relations between mauritius and kenya tighten further, is fast being fulfilled. conclusion let me now conclude. this financing and investment package that we are celebrating this evening has allowed us to tick so many boxes on the long to - do list on our financial sector bis central bankers β speeches development agenda. we are slowly but surely moving forward. the road ahead is long, bumpy, and certainly not risk - free. but i have no doubt that the notes issue by omnicane will prove to be a milestone in this long journey. it would be remiss of me to conclude without giving some good marks to standard bank for taking the lead in this initiative. since the bank set up shop here in 2001, its business has expanded significantly. during the last five years, the bank β s total assets have increased three - fold. it now ranks 6th in terms of total assets of the banking sector. the bank β s previous ceo, chris clarkson, was constantly fighting for financial deepening and the development of the domestic debt | . this does not constitute a change of strategy ; it is an attempt to explain our monetary policy stance even more simply and clearly β so that it is understood ; if possible, by all market participants. it outlines our likely monetary policy response based on current data and the eurosystem β s two - pillar approach to analysing risks to price stability. it is not a historical sea change in monetary policy communication ; it is intended to provide more monetary policy guidance in times of heightened uncertainty. however, it is important to remember that this guidance is conditional on economic developments. it does not lay out an unconditional, fixed path for key interest rates. the ecb governing council has not simply tied itself to a mast like a modern - day ulysses. this forward guidance should not, therefore, rule out a timely rise in key interest rates if there are signs of increasing price pressures in the future. 5. conclusion ladies and gentlemen, aside from the acute crisis measures it is vital that we create a more stable monetary union. this won β t be easy to achieve. the current crisis has many different causes and combating it in the short term has taken a huge toll on the framework of europe β s monetary union. many different remedies will therefore be needed to find a lasting cure for this crisis. i have discussed some of these remedies in detail here today ; others i have only mentioned in passing. what many of them should have in common, however, is the aim of strengthening the no bail - out principle. this applies to banking and financial market regulation, the creation of a european banking union and the treatment of government debt in a monetary union. these are no easy tasks, and they sometimes involve a difficult balancing act β including for myself. but i promise that i will campaign forcefully and persistently to ensure that this promise is kept : that our currency, the euro, remains stable. thank you very much. bis central bankers β speeches | 0 |
on euro area bond yields. in my view, there is much to be said, then, for soon setting aside the practice of replacing all maturing bonds. this additional tightening signal would underscore our commitment to ensuring that inflation returns to the medium - term target of 2 % in a timely manner. if we act too hesitantly, we run the risk of having to tighten monetary policy even more severely further down the road. past experience, too, has taught us that if monetary policy gets behind the curve, medium - term inflation expectations adjust upwards. and that would make it far more difficult for monetary policy to achieve price stability. 2 / 5 bis - central bankers'speeches this is why it would be wrong to now hold back on further steps towards normalisation for fear of a downturn. on the contrary, unrestrained inflation is itself a burden on the economy. the longer inflation remains high, the more of a strain it places on consumption and investment. and the greater the risk of it becoming entrenched at a high level in the medium term. that has to be prevented from happening. for my part, it is important that we be honest : curbing inflation also comes with a price tag. it is likely to temporarily be an additional dampener on growth. but the main culprits behind the economic weakness are the supply bottlenecks caused by the pandemic and the war. honesty also means acknowledging that the lift - off in interest rates will make interest rate risk materialise on balance sheets. this also affects us as a central bank : we hold a high stock of low - interest securities with, in some cases, very long residual maturities. the counterpart to these on our balance sheet is mainly short - term deposits of commercial banks. the interest on these is now rising. as a result, this may weigh on our annual results. the provisions on our balance sheet are available as an initial buffer against potential losses arising from financial risks. 4 fiscal policy : targeted softening of hardships we have to recognise that the path to price stability is not a sprint but a marathon. unlike the runners in the berlin marathon, we do not know from the outset how much longer we still have to run until we reach our goal. this is especially true since monetary policy measures do not have their full effect on inflation immediately, but only after a delay. to make rapid progress on this route, fiscal policy can also play a part. it is an enduring principle that sound public finances | joachim nagel : el economista speech by dr joachim nagel, president of the deutsche bundesbank, in honour of mr pablo hernandez de cos, governor of the bank of spain and recipient of the echegaray prize, madrid, 2 november 2022. * * * 1 introduction ladies and gentlemen, today we are celebrating the award of the echegaray prize to an outstanding economist and central banker. pablo, it is a great pleasure for me to speak at this wonderful event in your honour here in madrid. i could certainly talk for a long time about all your achievements and merits, but my time is limited, so i will have to remain brief. 2 life path and achievements allow me first to say a few words about you, your life path and your major achievements. pablo hernandez de cos was born on january 20, 1971. his family originates from santander, a beautiful region in the north of spain. this region is, i guess, more green but less sunny than average for the country. he graduated in economics and business administration at the university college of financial studies in madrid in 1993 and in law at the national university of distance education the following year. his career as a central banker started in 1997, when he joined the research division of the department of monetary and financial studies at the banco de espana as a senior economist. a year later, he moved to the economic policy analysis division at the department of economic analysis and forecasting, where he stayed until 2004. as you can see, pablo is familiar with the groundwork carried out by economists at central banks. he was one of the economic experts that central banks are famous for. perhaps i am stressing this point because i believe that getting to know a central bank from its heart is a highly valuable experience. in this period, pablo not only worked as a senior economist at a central bank, he also got his phd at the same time. a great achievement! meanwhile, he also opened a chapter in his life that someone from frankfurt like me is especially pleased to talk about : in 2000 he came to this city for the first time as a country expert at the ecb, staying for a few months. after receiving his doctoral degree, he deepened his frankfurt connection further and became an advisor to the executive board of the ecb in 2004. his second frankfurt experience lasted much longer, spanning three years until 2007. his first child was even born in frankfurt. this gives me reason to hope that he can | 0.5 |
that will help all of us to consider the work ahead and make us even better prepared for the implementation of the new accord by the end of 2006. indeed, those of you in the audience from institutions that anticipate adopting the most advanced approaches available when the new accord is implemented have already begun to collect and process the necessary data. you know, as well as anyone, that the required commitment is substantial, and that supervisors β expectations are high. reading the results of the global basel ii survey conducted by garp during the month of january, presented in your monthly newsletter, i was encouraged to see that β most financial institutions ( 77 % ) across the globe are confident that they will achieve full compliance with the basel ii risk - capital accord in time for the 2006 implementation deadline. β perhaps even more important is the conclusion that β these institutions are confident that their internal risk management will be at least somewhat improved ( 86 % somewhat or greatly improved ) following the rollout of basel ii β. this is why i think that what you will discuss at this conference mean much more than simply complying with new regulations and calculating capital requirements appropriately. we want banks to manage risks, not to manage basel ii. the essence of basel ii is not just the set of rules and formulas to calculate regulatory capital, these are necessary and very important but, in my view, the heart of basel ii is the incentives for banks and risk management professionals to advance risk management and the recognition of this progress. studying and understanding the drivers of credit, market, and operational risk, and probing the relationships between them, will help all of us to get a better sense of the risks and rewards we face today, and how well we are prepared to navigate changes in the landscape of opportunity and challenge tomorrow. improving our understanding of risk, and strengthening our ability to manage it, offers the promise not just of better administered banks, but more importantly the promise of a more stable financial system one that is better able to serve as a source of credit and sustainable growth for businesses and consumers alike. thank you again for welcoming me to this conference, and i offer my best wishes for an enjoyable and educational event. | luis m linde : the european and spanish economic situation opening address by mr luis m linde, governor of the bank of spain, at the annual economists β forum / consejo general de economistas, madrid, 29 may 2014. * * * i much appreciate the invitation to participate in this forum and the opportunity to share with you some brief thoughts on the european and spanish economic situation. following six quarters of negative growth, the euro area economy initiated a mild recovery in 2013 which has since continued. the recovery is essentially being underpinned by the gradual pick - up in domestic demand, after the strong adjustment it underwent during the recession. however, the latest gdp growth figure, for the first quarter of this year, illustrates the stillfragile and uneven nature of this economic improvement in the euro area. according to the provisional estimate released by eurostat, the increase in activity in the euro area as a whole in 2014 q1 was 0. 2 % in quarter - on - quarter terms, below most analysts β expectations. note that this rate has been affected by exceptional temporary factors in some countries. in any event, the mixed nature of the recovery is evident if we compare the strong momentum the german economy is providing to the area as a whole with the behaviour of activity in other countries such as france, where it is practically flat, or others still such as italy, the netherlands, portugal and finland, where negative figures have been posted. the ecb and the national central banks of the eurosystem are finalising a new projection exercise, whose results will be published in early june. that will be the time to assess the effects that this first - quarter figure and all the new information compiled since the last exercise may have exerted on the baseline scenario for gdp growth in the coming quarters. as you know, in any event, the procedural rules for the ecb governing council set a brief period immediately before each of the monetary policy meetings in which the members, myself among them, must not make any statement that may be interpreted as pre - judging in any way the outcome of the meeting. you will therefore understand if i abstain from making any further assessment in relation to this scenario. in terms of employment, last year also saw a turnaround and the job destruction phase in the euro area touched bottom in the second quarter. but the still - moderate recovery has not yet provided for significant improvements in employment levels, meaning that hours worked in the labour market remain far below the historical average and | 0.5 |
for individual firms and the financial system as whole. this can be resilience of a firm β s balance sheet in response to financial risk or an unexpected loss that depletes a firm β s equity capital or resilience of a firm β s culture in response to conduct risk or an unexpected fraud that depletes its cultural capital. 13 in all of these cases, a resilient firm will be better able to adapt and evolve in order to continue to function and provide the critical financial services necessary to support a growing and stable economy. thank you. 1 i thank stephanie chaly, robert fitchette, jim hennessy, jackie mccormack, and tom noone for helpful discussions and feedback on earlier drafts. 2 david j. snowden and mary e. boone, β a leader β s framework for decision making, β harvard business review, november 2007 3 the boston consulting group, staying the course in banking, march 2, 2017. 4 william c. dudley, ending too big to fail, november 7, 2013. 4 / 5 bis central bankers'speeches 5 john c. williams, now is the time for banking culture reform, june 18, 2018. 6 reforming culture and behavior in the financial services industry : progress, challenges, and the next generation of leaders 7 stephanie chaly, james hennessy, lev menand, kevin stiroh and joseph tracy, misconduct risk, culture, and supervision, december 2017. 8 john sterman, β learning from evidence in a complex world, β public health matters, 96 ( 3 ), 2006. for example, the overuse of antibiotics that spread resistant pathogens. 9 michael held, reforming culture and conduct in the financial services industry : how can lawyers help?, remarks at yale law school β s chirelstein colloquium, mar. 8, 2017. 10 banking standards board 11 richard h. thaler and cass sunstein, nudge : improving decisions about health, wealth, and happiness, 2009. 12 kurtz and snowden, β the new dynamics of strategy : sense - making in a complex and complicated world, β ibm systems journal, vol. 42, no. 3, 2003 ; and, david snowden and mary boone, β a leader β s framework for decision making, β november 2007, harvard business review. 13 see misconduct risk, culture, and supervision for more on the concept of β cultural capital. β 5 / 5 bis central bankers'speeches | in productivity was not completely unique to the united states, but it has not yet been matched by the other major economies, though that may be in prospect. what accounted for these achievements? this is important to try to understand, because it is important to assessing whether these trends are enduring or temporary, and what types of policies are likely to sustain them. there is no definitive consensus on this question, and economists have an interesting debate underway about how much of this was luck and how much was skill. most observers seem to attribute the record to the following mix of factors. the first, of course, is technology. we experienced during this period the benefits of a powerful technology shock that made possible a revolution in the productivity of investment, in transportation and communication costs, in business methods, in computing power, etc. given the speed with which technological advances are diffused, one might expect the benefits to have been more broadly spread among other economies, but that has not yet happened on a scale that is sufficient to narrow the growth gap. the extent of technological progress and its impact on economic growth were magnified by the openness and flexibility of the u. s. economy. the united states became significantly more open over the past decade, with imports and exports as a share of gdp rising by about 50 percent. this happened in part because of the impact of trade agreements like nafta and the uruguay round that lowered u. s. trade barriers, and in part because we stayed out of the way of the impact of technology and globalization and did not, on the whole, try to insulate the u. s. economy from the pressures of competition. we are by choice significantly more flexible than the other major economies. the major deregulations ( telecom, transportation, finance, etc. ) of the last two decades made us more so. we have relatively limited regulation of business activity, low barriers to entry by new firms, lower hiring and firing costs, and more worker mobility and turnover. a third key factor involves the u. s. financial system. our system has proven to be exceptionally good at matching capital to ideas, at rewarding innovation and penalizing failure, and relatively more resilient to shocks. in comparison to the other major economies, banks are a smaller share of our financial system and the capital markets play a greater role. securitization and other avenues for risk transfer advanced much more rapidly here. the venture capital, private equity and hedge fund parts of our financial system are | 0.5 |
16 october 2007 14 november 2007 13 december 2007 17 january 2008 no change no change no change no change no change no change no change no change - 0. 25 - 0. 50 - 0. 50 - 0. 50 - 0. 25 17. 50 17. 50 17. 50 17. 50 17. 50 17. 50 17. 50 17. 50 17. 25 16. 75 16. 25 15. 75 15. 50 source : cbrt. both the 12 - month and 24 - month ahead inflation expectations exhibited a declining pattern throughout 2007 ( figure 10 ). however, the improvement in expectations, especially in the last quarter, was rather limited, owing to backward looking behavior, and possibly due to preannounced hikes in administered energy prices. nevertheless, it is worthwhile to mention that the administrative price hikes in november had little effect on medium - term inflation expectations, despite the upward revision in the year - end inflation expectations. this observation shows that inflation target, to a significant extent, continue to serve as an anchor and that economic agents expect the disinflation process to continue in the medium term. nevertheless, the fact that currently medium - term inflation expectations are significantly above our medium term target of 4 percent necessitates a cautious policy stance 1. figure 10 : medium - term inflation expectations * 12 - month 24 - month expectations regarding the period after 24 months have been published since may 2006. source : cbrt. as of january, one - year and two - year ahead inflation expectations are 6. 01 percent and 5. 17 percent, respectively. 3. inflation and monetary policy outlook distinguished guests and press members, after summarizing inflation and monetary policy developments in 2007, in this part of my speech, i would like to share our evaluations on inflation and the monetary policy outlook. first of all, i would like to summarize several factors that might enable the disinflation process to continue in the upcoming period : annual percentage change in cpi excluding food, energy and tobacco imply an inflation trend of 4. 8 percent ( figure 11 ) 2. in other words, underlying inflation in the past year was not far away from the medium - term targets. therefore, under the assumption that oil and food inflation will follow a more benign path in 2008 than 2007, we expect some contribution to disinflation from the base effects. figure 11 : response of inflation to monetary tightening policy rates h ( right axis ) h exc. processed food | ( right axis ) h : unprocessed food, energy, alcohol beverages - tobacco, and gold excluded cpi. source : turkstat, cbrt. we believe that existing supply and demand conditions continue to support disinflation. the sharp slowdown in the second half of 2006 created an ample slack in the economy ( graph 12 ). although domestic demand showed some signs of recovery in the second half of the year 2007, the pace of economic activity does not appear to be fast enough to eliminate the output gap. moreover, the uncertainty created by the ongoing difficulties in the mature credit markets is expected to hold back the domestic consumer and investment spending in the forthcoming period. accordingly, our medium term projections are constructed under the assumption that demand and capacity conditions contribute to the disinflation process throughout 2008. official core inflation measures, published under the name β special cpi aggregates β ( sca ), do not exclude processed food prices. we believe that excluding this item, in line with the international practice, could give a better proxy for recent inflation trends. figure 12 : output gap - 2 - 4 monetary tightening - 6 07 - iii 07 - i 06 - iii 06 - i 05 - iii 05 - i 04 - iii 04 - i 03 - iii 03 - i 02 - iii 02 - i 01 - iii 01 - i 00 - i - 10 00 - iii - 8 monetary conditions continue to support the disinflation process. despite the recent rate cuts, monetary policy can still be considered to be in the restrictive territory. underlying rate of monetary expansion remains modest, consistent with a relatively restrictive monetary stance. although medium term interest rates followed a downward trend in the past quarter, 2 - year - real rates at this point fluctuate between 9 and 10 percent, implying a nonaccommodative monetary stance. moreover, the currency remains strong, curbing inflationary pressures and easing the impact of rising commodity prices on domestic production costs. ( figure 13 ). figure 13 : real interest rate and real exchange rate * real exchange rate ( left axis ) 2 - year real interest rates * real interest rates are computed by using the expectations survey and 2 - year nominal rate estimated with extended nelson - siegel method. real exchange rate is cpi based ( an increase means an appreciation ). source : cbrt. credit data also confirm that monetary conditions are still non - accommodative. annual growth rates in the automobile and housing loans are at much lower levels compared to the | 1 |
have seen in the quarter century since the mpc was created in 1997. that emphatically does not mean the regime has failed. far from it. the regime was set up for times exactly like these. the regime, founded on central bank independence, is now more important than ever. the worth of any regime is tested in the difficult, not the nice, times. to illustrate that, let me quote part of the then governor eddie george β s speech given at mansion house in 1997, a month after the mpc came into being : β the technical implementation of monetary policy is not at all an exact science. it operates with long and unpredictable time lags so that we are necessarily continuously straining to peer into the future, relying substantially upon uncertain economic forecasts and carefully considered, but ultimately subjective judgements about the probabilities β and of risks β surrounding them. so i welcome the chancellor β s detailed reformulation of our marching orders, which acknowledges the volatility of the real world. β wise words, which are more relevant than ever today. in the same spirit, i want to spend the rest of my time tonight setting out the judgements we are having to make now, in a real world which is certainly volatile. but i will start with one statement that doesn β t change whatever the circumstances : our job is to hit the inflation target, and in the current circumstances to return inflation to target, always remembering the importance of understanding time lags in policy, and lags in the impact of economic shocks. let me be quite clear, there are no ifs or buts in our commitment to the 2 % inflation target. that β s our job, and that β s what we will do. when it comes to judgements we have to make, it is important to understand the disturbances hitting the economy and their significance for monetary policy. we have seen an almost unprecedented series of such disturbances β unprecedented certainly in modern times. i am going to pick out four which have been at work in the last two and a half years and discuss them in broadly chronological order. i will start with the onset of covid over two years ago now and its subsequent waves. it is worth briefly recalling the precipitous drop in economic activity at that time, and the speculation that it would be the largest drop in three hundred years. in the end it was very big, but not quite that big. it required a very large response from macroeconomic policy. monetary and fiscal policy | financial firm in the latest turmoil. finally, and a good deal less shockingly i β m pleased to say, the czech national bank has been not only the central bank, but also the integrated supervisor of the czech financial industry since 2006. this set - up gives us many advantages in terms of dealing with the financial crisis and maintaining financial stability at national level, and it hopefully also enhances our understanding of the current events in the eurozone. i β d now like to remind you of some important events which, i feel, provide us with important lessons and guidance for dealing with the current crisis. the first of these was the collapse of the bretton woods system at the beginning of the 1970s. the key lesson from this event was the so - called impossible trinity, namely that it is impossible to have a fixed exchange rate, free capital flows and independent monetary policy all at the same time. cracks started to appear in the bretton woods system in the 1960s as a result of globalisation of the financial system and enormous growth in cross - border capital flows. this process was accelerated by the expansive fiscal policy of the usa, which fostered monetary expansion, a loss of competitiveness of us producers and growth in the us trade deficit. as bis central bankers β speeches soon as the rising demand for dollars exchangeable for gold encountered the limited stock of us gold reserves, the credibility of the us dollar foundered. this loss of credibility undermined the very foundations on which the global monetary system was built. the fall of the bretton woods system teaches us that a fixed exchange rate requires a consistent macroeconomic framework and corresponding coordination of all aspects of monetary policy. various adjustments to this set - up might reduce some partial imbalances, but if the cause of the problem is not tackled head on, the effects of such adjustments will be short - lived and it will only be a matter of time before the whole system comes crashing down. now let β s move forward in time some 20 years, to the split of the czechoslovak currency following the dissolution of czechoslovakia in 1993. for many years, fiscal transfers had masked the significantly inferior performance of slovak economy relative to its czech neighbour to the west. this performance gap was further widened by the closing - off of the slovak armament industry from the federal centre at the beginning of the 1990s. after the country split in two, the stated goal of keeping a common currency came under market pressures as czech and slovak entities transferred their deposits to czech banks and capital flowed out of both | 0 |
customer identification and kyc purposes, providing low - value one - toone transfers on a 24x7 basis, etc. giving a logical direction to settlement finality in netsettlement systems by examining guaranteed settlement is yet another thought process. ladies and gentlemen, you would agree with me that the host of issues that revolve around the retail payment systems cannot be addressed in a matter of few minutes. all that i have attempted is to draw your attention to the important issues that any regulator needs to be conscious about. i am sure over the next three days some of these issues may see solutions emerging with your active participation. at the end of the seminar, let us all hope to carry with us sufficient knowledge to steer the course of the retail payment systems not just within our jurisdictions but also strive to harmonise the efforts of retail payment activities across jurisdictions. let me conclude by quoting what leonardo da vinci had said β β i have been impressed with the urgency of doing. knowing is not enough ; we must apply. being willing is not enough ; we must do. β what was true then is equally applicable today. i wish you all the very best and happy deliberations. | of the financial system for the progress of the region. commercial banks, which are involved in providing credit facilities and making investments for productive activities as well as broadening banking practices under financial inclusion, have expanded their offices across the region. the number of offices ( including regional rural banks ) expanded in the region by moving up sharply from 17, 613 end - march 1999 to 29, 135 at end - march 2013 ( excluding u. ts of pudhucherry and lakshadweep ). role of banks 10. i would like to highlight the involvement of commercial banks in the development of the region. for measuring the role of banks, the following parameters have been considered by me : ( a ) deposits to gsdp, ( b ) credit to gsdp and ( c ) c / d ratio. the role played by banks has been analysed under these categories in terms of : ( a ) prior to the introduction of financial sector reforms ; ( b ) post financial sector reform period and ( c ) inclusive growth period. prior to 1991, the deposit to gsdp of combined andhra pradesh in 1981 was hardly 28. 0 per cent, credit to gsdp ratio was 21. 1 per cent and credit to deposit ratio was 75. 3 per cent. this moved up to an impressive level of 52. 8 per cent, 58. 1 per cent and 109. 9 per cent, respectively, in 2013, underscoring banking penetration for the growth in the combined state of andhra pradesh ( table 4 ). in fact, banks have played deeper role, even better in the rest of the region like karnataka, tamil nadu and kerala states. urban co - operative banks 11. another important institutional set up in the financial system allocating funds for economic activities is by urban cooperative banks ( ucbs ). as at end - march 2014, a total of 557 ucbs under both scheduled and non - scheduled categories were operating in the region. these ucbs put - together have mobilized public deposits totaling 48, 461. 41crore as at endmarch 2014 and funded various activities in the region amounting to 32, 146. 15 crore at end - march ( table 5 ). bis central bankers β speeches role of nbfcs in the region 12. as at end - march 2014, there were 995 non - banking financial companies in the category of deposit taking, non - deposit taking and core investment companies in the southern region as against 12, 029 for all - india | 0.5 |
erkki liikanen : banking after the regulatory reforms β business as usual? speech by mr erkki liikanen, governor of the bank of finland and chairman of the highlevel expert group on the structure of the eu banking sector, at the bank of finland suerf conference, helsinki, 13 june 2013. * * * slides ( ppt ) slides ( pdf ) on the size and structure of the banking sector [ page 1 : on the size and structure of the banking sector ] research findings before the financial crisis, the consensus view from the finance and growth research was that financial development not only follows economic growth but contributes to it. 1 however, after the financial crisis, the other side of the financial sector growth has received increasing attention. now it is recognised that before the crisis, the financial sector had grown to quite massive proportions in many countries. and at the same time, the sector had become more and more concentrated as the biggest institutions had increased their market share. [ page 2 : rapid growth in the eu banking sector ] let me start with the benign view of the financial sector expansion, and the emergence of increasingly large banks, that prevailed before the crisis. the main point in the benign story is that growth of the financial sector improves overall economic growth opportunities by mobilising resources to finance investment projects and by facilitating risk management. 2 the key assumption is that a well developed financial system helps allocate productive resources more efficiently, both by channelling funds to growth sectors and by pulling resources from declining ones. at the level of individual financial institutions, the growth of bank balance sheets was seen as reflecting increasing returns to scale and scope from combining a wide variety of financial services and providing them also cross - border to internationally active clients. however, the events of the financial crisis have led us 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 indeed contribute to economic growth but only up to a point. 3 a too large 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 levine ( 2005 ), finance and growth : theory and evidence, in handbook of economic growth, edited by aghion and durlauf king and levine ( 1993 ), finance and growth, schumpeter might | service, where heavy fixed costs allow economies of scale with relatively low marginal operating costs. old legacy systems may not provide a viable platform for new requirements coming from the single euro payments area or new payment instruments. during a period of low interest rates banks cannot cross - subsidise payment services from other revenue sources. at the same time, end - customers are not willing to pay for paying. the equation is quite difficult. banks are obviously asking themselves the very relevant question whether it is worthwhile to invest and maintain this type of processing capabilities, or should they be outsourced or bought from companies which are specialized in processing. should banks not concentrate in what they know best : customer relationship and risk management? bis central bankers β speeches drivers of change in payment services main characteristic of payment services is the two - sidedness : in order to provide payment services, both the payer and the payee must participate in the same network. payment cards need to be issued and merchants need to accept the card in their payment terminal to enable card payments. this type of network requires co - operation between service providers. at the same time, we want to see competition in services provision. competition gives incentives to streamline processing of payments and to service innovation. the competition takes place in the customer interface, whereas the efficient processing of payments needs co - operation for standards and security. other driving forces of payments development are changing demographics, changing customer demand and integration. i mentioned earlier that banks have not met customer demand for internet or mobile payments or real - time payments. i know that cards are heavily used when paying in web shops, but that is not what cards were designed for. there are initiatives for improved security for card payments in the internet, but there is still room for improvement there. mobile payments have been of high expectations but nothing much in reality. some jurisdictions have created real - time payment systems, but mainly with support from the public authorities. european regulation aims to open the competitive market by allowing payment institutions to provide payment services. there is a lot of talk about big data, mining the payments data for better customer relationship management. banks have a strong position keeping customers β accounts, but if they are not sensitive to the changing customer demand, they may well lose the momentum. there is a finnish study showing that 95 % of people between ages 16 β 65 use internet regularly and 53 % of people between 65 and 74 years do so as well. the majority of payments in shops are made with cards. aging population | 0.5 |
crisis. we have come sa long way, but there are still challenges ahead of us for the ten years to come. yet the challenges for the financial industry are gradually changing in nature : they could shift from adapting to the regulatory or monetary policy environment to reflecting on new business model strategies. in this regard, the expected strengthening of the economic recovery will hopefully make the path smoother. austerity β or rigour β will remain necessary, but innovation will be the game changer. thank you for your attention. 4 / 9 bis central bankers'speeches slide 2 5 / 9 bis central bankers'speeches slide 3 6 / 9 bis central bankers'speeches slide 4 7 / 9 bis central bankers'speeches slide 5 8 / 9 bis central bankers'speeches slide 6 9 / 9 bis central bankers'speeches | ΓΈystein olsen : the conduct of monetary policy introductory statement by mr ΓΈystein olsen, governor of norges bank ( central bank of norway ), at the hearing before the standing committee on finance and economic affairs of the storting ( norwegian parliament ), oslo, 14 may 2018. * * * accompanying slides thank you for this opportunity to report on the conduct of monetary policy. my introduction here today is based on norges bank β s annual report for 2017 and our monetary policy assessments up to the monetary policy meeting at the beginning of may. the various components of economic policy must interact to achieve sound and stable economic developments over time β with high employment and low unemployment. the primary objective of monetary policy is to maintain monetary stability. since 2001, the operational target of monetary policy has been low and stable inflation. this has been retained in the new regulation on monetary policy issued by the government on 2 march this year. the regulation clarifies the monetary policy mandate and will not result in significant changes in the conduct of monetary policy. i will return to this topic later, but first of all i would like to go back to just over a year ago. at the beginning of 2017, the level of spare capacity in the norwegian economy was still fairly high and there were prospects that inflation could remain below the inflation target in the coming years. international interest rates were very low. norges bank had kept the key policy rate at 0. 5 percent for a year, and there was a slightly higher probability that the key policy rate would be reduced further than that it would be increased in the near term. there were signs of some brightening, both internationally and in norway, but considerable uncertainty prevailed. chart : global gdp growth the economic outlook changed through 2017. global growth gradually gained a firm footing, and global growth projections were revised up. for several of norway β s main trading partners, unemployment was lower towards the end of 2017 than before the financial crisis. despite rising growth abroad and falling unemployment, wage growth remained moderate. in 2017, most of norway β s trading partners were still experiencing below - target core inflation. chart : international interest rates policy rates in the us, uk and canada were raised in 2017. in addition, the federal reserve started to cautiously reduce its balance sheet, while the european central bank ( ecb ) announced that it would reduce its asset purchases from 2018. nevertheless, international interest rates remain low, and signals from central banks as well as market expectations indicate a very gradual rise | 0 |
diminished. the revisions of basel ii also address internal controls through a proposed capital charge for operational risk. developments such as the widespread adoption of technology, large - scale mergers, e - commerce, and the increased prevalence of outsourcing, can increase operational risk. while the regulatory reforms are being developed - - and in the interim before a formal revision to the basel accord - - supervisors will continue evaluating management's ability to control operational risk. this aspect of the effort to amend the accord has been criticized by some in the industry either as unnecessary or as creating a formulaic approach that is only a crude approx - imation of a proper capital charge. i suggest the events of september 11 indicate that operational risk is an issue that cannot be ignored. i invite both internal and external auditors to monitor basel ii and offer their counsel on how best to reflect operational risk in capital. both managers and supervisors focused on the operational aspects of banking in the years leading up to year 2000, a date that was uneventful in large part because of the preparations that were made. now we know that the possible loss of physical facilities and key personnel, which were generally not considered as part of y2k planning, must be factored into financial firms'disaster - recovery scenarios. similarly, providing reliable backup to key infrastructure - - electricity, telephone, water - - is likely to play a larger role in financial institutions'planning. as we go forward, the operational preparedness of regulated institutions will figure more prominently in our supervisory program. the role of the external auditor in the banking sector the federal reserve and other supervisory agencies have long recognized the key role that the accounting and auditing profession plays in assessing internal controls. guidance issued by the federal reserve and other regulatory agencies reflects the important role that both internal and external auditing play in enhancing internal systems and monitoring risk. as required by statute, banking organizations with assets of more than $ 500 million must have annual independent audits. the banking agencies encourage all small institutions to follow suit. in a similar vein, the basel committee has produced extensive guidance on the roles of both the external audit and internal audit and the ways these can be factored into the supervisory process. as i said, market discipline is becoming a key element of supervisory thinking, and market discipline depends on prompt, accurate financial information. external auditors help significantly in ensuring that financial statements are reliable and useful to the marketplace. periodic financial statements of banking organizations are also used by the federal reserve in our risk - | ##ntial approach to supervising and regulating at least some parts of this sector. thanks again to the hoover institution for having me, and i look forward to the discussion that follows. 1 board of governors of the federal reserve system, " federal reserve issues fomc statement, " press release, september 16, 2020. return to text 2 " assets and liabilities of commercial banks in the united states β h. 8, " last modified october 9, 2020. return to text 3 board of governors of the federal reserve system, " federal reserve board announces temporary change to its supplementary leverage ratio rule to ease strains in the treasury market resulting from the coronavirus and increase banking organizations β ability to provide credit to households and businesses, " press release, april 1, 2020. return to text 4 " coronavirus disease 2019 ( covid - 19 ), " board of governors of the federal reserve system, last modified, april 30, 2020. return to text 5 board of governors of the federal reserve system, assessment of bank capital during the recent coronavirus event ( pdf ) ( washington : board of governors, june 2020 ). return to text 6 board of governors of the federal reserve system, supervisory scenarios for the resubmission of capital plans in the fourth quarter of 2020 ( washington : board of governors, september 2020 ). return to text 7 board of governors of the federal reserve system, " federal reserve issues fomc statement, " press release, march 23, 2020. return to text 8 financial stability board. " fsb publishes annual report on nonbank financial intermediation, " press release, january 19, 2020. return to text 4 / 4 bis central bankers'speeches | 0.5 |
two consecutive quarters of negative gdp growth. previous recessions include those beginning in 1973, 1975, 1980 and 1990. a recovery ends if a second recession occurs in the period shown. chart 9b : β¦ and international experience percentage changes on a year earlier ( % ) g7 excluding the uk uk - 5 - 10 - 15 range across the g7 excluding the uk - 20 - 25 sources : eikon from refinitiv, japanese cabinet office, oecd, ons, oxford economics, statistics canada, us bureau of economic analysis and bank calculations. notes : chained β volume measure. business investment is not an internationally recognised concept. this swathe includes similar series derived from other countries β national accounts. private sector business investment for italy. business investment minus residential structures for canada. non β residential private investment for japan and the us. non β government investment minus dwellings investment for france and germany. all speeches are available online at www. bankofengland. co. uk / news / speeches there are three ways to measure the scale of the uk investment underperformance. - first, by using evidence from the bank β s decision maker panel survey of companies. 8 since the referendum, brexit has ranked as one of the three most important sources of uncertainty for over one third of respondents to this survey β and for one half since autumn last year. 9 investment growth has been persistently weaker among these companies ( chart 10 ), reducing total business investment by an estimated 6 to 14 %. - second, by comparing the performance of business investment in the uk with the rest of the g7. prior to brexit, uk business investment was growing in line with the average across the rest of the g7. since then, it has risen by just 1 % in the uk, while it is up by 12 % on average elsewhere, and by 16 % in the us. - and third, by comparing to pre - crisis trends. the current level of business investment is some 20 % below the mpc β s projection from may 2016, conditioned on a vote to remain. these three approaches average to a 12 % hit to uk business investment caused by brexit uncertainty. to compare that to what markets may be pricing in for global trade effects, consider that expected policy rates in the us have fallen by around 150 basis points since the first trade measures took effect in july last year. that is enough to offset a reduction in gdp of some 1. 5 % 10 β | adapt β that is, learn from the past without assuming that the future will follow the past. kahneman and tversky ( 1973 ) famously shows how humans are neither rational nor mechanical in making predictions, rather applying ( oft - mistaken ) judgment. williams ( 1987 ) reports various experiments testing how market participants form price forecasts, rejecting both rational expectations and extrapolative expectations models. see for example lovell university of chicago sovereign defaults are a fascinating example throughout history of the complexity of expectation formation β on the one hand, there are many examples of investors having long memories. louis xi faced a very high cost of borrowing because of repeated defaults and similar pressure encouraged william iii to the creation of the bank of england. on the other hand, there are many instances of investors lending repeatedly to sovereigns that have defaulted repeatedly. all speeches are available online at www. bankofengland. co. uk / speeches pedro bordalo, nicola gennaioli and andrei shleifer have recently posited a model of expectations that acknowledges our tendency to extrapolate from the past, but also allows for the use of forward - looking information. 19 it endeavours to integrate insights from behavioural economics into a rigorous economic model. they have embedded the work of behavioural psychologists that shows that while we do use news to form expectations of the future, we have a tendency to over - weight certain types of news. and that the way we remember can lead to certain risks being neglected or undervalued when we project the future. they use this model to explain the development of expectations in the run - up to the great financial crisis 10 years ago, expectations which they demonstrate were clearly not rational in the light of available information. the economic model they have developed β of β diagnostic β expectations β is appealing because it starts from research on how humans form beliefs about the future, and how they act on those. the way in which investors and markets form expectations of the future is clearly an area that merits further research. as i will go on to discuss, it is important to those of us responsible for financial stability to understand what is driving the expectations of the future that underlie risk - taking and what drivers kick in when those expectations meet the future and have to be adjusted. macroprudential policy as i said at the outset, i expect the next β crisis β to involve some form of over - valuation of assets, over - extension of credit and losses when this corrects. | 0.5 |
difficulties, coped with the need for capital strengthening, and suffered a sharp drop in profitability. their initial, underlying soundness, also a reflection of supervisory action, has enabled them to withstand the shock. however, overcoming the crisis once and for all will necessitate a further, protracted effort. i have described the steps that are ineluctable, on which intermediaries must take action without delay. in addition, with the farsightedness demanded of all parties, the problem of the quality of ownership structure and governance must be addressed, bearing in mind the interest of the real economy and the stability of the banks themselves. the decisions of the ecb governing council, aimed at safeguarding the effective transmission of monetary policy within the euro area, have preserved the liquidity of the banking system, contained the financial market distortions caused by the sovereign debt crisis, and countered fears for the solidity of monetary union. we evaluate the correspondence between monetary conditions and economic outlook with the greatest care. monetary policy can do much, but by itself it cannot get us out of the crisis. investors β fears have abated since the tension was at its height, but they have certainly not vanished. the quality of national economic policies and the completion of the reform of european economic governance moving towards full monetary, banking and fiscal union and, further down the road, political union as well will be decisive. italy must not lower its guard. the international investors continue, rightly, to concentrate their attention on our ability to keep the public finances in balance and energetically pursue the goal of increasing potential growth. the recurrent tensions are a reminder of how fragile the situation remains. the yield spread between italian and german government securities is still wider than is consistent with the fundamentals and potential of our economy. its further reduction could facilitate banks β funding and the revival of lending to the economy on more advantageous terms. the return to balanced and rapid growth of our economy must be pursued even more resolutely. keeping the public finances in balance is a prerequisite to this, not an bis central bankers β speeches impediment. only the full implementation of comprehensive and systematic reform, certainly a challenging task, can ensure the necessary gains in competitiveness and thereby favour the expansion of employment. the cornerstones of the reform have been identified : we must invest in knowledge, provide higher - quality public and private services, fight illegality and promote competition. we have barely embarked on this course ; | francois villeroy de galhau : looking up to achieve a financing union speech by mr francois villeroy de galhau, governor of the bank of france and chair of the board of directors of the bank for international settlements, at the eurofi high level seminar 2022, paris, 23 february 2022. * * * ladies and gentlemen, it is a great pleasure for me to open this edition of eurofi today in paris, and i extend my warmest thanks to didier cahen and david wright for their tireless efforts that allow us to gather in this beautiful hotel du collectionneur. today i will indeed be speaking about a collection β not of fine arts, but rather of national banking and financial systems. unfortunately, such a collection is nothing to rejoice about, it is rather an achilles heel. but let me start with a few words about ukraine. we are obviously monitoring closely the geopolitical developments, and their possible economic and financial implications. let me already stress that the direct exposure of french financial institutions to russia remains limited, but the ssm called all european banks to enhanced vigilance on cyber risks. we will assess in our governing council in march the more indirect consequences on inflation and growth, and we will be facts driven : more than ever, optionality β about the right monetary stance β and flexibility β to guarantee the right monetary transmission β are the two names of the game for our policy. a few days ago, on 7 february, we celebrated the thirtieth birthday of the european union and of the maastricht treaty. i was personally present during the signature of this treaty, which promoted β the strengthening of economic and monetary union, ultimately including a single currency β. we have successfully established a monetary eurosystem, however a real financial eurosystem must now develop. let me therefore share some proposals on the banking union and the capital markets union ( cmu ), which are the two cornerstones for such a financial eurosystem. we are all aware the banking union is for 19 countries, and tomorrow 21, while the cmu is for 27. but allow me to mix them today with a common core β the euro area β and a common purpose β the right funding of our economies. i will quote two thriller books today. you may rightly think of the postman always rings twice : andrea enria and myself already conveyed this message quite plainly regarding the banking union during the last eurofi session in september. | 0 |
