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governor title date event venue : mr. tariq bajwa : remarks by the governor, state bank of pakistan : april 19, 2019 : 23rd zahid husain memorial lecture : sbp head office karachi remarks by the governor, state bank of pakistan 23rd zahid husain memorial lecture 19th april 2019 honorable chief guest justice ( r ) nasir aslam zahid, learned speaker dr. zhou xiaochuan, distinguished guests, ladies and gentlemen! 1. i feel honored to welcome you all to the 23rd zahid husain memorial lecture today, on β lessons from the role of people β s bank of china in china β s economic rise β by dr. zhou xiaochuan, former governor of the peoples bank of china. 2. the zahid hussain memorial lecture series is one of the most prestigious events organized by the state bank of pakistan every year, and serves a dual purpose : it symbolizes our humble effort to acknowledge the services page 1 of 7 rendered to the nation by mr. zahid husain β the first governor of the state bank. and second, the lectures offer an opportunity for intellectuals, academics and policymakers to come together and engage in healthy and constructive debates on contemporary economic issues and challenges. while we may be in variance with some of the viewpoints expressed by our eminent speakers, we nonetheless wholeheartedly welcome the opportunity to learn from their understanding and interpretation of complex economic interactions, and their efforts to deal with the identified issues. ladies and gentlemen! 3. but before i introduce our eminent speaker, please allow me to briefly recognize the services rendered to our country by mr. zahid husain. as we are all aware, this country faced incredible challenges immediately after independence. in the words of quaid - i - azam muhammad ali jinnah, we got a β mutilated, truncated and moth - eaten β country. 1 pakistan β s chances of survival did not appear encouraging during those earlier years. it was during these testing times that mr. zahid husain stood out amongst the dedicated lieutenants of our founding father. 4. mr. zahid husain was among the principal architects of pakistan β s financial and planning system. his commitment to public service and nation - building, and his resolve and ability to overcome multiple, significant challenges faced by the new - born country, set him apart from β truncated state, divided nation β ( ch. 2, p. 40 β 60 ) from β the struggle
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news conference berne, 14 december 2017 andrea m. maechler introductory remarks by andrea m. maechler i will begin my remarks with a review of the situation on the financial markets, before going on to discuss the progress made in reference interest rate reform. situation on the financial markets let me start with developments on the financial markets. the monetary policy pursued by the large central banks was once again the focus of attention for the financial markets in the second half of the year. given moderate inflation growth, financial market participants are expecting only a very gradual normalisation of monetary policy across the world. against this backdrop, government bond yields have remained persistently low. muted expectations regarding a move away from expansionary monetary policy, coupled with favourable economic data and good corporate results, have contributed to largely positive risk sentiment on the financial markets. this has been reflected, for instance, in a stock market rally, lower yield spreads on corporate bonds and reduced demand for safe - haven assets such as the swiss franc. in this positive market environment, volatility has remained low and volatility for the us equity and bond markets, calculated using option prices, has dropped to record lows ( cf. chart 1 ). despite positive economic data in europe, european stock indices have risen only moderately. the stoxx europe 600 has climbed some 3 % since mid - year. one reason for the modest stock market performance in europe is the strengthening of the euro, which impaired corporate earnings growth somewhat. by contrast, us companies recorded a strong increase in profits. furthermore, the prospect of lower corporate tax rates raised expectations of higher profits in the future. against this background, us stock indices reached record highs. the s & p 500 has risen by about 10 % since mid - year. swiss companies have benefited from stronger demand from europe and the weaker swiss franc. the swiss stock market ( smi ) also made substantial gains, up some 5 % ( cf. chart 2 ). page 1 / 5 berne, 14 december 2017 andrea m. maechler news conference the low yields on ten - year government bonds from advanced economies have remained virtually unchanged since mid - year. in the us too, although key rate normalisation is underway and the federal reserve has initiated balance sheet reduction, longer - term yields have risen only marginally until now. on the foreign exchange market, the us dollar initially continued on the downward path it had been following since the beginning of the year. the dollar then strengthened again somewhat
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##ify in the months ahead. 11. it is heartening that there is coordination among developed countries in the management of the crisis. that is welcome and necessary, but not sufficient. in as much as emerging and developing economies are likely to be increasingly impacted by the crisis, going forward two things are necessary. first, in managing the crisis, the implications of that management for emerging and developing economies should be explicitly factored in. second, emerging and developing economies should be taken into confidence and consulted whenever the policies and actions of the developed countries have implications for them.
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y v reddy : issues in managing capital account liberalisation presentation by dr y v reddy, deputy governor of the reserve bank of india, at commonwealth secretariat - world bank conference on developing countries and global financial architecture, held in london, on 23 june 2000. * * * the objectives of this presentation are : ( i ) to suggest the need of some of the developing countries for managing capital account, implying elements of control, regulation and liberalisation as appropriate ; ( ii ) to emphasise the importance of both international and national context in the management of capital account ; ( iii ) to outline the contours of control and regulatory framework and the possible use of these in prioritising capital flows while suggesting the dynamic elements needed to enable liberalisation ; ( iv ) to elaborate the linkages with other external sector policies, while considering the appropriate control and regulatory framework or liberalisation ; ( v ) to highlight the complementary policies that are necessary while considering liberalisation of capital account. this presentation is from the perspective of policy making in developing countries, and is drawn mainly from the indian experience. need it is currently well recognised that although global capital flows have a potential for improving efficiency and growth prospects, they can also trigger instability, due to a variety of reasons. the objective of current deliberations on the international financial architecture is to enhance efficiency of such flows while avoiding, to the extent possible, instability, and managing instability if and when it occurs. these issues are assessed essentially from the view point of developing countries, which, as a group has tended to be more vulnerable to instability arising out of capital flows. though there are some differences of opinion as to whether liberalisation of capital account would necessarily add to growth prospects of developing countries, there are several developments in regard to international trade in goods and services, international business, technology, cross - border flows of capital, etc. that would necessitate a more active management of capital account, with a view to continuously assessing the costs and benefits of liberalisation vis - a - vis control or regulation. in the current debate on international financial architecture, there is no settled position on several of the actions being considered. in respect of liberalisation of capital account, however, there appears to be a broad consensus, viz. such a liberalisation is desirable, should be gradual, well - sequenced and undertaken in conjunction with several other measures at micro and macro level. in most cases, the desirability of limiting total external debt, especially short - term is generally
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β ve had to look under the bonnet and find out how all parts of the engine work. but let me add that the challenges for the next eight years could be substantially different, and could be even more daunting. what do you think the key challenges are going to be for the next president? let me outline four main challenges. first, global cooperation is eroding. the capacity of global policymakers to deal with shocks to the global economy is today less than it was previously. the kind of coordinated action that we saw back in 2008 would be more difficult to achieve today. i β m not saying it would be impossible, but it would be more difficult. second, the eurozone β s structural weaknesses, its lingering fragilities, are not going to go away soon. i β m not dismissing all the good work being done in brussels and other places to strengthen the european stability mechanism and to complete banking union, which is something that we didn β t have eight years ago, and that β s clear progress. but we β re still only half way. and as long as this journey is not completed, new crises will inevitably come, and we have to stand ready to ride out those crises. third, as the ecb, we do have instruments, and we β ve shown that we β re ready to use them and even design new ones while staying within our mandate. but the cost of using any given instrument might be increasing, which makes the trade - offs more acute. let me give an example. rates being low for long may eventually create financial stability risks. so far, they β ve been limited, scattered around the continent, around sectors, around jurisdictions, and they could be addressed using targeted macroprudential instruments. but most of these macroprudential instruments are about addressing risk in the housing sector ; there is little they can do today about risks in the corporate sector, or in shadow banking. and finally, there are mounting challenges to our independence. the world today is different from the one we faced in 2011 or 2012. there is widespread mistrust of experts, and what are central bankers if not experts? european politics is much more fragmented, both within countries and at the european level, than it was eight years ago, and that has been evidenced by the latest european election. the temptation to either overburden central banks with a variety of objectives which politicians cannot achieve, or blame them for political failures, will be greater, and that β
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scams has exposed consumers to increasingly sophisticated fraud schemes that can be difficult to detect and prevent. this is why individual firms must be proactive, ensuring they incorporate security by design when developing new payment solutions. innovation is required to keep pace with criminal elements seeking to disrupt the payments ecosystem, thereby undermining public trust in the broader financial system. the fight against fraud is not limited to any individual firm - the entire ecosystem, including both financial and non - financial stakeholders, must work together to meet the challenge of evolving fraud techniques and typologies. this is why β at the central bank - we have been engaging with a number of large tech firms since the start of the year, including google, encouraging them to do more to ensure they are not facilitating consumer harm. i am pleased that progress has been made in this regard and welcome google's announcement last week that they will introduce a verification process for financial services advertisers. an effective financial services verification policy is a key disruptive tool in the fight against online financial scams. for that reason, in particular, i want to welcome the establishment of the anti - fraud forum under the strategy. this forum will seek to enhance the formal cooperation between the financial sector, telecoms, and social media companies, whose networks and platforms are often utilised to propagate fraudulent activity. let me conclude. as minister chambers outlined, the overarching objective of the national payments strategy is to build and enhance public trust in the payment system, by ensuring that it works in the best interests of all consumers and businesses. ultimately, the success of the national payments strategy will be largely determined by the organisations in attendance today, and the degree to which we all engage in and support this multi - year programme of work. the department of finance has set out the roadmap for the future of the irish payments ecosystem, and it is now up to us, as a collective, to put our words into action. i would like to thank you all again for attending the event today. we have arranged a small reception which i hope some of you will be able to stay to attend. 2 / 3 bis - central bankers'speeches thank you. 3 / 3 bis - central bankers'speeches
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boost confidence in the euro area β s banks. bis central bankers β speeches
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of 2022. 2 / 4 bis - central bankers'speeches for now, our assessment is that strong wage growth mainly reflects " catch - up " effects related to past inflation, rather than a self - fulfilling dynamic where people expect higher inflation in the future. but to assess how wages are evolving and whether they pose a risk to price stability, we will be closely monitoring a number of developments. first, whether firms absorb rising wages in their profit margins5, which would allow real wages to recover some of their past losses without the increase being fully passed through to inflation. second, whether there is some easing of labour market tightness, which would prevent excess demand for labour from becoming a driver of persistently high wage demands. and third, that inflation expectations remain anchored, which ensures that, when the current shock passes, wage and price - setting will be guided by our 2 % inflation target. in other words, we will need to remain attentive until we have firm evidence that the conditions are in place for inflation to return sustainably to our goal. that is why we have said our future decisions will ensure that our policy rates will be set at sufficiently restrictive levels for as long as necessary. and we have made those future decisions conditional on the incoming data, meaning that we can act again if we see rising risks of missing our inflation target. conclusion let me conclude. we have faced a major inflation shock and we have made a major policy adjustment in response. the effects of that adjustment are increasingly being felt and inflation pressures are easing. but there is still a journey ahead of us. our monetary policy is in a phase where we need to be attentive to the different forces affecting inflation β but always firmly focused on our mandate of price stability. 1 feldman, g. ( 1993 ), the great disorder : politics, economics, and society in the german inflation, 1914 - 1924, oxford university press. 2 bobasu, a., di nino, v. and osbat, c. ( 2023 ), " the impact of the recent inflation surge across households ", economic bulletin, issue 3, ecb. another study by ecb staff looks at the effects of fiscal measures on low - income households. see pallotti, f. paz - pardo, g., slacalek, j., tristani, o., violante, g. ( 2023 ), " who bears the costs of inflation? euro area households and the 2021
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fritz zurbrugg : the swiss national bank β s investment policy β options and limitations speech by mr fritz zurbrugg, member of the governing board of the swiss national bank, at the money market event, zurich, 27 march 2014. * * * accompanying charts can be found at the end of the speech or on the swiss national bank β s website the speaker would like to thank dirk faltin and adriel jost for their valuable support in preparing this speech. he is also indebted to erich gmur, marco huwiler and sandro streit for their insightful comments. ladies and gentlemen i would like to welcome you to our traditional money market event in zurich. i am delighted that so many of you have responded to our invitation. the focus of my comments today will be the investment policy of the swiss national bank ( snb ), since it is now exactly ten years since the new national bank act ( nba ) came into force, opening up new options for the snb in the management of its foreign exchange reserves. today i want to take the opportunity of presenting an assessment and acquainting you with the most important aspects of our investment policy. one of the most important and striking changes since 2004 has been our investments in equities and i will therefore focus particularly on our equity investments in my remarks. following my presentation, my colleague dewet moser will take a closer look at developments on the foreign exchange and money markets. monetary policy conditions our investment policy differs in a number of ways from that of other large investors, whether they be private sector investors or sovereign wealth funds. this is due to the snb β s special role. as an independent central bank, the snb conducts switzerland β s monetary policy. our investment policy is always subordinated to monetary policy and can only be understood in the context of this policy, which is currently shaped by the minimum exchange rate of chf 1. 20 against the euro. we introduced the minimum exchange rate in september 2011, and since then we have enforced it consistently. you will recall how, at the time, the debt crisis in the euro area was threatening to deteriorate. the upward pressure on the swiss franc was immense. for the snb, it was important to ensure price stability and avert serious damage to the swiss economy. seen from the current perspective, this was certainly achieved. two and a half years after its introduction, the minimum exchange rate remains a key