monetary policy easing measures, the single currency came under downward pressure. by the beginning of december, the expectations of financial market participants had not been fulfilled and the euro gained in value again. by comparison with its mid - year level, the euro has appreciated only marginally on a trade - weighted basis. demand for secure investments remained high worldwide. on the bond markets, yields on longer - term government bonds declined further. chart 1 shows that the decline in yields in the euro area was somewhat greater than in the us. the yields on ten - year german government bonds have fallen by almost 20 basis points since the end of june. in france and italy, the decline in yields was more pronounced. meanwhile, yields on ten - year us treasury bonds have changed relatively little. on the swiss capital market, almost the entire yield curve has shifted downwards again since mid - year. yields on confederation bonds with terms of up to 13 years are currently in negative territory. this corresponds to three - quarters of the outstanding volume. at the beginning of december, the yield on ten - year confederation bonds reached a new low of β 0. 4 %. most recently, it was trading at β 0. 25 % or about 40 basis points lower than mid - year. bis central bankers β speeches how negative interest works in the second part of my remarks today, i will talk about the way in which negative interest works. since january, the swiss national bank ( snb ) has been charging negative interest of β 0. 75 % on sight deposits held by banks and other financial market participants at the snb. negative interest is a key instrument in our monetary policy. together with our willingness to intervene on the foreign exchange market, it counteracts the overvaluation of the swiss franc. when calculating negative interest, the snb grants the banks exemptions so that the banking system does not have to carry the full burden resulting from the high level of sight deposits. for banks subject to minimum reserve requirements, the exemption threshold is calculated as 20 times the minimum reserve requirement, based on a reference period. for sight deposit account holders not subject to any minimum reserve requirements, the exemption threshold has been set at a minimum of chf 10 million. by applying negative interest universally to all account holders, we are adhering to the principle of equal treatment. it therefore makes sense that banks with above - average sight deposits in proportion to their minimum reserves pay higher interest than other banks. in this respect, negative interest is no different to | andrea m maechler : how negative interest works and changes in the management of foreign exchange reserves speech by ms andrea m maechler, member of the governing board of the swiss national bank, at the media news conference of the swiss national bank, berne, 10 december 2015. * * * accompanying charts can be found at the end of the speech. in my remarks today, i will begin by talking about developments on financial markets since the middle of the year. then i will discuss the way in which negative interest works. i will conclude with a report on changes in the way we manage our currency reserves. situation on the financial markets i will start with the situation on the financial markets. financial market developments since the middle of the year have mainly been shaped by three topics : the uncertainty surrounding the first interest rate move by the federal reserve, monetary policy easing measures by the european central bank ( ecb ) and concerns about growth prospects in the emerging economies, particularly china. in mid - august, disappointing economic data and an unexpected depreciation of the renminbi against the us dollar resulted in a sharp decline in the chinese stock market. the fallout was also felt by stock markets of other emerging and advanced economies in short succession. after volatility on the stock markets had increased sharply at times, investors β appetite for risk gradually returned at the end of september. favourable economic data from the us and the euro area contributed to the more positive sentiment. in addition, concerns about growth in china recently slipped into the background again. the stock markets of the advanced economies, which have since been able to partially recoup their losses, were the main beneficiaries of this recovery. by contrast, in the emerging economies, the wave of selling has had a lasting impact. in the most recent period, the msci emerging markets index β calculated in local currency β was still approximately 12 % below its level at the end of june. stronger signals of diverging monetary policy stances between the euro area and the us were also reflected on the foreign exchange markets. on the one hand, the prospect of higher interest rates in the us boosted the us dollar. on the other, it put the currencies of emerging economies under pressure. since mid - year, the us dollar has appreciated by 4. 5 % on a tradeweighted basis. the euro initially gained ground at times as a result of uncertainty in the emerging economies. however, after the ecb had held out the prospect of further | 1 |
formed by growth and consolidation are increasingly complex entities that create the potential for unusually large systemic risks in the national and international economy should they fail. no central bank can fulfill its ultimate responsibilities without endeavoring to ensure that the oversight of such entities is consistent with those potential risks. at the same time, policymakers must be sensitive to the tradeoffs between more detailed supervision and regulation, on the one hand, and moral hazard and the smothering of innovation and competitive response, on the other. heavier supervision and regulation designed to reduce systemic risk would likely lead to the virtual abdication of risk evaluation by creditors of such entities, who could β in such an environment β rely almost totally on the authorities to discipline and protect the bank. the resultant reduction in market discipline would, in turn, increase the risks in the banking system, quite the opposite of what is intended. such a heavier hand would also blunt the ability of us banks to respond to crisis events. increased government regulation is inconsistent with a banking system that can respond to the kinds of changes that have characterized recent years, changes that are expected to accelerate in the years ahead. the desirability of limiting moral hazard, and of minimizing the risks of overly burdensome supervision and regulation, has motivated those of us associated with the basel exercise to propose a three - pillared approach to prudential oversight. this approach emphasizes, and seeks to strengthen, market discipline, supervision, and minimum capital regulation. market discipline in trying to balance the necessary tradeoffs, and in contemplating the growing complexity of our largest banking organizations, it seems to us that the supervisors have little choice but to try to rely more β not less β on market discipline β augmented by more effective public disclosures β to carry an increasing share of the oversight load. this is, of course, only feasible for those, primarily large, banking organizations that rely on uninsured liabilities in a significant way. to be sure, these organizations already disclose a considerable volume of information to market participants, and, indeed, there is ample evidence that market discipline now plays a role in banking behavior. nonetheless, the scale and clarity of disclosures is better at some institutions than at others and, on average, could be considerably improved. with more than a third of large - bank assets funded by non - insured liabilities, the potential for oversight through market discipline is significant, and success in this area may well reduce the need to rely on more stringent governmental supervision and regulation. the channels | that banks are, and will be, using to evaluate their risk positions and the capital needed to support these risks. to spur this process in the united states, the federal reserve in june issued new examination guidance encouraging the largest and most complex banks to carry out self - assessments of their capital adequacy in relation to objective and quantifiable measures of risk. these self - assessments will be evaluated during on - site examinations and, eventually, are to be a factor in assigning supervisory ratings. a key component of these self - assessments will be each bank β s internal risk evaluations of the credit quality of its customers and counterparties. currently, such internal risk ratings are beginning to be used by a small number of banks in their risk - management, pricing, internal economic capital allocation, and loan loss reserve determinations. some banks are further along in the process than others. virtually all large banks are moving in that direction. the bank regulators already have begun incorporating reviews of these internal risk - rating processes into their on - site examinations, and last july the federal reserve issued examination guidance on this subject, including a summary of emerging sound practices in this area. the supervisory policies and procedures being contemplated will build on the increasingly sophisticated management and control systems that are rapidly becoming part of banks β best practice risk - management mechanisms. they will, as well, require both good judgment and sophistication on the part of bank examiners in order to avoid a cookie - cutter application of policies and to develop skills at evaluation that will match those available to the banks. for each of about thirty large, complex banking organizations β in washington parlance, lcbos β the federal reserve has already established dedicated teams of examiners, supplemented by experts in areas ranging from clearance and settlement to value - at - risk and credit - risk models. each lcbo team is directed by a senior reserve bank official. both that β central point of contact β and his or her supervisory team will be charged with following one lcbo and understanding its strategy, controls, and risk profile. jointly, these teams will represent the federal reserve supervisory pillar as it applies to lcbos. minimum capital regulation in addition to emphasizing more effective market discipline and making supervisory assessments of bank capital adequacy more risk - focused, the june consultative paper highlights the need to make regulatory capital requirements β the third pillar of prudential oversight β more risk - focused as well. in recent years, it has become clear that the largely arbitrary treatment | 1 |
erkki liikanen : comment to prof gerard roland : after enlargement institutional achievements and prospects in the new member states comment by mr erkki liikanen, governor of the bank of finland, to prof gerard roland : after enlargement - institutional achievements and prospects in the new member states, at the central banking conference, frankfurt, 21 october 2004. * 1. * * introductory remarks professor roland β s paper raises some essential issues regarding institutional development of the new member states and prospects as to how enlarged european union will work. the paper looks at various institutional indicators compiled by erbd and the world bank. by the use of these indicators, the paper aims at answering the following specific questions i ) have new member states achieved their institutional transition in a stable and satisfactory way, ii ) has eu played a positive role in this process, iii ) is there anything that eu can learn for its needed structural reforms in labor markets, pension and welfare reform and iv ) how will eu work with 25 members. 2. summing up the main results of the paper the paper provides some tentative answers regarding the first two questions. it argues that institutional problems in the future are not going to be essentially worse than those facing existing eu - member countries. furthermore, the paper argues that eu has been playing β fundamentally positive role in anchoring the institutions of the new member states to sound market system β. as a general message, the paper suggests that fundamental market institutions and the basics of market institutions are well established and solid. the last two questions get understandably less attention in the paper, given the wide scope of the paper. first i want to comment two questions ; 1. hypothesis on external anchor and enforcement powers vis a vis the governments of member states 2. stable and satisfactory institutional transition 3. external anchor and enforcement powers regarding the first point, prof. roland argues that prospects on eu membership has enforced an institutional reform, but that once inside, incentives to fulfil future reforms will be weaker. the paper builds analogy to weak implementation of the stability and growth pact ( sgp ) and argues that eu does not have appropriate ( very strong ) enforcement powers. while to some extent it is rather easy to agree with this point, one may also recognize that sgp similarly to maastricht criteria - has improved fiscal prudence within the eu markedly over the last decade. and this in spite of all the difficulties. on the other hand the spg is still a relatively new instrument. the commission | the introduction of qqe, medium - to long - term inflation expectations of economists and the inflation swap rate ( implied five - year forward rate, five years ahead ) have risen moderately and remain around 1 percent today. nevertheless, the 2 percent target remains distant ( chart 3 ). from japan β s experience, it is essential first to make a continuous improvement in the output gap and thereby steadily raise the rate of change in the cpi. in this regard, the output gap it must be noted that the year - on - year rate of change in the cpi, as well as short - term inflation expectations, rose substantially, owing to consumption tax hikes in 1997 and 2014, and the surge in commodity prices in early 2008. bis central bankers β speeches estimated by the boj turned positively to 0. 1 percent in the january β march quarter of 2015. after a temporary deterioration projected for the april β june quarter, the output gap is expected to gradually improve in positive territory from the july β september quarter this year and increase its upward pressure on prices. the change in the core cpi ( all items less fresh food ) is currently about 0 percent. however, the cpi excluding food and energy is about 0. 6 percent, which exceeds the core cpi. the proportion of items whose prices have risen among all core cpi - composing items has increased to around 65 percent ( chart 5 ). moreover, some price hikes have accompanied increased sales. for those reasons, it is fair to say that there has been no deterioration in the underlying trend in prices. the boj projects that the rate of change in the core cpi will begin to rise from the second half of fiscal 2015. once the rising trend of the core cpi becomes stable, inflation expectations are projected to rise gradually toward around 2 percent. b. euro area β s inflation expectations : broadly consistent with the price stability target by contrast, in the euro area, the medium - to long - term inflation expectations of economists have been more or less stable at around 2 percent since the initial phase of adopting the euro ( chart 6 ). this is evident in two ways : one is that the rate of inflation had already moved to around 2 percent a few years prior to the euro adoption ; the other is that the ecb initially defined price stability as inflation rates below 2 percent over the medium term. medium - to long - term inflation expectations appear to have stabilized more firmly after the ecb further clarified its definition in 2003 as inflation rates below, but close to | 0 |
procedures, systems, models, methodologies, and delegations that govern the way credit risk is managed. all these processes put together, can be described as the credit risk β architecture β of the institution. for the png banks, credit risk is mostly associated with their lending transactions. bis central bankers β speeches bpng has in place a prudential standard on asset quality which is titled asset classification, provisioning and suspension of interest. this standard is intended to ensure that : ( i ) loans and advances are regularly evaluated using an objective grading system that is consistent with regulatory standards ; ( ii ) the accounting treatment for accrued but uncollected interest on non - performing assets is consistent with international accounting standards and regulatory reporting requirements ; and ( iii ) timely and appropriate provisions and write - offs are made to the loan loss provisions account in order to accurately reflect the condition and operations of the bank. it is also intended to promote well - reasoned, effective work - out plans for problem assets, and effective internal controls to manage the level of such assets. as at end june 2011, asset quality of the banks was maintained at satisfactory levels. npls to total assets marginally decreased to 1. 0 percent as at end - june 2011 compared to 1. 1 percent at end - march 2011. provision for loan losses to npls decreased to 188. 8 percent from 121. 0 percent over the same period, while npls to total loans increased to 5. 5 percent from 2. 4 percent. market risk institutions must put in place a market risk management framework that should outline the policy and process on measuring, monitoring, managing liquidity, interest rate, foreign exchange and equity as well as commodity risk. bpng has in place a prudential standard for foreign exchange risk called foreign currency exposure limit. this standard is intended to : 1 ) assure that the potential risk of loss to a bank β s capital base is within prudential limits ; 2 ) promote maximum availability of foreign exchange at competitive rates ; and 3 ) allow banks to conduct business in a profitable yet prudent manner. apart from minor issues with the banks regarding adherence to the requirements of the prudential standard, it is pleasing to note that the banks are managing market risk adequately. challenges in risk regulation and compliance in banks in summary, and as mentioned in each of the risk areas, the following are the challenges we face at bpng regarding supervision of risks and compliance by banks : β’ the financial market is thin and | venture is undertaken. risk management is a discipline at the core of every bank and encompasses all the activities that affect its risk profile. banks in png can introduce risks into their operations through imprudent management practices. these include credit, operations and market risks. it is pleasing to note that banks in png are risk aware and have put in place necessary risk mitigation controls depending on their respective risk appetite. banks have generally achieved the various stages of defining, implementing and enforcing some risk framework to ensure that it is commensurate with the scope and complexity of its operations. i will now briefly touch on key risk areas that bpng focuses on in its reviews of the banks. bis central bankers β speeches capital risk bpng emphasizes that it is the responsibility of an institution β s board and senior management to ensure that the capital resources are appropriate to the size, business mix and complexity of the institution β s business. accordingly, the institution must have suitable systems in place to identify, manage and monitor the risks associated with its business activities, and to hold a level of capital that is commensurate with its overall risk profile. in controlling capital risk in the banking system, bpng has put in place requirements in the form of the capital adequacy prudential standard. the standard incorporates the minimum capital requirements as stated under the basel 1 accord. bpng has set the minimum capital ratios of an institution at 6 % ( leverage ratio ), 8 % ( tier 1 risk based capital ) and 12 % ( total risk based capital ). institutions are expected to have adequate buffers above the bpng minimum capital ratio. this may range from several percentage points for the smaller unsophisticated institutions to small margins for the larger institutions with sophisticated capital management systems. excessive leverage by banks is widely believed to have contributed to the recent global financial crisis. to address this, the international community has proposed the adoption of a non - risk - based capital measure, the leverage ratio, as an additional prudential tool to complement minimum capital adequacy requirements. its adoption can reduce the risk of excessive leverage building up in individual entities and in the financial system as a whole. it is pleasing to note that bpng is one step ahead as the leverage ratio forms part of our minimum capital requirements. adherence to these minimum standards has been a norm by the banking system and bpng has not experienced any adverse effects regarding capital run by the regulated institutions. as at end of march 2012, | 1 |
charles i plosser : the us economic outlook and the normalization of monetary policy speech by mr charles i plosser, president and chief executive officer of the federal reserve bank of philadelphia, at the society of business economists annual conference, london, england, 9 june 2011. * * * the views expressed today are my own and not necessarily those of the federal reserve system or the fomc. introduction good morning. thank you for this opportunity to speak before your society. as business economists, you are well aware of the extraordinary economic times in which we live. a financial crisis and arguably the worst global recession of the post - war era have challenged policymakers in the u. s. and abroad. in many nations, monetary and fiscal authorities undertook extraordinary actions to mitigate the damage, and for most of the hardest hit countries, the recession trough has passed and a moderate recovery is underway. yet the actions taken leave a legacy of huge government budget deficits, short - term interest rates at record lows, and central bank balance sheets of unprecedented magnitudes. even as our economies recover, policymakers face some daunting challenges as we try to unwind these extraordinary actions and rebuild confidence and credibility in our monetary policy frameworks. today i would like to discuss my outlook for the u. s. economy and some thoughts about ways to begin the normalization of u. s. monetary policy. i believe there are several steps the federal reserve can take to ensure a successful exit from this period of extraordinary accommodation, including taking a page out of the bank of england β s book by announcing an explicit numerical goal for inflation. as always, my remarks reflect my own views and do not necessarily represent the views of the federal reserve board or my colleagues on the federal open market committee. economic outlook let me begin with an update on the u. s. economy. we are nearly two years into a moderate, sustained recovery from financial crisis and the worst economic downturn since the great depression. in the fourth quarter of last year, the level of real gdp finally passed its prerecession peak, but it did so with some 7Β½ million fewer workers, a reflection of strong productivity growth. this year β s first - quarter gdp growth, at just below 2 percent, was somewhat disappointing. but i believe that this weakness will likely prove to be a temporary soft patch and that the underlying fundamentals remain in place for the economy to resume growing at a moderate pace in the second half of this | year, and to strengthen a bit more next year. such soft patches are not that uncommon. indeed, last year we experienced just such a bump in the road. yet, after what i described as the summer doldrums, the economy picked up momentum to give us just under 3 percent growth for the full year. i think the slower growth in the early part of this year has similarly been influenced by a number of temporary factors. in particular, severe weather, uncertainty surrounding the aftermath of the disaster in japan, political events in the middle east and north africa, and higher food and energy prices, all have weighed on growth. oil and commodity price increases and supply chain disruptions from the devastation in japan may have some carryover into the second quarter, but i believe any loss of momentum is likely to be transitory. bis central bankers β speeches of course, the drama being played out in congress over debt and spending has provided yet another source of uncertainty for the economy. progress in that arena would undoubtedly improve confidence going forward and reduce uncertainty. monetary policy cannot and should not be viewed as a substitute for sound fiscal policies. as i have argued many times in the past, monetary policy is not the silver bullet that many would like to think it is. it cannot solve all of our economic ills, and attempting to do so can be quite dangerous for economic stability. 1 i anticipate moderate but above - trend growth of around 3 to 3Β½ percent for the remainder of this year and next. the overall strength in some sectors will more than offset persistent weaknesses in others, so that the recovery will be sustained and more broad - based as it continues. improvement in household balance sheets and better labor market conditions will support moderate growth in consumer spending. solid growth in corporate earnings will support continued healthy advances in business spending on equipment and software. housing, however, will likely remain a weak spot in the u. s. economy, with flat to slightly falling prices and little new construction. outside of recent supply disruptions in the auto industry, i anticipate that growth in manufacturing will remain a source for optimism. the philadelphia fed β s business outlook survey of manufacturers has proven over the years to be a useful barometer of national trends in manufacturing. in april and may, the measures of current activity saw some pullback from the very high numbers of february and march, but the numbers show that activity in the manufacturing sector continues to expand. moreover, the survey β s indicators of future activity, | 1 |
future earnings and apply shariah - compliant risk mitigation techniques at an early stage so as to manage the volatility in returns to ensure stable and competitive income to depositors. similarly, applications of risk - based models allow islamic financial institutions to conduct stress testing, sensitivity analysis and simulations based on multiple scenarios to take into account all possible potential outcomes that may occur. this will enhance the capacity of islamic financial institutions to better anticipate the possible impact of financial shocks on future earnings and hence formulate contingency plans leading to a more effective and efficient asset and liability management. in addition, it - based risk management systems would strengthen the capacity of islamic financial institutions to effectively manage the segregation of demand deposits, restricted and unrestricted investment accounts and shareholders funds in accordance with their distinct investment objectives and risk tolerance. the mapping of financial performance of assets with risk - adjusted returns to these specific classes of investors will lead to enhanced accuracy and transparency in the determination of returns. in addition, as returns in islamic banking are uncertain and can only be ascertained on an ex - post basis, well - developed it systems can equip islamic financial institutions with the ability to make projections on future returns to reduce the degree of uncertainty in the returns to be paid to the depositors. this would enhance credibility and strengthen the competitiveness of the islamic financial industry. conclusion the future prospects of the islamic financial services industry will be the result of the combined efforts of all the relevant entities in the financial sector - the industry, the regulators, the market participants and the international community. these collective efforts need to be galvanized as a coordinated and concerted effort to maximize the potential for the industry. evolving the shared vision and common goal to be achieved will be an important first step. of greater importance will be the actions that need to be taken to make this happen. it will be our actions and initiatives taken today that will contribute towards determining the future that we aspire. | fraziali ismail : closing ceremony of the project greenback 2. 0 kota kinabalu welcoming remarks by mr fraziali ismail, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the closing ceremony of the project greenback 2. 0 kota kinabalu, kuala lumpur, 14 february 2020. * * * before i begin, i would like to convey my deepest condolences to the family members and friends of those who were involved in the boat crash incident near pulau tanjung aru, yesterday. let us pray for the safety of the victims as well as the search and rescue team. ladies and gentlemen, after we concluded project greenback in johor bahru more than two years ago, bank negara malaysia together with the world bank sat down to choose the second β remittance champion city β. among others, we considered ipoh, butterworth and kota kinabalu. we discussed long and hard, and weighed our options. our assessment suggested that ipoh and butterworth would have presented us with a rather similar case study to johor bahru. this is in view of the similar profile of the target groups who are largely made up of urban migrants, therefore exhibiting similar remittance behaviors. the odd for success would have been easier and kinder to us. but our intention has never been about replicating our experience in johor bahru. kota kinabalu offers a much more exciting proposition. this is despite our full cognisance of the challenges ahead of us, such as geographical barriers and connectivity issue. the more we thought about it, the more we were adamant to take this β road less travelled β, premised on a very clear objective which was to test how digitalisation and technology could be leveraged as a driver for inclusive financial services. our work under project greenback 2. 0 were not limited to the city of kota kinabalu alone. we covered keningau, inanam, tenom, kunak, tawau. some of these areas are remote, and admittedly, only a few of these i have visited myself. our work also brings us to this beautiful city of sandakan, where we gather this evening. it is my great pleasure to extend a warm welcome to all of you to the closing ceremony of the project greenback 2. 0 kota kinabalu. our utmost appreciation goes to our guest of honor, yang berhormat dato β | 0.5 |
in the western and southwestern areas of the country where the oil service industry has predominated in recent decades. countrywide the downturn has not been as pronounced as the contraction triggered by the financial crisis. excluding that sharp, albeit short, contraction, the period of weak growth we are now experiencing has not been seen since around 1990. mainland output per capita has stagnated over the past two years, and the level of real wages is lower than in 2014. chart : oil investment and spending of petroleum revenues most of us might say that the economic winter has been fairly mild so far. this is partly because the economy has been provided with ample fuel. when oil prices started to fall, the economy had for several years enjoyed both strong growth in oil investment and fiscal spending of petroleum revenues. oil investment has since declined, while government spending has continued to rise. spending of oil revenues has increased by about as much as oil investment has fallen since 1 / 9 bis central bankers'speeches 2013. chart : key policy rates monetary policy has also made a substantial contribution. an already low policy rate was cut further. the key policy rate has now been kept at a record - low 0. 5 percent for close to a year. in our neighbouring countries, interest rates have come down to even lower levels, but in real terms the interest rate level has been lowest in norway. the krone exchange rate fell in tandem with the oil price and led to higher prices for imported goods, resulting in a temporary increase in inflation. since there is confidence that inflation will remain low and stable, we have been able to disregard that increase when setting monetary policy. the social partners have shown wage restraint. the krone depreciation has thus translated into a marked decline in relative labour costs, which has helped strengthen the position of norwegian firms exposed to international competition. chart : changes in employment so far, however, it is only in the tourist industry where a weaker krone has led to clearly higher activity. since oil prices started falling in autumn 2014, employment has shown solid growth in the hotel and restaurant industry, but otherwise almost two in three new jobs have come in the public sector and the construction industry. growth in those sectors has offset the decline in oilrelated industries, where one in five jobs has been lost. the strong growth in jobs in the construction industry reflects the economic policy pursued. public investment has increased, and low interest rates have fuelled house price inflation and led to a sharp rise in housing construction. in | defenders of old truths see the light, but rather because they eventually die. 4 if we take a closer look at the basel iii framework, there are still signs of innovation. macroprudential policy is a new element of the framework, aimed at containing systemic risk in banks and financial institutions. for the first time, international banking regulation includes requirements grounded in the interplay between the banking sector and the rest of the economy. we must acknowledge that in the run - up to a financial crisis, the authorities, banks and other economic agents often confuse good times with normal times. strong growth in real estate prices, credit and tax revenues are perceived as normal. statistical filtering methods confirm that trend growth is high and that debt growth is sustainable. this time is different. we should know better β because we have fairly extensive knowledge about the economic background leading to financial crises. analyses, including our own, show that a rapid accumulation of debt almost always precedes a financial crisis. empirical studies document that high debt growth increases the probability of a crisis and results in a deeper crisis. 5 debt is at the core of all financial crises. real estate prices also rise rapidly ahead of a crisis. and it is warning signal when banks have to run to securities markets to finance growth faster than deposits alone allow them to do. systemic risk increases when imbalances build up. macroprudential policy is designed to address the systematic features of financial crises, strengthen bank resilience and curb the probability of a crisis. policy rules and transparency are aimed at avoiding complacency in good times. for example, the basel iii framework specifies that the ratio of credit to gdp should be a conditioning variable when setting the level of the countercyclical capital buffer for banks. the authorities must explain and justify their actions, or their inaction. if banking regulation is to be effective, not only must we be able to identify imbalances that are building up, but we must also understand the interaction between banks and other economic agents and how systemic risk arises. lessons from the 1960s and 1970s showed that detailed regulation was not very effective. if we are to intervene in the markets, we must understand how the market functions and why the market cannot be left to its own devices. this provides a basis for regulating markets and insight into regulatory effects. from the textbooks we are well aware of the ingredients of market failure β or the preconditions for regulating markets. environmental economics is often used as an example. if a poll | 0.5 |
augmented reality ( ar ) headsets and blockchain technology. 3 current share of manufacturing is 17 per cent. 6 / 6 bis - central bankers'speeches | so as to address the risk inherent in them. similarly, if an exposure has sensitivity to more than one risk factor it should be subjected to the risk management framework applicable to all the relevant risk factors. 17. in view of the volatility in prices of commercial real estate ( cre ), higher risk weight and provisioning norms have been prescribed by us for the cre sector. we have prescribed differential loan to value ( ltv ) ratio, risk weights and provisioning for individual housing loans in order to differentiate the risks involved in low value and high value home loans. in order to support the residential housing sector, we have carved out ( vide circular dated june 21, 2013 ) a separate sub - sector out of cre viz. cre - rh ( commercial real estate β residential housing ). the circular defines cre - rh as below : cre - rh would consist of loans to builders / developers for residential housing projects ( except for captive consumption ) under cre segment. such projects should ordinarily not include non - residential commercial real estate. however, integrated housing projects comprising of some commercial space ( e. g. shopping complex, school, etc. ) can also be classified under cre - rh, provided that the commercial area in the residential housing project does not exceed 10 % of the total floor space index ( fsi ) of the project. in case the fsi of the commercial area in the predominantly residential housing complex exceeds the ceiling of 10 %, the project loans should be classified as cre and not cre - rh. 18. carving out of cre - rh was done with the intention of providing regulatory support to lending towards residential housing projects by allowing lower provisioning and risk - weights. apart from this, different slabs of ltv ratios, risk weights and provisioning have been prescribed to support housing loans for lower income groups while stressing the need for higher stake of home buyers in high cost houses. 19. the ltv ratio β risk weight matrix for housing loans as also cre and standard assets provisioning for both housing as also cres are tabulated below : bis central bankers β speeches 20. the restructured housing loans should be risk weighted with an additional risk weight of 25 %. in view of the higher risk associated with housing loans at teaser rates i. e. at comparatively lower rates of interest in the first few years, after which rates are reset at higher rates, we have prescribed higher standard | 0.5 |
markets due to, for example, a lower level of state aids and regulatory reform in network industries that resulted in substantial price reductions as well as in higher activity. for example, between 2000 and mid - 2003 alone, the price decline in telecommunication services as measured by the hicp sub - index for telecommunications led to a cumulated downward effect on total hicp inflation of 0. 33 percentage point. 2 moreover, its positive effect on real acticity supported the creation of new jobs. at the same time, labour market reforms undertaken during the 1990s seem to have contributed to the strong employment growth and to the considerable decline in unemployment in many countries during the cyclical upswing between 1997 and 2000. reform measures in this field included, for example, improvements in countries β job mediation systems, a more intensive use of part - time work contracts as well as policies raising the efficiency of tax and benefit systems. with the so - called lisbon agenda the european council intends to reinforce these reform efforts. it identifies various areas for further reform, summarised under employment, research and innovation, the single market, social cohesion as well as sustainable development and the environment. i think we namely, β to become the most competitive and dynamic knowledge - based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion β by 2010. see ecb monthly bulletin ( 2003 ), pp 26. all agree that stepping up structural reforms in these areas is indispensible for improving the euro area β s unsatisfactory growth potential and its ability to create employment, even more so after the eu has been enlarged to countries that have substantially lower labour costs. the euro area β s insufficient flexibility is manifested in the high rate of unemployment, which amounted to 8. 8 % in 2003. this reveals shortcomings in the implementation of structural refoms that would improve the use of the euro area β s productive forces and increase their flexibility in response to economic shocks. it is thus crucial that the lisbon agenda β s impetus is maintained, which must manifest itself in increased efforts to reach the agenda β s 2010 targets. there is, however, still a long way to go. for example, raising the euro area overall employment rate to 70 % by 2010 can be expected to require an additional 15. 3 million jobs, although hiding significantly varying challenges for different groups in the labour market. whereas, for example, significant progress has been made to raise female employment, employment growth for older workers aged | β global dimensions of unconventional monetary policy β, a symposium sponsored by the federal reserve bank of kansas city. β stein, j. ( 2014 ), β challenges for monetary policy communication β, remarks by jeremy c. stein to the money marketeers of new york university, may 6, 2014. stein, j. and sunderam, a. ( 2016 ), β the fed, the bond market, and gradualism in monetary policy β, manuscript, harvard university. woodford, m. ( 2012 ), β methods of policy accommodation at the interest - rate lower bound β, the changing policy landscape, federal reserve bank of kansas city, pages 185 β 288. 1 i would like to thank s. andreopoulos for his contributions to this speech. i remain solely responsible for the opinions contained herein. 2 see blinder et al. ( 2008 ). 3 see cΕure ( 2017 ). 4 see gurkaynak et al. ( 2005 ) and, for the ecb, brand et al. ( 2010 ). 5 see eggertsson and woodford ( 2003 ) and woodford ( 2012 ) in particular. 6 for earlier contributions, see coeure ( 2013 ) and praet ( 2013 ). 7 see campbell et al. ( 2012 ). 8 see stein ( 2014 ) and stein and sunderam ( 2016 ). 9 see, e. g., filardo and hofmann ( 2014 ), p. 45. 10 see coenen et al. ( 2017 ). 9 / 10 bis central bankers'speeches 11 see, e. g., altavilla et al. ( 2015 ), blattner and joyce ( 2016 ) and ecb ( 2017 ). 12 see fuhrer ( 1994 ). 13 specifically, on occasions of no change, the introductory statement said that β [ β¦ ] in line with our forward guidance, we decided to keep the key ecb interest rates unchanged. β 14 gaballo ( 2016 ). 15 see cΕure ( 2016 ). the speech concluded that the current level of the dfr is β still far away from the physical lower bound β, triggering cash substitution, and safely above the economic lower bound. 16 see shin ( 2013 ). 17 see also stein ( 2014 ). 18 blinder ( 2004 ). 19 see e. g. blattner et al. ( 2008 ) and blinder et al. ( 2008 ). 10 / 10 bis | 0.5 |
there can be arguments against disclosure. the few years involved can be perceived as a running - in period during which the previous dialogue between the banks and the authority concerning provisions is supplemented by a dialogue on capital adequacy. danmarks nationalbank would like to emphasise, however, that the assessment of the need for capital should be disclosed when the full basel ii framework is implemented. the financial markets and the financial products are becoming more and more technically advanced and sophisticated. new products are constantly appearing to match customers β changing needs and preferences. in overall terms this is good for both business enterprises and households. choice is always a good thing - so that everyone β s needs can be catered for. for large groups of especially households it can be very difficult, however, to pinpoint exactly what is needed, and even harder to understand the various products and the risks they entail, and make the right choice. this applies especially to life β s major financial decisions, not least financing the purchase of a home and choosing the right pension scheme. this is where advisory services come into play. bank employees devote a lot of effort to advising households. it is, however, important that clients understand that there is no certain answer to the question of how e. g. interest rates and share prices will develop in the future. the adviser may have certain expectations, but nobody can know for sure. today many banks do a lot to emphasise that they are profit - driven commercial enterprises. this means that their employees must be good at selling their products. for this reason, some banks have incentive structures to reward successful salespeople. undoubtedly the interests of the bank and the private client may coincide, but it is hard to believe that this is always the case. this applies to many types of professional advisers - from insurance brokers to pharmacies, opticians and banks. denmark is now harvesting the fruits of more than 20 years β stability - oriented economic policy during which major structural reforms have been implemented. as a result, we have favourable growth, low inflation, a large current - account surplus and a surplus on government finances. unemployment is low in international terms. after rising for two years the curve seems to be on the way down as the unemployment level has stabilised, or is dropping slowly, depending on whether people in job creation schemes are included or not. the krone is extremely stable against the euro and both short - term and long - term interest rates are only marginally above the euro interest | you can set a limit below which you pledge not to investigate payments, but then you need to oversee that criminals don't circumvent that limit by splitting up payments, and in practice it's difficult to decline investigating crimes based on an administratively determined limit. interest on the deposit will be an issue. in principle, interest could be set at a rate so unattractive that for deposits of amounts exceeding, say, 3, 000 euro, it would replace the impact of a threshold. however, it's unrealistic that a low rate of interest will be able to stem a bank run. a threshold of 3, 000 euro is unlikely to have any appreciable effect, but otherwise the ecb's interest rate on the account would undoubtedly serve as a lower limit for private banks'deposit rate. when it comes to the motivation for a retail cbdc, the following is inspired by an interview with agustin carstens, general manager of the bis. 8 in practice, customers are unlikely to see much change with a retail cbdc because the product is very similar to existing private bank accounts. ( one might say that a retail cbdc would be a small step for consumers and corporations, but a giant leap for central banks. ) mr carstens mentions three types of motivation for ongoing projects. first, the large number of countries and regions with less developed payment systems, for instance without instant payments. in these countries and regions, one account for all at the same bank will make it easier to receive instant payments. second, it will stimulate additional competition that may spur innovation, also in the private sector. third, some people see access to direct " settlement in central bank money " as a particular advantage ; this is possible when paying in cash although more and more people are opting out of cash. it should be noted that consumers'and corporations'choice of increasingly transferring funds digitally between their accounts rather than in cash is not governed by central banks or policymakers. moreover, it is argued that if individual countries and currency areas design the retail cbdc using the same standards, it would be possible to further develop a system of cross - border payments between currency areas. currently, most of the debate revolves around the possible technological solution, and many people take particular notice of the term " digital ". at danmarks nationalbank, we have devoted a number of resources to this issue, we have prepared a report9 and we closely monitor what other central banks are doing. however | 0.5 |
. if the intention is that prices should increase by 2 per cent, but over a period of time they have increased by less than this, the rate of price increase must be higher than 2 per cent for a period in order to return to the original price level path. the advantages and disadvantages of a price level target have been debated considerably in research and are also discussed in the evaluation. one example of an advantage of having a price level target is that it provides more guidance than an inflation target with regard to the price level far into the future. as i understand it, the authors do not appear to be advocating a pure price level target, rather some form of hybrid. in concrete terms, this means, if i interpret rightly, that the riksbank should retain its inflation target but still to some extent compensate for the deviations from target that have arisen by deliberately allowing inflation to go above the target for a time. here i can imagine a number of practical objections. i believe, for instance, that it would not be an easy task to convey the message to the general public that as inflation had been, say, below target for a period of time, the riksbank would endeavour to bring inflation up to, say, around 3 per cent for a period of perhaps a year. in my opinion, this could lead to considerable confusion with regard to the status of the 2 per cent target. there is a risk that it could be perceived as the riksbank beginning to work with inflation targets that vary over time, which could also be said to be the case. i believe that in this type of world it would be more difficult to anchor expectations of future inflation. the authors claim that this method of conducting monetary policy would only entail a minor change in the current policy. i do not really agree with this. i consider that it would be a fairly major change in a system that, all in all, has been proved to work well. it would in any case be a much greater change than the ones we have made so far, such as abandoning the assumption of an unchanged repo rate and our earlier simple policy rule. bearing in mind that the riksbank, as is also noted in the report, has not found it entirely easy to communicate these relatively limited changes in its monetary policy system, it is somewhat surprising that the authors consider this change as minor. however, i am not saying that changes in the monetary policy strategy, for instance in the way suggested by | this design worked incredibly well, as activity in most of the facilities gradually declined to near zero, allowing the fed to simply turn them off with no market disruption. the success of these facilities should be judged by the outcomes they produced for financial market functioning, and not by the financial returns they generated on the federal reserve β s books. however, there are several reasons why the fed might be expected to profit from this type of lending under most circumstances. first, the fed is providing funds in response to an extreme move in the price of liquidity β that is, it is in effect buying a cheap asset. second, the programs themselves, if successful at returning market functioning, would help the performance of the fed β s loans to be sound. and third, the lending under these facilities has to be adequately secured. asset holdings : a policy lever while the exit from the liquidity facilities has been successful, the exit from the accommodative stance of monetary policy involves a different set of challenges. many of these challenges arise from the federal reserve β s outright holdings of treasury debt, agency debt and agency mortgage - backed securities ( mbs ), which together represent the overwhelming share of the fed β s balance sheet today. indeed, as a result of our large - scale asset purchase programs, these asset holdings now account for $ 2. 0 trillion of the fed β s $ 2. 3 trillion balance sheet. the federal reserve is approaching the scheduled end of its large - scale asset purchases. we have bought $ 169 billion of agency debt to date, nearly fulfilling our plan to purchase β about $ 175 billion β. for mbs, we have only about $ 30 billion of purchases remaining to reach our $ 1. 25 trillion target. in addition, we completed $ 300 billion of purchases of treasury securities late last year. looking across these programs, we have now purchased $ 1. 69 trillion of assets, bringing us 98 percent of the way through our scheduled purchases. to get to this point, the trading desk at the new york fed has so far conducted 126 discrete operations to purchase treasury and agency debt, and has managed 292 trading days on which either it or its investment managers have acquired mbs. my view is that the purchase programs have helped to hold down longer - term interest rates, thereby supporting economic activity. with the conclusion of the programs approaching, the desk has been tapering the pace of its purchases of agency debt and mbs. however, even as the pace of our purchases has | 0 |