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the stock market. in other words, the snb basically does not select individual equities. instead, we use rule - based procedures to invest in a very broad equity universe. at present, the snb holds some 6, 000 securities in more than ten currencies. the equity universe on which our equity investments is based covers some 90 % of global market capitalisation. we mainly invest in mid and large cap companies. this makes sense, particularly in view of the special liquidity requirements i have already mentioned. in addition, we also place funds in small cap companies. in terms of market capitalisation these holdings only account for a small portion of our equity portfolio, but in numbers they make up about three - quarters of all the securities we hold. this, too, shows the breadth of our equity universe. when selecting our equities, we use a benchmark. this is a combination of various commonly used indices, assembled by us. as soon as we have determined the benchmark, equity investment becomes a largely automatic process. why does the snb not make targeted investments in individual companies or sectors where an above - average return can be expected? in other words, why do we not engage in stock picking? warren buffett is quoted as having said, wide diversification is only required when investors do not understand what they are doing. i can assure you that our investment specialists have an excellent understanding of what they are doing. however, we choose to have recourse to a broad equity universe for the following four reasons. first, we achieve a greater diversification effect within the equity segment by investing as widely as possible, across both regions and sectors. second, it should not be our objective to enforce strategic or, indeed, political interests by means of our investments in individual companies. this could limit our monetary policy room for manoeuvre and would also make our position vulnerable. due to the size of our foreign exchange reserves, the snb could quickly acquire large shares in companies, and this might be misconstrued as strategic participations in the event of active management of our equity holdings and corresponding overweightings in some areas. our strategy ensures that holdings in individual companies remain low. third, through a passive strategy we can minimise our market influence, since our policy does not cause us to give preference to individual securities or sectors. fourth, our investment horizon is very long - term, that is, it spans several business cycles. the academic literature shows that
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mark carney : summary of the latest monetary policy report opening statement by mr mark carney, governor of the bank of canada, at a press conference following the release of the monetary policy report, ottawa, 24 april 2008. * * * today, we released our april monetary policy report, which discusses current economic and financial trends in the context of canada's inflation - control strategy. growth in the global economy has weakened since the january monetary policy report update, reflecting the effects of a sharp slowdown in the u. s. economy and ongoing dislocations in global financial markets. growth in the canadian economy has also moderated. buoyant growth in domestic demand, supported by high employment levels and improved terms of trade, has been substantially offset by a fall in net exports. both total and core cpi inflation were running at about 1. 5 per cent at the end of the first quarter, but the underlying trend of inflation is judged to be about 2 per cent, consistent with an economy that is running just above its production capacity. the u. s. economic slowdown is projected to be deeper and more protracted than in the january update. the projection reflects a more pronounced impact on consumer spending of the contraction in the u. s. housing market and significantly tighter credit conditions. the deterioration in economic and financial conditions in the united states will have direct consequences for the canadian economy. first, exports are projected to decline, exerting a significant drag on growth in 2008. second, turbulence in global financial markets will continue to affect the cost and availability of credit. third, business and consumer sentiment in canada is expected to soften somewhat. nevertheless, domestic demand is projected to remain strong, supported by firm commodity prices, high employment levels, and the effect of cumulative easing in monetary policy. the bank projects that the canadian economy will grow by 1. 4 per cent this year, 2. 4 per cent in 2009, and 3. 3 per cent in 2010. the emergence of excess supply in the economy should keep inflation below 2 per cent through 2009. both core and total inflation are projected to move up to 2 per cent in 2010 as the economy moves back into balance. there are both upside and downside risks to the bank's new projection for inflation ; these risks appear to be balanced. in line with this outlook, some further monetary stimulus will likely be required to achieve the inflation target over the medium term. given the cumulative reduction in the target for the overnight rate of 150
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##a is the pride that its staff members take in providing objective analysis. that devotion first and foremost to objectivity has led to the interesting phenomenon that, while the overall economic views of administrations have swung widely, the policy advice given by their successive ceas has undergone far smaller swings. even though the average tenure among members of the council and staff economists is short - - often just a year or two - - there have been some sources of continuity. perhaps the most remarkable element of continuity has been the service of catherine furlong, better known to her friends and colleagues as " kitty. " she recently retired after fifty - four years of service, with her tenure extending back to the earliest years of the agency during the truman administration. among other important roles, kitty was the fact - checker - in - chief at the cea - - an important position when the stock of the agency depends critically on its credibility. for presidents on down, having your material fact - checked by kitty meant that you were going to meet the gold standard of credibility. the type of continuity she provided is rare in the government and contributed to the cea's success over the years. among its contributions, the cea serves as an in - house research organization that can assemble, analyze, and present information relevant to an economic decision. many of the members and staff come from research backgrounds and are uniquely positioned to play this role in the administration. because the cea has retained its small size over the years, it can be quick and nimble in ways that are difficult for some larger agencies. moreover, because the cea is viewed as a neutral agency without ties to any particular constituency, the cea often has played an important role on interagency committees and working groups, ensuring that economic insights are heard at debates about key issues. along those lines, perhaps the most important role of the cea has been to scuttle many of the more adventuresome ideas that inevitably bubble up through the machinery of government. in every administration, all sorts of ideas for changes in spending, tax, and regulatory policy are developed by one agency or another and then circulated within the administration. a few of these ideas are genuinely good. however, many of them are ill - advised and not well thought through and fail miserably the test of benefits exceeding costs. often, it falls to the cea to point out the flaws and derail these ideas. this role of the cea is wholly unheralded - - after
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pace and content of capital account liberalisation will depend upon the future events, but the regulatory regime has to be clear and transparent. a regulatory regime that creates uncertainty and obfuscates imposes tremendous cost on the economy and the society. e. finally, the issue of fair pricing. forex customers, especially from small and medium enterprises and retail segments, have approached us on several occasions highlighting β high β charges levied by authorised dealer banks on their forex transactions. not only there appears to be a wide variation amongst the banks in the charges levied on the smaller customers, there appears to be a complete lack of transparency regarding the information on charges levied for such customers. i am aware that fedai has issued a special circular in this regard but i once again urge all banks assembled here to pay due attention to this aspect before calls for regulation of forex rates become more vocal. 33. i wish the conference, whatever is left of it, all success. i also wish each one of you all success in the years to come. as i leave the stage, rather than singing along with frost that we have miles to go before sleeping, i would rather echo tennyson β s brook ( read markets ) that will surge along irrespective of men ( like me or any other ) who may come and go. i shall of course continue to watch the developments from the sidelines. good bye. bis central bankers β speeches
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forward. 17. please join me in welcoming arvind subramanian. bis central bankers β speeches
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you well during your deliberations for the rest of the day as we search for new and innovative ways to address the challenges that we collectively face in an effort to make this country of ours truly great, in amplification of the inspiring achievements of teams sa at the london 2012 olympic games, that have made us all proud. i thank you. bis central bankers β speeches
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the cma are not familiar with securitisation ; many mortgage and instalment sale contracts have already been securitised, but these have tended to be very straightforward β plain vanilla β securitisations. the international financial market turbulence has resulted in slower global economic growth, and is projected to continue doing so. recent forecasts suggest a significant slowdown in growth in the us, which is bound to spill over to the rest of the world. talk of decoupling from the united states is dodgy, at best. accordingly, cma exports β and especially those exports destined for the countries most affected by the financial turmoil β are likely to be held back to some extent. as far as the money market in the cma is concerned, liquidity has remained adequate throughout this episode of international financial market turmoil. the lack of enthusiasm to do business with other private - sector participants in the money market has not emerged in the cma. interbank lending, for instance, has continued without any disruption, and the interest rates at which interbank funds are placed have not risen significantly ( as would have happened if perceptions of risk had deteriorated ). for instance, the margin between the south african reserve bank β s repurchase rate and the sabor, or south african benchmark overnight rate, has not changed much over time. the turbulence prompted investors to demand higher risk premia on a wide variety of securities. securities issued by emerging - market countries were affected, and the cma was no exception. accordingly, the spread of debt instruments issued by cma governments over β risk - free β us treasuries have widened. however, as can be seen in the graph, this widening was mostly attributable to declining us treasury yields, which attracted investors owing to their safe - haven status. while it seems fairly safe to say that the pricing of financial instruments has been influenced by this turmoil, it is more difficult to establish what the impact has been on non - resident capital movements β in other words, the magnitude of capital flows rather than the price thereof. south africa currently runs a sizable deficit on the current account of the balance of payments, and has since the emergence of the deficit been able throughout to finance the shortfall through capital inflows. since late 2007 the composition of the flows has changed : portfolio inflows have faltered but at the same time inflows of foreign direct investment and other investment funds have picked up considerably. the turmoil has so
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thomas jordan : swiss national bank β s assessment of the economic situation introductory remarks by mr thomas jordan, chairman of the governing board of the swiss national bank, at the media news conference of the swiss national bank, berne, 19 june 2014. * * * ladies and gentlemen welcome to the swiss national bank β s six - monthly news conference. as usual, i will begin by explaining the monetary policy decision and outlining our assessment of the economic situation. afterwards, jean - pierre danthine will present our latest financial stability report, before fritz zurbrugg comments on current developments in the financial markets. following our introductory remarks, we will be pleased to answer any questions you might have. monetary policy decision i will begin with the monetary policy decision. the snb is maintaining its minimum exchange rate of chf 1. 20 per euro. the target range for the three - month libor will remain unchanged at 0. 0 β 0. 25 %. the swiss franc is still high. we will therefore continue to enforce the minimum exchange rate with the utmost determination. if necessary, we are prepared to buy foreign currency in unlimited quantities for this purpose. with interest rates close to zero, the minimum exchange rate is the right tool to avoid an undesirable tightening of monetary conditions. this applies especially if the upward pressure on the swiss franc were to intensify once again. and, if required, we are also willing to take further measures. our new conditional inflation forecast shows that inflationary pressure has receded once more in the medium term. the inflation forecast for the coming quarters is slightly higher than in march. this is because the departure point for the forecast has moved upwards, as inflation was somewhat higher in may than expected. however, from mid - 2015 onwards, inflation will be lower than forecast in the previous quarter. the reason for this is that the global economic outlook has deteriorated slightly. another factor is the unexpectedly weak inflation in the euro area. at 0. 1 %, the inflation forecast for the current year is 0. 1 percentage points higher than in march. for 2015 and 2016, the new forecast β of 0. 3 % for 2015 and 0. 9 % for 2016 β is 0. 1 percentage points lower, in each case, than at the previous monetary policy assessment. it is important to bear in mind that our forecast is conditional. it is based on the assumption that the three - month libor remains at 0. 0 % over the next three years
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be participating today - i hope we manage to play a small part in sending you down that path. 1 / 2 bis - central bankers'speeches finally, on that note, i would like to encourage everyone to reach out to others joining today. strong networks of both mentors and peers can be a lifeline. they are critical to entering and completing advanced degree programs. they help navigate the professional landscape. and they will offer both support and advice as you advance in your career. and we do hope that for some of you, that path is economics, and you will make the federal reserve a stop along the way. thank you for joining us and enjoy the day. 2 / 2 bis - central bankers'speeches
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standard supervisory measures and early intervention measures, for instance. as we are obliged to apply the least intrusive tool, the overlap often prevents us from taking early intervention measures. we also need to expand our toolbox to include a harmonised moratorium tool. finally, national insolvency laws need to be aligned. all this would make the single resolution mechanism even more effective. these measures will help to better contain risks in the future. however, we also have to reduce the risks we face today. non - performing loans ( npls ) currently pose one of the biggest risks to the european banking sector. they need to be dealt with first and foremost by the banks themselves. some progress has been made on this front, although more needs to be done. in addition, supervisors need to play their part. european supervisors closely monitor how banks approach npls, and in 2017 and 2018 the ecb published guidance on the subject. the aim is not only to resolve the current npl problem, but also to keep it from recurring in the future. finally, legislators also need to address the issue of npls. across the euro area, legal and judicial systems differ substantially in terms of effectiveness and efficiency when it comes to 1 / 2 bis central bankers'speeches dealing with npls. the time and resources required to resolve npls thus differ from country to country. national legislators should strive to improve legal and judicial frameworks. in the end, tackling npls requires a joint effort by banks, supervisors and legislators. to sum up, there are still things we can do to reduce risks in the euro area. in doing so, we will grow closer together, and that in turn will help to reduce risks further ; european banking supervision is a prime example of this. we must thus be careful not to reach a point where we neither reduce risks nor grow closer together. we have to keep moving on both fronts ; only then will we reach our destination of a more stable and prosperous european union. 2 / 2 bis central bankers'speeches
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sabine lautenschlager : risk reduction in the euro area β how low can you go? contribution by ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the european central bank, eurofi newsletter, 26 april 2018. * * * the financial crisis demonstrated that risks need to be kept in check, both at bank level and at systemic level. to that end, the euro area has taken many steps over recent years. it has grown closer together and this has helped to reduce risks. the european banking union is the centrepiece of these efforts. the first pillar, european banking supervision, was set up in 2014 to ensure that banks across the euro area are supervised to the same high standards. to that end, we have harmonised the supervisory approach applied to the 118 largest banking groups. in the process, we made use of the discretion contained in both the european and the national frameworks. this enabled us, for example, to move in 2014 from 19 different supervisory review and evaluation processes to a single harmonised one. this and many other changes in day - to - day supervision help to reduce risks and ensure that banks remain both safe and sound. the second pillar of the banking union was established in 2016 : the single resolution mechanism. this ensures that banks can fail in an orderly manner. the failure of a bank must not pose a threat to financial stability or to public funds. recent bank failures have shown that the new system works ; supervisory and resolution authorities have cooperated smoothly and effectively. this new institutional set - up is a good basis for reducing risks, but it needs further refinement. regulation, for instance, needs to be further harmonised. to reap the full benefits of the banking union, we need a harmonised regulatory framework. first, there is the issue of options and national discretions ( onds ). while some of these onds have been harmonised by supervisors, others lie in the hands of national legislators. waivers for large exposure limits, for instance, are still fragmented across the euro area. this in turn affects other cross - border waivers, such as that on liquidity requirements. more generally, it stands in the way of a truly european banking market, as do the other onds that fall within the competence of national legislators. second, recent bank failures have shown that we need to further harmonise the tools for crisis management. we need to remove the overlap between