in those regions where many people still do not have access to face - to - face financial services. this has been made possible by the spread of smartphones, which function as a platform for providing financial services, skipping the stage of face - to - face financial services. this leapfrogging has the advantage of providing immediate access to the fruits of financial innovation without the switching costs of shifting from existing information technology systems. moreover, it also brings substantial benefits in the context of financial inclusion. notably, the evolution of digital technologies is not limited to traditional banks ; non - bank financial intermediaries ( nbfis ) increasingly leverage digital platforms to offer innovative services, such as cross - border funds transfers. on the other hand, it should be noted that the digitalization of finance could pose new risks to the stability of the financial system. it is becoming ever more important to ensure operational resilience, for example, by managing cyber and third - party risks, and to introduce anti - money laundering and combating the financing of terrorism ( aml / cft ) measures. crypto assets, tokenization, artificial intelligence ( ai ), and other new technologies may bring opportunities, but they could also pose risks to the financial system. a critical challenge for financial authorities lies in harnessing the advantages of the digitalization of finance while effectively managing risks to ensure the stability of the financial system. as financial services and providers continue to diversify, adopting the 3 / 5 bis - central bankers'speeches principle " same activity, same risk, same regulation " has become increasingly important. however, a practical challenge persists in determining which activities and risks should be classified as " the same " under this principle. given the significant progress in digitalization witnessed in the apac region, it is imperative for financial authorities to collaborate and engage in comprehensive discussions on this topic. c. growing need to address climate change on the financial front the third change is the growing need to address climate change on the financial front. the apac region accounts for a large share of the world's carbon dioxide emissions, and the region is susceptible to the adverse effects of climate change, with massive flood damage increasing in recent years, for example. this is why financial authorities in this region are particularly interested in addressing climate change. climate change represents a global challenge necessitating active participation of diverse entities acrosssociety and the economy. on the financial front, efforts are being pursued based on two overarching perspectives. the first | 25. 02. 2021 latin american economies : developments and challenges consejo empresarial alianza por iberoamerica ( ceapi ) pablo hernandez de cos governor ladies and gentlemen, good afternoon. first of all, i would like to thank the consejo empresarial alianza por iberoamerica ( ceapi ) and its president, nuria vilanova, for the kind invitation to participate in this event. i should also like to take this opportunity to acknowledge the role that the ceapi plays to support the business and investment of spanish, portuguese and latin american firms. as you all well know, latin america is a very important region for spain owing to our close cultural and economic ties. it is likewise important for the banco de espana, as evidenced by one of the initiatives in our strategic plan for 2020 - 2024 : 1 positioning the banco de espana as a leading central bank for latin america. this objective entails engaging in a series of actions, such as organising events, entering into and implementing cooperative agreements with central banks and institutions in the region, and the provision of services and international cooperation, all with a medium and long - term strategic view. it also means working to extend and improve our institution's analytical capacity and its visibility vis - a - vis the region β s economies and financial systems. fortunately, it is already viewed as a benchmark in this regard within the eurosystem. allow me to briefly remind you of some figures on spain β s exposure to latin america as a whole ; this exposure is particularly relevant in terms of the stock of direct investment, given that around 31 % of all spanish foreign direct investment assets are located in the region. particularly prominent are the positions in brazil and mexico. trade is likewise significant, with 4. 8 % and 7. 8 % of all spanish exports of goods and services, respectively, heading to the region. since the early 1990s, the internationalisation of spanish banking has largely focused on latin america, in addition to the european union, the united states and turkey. consequently, the region has taken on considerable significance for the spanish banking https : / / www. bde. es / f / webbde / ssicom / 20200115 / plan _ estrategico _ 2024 _ en. pdf. system. indeed, on pre - pandemic data, spanish banks'exposures2 to latin america represent nearly one - fifth of the system β s total | 0 |
n s vishwanathan : basel iii liquidity risk framework β implementation and way forward expanded version of opening address by mr n s vishwanathan, executive director of the reserve bank of india, at the β basel iii liquidity risk framework β implementation and way forward β, hyderabad, 27 november 2015. * * * the contribution of shri puneet pancholy, dgm, dbr is gratefully acknowledged. good morning. it is my pleasure to be with you in hyderabad in this conference on the basel iii liquidity risk framework in india. as the chair of a group discussion on liquidity coverage ratio ( lcr ) and net stable funding ratio ( nsfr ) at the fixed income money market and derivatives association of india ( fimmda ) annual conference in prague a couple of months ago, i had hinted that the reserve bank would initiate a process of discussions with bankers on the whole gamut of issues concerning basel iii liquidity framework. i am happy to say that the plan for this unique endeavour has fructified, as a result of a series of discussions with you all. why this seminar it needs no mention that liquidity framework is an important part of the post - crisis reforms taken up by the basel committee and i believe it is a very significant one. prior to these guidelines, the regulations relating to liquidity were limited which in a way paved the way for the banks to extensively use wholesale short term funding to fund long term assets. unlike the west, our banking system did not depend on wholesale short term funds. our system was more dependent on public deposits and did not face the kind of liquidity issues that the banking system in the west did. there were several reasons for this. first, our economy had a high domestic, and more particularly household, savings ratio. second, there were not many avenues for the household to park their savings and hence banks became the primary repository. third, the banking system was largely in the public sector which gave the public a sense of safety of their funds. fourth, we always had the notion of an acceptable credit - deposit ratio that provided an informal foil to any attempt to build an over - extended credit portfolio. fifth, we bis central bankers β speeches had the statutory liquidity ratio ( slr ), which statutorily required that a part of the demand and time liabilities are held in liquid assets. sixth, as early as 1999, we had issued guidelines on asset liability management ( alm ) by banks | the wings waiting for a go ahead. 17. india has good it talent as also financial sector talent and hence this experiment to bring ict based financial inclusion is not only relevant to india but to the entire globe as success of this experiment can be replicated elsewhere. entire world is looking at these developments with keen interest. we need to meet these expectations. 18. we have a broad based government - central bank commitment to financial inclusion to help alleviate poverty. our aim is to help create an enabling policy and regulatory environment for innovative financial inclusion. the present enabling environment will critically determine the speed at which the financial services access gap will close for the people currently excluded. 19. thank you. i wish the 23rd skoch summit all the best and hope the deliberations here throw new light on various aspects of financial deepening. | 0.5 |
the term rate, last updated may 4, 2022. 2 john c. williams, a solution to every puzzle, remarks at the 2020 u. s. treasury market conference ( via videoconference ) ( september 29, 2020 ). 3 john c. williams, preparing for the unknown, remarks at the 2021 u. s. treasury market conference ( via videoconference ) ( november 17, 2021 ). 4 john c. williams, financial stability and monetary policy : happy marriage or untenable union?, presentation to the deutsche bundesbank conference, eltville am rhein, germany ( june 5, 2014 ). 5 john c. williams, 2015. measuring monetary policy's effect on house prices, frbsf economic letter, no. 2015 - 28, federal reserve bank of san francisco. 6 board of governors of the federal reserve system, statement regarding repurchase agreement arrangements, july 28, 2021. 7 inter - agency working group for treasury market surveillance, enhancing the resilience of the u. s. treasury market : 2022 staff progress report, november 10, 2022. 8 financial stability board, non - bank financial intermediation, as updated november 10, 2022. 4 / 4 bis - central bankers'speeches | anyone wants to watch is the sequel, " libor : the next generation. " the libor transition is tangible proof of what can be accomplished when all stakeholders - public and private - work together and persevere, against all odds. that sense of purpose, collaboration, and accomplishment gives me hope for the main topic of the conference today : treasury market resilience. and yes, there is much work to be done. 1 / 4 bis - central bankers'speeches before i go on, here's a reminder that you know all too well i cannot leave behind - and that's the usual disclaimer that the views i express are mine alone and do not necessarily reflect those of the federal open market committee ( fomc ) or anyone else in the federal reserve system. well - functioning markets and monetary policy i've long made the case that a well - functioning u. s. treasury market is critical to our economy, and, in fact, the entire world. 2 3 but now, i'd like to take it a step further to explain how critically important a resilient financial system - and especially a resilient u. s. treasury market - is for monetary policy. in the current environment of high global inflation, central banks around the world have been taking strong, decisive actions to restore price stability. restoring price stability is of paramount importance because it is the foundation of sustained economic and financial stability. price stability is not an either / or, it's a must have. for monetary policy to be most effective, financial markets must function properly. monetary policy influences the economy by affecting financial conditions, with the treasury market at the center of it all. if the treasury market isn't functioning well, it can impede the transmission of monetary policy to the economy. the great debate these issues recall a longstanding debate over what should be done when there is a trade - off between monetary policy and financial stability goals. in the decade before the pandemic, this debate occurred in the context of inflation running persistently below the fomc's long - run 2 percent target. 4 on one side, there were those who argued that an extended period of accommodative policy aimed at boosting inflation would contribute to a buildup of asset prices, leverage, and risk - taking that would ultimately undermine financial stability. they concluded that policy should lean against the wind of financial stability risks, even at some cost to achieving the price stability goal | 1 |
##ll73. htm 4 blockchain equivalent of delivery versus payment ( dvp ). tokens and assets for which payment is made are transferred simultaneously. 5 https : / / www. bis. org / press / p240403. htm 6 iadi survey brief on the role of climate in deposit insurers'fund management, 2023. 6 / 6 bis - central bankers'speeches | approaches. the question we need to consider is whether there is consistency between the results of the statistical and structural approaches. if not, how do we deal with the divergences? 5. second, in the first stage of the exercise, the criteria applied to the systemically important countries have been more stringent. the screening however has been largely mechanical though, based as it was, mainly on deviations from the mean or median. there has been no analysis, however, to check whether such deviations indeed constitute large and systemic imbalances warranting corrective action. such a mechanical approach, without the application of mind, can lead to anomalies. let me give two illustrations of the type of potential anomalies using india as a case study. 6. large deviations from the mean is the criteria adopted for screening in on the basis of private savings irrespective of whether the country concerned is running a current account deficit or a current account surplus, or its stage of economic development. if, for the sake of argument, such a country was running a current account deficit and adjusted its private savings downwards, it would need to expand its current account deficit and then get screened in by the external imbalance indicators. in india, for example, our growth has been driven by domestic savings. if because of the mutual assessment process ( map ), india was bis central bankers β speeches asked to reduce domestic savings, it will increase our dependence on foreign savings, actually adding to imbalances. this would indeed be paradoxical. 7. the second illustration is the treatment of public debt. instead of deviations from the mean / median, what was attempted was deviations from asymmetric reference values for developed and developing countries, with higher thresholds for developed countries. these thresholds are based on historic averages rather than on current assessments of debt sustainability related to expected or projected growth rates. the adjustment period to stabilize the debt is also very backloaded. the year 2030 is long - term enough, and to paraphrase the immortal words of lord keynes, many of us here may well be dead. one reason why the fiscal balance in advanced countries is so important to the global economy is that by virtue of being reserve currency issuing countries their deficits have large spillover effects. 8. there are two issues here. first, there is no justification for using different debt to gdp ratios for advanced countries and emerging and developing countries ( emdcs ). if we take a forward | 0.5 |
s financial system, first as a commercial banker and now as a central banker, i intend to use this opportunity today to share my perspectives on the approach adopted by rbi as the regulator of indian banks for making the indian banking bis central bankers β speeches sector more inclusive and relevant to a large cross - section of the indian economy and society. i shall also delve on the challenges which the banking system is encountering in realizing the goal of universal financial inclusion and the innovation and reforms that may be necessary to overcome some of these challenges. i also wish to emphasize that having bright and innovative ideas do not have any meaning until and unless they are acted upon. i, therefore, compliment the organizers for including β implementation β as an element of the theme for the conference, as i believe that rigor in implementation is extremely important for realization of the dream of universal access to financial services and products. why is financial inclusion necessary? 9. the ilo declaration of philadelphia in 1944 proclaimed that β poverty anywhere is a threat to prosperity everywhere. β it is universally agreed now that financial inclusion helps build domestic savings, bolster household, domestic and financial sector resilience and stimulate business and entrepreneurial activity, while exclusion leads to increasing inequality, impediments to growth and development. thus, financial inclusion is an important tool for poverty alleviation as it not only connects individuals to the formal financial system, but also inculcates savings habit among them. hence, financial inclusion or inclusive banking is a precursor for inclusive and sustainable economic growth. financial exclusion : dimension of the problem 10. an accusation that has come to be levied against the banking sector in the aftermath of the financial crisis is that it has failed to be β inclusive β. let me tell you that the indian banking system is not alone in failing the β inclusion β test. it is only the degree of exclusion that varies between different jurisdictions. the financial inclusion action plan ( fiap ) developed by the g20 global partnership for financial inclusion mentions that the universal financial inclusion initiative requires bringing the 2. 5 billion people ( or about half the working age population ) currently excluded, into the formal financial system. 11. that brings us to the question how inclusive is the indian financial system? census 2011 gives us some answers. out of 24. 67 crore households in the country, only about 14. 48 crore or 58. 70 per cent households had access to banking services. further, of the 16. 78 crore rural households only about 9. 14 | in about 300 b. c., has also mentioned about the existence of powerful guilds of merchant bankers who received deposits, and advanced loans and issued hundis ( letters of transfer ). in the modern times, an experienced scottish goldsmith, william paterson, is credited with the idea of setting up a national bank in britain in 1688, which gave birth to the bank of england. the modern day banking, in its simplest form, is meant to facilitate financial intermediation between the savers and the borrowers. it also seeks to act as a safe place to store money and earn some return in the process, as also a place to seek simple financial solutions to individual problems. the advent of technology in modern times has heralded three distinct phases in banking : a ) computerization of back office processes during the 1980s, b ) facilitating higher customer convenience during the 1990s and c ) enabling lifestyle / life stage banking during the 2000s. thus, over time, the banks have witnessed significant changes in their outlook and have emerged as financial supermarkets offering a range of complex financial products and services on a round the clock basis, duly customized to the needs of their customers through multiple delivery channels. 7. rbi, as the regulator of banks in india, has increasingly deregulated the sector and has allowed the market players to develop products and services best suited to their customers. as a result, both in terms of products & services and delivery channels, there has not been any dearth of innovations. on the product front, the innovations have led to emergence of complex offerings like swaps, derivatives and securitization, while on the other hand, the delivery channel is no more limited to brick and mortar branches, but has spread to modern, technology - driven channels like atms, mobile, internet and the social media, besides the business correspondent model. thus, over the years, there has been tremendous amount of progress and innovations in the sector. however, these developments have, simultaneously, raised certain pertinent questions : β’ whom have these innovations benefited? β’ are these product offerings demand driven? β’ have the banks addressed the β suitability and appropriateness β question? β’ have the charges for various services been made transparent and nondiscriminatory? why banks are still a place where ordinary mortals fear to tread? β’ why has a large section of the society remained financially excluded despite sincere efforts of the regulator as well as the policy makers? 8. having an insider β s view of india β | 1 |
to shaping an organization β s culture. you can never take a step back and say, β we β ve finished the culture project. well done! now it β s time to focus our efforts elsewhere. β culture is constantly evolving, and therefore needs to be constantly nurtured. one of the most challenging elements is that there β s no clear benchmark for success. and sometimes your greatest strengths can become your blind spots. as an organization with a public mission and regulatory responsibilities, the fed needs to have a particular focus on compliance. but cultures with a heavy focus on compliance can breed a sense that individuals aren β t responsible for their actions. as a ceo, i β ve tackled these issues by focusing on principles and values rather than writing extensive policies that try to cover every potential decision. this puts a premium on individual accountability to do what β s right and creating an environment where everyone has the ability and responsibility to speak up. somewhat paradoxically, focusing on principled decision making and accountability, rather than relying exclusively on rules and policies, can be the most effective safeguard against wrongdoing and unethical behavior. what β s the way forward? creating a positive work culture is challenging and ongoing work. and there β s no silver bullet that can solve cultural problems overnight. in terms of how to move forward i β d like to make three brief points before i close : first, the fact that we β re all sitting here in this room is a very positive sign. that so many leaders from major firms are here today, engaged in these issues, is a symbol of how organizational culture is moving up the agenda. the second is that the banking standards board survey is a terrific tool for getting a snapshot of what your organization β s culture looks like and how it β s changing over time. it goes far beyond typical engagement questionnaires and provides powerful insights into the values of employees and the characteristics of an organization. 7 it β s impossible to make progress if you don β t have an accurate picture of your starting point. the third is that when it comes to culture, i encourage everyone to look beyond their own lens of expertise. the fed couldn β t do its work without the deep knowledge of economists, lawyers, and statisticians. but the solutions to challenges related to a firm β s culture are unlikely to be found if we keep our focus narrowly trained on our own specialties. we have so much to learn from experts in psychology, ethics, and management. 3 | projects by incorporating climate change into its corporate bond purchases, collateral framework and risk management. see β ecb takes further steps to incorporate climate change into its monetary policy operations β, press release, ecb, 4 july 2022. in parallel, ecb banking supervision has placed climaterelated risks at the core of its activities, urging banks to improve how they manage and disclose climate and environmental risks in the light of the results of the ecb supervisory climate risk stress test. see β banks must sharpen their focus on climate risk, ecb supervisory stress test shows β, press release, ecb, 8 july 2022. 47. certain investments delivering eu public goods would be more effectively or efficiently provided at the eu level. there is a strong case to be made that investments in climate change mitigation and energy security fall into this category given the limited scope for individual action and the cross - border nature of the issue. panetta ( 2022 ), op. cit. 48. terzi. a ( 2022 ), β growth for good β, harvard university press. 49. stern, n. and lankes, h. p. ( 2022 ), β collaborating and delivering on climate action through a climate club β, london school of economics, october. 50. lagarde, c. ( 2021 ), β charting a course for climate action β, ecb blog, november. see also heemskerk, i., nerlich, c. and parker m. ( 2022 ), β turning down the heat : how the green transition supports price stability β, ecb blog, november. copyright 2022, european central bank | 0 |
radovan jelasic : provision of credits to small and medium sized enterprises in serbia speech by mr radovan jelasic, governor of the national bank of serbia, at the roundtable organized by β ekonomist β magazine on provision of credits to small and medium sized enterprises in serbia, held at the national bank of serbia, belgrade, 13 june 2007. * * * ladies and gentlemen, allow me to welcome you on behalf of the national bank of serbia on the occasion of conference on medium and small size enterprise crediting in serbia. i would like to discuss two related subjects β stability of prices, i. e. inflation, and the role of the nbs in providing credits to finance small and medium sized enterprises. stability of prices and business environment represent one of the key conditions for the success of economy as a whole and particularly so for the success of small and medium - sized enterprises. in contrast to large enterprises that have β connections β, access to insider information and are more than aware of their economic and political power, medium and small sized enterprises are usually treated as an ornament, more as a social than economic category β and that serves them no purpose. as for stability in prices, it is currently at the level most people do not remember ever having seen before because, back than, they were either not yet born or were not really very much interested in such matters at all. inflation today, after 44 years to the day, matches the level recorded in 1963. in may this year, year - on - year, the rate of headline inflation equalled 4. 4 % and core inflation reached 3. o %. at the same time, our economy has been growing at the rate of around 7 % ( first quarter 2007 over the same period a year earlier ) and displaying a greater abundance and variety of cheap credits than seen in serbia in a long time, the exchange rate for the dinar has been floating freely for over three months now without any interventions from the nbs, and our foreign exchange reserves have grown in excess of us $ 12. 2 billion. stability seems to have brought about a number of unexpected effects of β operating in a normal business environment β, which almost whole of our economy has kind of grown unaccustomed to in the course of these last 44 years, such as the facts that : β’ market implies competition, glorifies success and puts a persistent pressure on increase in productivity. one can no longer get by with phrases like : | benefited directly from two of these measures. the first is the granting of easier and greater access to the mainland banking market under cepa from 1 january 2004 and the second is the introduction of personal renminbi business in february. these will in time help to broaden meaningfully, i am sure, the scope of banking business for banks in hong kong. i should add that there are other initiatives being developed, with the aim of positioning the banking system of hong kong to take advantage of further financial liberalisation in the mainland. i hope they can be agreed, announced and introduced soon. short - term risks however, the generally good news in recent months should not blind us to the problems that remain in our economy or to the risks that face us. while the economy has been recovering strongly, it has not been creating as many jobs as we all would like to see. it is also uncertain to what extent the budget deficit will be reduced, as government revenues recover along with the economy. to be sure, the difficult investment environment is not helping us in our attempt to meet the budgeted investment income for the fiscal reserves. disappointments on these fronts may affect market sentiment in the short term, although the determination and ability on the part hksar government in tackling the remaining, structural components of these problems should not be in doubt. furthermore, there is a risk that our financial markets could over - react to external developments, notably stronger than expected monetary tightening in the us, macro - economic adjustments in the mainland and sharp increases in oil prices. although it is unlikely that these external factors would derail our economy, and so this risk seems small, under extreme market conditions, short - term volatility in financial markets could have a bearing on monetary and financial stability in hong kong. in contrast, there are also concerns about the effects of continuing easy monetary conditions within hong kong. during the past few months, economic recovery has resulted in inflows of funds into the hong kong dollar to the extent that the aggregate balance of the banking system has become extraordinarily high ( despite some outflows recently associated with the corrections in the financial markets ). as you know, under the currency board system there is not much that we can do to dampen easy monetary conditions : this is a question that the sub - committee on currency board operations of the exchange fund advisory committee has given a great deal of thought to. if there continue to be capital inflows on the back of sustained growth and confidence | 0 |
general - purpose technology, comparable to revolutionary innovations such as electricity or the internet. while ai impacts all sectors of the economy, the financial system - given its heavy reliance on data - is especially susceptible to ai - driven disruption. according to the bank for international settlements, ai will have far - reaching implications, significantly enhancing efficiency, reducing costs, and improving compliance by processing vast amounts of data more quickly and accurately than human capabilities. however, alongside this great potential come significant risks. as the imf and the oecd have pointed out in several publications, the increased use of ai in finance could lead to greater market concentration, as only a handful of firms have access to the vast computational power needed to build and operate advanced ai systems. this concentration introduces operational risks and heightens concerns about too - big - to - fail institutions, creating potential vulnerabilities within the financial system. additionally, other complex issues related to algorithmic bias and discrimination, were discussed today and present significant challenges that will not be easily resolved in the near future. undoubtedly, capacity building among financial stability staff on these innovative topics will become increasingly important for the central bank, in order to ensure a smooth digital transition within the financial sector. going forward, it is imperative that policymakers establish frameworks that promote transparency, fairness, and accountability in ai systems. the ultimate objective for both authorities and market participants is to develop resilient infrastructures capable of withstanding cyber threats while ensuring impartiality in an increasingly automated financial environment. in my opinion, the increasing complexity of finance and banking should motivate central banks to actively seek top talent not only from the financial sector but also from related fields such as it, computer science, and statistics, among others. this expanded expertise in financial stability will be crucial for effectively addressing the evolving challenges within the financial landscape. ladies and gentlemen, the success of this seminar is built upon the insights and expertise shared by our distinguished speakers. i would like to extend my sincere gratitude to the international monetary fund, our steadfast partner for nearly two decades in this important initiative. together, we began building this project several years before the onset of the global financial crisis, at a time when financial stability was not yet a central focus for policymakers. additionally, i would like to express my appreciation to my colleagues from the financial stability department, the international relations department, the secretariat and the entire organizational team, whose tireless efforts made this event possible. 2 / 3 bis - central bankers ' | speeches as we look ahead, we bear the responsibility of advancing the knowledge and ideas shared during this seminar and, whenever feasible, translating them into policy actions. as we conclude this seminar, let us remain dedicated to enhancing our collaboration, keeping in mind that financial stability is not a static objective but a dynamic process that requires ongoing vigilance, flexibility, and cooperation. thank you all once again for your engagement and contributions. i wish you safe travels as you return home, and i look forward to seeing you at future editions of the financial stability seminar in the years to come. thank you. 3 / 3 bis - central bankers'speeches | 1 |
. the first is so - called β forward guidance β about monetary policy. how you judge its success hinges crucially on what you consider to have been its objective and audience. if you are a financial market participant whose job it is to price the future path of interest rates, the most useful type of policy guidance is precise and time - specific. by contrast, if you are a company or household considering whether to spend, a general idea of the direction and destination of interest rates is likely to be sufficient. the critics of forward guidance have tended to be financial market participants for whom it lacks sufficient precision and time - specificity. but forward guidance simply cannot be that precise ; it depends on the path of the economy. and pricing interest rates in financial markets was not the main purpose of forward guidance in the first place. its purpose was to support spending in the economy by households and companies. that calls for shorter and simpler guidance, focussed on the broad direction and destination of interest rates. the mpc first used the words β limited and gradual β in 2014 when describing the likely future course of interest rates rises. it was short and simple β three little words. it was guidance aimed squarely at households and companies, offering them an indication ( but no promise ) of the broad direction and destination of interest rates. surveys suggest this message was understood by a majority of companies and some households. by allaying fears about too - rapid a rise in rates, it is likely to have encouraged spending and supported the economy. when the mpc did come to raise interest rates, in november 2017 and again in august 2018, it is interesting to see how well these were understood by companies and households. around three - quarters of households, and around 90 % of companies, had expected a rise in rates within the year ahead in surveys held immediately prior to the decisions. simple, directional forward guidance on monetary policy appears, for this non - expert audience who comprise most of the spending in the economy, to have been effective. a second monetary policy example comes from the bank β s quarterly inflation report. this was first produced over 25 years ago, as part of the first wave of the transparency revolution. it is a long and technical document, with language requiring at least 13 - 14 years of education to understand. the complexity of its language meant the report was probably only accessible to around 10 % of the population. bank of england ( 2013 ) provides a useful summary of concepts and issues relating to forward guidance ; see carney | church, we cannot promise that bad things won β t happen to our flock β the prevention of all financial crises is in neither our nor anyone else β s power, as a study of history or human nature would reveal. and experience suggests that attempts to encourage a better life through the power of voice is not enough. warnings are unlikely to be effective when people are being asked to change behaviour which seems to them highly profitable. so it is not entirely clear how the bank will be able to discharge its new statutory responsibility if we can do no more than issue sermons or organise burials. whatever the ultimate shape of the structure and regulation of the banking system β and, as many of you have said, we need to think carefully to get this right β change will be necessary. the costs of this crisis are not to be measured simply in terms of its impact on public finances, the destruction of wealth, and the number of jobs lost. they are also to be seen in the lost trust in the financial sector among other parts of our economy. for a generation or more, businesses and families up and down the country were told, not least by the city, that the disciplines of the market economy were essential, even if painful in the short run, for greater prosperity in the longer term. that belief in the merits of a market economy was embraced and for many years was not misplaced. but out of the blue β in this case the financial sector β came a crisis that did not stem from weaknesses in the real economy. it has wreaked havoc on those same businesses and families. unemployment, as we saw in today β s figures, is rising sharply. and yet it is the banking system that has received financial support on an almost unimaginable scale. we who work in the financial sector have much to do to regain the trust of those who work outside it. β my word is my bond β are old words, but they were important. β my word is my cdo - squared β will never catch on. there is no support in this country, and no case, for excessively bureaucratic regulation. but change to the structure, regulation and indeed culture of our banking system is necessary. blaming individuals is no substitute for acknowledging the failure of a system, of a certain type of banking. we have a real opportunity now to put that right, and regain the trust that has been lost. lord mayor, as we prepare to toast the bankers and merchants of the city of london, we remember | 0.5 |
involved in. it also highlights the rapidly growing proportion of maori in new zealand β s workforce. quite spectacularly, since 2013 the maori population in new zealand has grown by 30 percent, while the number of maori in employment increased by 47 percent. however, the report also identified several challenges, with access to capital highlighted as one of the primary challenges inhibiting progress. maori customers and entities report lower rates of capital accessibility than non - maori. we are now researching the significance and root causes of the lack of access to capital. our first finding was simply the dearth of quantitative data on the topic. however, qualitative interviews with both maori capital seekers and providers suggests there are unique barriers to financial resources, which has implications for the efficiency and effectiveness of capital allocation in new zealand more generally. our work is ongoing with the publication of an issues paper on the near horizon. we are looking to identify any issues around accessing capital that may arise due to market failures, gaps in the new zealand financial system, or unintended consequences of current behaviours. international literature generally highlights that minority and indigenous people and businesses face barriers to raising capital. our own quantitative research highlights that maori are underrepresented when it comes to business ownership. in addition, this work shows that maori firms face persistently higher interest rates compared to other new zealand companies. there are parallels with other indigenous peoples due to the challenges with collectively or tribally owned land. the inability to use property as ref # x567560 v1. 17 in confidence embargoed until 11. 00pm 13 june collateral has limited the opportunities for maori to accumulate financial wealth and grow businesses. a scan of the market shows there has been little in the way of financial innovation for maori. our consultation with stakeholders has shed further light on these issues, which can be summarised across the following themes : scale and coordination ; capability ; asymmetry of information and lack of data ; myopia in decision - making and leadership ; and missing markets and products this work will help us move towards more equitable access to capital for maori. conclusion in summarising, we are late to investigating the issues and adopting a te ao maori view of our work. but we are committed and transparent in our activities and aspirations, while working within our legal mandate. embedding te ao maori in our approach and learning from the different perspectives and knowledge it brings, we will be a great team building a better central bank for new zealand. w | in price levels and inflation. finally, there have been significant influences on the level of β neutral interest rates β globally, including ageing populations with less propensity to consume, reduced wage bargaining leverage for workers as labour mobility and product sourcing has broadened, and declining productivity growth as technologies have matured. on top of these long - term trends towards lower rates, adverse cyclical events - especially during and post the gfc - have driven many central banks to reduce interest rates to their effective lower bound ( figure 4 ) as a means to stimulate demand i. e., to continue to meet their inflation mandate. figure 4 : central bank policy rates in select advanced economies source : bloomberg. monetary policy instruments in times of record low interest rates as central banks β policy rates approached their effective lower bounds, they have had to find other ways to influence peoples β spending / saving habits, the exchange rate, the slope of yield curve, and the flow of credit through their economies. a growing number of central banks have gradually introduced a set of new monetary policy measures β that are coined as β unconventional monetary policy tools β β to continue to meet their inflation mandate ( table 1 ). these tools came under the general headings of : negative interest rate policies ; lending operations to banks ; large scale asset purchase programmes ( otherwise known as β quantitative easing β ) ; and forward guidance ( telling people what the central bank intends to do and for how long ). table 1 : summary of unconventional monetary policy interventions ( date of first implementation in parenthesis ) negative term lending asset purchase interest rates programmes ecb united kingdom united states japan switzerland sweden denmark canada forward guidance sources : bis ( 2019 ), unconventional monetary policy issues : a cross - country analysis, cgfs papers, no 63 ; and relevant central banks. the selection of the particular instruments was dependent on each countries β issues ( i. e., were they aiming to boost demand and / or manage a specific market disruption ) and their financial market structure ( e. g., what assets are on offer to purchase ). for example, the bank of international settlements ( bis ) report that around 18 asset purchase programmes were initiated by central banks between 2009 and 2016. 8 central banks bought a host of public and private sector bonds, specific agency mortgage backed securities, and other β asset backed β securities ( table 2 ). they did so to swap central bank cash for other peoples β assets, thereby generating liquidity and lowering interest rates. bis ( 2019 | 0.5 |
will continue, and yield curve inversion may even deepen on major markets, and knock the door in some emerging markets 20. pimco seems to subscribe to this possibility, although they do not use asset shortage argument, but they do say : β local markets investments may provide the greatest divergence of returns within the em universe, with those β developing β economies furthest along the road to β developed β market status able to enact traditional policy prescriptions in a slowing global economy and therefore providing enhanced return potential to local fixed - income instruments β. as a central banker in emerging market economy well advanced on the road to developed status i ask myself a question which view of the world is correct, because it may have different implications for growth and inflation prospects. should we expect slowing external demand combined with local currency strength or combined with a local currency weakness. these are important questions ( even in the context of falling exchange rate pass - through ) which will be empirically answered next year. today we can think only in balance of risks terms. evidence in the last few months, including december bis report 21 shows, that official institutions may have accelerated their attempts to diversify reserve assets, which may mean more demand for high - yielding assets and for non - core currencies, and in particular for emerging market currencies ( recall government of singapore investment corporation statement that emerging market weight in their assets under management will be increased, recall a number of hints given by oil exporting nations, or recall the statements given by gomez m. ( 2006 ) β is it safe? β, emerging markets watch, pimco, september 2006. i acknowledge that it would be against the historical evidence that after the end of the tightening cycle and the beginning of easing cycle the fall of 2 - year rates was deeper than that of 10 - year rates. but it is precisely the issue we discuss here : are historical patterns a good guide for the future? bis ( 2006 ) β quarterly review β, bank for international settlements, december 2006. chinese authorities that the central bank should be more open - minded about cooperating with the government institutions in managing huge reserve assets ). so, ceteris paribus, this factor will imply balance of risks skewed towards further risk premia compression in emerging markets in situation when us growth slows and expected returns in developed markets drop amid poor growth outlook. the important question is how it will end? temporary us growth slowdown is unlikely to solve global imbalances | you that the digital economy is a promising way to raise trend growth and overall living standards. we cannot be satisfied, though, if some of the potential gains are left on the table, because many people will be left behind and important markets will be virtually uncontestable. it does not have to be this way if we choose a road for policy that effectively manages the 5 / 7 bis central bankers'speeches downsides of innovation without stifling it. of all the areas where we could develop and implement a better strategy, here are my top three : ( i ) develop a dynamic workforce with the skills to match the jobs, and encourage more labour force participation ; ( ii ) keep market power in check, particularly the power that comes from control of consumer data, to encourage competition and limit monopoly profits ; and ( iii ) manage the growing operational risks associated with the digital services that are provided by a concentrated set of firms to systemically important financial institutions. we will need to judge wisely when it is best to use public policy tools to manage risks and when to let private enterprise work its magic. we β ll need to work together and in the field to inform these judgments. i am confident that, together, the g7 will show leadership and will build with the private sector a shared sense of responsibility for the future. i would like to thank gurnain k. pasricha, lori rennison and eric santor for their help in preparing this speech. 1 the data for this calculation are taken from m. roser and e. ortiz - ospina, global extreme poverty ( 2018 ). poverty is defined as a consumption level below int $ 1. 90 per day, adjusting for price differences and inflation. 2 see international monetary fund, world economic outlook, chapter 3, β understanding the downward trend in labor income shares, β april 2017 ; and g. michaels, a. natraj and j. van reenen, β has ict polarized skill demand? evidence from eleven countries over twenty - five years, β review of economics and statistics 96, no. 1 ( march 2014 ) : 60 β 77. 3 according to mckinsey & company, 46 per cent of tasks could be automated in the united states using current technology. in canada, the share is slightly lower ( 42 per cent ). see c. lamb, β the talented mr. robot : the impact of automation on canada β s workforce, β brookfield institute, june 2016. 4 data | 0 |
me also comment on a few other outstanding matters. first is the vexed question of the approval of managers. i must confess we have been a little taken aback by some of the reaction to this proposal, which seems to question our motives for seeking such a power. all i can say is that we have no ulterior motives. we simply feel that if individuals are to fill important positions in banks then steps should be taken to ensure that they are fit and proper for the position. clearly it is the banks β responsibility to select individuals and satisfy themselves as to their credentials, and you can be assured that we have absolutely no desire to second - guess these decisions. however, it is a fact that we may, on occasion, have access to information on an individual which the bank does not have. we would see ourselves, therefore, as acting as very much a second line of defence β and only in exceptional cases. a number of banks see the logic in this and support our proposals. others remain less enthusiastic. but we are consulting the industry further on this and i hope that something that is acceptable to all can be arrived at. 11. next is the issue of the review of the code of banking practice, in relation to which it is suggested in david β s letter that some people are unhappy about the stance taken by the hkma. on this, i am afraid, i have rather less sympathy than on other issues with those who raise concerns. i do not believe that any of the changes promoted in the working group, such as in relation to credit cards and also to fees and charges, are unreasonable. indeed, most banks seem to have accepted the rationale for changes such as the $ 500 card loss limit, which brings hong kong into line with international practice. i believe that the banks must appreciate that issues relating to terms and conditions and other aspects of customer service are a legitimate matter of public interest and concern. in the past, it is true, the hkma has not been as closely involved in consumer matters. this, however, is something that is changing, not because we particularly desire it but because it seems to be what the public expect. we plan, therefore, to review our involvement in this area so as to determine exactly what our role should be. 12. finally, there have been concerns expressed that the hkma β s supervision has become more intrusive and that requests for information are sometimes excessive. this is certainly something we are aware of, however i should point | consultancy report published a year or so ago which are still being progressed. for example, later this year we will consider whether there should be some further relaxation of the restriction on the opening of branches by foreign banks which have entered the market since 1978. we also plan to review whether the three - tier system of authorisation might be reduced to two tiers, although we do not plan to visit this issue until next year β i. e. 2002 - and have quite an open mind on this. this is rather later than we originally intended. but it reflects the fact that we believe that the present system is working reasonably well and that there is no pressing need to change. we are also heavily preoccupied with deposit insurance and the outcome of that exercise may influence the way in which the three tier structure is modified β most obviously, whether the deposit threshold for dtcs should continue to be set at $ 100, 000. 8. also on the back burner for the time being is consideration of whether there should be any change to the minimum paid - up capital requirements for locally - incorporated ais. this obviously is tied in to some extent with the reform of the three - tier structure, as if we did amalgamate the rlbs and dtcs into a single class we would have to decide what the minimum paid - up capital requirement for the class should be. this is something we will have to consider in due course, but we are of course well aware that a higher requirement would have implications for some of the smaller dtcs, and we will certainly have regard to this. aside from any change related to the reform of the three - tier structure, we don β t at present have any other plans in relation to the minimum capital requirements, although at some point we may want to consider updating them in line with inflation. 9. on the third initiative i mentioned, the credit reference agency, some of you may know that we have established a working group to take this initiative further. the consultation we conducted indicated that there was quite widespead support for such an agency, although having said that it is fair to say that there was quite a diversity of opinion on various aspects. the working group will investigate this further and try to arrive at a recommended way forward. but we hope that something can be done in this area, as most seem to agree that such an agency would be beneficial. 10. so that brings me to the end of what i see as the three main initiatives, but let | 1 |