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relative telecoms prices has deepened, and service providers have increased the variety of packages offered. in fact, competition between operators focuses increasingly on the speed and quality of data services provided through both fixed and mobile means. another encouraging sign is the interest of international players in the mexican market. 1 to turn to our second focus, the energy sector has also suffered from high prices and frequently, insufficient supply. crude oil production has been declining continuously since 2004. inadequate pipeline infrastructure has limited lower - price gas imports, as well as lower - cost, more efficient distribution. electricity prices in mexico remain well above those in its key trading partners. 2 behind these problems lie decades of state control, with little or no benefit from outside participation. the energy reform seeks to confront this reality by allowing private participation in virtually all aspects of the sector. this includes public bidding for oil and gas exploration and production contracts, and permits for production of oil products and petrochemicals, transport, storage, distribution, and sale of hydrocarbons and hydrocarbon products. also, permits are to be granted to generate and sell electric power, as well as import electricity using mexico β s national electric system. 3 the reform contemplates a wholesale market for the purchase and sale of electricity, with retail operations also possible. electricity transmission and distribution remain in the hands of the state, with the outsourcing of private contractors permitted. for an analysis of recent price developments in the telecom services sector, see banco de mexico ( 2015 ), informe trimestral, octubre - diciembre 2014, box 1, february. the negative impact of the inadequate infrastructure of the gas pipeline system is illustrated in banco de mexico ( 2013 ), inflation report, july β september 2013, box 2, november. the national electric system is mainly composed of the national transmission and general distribution networks, the power plants that deliver electricity to the national networks, and the equipment and facilities used to control the system itself. bis central bankers β speeches as to oil and gas exploration and extraction, four different types of contract are on offer, namely licenses, profit - sharing, production - sharing, and services. in the first three, private companies can register the value of the expected profits backed by the contracts on their books. in the wake of the so - called round zero in which pemex applied for certain fields and was allocated some of them, the first round of public bidding has begun. two auctions have been announced, one for exploration
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march. bis central bankers β speeches goes, higher interest rates in the united states associated to a stronger economy in that country are a net positive for emerging market economies. β’ the ongoing efforts from the part of the federal reserve and other central banks in the advanced economies in terms of their communication with the public and the transparency of their decisions, are expected to play a key role on how markets react and emerging economies are affected as monetary policy in those economies goes back to normal. as evidence in support of this argument, it is noted that anticipated interest rate increases by the federal reserve have been followed by minor pullbacks in capital inflows to emerging markets, while the impact of unanticipated moves has been much larger. 6 β’ after years β and perhaps decades in some cases β of continued policy efforts in some key areas, emerging economies in general are today more resilient than they were in the past to external shocks. on the other hand, there are also compelling arguments calling for extra caution going forward, as international financial markets adjust to monetary policy normalization in the united states : β’ unconventional monetary policies affect financial markets in a way that differs from the more conventional interest rate policy, and the extent of such difference is largely unknown. for instance, the large - scale asset purchase programs deployed by the federal reserve and other central banks in advanced economies have affected global interest rates along the yield curve through a significant compressing effect on bond risk and term premia, something that does not necessarily follow from changes in short - term interest rates. 7 thus, there is a risk that such premia, and particularly the term premium, quickly decompress, giving rise to an abrupt adjustment of long - term interest rates as the federal reserve begins to tighten. β’ the marked divergence in the expected path for the federal funds rate between that implied by market instruments ( such as federal funds futures or overnight indexed swaps ) and that obtained from fomc projections and forecasters surveys, increases the possibility of surprises and sharp adjustments in financial markets. β’ the share of the nonbanking sector in the intermediation of international credit has risen substantially after the crisis, with the growing role of the asset management industry being particularly noteworthy. it has been noted that this kind of investors may be more prone to herd behavior, and therefore emes may be facing an increased risk of contagion during episodes of financial turbulence. 8 it is of course impossible to determine ex ante which of these views is correct.
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the leverage ratio, and there are also two new liquidity ratios, capital buffers, loss - absorbing capital and individual capital add - ons under the supervisory review and evaluation process ( srep ). these are worthwhile additions from a supervisory vantage point because they give us a tailormade toolkit to control the various risks which can cause a bank to fail. but for credit institutions, the new system means that their management systems now have to take into account not just one metric, but several of them. so a decision whether or not to grant a loan no longer depends solely on the return and the efficient allocation of equity, but also, for 3 / 4 bis central bankers'speeches instance, on the impact on the balance sheet structure, which is regulated by the net stable funding ratio ( nsfr ). the toughest challenge probably lies in coping with the interplay between the various minimum standards and the need to simultaneously adhere to minimum capital requirements, the leverage ratio, requirements for an institution β s liquidity and balance sheet structure as well as varying point - in - time and institution - specific criteria β on this magnitude, this is uncharted territory. what all this means is that the optimisation problem suddenly becomes much more complicated, raising the question as to whether compliance can be achieved by means of a simple equation. or does a more multifaceted approach need to be adopted? it is precisely this complexity which makes a smart approach to integrated risk management so crucial. there is the question, of course, of the levels which this integrated management approach ought to address. can different metrics be broken down to individual business activities? or does it make more sense to look at the bank as a whole or at portfolio level in order to identify risk drivers and render management measures more transparent? all this is forcing institutions to rethink both their operational and strategic set - ups. one aspect, i believe, is particularly crucial. institutions should not and cannot steer their business solely on the basis of compliance with the regulatory minimum requirements. even if i do have to concede that the rules which supervisors including myself have created naturally curtail the scope of management action. but there is nonetheless still a great deal of entrepreneurial scope which institutions can capitalise on β by running smart business models, by adopting innovative strategies, and by smoothly putting them into operation. business models that operate solely on the basis of satisfying the regulatory minimum requirements cannot be successful over the long run. adhering to the minimum requirements
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hermann remsperger : euro markets in a global context speech by professor hermann remsperger, member of the directorate of the deutsche bundesbank, at the gulf euro summit, held in dubai, on 8 october 2000. * * * i european economic and monetary union ( emu ) has brought about important changes in the framework for financial markets. this is particularly true of the 11 european countries which have merged their national currencies into a single currency, the euro, and which have been conducting a common monetary policy since 1999. however, these changes also apply to market participants in other countries which maintain economic and financial relations with the countries participating in emu. they, too, no longer have to deal with different emu currencies but only with a single one. thus, non - participating states have increasingly perceived the emu countries as a single area. let me start by saying that the euro area represents a relatively large economy. in economic terms, the euro area comes close to the size of the united states ; both economic areas are far larger than japan. measured in terms of world gdp, the us share is about 20. 8 %. the share of the euro area amounts to 15. 5 %. it is significantly larger than that of japan ( 7. 4 % ). the population of the euro area, at around 290 million, is larger than that of the united states ( 270 million ) and of japan ( 125 million ). the size and capacity of an economic area is of significant relevance to its currency and to the evolution of its financial markets : economies of scale play an important role, especially in determining the degree to which the money is used. a large economic area generates a large β natural constituency β for its own currency. if a currency is widely accepted, this normally lowers transaction costs, thus attracting international customers and spreading the currency even farther beyond its domestic area. the argument of size is all the more important since the euro area is highly integrated into the world economy. the euro area accounts for one - fifth of world trade, excluding trade within the euro area. this is more than the corresponding ratio for the united states, which is 15 %, or japan, which is just under 9 %. 1 ii if the three large economic regions are examined with respect to their different financing structures then it quickly becomes apparent that loan - based financing via the banking sector is still important for the euro area. the volume of credit which euro - area monetary financial institutions have
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##tre les deficits budgetaires durant les recessions sans depasser la valeur de reference de 3 %. bref, il leur permet de se constituer, durant les periodes economiques normales, un volant de securite budgetaire auquel ils peuvent recourir pour resister a un choc asymetrique. b. les preparatifs techniques approfondis ont permis l β introduction reussie de l β euro sur les marches 1. d β un point de vue technique, le passage a l β euro au cours du dernier week - end de 1998 a ete une reussite au cours du week - end de passage a l β euro, le sebc a suivi le deroulement des operations de conversion a la bce, dans les banques centrales nationales participantes et dans les principaux etablissements. des echanges reguliers d β informations ont eu lieu par l β intermediaire d β un reseau de points de communication entre la bce et les bcn. il n β a ete signale aucun incident susceptible d β entraver le demarrage sans heurt du systeme, qui a ainsi pu debuter normalement ses activites le 4 janvier, a l β ouverture des marches. ces resultats temoignent de la qualite des preparatifs auxquels se sont livres la communaute des banques centrales et les operateurs prives des marches de capitaux, ces derniers mois et annees. pour ce qui concerne la communaute bancaire et financiere francaise, la fin de l β annee derniere a ete consacree a la planification et aux phases de tests en vue d β organiser le basculement des marches financiers au cours du dernier week - end de 1998. c β est grace a ces preparatifs que le processus de conversion a ete un grand succes. 2. ces preparatifs ont permis une introduction reussie de l β euro sur les marches de capitaux le 4 janvier, l β introduction de l β euro s β
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travail et a la creation d β emplois, meilleure efficacite des systemes de protection sociale etc. - en quatrieme lieu, tous les responsables economiques d β europe doivent etre lucides sur la question cruciale de la competitivite. la politique economique de la periode anterieure a l β introduction de l β euro consistait a surveiller la balance commerciale, la balance des paiements, les marches de change et de taux. les gouvernements recevaient ainsi en retour des informations constantes sur les principaux indicateurs de l β evolution de l β economie nationale et pouvaient agir en consequence. avec l β avenement de l β euro, ces indicateurs ont pour la plupart disparu au niveau national, mais ils subsistent naturellement au niveau de la zone euro. d β ou l β importance des dispositions du traite sur la coordination des politiques budgetaires et des politiques economiques. neanmoins, les regles de l β economie de marche continuent de s β appliquer a chacune des economies. les consommateurs creent des emplois lorsqu β ils choisissent les biens et services qu β ils estiment presenter le meilleur rapport qualite / prix. les chefs d β entreprise peuvent repartir ces emplois sur differents sites et pays en fonction de la competitivite relative de ces sites. il faut donc que les dirigeants de chaque economie nationale suivent plus attentivement encore qu β auparavant les indicateurs de competitivite tels que l β evolution des couts unitaires de production, des depenses des entreprises, et l β environnement fiscal et reglementaire. contrairement a la periode anterieure a l β euro, toute perte de competitivite ne s β affichera pas rapidement sur les ecrans radar que sont les comptes exterieurs et
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sabine mauderer : putting our money where our mouths are - joint efforts to finance the global green transition speech by dr sabine mauderer, member of the executive board of the deutsche bundesbank, at the un climate change conference cop 27, sharm el - sheikh, 9 november 2022. * * * to limit global warming and adapt to the impact of climate change, large - scale investments are necessary. the international energy agency highlighted in its recent world energy outlook that, to stand a chance to limit global warming to 1. 5 degrees, investments in clean energy alone would have to reach usd 4 trillion a year by 2030 from only usd 1. 3 trillion today. 1 and a study by the london school of economics pointed out this week, even without considering the investment needs in china, emerging and developing countries will have to spend around usd 2. 4 trillion or 6. 5 % of gdp per year by 2030 on climate change adaptation and mitigation. 2 this will require both public and private funds : public money from governments and multilateral development banks especially but not only for adaptation ; and for innovative projects that mitigate climate change, private money is key, be it from private banks, funds, institutional investors or philanthropic organisations. but as such innovative projects are often risky, governments and multilateral development banks may have to take on part of this risk via equity shares to trigger the necessary private investment. such blended finance would give a boost to the green transition in emerging, developing as well as developed economies. yet public and private investors need transparency about climate impact and climaterelated risks to drive the green transition. improving transparency first, helps financial markets to work efficiently and scale up green finance, and second, allows investors to make sure that their funds are being used as they intend. regulators are in the driver's seat when it comes to increasing market transparency around climate - related risks. central banks can play a supporting role in boosting transparency. they can cooperate internationally to identify best practices as well as inefficiencies and existing obstacles. the ngfs is an excellent forum to this end. a recent ngfs study showed that transparency initiatives around the world differ significantly and that numerous divergent taxonomies, standards and guidelines have been developed. to a large degree, these differences reflect the varying needs in different markets. 1 / 2 bis - central bankers'speeches what works well in one country may not necessarily be a suitable blueprint for other countries or regions. that