timothy f geithner : key challenges in risk management keynote address by mr timothy f geithner, president and chief executive officer of the federal reserve bank of new york, at the rma / risk business kri β s global operational risk forum, new york, 13 january 2005. * * * thank you for giving me the opportunity to speak to you today. i want to talk about the mix of forces at work on the broader macroeconomic front and what that may imply for risk and for financial stability. by many measures, the economic landscape looks reasonably good. the qualified optimism that now seems to prevail about the global expansion is reflected in low risk premia, unusually low credit spreads, low and quite stable inflation expectations, and low actual and implied volatility. but the global economy faces a set of pressing macroeconomic policy challenges. how should we think about the risks presented by these broader macroeconomic forces, and their implications for the sustainability of this recent period of stable economic performance, and low volatility and risk premia? the u. s. expansion has proven quite resilient. we enter the new year with what appears to be a pretty solid underlying pace of growth. core inflation is moderate, and various measures of inflation expectations suggest confidence in the outlook for price stability. estimates of structural productivity growth remain high, although there has been some moderation recently. the pace of global growth has moderated a bit, but most forecasts anticipate a quite strong and broad based expansion. the imf β s projection is just over four percent for real global gdp growth. the consensus of private forecasters sees growth in europe and japan close to estimates of potential, or in the neighborhood of two percent. growth in the major emerging markets looks impressive, reflecting not only the benefits of a positive external environment, but also the impact of better economic leadership and policies more supportive of macroeconomic stability and reduced external vulnerability. in china, officials now seem more confident that they have induced the desired moderation in growth to a more sustainable, but still high pace of growth. the global economy has weathered the oil price shock quite well. if the long term futures prices are right, we need to be prepared to live with the possibility of a sustained period of higher oil prices, and perhaps more volatility in oil prices, and the world seems to be getting itself more prepared for that prospect. in the financial markets, this broadly positive outlook has been accompanied by a dramatic reduction in | complete. the news at the end of the day is good : it turns out that the alert was a false positive. but, the organization lost half a day of productive activity. in a simple world, controls detect problems immediately, diagnose with perfect accuracy, and result in corrective actions that are instantly and fully effective. in the real world, detection takes time, diagnosis is not always accurate, solutions take time to implement, and they don β t always work. that said, we must make decisions β including ones about whether and how to execute controls β based on the information available at the time. control design and execution take place in a world in which there is uncertainty about whether 3 / 5 bis central bankers'speeches there is a problem, what the problem is, what to do about it, when to do something, and what the effects of what we do will be. we can make better decisions when we understand and manage that uncertainty. there is also uncertainty about threats. we will never be able to envision the characteristics of all future causes of disruption. even when we plan effectively, we will be surprised again. and, like any other system, the control system will exhibit performance variability. for these reasons, we can β t rely solely on prevention. resilience requires the ability to withstand and recover when threats make it through preventive barriers, so a strong control system must incorporate preventive, detective, and corrective controls. perhaps because we are overoptimistic about prevention, detective and corrective controls sometimes get second - class billing. for many threats, time is not on our side ; the impact grows as the detection time increases. that β s the case with β dwell time β for cyber breaches, which is the amount of time attackers are on your network before you detect them. 9 it β s important to decide how long you are willing to wait to find out that you have a problem, and then use that as a requirement to design detective controls. underinvesting in corrective controls is problematic too. for example, how would you feel after a ransomware attack, if you find out that your backed - up data is intact but it will take months and millions of dollars to restore? or, if your first corrective action is the wrong solution and makes the problem worse? it takes time and resources to develop the tools, procedures, and skills to accurately diagnose causes, contain the immediate threat, and implement a long - term | 0.5 |
to capture weaker parts of the economic cycle. to address this problem, the agencies have proposed a supervisory mapping function that can be used in the interim by those institutions unable to estimate appropriate downturn lgds. the mapping function allows an institution to β stress β its expected lgds, generating an input to the capital calculation that conforms to the basel ii requirements and hence produces a more appropriate capital requirement. the federal reserve supported the introduction of this supervisory mapping function, as an important component of u. s. basel ii implementation, in order to address a specific challenge articulated by the industry. banks would be able to shift from using the mapping function to using their own internal estimates of lgds when their own estimates become reliable. about a month ago, the basel committee released the results of qis5, which was conducted by a number of countries but not the united states, since we had already conducted qis4. as you know, the qis4 results from u. s. institutions are not completely comparable with the qis5 results from institutions in other countries. nonetheless, some similarities are worth noting. first, the aggregate declines in minimum regulatory capital of banks using the advanced approaches were similar in the two exercises, particularly considering that qis4 did not include the 1. 06 capital multiplier and qis5 did. for both exercises the aggregate declines reflected relatively good economic times - which, as we know all too well, do not last forever. second, both studies pointed to dispersion of changes in minimum required capital. the dispersion among banks in qis5 was attributed largely to a combination of differences in portfolio characteristics and differences and uncertainties in estimation methodologies. the u. s. agencies highlighted similar issues in their public release on qis4 and have stated their intention to monitor issues related to dispersion very closely in the future, because we want to ensure that the basel ii framework does indeed accurately produce similar capital for similar risk. the basel committee β s release on qis5 also stated that methodologies and systems for lgd calculation are still being developed and that, as a result, some of the effects of downturns may have been underestimated. the u. s. agencies'release on qis4 stated that u. s. banks also faced some challenges in estimating downturn lgds. basel i modifications at this point i would like to say just a few words about ongoing efforts to revise | ms. rivlin discusses how economists might be helpful in the current and upcoming macroeconomic policy process remarks by the vice chairman of the board of governors of the us federal reserve system, ms. alice m. rivlin, at the annual meeting of the eastern economic association in washington, d. c. on 4 / 4 / 97. i am delighted to be here today with such a large group of my fellow economists. economists are a very diverse group, but they share a basic kit of analytical tools that shape the way they approach problems. economists share a useful shorthand vocabulary - - sometimes disparaged by others as jargon - - that makes it easier to communicate with each other. they share a sense of what kinds of things are known about how economies work and, far more important, an appreciation for how much is not known about the workings of any complex human system, including the economy in which we are all living and working right now. most importantly, economists share a sense of excitement that others often find hard to fathom, about unraveling the many puzzles that abound in economic analysis. at the moment, as a relatively new governor of the federal reserve, i am particularly glad to be in a group of economists, because i can be quite sure they don β t share the popular stereotype of a fed governor. this stereotype has several elements : any fed governor or central banker is an inflation freak who thinks reducing inflation should be the only objective of monetary policy and a zero inflation economy would be heaven. any central banker has a firm view of exactly what growth rate the economy ought not to exceed and how high the unemployment rate ought to be to avoid inflation - - that something called the nairu is engraved on a stone tablet somewhere high on a mountain top and all we have to do is find it. moreover, this stereotypical central banker knows exactly what monetary policy ought to be in order to keep the economy on the desired track. this stereotype leads otherwise quite intelligent members of the press to believe that if central bankers don β t reveal this secret blueprint, it β s because they are being deliberately obscure and inscrutable. the media β s sacred calling is to interpret what central bankers really meant but out of sheer perversity did not choose to say. so it β s a pleasure to be in a room full of economists who know that : while the fed has access to all the latest statistics and an excellent staff to analyze them, it has not | 0.5 |
looking at the foreign currency denominated balance sheets of major japanese banks, for approximately six months preceding last october, they actually increased their assets, including an increase of 33 billion u. s. dollars in overseas loans. 4 on the liabilities side of the balance sheet, there was a decrease of 62 billion dollars in cp and cd issues, which was more than compensated for by an increase of 67 billion dollars in client - related deposits, reflecting banks'efforts to build up stable funding sources, and an increase of 26 billion dollars in repo funding. these major banks were thus able to avoid increasing their reliance on relatively expensive funding through the fx swap market. bank debt and safe assets one interesting question here is why major japanese banks were able to pull off such a significant change in their balance sheets in such short order. let me reflect on this from the viewpoint of balancing supply and demand of u. s. dollar - denominated financial assets at the macro level. the key phrase is " safe assets. " financial intermediaries perform an important function of investing in risky assets while issuing safe debt. debt issued by private financial institutions, along with securities issued by governments, constitutes safe assets that are provided to the economy. a prime example of such a function is the bank deposit. through the results of recent research on safe assets, we are now aware of two empirical regularities over long periods. 5 the first point is that the share of safe assets in the whole universe of financial assets including equities is more or less constant. in other words, the demand for safe debt has been relatively constant as a fraction of the total assets in the economy. the second point is that safe debt issued by the government and safe debt issued by private financial intermediaries are substitutes. these two regularities indicate that fluctuations in the stock or price of government debt crowd in or crowd out safe debt issued by financial intermediaries so that the share of safe assets as a whole may be kept constant. when we attempt to assess the market conditions regarding safe assets in the u. s. financial system, the rise and fall of the " yield spread, " which is the difference between the stock yield and long - term given that foreign currency - denominated balance sheets of japanese banks are predominantly based on u. s. dollars, chart 7 essentially shows the features of u. s. dollar - denominated balance sheets. see gorton, g., s. lewellen, and a. | the real economy and financial sector, they used a variety of tools, including monetary policy, fx interventions, macroprudential measures ( mpms ) and capital flow management measures ( cfms ). β how etfs amplify the global financial cycle in emerging markets β, n. converse et al. ( 2020 ), fed international finance discussion papers. iosco research report on financial technologies ( fintech ), february 2017. β capital flows during the pandemic : lessons for a more resilient international financial architecture β, c. maurini, a, moro, v. nispi landi, a. schiavone et al. ( 2020 ). banca d β italia, occasional paper no. 589. f. eguren martin, m. joy, c. maurini, a. moro et al. ( 2020 ), β capital flows during the pandemic : lessons for a more resilient international financial architecture β, banca d β italia, occasional paper no. 589 in the early stages of the covid crisis, eme central banks intervened heavily in fx markets, trying to stem currency depreciation. interventions were later scaled down, as market tensions and exchange rate pressures receded. interestingly, a few eme authorities used both conventional and, i believe mostly for the first time, unconventional monetary policy instruments. as regards macro - prudential measures, several emes relaxed their overall prudential stance, mainly by easing capital and liquidity buffers counter - cyclically. again, i believe this was the first time emes had extensively resorted to mpms to stabilise the economy, proving that these instruments have become part of their policy toolkit. by contrast, capital flow measures played a minor role in the recent episode. many emes relaxed cfms on inflows, mostly to reduce banks β fx needs stemming from prudential requirements, and in some cases to increase liquidity in domestic bond markets. unlike in previous crises, only a few countries tightened cfms to curb outflows. policymakers β response to the sudden stop in march 2020 highlighted the complementarity of different policy tools when a severe external shock hits an open economy, and will offer ample material for reflection and research. tobias adrian will give us glimpse of the fund β s efforts to develop an integrated policy framework ( ipf ) that would jointly consider monetary policy, fx intervention, mp | 0 |
mccallum stressed regarding rules have become widely accepted. the first message is that rules can be countercyclical. mccallum became interested in policy rules at a time when those rules were closely associated with what is termed β nonactivist β policymaking β defined as approaches that did not involve the monetary authority responding to fluctuations in real variables such as output and employment. at that time, the research literature focused on what was known as the k percent rule, implying a fixed rate of growth for the money supply. this rule was intended to pin down the longer - run inflation rate, but it precluded monetary policy responses to the state of the business cycle. in contrast, mccallum, as well as other economists of his generation such as stanley fischer and john taylor, argued that it was appropriate to consider both nonactivist policy rules and rules that were deliberately countercyclical or activist. 6 a policy rule, according to this view, could respond to movements in output, employment, and inflation in a systematic way, using a formula intended to be applicable over time and in different circumstances. 7 today it is widely accepted by economists that monetary policy rules can be activist rules. a second, related message of mccallum β s work was that different rule specifications can concretely characterize differences among economists on appropriate monetary policy. in the 1970s, the whole notion of policy rules was closely associated see dornbusch and fischer ( 1978, p. 290 ), taylor ( 1980, pp. 31β32 ), and mccallum ( 1980, 1987 ). see mccallum ( 1987, p. 416 ). - 7with advocates of monetarism and rational expectations, with keynesian economics being seen as entailing opposition to policy rules. mccallum opposed this dichotomy and observed, β to me it seems quite clear that debates between economists β for example, milton friedman and james tobin β are about the desirability of different policy rules. β 8 that is, mccallum wanted to represent alternative perspectives on monetary policy as different rule specifications, and he urged the study of rules as a means of understanding various policy prescriptions and their consequences for the economy. this perspective on rules has also become standard. indeed, the box on monetary policy rules that regularly appears in the federal reserve board β s monetary policy report provides a menu of policy rules designed to reflect a variety of views about the appropriate formulation of monetary policy. 9 similarly, multiple rule prescriptions and the possible | christian noyer : the euro area sovereign debt crisis speech by mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, at the bank of france / toulouse school of economics conference β the euro area sovereign debt crisis β, paris, 19 december 2011. * * * ladies and gentlemen, it is a great pleasure for me to give the introductory address to this stimulating conference that the banque de france is very pleased to organize jointly with toulouse school of economics. obviously, finding a more topical subject would be difficult, now that euro area β s sovereign debt markets are caught in the vortex of the financial turmoil that has been plaguing the world economy for the last four years. this topic is also the one we have chosen for our next financial stability review, to be released next march, with a significant number of contributions stemming from today β s presentations. the current crisis is indeed extremely challenging. many complex factors are currently interacting, making policy decision - making particularly difficult. in such a context, academics have a critical role to play to help us clarify the tradeoffs and available options, so that we are better able to make the right choices in real time. this very fact that intellectual inputs from research are a precious resource in times of stress and multi - faceted uncertainty confirms me in my view that central banks β investment in economic research, be it in - house or through partnerships with academia, is a very valuable asset. therefore, i also warmly welcome this conference as being one brilliant illustration of the benefits brought by our three years long partnership with toulouse school of economics ( tse ). note however that, while the organization of high - level academic conferences has been an important achievement within this partnership, it is not the only one. indeed, many avenues of fruitful collaboration have developed. two series of regular joint seminars, one on monetary economics, the other on financial stability, and several workshops have notably contributed to strengthen the links between banque - de - france and tse researchers and stimulate the scientific and policy debates. i would also like to take this opportunity to thank jean tirole for his personal involvement in the exchanges with banque de france. last but not least, let me also advertise the new banque de france β tse senior and junior prizes in monetary economics and finance which purpose is to distinguish outstanding contributions by academics. the first prizes will be awarded for the first time on 16 march 2012. in the | 0 |
lars rohde : the danish economy against the background of global economic developments speech by mr lars rohde, governor of the national bank of denmark, at the annual meeting of the association of danish mortgage banks 2014, copenhagen, 2 october 2014. * * * firstly, i am pleased to note that your annual meeting is on 2 october this year, not 26 september as it was last year. it has been moved from the anniversary of the peace in lund on 26 september 1679, when denmark definitively surrendered the provinces of scania, halland and blekinge to sweden, to the anniversary of the referendum on 2 october 1972, when a majority of the danes voted to join the ec. surely that signals a positive, forward - looking attitude. as regards the international economy, the 1st half of the year was a little weaker than expected at the turn of the year. growth is expected to pick up in the 2nd half of 2014 and in 2015. the us economy grew in the 1st half of 2014, while economic development was weaker in the euro area. the german economy slowed down a little in the spring following strong growth at the beginning of the year. unlike previously, greece, portugal and spain are now also experiencing sound growth. that is not the case in france and italy, which are both struggling with considerable structural problems. their competitiveness has deteriorated over a number of years, and france will not comply with the recommendation to reduce its budget deficit to 3 per cent of gdp by 2015. euro area price inflation has been decreasing for some time and was 0. 3 per cent in september according to the preliminary data. this is substantially below the ecb β s target of inflation close to, but just under, 2 per cent. the ecb β s deposit rate, which determines money market interest rates, has been negative since 11 june. against the backdrop of weakening euro area growth momentum, weak credit growth and declining inflation, the ecb reduced its rates of interest further with effect from 10 september. the deposit rate is now negative by 0. 2 per cent. in addition, the ecb announced two new purchase programmes to support lending to the private sector. and loans for up to 4 years are provided at a rate of interest of 15 basis points. in other words, a series of non - standard measures have been introduced. the markets do not expect monetary policy interest rates to be raised again until sometime during 2017. so the period of very low interest rates β also in denmark β | nils bernstein : global recovery and the danish economic outlook speech by mr nils bernstein, governor of the national bank of denmark, at the annual meeting of the association of danish mortgage banks, copenhagen, 22 april 2010. * * * the global economy is on the mend. the latest indicators point to a faster recovery than previously expected. there is considerable regional variation, and it is likely to be a bumpy ride. the emerging and developing economies show the strongest growth. countries like china, india and brazil are now less affected by the economic crisis, while growth is more subdued in the old oecd countries, especially europe. global gdp contracted by 0. 6 per cent in 2009, the strongest fall in output since world war ii. for comparison, global growth peaked at more than 5 per cent before the slowdown set in. the crisis originated in the usa, but europe experienced the most severe setback. indeed, the recovery now seems to be stronger in the usa than in europe. the us business sector has once again demonstrated its adaptability. however, the main driver of the global economic recovery is the very accommodative economic policy. many countries have historically low monetary - policy interest rates and very high budget deficits. budget deficits of such magnitude may only exist for a relatively short period of a few years. most countries are facing a consolidation challenge in the coming years, and some have to start already this year. optimism about the global economy is only moderate because it is still uncertain whether the recovery will be self - sustaining. this means whether private demand will be able to take over when fiscal policies are tightened again. the global recovery is illustrated by the rebound in world trade after the strong drop. before the crisis, the limelight was on international imbalances, especially the large us currentaccount deficit and china β s equally large surplus. the crisis has not eliminated these imbalances, and the discussion of the exchange rate of the chinese currency should be viewed against that backdrop. the market focus has shifted to fiscal imbalances β sovereign risk has taken centre stage. the imf expects the government debt of the old oecd countries taken as one to reach 110 per cent of gdp by 2014. this is an alarming figure, but it covers considerable variation across countries. greece is an example of how slippery the slope can be if a country is too complacent for too long. but greece β s tribulations have also highlighted the eurosyst | 0.5 |
further enhance the offerings of islamic banks. the iap provides an online marketplace to match potential investors with viable ventures. islamic banking assets have also grown beyond the targeted 20 % as originally intended in bank negara malaysia β s financial sector masterplan. it now stands at more than a quarter ( 27 % ) of the total banking system. islamic finance also provides financing to all segments of society irrespective of beliefs, race and gender. there is also greater acceptance of takaful with its increased penetration rate to 14. 8 % of the population. for over 3 decades, islamic finance has grown and developed and contributed significantly to the development of the real economy. secondly, enhanced integration with the global market has enabled greater trade and financial linkages. malaysia is now positioned at the forefront of international developments with increasing connectivity between financial centres, and more cross - border islamic financial transactions. our sukuk market constitutes more than 50 % of global sukuk outstanding for the past 16 years. malaysia as an international islamic finance marketplace offers an attractive and facilitative platform for foreign issuers to tap our domestic sukuk market. there have been bis central bankers β speeches various issuances of multicurrency sukuk in us dollar, singapore dollar, chinese renminbi and japanese yen. there are also stronger bilateral ties with various countries such as the united kingdom, hong kong, turkey, indonesia and japan. these interlinkages open up greater opportunities to introduce and strategically position islamic finance services globally while providing opportunities for meaningful participation of our local players as lead arrangers for some of the global sukuk issuances. the gains are also extended to our ancillary service providers that were able to establish greater connections with the international market. thirdly, malaysia's pioneering initiatives and thought leadership in islamic finance has enabled the country to advance innovation in the islamic finance industry. on the regulatory front, the modernisation of the regulatory framework through the islamic financial services act 2013 ( ifsa ) provides an opportunity and space for islamic financial institutions to offer new products and services. the launch that we are witnessing today is a major initiative, the development of a shariah standard that is integrated with details on operational requirements. this approach ensures a transparent basis of shariah rulings by the sac, and provides a convergent in understanding between shariah scholars and industry practitioners. in judiciary matters, where the sac serves as a reference point in analysing muamalat | this leads me to my next point β the importance of other supporting infrastructure. other supporting infrastructure for risk management and supervision to be effective and efficient, it is not sufficient to just have a sound capital framework. the second element of the committee β s strategy is to get the basic supporting infrastructure in place. the development of the core principles for effective banking supervision, the committee β s liaison with international accounting bodies, and the committee β s work on cross - sectoral bodies such as the joint forum are examples of our efforts to promote the fundamental infrastructure needed for a sound banking system and for effective supervision. building the foundations for effective supervision and promoting the prudence and integrity of financial accounts are an integral part of the committee β s current work. a sound system of accounting and provisioning underpins the integrity of risk measures, capital adequacy and meaningful market discipline. moreover, as many of you here would know too well, it is not enough to just focus our attention on the implications of our policies for banks as the traditional lines between the various financial sectors become less clear. it is therefore important to understand the implications of market developments and supervisory changes on non - bank financial institutions and financial markets more generally. supervision is not all about sophisticated modelling approaches. rather it is about understanding the risks that a bank faces and promoting better management of those risks. used appropriately, advanced modelling approaches can help a bank to refine and sharpen its ability to measure, monitor and control risk. used inappropriately however, and without an understanding of the limitations and assumptions built into such models, the costs may be greater than the benefits. in this respect, i view the infrastructure supporting the capital foundation as vitally important. an initiative that the committee will begin work on is the so - called β definition of capital β. over the past decade we have witnessed significant advances in the way banks manage their economic capital, as well as the development of new and innovative capital instruments. the definition of capital topic highlights the importance of the supporting legal and accounting infrastructure, and the need to understand market dynamics within and across jurisdictions. at this stage, the committee β s work in this area will focus on a stocktaking of the issues. proportionate policy and flexible frameworks the third element of the committee β s strategy is to promote proportionate policy responses, and to develop flexible policy frameworks. the committee promotes a range of supervisory methods and advocates proportionality in supervisory approaches. the supervisory tools may include better regulation, supervisory guidance, or | 0 |
##saka at which views of various stakeholders on what needs to be done to address binding constraints to the sme sector were considered. the fact that the discourse on sme financing continues underpins two significant positions. firstly, it gives recognition to the fact that we are all aware of the potential of this sector in generating employment, promoting economic growth and reducing existing poverty levels. in low income sub - saharan african countries, smes and micro - enterprises make up about 90 % of all enterprises. however, due to the various constraints they face, their overall contribution to gdp can in some countries be as low as 20 % although estimates show that this could be scaled up to 60 % with the greater realization of the sector β s potential. contribution to employment can be as high as 63 %. for most low income countries, smes are the main bis central bankers β speeches source of jobs and income after subsistence agriculture. particularly significant is that they are a great source of livelihood for women who own more than half of smes while over 70 % of africa β s rural population survives through the formal and informal sme sector. there is little doubt, therefore, that smes form a solid basis for sustainable economic development on our continent. secondly, the continued discourse on smes reminds us of the possibility that we have probably done more talking about the problem than fixing it. although the development of smes is varied extensively across africa, what is clear is that in most countries a major obstacle to their growth is the lack of sustainable and cost effective financial products. south africa and mauritius in this region and north africa have done a commendable job in developing flourishing smes sectors. part of the reasons for success in these countries can be attributed to their modern financial systems and clear policies that support the growth of the sector. however, the fact still remains that for most african countries, a sustainable way of financing smes has yet to be found. as i mentioned earlier, the programme for this meeting is broad and extensive. but i would wish to draw your attention to a number of broad areas of reflection which i believe can help in delivering greater finance to the sector. the first area is that there is a need to accept that not all banks can or should even be expected to provide sme financing products. the cost structure and skills orientation simply make some financing institutions completely unsuitable to deliver sme products cost effectively. the implication of this is that greater effort must be placed on developing financial institutions that see sme financing as the | bwalya k e ng β andu : financing small - and medium - scale industries in africa keynote speech by dr bwalya k e ng β andu, deputy governor ( operations ) of the bank of zambia, to the united nations economic commission for africa expert group meeting on β financing small - and medium - scale industries in africa β, lusaka, 26 june 2012. * * * β’ the undp resident representative, ms khanni wignaraja ; β’ director of uneca, southern region office, ms beatrice kiraso β’ the afdb representative, dr fred kwesiga ; β’ officials from the ministries of finance of various countries ; β’ officials from various central banks ; development banks, commercial banks and other financial institutions ; β’ private sector representatives β’ participants ; β’ ladies and gentlemen ; i would like to firstly express my appreciation to the director of uneca, southern region office for extending an invitation to me to deliver the keynote address at the start of the experts group meeting of financing small and medium scale industries. i commend uneca for this great effort to bring together this assembly of high level officials and experts from government, the financial sector, private sector and academic institutions to discuss the vexing problem of enhancing financial flows to the sme sector in africa. i note from the very elaborate programme for this meeting that you will in the next three days cover a wide spectrum of issues some of which will focus on factors that constrain smes access to finance and some of which will focus on what needs to be done to change this situation. the meeting is, therefore, an opportunity for us to face a number of challenges that characterize this sector. these will include revisiting strategies and approaches to sme financing currently in use as much as it will require a review of current institutional arrangements through which finance is directly delivered to smes, on one hand, and those which indirectly obstruct or facilitate this flow of resources, on the other. however, i believe that probably the greatest challenge before this assembly is to attempt to narrow the gap between analysis of the problem and the implementation of measures and actions that work. meetings, workshops, seminars, etc. on sme financing are plenty at national, regional and international levels. some of you have had the opportunity to attend several of these meetings in the past. indeed, some of you have become experts at talking about the subject. barely two weeks ago, the bank of zambia held a financial sector forum here in lu | 1 |
. this means that the liquidity injection is restrained by a policy decision. last autumn, we changed that. as the demand for liquidity by individual institutions expanded abnormally and markets dramatically ceased to allocate liquidity, we have turned that practice around. we have been determining the lending rate β at a very low level β and we stand ready to fill any shortage of liquidity that might occur at that interest rate for maturities of up to six months. this means that we currently act as a surrogate for the market in terms of both liquidity allocation and price - setting. 2 ) the second building block of our new approach is our large list of assets that we take as collateral. this list was already very large before the crisis, but we have enlarged it even further and now accept an even wider range of securities as collateral. government securities account for only 44 % of the nominal value of securities on the list. the rest are private securities. in contrast to many other central banks, the ecb already intermediated private paper before the crisis and we have even strengthened this aspect in the crisis by accepting an even wider range of private paper. the total value of these securities, which are 45, 000 in number, is currently β¬12. 2 trillion. this amounts to 86 % of all debt securities issued in euros and to 130 % of gdp in the euro area. this very ample eligibility of collateral has dramatically eased banks β liquidity constraints during the crisis and, ultimately, it has encouraged them to extend new credit or continue rolling over maturing loans. 3 ) the first two building blocks offer unlimited refinancing against a very wide range of collateral. but they can only reach the financial system if they are coupled with the third building block, namely the very large number of counterparties that have always been able to take part in our refinancing operations. even before the crisis, 1, 700 counterparties fulfilled all relevant criteria. this number was higher at the time than for the other major central banks. following the changes to our operational framework in october 2008, this number rose further. currently 2, 200 credit institutions in the euro area have the opportunity to refinance themselves with us, and for most of the remaining 4, 300 credit institutions it would not be a problematic to become eligible. for example, in march 2009, 750 counterparties actually made use of this opportunity, compared with 450 in july 2007. this structural feature of our operational framework has been instrumental since | ##red is that, apart from need alone, there would be certain other factors such as ( i ) willingness of customers to embrace customer service methods and innovations, ( ii ) level of comfort while using an advanced technique including technological platforms, and ( iii ) cost that service providers incur to put in place an advanced technique to attract customers. prominent examples of such innovations used in the banking industry, which came to be embraced by more customers willingly with passage of time include micr technology, electronic payment systems viz. ecs, eft, neft, nfs, cts, various type of plastic cards etc. these products and innovations were primarily supply driven with a purposeful push by regulators themselves. these products were rolled out and banks were encouraged to make use of these products to render better, faster, safer and secure services to their customers. thus, at times, in the larger interests of customers and the financial world, certain initiatives have to be pushed forward by authorities and a need created for them. we could, in the same vein, cite financial inclusion as an example, that has been extensively driven by the regulators and the government of india to substantiate the above point. here is thus a classic case of customer need that is β identified β ( inclusive banking ), targeted ( publicity and outreach exercises, financial literacy initiatives ), implemented ( usage of business correspondents, face to face interactions, exhibitions and fairs to propagate the habit of using and operating bank accounts ) and innovated ( technology based transfers of funds to accounts [ ebt ] and the entire β aadhar β exercise to uniquely identify individuals and embed the same in opening / operation of bank accounts by customers ). that also leads us firmly to the premise that, perhaps in contemporary times, technology at the right time and juncture will help in furthering the cause of customer service. is technology the panacea to all customer service challenges? mostly yes, since technology speeds up ease of access of customers to service providers, enables easier communication and possibly also speeds up operations. however, there is an interesting and contrasting evidence that i choose to draw from one of the examples adduced by shri g padmanabhan, executive director in the reserve bank of india, who made a telling comment on the number of mobile banking accounts that had been opened in india. while the number seemed staggering and really impressive, a comparison with the number of bank accounts opened in india revealed that the former was but a relatively | 0 |
and the rapid innovations they enable, and in pursuing the objective of a modern, flexible yet stable financial system, we must acknowledge that both the public and private sectors have a critical role to play. while the perspectives of market participants and official supervisors may differ from time to time, our objective is the same β to maintain a strong and vibrant financial system. indeed, it is evident to me, as a former commercial banker and now as a supervisor, that only if we work together, each meeting our responsibilities and reinforcing the other, will we be able to successfully manage a rapidly evolving, ever - more complex financial services industry. | loan characteristics, while under the advanced approach, they could make use of their own analysis. the third step is to derive the bank β s capital requirement. the committee will set out the risk weights that correspond to different estimated probabilities of default and loss - given - default. these risk weights are being developed by the committee as a measure of unexpected loss, reflecting the amount of potential credit loss for each loan. a key aspect of the internal ratings - based approach is the development of rigorous supervisory standards for the assignment and quantification of internal ratings. an essential component of these standards is the so - called β use test β that requires a system of internal ratings to be an integral part of a bank β s risk management and own assessment of capital adequacy. the internal reliance on these risk ratings will not only help supervisors gain confidence in the accuracy of a bank β s ratings system, but will also provide a key link to the proposed second pillar of the accord, supervisory review. other work on minimum capital requirements while the focus of my remarks has been on the internal ratings - based approach, the committee also is working on other key aspects of the new framework, including revising the standardized approach, developing an expanded treatment of credit risk mitigation techniques and assessing a capital charge for operational risk. standardized approach the basel committee remains dedicated to revising the standardized approach as banks and supervisors in some countries may not yet have the necessary resources to implement an internal ratings - based method. to improve the risk sensitivity of the standardized approach, the committee sought to establish capital requirements that recognized some differences in the probability of default between borrowers. at the same time, the committee sought to be attentive to the views of many bankers and supervisors who wanted the standardized approach to remain simple so that banks of all sizes and levels of sophistication could implement it. it consequently proposed the use of external credit assessments, such as credit ratings, as a means for helping to assign risk weights, and hence capital charges, on claims. we were pleased that on the whole respondents agreed with the goal of increasing the sensitivity of the standardized approach to credit risk. nonetheless, given the difficulty of achieving the right balance between sensitivity and simplicity, the proposal to base the standardized approach on external credit rating agencies β ratings has raised real concerns. some have noted that, especially in emerging market countries, very few borrowers have credit ratings, and the new framework might then not be able to differentiate credit risk substantially between borrow | 1 |
amando m tetangco, jr : rbap β sustaining reforms for an economically vibrant countryside speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the inaugural dinner for the newly elected rbap officers and board of directors, manila, 14 july 2009. * * * the leadership of the rural bankers association of the philippines ( rbap ) led by president omar andaya and immediate past president mitch gomez, the officers and members of rbap, good evening. i am delighted to be part of this inaugural dinner celebrating your new set officers at rbap. to me, this seamless transition in the association β s leadership is a strong indication that the rural banking sector will continue the many significant initiatives that have characterized the past year. united, your initiatives under rbap have kept the rural banking sector resilient in the midst of a particularly challenging environment. let us therefore give the rbap leadership a well - deserved round of applause! indeed, the past year was full of challenges, for the economy in general and for the rural banking sector in particular. and yet, latest available figures indicate that the rural banking sector continues to perform relatively well. it appears that our rural bankers have turned this period of challenges as an opportunity to further strengthen your institutions. thus, even with the series of bank closures affiliated with one group, total capitalization of the rural banking sector actually improved further from p24. 8 billion in december 2008 to p25. 4 billion as of march 2009. less measurable, but no less important, is rbap β s success in maintaining public confidence in rural banks in the face of successive bank closures. through vigilance and proactive measures, rbap ensured that your clients understood that these high profile bank closures basically involved a single group that is not representative of the management of other rural banks. i also wish to acknowledge rbap β s pioneering work on inclusive banking through technological and product innovations, as well as your continuing efforts to be more responsive and efficient in serving your clients. in particular, the rural banking sector continues to expand its operating network to reach more clients. what we have today, therefore, is a more solid and more inclusive rural banking industry. and so, once again, ladies and gentlemen, let us celebrate our rural banking sector with another round of applause! however there is much more that we have to accomplish and we are looking at rb | part of the financial mainstream where they can access financial services and to have options other than informal lenders with prohibitive rates and onerous conditions. and we want our people to be able to protect themselves against scams and to know their rights as financial consumers. let us therefore forge partnerships that will empower more filipinos to improve their lives through access to responsive, responsible and fair financial services. finally, we thank her majesty queen maxima, for making a special visit to the philippines to express her support for our financial inclusion initiatives and our national strategy for financial inclusion. we take inspiration from your work in countries like ours. indeed, we support your efforts to promote financial inclusion in the global arena as a means to achieve development goals. with your support, and the commitment of everybody in this hall as co - implementers of the national strategy for financial inclusion, i believe that we are on our way to a meaningful and fruitful journey toward financial inclusion for all filipinos. thank you all for joining us on this auspicious day. maraming salamat at mabuhay! bis central bankers β speeches | 0.5 |
the next few years, eventually bringing the federal reserve's securities holdings to a level consistent with the ample reserves framework that the fomc reaffirmed in january when it released its principles for balance sheet reduction. 3 economic outlook even before it took these actions, the fomc communicated a path of raising the target federal funds rate and reducing the balance sheet. those communications and subsequent actions are having a meaningful effect on broad financial conditions. for example, since the beginning of the year, both two - year treasury yields and 30 - year fixed mortgage rates have risen more than 2 percentage points. we have seen a significant tightening of financial conditions abroad as well. our monetary policy actions will cool the demand side of the equation. i also expect that over time, the factors contributing to supply shortages will be resolved, so that some of the rebalancing will be accomplished through increases in supply, both in the united states and around the world. for 2022, i expect core pce inflation to be nearly 4 percent, before falling to about 2 aΒ½ percent next year. i expect inflation to further decline to close to our 2 percent longer - run goal in 2024. i expect the labor market and economy to continue to show strength and resilience. for 2022, i expect gdp growth to be around 2 percent and the unemployment rate to remain around its current low level. conclusion reducing inflation to our longer - run goal while keeping the labor market strong is the challenge of our time. the ongoing pandemic and war in ukraine bring a tremendous amount of complexity and uncertainty. we will need to be data dependent and adjust 3 / 4 bis - central bankers'speeches our policy actions as circumstances warrant. we have the right tools, and we will use them to meet this challenge. 1 board of governors of the federal reserve system, federal reserve issues fomc statement, may 4, 2022. 2 board of governors of the federal reserve system, plans for reducing the size of the federal reserve's balance sheet, may 4, 2022. 3 board of governors of the federal reserve system, principles for reducing the size of the federal reserve's balance sheet, january 26, 2022. 4 / 4 bis - central bankers'speeches | john c williams : the economy in the time of coronavirus remarks ( via videoconference ) by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at the buffalo niagara partnership, the greater rochester chamber of commerce, and centerstate ceo, 21 may 2020. * * * as prepared for delivery introduction it β s a pleasure to be able to join you all from my apartment in manhattan. i sincerely look forward to the day when we can again meet in person. in a short period, our lives have changed in unimaginable ways : things that we took for granted β like eating at a restaurant, or going to a movie β are no longer possible in many places. for the first time in our lifetimes, governments around the world have had to take the extraordinary action of shutting their economies down. those workers who continue to deliver essential services face very real risks, and my deep gratitude is with all those working in hospitals, law enforcement, transportation, and grocery stores. all essential workers have the thanks of everyone at the new york fed. what started as a healthcare crisis has had profound consequences for the u. s. and global economies. we all know the incredible strain that new york city has been under, with numerous patients still being diagnosed with covid - 19 on a daily basis. but upstate new york has also been deeply affected β not just by the spread of the virus, but also by the profound economic fallout. the cause of this recession β a global pandemic β means that our economic future will be determined in large part by the path of the virus. it β s impossible to know exactly how and when workers and businesses will be fully back to work and when consumers will return to the businesses that are open. despite the uncertainty, i β m going to spend some time today discussing what the scale of the challenge looks like for new york state, and for the u. s. economy as a whole. i β m also going to outline the federal reserve system β s response. the fed is well - known for setting interest rates. but we play a number of other roles, and have a key responsibility for ensuring that the financial system is working to support the economy, which has been crucial during this crisis. before i continue, let me give the fed disclaimer that the views i express are mine alone and do not necessarily reflect those of the federal open market committee or anyone else in the federal reserve system. a diverse | 0.5 |