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of german banks earned their cost of capital last year. what can explain these weak earnings? well, the main culprit in germany seems to be a business model that is relatively dependent on interest income. such a business model poses a major challenge in the current environment of low interest rates. consequently, in the first six months of this year, the operative results of the large german banks were about 8 % below their 2013 levels β a result which was largely driven by a contracting interest margin. nonetheless, banks are also faced with a structural problem in this context : the interest margin has been declining constantly since the mid - 1980s. the banks should therefore reconsider their business models and gear them towards sustainable profitability. to be sure, the need to adapt business models is not only relevant for german banks. however, in its recent financial stability report, the imf finds that german banks are again below average in terms of reforming their business models. again, there is room to catch up with international peers. bis central bankers β speeches an obvious strategy for the german banks would be to diversify their sources of income away from interest income. looking at the cost - side, german banks fare rather well compared to other countries. that is the good news. but there are still options to reduce costs. in this regard, mergers may well be a potential strategy. the german banking market still offers scope for further consolidation β the focus here should, of course, always remain on arriving at a sustainable business model. as a side note : in future, european banking supervision will also keep a close watch on the business models of banks. however, we should not expect supervisors to be the better bankers. at the end of the day, management decisions have to be taken by those who bear the risks and reap the rewards. what the supervisors could do is impose additional capital or liquidity requirements whenever they have doubts about the sustainability of a bank β s business model. 5. conclusion ladies and gentlemen there is no doubt : european banking supervision is an important step forward in ensuring financial stability in the euro area. nevertheless, as i said earlier, unrealistic expectations are the roots of complacency and, consequently, of disappointment. european banking supervision is just the first pillar of the envisaged banking union. it has to be supplemented with the european resolution mechanism for banks. this second pillar of the banking union will be erected in 2016. eventually, the banking union will provide a stable framework for the banking system
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around 180 basis points since may 2014. by the end of 2016, the recovery was clearly firming and further broadening across sectors and countries. incoming data and sentiment indicators in the first quarter of this year suggest that the pace of growth may be gaining momentum. nevertheless, the legacy of the financial crisis still determines today β s economic performance in many respects. owing to a considerable amount of unutilised resources underlying inflation continues to lack a convincing upward trend. headline inflation has increased but that mostly reflects rising energy and food prices. the march flash estimate shows that headline inflation dropped to 1. 5 % from 2 % in february and that underlying inflation decreased from 0. 9 % to 0. 7 %. we had previously warned that headline inflation could decline after march - april as a result of the reduced statistical base effect of comparing this year β s price levels of oil and other commodities with their levels a year ago. the decrease in underlying inflation, however, was disappointing. the domestic drivers of inflation, namely wages, are not yet responding to the recovery and the narrowing output gap. according to our latest staff projections, inflation is expected to move towards 1. 7 % in 2019, but that assumes underlying inflation at 1. 8 % and wage growth at 2. 4 %. the foreseen increase in wages in the baseline scenario is thus essential for the staff projections for growth and inflation to materialise in 2019. furthermore, while near - term projected inflation has been subject to sizeable upward revisions due to energy and food price rises, the medium - term outlook remains largely unaffected. more importantly, the upward path of headline inflation over the coming years remains highly dependent on monetary policy support. against this background, it is appropriate to preserve the degree of monetary accommodation we are currently providing. ensuring a safe and growth - supporting financial system while our monetary policy is primarily geared towards maintaining price stability, the ecb is also 2 / 5 bis central bankers'speeches tasked with identifying and assessing the potential impact of systemic risks on the stability of the euro area financial system. our annual report sets out four key risks. first, the possibility of a rise in global risk premia has increased in an environment of political uncertainty and benign pricing in the markets. second, possible rising negative feedback loops between weak bank profitability, in the face of structural challenges in a low interest rate environment, and low nominal growth. third, political uncertainty which undermines reform efforts, with debt sustainability concerns resurfacing for the sovereign and
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lorenzo bini smaghi : economic policies on the two sides of the atlantic β ( why ) are they different? lecture by mr lorenzo bini smaghi, member of the executive board of the european central bank, at the collegio carlo alberto, moncalieri, 7 november 2008. * 1. * * introduction 1 the united states and the euro area are the two main economic and monetary areas in the world and they are reasonably similar in size, with a population of over 300 million ( 300 million in the united states and 320 million in the euro area ) and gdp of around β¬10, 000 billion at current prices ( at the going rate of exchange of around usd 1. 30 to the euro β us gdp is worth around β¬11, 000 billion, while euro area gdp is worth around β¬9, 000 billion ). the economic policies implemented in these two areas act as a reference for the whole world β s economy. they are carefully scrutinised and compared by academics, market players and commentators. in recent years, the two economies have been compared in a largely asymmetrical way, possibly a hangover from an obsolete institutional setup and analytical reference framework. while in the united states economic policies are mainly assessed on the basis of the us economy β s underlying state, in the euro area the assessment is made on the basis not only of european economic fundamentals, but also, and indeed above all, with reference to economic policy decisions made on the other side of the atlantic. on our continent, monetary and budgetary policies are often judged in relation to what is decided in the united states rather than in their own right. however, it is very rare that the opposite happens. particularly at moments such as we are experiencing right now, one often hears people asking how come monetary and budgetary policies in the euro area do not closely follow the strategies implemented in the united states, without their pausing for a moment to consider whether or not those us policies are suited to the european economy. there is still a kind of unthinking reflex in europe that prompts some people to believe that our economic policy authorities should adopt the same approach as the us authorities, and that we are making a mistake when we do not do so. this kind of asymmetrical assessment was perhaps alright under the bretton woods system, in which the european countries pegged their currencies to the dollar, and under the subsequent fluctuating system in which the individual european countries
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commodities ; certain types of commodity derivatives transactions settled by transitory title transfer ; the purchase and sale of coin and bullion, precious metals, and copper ; and the holding of physical commodities to hedge customer - driven, bank - permissible derivative transactions. under the glb act, congress created the financial holding company framework, which allowed bank holding companies with bank subsidiaries that are well capitalized and well managed4 to engage in expanded financial activities. 5 three provisions in the glb act have section 4 ( c ) ( 8 ) of the bank holding company act, 12 usc 1843 ( c ) ( 8 ). 12 cfr 225. 28 ( b ) ( 8 ). 12 usc 24 ( seventh ). in addition to the capital and management requirements, the glb act also requires the subsidiary depository institutions of financial holding companies to have at least a β satisfactory β rating under the community bis central bankers β speeches enabled certain financial holding companies to engage in commodities activities. the first provision β section 4 ( k ) ( 1 ) ( b ) of the bank holding company act β authorizes a financial holding company to engage in any activity that the board finds to be β complementary to a financial activity. β this provision in the glb act enables financial holding companies to engage in commercial activities that complement their financial activities, so long as the activities do not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally. 6 in reviewing requests for complementary authority, the board is required to consider whether performance of the activity can reasonably be expected to produce benefits to the public β such as greater convenience, increased competition, or gains in efficiency β that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interest, or unsound banking practices. 7 beginning in 2003, the board issued a limited number of orders permitting individual financial holding companies to engage in specified commodities - related activities as complementary activities under this statutory authority. these activities included physical settlement of derivative contracts involving certain approved commodities and spot trading of those commodities. 8 a dozen financial holding companies currently have this 4 ( k ) authority. 9 in addition, a subset of these companies has been granted additional authority to engage in energy tolling and energy - management activities. energy tolling involves making fixed, periodic payments to power plant owners that compensate the owners for their fixed costs in exchange for the right to all or part of their plants β power output. energy - management activities
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activities that could threaten its safety and soundness. federal reserve review of physical commodities activities this past january, the federal reserve invited public comment through an anpr on a range of issues related to the commodities activities of financial holding companies. the scope of our ongoing review covers commodities activities and investments under section 4 ( k ) complementary authority, merchant banking authority, and section & 4 ( o ) grandfather authority. recently, some of the financial holding companies engaged in physical commodities activities have publicly indicated that they are reducing or terminating some of these activities. as the anpr explains, we are exploring what further prudential restrictions or limitations on the ability of financial holding companies to engage in commodities - related activities as a complementary activity are warranted to mitigate the risks associated with these activities. such additional restrictions on complementary commodities activities could include reductions in the maximum amount of assets or revenue attributable to such activities, increased capital or insurance requirements on such activities, and prohibitions on holding specific types of physical commodities that pose undue risk to the company. we also are exploring what restrictions or limitations on investments made through the merchant banking authority would appropriately address those or similar risks. in response to the notice, the board received 184 unique comments and more than 16, 900 form letters. commenters included members of congress, individuals, public interest groups, academics, end users, banks, and trade associations. the comments present a range of views and perspectives. those opposed to financial holding company involvement in physical commodities activities argued that the different roles of financial holding companies in the commodities markets ( such as trading and credit ) allow these firms an unfair competitive advantage and present conflicts of interest in dealing with customers. they also contend that physical commodities activities pose a wide range of risks ( including compliance with environmental laws and potential market conduct issues ) to financial holding companies that are difficult for companies to measure and mitigate, and for regulators to monitor. on the other hand, a number of commodities end - users, including corporate treasurers and municipalities, as well as several trade associations and others, argued that financial holding companies provide valuable and hard - to - replace services to end - users. they also argued that financial holding companies are reliable and low - risk counterparties that enhance the efficiency of the commodities markets and provide additional liquidity to those markets. these commenters contended that financial holding companies can successfully mitigate the risks of commodities activities with robust risk management, insurance, and maintenance of appropriate corporate separateness. as would be expected from
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eddie yue : structural reforms needed to improve asia β s economies statement by mr eddie yue, deputy chief executive of the hong kong monetary authority, and head of delegation, hong kong, for the 47th asian development bank annual meeting, astana, kazakhstan, 4 β 5 may 2014. * * * i would like to express my gratitude to the government of kazakhstan for hosting the 47th annual meeting of the asian development bank ( adb ) and the people of kazakhstan for their hospitality. i would also like to thank the management and staff of adb for the excellent organisation of the event. since the last adb annual meeting, we have seen a modest and uneven global recovery, with the advanced economies showing a pickup in economic activities while emerging market economies ( emes ) generally experiencing a moderation in growth. financial markets have turned more volatile in response to the changing pattern of global growth and expectations of a turning point in us monetary policy, and a number of emes have seen a sharp reversal of capital flows. regional economies have remained relatively resilient in the recent bouts of financial market volatility, thanks mainly to the stronger fundamentals of the region nowadays. since the asian financial crisis, many regional economies have implemented reforms to improve their macroeconomic management and fiscal positions, built up foreign reserves and strengthened their financial sectors. for some economies that were more affected by the recent financial market turmoil, they have also taken credible policies to address domestic imbalances and have been successful in restoring investors β confidence so far. nevertheless, we cannot afford to be complacent as what we had experienced in the past year was probably a prelude to, rather than the end of, a period of heightened market volatility. the sentiment of global financial markets has turned more sanguine recently amid expectation of prolonged low interest rates in the us. however, the pace of monetary normalisation in the us is very much uncertain and data dependent. with a large part of the cumulated capital inflows to asia since 2009 still in the region, it is possible that regional economies with domestic vulnerabilities built up during the period of ultra - loose global monetary conditions could experience sharp corrections when capital flows ultimately reverse. it is therefore imperative that regional economies should make use of the current breathing space to put their own house in order, take credible measures to reduce macroeconomic and financial imbalances, step up surveillance and ready contingency plans and liquidity backstops such as the use of foreign reserves and bilateral
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financial centre depends crucially on its soft powers, not just on hard infrastructure. hong kong is uniquely well positioned to take advantage and play a pivotal role in the new era of china β s growth story and in the internationalisation of rmb. hong kong enjoys both first - mover advantages as well as many irreplaceable structural advantages, given hong kong β s very close links with the mainland in trade, investment and finance under the β one country, two systems β principle. however, there is absolutely no room for complacency. as this new era of rmb internationalisation has just begun, we still have a long, long way to go as the offshore rmb markets continue to grow and mature, while the capital account controls in mainland china are being gradually relaxed or lifted. in the early stages of this new era, the primary task of hong kong is to develop the cnh market and at the same time work with other financial centres such as sydney, london or paris to grow the pie, leading to win - win outcomes. as we move into the more mature stages of the internationalisation of rmb, the available policy headroom should be quite ample for the markets to flourish. at that time, the 2nd and 3rd elements of pips, i. e. infrastructure and people / products, would matter a great deal more if hong kong wishes to retain its competitive edge over the others. it will be up to our industry, financial firms and market practitioners to out compete the other centres in terms of product innovation and distribution of various financial products and services that best serve the needs of their clients. i am sure that the tma, with the support of its members and the financial industry, will continue to play a leading role in developing the professionalism of the practitioners and in facilitating product innovation. thank you. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches
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in the past. we also hosted a workshop on this topic in 2013. as i see your workshop agenda, i appreciate that you are going to discuss the timely issue of sovereign exposures in emerging markets. the reasons for the high share of government bonds in commercial bank assets in emerging markets are clear and straightforward. financial markets in these countries are still under development and shallow, which is limiting their ability to diversify assets. banks can also choose to be exposed to sovereign debt in some countries as the alternative ( private lending ) is riskier given existing legal and institutional imperfections. finally, the current regulatory setup gives preferential treatment to sovereign exposures, as banks β exposures to domestic government in domestic currency are subject to low or even zero risk weights. 1 / 2 bis central bankers'speeches while banks β sovereign exposures in advanced countries are considered to hover at reasonable levels, exposures in many emerging market countries are significant. the current level or its buildup is becoming a relevant concern to emerging market countries, mainly owing to credit and concentration risks. as the sovereign debt crisis in europe showed recently, the zero risk weight commonly applied to sovereign exposures in domestic currency might not be fully consistent with empirical observations of the risks of sovereign debt defaults. hence, the default risks of sovereign issuers need to be reflected accurately in risk weights to ensure that banks have appropriate ex - ante incentives to take on such exposures. besides credit risks, excessive sovereign exposure concentration reinforces the link between sovereign and banking sector stress. in fact, the close relationship between sovereigns and banks is seen as one of the major reasons for the severity of the eurozone crisis. therefore, breaking the sovereign - bank nexus is needed in order to strengthen macroeconomic stability. nevertheless, our prudential treatment of sovereign exposures needs to strike a balance. it has to bear in mind the specific role sovereign debt plays in financial markets. government securities are used by central banks as collateral in managing market liquidity and implementing monetary policy through money market operations. furthermore, given their low risks, they are used by banks and pension funds as investment instruments. these aspects need to be borne in mind when designing prudential treatment of banks β sovereign exposures. this is particularly true of emerging and developing countries, as their financial markets are shallow and low - risk equivalents to government securities and central bank papers are hard to find. as i have already mentioned at the beginning of my speech, the cnb hosted the bc
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sada s reddy : fijian business β on the edge presentation by mr sada s reddy, governor of the reserve bank of fiji, to the fiji indigenous business council, suva, fiji, 23 june 2010. * * * the chairman of the fiji indigenous business council, distinguished guests, ladies and gentlemen good morning i am very honoured to be invited to speak to you this morning. i have been requested to speak on the theme : β fijian business : on the edge. β well, when i looked at the topic, a number of things came to my mind. first of all, what does a fijian business mean for instance ; and secondly why β on the edge β. let me first deal with what a β fijian business β means to me. i presume it means any business venture that the indigenous people of fiji own and operate as distinct from business ventures owned and operated by the rest of the people of fiji, including foreign investors. if my understanding is correct then i need to ask why is that you wish to distinguish fijian businesses from the rest of fiji businesses. i guess this is where the challenge comes. for your council to form an association to represent the indigenous businesses itself shows that you have seen the need for such a body to address some of the opportunities and challenges you collectively feel need to be addressed. so what are these challenges and needs? i have to confess i have not had the opportunity until today to discuss with anyone of you to really find out what exactly are the aims and objectives of the fiji indigenous business council. but i have closely followed, through various media, the activities of various business associations including your association, over the years and therefore have some idea about what these associations β aims and objectives are. i guess one of the key issues your members have to deal with is how to grow and compete with existing businesses. this in itself is a very difficult and complex issue. when you look at some of the successful fiji businesses, you will find that they have all had very humble and small beginnings. some started off with corner grocery shop and over say two to three generations of hard work, personal and family sacrifices, enormous discipline in managing money, building up saving and making prudent business decisions, managing business risks, developing strategic business alliances, but more importantly having a passionate vision and working day and night to achieve that vision. there is no short cut. most of the successful businesses you see today did not get any government help in the initial years
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inception in 2013. another major project is china β s asean silk road, the high - speed rail line expected to run from kunming to singapore and run through laos, thailand, malaysia and singapore. despite geopolitical tensions arising from china β s claims over the south china sea and the authoritarian regime in north korea, asean unity has largely been restored as more countries have either warmed to china or at least indicated a greater acceptance of its clout against the background of reduced us commitment and the latest unilateralist decisions by president trump. it is clear that the modern distortions in the world economy and disruptions in the global order need to be addressed through close cooperation and maintained regional balances of power, rather than bilaterally. just a quick note here on the alarming increase in chinese military spending : it has now exceeded us $ 400 billion dollars, i. e. it has doubled in ten years, and to give you a point of reference : russia β s military spending is estimated at around $ 200 billion and that of the united states at us $ 600 billion. looking at the other major geopolitical pole, tensions between russia and the west ( us, canada, eu ) are as high as they have been for years. a fortnight ago, we saw the largest coordinated expulsion of russian diplomats since the cold war from more than twenty countries, members of nato and the eu, as a retaliatory measure against the use of a russian nerve agent in the uk, violating the prohibition of chemical weapons under the 1997 chemical weapons convention, an international convention that russia had agreed to and signed. or the recent blow - for - blow developments unfolding in syria, a joint attack of the us, the uk and france was launched last night and the rest of the world is following with grave concern about what comes next. 5. on the adverse distributional effects of globalisation before coming to perhaps more boring economic data and figures, let me make a short pause here for a joke, which actually shows that economists and lawyers have lots in common! a university committee was selecting a new dean. they had narrowed the candidates down to a mathematician, a statistician and a lawyer. each was asked this β tricky β question during this interview. how much is β two plus two β? the mathematician immediately answered, β four β. the statistician also answered almost immediately, β four, plus or minus two percent ( the statistical error ) β. finally, the lawyer stood up
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their administrative and regulatory capabilities. financial institutions were reformed with insufficient regulation and unclear focus and expansion was associated with improprieties, scandals and fraudulent schemes during the early stages of transition. therefore, the financial sector was unable to attract deposits and develop extensive client networks. finally, state banks were compelled to carry a high number of non - performing loans, which had been accumulated by the government subsidization programs to state run enterprises. the development of the financial sector was hampered at the beginning by inadequate macroeconomic management. fiscal deficits were mostly excessive, and often monetized, and the inevitable outcome was high inflation. it is encouraging that in the last few years we can see clear evidence of maturity in economic management. the path to macroeconomic stabilization was different for every country. in the region we can now observe all types of monetary and exchange rate regimes, from formal euro - ization and currency boards linked to the euro, all the way to monetary targeting. this is proof, if proof was needed, that there is no single solution, to economic problems but that the policies of each country should be tailored to its specific needs. going beyond the diversity of the region, at this point i would like to underline two characteristics of the financial system of practically all countries in the region, which are the result of their past, but will also shape their future developments. the first is extensive currency substitution. as a result of past inflation, but also because of the large numbers of people working abroad, foreign currencies, and especially the euro, play a large role and they have often become the main currency in use. one can gauge the degree of currency substitution by noting that in all countries in the region deposits in a foreign currency account for at least half of all bank deposits. one must add to this, money " kept under the mattress " and capital flight. undoubtedly all these were a vote of no confidence in domestic policymakers. people showed their dissatisfaction with local financial institutions and monetary authorities by moving their savings abroad, or by using other, more stable currencies. this high degree of currency substitution can only be found in some latin american countries and undermined the effectiveness of monetary policy. the ability of monetary authorities to extract seignorage was severely limited, and this is a partial justification of the high inflation rates. at the same time, monetary management became more difficult, as small shocks had a disproportionately big impact on inflation and the exchange rate. in
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for specific bank product segments. 6 especially in those segments, for which market - based financing is an alternative ( for instance for long - term loans to non - financial corporations ), an increase in the speed of pass - through seems to have occurred in the euro area during recent years. overall, the monetary transmission mechanism benefits from integrated and well - developed financial systems in the sense that it leads to a more similar and, in part, faster pass - through of market rates to bank rates. efforts to strengthen bank competition and enhancing the availability of alternative capital market - based instruments as well as access to financing should therefore be expected to improve the monetary transmission mechanism. at the same time, one has to acknowledge that several studies 7 on the productivity of the eu ( euro area ) from an industry point of view come to the conclusion that the differences in productivity growth between the us and the eu ( euro area ) may be partly due to differences in the financial sector. while the productivity performance of the financial intermediation and insurance and pension funds sub - sectors was comparable between the eu and the us, according to some studies the main difference was in the sub - sector β activities auxiliary to financial intermediation β. 8 while productivity measurement is particularly difficult in the services sector, and, hence, also in the financial sector, such differences in productivity growth may be partly related to a higher development and integration of the us financial system, which may facilitate the exploitation of economies of scale. at the same time, with respect to the current situation, it is still too early to assess the longer - term effects of the current turbulences on the gap in productivity growth between the two economic regions. in this context, there is evidence of a considerably positive effect of financial development on eu economic growth. assuming that the eu would reach the same level of financial development ( defined as the sum of domestic credit and stock market capitalisation to gdp ) as the us, it is estimated that the overall effect on annual eu value added growth would be between 0. 5 and 1. 0 percent. 9 evidence on euro area financial integration let me now turn to financial integration, which is one important dimension of the efficiency of a financial system. let me begin by recalling that the ecb and the eurosystem have a keen interest in the progress towards financial integration in europe as it is of key importance for the conduct of the single monetary policy, as it enhances the smooth and effective transmission of monetary policy throughout the euro area. in this
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the workforce play a key role in boosting labour productivity. β’ increasing the flexibility of labour market, which would ensure that wages are aligned with productivity developments and reflect competitiveness at the sectoral and firm level as well as the regional employment situation. β’ other measures devoted to human capital accumulation, through improving higher education systems and supporting training and life - long learning, and a higher share and more efficient expenditure in research and development, enhance productivity growth in the long - run and also increase non - price competitiveness. β’ in addition, further efforts are also needed to improve the access to financing, especially as regards small and medium - sized enterprises ( smes ) and the access of start - up firms to venture capital financing. as most recently highlighted in empirical work 2, small successful european firms are apparently less able to grow than comparable us firms due to the poorer access to financing. over the past decade, progress in these areas has been uneven across euro area countries. some significant efforts have been made and countries see the benefits from these reforms coming in. however, the reform process needs to continue and the past years of good economic performance are no reason for complacency or even a reversal of past reforms. there is still a long way to go if we want to attain the objective of the lisbon strategy to make the european union β the most competitive and dynamic knowledge - based economy in the world β. see, among others, philippon and veron ( 2008 ) and aghion, fally and scarpetta ( 2007 ). let me now turn to the competitiveness of the euro area financial sector. financial efficiency has made large progress since the introduction of the euro and has contributed to the competitiveness of the euro area, by accelerating the speed of capital reallocation. generally, in an efficient financial system, information is accessible and widely distributed. an efficient financial system usually enhances economic growth, whereas, by contrast, information asymmetries or insufficiently developed markets may lead to financing constraints, often especially for smes. therefore, a well - functioning financial system is an eu policy priority as it allows the economy to fully exploit its growth potential, fosters the accumulation of capital and the diversification of risk. evidence on euro area financial development let me start with the size of capital markets, on the basis of which financial development can be assessed, which is an important feature also for the competitiveness of the financial system. the size of euro area capital markets has increased markedly since
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of that we, central bankers are interested in limiting currency mismatches in the balance sheet of domestic market participants. one can also look at fx borrowing of the unhedged domestic agents as the mirror image of the well - known convergence play, when foreigners invest in assets denominated in local currency. the only constraint of this convergence play is the risk absorption capacity of the borrowers. magyar nemzeti bank supports responsible lending and borrowing behavior that targets to increase the risk absorption capacity of borrowers. i am sure we still have to discuss the role of fx loans in more detail in the future. however, i am convinced that an overly simplified view, emphasizing only type of risks, would not lead us towards a consensus view and would help little in guiding future policy measures. finally let me say a few words about the events of the most recent months and touch briefly on future challenges we are facing. summer brought favourable developments in various dimensions. global risk aversion eased significantly, thanks mainly to the well coordinated fiscal and monetary measures of developed countries. this was obviously a very welcome phenomenon for hungary. it helped the currency to appreciate by more than 10 % compared to the levels in spring, and also contributed to the significant drop of domestic bond yields, even at longer maturity. i consider the functioning of the government securities market to be a key indicator of market perception on fiscal sustainability. in this regard, it was particularly favorable that, following a long pause, the government was also able to issue long maturity bonds in forints. while the imf / eu package provides reliable source of financing, the ultimate goal is obviously to return to market financing, preferably in forints. therefore we not only have to present sound and credible fiscal consolidation measures to the international institutions for approval, we also have to make sure that market participants find the fiscal path credible. last, but not least, the return of market confidence gave the magyar nemzeti bank the room to start reducing the key interest rates. further positive news was coming from price developments. ex ante there were wellgrounded concerns about the inflation impact of the large vat hike, a crucial part of the fiscal tightening measures. central banks never welcome any administrative increase in the price level, there is always the risk that a part of the one - off increase will lead to more permanent inflation pressure. this was especially a pronounced concern in hungary given our less than satisfying track record of meeting the inflation targets. while it
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is obviously too early to say the final judgments, july and august cpi data indicate that vat increase is reflected in the prices to a smaller degree than previously expected, and, probably more importantly, there is no sign that underlying inflation trend would have accelerated due to the tax increase. i find it important to emphasize in this context that monetary easing in hungary is also conditional on the evolution of global risk appetite. we have learned during the crisis that risk premia can be extremely volatile. it is therefore essential to have a robust strategy, to be prepared to cope with potential unfavorable shifts in risk perception. to this end the monetary council has decided to follow a gradual approach in reducing the interest rate. despite of the dominance of good news of the last few months becoming complacent at the current juncture would be a great mistake. we are perfectly aware that still a lot has to be done in hungary to finally reach a sound, sustainable fiscal and external position, characterized by dynamic growth and low inflation and well functioning financial sector. monetary policy of the magyar nemzeti bank has a clear objective : price stability. this does not mean that we are narrowly looking only at inflation forecasts, but rather, in a broader context, we want to contribute to longer term predictability in the hungarian economy. i am convinced that price stability cannot be attained and maintained without longer term predictability. to this end we will be focusing on managing risks to stability and sustainability, risks that we expect to be with us for a protracted period of time. thank you for your attention!