system that also evolve and change. moreover, the data that are used to estimate model parameters and to formulate the economic outlook are inherently uncertain and are often revised as the statistical agencies refine their estimates or gather more information. in addition to uncertainties surrounding macroeconomic models and measurement, there are a number of risks that, if realized, could shock the economy and financial system, making it more difficult for policymakers to confidently assess the economy and the economic outlook. despite these challenges, monetary policymaking requires a forward - looking approach, since its actions affect the economy, labor markets, and inflation with a lag. 2 the post β financial crisis economy and monetary policy at the zero lower bound when i joined the fomc in late 2018, despite nearly a decade of accommodative monetary policy following the financial crisis and subsequent recession, one of the primary concerns was that inflation had persistently been running slightly below the committee β s 2 percent inflation target. there was a recognition that the β natural rate of unemployment β may have been lower than many on the fomc had estimated, and that inflation may have become greenspan ( 2004 ), bernanke ( 2007 ), and powell ( 2018 ) offer discussions of how risk and uncertainty may influence monetary policy in practice. see alan greenspan ( 2004 ), β risk and uncertainty in monetary policy, β american economic review, vol. 94 ( may ), pp. 33 β 40 ; ben s. bernanke ( 2007 ), β monetary policy under uncertainty, β speech delivered at the 32nd annual economic policy conference, federal reserve bank of st. louis, st. louis ( via videoconference ), october 19, https : / / www. federalreserve. gov / newsevents / speech / bernanke20071019a. htm ; and jerome h. powell ( 2018 ), β monetary policy in a changing economy, β speech delivered at β changing market structure and implications for monetary policy, β a symposium sponsored by the federal reserve bank of kansas city, held in jackson hole, wyo., august 24, https : / / www. federalreserve. gov / newsevents / speech / powell20180824a. htm. - 3less responsive to reductions in the unemployment rate. 3 this recognition meant that preemptive increases in the federal funds rate based on expected reductions in the unemployment rate alone may not have been needed to keep inflation and | will promote financial stability and healthy economies. ultimately, the focus of financial education is all about improving individual financial well - being and how we can support individuals to achieve that. john adams, who was the second president of the united states, once said, " all the perplexities, confusions and distresses in america arise not from defects in their constitutions or confederation, not from a want of honour or virtue, so much as from downright ignorance of the nature of coin, credit and circulation. " 18. thank you very much for being with us here today to kick off the financial literacy month 2022. 4 / 4 bis - central bankers'speeches | 0 |
expansion while they grew steadily in previous expansions ( figure 5 ). consumer credit has risen at a modest rate in this recovery β comparable to that of the last cycle ( figure 6 ). this category includes auto loans, credit cards and other consumer debts that are mainly originated by banks. but it also includes student loans where the federal government is the dominant lender. student loans have risen robustly during this expansion, and have driven much of the rise of overall consumer credit. we will have much more to say about them later in today β s briefing. the u. s. financial system relies more heavily on capital markets than other advanced economies. bonds and other negotiable debt instruments are an important source of funding to credit - worthy corporations. indeed, the growth rate of real nonfinancial corporate bonds outstanding during this expansion has been roughly similar to that of previous expansions ( figure 7 ). a similar pattern is evident in the commercial paper market ( figure 8 ). notwithstanding the robust performance of debt markets during this expansion, the sharper decline in outstanding bank loans to businesses that i mentioned earlier was likely a contributing factor to the slower economic recovery we have observed this time around. these developments appear to have had adverse consequences on the cost and availability of credit for bank - dependent borrowers. also, in the early years of this recovery, bankdependent firms appear to have deleveraged more and invested less than firms with access to capital markets. so, the impairment of banks β ability to extend credit still has the potential to hinder investment and adversely affect the overall economy. we see similar correlations when it comes to lending to households. the expansion in auto lending that commenced in 2010 coincided with a recovery in auto sales, which have now essentially regained the ground they lost during the recession. until recent quarters, overall consumption growth has been slow, consistent with a pattern of slow growth in credit card balances. the most obvious case is mortgages where β after a massive tightening from 2007 to early 2010 β underwriting standards remain very tight. this tightness, especially for nonprime borrowers, has likely been a factor behind a persistently sluggish housing market that has held back this recovery relative to earlier ones. overall, these patterns of credit growth support the idea that the weakness of banks at the end of the great recession has been a contributing factor to the slow recovery of the u. s. economy since the recession. these patterns are consistent with evidence provided | to the worsening of the crisis in 2008. but the financial markets are still functioning much less efficiently than normal. it is also still difficult for companies to finance themselves in the capital market. the riksbank has also implemented a large number of unconventional measures to safeguard financial stability and mitigate the negative effects of the financial crisis. during the second half of 2008 the riksbank increased its lending to the banks by more than sek 450 billion. almost sek 200 billion of this was comprised of loans in us dollars. we have largely financed this through a swap agreement with the fed. our own foreign exchange reserve was not sufficiently large to manage such extensive lending in dollars. the increased lending has meant that the riksbank β s balance sheet grew during the second half of 2008 from around sek 200 billion to around sek 700 billion. we have also changed our collateral requirements so that the banks can offer more types of security as collateral and thus more easily sustain their functions in the market. we have given special liquidity assistance to kaupthing and carnegie to safeguard financial stability and ensure the functioning of the financial markets. we have begun offering loans with commercial paper as collateral to facilitate companies β financing. we have also signed swap agreements with iceland and latvia to support crisis management in these countries. and we have cut the interest rate. since the monetary policy meeting in february we have further extended these unconventional measures. we have decided on loans with longer maturities, with variable interest rates and with smaller supplements and we have signed a swap agreement with estonia. the swedish national debt office and finansinspektionen ( the swedish financial supervisory authority ) have also taken action to alleviate the financial crisis. the government has raised the state deposit guarantee and extended it to cover all types of deposits in accounts, it has introduced a guarantee programme, established a guarantee fund and decided on means of capital injections to the banks. at the same time, the government is conducting a more expansionary fiscal policy than before. i now intend to move on to describe international developments. international developments will be weak this year the world economy was in a slowdown phase even before september 2008. since then the deterioration in the world economy has been rapid. all of the large, developed economies are now in recession. during the fourth quarter of last year gdp growth in the united states and the euro area fell by around 6 per cent calculated on an annual rate. in japan the fall was even greater, more than 12 per cent calculated | 0 |
##ncy : no β wait and see what happens next β. in recent years, a significant part of the banking system in several countries has been kept alive by public capital injections and state guarantees, plus the liquidity support of the ecb. most banks were no longer masters of their destiny. in hindsight, many of them generated instability and became part of the problem. now, we need them to be active parts of the solution. hence the call for a european banking union : the biggest cogwheel that we can complete right now. i hope that you agree that we have come a long way since the start of the crisis. but we still have further to go! implementing the banking union will take a great deal of hard work and cooperation. however, once it β s in place we shall have a healthier financial system. to conclude, let me quote alexis de tocqueville here : β i cannot help fearing that men may reach a point where they look on every new theory as a danger, every innovation as a toilsome trouble, every social advance as a first step toward revolution, and that they may absolutely refuse to move at all. β thank you for your attention. bis central bankers β speeches | considered very carefully the possible risks β and we designed our operations to minimise them. but i am aware that some observers in this country remain concerned about the potential impact of this policy. i would therefore like to use this opportunity to go through those concerns β one by one β and explain our views. first, omts will not lead to disguised financing of governments. we have specifically designed our interventions to avoid this. they will take place solely on secondary markets, where bonds that have already been issued are traded. if interventions take place, they will involve buying government debt from investors, not from governments. all this is fully consistent with the treaty β s prohibition on monetary financing. moreover, they will focus on shorter maturities and leave room for market discipline. second, omts will not compromise the independence of the ecb. the ecb will continue to take all decisions related to omts in full independence. it will decide whether to intervene based on its own assessment of monetary policy transmission and with the aim of safeguarding price stability. the fact that governments have to comply with conditionality will actually protect our independence. the ecb will not be forced to step in for a lack of policy implementation. third, omts will not create excessive risks for euro area taxpayers. such risks would only materialise if a country were to run unsound policies. this is explicitly prevented by the esm programme. and we have been very clear that each time a programme starts being reviewed, we will routinely suspend operations and resume them only if the review has been concluded positively. this will ensure that the ecb intervenes only in countries where the economy and public finances are on a sustainable path. fourth, omts will not lead to inflation. we have designed our operations so that their effect on monetary conditions will be neutral. for every euro we inject, we will withdraw a euro. in our assessment, the greater risk to price stability is currently falling prices in some euro area countries. in this sense, omts are not in contradiction to our mandate : in fact, they are essential for ensuring we can continue to achieve it. moreover, we see no signs that our announcement has affected inflation expectations. they continue to be firmly anchored. this is testament to our track record on price stability over the last decade and our credible commitment to maintaining price stability. the citizens of the euro area can be confident that we will remain permanently alert to risks to price stability. we have all the necessary tools at our disposal to | 0.5 |
may be very different depending on the starting levels of household and corporate debt and debt servicing capacity. when are monetary policy adjustments likely to be helpful from a financial stability perspective? this is likely to be in situations where asset and credit markets are buoyant and prudential policies alone are insufficient to constrain a build - up of financial system stress. for example, by themselves, macro - prudential policies such as lvr restrictions may have limited effects on asset price inflation and the credit cycle. macro - prudential policies must remain consistent with micro prudential principles and are therefore not generally scalable in the way that interest rates are. further, the impact of macro - prudential policies can be eroded if there is disintermediation outside the regulatory perimeter, something which becomes more likely if interest rates are set at stimulatory levels. thus, in a situation where inflation is near the target, but asset markets are rising sharply, assistance from monetary policy can be an important means of meeting financial stability objectives. many countries are currently actively considering how to manage the potential effects of an extended period of loose monetary policy on financial stability. for example, the bank of england has recently included a financial stability knock - out in its forward guidance on monetary policy ( kohn ( 2013 ). bis central bankers β speeches as noted by federal reserve governor, jeremy stein ( 2012 ), monetary policy β gets in all the cracks β of the financial system. it affects the cost of credit for all borrowers, including those that may be avoiding macro - prudential regulations as a result of disintermediation. other policy initiatives that seek to alleviate supply - demand imbalances in asset markets can also be helpful. in the case of housing markets for example, this might involve regulatory reform around zoning and other planning restrictions, or changes in taxation that reduce the incentive for speculative investment. should monetary policy respond to a request from the prudential authorities for tighter policy? the key test is whether this is consistent with the primary monetary policy objective of price stability. if monetary policy is diverted too far or too long from its primary objective of price stability there is a risk that the transparency and credibility of monetary policy will be damaged, thus reducing the long - run effectiveness of monetary policy in achieving its prime objective. this potential problem has been emphasised for example by svensson ( 2011 ). policymakers and academics around the world have debated the appropriateness of tightening monetary policy on financial | . by and large, the exchange rate movements delivered by the market have served canada well. trying to hold the dollar constant would have given us larger fluctuations in unemployment, output and inflation. nonetheless, for many years we did have a policy of routinely using our foreign reserves to resist, in an automatic fashion, any significant upward or downward pressure on the dollar. for example, between 1995 and 1998, we intervened roughly 150 times. we weren β t targeting a particular level for the exchange rate but simply smoothing its movements. this reflected a belief at the time that markets did not function efficiently and could give rise to volatility that could be destabilizing. but this view gradually gave way to the weight of evidence and experience. by 1998, we had concluded that such interventions weren β t particularly effective. we saw the futility of attempting to moderate exchange rate movements caused by changes in the underlying fundamental factors. trying to counter them was a bit like tapping on the brakes while skidding on ice. it can help, momentarily, but not by much. so where does that leave us? we do have a policy framework that would allow us to intervene in the unlikely event that it β s needed. that could happen under two scenarios. the first would be a market breakdown with extreme price volatility. buyers or sellers would be increasingly unwilling to transact, indicating a severe lack of liquidity in the canadian - dollar market. the second would be sharp currency movements that seriously threaten the conditions that support sustainable, long - term economic growth. in a market breakdown, intervention would aim to restore market functioning and would likely be quite short - lived. in extreme currency movements, it β s understood that intervention would be part of a broader set of policy changes to re - establish confidence in canadian economy. this framework is transparent β it is posted on our website. thus, we are ready to intervene, if necessary. but as i said, we have not seen the need to do so at any time throughout the past two β often turbulent β decades. there have, however, been a couple of occasions over that period when canada participated in concerted intervention along with other countries. in 2011, canada joined an action to stem excess volatility and disorderly movements in the exchange rate of the japanese yen following 2 / 6 bis central bankers'speeches the earthquake and resulting tsunami and nuclear crisis at the fukushima nuclear plant. the intervention involved selling the yen against our respective domestic currencies to send a clear | 0 |
amando m tetangco, jr : working on asean governance standards speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the financial sector forum on asean corporate governance scorecard, manila, 24 september 2014. * * * good morning everyone and welcome to the bangko sentral ng pilipinas. on behalf of the other members of the fsf β the heads of sec, ic and pdic β i also welcome everyone to this forum on the asean corporate governance scorecard or what we call acgs. the bangko sentral ng pilipinas, the securities and exchange commission, the insurance commission and the philippine deposit insurance corporation are pleased that representatives from various sectors have joined us this morning to know more about the acgs. this tells us that you and the institutions you represent similarly value corporate governance. as you and i know, good corporate governance is key to ensuring sustainable long - term growth. in this context, acgs is important β it deserves our time and full attention. a joint initiative of the asean capital markets forum and the asian development bank, the acgs evaluates the top publicly listed companies in five categories, based on the following weights : 10 % for rights of the shareholders ; 10 % for role of stakeholders ; 15 % for equitable treatment of shareholders ; 25 % for disclosure and transparency ; and 40 % for responsibilities of the board. benchmarked against international best practice, the acgs provides a standard rigorous methodology that can generate comparable information crucial to investors, fund managers, the private sector, the regulators and governments. at present, the acgs counts six participating asean countries : indonesia, malaysia, singapore, thailand, vietnam and the philippines. this program is being done in parallel with other efforts to promote asean as a competitive growth region. while the acgs country reports and assessments for 2013 β 2014 said the performance of asean publicly listed companies in applying recommended corporate governance principles is commendable, continuing improvements are called for. we agree. and all of us should strive to do so in our respective institutions, industries and sectors. good governance has to be a culture not only within institutions but across our country. at this point, i will share a number of our initiatives at the bangko sentral. over the years, we at the bangko sentral have been working on strengthening governance standards in banks. among others, proposed directors of banks are subject to | the confirmation requirements of the bsp. our β fit and proper β standard covers not only competence, education and experience but makes specific reference to integrity, probity, as well as physical and mental fitness. in addition, we have mandated the creation of board - level committees that will oversee risk, audit and governance. we have also institutionalized a compliance system that should have the authority and independence to address the bank β s business risks. these are check - and - balance type structures which are integral to a bank β s governance, alongside its own culture on the management of articulated risks. equally important, disclosure and transparency requirements continue to be enhanced. among others, disclosure requirements cover potential conflicts of interest, basel 3 - eligible capital instruments with loss - absorbency features and cross - selling. in other words, ensuring good governance is never - ending ; it is always a work in progress. bis central bankers β speeches ladies and gentlemen. the strategic nature of corporate governance has tactical elements which are inherently actionable. this is what we aspire for : on one hand, we want to institutionalize the public β s awareness of the value of corporate governance ; on the other, we want corporate entities to practice what is globally preached and to build a philippine brand that can stand side by side with other corporates in the region. to do just that, we need to monitor the execution of these standards at the institutional level. this is where we are today. i trust therefore that this forum can contribute towards greater understanding of the acgs. we in the fsf also would like to see our corporates β banks and non - banks, listed and not listed β to be able to apply best practice standards and to hold themselves against the bar of providing a value proposition to the general public. while the philippines has made big strides to move our economy forward and achieve investment grade rating, certainly we should strive for high standards of governance to ensure sustained and inclusive growth for our people. ladies and gentlemen, having a successful and productive forum today on the asean corporate governance scorecard is one more step forward in our continuing efforts to make the philippines fulfil its full potential in the midst of regional integration. thank you all for joining our forum. mabuhay po tayong lahat! mabuhay ang ating mahal na bansang pilipinas! maraming salamat sa inyong lahat! bis central bankers β speeches | 1 |
lim hng kiang : brief overview of economic links between vietnam and singapore opening remarks by mr lim hng kiang, deputy chairman of the monetary authority of singapore and minister for trade and industry, at the launch of vietnam - singapore listing preparatory program, hanoi, 2 april 2007. * * * his excellency, vu van ninh minister of finance of the socialist republic of vietnam distinguished guests ladies and gentlemen it gives me great pleasure this morning to join his excellency, minister vu and all of you in hanoi at the official launch of the vietnam - singapore listing preparatory program. as minister vu has shared earlier, today β s programme adds yet another pillar to our growing economic relationship. today β s launch is especially meaningful for me, as looking back at 2005, our two countries inked a historic framework agreement on vietnam - singapore connectivity to strengthen our relations and to cooperate across the many areas in which we have shared interests. i am thus very glad that my officials from the monetary authority of singapore have been working closely with vietnam ministry of finance and the state securities commission to see through the implementation of the terms provided under the connectivity agreement. the objective of the connectivity agreement had been to build closer government - to - government relations between vietnam and singapore, to bring about more opportunities for mutual collaboration and exchanges between our two countries. more importantly, we believe that by working together in partnership, vietnam and singapore can present an even more compelling proposition to global investors and to raise the profile of asean markets. vietnam and singapore have always enjoyed strong economic linkages. bilateral trade between singapore and vietnam rose by 8. 6 % to us $ 7. 4 billion in 2006, making singapore vietnam β s 4th largest trading partner. likewise, vietnam is singapore β s 14th largest export market, with over us $ 5. 7bn worth of exports in 2006. in the last few years, we have witnessed how vietnam β s economy has flourished, spurred by an impressive growth rate of more than 8 %. vietnam is now asia β s secondfastest - growing economy, trailing only china β s. touted as asia β s newest economic tiger, we have seen vietnam β s stock market index surged 144 % last year and its market capitalisation developed from less than us $ 1 billion to more than us $ 14 billion now. these results have been due to vietnam β s commitment towards market liberalization and its steadfastness in working towards your accession into the world trade organization. vietnam β s strong economic story | jean - claude trichet : ecb press conference β introductory statement introductory statement by mr jean - claude trichet, president of the european central bank, and mr vitor constancio, vice - president of the european central bank, frankfurt am main, 7 april 2011. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. before we report on the outcome of today β s meeting, we wish to express our sincere sympathy to the people of japan, after the tragic events and lamentable loss of life. all our thoughts are with those who have suffered directly or indirectly from the natural and nuclear disaster. let me now start reporting on the outcome of today β s meeting. based on its regular economic and monetary analyses, the governing council decided to increase the key ecb interest rates by 25 basis points, after maintaining them unchanged for almost two years at historically low levels. the adjustment of the current very accommodative monetary policy stance is warranted in the light of upside risks to price stability that we have identified in our economic analysis. while our monetary analysis indicates that the underlying pace of monetary expansion is still moderate, monetary liquidity remains ample and may facilitate the accommodation of price pressures. all in all, it is essential that the recent price developments do not give rise to broad - based inflationary pressures over the medium term. our decision will contribute to keeping inflation expectations in the euro area firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. such anchoring is a prerequisite for monetary policy to contribute to economic growth in the euro area. at the same time, interest rates across the entire maturity spectrum remain low. thus, the stance of monetary policy remains accommodative and thereby continues to lend considerable support to economic activity and job creation. recent economic data confirm that the underlying momentum of economic activity continues to be positive, with uncertainty remaining elevated. we will continue to monitor very closely all developments with respect to upside risks to price stability. as stated on previous occasions, the provision of liquidity and the allotment modes for refinancing operations will also be adjusted when appropriate, taking into account the fact that all the non - standard measures taken during the period of acute financial market tensions are, by construction, temporary in nature. accordingly, the governing council will continue to monitor all developments over the period ahead very closely. let me now | 0 |
has been closely involved in the european construction and european unity. he has been an outstanding ecb chief economist. he is one of the greatest champions of the european union that i know. when, after serving the euro for many years, such a person, who has been totally loyal to the institution, announces his resignation for personal reasons, one has to fully respect his decision. according to opinion polls, a majority of germans now want the deutsche mark back. is the euro at risk of losing its backing in europe β s largest economy? there are different opinion polls! in early september die welt published the results of a survey in which two thirds of respondents in germany called for β more common policies in europe β. the citizens of germany know how important european unification is for their country ; the fall of the iron curtain would not have been possible without a united western europe. bis central bankers β speeches in that case, how do you explain the growing mistrust? i believe there is a problem of communication. contrary to how things are often portrayed, we do not have a crisis of the euro as a currency. the euro is a credible, stable currency. in spite of the global crisis, its external value today is significantly higher than when it began. for 13 years the ecb has provided for stable prices. and observers and markets are anticipating the same stable prices for the next ten years. this achievement in particular is not valued highly enough by some commentators in germany, and i do not understand why that is. of course, there are shortcomings in the financial sector, in fiscal policies, and as regards financial stability : the financial markets are too unstable, some euro area countries are uncompetitive, and reliable fiscal policy is lacking in several countries. however, none of these problems have to do with the currency. they are the responsibility of the governments of the euro area. do you have the impression that the heads of government have understood what is at stake? i believe they are conscious of their extraordinary responsibility. they all have to make decisions in the context of democracies which, in the advanced economies, are very inwardlooking, which is a real problem at the time of the worst global crisis for the last 66 years. what will happen if the european heads of government do not get the crisis under control? my working assumption is that the heads of state and government will overcome the crisis. europe must realign its fiscal policy, as other large developed economies must also do | jose manuel gonzalez - paramo : the euro as one of the main aspects shaping european identity today speech by mr jose manuel gonzalez - paramo, member of the executive board of the european central bank, on the occasion of the inauguration of the euro exhibition at banca nationala a romaniei, bucharest, 10 march 2011. * * * dear governor isarescu, ladies and gentlemen, i am delighted to be here today for the opening of the euro exhibition, which is being hosted by banca nationala a romaniei until 27 may 2011. this is yet another example of the strong ties that the european central bank has developed with banca nationala a romaniei over the last few years β i remember vividly the romanian artists who performed in frankfurt in 2009 as part of the ecb β s cultural days, which were showcasing romania that year. the euro exhibition is dedicated to europe β s single currency : the euro. stage three of economic and monetary union began on 1 january 1999 with the irrevocable fixing of the exchange rates of the currencies of the 11 member states initially forming the euro area, and culminated on 1 january 2002 with the introduction of the euro banknotes and coins. since then, countries have continued to join the euro area, the latest, as you know, being estonia on 1 january this year. the euro banknotes and coins are therefore now legal tender in 17 of the 27 eu member states and are used by the 331 million citizens in an area stretching from cyprus to ireland and from portugal to finland. in fact, they have become one of the most visible symbols of europe and the euro is one of the main aspects shaping the european identity today. the introduction of the euro has brought many advantages β not only for citizens of the euro area countries, but also for citizens of other eu member states, such as romania. for example, when travelling within the euro area, romanian citizens can use the euro as a means of payment across borders and thus only need to exchange their currency once. furthermore, they can compare prices across the euro area countries much more easily. finally, romanian enterprises, for which the euro area is an important trading partner, can use one currency, namely the euro, in their transactions with business partners from the 17 euro area countries. in order to join the euro area, each eu country must meet a number of clearly defined criteria, namely : 1. it must not be subject to an eu council decision that an excessive budget deficit exists ; | 0.5 |
form of exchange rate peg and managed float intervene regularly so as to ensure that the respective exchange rate is consistent with the chosen regime. in conducting such interventions, they prefer to use the anchor currency which then also serves as their main reserve currency. today, roughly 50 countries use the euro as an anchor or reference currency in their exchange rate policies. while the composition of this group of countries has changed somewhat in recent years, the total number of countries has been stable. indeed, the use of the euro in third countries β exchange rate regimes has a strong geographical and institutional underpinning, with many of these countries being close to the euro area, including most non - euro area eu member states, or having special institutional arrangements with the european union, like the candidate countries, potential candidate countries and the countries of the cfa franc zone in west africa. overall, most of these countries are located in eastern and south - eastern europe, in the mediterranean and the middle east and sub - saharan africa. with regard to the use of the euro as a reserve currency, you are probably all aware that the relevant data are extremely difficult to obtain. what we do know is that from 1999 to 2003, global foreign exchange reserves rose by more than usd 1. 3 trillion to about usd 3 trillion. by far the largest share of this increase is attributable to reserve accumulation in a few countries in asia as well as in japan, russia and mexico. these are countries which conduct an exchange rate policy which is either de jure or de facto oriented towards the us dollar. from this development, it could be inferred that most of the reserve accumulation probably pertained to the us dollar. against this background, and bearing in mind that most countries near the euro area are small in economic and financial terms ( compared with asian and latin american countries ), it is no great surprise that the euro β s share in global foreign exchange reserves is still rather small, although it has risen gradually from roughly 15 % to almost 20 %. available evidence suggests that several central banks of the new eu member states, candidate and potential candidate countries intervene in foreign exchange markets mainly by using the euro as intervention currency. my final remark in this overview of the facts and figures relates to one specific international use of the euro : in certain countries neighbouring the euro area, the euro is used in parallel alongside the national currency, as a means of exchange, unit of account and store of value in people β s everyday transactions. in the past, | , these five countries have seen an opportunity in fatca to counter offshore tax evasion and improve international tax compliance. they have agreed to each enter into intergovernmental agreements with the united states for collecting and reporting fatca - style information to their local tax authorities. on september 14 2012, the united states and the united kingdom announced they had signed the first bilateral agreement to implement fatca. fatca and the caribbean so, ladies and gentlemen, where does this leave the caribbean? as you may be aware, tax transparency and the fight against cross - border tax evasion have been high on the agenda of successive g - 20 summits. at the g - 20 summit held in los cabos, mexico in june 2012, leaders reiterated their commitment to strengthen transparency and comprehensive exchange of tax information including through the global forum on transparency and exchange of information for tax purposes and through the multilateral convention on mutual administrative assistance. this will be mainly achieved through peer reviews of countries [UNK] compliance with internationally agreed tax standards. it is my respectful view that adopting a robust, common set of standards may be essential to fostering global financial stability. but it is neither practical nor desirable to effect a dogmatic application of these identical standards to every country or region. standards must be calibrated and adapted to local circumstances. this is particularly true in the caribbean given the limitation and vulnerabilities inherent in the relatively small size of individual economies. for some time now, caribbean countries have had to grapple with the exercise of the asymmetrical global application of power and influence when it comes to the increased regulatory scrutiny by the advanced countries of the region β s offshore financial centres, especially in respect of tax evasion and money laundering. to be fair, some of these caribbean jurisdictions did have loosely defined regulatory and supervisory environments, but have subsequently come a long way in strengthening their capacity. as an example, i recall 1998, when the organization for economic cooperation and development ( oecd ) produced a list of countries which it said would be β blacklisted β for β harmful tax competition β. caribbean countries, which were on that list, mounted a spirited response with the assistance of the commonwealth secretariat, forcing the oecd to relax its position in 2000. since then, the global financial crisis and a string of headline - grabbing fraud scandals like those involving disgraced wall street financier bernard madoff and texas billionaire allen stanford have focused new attention on offshore financial centers in the caribbean. however, no | 0 |
follow a stable growth path with authorities conducting fiscal and monetary policies in a timely manner, despite being affected to some extent by the trade friction with the united states and deleveraging policy measures. in addition, the european economy is projected to gradually move out of its deceleration phase, reflecting progress in adjustments in the manufacturing sector, where relatively weak developments have been observed. that said, the downside risks concerning overseas economies have remained significant, and uncertainties regarding the effects of protectionist moves in particular have been heightening. although the united states and china are still in negotiations to solve the trade issues, future developments in u. s. trade policy against china, as well as other economies, continue to warrant attention. besides this trade friction, uncertainties concerning overseas economies include ( 1 ) the timing of when the effects of stimulus measures in china will materialize, ( 2 ) how far the adjustments in it - related goods will progress, and ( 3 ) the consequences of negotiations on the united kingdom's exit from the european union ( eu ). it is necessary to pay attention to the risk that, if uncertainties concerning overseas economies heighten further going forward, domestic and foreign economies will be affected widely, not only through downward pressure on the trade activity of related economies but also deterioration in business sentiment and instability in financial markets. thus, the bank will carefully monitor whether overseas economies will pick up during the time when domestic demand, as i referred to earlier, is maintained firmly. ii. price developments next, i will explain price developments in japan ( chart 7 ). for many years starting from the late 1990s, japan's economy was in deflation in terms of a sustained decline in the consumer price index ( cpi ). in order to make a breakthrough in this situation, the bank introduced quantitative and qualitative monetary easing ( qqe ) in april 2013, embarking on unprecedentedly powerful monetary easing. since then, japan's economy has improved significantly and the positive annual cpi inflation has taken hold. thus, the economy is no longer in deflation, in the sense of a sustained decline in prices. turning to recent price developments, the year - on - year rate of change in the cpi is at around 0. 5 percent and has continued to show relatively weak developments compared to the economic expansion and tight labor market conditions. however, with the economy continuing on an expanding trend, the basic mechanism for moderate increases in wages and prices driven by a positive output gap has continued to | . the real gdp growth rate for the july - september quarter of 2015 increased by an annualized quarter - on - quarter growth rate of 1. 4 percent, which exceeds the potential growth, due mainly to an increase in domestic private demand. that for the octoberdecember quarter registered minus 1. 1 percent on an annualized quarter - on - quarter basis, due partly to the effects of irregularly warm weather. as for the outlook, although the sluggishness in exports and production will probably remain for some time, domestic demand is likely to follow an uptrend, with a virtuous cycle from income to spending being maintained in both the household and corporate sectors, and exports are expected to increase moderately on the back of emerging economies moving out of their deceleration phase. thus, japan β s economy is likely to be on a moderate expanding trend. specifically, the economy is expected to continue growing at a pace above its potential through fiscal 2016. thereafter, through fiscal 2017, it is projected to maintain its positive growth, although with a slowing in its pace to around a level somewhat below the potential growth rate, due mainly to the effects of a front - loaded increase and subsequent decline in demand prior to and after the consumption tax hike planned in april 2017. according to the bank β s january 2016 outlook for economic activity and prices ( hereafter the outlook report ), the medians of the policy board members β forecasts for the economic growth rate β 1. 1 percent for fiscal 2015, 1. 5 percent for fiscal 2016, and 0. 3 percent for fiscal 2017 β were more or less unchanged from the forecasts presented in october 2015. 2. prices next, i will talk about price developments. the year - on - year rate of change in the consumer price index ( cpi ) for all items less fresh food has generally been about 0 percent, with the decline in energy prices and the increase in non - energy prices broadly offsetting each other. the rate of change for all items less fresh food and energy β one of the indicators that capture the underlying trend in the cpi β has remained positive for 28 months and has been at a level above 1 percent recently. in addition, looking at annual price changes in all cpi bis central bankers β speeches items less fresh food, the share of price - increasing items minus the share of price - decreasing items has shown a marked increase since spring 2015, albeit with some fluctuations. with regard to the outlook, the year - on | 0.5 |
internal control environment is a matter that concerns the entire central bank community. we recognize the challenges and complexities in strengthening prevention, detection, and incident response regimes around processing of fraudulent payment instructions. swift users span the full range of it sophistication and capacity, and remediating deficiencies in prevention and detection may require a substantial re - orientation of priorities and resources for some institutions. overcoming these obstacles will be no easy task, but so long as there is a weak link in the cybersecurity chain cybercriminals will seek to exploit it. reflecting the complex, systemic, and cross - national nature of the threats, recent global initiatives have been undertaken at multiple levels. at the international level, swift has taken the lead through its customer security program ( csp ). at the core of the csp is promoting increased transparency concerning the adherence of swift users to best practices on internal controls, with a related attestation required by the end of this year. at the global standard - setting level, the bis committee on payments and market infrastructures ( cpmi ) initiated last year a task force on wholesale payments security. the task force was established to look into the security of wholesale payments that involve banks, financial market infrastructures and other financial institutions. this effort builds on previous work by the cpmi on cyber security and operational risk and is working to make sure there are adequate checks and balances in place at each stage of the payments process. while these international efforts are important and necessary, they are in themselves inadequate unless there is buy - in at the institutional level for strengthening internal risk frameworks, controls, and cultures. for some, this may require investing in expanded technical capabilities. but for all, this is represented by β going back to basics β by continuously reinforcing strong risk management policies and practices in your work environments. cyber incidents often originate from an initial breakdown at the human level, be it inserting an unauthorized usb drive, leaving a token inserted overnight, clicking on an improper link, or falling prey to social engineering. as we all move forward to strengthen the global financial system, we stand ready to cooperate with african central banks, a critical component of which is building strong relationships of trust and understanding. our participation in these meetings are an important part of furthering our partnership and we look forward to a more comprehensive and sustained engagement going forward. 2 / 2 bis central bankers'speeches | of the recent crisis, of entrepreneurship focused on business opportunities in which the scale, organisation and capital requirements were not key determinants to success. this appears to have been β alongside outward migration β the response of economic agents to the job destruction caused by the crisis. 1 / 3 bis central bankers'speeches this is positive news as it shows that the economy was able to react. however, although it is true that this type of entrepreneurship makes economic adjustment easier, it is important to recognise that it is not enough to lead the portuguese economy to a higher growth path. for this we need two additional types of entrepreneurship : entrepreneurship focused on technological business opportunities ; and entrepreneurship that promotes the restructuring and growth of existing small and medium - sized enterprises. public policies have a relevant role to play in the promotion of these types of entrepreneurship, from the adoption of a legal and institutional framework conducive to an attractive business environment β that is, a business environment that enables a more efficient and flexible allocation of available resources and promotes a reduction in the levels of uncertainty that economic agents operate in. the attractiveness of the business environment depends on countless factors, from the operation of the labour market to the operation of the capital market, to corporate insolvency and recovery mechanisms, to name but a few. notwithstanding, no matter how relevant the business environment may be, the way the manager combines that environment, the organisation and the firm β s strategy is actually equally critical to economic growth. for this to result in production that is desired and valued by the market, we always need a management model that is effective and professional. in an economy like that of portugal, in which family - run firms form a large proportion of small and medium - sized enterprises as a whole, the reconciliation between family ownership and management professionalisation is a critical element in the evolution of the corporate sector and the portuguese economy. the separation of ownership and management is a decisive factor for management professionalisation. such separation allows a fair balance to be found and safeguarded between the continuity of the entrepreneurial factor that was present during the development of a given firm, the legitimate interests of the different stakeholders of that firm, and the defence of an ambition to grow in scale and / or value chain migration. that is, only through the professionalisation of management, combined with the continued commitment of the entrepreneurial elements present, can there be an affirmation of more effective management models and the sustainability and growth of business. public policy can encourage management professionalisation in | 0 |