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john hurley : recent economic and financial developments in ireland address by mr john hurley, governor of the central bank & financial services authority of ireland, at the russian bankers β federation conference on β the transition to the market economy : actual problems in the economic and finanical sectors β, dublin, 20 april 2004. * * * ladies and gentlemen, let me begin by welcoming you to ireland. i hope that you will find this conference helpful and that you can draw on some of the lessons learned from ireland β s experience in our transition to a more market - oriented economy. initially, i will briefly outline the main metamorphoses undergone as our economy developed to a stage where standards of living are now broadly comparable to those of other advanced european economies. the process of income convergence was β telescoped β into a relatively short period compared with many other countries. however, the fundamental factors underlying the convergence are based on lessons learned over a significantly longer period. i will go on to speak about monetary and exchange policy in ireland prior to our entry to the exchange rate mechanism of the european monetary system, our experience in the mechanism itself and our experience in the euro area. i will also give some indication of the current economic outlook. economic development and policies in ireland. for much of the first half of the last century, ireland adopted predominantly protectionist, heavily regulated and inward - looking policies with the focus largely on promoting domestic indigenous industries behind high tariff barriers. these policies ultimately proved to be unsuccessful, as employment stagnated, emigration became endemic, and living standards, as measured by gdp per capita, remained persistently well below european levels. coupled with the protectionist policies of the time, the state played a relatively major role in the commercial life of the economy. with few major industries or wealthy individuals in the country at the time of our independence, a strategy of creating state - sponsored bodies to fill the gaps left by the lack of private enterprise was adopted. state companies were established in areas such as banking, transport and resource - based utilities. by the 1970s the state still played an extensive role in most areas of the economy. however, since then the role of the state has diminished considerably. there was a fundamental shift in thinking about a decade and a half or so before ireland joined the eu in 1973, with a move away from protectionist inward - looking policies to one of opening up the economy to trade and investment. this entailed a policy of encouraging foreign - owned firms to establish manufacturing bases
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mario draghi : hearing at the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, before the hearing at the committee on economic and monetary affairs of the european parliament, brussels, 21 june 2016. * * * mr chairman, honourable members of the economic and monetary affairs committee, ladies and gentlemen, i am grateful to be back speaking to your committee for the second hearing of this year. let me first say that the ecb takes note of today β s judgement of the federal german constitutional court. this judgement confirms the ruling of the court of justice of the european union which concluded that the omt programme is compatible with eu law and falls within our mandate. in my remarks today, i will review the state of the euro area recovery and the recent monetary policy measures adopted by the ecb. then, at the request of this committee, i will discuss the investment outlook, outlining in particular why more action is needed to boost investment demand in the euro area. economic outlook and the ecb β s monetary policy as regards economic developments, the recovery of the euro area economy gained momentum at the start of the year. it is expected to proceed at a moderate but steady pace, supported by solid domestic demand and the effective pass - through of our monetary policy measures to the real economy. consumers are benefiting from still relatively low oil prices and improved employment prospects. likewise, investment is edging up, supported by higher corporate profits and favourable financing conditions. looking forwards, according to the june 2016 eurosystem staff macroeconomic projections for the euro area, annual real gdp is expected to increase by 1. 6 % this year and by 1. 7 % in the next two years. at the same time, inflation dynamics in the euro area remain rather subdued. the rate of headline inflation was slightly negative in may and is expected to hover at low levels over the coming months. while lower oil prices continue to act as a drag on the annual headline inflation, domestic price pressures, notably from wage growth, also remain muted, reflecting persistent economic slack. according to the eurosystem staff projections, inflation should pick up towards the end of 2016. thereafter, inflation is expected to increase further to 1. 3 % in 2017 and to 1. 6 % in 2018, as a strengthening economic recovery mobilises unused resources. since the start of our credit easing measures in june 2014, bank lending rates for firms and households have fallen by about
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are generally aware of the differences between banks and non - banks, and of the fact that non - banks may be more risky than banks. however, i would be the first to acknowledge that such an approach would not necessarily be the best for all other countries. in many countries, retail depositors typically use non - bank financial institutions rather than banks and it may therefore be important that those institutions are licensed and supervised. similarly, in some countries where there are perhaps thousands of licensed financial institutions and a very large population β and generous deposit insurance or a strong implicit government guarantee of bank deposits β it may well be desirable for the supervisor to check the bona fides of bank management. in new zealand, with its relatively small population and absence of deposit insurance, we are satisfied that the public is well able to make its own assessment of the quality of bank management and has an incentive to do so, and in these circumstances there is no need for the supervisor to take on this role. thus, while we strongly support the introduction of international standards in principle, we would not like to see a one - size - fits - all or checklist, tick - the - boxes, approach. international standards need to be interpreted with an appropriate degree of flexibility in order to adequately cater for the individual circumstances of each country. further, when devising supervisory policies we need to bear in mind not only the individual circumstances of our own countries but also the need to ensure that policies harness market forces to the extent possible, rather than undermine them. as alan greenspan said in 1997 : β as financial transactions become increasingly rapid and complex, i believe we have no choice but to harness market forces, as best we can, to reinforce our supervisory objectives. the appeal of market - led discipline lies not only in its cost effectiveness and flexibility but also in its limited intrusiveness and its greater adaptability to changing financial environments. measures to enhance market discipline involve providing private investors the incentives and the means to reward good bank performance and penalise poor performance. expanded risk management disclosures by financial institutions is a significant step in this direction. β 1 indeed, mr greenspan made the same point again exactly one month ago, when addressing the american bankers association in phoenix, arizona. in that speech he said : β a one - size - fits - all approach to regulation and supervision is inefficient and, frankly, untenable in a world in which banks vary dramatically in terms of size, business mix, and appetite
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rosanna costa : opening address - iv meeting of heads of financial risk management in central banks opening address by ms rosanna costa, governor of the central bank of chile, at the iv meeting of heads of financial risk management in central banks, santiago de chile, 26 april 2023. * * * good morning, i would like to extend a warm welcome to all participants at this fourth meeting of heads of financial risk management in central banks organized jointly by the center for latin american monetary studies, cemla and the banco central de costa rica, banco de espana, banco de mexico and banco central de chile. this initiative, whose first version was launched in 2020, has been consolidated as a forum for analysis and reflection to analyze current and emerging challenges of financial - risk management at central banks. throughout these meetings, topics related to the governance of risk management and financial risks have been addressed from different perspectives, in a context strongly dominated by the challenges that the covid19 pandemic has posed. every organization is subject to numerous contingencies that may hinder or prevent the normal fulfillment of its functions. in particular, institutions such as central banks, whose mandate has important effects on the economy and social welfare, must also consider not only their own risks when making decisions, but also broader risks in the financial sector and the macroeconomy in general. risk management aims precisely at identifying potential contingencies, appraising them and adopting adequate preventive measures to avoid their materialization as much as possible, as well as having in place timely response plans to correct or mitigate the impact of such contingencies as they occur. our experience at the central bank of chile at the central bank of chile, we are in constant search for improvements in integral risk management, understanding that it adds value to business processes by helping to prevent, among other things, interruptions in operations and damage to reputation. for risk management, we have a corporate governance structure headed by the board, senior management, a committee of independent experts ( the audit and compliance committee ) and the risk committee, which promotes the framework for the management of risks that may affect the bank's ability to achieve its mission, its vision and its strategic objectives. while risk - oriented functions had been in place for quite some time, in 2019 the bank created a unit to cover strategic, financial and non - financial risks ( corporate risk ). issues that have been addressed since then include comprehensive and consolidated 1 / 3 bis - central bankers'speeches
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1949 10 : β i am certain that it is within our powers to overcome the dangers still before us, if we so wish. our hopes and our work point to an era of peace, prosperity and abundance and the inexhaustible wealth and genius of europe will turn it once again into the very source and inspiration of the world β s life. β the european union remains to this day a unique political and economic experiment that has no equivalent in modern history. and we have from 2017, following the electoral cycle in europe, a unique window of opportunity. nothing should be taken for granted, but much is open. we should not let this opportunity pass us by. thank you for your attention. 1 β tommaso padoa - schioppa : economist, policy - maker, citizen in search of european unity β, speech by lorenzo bini smaghi, european university institute, fiesole, 28 january 2011. 2 source : european commission, reflection paper on the deepening of the economic and monetary union, may 2017. 3 european commission, standard eurobarometer 86, autumn 2016. 4 t. padoa - schioppa, β capital mobility : why is the treaty not implemented? β, address to the second symposium of european banks, milan, june 1982. 5 pietro catte, the reform of the international monetary system, background note prepared for conference in memory of tommaso padoa - schioppa, rome, 2011. 6 t. padoa - schioppa, β the european monetary system : a long - term view β, in f. giavazzi, s. micossi, m. miller, the european monetary system, cambridge university press, 1988. 7 banque de france, Β« cout des carences de coordination des politiques economiques dans la zone euro Β», bulletin de la banque de france, nΒ° 211, mai - juin 2017. english version : β cost of the lack of coordination of economic policies in the euro area β, quartely selection of articles no. 46 ( banque de france bulletin ), to be published in summer 2017. 8 t. padoa - schioppa, β capital mobility : why is the treaty not implemented? β, address to the second symposium of european banks, milan, june 1982. 7 / 8 bis central bankers'speeches 9 see for instance : speech at bruegel in brussels on 22nd march
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β challenge the first triangle i β d like to dwell on is the famous incompatibility triangle derived from the mundellfleming model of the 1960 β s, also known as the β impossible trinity β or the β trilemma β. this triangle has been used to argue that it is impossible to reconcile fixed exchange rates, full capital mobility and national autonomy of monetary policy. early as 1982, tommaso padoa - schioppa coined the term β inconsistent quartet β 4 ( quartetto inconciliabile ), thereby enlarging the impossible trinity to a fourth goal, free trade β a pillar of the treaty of rome. let me quote here an analysis by banca d β italia 5 : β at first sight this may appear to be a puzzling choice, since from the strictly analytical standpoint the inconsistency between the other three elements holds regardless of the presence or absence of free trade. but in a deeper economic sense, taking trade into consideration was essential, since the costs and benefits of different positions along that three - way trade - off depend crucially on the degree of trade integration. β and as tommaso padoa - schioppa wrote in 1988 : β in the long term, the only solution to the inconsistency is to complement the internal market with a monetary union. [ otherwise ] it would be unrealistic to expect the community to be able to square a circle that has never been squared. β 6 the early 1990 β s were indeed difficult times for the european monetary system : several countries were forced to realign their exchange rate or to withdraw as 2 / 8 bis central bankers'speeches from the mechanism, like for instance italy in 1992. it was that same year, with the maastricht treaty, that europe chose to move forward towards a european monetary union. tommaso padoa - schioppa was right in his belief and in his recommendation to create the euro. the euro has proven to be a great success which has delivered material benefits. first, price stability, which is the main objective assigned to the eurosystem, and which directly benefits euro area citizens β purchasing power. in the 18 years since the introduction of the euro ( 1999 β 2016 ), inflation has stood at 1. 7 % on average, compared with 4. 6 % in the 18 years preceding the introduction of the euro ( 1981 β 1998 ). second, lower interest rates, which are the
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jean - claude trichet : interview with corriere della sera interview with mr jean - claude trichet, president of the european central bank, conducted by ms marika de feo and published on 28 september 2011. * * * corriere della sera : mr president, are you satisfied with the outcome of the meetings in washington? jean - claude trichet : it is always extremely important for world leaders in the areas of economy and finance to exchange views, compare notes and work out a diagnosis of the situation which is lucid and without any complacency. we are in the fourth year of a very demanding global crisis. the epicentre of the crisis is in europe, but it is a global crisis. on behalf of the ecb β s governing council, i called on all european authorities to be up to the very demanding challenges of the times and to demonstrate their sense of direction. and i told our partners in the rest of the world that we needed support and strong encouragement for european affairs, but not public lectures. the g20 pledged on thursday to β take all necessary actions to preserve the stability of banking systems and financial markets β. which strong and collective action do you suggest? first, the full, comprehensive and speedy implementation of all decisions already taken individually and collectively in europe and in the world. as regards the europeans, full and swift implementation of the decisions taken on 21 july. second, as has been underlined by the european systemic risk board, coordinated efforts to strengthen bank capital, including recourse to backstop facilities. third, we need to stand ready to respond to new challenges that can arise at any time. permanent and credible alertness is more important than ever in the present circumstances. are governments responsible for the dangerous development of the crisis? i am on record as having stressed, on behalf of the governing council, since the inception of the euro, that fiscal soundness was of the essence, that the stability and growth pact was fundamental in a single currency area without a federal budget, and that the surveillance of competitive indicators by peers was absolutely necessary. all this is clearly documented. now, in the present very demanding circumstances, what counts is that all authorities are up to their responsibilities. now is the time for effective action, implementation, verbal discipline and a stronger team spirit on the part of the european executive branches. european countries were urged to boost the rescue fund ( efsf ) to contain contagion and avoid recession. what do you think
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measures are still missing? we would encourage everything that goes in the direction of structural reforms to unleash the capacity of italy to grow faster, to have a better growth potential. the potential of italy is immense, and the present growth potential is not in line with the overall capacity of italy. i think there is a general consensus among economists on this, and everything that goes in the direction of unleashing productive forces is welcome. which other strengths do you see in the potential of the italian economy? one of the major strengths of italy is its entrepreneurial spirit. the capacity of individuals and families to start a business, take risks and be devoted to their enterprises is exceptional. but this entrepreneurial spirit, which is shared by society as a whole, needs to be allowed to develop fully through structural reforms aimed at increasing the flexibility of the economy. bis central bankers β speeches what more should be done to increase growth? for instance, reducing protection in non - tradable sectors and monopolies, approving the liberalisation of closed professions, higher pension age, making labour markets more flexible and an overall increase in productivity? a lot of things can be done, in particular but not exclusively the liberalisation of closed professions, improved flexibility of the labour markets, improved education and training, and measures to boost innovation. how do you evaluate the fact that italy is going to have a primary surplus as a percentage of gdp from next year onwards? it is of course something which is important, and maybe not sufficiently well - known by external observers. we encourage italy to follow this path and to do all that is necessary in order to consolidate this primary surplus and reach the goal of having balanced overall public finances in 2013. do you think that this objective can be reached with the measures taken until now? what counts is the goal. the decisions which were taken recently make it possible to advance significantly in the direction of that goal. whether new decisions will have to be taken, taking into account the overall situation and the evolution of the real economy, is an open question. but the goal is the goal ; it has been affirmed, and it is very important. would it have been better to publish the messages you sent to italy? as you know, we have sent messages and we do that on a permanent basis, through various means, addressed to individual governments. we do not make them public. but we are calling for all governments without exception to permanently ensure sound fiscal and macroeconomic policies. we do this every
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to stimulate domestic investment spending and help new, innovative industries to grow and develop. only in this way will convergence towards the eu - 28 average accelerate. these should be joint efforts, however, which brings me to the second part of my remarks. europe can and should help, in three main ways. first, by providing the market that makes the development of new industries profitable. second, by channelling funds to sectors and countries where capital can be used most productively. and, third, by providing direct financial assistance to foster convergence and support national reform efforts. reaping the benefits of the single market let me take each of these points in turn, starting with the market dimension. the eu β s single market can be a valuable source of competitive advantage for firms located in cesee economies, in particular when competing with other economies at similar stages of development. it is the largest market in the world, offering the benefits of enormous economies of scale, and has helped establish product and safety standards that are used worldwide. there is compelling evidence that the single market has had a positive impact on exports, investment, innovation and productivity. 18 to exploit its full potential, and to accelerate convergence, two things need to be done. first, member states need to strengthen its enforcement so that single market initiatives translate into concrete and positive effects on the ground. a key ingredient for this is efficient administration at all levels of government. indeed, a lack of real convergence in income levels is, more often than not, the result of a lack of convergence in institutional quality. 19 you can see this on my next slide β a slide i like to show because i think it makes a compelling point, notwithstanding the usual caveat on the two - way causality between institutional quality and income levels. 20 8 / 16 bis central bankers'speeches most cesee economies are still in the lower left - hand corner, meaning there remains a significant gap in overall institutional quality compared with the average level observed in the eu as a whole. some eu member states have recently renewed their interest in the process leading to participation in the exchange rate mechanism ( erm ii ) and the adoption of the euro. this could become a fundamental catalyst for institutional reforms in the years to come. second, the scope of the single market must be broadened. for the eu, this means expanding its reach into industries that are prime drivers of innovation and catalysts for future growth. this is particularly relevant for cesee economies. as you can see on my next
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prices as i explained, japan β s economy is likely to continue growing above its potential. however, growth in fiscal 2013 and 2014 is likely to turn out somewhat lower than previously expected due to the delay in the recovery in exports. despite these downward revisions, the year - onyear rate of change in the cpi for fiscal 2013 turned out as projected and the outlook remains unchanged. the output gap has been steadily narrowing mainly due to the tightening of labor market conditions as projected, and the rise in medium - to long - term inflation expectations seems to have started to influence actual wage and price settings. let me elaborate on these two points. the output gap and prices first, on the output gap. the current recovery has been led by domestic demand, and business conditions in nonmanufacturing in particular have been improving. as domestic demand tends to have large stimulative effects on employment, this has led to a further tightening in labor market conditions. for example, the unemployment rate is approaching the structural unemployment rate and the active job openings - to - applicants ratio is now at the same level as the peak reached before the global financial crisis ( chart 5 ). the employment conditions di in the bank β s tankan survey revealed that more and more firms feel that there is a labor shortage. this tightening of labor market conditions has started to influence wages. in the regular annual wage negotiations this spring, the number of firms that raised not only bonuses but also base pay increased substantially. in addition, more and more firms, especially in nonmanufacturing, feel that they have insufficient capacity. while estimates of the output gap are subject to a considerable margin of error, the gap seems to have narrowed to close to 0 percent, which is the past long - term average, reflecting the increased utilization of labor and capital ( chart 6 ). as for the outlook, it is likely that the tightening of labor market conditions will become more pronounced as the economy continues to grow above its potential, and inflationary pressure from wages and the output gap is likely to steadily strengthen. i will touch on what implications this might have in the last part of my speech. medium - to long - term inflation expectations next, according to various surveys and market indicators, medium - to long - term inflation expectations appear to be rising on the whole ( chart 7 ). as i mentioned at the outset, the year - on - year rate of change in the cpi excluding fresh food has been plus 1. 3 percent for four consecutive months
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jens weidmann : the future of the european monetary union speech by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at the ihk rhein - neckar new year's reception, mannheim, 31 january 2019. * * * 1 introduction mr schnabel, mr von pentz, ladies and gentlemen, many thanks for your invitation and your kind welcome. tradition has it that speeches at new year β s receptions look ahead at the topics we will be facing over the coming twelve months. and the speech i will be delivering here today is no exception. but before i look forward towards what the future might hold, let me reflect briefly on an event which took place almost 50 years ago to the day. it was on 30 january 1969, to be precise. what i would give to have been strolling down london β s savile row during my lunch break on what was, like today, a chilly thursday. passers - by could hardly believe their ears. music was blaring from the rooftop of house number 3. but it wasn β t just any old music β it was the beatles, and they were playing live1. by this point in their career, the beatles hadn β t given a live concert for more than two years, having decided to concentrate on their work in the studio. recordings for the fab four β s latest lp, which would later be released under the title let it be, were being videotaped, and the highlight of the documentary was to be a live concert at a spectacular location. but the band ended up simply performing a concert on the roof of their headquarters. what no - one suspected at the time was that it would be the last time the beatles ever performed live. 50 years ago, then, saw the end of a musical era that we still hold dear today. and that β s why the beatles will pop up at various points during my speech here today. at first glance, the fab four wouldn β t immediately appear to have all that much in common with central bank topics. that said, raghuram rajan, the former chief economist of the international monetary fund, does see some parallels between music and monetary policy. a few years ago, he said : β central bankers nowadays enjoy the popularity of rock stars. β now, i β m not aware of any colleagues whose public appearances send the audience as wild as john
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michelle w bowman : brief remarks - fed listens event on transitioning to the post - pandemic economy brief remarks by ms michelle w bowman, member of the board of governors of the federal reserve system, at the fed listens event on transitioning to the postpandemic economy, boston, massachusetts, 31 may 2023. * * * it is very good to be here, and to be part of this fed listens event and discussion about the effects of the pandemic experience on the u. s. economy, highlighting challenges in the labor and housing markets. while there are many ways to think about the impact of these effects, i find it helpful to consider both the cyclical or temporary factors and those that are structural and longer term. as monetary policymakers, we are primarily focused on the cyclical mattersmeaning how the pandemic and the measures taken to address it complicated accomplishing our dual - mandate objectives of maximum employment and stable prices. making the best monetary policy decisions over the business cycle requires distinguishing between temporary effects and lasting, structural changes. today's agenda includes the employment recovery following the high unemployment during the spring of 2020 leading to the current tight labor market. today's labor market strength reflects policy decisions taken in light of the pandemic experience, including the widespread lockdowns, reliance upon remote work, and other factors that may have structurally altered the labor market. i am very much looking forward to the discussion. i also look forward to learning from the perspectives of today's participants from around new england about the issues that will be discussed today. i find it especially helpful to participate in regional discussions to broaden my understanding of economic conditions throughout the country. this local perspective is one of the great advantages of the federal reserve system's regional structure, and of the fed listens initiative, which complements the board's efforts to understand national economic conditions. in 2019, the board launched fed listens with a year of listening sessions with the public focused on monetary policy and, specifically, on how the federal open market committee uses interest rates and other tools to promote a healthy economy. while data can tell us a lot, learning about the experiences behind those data helps bring economic data to life for me and for my colleagues. through fed listens and other engagements with the public, we hear about how americans are faring in the economy and about how our policy decisions affect individuals, businesses, and communities. so our efforts to enhance
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democracy β political stability and reengagement of our development partners. as a result, consumption and investment activity have been very robust. this is confirmed by trends in the various partial indicators. improved disposable household incomes from lower taxes, government financial support and remittance inflows from fijians abroad continue to underpin consumer spending. the vehicle industry has clearly benefitted under this climate and this has been further supported by favourable labour market conditions, as reflected in growing numbers of newly registered members with the fiji national provident fund and job advertisements placed in the daily newspapers. bis central bankers β speeches investment activity has expanded and continues to grow with momentum from both the private sector and government. in recent years the government has allocated sizeable budgets for infrastructure development, which benefit both the public and private sectors and which will gradually unlock previously untapped resources across our major islands as our local entrepreneurs begin to play their part to develop their businesses. this year, despite tropical cyclone ( tc ) winston and the april floods brought on by tc zena, the fijian economy is still forecast to grow by 2. 4 percent. this growth reflects expected strong activity in our tourism - related industries, including transport, wholesale, retail, accommodation & food services, which were relatively unscathed by the cyclones. in addition, with the on - going reconstruction and recovery efforts, construction activity is expected to remain strong, further boosting retail sales activity. ladies and gentlemen, we know that imports of investment and consumption goods are projected to pick up as the domestic economy strengthens and reconstruction efforts postcyclones continue. when we couple this with expected lower exports of agricultural products as a result of the natural disasters, it is possible that we will see a small dent in our foreign reserves towards the end of this year. nonetheless, at the moment, our official reserves continue to remain comfortable, at just under $ 2. 0 billion, or enough to pay for 5. 5 months of retained imports. inflation, another key macro - economic indicator which we monitor closely, spiked in june to 5. 3 percent on the back of price hikes in local agricultural market items following the cyclones. this effect will be temporary, and in the near - to - medium term, we forecast inflation to be stabilised by the existing low world commodity prices. our end - year number for inflation is closer to 3 percent. the medium term outlook for the fiji economy is expected to remain positive. notwithstanding any further adverse shocks, our
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sada reddy : economic indicators and implications β where to from here? address by mr sada reddy, governor of the reserve bank of fiji, at the fiji institute of bankers β convention, suva, 23 october 2010. * * * introduction his excellency the president of the republic of the fiji islands, ratu epeli nailatikau, the attorney - general & minister for justice, anti - corruption, public enterprise, industry, tourism & trade and communications, mr. aiyaz sayed - khaiyum, the president of the fiji institute of bankers, mr. norman wilson, distinguished guests, ladies & gentlemen good morning and thank you for inviting me to speak to you on this occasion of the inaugural convention of the fiji institute of bankers ( fib ). the fib, which will turn 20 years soon, plays a very important role in the training and development of bank professionals in fiji. i must congratulate the fib for this excellent initiative in bringing together professionals and partners from the financial sector as well as stakeholders from the public and private sectors towards a common interest, that is, to establish a vision and strategic direction for the banking sector towards 2015 β the theme of today β s convention. i have great pleasure this morning to speak on the topic β economic indicators and implications β where to from here? β first i will provide an overview of the current state of the economy and its future outlook, before i move on to outlining the future policy direction for our economy. as bankers, we can attest to the prominent role played by financial institutions in the development of any economy. in fiji, the contribution of the financial sector to total real growth or total value added product of the economy is around 9 percent. as a measure of its size, total assets of the financial sector in fiji is around 180 percent of the country β s overall gross domestic product ( gdp ). this ratio has increased from about 150 percent five years ago and shows the increasing importance of the financial sector in our economy. in addition, the financial sector employs around 8, 800 people which accounts for around 7 percent of paid employment in fiji. an efficient and sound financial sector is essential for economic growth. the intermediation process which facilitates the transfer of funds from savers to borrowers, contributes significantly to raising investment, generating income, creating employment opportunities and supporting our economy. as someone said, credit is the oxygen on which businesses grow and survive. therefore, as would be true
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effects and potential side effects β as well as our communication practices. we also assessed the importance of digitalization, financial stability, globalization and climate change from the perspective of monetary policy. needless to say, these themes continue to be important topics for future research. many of these themes will be also addressed at this conference. the most important revision to our strategy is the new definition of our inflation target and how it will be applied in our future decision - making ; that is ( in β centralbankese β ) the reaction function. according to the new strategy, price stability is best maintained by pursuing at a 2 % symmetric inflation target over the medium term. the old inflation target of β below, but close to 2 % β, which was valid until july 2021, was less precise, and open to interpretation. in particular, this former definition had a streak of asymmetry, and the quantification of 2 % may have appeared more of a ceiling than a central target. the new 2 % inflation target is symmetric and unambiguous. symmetry means that the 1 / 3 bis central bankers'speeches governing council considers both slower and faster inflation to be equally undesirable. this change is clearly reflected in our forward guidance. as decided at our monetary policy meeting yesterday, the governing council expects the key ecb interest rates to remain at their present or lower levels until it sees inflation reaching 2 % durably, and it judges that the progress realized in underlying inflation is consistent with inflation stabilizing at 2 % over the medium term. this may also imply a transitory period in which inflation is moderately above target. thus we maintain our very accommodative monetary policy stance, appropriate for the rebounding eurozone economy and the still remaining uncertainties. we also deemed that favourable financing conditions can be maintained with a moderately lower pace of net asset purchases of pepp than in the previous two quarter. in order to assess how much the new strategy is likely to change the ecb β s policy preferences, a recent study β reading between the lines β by bank of finland staff estimates the ecb governing council β s objective function, or loss function. 1 this is done by applying text analysis to extract the tone, or sentiment, from the ecb β s introductory statements, and combining this information with the ecb β s real time macroeconomic projections. the results suggest that under the now old definition of price stability the ecb β s loss function indeed was asymmetric