measured by the harmonised index of consumer prices increased to 1. 9 % in may 2018 and, on the basis of current futures prices for oil, headline inflation is likely to hover around its current level for the remainder of the year. while measures of underlying inflation remain generally muted, they are higher than earlier low levels. domestic cost pressures are strengthening amid high levels of capacity utilisation and tightening labour markets. so against this background, the governing council carefully reviewed the progress towards a sustained adjustment in the path of inflation to levels below, but close to, 2 % in the medium term. our assessment on the progress made was guided by the three criteria of convergence, confidence and resilience. first, on convergence, headline inflation should be well on track towards reaching levels below, but close to, 2 % over the medium term, which is also supported by our staff projections. 1 / 3 bis central bankers'speeches second, on confidence, uncertainty around the inflation outlook has further diminished. in addition, high levels of capacity utilisation and a progressive tightening in labour markets provide increasing confidence that price and wage pressures will emerge more strongly and show through in inflation developments. finally, on resilience, the projected sustained adjustment in the path of inflation is expected to be maintained even without additional net asset purchases. in summary, we concluded at our meeting on 14 june that progress towards a sustained adjustment in inflation has been substantial. the underlying strength in the euro area economy, together with well - anchored, longer - term inflation expectations, provide grounds to be confident that the sustained convergence of inflation towards our inflation aim will continue in the period ahead, even after a gradual winding down of net asset purchases. let me reiterate the governing council β s policy decisions on our policy instruments. first, we anticipate reducing the current monthly pace of net asset purchases of β¬30 billion to β¬15 billion at the end of september 2018 and ending net purchases at the end of december 2018. second, we intend to maintain our policy of reinvesting the principal payments from maturing securities purchased under the asset purchase programme for an extended time after the end of net purchases, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. third, we expect the key ecb interest rates to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with our | luis de guindos : most recent ecb monetary policy decisions welcome remarks by mr luis de guindos, vice - president of the european central bank, at the meeting of the ecb's bond market contact group, frankfurt am main, 26 june 2018. * * * ladies and gentlemen, i am very pleased to be here today to give the introductory remarks to the bond market contact group meeting. i will focus on two issues. first, i will take this opportunity to briefly explain the important decisions taken by the governing council earlier this month. and second, i would like to provide some food for thought on the topics that you will be discussing today. let me start by explaining the backdrop to the decisions taken by the governing council on 14 june 2018. while euro area economic activity moderated in the first quarter of 2018, following high levels of growth in 2017, the fundamentals remain in place for continued solid and broad - based economic growth. in fact, economic growth continues to be supported by the domestic strength of the economy. private consumption growth is expected to remain robust thanks to continued improvements in the labour market. the unemployment rate is at its lowest level in almost ten years, while the number of people employed in the euro area has increased by some eight and a half million since mid - 2013. the outlook for business investment continues to strengthen and is supported by the favourable financing conditions, an improvement in profitability and solid demand. the euro area fiscal stance is projected to be expansionary in 2018 and to become broadly neutral over 2019 β 20. also the external environment remains supportive. the expected continuation of the broad - based expansion in global demand should support euro area exports. in particular, growth in the united states is expected to accelerate on the back of solid investment and consumption data and significant fiscal stimulus. our assessment that broad - based economic growth will continue is largely echoed in the june 2018 eurosystem staff macroeconomic projections for the euro area. real gdp is projected to increase by 2. 1 % in 2018, 1. 9 % in 2019 and 1. 7 % in 2020. while we still find that the risks to the growth outlook are balanced, those related to global factors have become more prominent. in fact, downside risks to the outlook stem from the threat of increased protectionism, rising oil prices and its impact on inflation and global growth, as well as very elevated levels of global debt. moreover, the risk of persistent heightened financial market volatility warrants monitoring. inflation | 1 |
the release of the minutes, specifically to publish them before the next fomc meeting. currently, the private reaction to the release of the minutes is muted, given that an intervening fomc meeting and policy decision have occurred. if the release of the minutes, instead, came before the next meeting, then market participants would be more likely to react to two sources of information for each single meeting - - first to the statement that immediately followed the policy action and then, some weeks later, to the minutes. the minutes should simply deepen and expand the rationale for a policy decision that was already given in the statement released immediately after the meeting. they might also indicate the existence and strength of contrary views. at the margin, some of this might be additional information. however, there is a risk that even such a marginal expansion of information could receive more weight than it warranted and foster misperceptions about the possible course of policy. such misperceptions might result from a market misinterpretation of any one element of these minutes, which in turn could lead to an inappropriate reaction to incoming data. additionally, minutes are not new information about the performance of the economy. i believe that markets and policymakers are both best served if markets focus on, and react to, incoming data and the evolving outlook rather than the printed record of a past meeting released during the intermeeting period having limited, if any, predictive value for the upcoming meeting. conclusion in conclusion, central bank transparency is obviously beneficial, and i strongly welcome the recent trend across the globe toward greater openness. transparency supports central bank independence and helps markets formulate policy expectations that are more consistent with the monetary authority β s intentions. i am pleased that the federal reserve has increased its transparency and am proud that i had the opportunity to contribute to some elements of that improvement. central banks should continue to thoughtfully consider proposals to increase transparency. openness is intended to serve two goals - - accountability and effectiveness of policy. any proposal for greater transparency should be judged by how well those objectives are met. our goal at the federal reserve regarding monetary policy transparency is to provide as much information as possible to understand the decisions that we have made. some recent suggestions - - including the quantification of objectives, the publication of forecasts, and the earlier release of minutes - - present problems in that they could well detract from our ability to achieve our externally defined goals. while, on balance, i do not | , 000. 9 the high college dropout rate thus suggests that many students could benefit from more information about what is required for college success. of course, it β s not enough to simply prescribe what students need to know ; we must also help them learn it. this points to the value of improving the effectiveness of the k - 12 portion of our education system. while that subject is beyond the scope of this talk, i applaud the ongoing efforts here in north carolina and across the country to increase student achievement and close the gaps between students of different backgrounds. the national center for education statistics defines college completion as earning a bachelor β s degree within six years of matriculating. graduation rates are calculated according to where students started as full - time, first - time students. transfer students and students who return to college after an absence are not included. accenture and the manufacturing institute, 2014 manufacturing skills and training study, january 2015. for example, see r. jason faberman and bhashkar mazumder, β is there a skills mismatch in the labor market? β chicago fed letter no. 300, july 2012. see christopher avery and sarah turner, β student loans : do college students borrow too much β or not enough? β journal of economic perspectives, winter 2012, vol. 26, no. 1, pp. 165 β 192. bis central bankers β speeches i also believe we should supplement information about college preparedness with information about other career and postsecondary education options. community colleges, for example, are a venue where students can learn more about their interests and aptitudes and hone the skills that are required for success at four - year schools. moreover, there are a range of other post - high - school educational institutions that can help students acquire the skills they need to succeed without a college degree. one factor in the high school dropout rate may be the increasing focus of many high schools on college preparation. some students, however, may not wish to attend college or may see large barriers to doing so. if these students believe that the only reason to complete high school is to attend college, they might not see much value in doing what β s required to graduate. learning about alternative career and educational opportunities that also require a high school degree could increase the perceived value of high school completion and improve their labor market outcomes relative to dropping out. 10 on the other hand, we can do more to ensure that well - qualified students don | 0 |
2002 and by nearly 25 per cent in the first eleven months of 2003. such volatility in exchange rates seems to be a fact of life in most economies these days. fluctuations in the external value of currencies are unavoidable in the current international monetary system of generally floating exchange rates. even when currencies are pegged to another currency or to a basket of currencies, they still float against other currencies and fluctuate widely at times. large fluctuations in the exchange rate of the rand are clearly not healthy for the economy. the uncertainty caused by these fluctuations makes investment and export planning extremely difficult. what may seem to be a profitable venture can turn out completely different with a substantial swing in the external value of the rand. the reserve bank would obviously prefer to have greater exchange rate stability, but as already indicated fluctuations in the exchange rate of the rand seems unavoidable. the bank can only create an environment that favours exchange rate stability. one of the most important recent developments in this regard has been the improvement in the net open foreign currency position of the reserve bank. the oversold foreign currency position of the bank has always been perceived as a source of exchange rate weakness and instability. the bank's objective was therefore to eliminate this oversold position, which stood at us $ 23, 2 billion at the end of september 1998. during the past year this objective was finally achieved in may. at the end of october a positive net open foreign currency position of us $ 2, 7 billion was recorded. having removed this perceived vulnerability, the price discovery process in the market for foreign exchange should now display a better two - way trading pattern. in an attempt to further improve the functioning of the south african market for foreign exchange, the bank has shifted its focus to reducing its oversold forward book and to strengthening the official foreign exchange reserve position. considerable success has been achieved in bringing the oversold forward book down to lower levels. the balance on the oversold forward book stood at us $ 2, 3 billion at the end of october 2003, compared with us $ 6, 9 billion at the end of december 2002. in the mean time, the official foreign exchange reserve position was also increased to a level of us $ 7, 8 billion at the end of october 2003. 6. conclusion these improvements in the functioning of the foreign exchange market and the lower inflation rate should at least provide a basis for more stability in the value of the rand. however, | . domestic final demand increased at a rate of 4 per cent in the first nine months of 2003 compared with the same period in the preceding year. this continued high growth in domestic final demand was the result of increases in consumption as well as fixed capital formation. the growth in real final consumption expenditure by households also remained strong throughout 2003. the sustained high growth in private consumption expenditure was underscored by a rise in real personal disposable income owing to recent salary and wage increases, a reduction in income tax rates and more recently the decrease in interest rates. to supplement the growth in their disposable income, households became more willing to incur debt. consequently, households debt as a percentage of disposable income rose somewhat from 51 per cent in the fourth quarter of 2002 to 53 per cent in the third quarter of 2003. this level is still low compared to those of many other countries. the strong domestic demand was also supported by growth in real final consumption expenditure by general government at an annualised rate of about 4 per cent in the first three quarters of 2003. this was mainly due to government purchases of goods and services, while real spending on salary and wages of government employees was rather restrained. expenditure on real gross fixed investment continued to be buoyant throughout the first nine months of 2003. private business enterprises as well as the public sector increased their fixed capital outlays. the government and public corporations increased their capital expenditure on infrastructure expansion aimed at service delivery, while private business appeared to be making the most of conditions that favour expenditure on capital goods. such conditions included an exchange rate conducive to importing goods, a lowering in the cost of borrowing, rising prices in international commodity markets and considerably more stability on the inflation front. the strong domestic final demand was unable to prevent a decline in manufacturing output. having increased robustly in the first half of 2002, real manufacturing output started to grow at a slower rate in the second half of that year and then declined in the first nine months of 2003. this was mainly a reflection of lacklustre global growth trends and the recovery in the exchange rate of the rand. most of the subsectors of manufacturing were affected by a low demand for exports and increased imports as a greater proportion of domestic demand was met by competitively priced imports. as could be expected, this had a marked effect on employment. 4. inflation and monetary policy the inflation outlook improved significantly during 2003. the twelve - month cpix inflation fell from | 1 |
the quality of customer relation arrangements. sanctions are of course an essential deterrence tool, and ( again, differently from prudential supervision ) may be complemented by the power to impose the reimbursement of sums unduly charged ( which directly favor damaged consumers, differently from sanctions ). product intervention powers may further enrich the supervisory toolbox, preventing harmful products from being distributed. in addition to public enforcement, effective customer protection may also be based on private enforcement tools. complaint management, and effective alternative dispute resolution ( adr ) schemes enabling customers to seek redress, represent relevant tools. public authorities may have a role in establishing, or at least promoting, adr schemes for the financial system. last but not least, financial education programs may obviously complement regulation and enforcement in ensuring effective consumer protection. overall, the work of finconet over these years has become extremely relevant in supporting the comparison and evaluation of supervisory instruments, the dissemination of good practices, the analyses of critical issues, the formulation of policy proposals. the bank of italy has also devoted a great effort to the development of a comprehensive consumer protection framework in the italian banking system. in 2009 we established a banking ombudsman. in 2014, we established a new directorate responsible for business conduct supervision and in charge of financial education initiatives. since then, we have issued several guidelines for financial intermediaries ; the ombudsman scheme has given solutions to a very large number of complaints filed by customers ; banks and other financial intermediaries reimbursed over β¬ 300 million to customers ; our financial education activities reach more than 100. 000 students every year. however, despite the steps taken so far, we are aware that we are still in the β early age β of business conduct supervision. that is why finconet meetings are important : we believe that comparing practices, sharing knowledge and experiences are essential to ensure financial consumer protection. the agenda of this two days meeting is very rich. you will be able to analyze and exchange views on several relevant issues : the tools available and their effectiveness, the evolving context in your respective jurisdictions, the use of new technology in market conduct supervision. new technologies in the financial system challenge regulators and supervisors, they open up new streams of products and services in a fast - changing market. the rise of β open banking β and the increased accessibility of bank accounts by third parties represent the most visible innovations in this field and are already contributing to reshaping the financial landscape. conduct supervisors | jean - claude trichet : the new eu member states - convergence and stability concluding remarks by mr jean - claude trichet, president of the european central bank, at the third ecb central bank conference on β the new eu member states : convergence and stability β, frankfurt, 22 october 2004. * * * ladies and gentlemen, it is my honour and pleasure to draw some conclusions at the end of the third ecb central banking conference on β the new member states : convergence and stability β. i hope that you found the last two days inspiring and stimulating. the road from eu enlargement to the euro is indeed a fascinating challenge for policy makers, academics and economic agents. during these two days we engaged into in - depth discussions about the past, present and future paths of the new member states joining the european monetary union and the challenges that these countries are confronted with. let me briefly elaborate on the main arguments and issues that were raised at the conference. i would then also like to take the opportunity to share with you the ecb β s view about the main challenges for the new member states on their way to the euro. in his presentation, gerard roland raised some key institutional and structural questions concerning the enlargement of the european union. first, how have institutions of the new member states changed during the last decade? second, what role has the european union played during the transition phase and finally how will eu enlargement affect the functioning of the eu - 25 in the future? as expected, institutions matter. the idea of the european union acting as an β external anchor β for most of the new member states has played a major role and incentives to meet the entry conditions set by the eu have worked well for the new member states. according to many indicators which gerard roland presented yesterday the new member states β performances have been good ; for example, price and trade liberalisation have been fully adopted, competition policy has been successful and most importantly individuals live in democratic societies. this success can also be seen in how these countries have adopted and implemented the acquis communautaire. taking stock of the progress made so far the paper stresses that more work still needs to be done. reforms and progress especially in the banking and other financial sectors should be continued to create a solid and sustainable base for the economies of the new member states, which can also be seen as important requirements for joining the euro area. i agree with discussants that the new member states will be active and will contribute | 0 |
gent sejko : bank of albania's achievements in 2022 and challenges for 2023 address by mr gent sejko, governor of the bank of albania, at the end - of - year meeting with journalists, analysts and media representatives and the governor's award ceremony, tirana, 20 december 2022. * * * dear ladies and gentlemen, i feel honoured and privileged to welcome in the historical hall of the bank of albania, media representatives and talented students who are brave in competing for " governor's award for the best diploma theses ". in the last year event, i emphasised that we experienced an unusual 3 - year period, with the hope that 2022 would be different, more vivid and more optimistic. nevertheless, the end of 2022 is proving a really challenging one, mainly due to the huge shock on commodity prices of energy, oil and gas, in particular. the increased prices - mainly engendered from the outbreak of the russia's war in ukraine - has generated strong inflationary pressures worldwide, triggering a difficult time for consumption and economic growth globally. albania is facing the same challenges as well. in november, inflation stood at 7. 9 %, somewhat lower than in the previous month, though a high level which is the main threat to both the macroeconomic stability and to the sustainable and long - term growth of albania. in this context, i would like to point out that the latest forecasts at the bank of albania show that inflation is expected to progressively reduce during 2023, and return to target in the middle of 2024. in view of an increased inflationary pressures environment, we have embarked on a gradual process of monetary policy normalisation, aimed at timely returning inflation to the target and at a rather low costs to the economic activity. nevertheless, the sound balance sheets of households and enterprises, the further expanded albanian exports, and the decreased uncertainty in response to the expected reduced inflation will continue to feed the economic growth, in turn the latter is expected to remain in positive territory. the sound position of banking system is an added guarantee for the expansion of the economic activity. the healthy and liquid financial balance sheets of the banking sector guarantee that the latter will continue to funding the albanian households and enterprises, by supporting the expansion of both consumption and investments as well as meeting the temporary needs for liquidity. the coverage and transmission in an objective manner of news to public is an important factor in meeting our objectives for a stable economic and financial environment | ardian fullani : cooperation in the field of banking supervision in albania speech by mr ardian fullani, governor of the bank of albania, on the occasion of the signing of the agreement on the field of banking supervision between the bank of albania and the banking and payments authority of kosova, prishtina, 11 july 2005. * * * i would like to take the opportunity from this occasion of the signing of the agreement on the banking supervision to say that i really feel excited for being here in prishtina today. it is my first visit since i took over the position as governor of the bank of albania and i would like to assure you that it will not be the last one. there are many reasons that pushed me to make this commitment today in front of you, and among them, i would like to focus on the necessity that our two institutions, the banking and payments authority of kosova and the bank of albania should raise the level of cooperation and reciprocal assistance. during this last period, i have personally attended meetings not only at the central banks of our region, but i have also met with high representatives of the interested international institutions. i have found everywhere an atmosphere of understanding and support, particularly with regard to the initiative for a greater cooperation between the region β s central banks. i would like to focus a bit more on this point, as i am of the opinion that it represents one of the relevant directions to which we should pay more attention in the future. the agreement that we signed today is a supporting evidence in this direction and based on the conversations i had with mr. svetchine, the unmic officials and with mr. kosumi, i can say that they have shown their goodwill and commitment as regards cooperation in this field. more specifically, we have established contacts with all the central banks of the region, up to the high levels of representation and i have realized that in every case they have expressed their readiness to further intensify the regional cooperation in this context. on the other hand, in the contacts with relevant international organizations such as the european commission, world bank, as well as the european central bank and many of the members of the european system of central banks, i have widely discussed this issue and i have found their total support in relation to the specific problems that characterize the economic and financial development of our region. at present, there exist many opportunities that we should use in a wise manner, since a collective action from our part | 0.5 |
of the then prevailing exchange rate system and the crawling band regime to sustain themselves. immediately after the float, the market experienced some volatility as is usually expected. however, this volatility has been contained overall since then. this, not only brought confidence to the market, as evidenced by increased foreign exchange inflows, but also allowed greater flexibility and market opportunities to foreign exchange dealers of commercial banks. subsequent to the float, the central bank became a net buyer of foreign exchange from the market, in sharp contrast to its experience in the period prior to that. our objective with regard to the foreign exchange market is to ensure an orderly adjustment of the exchange rate, without excessive volatility. such adjustment should reflect the emerging economic fundamentals of the country. we should ensure that demand and supply mismatches are addressed on time so that there is no excessive volatility in the exchange rate. turning to the theme of this year β s conference, i. e. β is it time for a common currency in the saarc region? β, i believe that it would give rise to much interesting and thought provoking discussion and debate. we know that the saarc was established in 1985, with the objective to provide a platform for the peoples of south asia to work together in a spirit of solidarity, trust and understanding. it aims at accelerating the process of economic and social development of member countries. i believe the considerations of the timeliness to introduce a common currency for the region will be supportive towards the objectives and aims of saarc as well. while taking note that deliberations such as these would definitely lay the foundation for future developments in the saarc region, i take great pleasure in inaugurating this conference today and wish you all success with the conference. and i would also like to urge you to take a little time off to visit some places of interest, while you are in this beautiful country, sri lanka. thank you. | industry loses its reputation, it is difficult to regain the same irrespective of whatever is being done by some genuine microfinance practitioners. the damage to the industry is done by some β black sheep β who are not controllable by other genuine performers. in this manner, the quick returns are earned by β ill - willed β practitioners, but the social cost has to be borne by the entire industry. hence, the major challenge faced by microfinance industry today is to save itself from the spurious micro - financiers. who is a poor person? the poor are normally defined by reference to income level or calorie intake or the level of opportunities available. all these definitions represent some aspects of the poor which are important. yet, they do not accurately depict the real nature of the poor. a poor person is a person who is unable to assess the risks faced by him and take the required mitigating measures to avoid them. the risk factor is more suitable to identify the poor, because the poor have to operate in a market which is full of risks. if he can successfully wade through the risks, he could succeed in the market as well. if he fails, he would remain a poor forever having to depend on outside help. greed is the killer not many in a society would be able to correctly assess the risks faced by them. if they are unable to assess the risks, then, they cannot expect to take risk mitigating measures as well. many reasons can be adduced to this general failure of individuals to assess risks appropriately. they may not have been taught to assess risks. or, their risks would have been assumed by others, chiefly the government, and as a result, the moral hazard behaviour would have prompted them to take unnecessary risks. even when they are educated and there are no opportunities for moral hazard practices, they may still take risks purely guided by their extreme greed. when the greed overtakes the rational mind, the individual may be blind to what he would get if the scheme fails. people belonging to both rich and poor categories fall into this last category. it is these people who normally fall easy prey to cunning tricksters who are planning to strip them of their wealth by making false promises. all that is necessary is to arouse, by means of a well - orchestrated marketing plan, their greed. the spurious micro - financiers use person to person contact method to outreach potential victims and lure them to leave their | 0.5 |
fabrizio saccomanni : managing international financial stability edited text of remarks by mr fabrizio saccomanni, director general of the bank of italy, at a meeting at the peterson institute for international economics, washington dc, 11 december 2008. * * * i am delighted to be here at the peterson institute to present my views on international financial instability before such a distinguished audience of eminent scholars and officials, among which i am fortunate to count many old friends. this is my first visit to the institute since i was invited to join its advisory committee and i would like to express my gratitude to fred bergsten for the invitation. i am honoured to participate in this important body of the institute and i look forward to contributing to its activity in the promotion of policy β oriented research in the field of international economics. instability in the age of globalization international financial instability is a subject that has fascinated and intrigued me since when i was a young economist at the imf and witnessed with considerable anxiety the collapse of the bretton woods system on august 15, 1971. the ensuing decade of instability was mostly attributable to the shock of the downward floating of the dollar and the resulting two oilshocks of 1974 and 1979. after some unsuccessful attempts to rebuild bretton woods, the negotiations for the reform of the international monetary system ended in 1976 with the legalization of freely floating exchange rates and that seemed sufficient to fix the problem. a tired us treasury secretary, william simon, commented : β all is well that ends β. at the beginning of the 1980s, following the process of liberalization, deregulation and privatisation set in motion by margaret thatcher and ronald reagan, it was widely expected that full international capital mobility would interact with floating exchange rates to ensure adjustment of balance of payments disequilibria and a stable financial environment. instead, these new conditions paved the way for the emergence of a global financial system in which financial innovation and the ict revolution combined to produce an extraordinary expansion of financial sectors and markets compared with the real sector in both industrialized and emerging countries. the seeds of instability were thus planted on fertile soil. indeed since the 1980s financial disturbances have occurred with increased frequency and intensity and have entailed major international repercussions. i will not review here the long list of debt crises, currency misalignments, illiquidity in credit markets, asset price bubbles, that have characterized the age of globalization, a subject to which i have devoted considerable attention | ca'foscari university of venice department of economics in praise of popularization lectio magistralis by the senior deputy governor of the bank of italy and president of the italian insurance supervisory authority ( ivass ) salvatore rossi venice, 5 october 2018 introduction this lecture stems from a reflection on the way in which we β all of us β form our opinions and make decisions. the question has many aspects, but here we will deal with one in particular : the information that we consume and the sources from which we gather it. this is a crucial aspect. opinions and decisions are, of course, shaped by cognitive processes and inspired by religious or political persuasions, but the information that we use is their main sustenance. combined with our pre - conceptions, they lead us to think one thing or another, and to decide accordingly. and yet, at this historical juncture, western democracies appear to have a problem regarding the quality of the information that is made available to the public. a lot of this information, it is said, is false or misleading, either through ignorance, superficiality or malice on the part of those who produce it. the fake news phenomenon is part of this debate. of course, italy is not exempt from this problem. on the contrary, it is one of its main laboratories. the thesis of this lecture is that nowadays serious manufacturers of information, and scholars in particular, have what has become an impelling and absolute duty to disseminate their knowledge. this should be their main concern. in all fields. before it is too late. especially here in italy. especially when it comes to economics. the high priests of knowledge versus democracy fantastical stories and tall tales have always circulated widely among human beings, at all times and in all places. a defining feature of the modern era was the emergence and diffusion of galilean science, according to which all claims must be subjected to careful empirical scrutiny and there are no absolute dogmas ; put simply, we should not believe in fairy tales. modern science, regardless of whether it is engaged in sending a rocket to the moon or in improving economic welfare, can sometimes be hesitant and imprecise, but it is the best that humanity can offer to draw closer to natural truths. it feeds on skills and talents, it seeks first and foremost to convince the rest of the scientific community of the validity of its findings ( even at a long remove ), it assigns no role to religions, political id | 0.5 |
of the total ; β’ more than 700 eu companies use hong kong as regional headquarters or regional offices ; β’ the eu is the 2nd largest source of visitors and 4th largest source of tourist earnings for hong kong ; β’ there are over 50 licensed banks and other authorized institutions in hong kong from the eu countries, the largest concentration in asia. clearly, what happens in the eu matters to hong kong. what therefore will be the impact of the euro on the participating countries? there should certainly be a number of economic benefits, including in particular : β’ a huge increase in transparency from the single currency which will make it easier to compare prices across national frontiers. this will boost competition, bring down costs and prices, and improve efficiency ; β’ a reduction in transaction costs, in particular from the elimination of foreign exchange commissions. this will encourage trade and cross - border investment flows ; β’ lower interest rates in individual countries from the elimination from the foreign exchange risk premium. this will reduce financing costs and stimulate investment and output ; β’ the development of larger and more liquid debt and stock markets across the euro zone. this will create a vast new pool of capital for companies, thus giving a further stimulus to investment ; β’ tighter fiscal discipline on the member countries under the stability and growth pact and monetary discipline exercised by the new european central bank. both these should ease inflationary expectations and produce a more stable financial environment for the euro zone. in summary, the single currency should be able to deliver higher economic growth and therefore increased demand for imports by the euro countries. as one of the eu β s major trading partners, this should benefit hong kong. hong kong may also be able to take advantage of the increased flow of funds for global investment which may be forthcoming from a greatly enlarged european capital market. furthermore, to the extent that an offshore euro market develops, hong kong would be an obvious location for this in asia. this reflects the existing large presence of european banks in hong kong and our role as a bridge between europe and mainland china. finally, hong kong is one of the world β s largest holders of foreign exchange reserves and the euro will provide interesting opportunities for diversification of our portfolio. of course, the advent of the single currency also brings with it certain risks. the discipline imposed by the single currency will not always be comfortable, particularly when the business cycles diverge in different member countries. this could set up tensions which could at worst lead to a break - up of monetary union or at least undermine confidence in the euro. the | the currency of a payment obligation should be determined by the law of the country of that currency. this means for example that a payment obligation payable in french francs would become payable in euros after the introduction of the euro because that is the situation that applies under the law of france. however, despite this general principle, concerns have been expressed that parties to contracts might argue that the introduction of the euro represented a fundamental change of circumstances, bringing the contract to an end or requiring its terms to be adjusted. in addition, another feature of the introduction of the euro is that it will replace the ecu at a rate of one for one on 1 january 1999. the ecu is a currency basket but not a currency in its own right. the β lex monetae β principle does not apply in this case and therefore the euro will not automatically substitute for the ecu in contracts. it is to remove uncertainty on these points that we have decided to legislate. we believe that this is appropriate for an international financial centre such as hong kong. the financial and legal community in hong kong strongly supports this view. this is just one specific example of how hong kong is affected by the introduction of the euro. there will undoubtedly be more far - reaching effects on our economy and our financial system as the single currency takes root. this is why this seminar is timely and important. i hope that you will find it enjoyable and useful. | 1 |
growth, and the low level of interest rates. moreover, the recent unwinding of uncertainties associated with geopolitical tensions should contribute to an economic recovery. such an assessment also seems to be reflected in recent financial market reactions. since the end of the war in iraq, financial market volatility has declined significantly, with a notable increase in stock prices. nevertheless, there continue to be downside risks. first, there are the risks originating from the past accumulation of macroeconomic imbalances outside the euro area, and lately concerns have arisen with regard to the sars virus. moreover, there is also some uncertainty over the extent of the adjustment still needed in the euro area corporate sector in order to enhance productivity and profitability, which could have an impact on employment growth and thus private consumption. as regards price developments, the annual rate of hicp inflation generally fluctuated at around 2. 3 - 2. 4 % between the autumn of last year and march 2003. broadly speaking, declining inflation rates in services and non - energy industrial goods have been offset by rising rates in energy and processed food prices. conversely, in april energy prices are expected to reflect the decline in oil prices following the developments in iraq. this expectation is in line with eurostat β s flash estimate for the inflation rate in april, which was 2. 1 %, i. e. 0. 3 percentage point lower than in march. looking ahead, current indications do not point to further strong declines in the inflation rate in the immediate future, but lower oil prices, an environment of moderate economic growth and, of course, the effects of the significantly higher exchange rate of the euro should all contribute to reducing inflationary pressure beyond the short term. the outlook for inflation will also depend to a significant extent on wage developments. the available indicators suggest that labour cost growth has shown signs of stabilising in the course of 2002. moderate wage trends are indeed crucial both to maintain price stability and to foster employment growth. in the context of our monetary analysis, focusing on the medium to long term, the broad monetary aggregate m3 has now been growing strongly over a protracted period. moreover, the data for more recent months do not suggest that a process of correction has started. as a consequence, the euro area economy continued to accumulate liquidity significantly above the amount needed to sustain non - inflationary growth. the strong monetary expansion contrasted with the more moderate growth in loans to the private sector. this is consistent with our assessment that | ##r and more sustainable economy. by making it easier for investors to seek out sustainable investment opportunities across europe, deep and liquid capital markets could help mobilise the funds needed to finance the transition to a low - carbon economy. it is not only the quantity and availability of private capital that matters for this transformation, but also its quality. ecb research shows, for instance, that equity finance seems to be more effective than debt finance in reallocating investment towards relatively greener sectors. equity investors, who tend to have a longer investment horizon and a greater appetite for high - risk high - return projects might be better placed to finance environmentally sustainable innovation than banks. by supporting the development of equity financing, the cmu could facilitate the funding and adoption of carbon - efficient technologies. but the positive feedback between cmu and sustainable finance works both ways. to the extent that the ongoing eu policy initiatives are successful in removing the current obstacles to the development of a cross - border market for sustainable financial products, these actions could also be instrumental in advancing growth in this segment of the capital markets. this, in turn, could support financial integration in the eu and strengthen europe β s role as a global hub for sustainable finance. conclusion developing private equity markets and supporting efforts towards a greener economy are very much on the minds of decision - makers, and we welcome the work of the various groups and forums that contribute to these debates. in particular, we look forward to the recommendations of the high level forum on cmu set up by the commission. we trust these will play an important role in shaping the commission β s new set of cmu measures for the benefit of the european citizens. [ 1 ] hartmann, p., heider, f., papaioannou, e. and lo duca, m. ( 2007 ), the role of financial markets and innovation in productivity and growth in europe, occasional paper series, no 72, ecb, september ; davis, j. ( 2015 ), capital markets and job creation in the 21st century, center for effective public management at brookings paper, december. [ 2 ] see rebranding capital markets union β a market finance action plan, report by the ceps - ecmi task force of june 2019. [ 3 ] see speech by luis de guindos, vice - president of the ecb, at the suerf / de nederlandsche bank conference β forging a new future between the uk and the eu β, amsterdam | 0.5 |
of written - off facilities in the published financial statements of banks. page | 3 we reviewed the governing legislations on the credit reference system to require banks to submit both positive and adverse information on borrowers to the bureaus through a new portal that has been developed. the bog also worked on the collateral registry system to address some outstanding issues with foreclosure. we are also supportive of government efforts to enhance clarity in the land acquisition process which transmits into the collateral perfection processes for banks. in addition, we are hopeful that the introduction of the ghana reference rate, ghana post gps and the national identification program would contribute to the ongoing measures aimed at reducing the incidence of loan defaults. mr. chairman, to fight financial crime means we needed to invest and strengthen our aml / cft regime by increasing the scope of aml risk - based supervision and collaborate with the financial intelligent centre ( fic ), economic and organized crime office ( eoco ) and other law enforcement agencies to enforce the aml / cft regulations. as we work closely with these agencies, the emerging area of crime that threatens the very existence of financial institutions is cybercrime. cyber criminals have managed to bypass security controls and to exploit breaches or vulnerabilities within the cyber and information security defenses of financial systems. in this regard, the central bank issued a draft directive on cyber and information security to the banking industry. page | 4 mr. chairman, we also issued the final directive of the capital requirement directive ( crd ) which addresses pillar one ( 1 ) of basel ii / iii capital regime. the pillar ii of the basel accord is expected to strengthen the supervisory review process. this would involve the internal capital adequacy assessment process ( icaap ) allowing banks to undertake an assessment of the capital commensurate with all their risk exposures. we are also driving the disclosure requirements in conformity with pillar iii of the basel accord to enhance appropriate information flow to market participants. the process of fully operationalising the bsdi act, 2016 ( act 930 ), is in progress and will continually reviewing the existing directives and regulations to align them with the act. in line with this, we issued the β fit and proper β directive, financial holding companies and the mergers and acquisitions directive. the central bank has adopted the accounting standard on financial instruments ( ifrs 9 ) since january this year. ifrs 9 requires banks to implement the expected credit loss model for the banking industry. though | keynote address on the futuristic economy : technology - driven future of business & governance for economic transformation by dr. ernest addison governor, bank of ghana may 20 - 21, 2019 kempinski gold coast hotel accra, ghana mr. chairman, his excellency the vice president, chiefs, invited guests, distinguished ladies and gentlemen. let me thank organisers of this ghana ceo summit for creating such a unique platform where over 400 ceos gather at one place to discuss issues of relevance to the businesses and the economy in general. mr. chairman, we at the bog start a 3 - day mpc meeting this week which we will review developments on the economy and take a decision on where to place the policy rate. i will therefore not discuss monetary policy today. however, as you all know, in the last two years, we addressed serious lapses in governance and weaknesses in the operational efficiency of some banks. the systemic nature of the infractions put several depositors β funds at risk and weakened public trust in the industry. we therefore took the challenge, daunting as it was, to clean the financial sector and safeguard the solvency and stability of the banking system in particular, and the financial system as whole, given the interconnectedness of the banks and other specialized deposit institutions. page | 2 the comprehensive set of reforms we undertook were tough but necessary. over the period, we have recapitalised the banks and implemented several regulatory reforms to underpin the stability and soundness of the banking sector. we now have a well - capitalized, liquid, solvent and resilient banking sector to effectively execute its core mandate of financial intermediation within a stable economic environment. given this platform, permit me to enumerate some of the reforms that have been implemented to safeguard the stability of the financial sector. these reforms are aimed at ensuring the safety and soundness of individual banks, aligning macro - and micro - prudential risks to bank capital and addressing cross - sectoral and cross - border risks to the industry. in order to address the overall risks of the industry, and to properly risk - profile individual banks, we revised the current risk based supervision framework to take account of the current developments in the global banking environment. as part of efforts to reduce the level of impaired assets, we have required that banks help to clean up their books and remove the structural challenges that undermine the effective credit delivery process. we have enforced our directive on loan write - off and require appropriate disclosure | 1 |
regional office of the banks and subsequently in the recognized clusters. in case of micro and small enterprises simplified procedure of loan application / sanction should be followed, score based lending be done up to rs 2 crores, working capital limits be given by projected turnover method, and term loans be sanctioned as recommended above to prevent the burden of data collection, project report / projections preparation for msmes. the disposal of applications should be done in a time bound manner, which should be within the overall time limit prescribed by rbi. all banks should tap the available technology and set up central registration of loan applications. the same set up can be used by the borrower for tracking of the status of application on the internet on the basis of the receipt issued to him. the borrower may also be provided option of tracking his application over telephone on the toll - free helpline. the same technological setup may also be used for making online applications. online applications may be popularized and publicized by all branches. lack of adequate capacity is the key feature, as regards micro, small and medium enterprises are concerned. in order to equip the msmes with the capacity to manage their businesses effectively and efficiently comprehensive guidance and training on setting up new units as well as providing continuous education on different aspects of successful management of existing business enterprises must be provided. while the rural self employment training institutes ( rsetis ) are working in this direction there is a need to examine the impact of rsetis. a scheme for utilizing ngos to provide training services to tiny micro enterprises could be encouraged. entrepreneurship development is important in view of its visible impact on wealth creation and employment generation. to facilitate and encourage this, skill building has been impressed upon by the prime minister β s task force for msmes. enterprise development centres ( edc ) should be set up by the central / state governments with incubators to provide training not just for setting up of new units but also to provide continuing education on different aspects like product design, packaging, technology upgradation, financial management and marketing. role of associations all slbc convenor banks have been to review their institutional arrangements for delivering credit to the msme sector, especially in 388 clusters identified by united nations industrial development organisation ( unido ) spread over 21 states in various parts of the country. the central bank of india has presence in 47 clusters identified by unido and these branches have been designated as specialised msme branch. the msme associations / chambers may bring to the notice of sl | disadvantage faced by many developing countries while making efforts to improve the gdp in per capita terms. however, with the emergence of skills and knowledge as new engines of economic growth, higher population growth is more of an opportunity than a constraint. according to census 2011, 56. 9 per cent of india β s total population belongs to the age group 15 β 59 years. importantly, only 7. 5 per cent of the population belongs to the age category β 60 years and above β. this shows that india is yet to experience the problem of aging. further, it is predicted that india will see a sharp decline in the dependency ratio over the next thirty years, which will be a major demographic dividend for india. moreover, it is estimated that not only india β s demographic trend would remain favourable for the next three decades but also remain better than other bric economies. we have to, however, realise that these advantages will not transform on its own to higher economic growth. in this regard, appropriate interventions would be required to reap maximum benefits from this favourable demographic dividend by investing in education and skill development. in the union budget for 2011 β 12, indian government has allocated rs. 52, 057 crore for the education sector, which is 24 per cent higher than the 2010 β 11 education expenditure. however, expenditure on education as per cent of gdp is relatively low in india when compared with some of the developed nations as also with some developing countries ( table ). among the g - 20 countries, india not only has lowest educational indicators, but the public education system is also poor when compared with other bric countries and some of the emerging market economies. in 2009, world bank expressed the view that acute shortage of skills especially in the area of civil engineering shadows the growth prospects of the indian economy. according to prime minister dr. manmohan singh, β around 10 per cent of the relevant age group is enrolled in any institute of higher education as compared to 40 to 50 per cent in most developed countries β. banks play a facilitating and enabling role in this endeavour by extending education loans and they have a great responsibility to ensure that no deserving student is denied an education loan. however, just providing education loan is not sufficient. industry and bankers would have to work together to ensure that the employability of such students is high and that the people with the right type of education and skills are available for the industry. table : expenditure on education country switzerland united states france uk malaysia mexico spending on education as | 0.5 |
that can attract long term private investment. the bou has also taken the lead in championing financial inclusion which entails spreading access to financial services to those who currently are not served by financial institutions. finance trust bank is expected to make a very important contribution to the promotion of financial inclusion given the nature of its customer base. i would also like to mention that, through the uganda bankers association, the commercial banks have put in place financial literacy campaigns aimed at educating the public about financial services. these campaigns augment the bou β s financial inclusion efforts. bis central bankers β speeches on the regulatory front, your excellency assented to the anti - money laundering act last year. this legislation is essential to our efforts to combat money laundering, the effects of which on our economy and society are pernicious. in addition, legislation is in the pipeline to provide a regulatory framework for islamic financial services and banc assurance. the east african payments system went live last year and this enables financial institutions to speed up settlement of cross border transactions and to support the growth of trade in the east african community. with these remarks allow me to once again extend my heartfelt congratulations to finance trust bank for the successful transition to a commercial bank. thank you very much for listening to me. bis central bankers β speeches | while 3 % and 2 % were borrowing from mdis and saccos respectively. financial inclusion is a central theme for all of us because most of those in poverty do not have access to financial services as already mentioned. poverty alleviation is a top priority for the uganda government and financial inclusion is an essential component of the country β s poverty alleviation strategy. it is our hope that greater financial inclusion will ultimately reduce poverty and inequality. this conference is, therefore, timely for amfiu to regroup and discuss a contemporary issue of financial inclusion. i, therefore, thank the management of amfiu for facilitating this conference. ladies and gentlemen, allow me to delve deeper into the pertinent issues which must be taken into account by all financial service providers in order to foster financial inclusion. bis central bankers β speeches assuring savers of the safety of their member - savings. β the lack of such assurance can be a great source of suffering to savers whenever there is collapse of any service provider. this is mostly pronounced among the many semi - formal and informal service providers like saccos and community groups. prudential regulation and other safety nets for service providers should always be in place to reduce on this risk. in that way, the country will be able to attract more savers into formal institutions. reducing lending risk and risk perceptions inherent in lending to key productive sectors particularly agriculture and smes. β while agriculture forms the backbone of the ugandan economy and provides employment to the majority of ugandans, there is little evidence that credit is churned into this sector in adequate proportions. exclusion of agriculture in lending is indeed exclusion of many people especially in uganda. it is therefore crucial that service providers should design financial products suited for the agricultural sector, i. e. reasonable priced credit facilities and agriculture insurance. innovation allows financial products and services to be customised to those who need it and it is crucial for creating a diversity of solutions to financial inclusion. the bank of uganda is currently implementing an agricultural credit facility set up by the government of uganda in partnership with commercial banks ; uganda development bank ltd, micro deposit taking institutions and credit institutions. the facility is for the purpose of providing medium / long term loans to agricultural loans to agricultural sector. however, no single mdi has participated in the scheme as the bulk of their clientele are small scale farmers requiring loans of a short term nature. expanding outreach β the cost of locating a financial institution branch in a rural set up where the road | 0.5 |
than changing interest rates. indeed there are at least two situations where the use of capital controls and limits on gearing might not be a very effective means of maintaining financial stability, namely if either : 1. the link between an institution β s leverage and its robustness to real ( or imagined ) risks to the value of its assets were very weak..... or... 2. there were great sensitivity of the overall cost of funding to changes in equity capital β so that requiring an institution to hold much more capital came at a very high price. if either of these things were true it would strengthen the case for using monetary policy directly to help preserve financial stability. but i think there is strong evidence that neither of these things are very likely. the only reason why a financial firm β s leverage ( the ratio of assets to equity capital ) would be irrelevant to robustness is if that equity were not truly loss - absorbing or if it was already so large relative to assets that the chances of losses being that great becomes virtually zero. but in fact bank equity capital that is truly loss absorbing has been 10 % or less for most banks, and generally a great deal less. that is certainly not so high that chances of losses this big are of negligible probability. value - at - risk ( var ) models might have suggested otherwise. but those models have weaknesses that reflect the difficulty of accurately assessing risks. assessing the probabilities of losses on bank assets is not easy. many bank assets are not marketable β or only became so a few years before the crisis. and where prices do exist, using their recent volatility and assuming price changes follow a normal distribution is unlikely to be reliable. yet that is what most var models do ( or at least did ). we do have long runs of data on total incomes for economies β that is gdp. since the value of bank assets β most of which are loans β ultimately depends upon the incomes of households and companies, variability in gdp is at least some guide to variability in their true value. analysing changes in annual gdp for a large sample of countries over long periods reveals two characteristics : changes in annual gdp do not follow a normal distribution ( they have much bigger chances of extreme movements ) and the chances of big falls are much greater than the chances of big rises ( there is clear downwards skew ). the table below shows the proportion of occasions when annual gdp fell by various amounts in one year 3. the sample is | struck by a trivial example of where a bad equilibrium path can lead on a recent visit to the us. i opened the mini bar in my hotel room to find it empty save for a small slip of paper. here is what it said : β a personal note to you.... we have made a renewing change to our heavenly guest rooms. our refreshment centers will no longer be pre - stocked. please be aware the refreshment center cooler is not intended as a refrigeration device β the empty - mini - bar equilibrium is not a good one. how do you get there? i think the story is this : mini - bar prices are high ; they are high because some people conveniently tend to forget how much they may have used their mini - bar when they come to pay the bill and that forgetfulness gets worse the higher are prices ; but then the mini bar prices need to be even higher as the forgetfulness seems to get worse. this vicious cycle ends up with mini bars that are empty save for a β personal note to you β. good economic policies can help prevent bad equilibria and reduce the chances of vicious circles. for banks, i believe the most direct way to do this is to prevent an initial ( limited ) fall in the value of assets triggering sharply higher concerns about their solvency. it seems to me the natural way to do that is to make sure they can withstand falls in asset values by having sufficient loss - absorbing capital rather than to expect monetary policy β moves in interest rates β to substantially reduce asset price variability, much of which might be warranted. the short - term nominal interest rate is a very blunt instrument to use to try to limit gearing of financial institutions. capital requirements, and explicit limits on gearing, are more direct means to control leverage. this is why i think the direction of the policy emerging from the basel iii process β which will put in place higher capital requirements on banks β is right. it is also why time - varying limits on gearing of financial firms β limits that might vary with asset prices and with the economic cycle β are likely to be useful in helping maintain financial stability. i believe that is a much more fruitful way forward than abandoning inflation targeting. but while i think this is plausible, the case is not proved. simply because they are a more direct means to control leverage does not prove that capital requirements or limits to gearing are a far more effective tool to preserve financial stability | 1 |
ravi menon : asia's digital transformation remarks by mr ravi menon, managing director of the monetary authority of singapore, at the gic institutional investors roundtable, singapore, 31 october 2018. * * * ladies and gentlemen, good morning. i thank gic for the invitation and am pleased to meet all of you. why fintech? about three - and - a - half years ago, the monetary authority of singapore ( mas ) made a momentous decision - to promote an innovative and dynamic financial sector by working with the industry to harness the power of technology. we saw that technology was transforming the way people live their lives, the way companies deliver products and services, and the way cities work and connect. meanwhile, the financial industry globally was facing the headwinds of slower economic growth, tighter regulation, and keen competition from non - financial technology players. technology presented an opportunity to inject new dynamism and new growth in financial services. it was an opportunity to increase efficiency in an industry that had some of the most archaic practices around β just think of interbank payments and settlements. it was an opportunity to manage risks better : financial institutions were pouring ever more resources into compliance and risk management β and still getting into trouble. most of all, it was an opportunity to improve people β s lives to bring financial services to the unbanked and uninsured in asia ; to help a growing middle class plan its finances more holistically and efficiently ; to help enterprises raise money, make payments, and tap new markets. in short : to maintain its position as one of the top financial centres in the world, singapore must embrace fintech β harnessing its benefits, managing its risks. thus began singapore β s fintech journey. and by fintech, i mean two things : encourage and support financial institutions to experiment and harness technology ; and promote non - financial fintech players to provide competition and inject innovation so that the ecosystem as a whole benefits. mas takes an even - handed approach, allowing competition between financial institutions and non - financial fintech players as well as facilitating collaboration among them. and of course, doing all this with a keen eye on managing the risks associated with technology β safeguarding financial stability and maintaining public confidence. mas and the financial industry are not doing this in a vacuum, but within the larger context of singapore β s smart nation agenda β to build a digital economy and society for higher productivity and more gracious living. asia β s digital transformation 1 / 4 | than their actual performance ( i. e. they are overconfident ). the cookie jar experiment18 asks people to estimate how many coins there are in a transparent cookie jar. when people do this independently, the accuracy of the average judgement rises with the number of estimates and is generally very close to the actual number of coins. but if people hear or see each other β s estimates, the mean can shift wildly up or down. this experiment has been completed across many different groups by age, sex, culture and so on, all giving the same result. the experiment highlights an important point ; better results are achieved through diversity and independent opinion. 4 / 7 bis central bankers'speeches as i have commented on in the past, we have reviewed a sample of diversity policies in regulated firms, which many financial services firms are now required to have ( under the crd, solvency ii and the central bank β s corporate governance codes ). in the main, they are striking for their lack of ambition. they should not just be about ticking the box from a compliance perspective β again, that question of β is it legal β arises. much more is needed to be done, and our supervisory efforts in this regard are going to increase. regulatory response the central bank continues to enhance its approach to behaviour and culture, including learning from international best practice. work has been undertaken in banks and insurance firms from a prudential perspective, and in the consumer area we have developed a framework for the assessment of culture in regulated entities. as has been well documented, this work will be expedited across the retail banks over the coming months, and be rolled out further after that. a variety of tools will be used to assess culture in regulated firms, including how boards and senior management are delivering against the good practices outlined earlier. these include considering : key risk indicators and triggers, for example ; staff turnover, and risk appetite breaches ; approach to staff incentivisation ; staff training ; onsite inspections ; staff surveys ; board and executive management meetings observation ; interviews across the organisation ; and product design, development and monitoring ( including how customers are incentivised ). this is not with the aim of delivering the impossible and frankly undesirable outcome of a standardised culture across all financial services firms, but of assessing the extent to which regulated firms are delivering the cultures they espouse and identifying improvements that reduce prudential and conduct risks. we expect institutions to critically evaluate their culture | 0 |
our 2 percent longer - run goal. conclusion in conclusion, monetary policy is having the desired effects on the economy and inflation. the future is inherently uncertain. as we work to achieve our dual mandate goals, we face two - sided risks. our decisions, as always, will be guided by the data, with our eyes squarely on our goals. 1 board of governors of the federal reserve system, statement on longer - run goals and monetary policy strategy, adopted effective january 24, 2012 ; as reaffirmed effective january 31, 2023. 2 john c. williams, a bedrock commitment to price stability, remarks at the 2022 u. s. hispanic chamber of commerce national conference, phoenix, arizona, october 3, 2022 ; john c. williams, peeling the inflation onion, remarks at the economic club of new york ( delivered via videoconference ), november 28, 2022. 3 federal reserve bank of new york, global supply chain pressure index. 4 ozge akinci, gianluca benigno, ruth cesar heymann, julian di giovanni, jan j. j. groen, lawrence lin, and adam i. noble, " the global supply side of inflationary 3 / 4 bis - central bankers'speeches pressures, " federal reserve bank of new york liberty street economics, january 28, 2022 ; and ozge akinci, gianluca benigno, hunter l. clark, william cross - bermingham, and ethan nourbash, " how much can gscpi improvements help reduce inflation?, " federal reserve bank of new york liberty street economics, february 22, 2023. 5 federal reserve bank of new york, households less optimistic about their financial situations, september 11, 2023. 6 john c. williams, a steady anchor in a stormy sea, remarks at snb - frb - bis high - level conference on global risk, uncertainty, and volatility, zurich, switzerland, november 9, 2022. 7 board of governors of the federal reserve system, federal reserve issues fomc statement, september 20, 2023. 4 / 4 bis - central bankers'speeches | john c williams : peeling the inflation onion, revisited remarks ( virtual ) by mr john c williams, president and chief executive officer of the federal reserve bank of new york, prepared for a regional visit to long island, 29 september 2023. * * * the federal reserve has two main monetary policy goals, often referred to as the " dual mandate " : maximum employment and price stability. as i will discuss in more detail, we are doing well on our maximum employment mandate, but we still have a ways to go to fully restore price stability. although inflation has come down from the peak reached last year, it is still too high. price stability is the bedrock upon which our economic prosperity and stability stands. the federal open market committee ( fomc ) has set a 2 percent longer - run goal for inflation and is committed to attaining that goal on a sustained basis. 1 before i go any further, i must give the standard fed disclaimer that the views i express today are mine alone and do not necessarily reflect those of the fomc or others in the federal reserve system. the inflation onion after peaking at just over 7 percent in june of last year, inflation is now 3 - 1 / 2 percent, based on the 12 - month percent change in the personal consumption expenditures price index. to understand why inflation rose so much and how it's coming back down, i find it useful to use the metaphor of an onion with various " layers " of inflation. 2 the outer layer of the onion consists of prices of globally traded commodities - lumber, steel, grains, and oil. the pandemic caused global demand for commodities to skyrocket. russia's war against ukraine set off a second sharp rise in commodity prices. since then, global demand has come into better balance with supply, and inflation in this layer has come down significantly. to give an idea of how big the swings in these inflation rates have been, food price inflation soared to over 10 percent and energy price inflation skyrocketed to over 40 percent in june of last year. over the past 12 months, as supply - demand imbalances receded, food price inflation dropped to about 3 percent, and, despite the recent rebound in oil and gasoline prices, energy prices have declined by about 3 - 1 / 2 percent. the middle layer of the onion is made up of goods like appliances, furniture, and cars. in the pandemic and its aftermath, demand for goods rose, supply - chain | 1 |
their nominal anchor currency. the euro also serves as a catalyst for economic reform. among other things, the adoption of a single currency means that member states participating in the euro area no longer have their own national currencies which they can devalue to protect inefficient industries in times of need. instead, other ways must be found to maintain competitiveness, both within the euro area and internationally. i believe it is no coincidence that policy - makers across europe are now focusing more than ever on how to overcome the economic rigidities which, in recent years, tended to hold europe back in terms of economic growth. ladies and gentlemen! but above all, the prime objective of the independent eurosystem is to guarantee price stability in the euro area. and this is what the eurosystem, now also including the bank of greece after greece has joined emu, has done. monetary policy decisions have been appropriate to the prevailing economic situation. the decisions of the governing council of the european central bank ( ecb ) have guaranteed internal price stability. with an average hicp increase of just 1. 1 % in 1999 and 2. 3 % from january to november 2000, the euro area has one of the lowest levels of inflation worldwide. during the last year, the emergence of external upward price pressures and the upswing of the euro area economy have generated some risks to price stability. in a preemptive manner, the governing council of the ecb has tightened monetary policy, thus helping to maintain the favorable conditions for sustained, non - inflationary growth with a positive impact on employment. over the medium term, there are still elements of upward risks to price stability which warrant close monitoring. financial markets have developed confidence in the eurosystem policies, as can be seen from the fact that long - term interest rates in the euro area have remained persistently at, or below, us levels. therefore, the independent eurosystem will stick, in a credible manner, both to its prime objective of safeguarding price stability and to its successful single monetary policy according to the specific needs of the euro area. this was clearly the case, when the governing council of the ecb did not take any action after the fed β s surprising interest rate cut by 50 basis points on january 3th, obviously expressing some concerns with a β soft landing β in the us. summing up, a lot of progress has already been made. in addition to low inflation, economic growth in the euro area has | robert holzmann governor oesterreichische nationalbank welcome remarks vienna, november 25, 2019 check against delivery! looking back on 30 years of transition β and looking 30 years ahead opening remarks conference on european economic integration ( ceei ) 2019 ladies and gentlemen, welcome to this year β s conference on european economic integration, the first in this oenb conference series that i have the honor to open in my capacity as the governor of the central bank of austria. let me particularly welcome β’ professor beata javorcik, chief economist of the european bank for reconstruction and development ( ebrd ) and β’ my central bank colleagues β’ vice - governor ana ivkovic, from serbia ; β’ governor jiri rusnok and deputy governor marek mora, my former student, from the czech republic ; β’ governor gent sejko, from albania ; β’ governor bostjan vasle and deputy governor primoz dolenc, from slovenia ; β’ governor boris vujcic, from croatia. this year β s conference on european economic integration ( ceei ) marks a very special occasion. exactly 30 years ago to this day, communist leaders in what was then czechoslovakia bowed to the pressure of hundreds of thousands of protesters in the streets led by former political prisoner and the country β s later president vaclav havel. yet, it was not just frustrated citizens during the velvet revolution in czechoslovakia who rose against political suppression and central planning, which had produced shoddy economic outcomes, but people throughout the entire former eastern bloc. as a result, the remarkable events of 1989 helped bring down the single most concrete β in every sense of the word β symbol of the 40 - year division of the european continent : the berlin wall. publisher and editor : oesterreichische nationalbank communications division editor in chief : christian gutlederer otto - wagner - platz 3, 1010 vienna, po box 61 in 1989, i was in warsaw, working with the international monetary fund ( imf ). i remember very well spending weeks on end in a room filled with cigar smoke in a lush but shabby hotel, calculating spreadsheets on the fiscal situation of poland together with a junior argentine colleague ( and later division head at the imf β s fiscal affairs department ). as a european, i had the advantage of having had better training on public finances than many of my american colleagues. nevertheless, this was not an easy task, given the lack of available data. but we managed | 0.5 |
. a particular cruelty of the pandemic has been its disproportionate effects on many areas that were already suffering. we will make our way back from this, but it will take time and work. some of the most valuable information we get from these discussions is how people are working to create growth. your feedback can be an invaluable example for other communities with similar challenges. the lordstown closure served as a reminder of how interconnected local economies can be, and other areas have experienced similar losses. your work on diversifying the economy, on skills development, on small business support programs, and in so many other areas can all serve as models for others to replicate. the path ahead is likely to be challenging. but given the opportunity, i β ll always bet on the american people and on the kind of community resolve and dedication we β re hearing about today. i β m looking forward to your insight and to hearing more about how you β ve been working to revitalize youngstown β s economy. thank you. 1 / 1 bis central bankers'speeches | that time implied erring on the side of offering more policy support β in practice, of doing more, rather than less, qe β in order to stave off the potential impact of risks that were viewed as heavily skewed to the downside. 3 this motivation was bolstered by fears about the effectiveness of monetary policy transmission as bank rate reached its effective lower bound, as well as potential downward rigidity in wage and price setting. 4 bank of england asymmetries in the structure of the economy, in policy transmission and in the distribution of shocks all served to justify β at least on occasion, for some mpc members β an offsetting asymmetry in setting the monetary policy stance. as the post - pandemic recovery became better established last year, these risks receded β and the need to maintain an β ultra - accommodative β stance receded with them. what β s more, the risks themselves became more symmetric, especially as bank rate moved away from its lower bound, and concerns about monetary policy transmission and downward nominal rigidities diminished. as a result, the case for β buying insurance β using monetary easing via qe fell away. by its nature, an asymmetric β risk management β approach to setting monetary policy designed to protect against skewed downside risk is inevitably somewhat over - stimulative should those downside risks not materialise. the challenge is then to manage the impact of this insurance premium, and ensure that it does not lead to departures of inflation from target. just to be clear, i don β t see this insurance premium as being an important driver of inflation β s rise above target over the past year. that rise follows from new shocks to the uk economy, which i will discuss in a moment. rather than in the form of inflation, the insurance premium to protect against downside risks through risk management has been paid in complicating what was anyway set to be a challenging process of monetary policy normalisation. by the autumn of 2021, the need to start tightening the monetary policy stance was becoming more evident as those new inflationary shocks mounted. that process was always likely to prove challenging. aside from the substantial communication and operational challenges involved, the very generous liquidity conditions established over more than a decade could have generated pockets of vulnerability in the financial sector, as the discipline on position - taking and balance sheet management imposed by liquidity constraints in normal times had been relaxed, at least for a | 0 |
k c chakrabarty : convergence of mobile banking, financial inclusion and consumer protection - trend remarks by dr k c chakrabarty, deputy governor of the reserve bank of india, at the financial consumer protection network ( finconet ) meeting, oecd headquarter, paris, 9 november 2011. * * * assistance provided by ms radha somakumar in preparation of this address is gratefully acknowledged. ms ursula menke, commissioner, financial consumer agency of canada and chair of the international financial consumer protection network ( finconet ), distinguished participants, ladies and gentlemen. 1. i thank the finconet for including a special session on financial inclusion, mobile banking and consumer protection in today β s agenda and inviting me to share the indian perspective. further, given the extent of financial exclusion that prevails in india where out of the 6, 00, 000 habitations in the country, less than 30, 000 have a commercial bank branch, only 55 % of the population have deposit accounts, and the proportion of people having any kind of life insurance is as low as 10 per cent, the rbi and the government of india are in recent times aggressively focussing on financial inclusion as one of the most important drivers of inclusive growth. 2. in a technology driven financial sector scenario, although intermediation is probably more tiered, it should eventually result in lower costs, greater financial inclusion and customer protection. customer protection becomes more important and perhaps more difficult due to such an intermediation. given this scenario, the rbi makes a conscious evaluation of the customer service and financial inclusion issues while approving any new innovation in the financial sector in general and payment system in particular. the fact that the rbi had appointed a high level committee on customer service in banks headed by mr. m. damodaran and representations from both the industry and the public to examine the entire gamut of customer protection issues indicates the importance which we attach to customer service and protection. the committee incidentally has come out with more than 100 recommendations for our consideration. 3. let me now turn to specific issues i have been asked to speak on viz. mobile banking, financial inclusion and consumer protection. a. bank - led vs non - bank led model of mobile banking 4. we were confronted with the question β which model of mobile banking should india go for β a bank led model or a non - bank led one? β protagonists of the non - bank led model referred to the success of such models | of the monetary actions listed in the table. first, even while the indian economy has recovered quite rapidly from the slowdown, there is persistent global uncertainty. emes have generally done quite well in coming out of the crisis, but a major part of the global economy β the us, the uk, the euro zone β is not only showing only very modest signs of recovery, it is also manifesting new stresses, partly as a result of the huge build - up of sovereign debt, which governments used to support their various fiscal stimulus packages. over the past few weeks, optimism about a sustained, even is slow, global recovery, has been giving ground to concerns about another imminent slowdown. one thing that we learnt from the events of 2008 β 09 was that india is not immune to global turbulence. be it through trade, capital flows or a general sense of confidence about economic prospects, a global problem quickly becomes a domestic one. given these linkages, the risks from the global economy need to be taken into consideration while formulating domestic policy. second, the reality is that the policy instruments are far from being in a normal position. as the economy recovers, it is imperative that policy instruments be brought as quickly as possible back to a position consistent with the state of the economy. this is essential for the management of expectations as well as to re - create the capacity to respond, should another shock hit the economy. but, as important as it is to return to normal quickly, it is equally necessary to do so non - disruptively. the kind of rapid and massive reductions that were made to instruments during the crisis simply cannot be replicated in the reverse direction. growth is picking up and confidence gradually returning to businesses and consumers, but given the vividness of the crisis, the process is still likely to be vulnerable to both external shocks and domestic ones. rapid transitions in the policy regime might constitute one such shock. in essence, on this consideration, while rapid and drastic actions are entirely warranted when dealing with a crisis, managing a return to normalcy requires a more gradualist and calibrated approach. third, notwithstanding the above two issues, the fact is that inflation has taken hold, with both supply and demand pressures contributing to it. monetary policy must respond. the table indicates that it indeed has. action on rates and liquidity, through the crr, began in january and has continued at the measured pace indicated earlier over the past six months. one strong criticism of the reserve bank | 0.5 |
business sentiment worsened further, falling to new all - time lows in february. moreover, labour markets have deteriorated which does not bode well for consumer spending. in this context, let me stress that we in the ecb governing council anticipated in our interest rate decisions that there will be bad news to come for the first quarter of 2009, as we take our decisions in a forward looking manner. once these expectations of further weakness in growth are confirmed by official data, we will not to take it into account again β there is no double counting! looking ahead, we expect a protracted period of further weakness in euro area activity. we have to face the truth that 2009 will be a very difficult year. it will be a year of balance sheet adjustments across banks, non - financial companies and private households. this could be a further drag on investment and consumer spending, already negatively affected by very low global demand, tight financing conditions and, in the case of private consumption, a further deterioration in labour markets. however, these corrections are inevitable as they lay the foundation of the gradual recovery. this is also reflected in the march 2009 ecb staff macroeconomic projections. the expected negative or very low annual gdp growth in 2009 and 2010 somehow masks these developments as it is affected by negative carry - over effects of the previous year. looking beyond the annual growth numbers, the underlying quarterly profile embodies expectations of increasingly positive quarterly rates of growth in real gdp over the course of 2010. underlying this outlook is the expectation of a gradual improvement of the external environment and a normalisation in financial markets, reflecting the extensive policy measures that have been introduced to restore the functioning of the financial system, both inside and outside the euro area. this together with low inflation rates which strengthen real incomes and the strong fiscal and monetary stimulus should support the gradual recovery in euro area activity. in our view, the economic outlook remains surrounded by uncertainty. the risks to economic growth appear now to be more balanced. on the one hand, there may be stronger than anticipated positive effects, also on confidence, stemming from the extensive macroeconomic stimulus under way and reflecting other policy measures taken. on the other hand, concerns relate mainly to the potential for the turmoil in financial markets to have a stronger impact on the real economy, as well as to the emergence and intensification of protectionist pressures and to possible adverse developments in the world economy stemming from a disorderly correction of global imbalances. c. euro area price developments let me turn to | , and many other countries. β’ in general, there has been one central securities depository ( csd ) per country providing custody services. csds were often established by the law and were given a legal monopoly in the local market. the transfer of securities was taking place in the books of the csd and the transfer of cash on the accounts of the central bank. this structure resulted from legal provisions, but also contributed to economic efficiency by allowing scale and network effects. β’ the csd was generally closely connected with the trading, clearing and settlement system in a vertically integrated structure, usually based on common ownership. services were provided in two layers. the csd provided clearing, settlement, safekeeping and other services to its settlement members. in turn some of these members, also called " custodians ", provided the same services to end - users and offered additional value - added services, such as credit facilities or securities lending services. finally central counterparties ( ccp ) used to limit the provision of netting facilities to derivatives products. β’ the world that i have just described is no longer the one of today. what are the forces driving the change? how do they affect the market players and the market structure? on these i would like to provide some views. β’ the main forces that are reshaping the securities industry are : technological progress, deregulation, and globalisation. in the euro area, the euro is an additional, very powerful, force, which, in my opinion, makes the pace of change much faster. as a result, there are several " trends " in the market structure that need to be considered. β’ a first trend is the increasing blurring of specialisation, i. e. of the borderline between the roles and services of different market players : custodians, clearinghouses and ( i ) csds. all market players are seeking to provide new services and to reach new markets. every player has become a potential competitor to all the others. for instance, csds are establishing links between each other and acting as custodians to one another. custodians are increasingly providing settlement functions. international central securities depositories ( icsds ) are merging with domestic csds and have started providing credit and securities lending facilities. central counterparties are expanding their services to all securities markets. β’ a second trend is the struggle to be at the centre. the legal monopoly csds have traditionally had is no longer a guarantee that these institutions | 0.5 |
is useful to take stock of india β s macroeconomic fundamentals and buffers, and assess them in the current and evolving conditions. first, india is widely perceived to be among the fastest growing major economies in the world in 2022 2, when the other major economies may encounter recession or considerable moderation in their growth momentum. the favorable growth differential of india provides confidence to investors. this is amply reflected in the surge of portfolio flows into india since july 2022. inflows in august alone at us $ 7. 5 billion are more than 16 world economic outlook update, july 2022, imf. times the net inflows in july. second, the recent softening of commodity prices and supply chain pressures have eased the terms of trade shock that india faced in the aftermath of the pandemic and the war. with the consequent easing of imported inflation pressures, india β s cpi inflation has peaked in april 2022. further, the average indian basket crude price in august at usd 97. 4 per barrel has turned out to be lower than what we had assumed for the full year - usd 105 per barrel - in the monetary policy resolution of august 5. in fact, india β s inflation is lower than a large number of its trading partners. third, the shift in the commodity price outlook is also altering the assessment of india β s current account deficit in 2022 - 23, which is now expected to remain well within sustainable levels. fourth, at a time when food security is threatened the world over by shortages and soaring prices, india β s large buffer stocks of food grains supplement domestic supply and assure food security domestically. fifth, india β s foreign exchange reserves of us $ 561 billion ( as on august 26 ) provide a cushion against external shocks, as is being demonstrated on a day - to - day basis. moreover, the reserves are also reinforced by forward assets. sixth, the health of our banking system is sound. it is well capitalised and well provisioned, with improved asset quality. this constitutes a key pillar of financial stability and is expected to provide positive spillovers for the financial markets. 6. reflecting these fundamental factors, the indian rupee has moved in an orderly manner in the current financial year so far. it has held its own in a world of sharp depreciation across other eme and ae currencies. while the us dollar has appreciated by 11. 8 per cent during the current financial year so far, the inr | with the reserve bank to meet the challenges of recent years. one such instance was the smooth completion of the government borrowing programme, despite the increased issuances in the last two years. 22. similarly, the move towards normalisation of liquidity conditions in the market has also taken place without any disruption. in response to changes in regulation, we are seeing our banks becoming active and visible in global markets and coming up with new products to meet the hedging needs of the real sector. the transition away from libor has also been achieved with relative smoothness. of course, the efforts towards complete transition need to continue as we approach the deadline for the cessation of all us dollar libor settings less than a year away. in all of these areas, market bodies such as the fimmda, pdai 4, fedai 5 and the indian banks association ( iba ) have continued to play an important role in acting as bridges between the market participants and the regulator, proactively conveying the views of the market and providing timely inputs for policy making. expectations from market participants 23. there are, however, some areas where performance of market participants can improve further. one area has been the delivery of services to the small / retail customers. while there has been a steady increase in the quantum of secondary market trades under the rbi retail direct scheme, there remains considerable scope for improvement in ensuring liquidity for the retail investors throughout market hours on the nds - om platform. we continue to get representations from customers - particularly, those undertaking forex transactions with small ticket sizes - about fair pricing of forex products. a research study by some officers in the rbi found empirical evidence of the presence of considerable price discrimination in the otc currency derivatives market. the services provided by banks on the fxretail platform need special attention. the response time and onboarding of customers on the platform can be faster. 24. the revised product regulations in otc derivative markets now permit market - makers to deal in derivative products of varying primary dealers association of india ( pdai ) foreign exchange dealers association of india ( fedai ) complexity and to offer these products only to non - retail / institutional customers who have the ability to handle the risks associated with such products. it has been reassuring to note that market participants and users have been taking a prudent approach in the use of complex products. the valuation and the risk management systems of the market - makers may need to be continually updated. customers also need | 1 |
nestor a espenilla, jr : speaking through speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), delivered by ms maria almasara cyd n tuano - amador, deputy governor of bangko sentral ng pilipinas, bsp christmas program, manila, 12 december 2018. * * * fellow members of the monetary board β secretary sonny dominguez, mbm philip medalla, mbm jun de zuniga, mbm peter favila, mbm tony abacan, and mbm bruce tolentino who is celebrating his first christmas here in the bsp. our diligent and reliable sector heads β dg diwa guinigundo, dg chuchi fonacier, dg cyd amador, and senior assistant governor dahlia luna. family, friends, fellow bspers, magandang hapon sa inyong lahat! this afternoon, i am so happy to be here amongst all of you. from the picc entrance proceeding to where i am now sitting, along the way, i was able to greet those nearby to exchange smiles and nods even from afar i was able to acknowledge and let you know through simple gestures that i truly appreciate each of you. i appreciate you individually, and collectively as part of this group that comprises the bsp family. team bsp. for several events now, i have, for health reasons, requested bsp officers to deliver messages on my behalf. i have allowed others to speak for me and i have spoken through others. this is not an easy thing for me to do, as i am by heart, a speechwriter and am mindful of the power of the podium. i must admit that allowing myself to speak through others can be a humbling experience as it reminds me of my own limitations. but there are two things that also make it a very powerful exercise. allowing myself to speak through others emphasizes the value of giving them full and complete trust. designating others to give messages on my behalf is accompanied by complete confidence that the officers i have requested to do so will not only read from a sheet of paper. rather, they do so, fully believing in the messages as well. in so doing, they are not only echoing my words, but are ambassadors and staunch advocates of the bsp β s best interests. when i took a two - | step back from the current context and explore an issue that ought to receive more attention β the longer - run potential growth rate of our economy. one reason for the low neutral rate of interest is that potential growth appears to have slowed. since the crisis ended, forecasters have broadly reduced their estimates of longer run growth by a full percentage point β from about 3 percent to about 2 percent. 3 this seemingly modest reduction implies dramatically smaller increases in living standards over time. a growing body of research shows that deep recessions accompanied by severe financial crises often leave behind permanent damage. 4 one recent analysis suggests that in about one - third of such cases there is no permanent damage ; one - third of the time there is a permanent reduction in the level of potential output but not its subsequent growth rate ; and one third of the time there is a reduction in both the level of potential output and in the growth rate. 5 unfortunately, many economies are currently in danger of falling into the third category, including the u. s. economy. output growth can be broken down into increases in hours worked and changes in output per hour, or productivity. most of the decline in estimated potential u. s. growth appears to be from lower productivity. labor productivity growth began to slow around 2005 β before the crisis β and been only 1 / 2 percent annually since 2011 β the slowest five year period since world war ii. the productivity slowdown has been worldwide, and has been seen in countries that were not as strongly affected by the crisis, so u. s. specific factors are probably not the main cause. 6 increasing productivity is necessary if living standards are to continue to rise over generations. so two important questions arise : why has productivity growth been so slow? and what does the future look like? we have tentative answers to the first question. labor productivity is a function of three things. the first two are the skills of the labor force, and the tools they have, particularly equipment, software and the like. these are inputs to production and are driven by private and public investment. the third determinant is called β total factor productivity, β or tfp, which refers to the ability of firms to produce more efficiently given the first two inputs. for example, as businesses learned how to incorporate advances in information technology into their production processes, there was a surge of productivity growth from roughly 1995 to 2005. the weak performance of productivity since the crisis appears to stem mainly from weak business investment and low tfp growth. weak | 0 |
risks early on and act effectively. the ssm will be in a position to provide a considerable part of what a supervisor can do for a resistant banking system. among other things, the division of tasks between national supervisors and the ecb will ensure this. but not all the developer β s wishes can be fulfilled or are feasible, as the resistance of the european banking system or the performance of a national credit institution don β t just depend on the supervisor β s performance and ability to act. in order to be resistant in the long term, a bank needs a sustainable business model ; it needs sufficient income in order to bear the risks associated with banking. after all, it shouldn β t be forgotten that the balance sheet of a bank β especially a bank with extensive corporate banking β is always a reflection of the economies in which it operates as a financial service provider. bis central bankers β speeches construction planning β dimensioning the building but let β s leave the expectations and go back to the building itself. at the beginning of every construction project is the planning. the architect has to bring the wishes and expectations of the developer into line with all kinds of existing restrictions. the final purpose of the building needs to be clearly defined. with regard to the ssm, this means that, for practical reasons, direct supervision of all institutions in the euro area was neither feasible nor wanted right from the outset. fully centralised supervision would β ve had the considerable disadvantages associated with an organisation being too large, the resultant burdens for all concerned β which would be considerable β and a loss of national and regional expertise concerning the specific characteristics of banks in the member states. what added value would have been brought by direct ecb supervision of the many smaller institutions, which often have regional roots? what challenges would β ve arisen in terms of linguistics alone? after all, without having a detailed look at a large number of credit files, it isn β t possible to properly supervise most of the banks which are active in private and corporate banking. national language skills are indispensable here for discussions with the executive board and employees, as well as for looking into the files. furthermore, it wouldn β t have been feasible to set up direct supervision of all banks in the euro area within a year. as you can see, ladies and gentlemen, when it came to the dimensions of our building, it was once again a question of striking a balance between the advantages and disadvantages of a central or decentral solution. for supervision | and every country should get involved. if european leaders focus only on domestic politics, this inward - looking attitude can only make europe weaker. a return to the previous era of globalisation without barriers is unlikely, isn β t it? this is indeed unlikely. and that β s good news, since the reason we are experiencing problems today is that globalisation didn β t deliver on its promises. as tommaso padoa - schioppa once said : β those people who complain that we won β t get back to the pre - crisis path forget that it was the very path that led to that crisis β. we are currently undergoing a very disorderly transition and there is a temptation to turn to nationalist ideas, when one of the great successes to emerge in the aftermath of the second world war was the creation of an international order based on trust. change is needed ; for instance, we were naive about opening up international financial flows. there was too much financial globalisation, and this led to volatility and systemic risk and it has eroded fiscal resources because multinationals have become footloose. to a certain extent, financial openness cancelled out the benefits of trade openness. we need to come up with a new international order that can overcome these problems. but returning to a system based on domestic priorities alone will clearly not work. don β t you think that central banks have been charged with too many roles and responsibilities? yes, i do. people expect too much from central banks, considering what we can do and the mandate they have given us in the first place. if you give a central bank too many objectives, you transform it from an apolitical entity with a narrow mandate into a political institution. we have a duty to deliver on our mandate, that is price stability. but giving us too many objectives would make us political, which we certainly don β t want to be. 2 / 2 bis central bankers'speeches | 0 |
to a future that is not only environmentally resilient but also to a sustainable economy. let me end with a quote from thanos, the villain from marvel's avengers : infinity war. to a question from gamora, he said, and i quote, " little one, it's a simple calculus. the universe if finite, its resources is finite. if life is left unchecked, life will cease to exist. it needs correcting. " while i don't agree with him on wiping off half of the human population from this beautiful planet, we call earth, to preserve endangered species and our environment, but he certainly has a point. we cannot go on unchecked. our actions need to be calibrated and corrected. such calibration will inevitably be guided by your robust research and valuable findings today. thank you and i wish you a fruitful conference ahead. 1 wef global risks report 2023, world economic forum 5 / 6 bis - central bankers'speeches 2 ipbes - ipcc co - sponsored workshop on biodiversity and climate change, ipbes secretariat 3 new nature economy report, world economic forum 4 implementation of the kunming - montreal global biodiversity framework at the national level by malaysian business and private sector community, bernama 6 / 6 bis - central bankers'speeches | . some of these reform proposals have attracted intense international debate generating divergent views on these issues. a broad consensus however is emerging on the need to raise both the quantity and quality of regulatory capital, strengthen liquidity rules and improve market transparency. there also seems to be agreement for the extension of regulatory tools to address pro - cyclicality in the financial system through the creation of counter - cyclical capital buffers, dynamic loan - loss provisioning and greater alignment of incentives with long - term goals. this consensus reflects the objective of avoiding having incentives that would encourage the material build - up of leverage and the excessive appetite for risk. other measures under consideration include the implementation of non - risk - based leverage limits to contain the build - up of leverage in the banking sector and the strengthening of the supervisory framework and the arrangements for dealing with oversight on crossborder financial groups and for resolution. implications for islamic finance islamic finance does not exist in isolation and as it becomes an increasingly important component of the global financial system, it will inevitably be impacted by the changing global landscape of financial regulation. this is particularly the case as its growth gains momentum both in terms of number of services providers and in terms of business volume and as its internationalisation process continues. the global call for improved regulation and increased oversight will thus intensify the efforts that have already been undertaken to strengthen the financial regulation for islamic finance. let me now focus my remarks on four major implications of the changing global financial regulatory landscape for islamic finance β first, particularly in financial systems in which islamic finance is being developed alongside the conventional financial sector in a dual system environment, ( which is the case for most ifsb member countries ), there will be a need to ensure that the reforms are undertaken in parallel. the concern is that there would be insufficient attention given for islamic finance and consequently, the tendency for broad - brush application of regulatory measures intended for conventional finance on islamic finance. in developing the appropriate regulatory framework for islamic finance, it is not uncommon to leverage on the established wisdoms of prudential regulation for conventional finance to achieve regulatory efficiency particularly in a dual system environment. whilst it may be envisaged that it is not necessary to reinvent the wheel, it should not override the importance of addressing the specificities of islamic finance where necessary. such a prudential regulatory design that takes into account the unique mix of risks associated with shariahcompliant instruments would enhance the effectiveness of the regulatory outcomes intended for islamic finance. although there | 0.5 |
easing in monetary conditions in the euro area β as manifest for instance in a downward shift in term money market interest rates and other important market interest rates. moreover, our forward guidance continued to effectively support our policy intentions : first, it has mitigated the sensitivity of the money market term structure to surprises from economic data releases ; and second it has reduced market uncertainty about the path of future short term rates. but notwithstanding this favourable track record of our recent policy measures, we should remain alert to any contingencies that may give rise to downside risks to price stability. in particular, we are closely monitoring money market conditions and their potential impact on our monetary policy stance. by extending the horizon of the fixed rate full allotment mode at least until mid - 2015 we have provided additional funding reassurance that will support the transmission of monetary policy signals through the banking system. the number for loans to households and non - financial corporations are adjusted for loan sales and securitisation. bis central bankers β speeches at the same time, we stand ready to adopt additional measures if we were to observe developments in money market conditions that threaten to interfere with our policy intentions. moreover, the subdued inflation outlook provides little safety margin against further adverse shocks that may give rise to downside risks to price stability. that safety margin is reflected in our focal point of inflation rates just below 2 % in the context of our price stability. it ensures that steady state inflation provides for a sufficient buffer away from zero. with an inflation outlook below this focal point, our reaction time for additional accommodative policy action shortens accordingly. in this regard, the debate among observers has focused on the question, which measures the ecb were to take under these circumstances. as explained β and demonstrated β in the past, the ecb is in a position to adopt a wide range of instruments to ensure price stability, in line with the extensive instrument independence it has been granted under the treaties. this allows us to tailor our policy response to the specific contingencies that the euro area may face at a given point in time. we will continuously evaluate our policy options and we will act if the circumstances so warrant and adopt measures that are most effective in confronting the challenges at hand. but we need to be also wary of the limitations of further measures. let β s not forget that our monetary policy stance is already accommodative and financing conditions are favourable overall. indeed, we see sluggish demand for credit despite low | s s mundra : unintended consequences of new international supervisory framework β an emerging market perspective keynote address by mr s s mundra, deputy governor of the reserve bank of india, at the bank of france - reserve bank of india joint conference, paris, 20 july 2015. * * * assistance provided by dr. mridul saggar, shri ayyappan nair and shri sanjeev prakash is gratefully acknowledged. bonjour! 1. thank you ms. anne le lorier for your thoughts. it is my pleasure to deliver the key note address at this rbi - bdf joint conference being hosted by banque de france. let me begin by thanking you and the bdf for your warmth, friendliness and cordiality. banque de france is one of the oldest central banks in the world, set up in january 1800 by napoleon bonaparte with the objective of fostering renewed economic growth in the wake of the deep recession of the revolutionary period. as we sit down to deliberate upon the consequences of new international supervisory framework today, the milieu is strikingly similar to what existed more than two centuries ago. even today, the global economy continues its struggle out of retrenchment in output suffered during the financial crisis, proving right the adage β more the things change, more they remain the same β. even as the standard setting bodies ( ssbs ) have embarked upon various regulatory reforms to nurture the financial system out of quagmire that it had gone into before the outbreak of the crisis, we feel it is worthwhile to deliberate upon the unintended consequences of the new international regulatory / supervisory measures and chart out ways to counter the potential adverse fallouts. in my address today, i would like to present the views from the perspective of the emerging markets. i will begin by briefly tracing the genesis and context of the new supervisory framework and then, i will argue that there are limitations around how much can the regulatory regime be tightened, considering its cost on the economy. i would then close by offering my perspectives on the way ahead for limiting the unintended consequences of the new regulatory framework. but before i get to the subject proper, let me spend a couple of minutes in underlining the contrasting realties that the advanced and the emerging economies like india are faced with, in an otherwise β interconnected β world. 2. let us face it β it β s a multi - paced world. the ground realties in advanced economies ( | 0 |
the past couple of months, while the 3 - year government bond rate has remained very close to the board's target, the 3 - year swap rate has risen relative to the 3 - year government bond rate. [ 8 ] the swap rate often trades above the government bond rate because it involves more credit risk. but the spread between the two has widened by around 20 basis points in recent months. in part this reflects the market's expectations about the future direction of monetary policy. the market is assigning some probability to the scenario that the cash rate could be higher in 2024 than the board's current forward guidance. [ 9 ] this expectation is being reflected in the swap rate, but not in the april 2024 bond rate, because the bank is ensuring the bond rate remains at the target. this move upward in the swap rate will put some upward pressure on longer - term household and business borrowing rates. but the effect is unlikely to be that large. overall funding costs for banks remain at historic lows. moreover, the 3 - year yield target is still playing a significant role in anchoring that part of the curve. if the yield target wasn't there, the government bond curve and swap rates would be higher still. bond purchase program in november 2020, the board announced a quantity - based bond purchase program that is complementary to the 3 - year yield target. the board decided to implement this policy for a number of reasons. longer - term australian government bond yields were higher than those in other advanced countries. this provided evidence that the size of other central banks'bond purchase programs was affecting longer - term australian bond yields beyond the anchoring effect of the bank's 3 - year yield target. this in turn was contributing to a higher exchange rate, which was restraining the recovery in the australian economy. the bond purchase program announced in november 2020 was for the purchase of $ 100 billion in bonds of maturities of around 5 to 10 years over the following 6 months. it includes bonds of both the australian and state and territory governments, with $ 80 billion allocated to the australian government and $ 20 billion to the state and territory governments. in february 2021 the board announced an additional $ 100 billion with the same composition and rate of purchase of $ 5 billion per week. the bonds are purchased in the secondary market through transparent auctions. the board opted not to extend the yield target to a longer horizon for a number of reasons. first, the yield target reinforces the board's | of global economic integration as i just noted, the economic integration of widely separated regions is hardly a new phenomenon. two thousand years ago, the romans unified their far - flung empire through an extensive transportation network and a common language, legal system, and currency. one historian recently observed that " a citizen of the empire traveling from britain to the euphrates in the mid - second century ce would have found in virtually every town along the journey foods, goods, landscapes, buildings, institutions, laws, entertainment, and sacred elements not dissimilar to those in his own community. " ( hitchner, 2003, p. 398 ). this unification promoted trade and economic development. a millennium and a half later, at the end of the fifteenth century, the voyages of columbus, vasco da gama, and other explorers initiated a period of trade over even vaster distances. these voyages of discovery were made possible by advances in european ship technology and navigation, including improvements in the compass, in the rudder, and in sail design. the sea lanes opened by these voyages facilitated a thriving intercontinental trade - although the high costs of and the risks associated with long voyages tended to limit trade to a relatively small set of commodities of high value relative to their weight and bulk, such as sugar, tobacco, spices, tea, silk, and precious metals. much of this trade ultimately came under the control of the trading companies created by the english and the dutch. these state - sanctioned monopolies enjoyed - and aggressively protected - high markups and profits. influenced by the prevailing mercantilist view of trade as a zero - sum game, european nation - states competed to dominate lucrative markets, a competition that sometimes spilled over into military conflict. the expansion of international trade in the sixteenth century faced some domestic opposition. for example, in an interesting combination of mercantilist thought and social commentary, the reformer martin luther wrote in 1524 : " but foreign trade, which brings from calcutta and india and such places wares like costly silks, articles of gold, and spices - which minister only to ostentation but serve no useful purpose, and which drain away the money of the land and people would not be permitted if we had proper government and princes... god has cast us germans off to such an extent that we have to fling our gold and silver into foreign lands and make the whole world rich, while we ourselves remain beggars. " ( james, 2001, p. 8 | 0 |
to regard the decision of the mediation panel as binding. the problems i have just set out highlight the crucial importance of a principle which the founders of the eurosystem were keen to safeguard : the independence of the ecb, and of its governors. if the governments decide to mandate the ecb with additional tasks, this basic principle still applies, as long as the treaty is not changed. thus, if the ecb is mandated with banking supervision, the governing council of the ecb will be the one deciding on all relevant supervisory matters, as long as there are no changes in primary law. this implies that β following a common principle of reason β those responsible for a decision need to be able to shape that decision. bis central bankers β speeches 4. conclusion let me sum up my main points. the single supervisory mechanism is a good step forward towards improving the european institutional framework. there is no doubt about that. however, the envisaged institutional set - up needs to take into account a basic feature of the eurosystem β the independence of the ecb and of the members of the governing council. hence i am not only looking forward to working with my supervisory colleagues within the ssm, but also to reading the final regulation governing the new system. thank you for your attention. bis central bankers β speeches | andreas dombret : interest rate reversal in the united states and german banks introductory statement by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the annual meeting of the verein fur socialpolitik, munster, 17 september 2015. * * * ladies and gentlemen the british rock band the alan parsons project charted in 1978 with a single entitled β what goes up... β, the first two lines of which read as follows : β what goes up, must come down / what must rise, must fall β. these words of wisdom are also worth heeding in the financial markets β indeed, they β re the secret of any successful trader. but interestingly, the precise opposite also holds true in the financial markets. so, we could equally say : β interest rates that fall, must rise again. β but for now, the euro area is still in the midst of a protracted spell of very low interest rates. it goes without saying that this low - interest - rate environment is making itself felt on banks β particularly on those whose business models are very reliant on interest income. so it β s not surprising that many a german credit institution is struggling with weak earnings. that β s a topic which has been on the agenda for quite some time now. incidentally, we will be getting a better idea of how german banks are coping with the currently low level of interest rates next week β on 18 september, to be precise, when the bundesbank and bafin will be releasing the findings of a joint survey on the low - interest - rate environment. what can banks do? in a nutshell, banks should act on the meagre state of their earnings at present by reflecting on their business models and tapping fresh sources of income. while the alan parsons project might have a point, living off ever - diminishing resources and simply sitting tight until interest rates reverse isn β t what i would consider the right course of action. that β s because interest rates in the euro area are likely to remain very low for some time to come β the low rate of inflation, the modest economic outlook and the ecb β s forward guidance suggest as much. the picture is a different one across the pond. for all extents and purposes, the united states already began edging towards the monetary policy exit back in may 2013. that was when the us federal reserve announced its plans to β taper β its bond purchase programme. | 0.5 |
upside risks relate to higher commodity prices and stronger than expected increases in administered prices and indirect taxes, while downside risks stem from weaker than expected economic activity. concerning the staff macroeconomic projections, let me inform you that the governing council has decided to publish more details as of december 2013. you will receive this material today after the press conference. turning to the monetary analysis, data for october confirm the assessment of subdued underlying growth in broad money ( m3 ) and credit. annual growth in m3 moderated to 1. 4 % in october, from 2. 0 % in september. this moderation was partly related to a base effect. annual growth in m1 remained strong at 6. 6 %, reflecting a preference for liquidity, although it was below the peak of 8. 7 % observed in april. net capital inflows into the euro area continued to be the main factor supporting annual m3 growth, while the annual rate of change of loans to the private sector remained weak. the annual growth rate of loans to households ( adjusted for loan sales and securitisation ) stood at 0. 3 % in october, broadly unchanged since the beginning of the year. the annual rate of change of loans to non - financial corporations ( adjusted for loan sales and securitisation ) was β 2. 9 % in october, following β 2. 8 % in september and β 2. 9 % in august. overall, weak loan dynamics for non - financial corporations continue to reflect their lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and non - financial sector balance sheets. since the summer of 2012 substantial progress has been made in improving the funding situation of banks. in order to ensure an adequate transmission of monetary policy to the financing conditions in euro area countries, it is essential that the fragmentation of euro area credit markets declines further and that the resilience of banks is strengthened where needed. the ecb β s comprehensive assessment before it adopts its supervisory role under the single supervisory mechanism will further support this confidence - building process. it will enhance the quality of information available on the condition of banks and result in the identification and implementation of necessary corrective actions. further decisive steps to establish a banking union will help to restore confidence in the financial system. to sum up, the economic analysis indicates that we may experience a prolonged period of low inflation, to be followed by a gradual upward movement towards inflation rates below, but close to, 2 % later on. a cross - check with | housing markets monetary policy and financial stability ( subsequently updated ), february. clark, a. and a. large ( 2011 ), macroprudential policy : addressing the things we don β t know, occasional paper series, no. 83, group of thirty, washington. drudi, f. et al. ( 2009 ), housing finance in the euro area, occasional paper series, no. 101, european central bank, march ecb ( 2003 ), structural factors in the eu housing markets, european central bank. garber, p. ( 2000 ), famous first bubbles : the fundamentals of early manias, massachusetts institute of technology. girouard, n., m. kennedy, p. van den noord and c. andreΒ΄, ( 2006 ), recent house price developments : the role of fundamentals, oecd working paper, no. 475, organisation for economic co - operation and development. imf ( 2004 ), β when bubbles burst β, world economic outlook, 61 β 84, international monetary fund, april. pastor, l. and p. veronesi ( 2004 ), was there a nasdaq bubble in the late 1990s?, working paper, university of chicago. reinhart, c. and k. rogoff, banking crises : an equal opportunity menace, working paper series, no. 14587, national bureau of economic research, december. bis central bankers β speeches | 0 |
is a sense of shared sacrifice across all segments of the economy. without being specific, these requirements suggest an approach in which we are willing to disappoint a host of special interests. it means, for example, controlling budget earmarks, trimming subsidies to numerous economic sectors, and resolving our banking problems and the perception that wall street is favored over main street, all of which would otherwise foster mistrust and cynicism among the public. leaving these issues unaddressed will undermine the essential popular support required for the tough decisions needed to bring our federal budget into balance. finally, there are no short - cuts. we currently must adjust from a misallocation of resources. there is no way to avoid some short - term pain in fixing the fundamentals in our economy. it is inconvenient for the election cycle, and it is undeniably terrible to have at least 10 percent of the labor force out of work. but short cuts now mean people out of work again in only a few years because we again try and avoid difficult adjustments. outlining a credible course for managing our debt for the future will accelerate the restoration of confidence in our economy and contribute importantly to sustainable capital investment and job growth. conclusion as i mentioned in the beginning, the fiscal projections for the united states are so stunning that, one way or another, reform will occur. fiscal policy is on an unsustainable course. the u. s. government must make adjustments in its spending and tax programs. it is that simple. if pre - emptive corrective action is not taken regarding the fiscal outlook, then the united states risks precipitating its own next crisis. eventually, government budgets that are severely out of balance are inevitably reformed β either by force of the markets or, preferably, by choice. unfortunately, nations often must experience a profound crisis to focus the government β s attention on taking corrective action. usually it is at this point that governments reestablish fiscal discipline and renew their commitment to an independent central bank. ironically, however, these generally are precisely the reforms that would have prevented a crisis in the first place. the only difference between countries that experience a fiscal crisis and those that don β t is the foresight to take corrective action before circumstance and markets harshly impose it upon them. in time, significant and permanent fiscal reforms must occur in the united states. i much prefer this be done well before anyone feels an irresistible impulse to knock on this central | gdp in only a few instances, and usually only during or immediately following a major war. as troubling as these deficits appear, even more disconcerting is the longer - term outlook for the federal debt caused by the accumulation of these deficits over time. the cbo β s long - term debt projections clearly show that current fiscal policies are unsustainable. in one scenario, the liftoff point for federal debt β that is, the time when debt starts rising without any sign of stabilizing β occurs shortly after 2020. by 2035, federal debt held by the public reaches 80 percent of gdp β a level only exceeded during and just after world war ii. in another, more pessimistic scenario, the liftoff in debt has already begun, with federal debt held by the public reaching 181 percent of gdp in 2035, easily exceeding the peak debt to gdp ratio of 113 percent that occurred at the end of world war ii. a key part of the problem stems from rapid growth in entitlement spending, including spending on social security and, especially, medicare. over the next 30 years, the government accountability office ( gao ) estimates that the present value of future expenditures on all social insurance programs exceeds future revenue by over $ 50 trillion. that is nearly four times the size of gdp and clearly unsustainable. adding to my concerns for the nation β s economic prospects is the current level of private indebtedness. as with government debt in the united states, private nonfinancial debt has grown steadily over the post - world war ii period, from 40 percent of gdp in 1945 to almost 175 percent in 2009. every consumer and business that is a net borrower would benefit from lower interest rates. and just as noteworthy, it should not escape our notice that rising inflation would trim the real value of their indebtedness. thus, high private indebtedness will contribute to the political pressure on the federal reserve. three paths forward returning to my opening comments, i see just three ways forward in dealing with our current and prospective fiscal imbalances. while each involves considerable pain only the third will resolve the imbalances without eventually causing inflation to accelerate or precipitating a financial and economic crisis. monetize. one option for dealing with a fiscal imbalance is for the central bank to succumb to political pressure and monetize the debt. as deficits and debt levels within a country rise relative to national | 1 |
to reduce its reliance on physical transportation, the proposed act would also reduce the risk that checks may be lost or delayed in transit. today, bad weather routinely delays check shipments and there have been occasions when checks have been destroyed in plane crashes. the banking industry's extensive reliance on air transportation was underscored in the aftermath of the september 11 tragedy, when air transportation came to a standstill and the flow of checks slowed dramatically. during the week of the attacks, the federal reserve banks'daily check float, which is normally a few hundred million dollars, ballooned to more than $ 47 billion. had the proposed legislation been in effect at that time and had banks been using a robust electronic infrastructure for check collection, banks would have been able to collect many more checks by transmitting electronic check information across the country and presenting substitute checks to paying banks. finally, many banks hope to use the authority provided by this legislation to streamline the processing of checks that they must return unpaid. today, after a bank processes its incoming checks and determines which checks to return, it has to reprocess all of the incoming checks to pull out the less than one percent of checks that are to be returned unpaid. many banks have indicated to us that they would find it more cost effective to use their image systems to generate substitute checks for return rather than to outsort the returned checks from all the checks presented. the act might also better position banks to provide new and improved services to their customers. for example, banks might allow some corporate customers to transmit their deposits electronically. because the act will likely encourage greater investments in image technology, banks might also be able to expand their customers'access to enhanced account information and check images through the internet. in addition, banks might be able to resolve customer inquiries more easily and quickly than today by accessing check images. the act is designed to provide banks with additional flexibility in processing checks by requiring banks to accept substitute checks in place of original checks. the act does not, however, require banks to accept checks in electronic form nor does it require banks to use the new authority granted by the act to create substitute checks. this market - based approach permits each bank to decide whether to make use of this new authority. this decision will be based on the bank's internal business case analysis, which will assess the costs and benefits of using the new authority. we believe the market changes arising from these revisions to check law will result in substantial cost savings. clearly, because substitute checks | that substantially revise the process by which banks return unpaid checks, which has expedited the receipt of those checks by depositary banks and ensured prompt notice of large - dollar returned checks. in addition, the board has adopted rules that enhance the legal abilities of private - sector banks to obtain same - day final settlement for checks presented by a specified time, which has spurred competition in the provision of check clearing services, improved efficiency, and sped the collection of many checks. section 611 ( f ) of the efaa states " the board is authorized to impose on or allocate among depository institutions the risks of loss and liability in connection with any aspect of the payment system, including the receipt, payment, collection, or clearing of checks, and any related function of the payment system with respect to checks. liability under this subsection shall not exceed the amount of the check giving rise to the loss or liability, and, where there is bad faith, other damages, if any, suffered as a proximate consequence of any act or omission giving rise to the loss or liability. " [ 12 u. s. c. Β§ 4010 ( f ) ] | 1 |
percentage points and is now approximately the same as among our trading partners. the krone has depreciated by about 6 per cent over the past year and the krone exchange rate, measured by the import - weighted index i - 44, is now at the level prevailing in march 2002. this is approximately on a par with the average for the 1990s. in the past few days, the krone has appreciated again somewhat. in february, inflation stood at β 0. 1 per cent. apart from some temporary, technical factors that together account for 3 - 4 tenths of a percentage point, three main factors have contributed to the substantial deviation from the inflation target : β’ first, the global downturn had considerable implications for the impact of interest - rate setting in norway, via the exchange rate for instance. β’ second, low external inflation and rapid shifts in the international division of labour has resulted in a fall in prices for imported goods and services. this also applies when these prices are measured in terms of what norwegian importers pay in foreign currency. the change in trade patterns has made a considerable contribution to the sharp decline in prices for clothing, footwear and audiovisual equipment. rapid technological advances have also pushed down prices for audiovisual equipment. β’ third, competition has probably increased in the retail industry and other service sectors in norway in recent years. initially, heightened competition affects companies β profit margins. but enterprises will respond by reducing their costs. this will occur in part in the individual business, but subcontractors will also be required to reduce their prices and enhance efficiency. therefore, increased competition usually triggers higher productivity growth in the economy. low inflation may therefore be matched by growth in productivity. prices for domestically produced goods and services are expected to rise towards the beginning of 2005 due to higher capacity utilisation in the norwegian economy. strong employment growth may contribute to somewhat higher wage growth than in 2004. at the same time, domestically produced goods and services are affected by exchange rate changes, albeit with a longer lag than is the case for imported consumer goods. there are clear signs that the global economy has passed the trough. however, while the outlook is brighter, price inflation is still low and interest rates are being kept unusually low. economic growth is high again in the us, but there is still excess production capacity and very low inflation. workforce reductions may no longer be as severe, but companies are still not hiring new staff. it may take some time before interest rates are increased | svein gjedrem : monetary policy and the economic outlook speech by mr svein gjedrem, governor of norges bank ( central bank of norway ), at sr - banken, stavanger, 19 march 2004. the text below may differ slightly from the actual presentation. the address is based on the assessments presented at norges bank β s press conference following the executive board β s monetary policy meeting on 11 march, inflation report 1 / 04 and on previous speeches. the charts in pdf - format can be found on the norges bank β s website. * * * the operational target of monetary policy as defined by the government is inflation of close to 2. 5 per cent over time. the target is symmetrical - it is just as important to avoid an inflation rate that is too low as an inflation rate that is too high. the inflation target provides economic agents with an anchor for inflation expectations. it therefore influences their decisions concerning saving, investment, budgets and wages. history shows that there is no long - term trade - off between lower unemployment or stronger economic growth and higher inflation. we witnessed this in the 1980s when growth was low and inflation high. the task of monetary policy is to provide a nominal anchor. low and stable inflation is such an anchor. there are several reasons why it is an advantage for inflation to be higher than zero : β’ the structure of the economy is in flux. demand for labour with different qualifications is changing. this requires changes in relative wages. there are rigidities in nominal wage growth. nominal wages do not readily fall. with some inflation, relative wages can change without a fall in nominal wages. there may also be rigidities in the pricing of goods and services. some degree of inflation will thus oil the economic machinery. β’ in periods, inflation and economic growth will be low. it is then appropriate for real interest rates to be low, or even negative. nominal interest rates cannot be set below zero. if inflation becomes entrenched at a low level or near zero, the interest rate will be less effective as an instrument. β’ there are different ways of measuring inflation. the consumer price index tends to overestimate actual inflation. the most important source of measurement errors is probably the difficulty of distinguishing between changes in the quality and price of goods. in other countries, findings show that the consumer price index overestimates actual inflation to the order of Β½ - 1 per cent. the inflation target is a vehicle for, not an obstacle | 1 |
their investment income in the medium term. many non - banks tend to compensate by searching for yield in riskier, more illiquid and higher duration assets. this can be a welcome and intended outcome of monetary policy accommodation as it may help to ease financing conditions for non - financial corporations. but this trend also has a flip side, as it contributes to rising risks and vulnerabilities in non - banks β balance sheets, with potential negative repercussions for the stability of the whole financial system. liquidity risk is a particular source of concern, especially for funds that invest in illiquid assets but offer daily redemptions. we have recently witnessed cases in which funds holding considerable amounts of illiquid assets faced severe difficulties in dealing with large - scale outflows. nevertheless, these cases had no systemic repercussions : because the outflows were triggered by idiosyncratic factors and, most importantly, because the financial market environment was benign. but this does not always need to be the case. another source of concern is the elevated exposure of non - banks to highly indebted segments of the corporate sector. excessive risk - taking may adversely affect the ability of non - banks to absorb shocks, especially if economic conditions deteriorate. downgrades of corporates to subinvestment grade ratings may force non - banks to sell assets to fulfil their investment mandates. this could amplify price movements in credit markets in times of low market liquidity. it could also generate spill - overs to the wider financial system and the real economy, as funding flows might recede and the cost of corporate financing might increase. developing a macroprudential framework for the non - bank financial sector should thus be treated as a priority. new policy instruments should ensure that non - banks can sustain their financing of the real economy under different economic conditions. they should aim to mitigate risks related to pro - cyclical risk taking, excessive leverage, liquidity and maturity transformation by increasing transparency on fund leverage and aligning redemption terms more closely with the liquidity of funds β assets, for example. by internalising the impact that non - banks β actions might have on the rest of the financial system and the real economy, such policy tools might curb non - banks β potential to amplify exuberance in upturns and adversely affect financial and economic conditions in downturns. conclusions let me conclude. at present, the weaker cyclical momentum and | appetite to facilitate discussions at all levels of the organisation. this, too, they must change. these are a few of my thoughts on the topic of governance and the role of supervisory boards. now i am looking forward to having a discussion with you. thank you for your attention. 3 / 3 bis central bankers'speeches | 0.5 |
systems and sovereign finances has been recognised and it has been accepted that borrowing to recapitalise banking systems adds to the negative feedback loop between the two. i look forward to the outcome of the continuing discussions on the summit conclusions so they are translated into a specific policy proposal that is indeed effective in breaking the banking - sovereign link. however, there are key steps that need to take place before this can be achieved, most notably the development of the banking union and centralised eurozone banking supervision. but that is a topic for another day. for now, my point is that in addition to the five domestic challenges for the irish banking system to more speedily achieve recovery, there is a sixth european challenge where there are positive signs but much work still to be done. this dependence on european developments, however, is no excuse for the banks to delay in tackling the five challenges i have discussed. with apologies in advance for the risk of oversimplification, let me sum this all up in the following way. one way to think about this is that the irish banks are now out of the critical ward, with more healthy vital signs, following radical surgery and an extensive transfusion of blood from the irish taxpayer. but as they stagger back to work they are still weak and aren β t contributing to society as they should. they need to demonstrate dedication in getting fully fit : they need to face up to their remaining ailments β by recognising losses β and continue to slim down β both their balance sheets and their costs. the banks now have the uncomfortable task of telling the neighbours who donated blood to them that they need to charge them more as customers. and the banks need to approach their new situation with a new culture to show they β ve truly changed their ways. these measures, which are in the hands of the banks β own management and do not depend on europe, will help speed them to full recovery. bis central bankers β speeches | ##s as a result of a severe reduction in income. the banks were required to identify a broader range of techniques, including loan modification arrangements such a split mortgages and the introduction of mortgage to rent schemes, and to pilot these during q3 of this year. these pilots are now mostly concluded ( although are dragging on in one or two cases ) and the banks are now in starting the process of rolling out the new arrangements more widely. this process offers the prospect of restructuring loans where necessary to avoid customers continually re - defaulting. the central bank has studiously avoided prescribing the detail of the loan modification arrangements adopted by the banks and it must necessarily be for the banks themselves to undertake the case - by - case review of customers that is required. however, i would observe that there is significant variability in the approaches that the banks are taking to loan modification. that is natural and understandable, and i would not expect a standard approach across so many different institutions, with different portfolios and different types of owners, for so many different customers. but there are some key parameters in the typical loan modification arrangements that might perhaps merit a close side - by - side comparison in due course. for example, a crucial new technique is that of the provision of a split mortgage. this involves rightsizing the performing part of the mortgage based on affordability, as determined by current income, and warehousing the non - performing part. this is to be welcome, but the treatment of the warehoused element merits close attention. for example, is there shared risk between the bank and the customer regarding this element? and is it realistic that full interest accrues on this warehoused element? as the banks move out of their pilot phase on these new techniques and adopt them in their mortgage arrears resolution strategies, our code in this area requires them to publish full details on their websites. so there will shortly be an opportunity for some comparative analysis of the different arrangements that are being promulgated and therefore some public and customer feedback on the design choices that have been made. one important message today is that these efforts underway for mortgage arrears need to be matched for the banks β sme portfolios. earlier in the year, the central bank commissioned an in - depth analysis of the leading banks operational capacity for sme loan review, recovery and resolution. the results were in many respects dismayingly similar to those regarding mortgage arrears operations. for example, the reviews found the following : limited | 1 |
can lead to wrong interpretations and unintended consequences. recent statements from the us fed on tapering of the qe. communication should not be one way. we should also listen. β’ town hall meetings ( at least once every year. chandigarh, jaipur, pondicherry ) β’ june 29 β on illegal, unlawful financial schemes β ponzi, multi - level marketing schemes β cheating people. β’ media conferences β’ post - policy teleconference β’ pre - policy consultations β’ consultative : discussion papers on policy initiatives. on new bank licences, on subsidiarization of foreign banks, deregulating interest on savings bank deposits, white label atms, risk based supervision. 6th attribute : open minded, communicative and consultative. 7th attribute : outreach 33. knowledge institution β effort at outreach β to get exposed to the real world. β’ reserve bank cannot function in an ivory tower. β’ growth, inflation, interest rates and exchange rates are not mere statistics. they impact people β s everyday lives. β’ outreach programme to listen and understand. to explain. β’ chennai β town hall meeting ( 3 years ago on the steps of the egmore museum ) β’ β’ β’ β inflation ( middle aged people ) β growth ( young people ) village immersion programme for drs β how do the poor live? β how do they manage their finances? frontline managers conference β bc : bm makes me wait in the line β humiliated in front of clients. you learn stuff that meetings, seminars, conferences and reports do not give you. bis central bankers β speeches 34. 7th attribute : outreach. understand the world for which we make policy. 8th attribute : takes accountability seriously 35. 36. knowledge institution β takes accountability seriously β’ as rbi, we jealously guard our autonomy β’ β rbi is independent. β we know public interest. no one should interfere. β’ but the autonomy that we assert so vehemently has to be earned. not demanded. need to earn by rendering accountability. β’ we are an unelected body of officials making public policy with enormous implications for people β s everyday lives. β’ accountable for results β explain growth, inflation β’ open to be challenged β’ governor to go before the standing committee of the parliament 8th attribute : takes accountability seriously. 9th attribute : think positive 37. 38. knowledge institution β think positive β’ executive of a shoe company to explore the demand for shoes β’ nobody wears shoes. no demand. β’ rival company : nobody wears shoes. | developments, according to eurostat β s flash estimate, annual hicp inflation was 2. 2 % in march 2006, compared with 2. 3 % in february and 2. 4 % in january. in the short run, inflation rates are likely to remain above 2 %, with the precise levels depending largely on developments in the more volatile components of the index. beyond the short term, changes in administered prices and indirect taxes are expected to significantly affect inflation in 2006 and 2007, and an upward impact may also be expected from the indirect effects of past oil price increases. at the same time, wage dynamics in the euro area have remained moderate over recent quarters and growth in wages is expected to remain contained, partly reflecting strong global competitive pressures, particularly in the manufacturing sector. over the recent past, moderate wage trends have helped to dampen domestic inflationary pressures ; looking ahead, it is crucial that the social partners continue to meet their responsibilities in this regard, also in the context of a more favourable economic environment. risks to the outlook for price developments remain on the upside and include further increases in oil prices, a possibly stronger pass - through of oil price rises into consumer prices than currently anticipated, additional increases in administered prices and indirect taxes, and β more fundamentally β stronger wage and price developments than expected due to second - round effects of past oil price increases. turning to the monetary analysis, the latest developments confirm that the stimulative impact of the low level of interest rates remains the dominant factor behind the high trend rate of monetary expansion. moreover, the annual growth rate of credit to the private sector has continued to increase over recent months, with borrowing by households β especially loans for house purchase β and nonfinancial corporations rising rapidly. overall, strong monetary and credit growth in an environment of ample liquidity in the euro area continues to point to upside risks to price stability over the medium to longer term. to sum up, annual inflation rates are projected to remain elevated in 2006 and 2007, and the economic analysis indicates that the risks to price stability remain on the upside. given the strength of monetary growth and the ample liquidity situation in a context of improving economic activity, crosschecking the outcome of the economic analysis with that of the monetary analysis supports the assessment that upside risks to price stability over the medium to long term prevail. it is essential that medium - term inflation expectations remain firmly anchored at levels consistent with price stability. accordingly, the governing council will continue to monitor very closely all developments | 0 |
provide further momentum to the pace of financial market integration. moreover, the eventual linkage of the domestic payment system with target will also facilitate the transmission of certain risks, not least those of an operational nature. conclusion there are clearly several good reasons why sound regulatory and oversight practices remain vital for the stability of our financial system and why, therefore, the central bank of malta and the mfsa must work more effectively together. it is also evident, however, that on their own these two institutions cannot provide full protection against systemic disturbances, and that the modalities for co - operation which are in place locally need to be strengthened further and extended to other bodies with comparable responsibilities at the international, and particularly at the eu level. ecb. 2002. financial sectors in eu accession countries. | accentuated by the fact that while most sectors of the economy operate in a competitive environment, in many sectors business remains concentrated among a small set of market players. the financial sector is no exception in this regard. furthermore, while the structure of the domestic financial sector has evolved considerably over time, its level of development still falls short of that of the more advanced eu member states. thus, for example, although in the past few years the number of players in the non - bank sector has increased in terms of both number and variety, financial intermediation in malta remains largely bank - based. within the domestic banking sector, moreover, two banks together account for around 90 % of total loans and deposits. a similar picture emerges in the capital market where the degree of capitalisation, the number of market participants and the volume of turnover are still relatively low. in 2003, for example, the ratio of stock market capitalisation to gdp stood at 37 %. while this was higher than in most of the other new member states, it was only around half of the euro area average. annual turnover was even lower, hovering around 4 % of gdp and 12 % of stock market capitalization. where, as in malta, the performance of the financial sector hinges crucially on the fate of a small number of players and where the lack of depth and liquidity in capital markets often causes the market value of a particular debt instrument to deviate from underlying fundamentals, the risk of contagion within the system, as well as, from other systems is accentuated. 3 this latter aspect might become less relevant as financial services providers in malta and in the eu respond to the introduction of the financial services action plan and the eventual establishment of a single market in financial services. on the positive side, such initiatives provide better income - earning and liquidity management opportunities, improve the efficiency with which the sector operates and enhance its capacity to weather sector - specific shocks. on the other hand, the advent of liberalisation and heightened levels of competition could well spur service providers domiciled in malta to take on new risks and venture into non - traditional lines of business. furthermore, as a result of passporting rights, competition is likely to become more acute. the ensuing interdependence between different sectors and countries could well expose the domestic system to new vulnerabilities, including possible contagion from systemic shocks. this will be especially the case upon malta β s entry in the euro area as such a move would | 1 |
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