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billion registered during the summer of 2012. the economic picture nevertheless remains fragile. international financial tensions are again threatening global market stability. the italian economy is improving only slowly, with considerable unevenness both geographically and by sector. to maintain the recent positive signs and convert them into sustained, robust economic growth that can cut significantly into italy β s high unemployment will require the country to finally tackle and begin solving a series of well - known structural problems on which action has been deferred for too long. another necessity is adequate financial support for firms. there can be no return to growth without the contribution of banks and markets. past efforts to foster the development of a more diversified financial system β one in which the importance of markets and institutional investors is comparable to the other leading countries β have not yielded the hoped - for results. the recession, the increase in credit risk and the resulting credit supply strains have nevertheless created incentives for firms and banks to renew those efforts, to make them more effective and to expand direct finance to the productive economy. in recent months italian firms have shown a greater propensity to turn to the capital market. both bond issues and new stock exchange listings have increased. but market recourse remains modest and for the most part limited to larger companies. small businesses have not taken proper advantage of the opportunities for direct financing. banks can be essential in encouraging direct access to the markets for larger firms and pointing smaller ones in the same direction. if they accompany firms with good growth prospects into the market, developing corporate finance services that take less capital and liquidity, they can curb risks and improve earnings. to attain these objectives they need to strengthen relationships with firms and avoid conflicts of interest. firms too must contribute to the development of the capital market. corporate financing needs cannot be met by bank credit alone. diversifying funding sources will require a commitment to greater accounting transparency, openness to outside parties, and above all capital strengthening. in order to gain the support of banks and investors, entrepreneurs will have to be the first to demonstrate their own faith in the prospects for their business. the task of economic policy is to remove the obstacles, to provide incentives to ensure that the development of the capital market gathers momentum and, above all, that it does not flag as in the past. like the rest of the italian economy, this process would benefit from an easing of the tax burden on firms. bis central bankers β speeches figure 1 bank loans to firms in the main euro - area countries ( as a percentage of
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2. 6 % is below 3 %, a level which is considered sustainable. the underlying idea is that current account deficit subsumes fiscal deficit in the sense that high fiscal deficit essentially connotes high public sector dis - saving which can be offset by private sector and house hold sector savings. it is significant in this context to note that indian economy has been characterized by increasing domestic savings rate financing investment, with domestic savings rate reaching a high of about 38 % of gdp in financing investment of 39 % of gdp in 2007 - 08. both the government and the reserve bank of india responded to the challenge in close coordination and consultation. the main plank of the government response was fiscal stimulus while the reserve bank's action comprised monetary accommodation and counter cyclical regulatory measures. monetary measures the monetary measures have comprised three elements : monetary easing by cutting policy rates, provision of rupee liquidity, forex liquidity and ensuring availability of credit for productive purposes. reduction in key policy rates β’ the repo rate was reduced by 425 basis points from 9. 0 per cent in october 2008 to the current rate of 4. 75 per cent. similarly the reverse repo rate was reduced by 275 basis points from 6. 0 per cent to 3. 25 per cent. provision of rupee liquidity β’ the cash reserve ratio ( crr ) was reduced from 9 % to 5 % of net demand and time liability ( ndtl ). the cumulative reduction in the crr by 400 basis points since mid - september 2008 released rs. 1. 6 trillion of primary liquidity. ( $ 32 billion ) β’ unwinding, redemption and de - sequestering of market stabilization scheme ( mss ) has released primary liquidity of rs. 1. 44 trillion. ( approx $ 29 billion ) β’ permanent reduction in slr by 1. 0 % of ndtl has released rs. 400 billion. ( $ 8 billion ) β’ an exclusive repo facility for supporting non - banking financial companies ( nbfcs ) mutual funds, and housing finance companies to the extent of rs. 600 billion. ( $ 12 billion ) β’ special purpose vehicle ( spv ) set up for extending assistance to nbfcs to the extent of rs. 250 billion. ( $ 5 billion ) β’ refinance extended to small industries development bank of india ( sidbi ) ( $ 1. 4 billion ), national housing bank ( $ 800 million ). β’ the actions of the reserve bank since mid - september 2008
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of the cross - border banking framework and principles. the real test would be in translating the principles into detailed policies and action plans that are both sound and practicable. the main challenge in applying the new accord uniformly across the globe is, indeed the complexity of the framework itself. while the underlying intention of the framework to promote sound risk management and best practices is not in question, countries, particularly the emerging markets, are at different levels of readiness to cope with the extensive changes and potential implications of basel ii. given the different stages of development and levels of market sophistication, applying basel ii, that is designed fundamentally based on parameters and experiences drawn from developed economies, may not be appropriate without some customisation to better reflect the situation in the emerging markets. the low liquidity in some markets and the higher level of market volatility in most emerging markets may not be adequately captured in the underlying assumptions within the basel ii framework. it is therefore important to emphasise that such constraints and the need for some customisation must be well understood and acknowledged by foreign banks operating in emerging markets. in essence, the discussions on the cross - border implementation of basel ii will contribute towards avoiding the imposition of " one size fits all'solutions, and minimising the potential adverse implications of the differences in approaches in addition to avoiding the unnecessary duplication of efforts and investments. ladies and gentlemen, in many emerging economies, basel ii is seen as an important catalyst to accelerate the introduction of best risk management practices within the banking sector in the medium and longer term. while best practices that have been adopted by global banks have even surpassed the expectations of basel ii, this is not the case for most domestic institutions. in many emerging markets where the banking system is still highly fragmented, promoting the adoption of these practices throughout the entire industry will indeed be a challenge. such efforts would therefore need to be implemented within the agenda of the overall financial sector development programme in the individual countries. it is within this context that malaysia has chosen to adopt a flexible timeframe, underpinned by four key implementation principles : β’ first, for capacity building measures to be implemented ; β’ second, within these capacity building efforts, the emphasis on the enhancement of the risk management framework for all banking institutions ; β’ third, to emphasise on strong business justification instead of regulatory mandate in the adoption of the more advanced approaches ; and β’ finally, to enhance the supervisory methodology to assess the internal models and the advanced risk management systems. the rigorousness
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regulatory, concentration and reputational. 8. in the case of nepal stakeholders including the nrb and fiu - nepal, have been proactively working to implement the preventive measures of financial crime, so as to investigate and disseminate the cases of money laundering and terrorist financing ( ml / tf ) to law enforcement agencies ( leas ). fiu - nepal received 45, 93, 5817 ttrs'and 887 str's in fy 2017 / 18 and out of the total strs'that has been received ; almost 312 were disseminated to the leas. i hope that fiu - nepal and leas will continue to coordinate to further investigate the cases for prosecution and convictions. i understand that fiu - nepal has already installed the goaml system for strengthening the receiving, reporting and dissemination mechanism of information and reports from commercial banks and is now reporting under the test environment. i am confident banks will soon move to live environment of goaml in reporting of str and ttr to fiunepal. 9. hence, leadership of government of nepal and joint and coordinate efforts among the regulators, bfis, leas, fiu, civil society and support agencies such as isp, telecommunication companies, vendors, etc. including with the public private partnership can play an important role to control the financial crime and help to maintain the financial stability in country. ladies and gentlemen, 10. at last, but not least, i would convey my best wishes that the conference will be successful and reach a concrete conclusion about the implementation of robust mechanism of aml compliance. in addition to this, i believe that, this program will able to help improve your knowledge on the risks associated with of ml / tf. it will also help to further continue discussions on plan of action to help prepare for the upcoming mutual evaluation scheduled in 2020. 11. with this note, let me close my remarks by congratulating and thank you all for your gracious presence and attention. thank you.
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gradually spill over into nearby areas. with both commercial and residential rents, not to mention sales prices, high and rising in manhattan, northern new jersey has an opportunity to capitalize on its widening cost advantage by attracting companies and residents that value an urban location, but find new york city to be too pricey. and if preferences are indeed in the midst of a long - term shift toward urbanization, this bodes particularly well for new jersey β s own cities. with a major international airport and seaport, a 20 β 30 minute train ride from most of manhattan β but much cheaper rents β as well as a number of universities and a solid infrastructure, newark has strong potential to develop its prominence as a major local business, economic and cultural hub. concluding thoughts to conclude, i would like to say a few words concerning proposals to reform the federal reserve system. first, i concur with chair yellen that the federal reserve already is very transparent and accountable to congress and to the public. i share her strong belief that the independence of the central bank to make appropriate policy decisions consistent with its legislated mandates is essential to a nation β s economic well - being. with regard to the structure of the federal reserve system and the role of the regional banks, including the new york fed, i also agree with chair yellen that the system is working well, and i do not see a need for any substantive changes. i believe that the system has been designed appropriately so that a wide range of regional views are represented. at the same time, i believe that the federal reserve system β s monetary policy responsibilities are allocated appropriately by the federal open market committee, with new york playing an important role to ensure that monetary policy is executed effectively even during periods of duress. of course, the federal reserve system and the new york fed are not perfect institutions. that is why we always must strive, in an open and transparent manner, to improve what we do and how we do it, for the benefit of the american people. thank you for your kind attention. i would now be happy to take some questions. bis central bankers β speeches
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we economists call the great moderation. macroeconomic conditions and prices were characterized by historically low volatility. it was commonly assumed that in such relative tranquility and with other favorable economic conditions any buildup of financial risks would not be a concern. many policymakers began to take macrofinancial stability for granted. they overlooked the accumulation of serious vulnerabilities in the financial system, both nationally and internationally. these vulnerabilities included the accumulation of excessive private sector debt ; inadequate monitoring and managing of banks β risks ; heavy reliance on very short - term debt funding ; and the increasing use of new and exotic financial instruments, traded mostly in what we refer to as the β shadow banking β system, that is, financial intermediation that takes place outside the traditional regulatory and supervisory framework. many of these financial instruments were exotic indeed β futures, options, elaborate combinations of puts and calls and asset - backed securities of every size and shape and stripe, most especially mortgage - backed securities. issuing and trading in these exotic instruments generated bonanzas, yet it seemed too many of even the most experienced financiers that these instruments could only be fathomed by triple phds in rocket science. bank owners and bank regulators oftentimes simply did not fully understand what these instruments were, how they were traded, and the jaw - dropping risks that were piling up for the system as a whole. on the regulatory side, dangerous vulnerabilities appeared as well : a lack of attention to systemic risks in the financial system, and an over - reliance on markets to self - discipline. in other words, complacency kicked in. one of the most important factors triggering the global financial crisis of 2008 was that in the previous years housing prices in the united states had stopped rising. in the absence of these many vulnerabilities, this might have had only minor consequences. but with these vulnerabilities, the u. s. and other major financial centers, now complexly interconnected through the β shadow banking β system, slid to the verge of collapse. the financial system was saved, but it was badly damaged. above all, trust in the regulators and in the system itself was damaged. policies cannot do what they are intended to do without adequate political support and that requires trust. trust that policymakers will not only make good policy but that, over time, they will remain vigilant, not complacent, and they will be flexible
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recent decades have also seen the fall of the berlin wall and the breakup of the soviet union, bringing much of eastern europe into global economic networks. we have witnessed the spectacular rise of china as an economic superpower. most of the clothing most of us are wearing today is probably made in china. perhaps your shoes, your wallet, your watch, and your smartphone. that so many things would have been made in and imported from the peoples republic of china would have been unthinkable as late as the early 1980s, when i was in graduate school. from a global perspective, in this period of the pax americana we have seen a dramatic decline in extreme poverty. another trend in the post - war decades that is easy to miss, for we can always find flaws β certainly they have them β these multinational bretton woods institutions have played an important role in promoting better governance throughout the world by emphasizing the need to foster strong and legitimate institutions, to hold policymakers accountable, and to make the policymaking process more transparent. for example, one of the three main roles of the international monetary fund is surveillance of the economic, financial, fiscal, and external situations of its member countries. this is done periodically through peer review exercises, each one concluding with recommendations that it continues to monitor. this grand arc of the post - world war ii period, this pax americana, has also seen the astonishing growth of international trade. on the one hand, with greater trade consumers and workers have benefitted all over the world. i share the strongly held view that free trade among countries contributes to faster economic growth and greater aggregate well - being. however, it is evident that in any given country not all members of society benefit from freer trade. in an ideal world, through appropriate policymaking, there would be schemes of compensation so that everyone might be satisfied. but the honest truth is that there are no examples of a seamless compensation processes. therefore, we periodically hear the voices of those who have been left behind. as i said, once a policy has been formulated and implemented, over time, responsible policymakers must remain both vigilant and flexible. we must evaluate policies and, as needed, adjust them. the north american free trade agreement, or nafta, which includes canada, the united states, and mexico, and was signed in 1994, is a case in point. all three nations have enjoyed substantial gains as a result of nafta. it is more than a trade agreement ;
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question for policymakers at the current juncture : what is the most appropriate policy mix in the face of these old and new shocks hitting our economies? my main message is twofold : first, it is fiscal policy that has to be in the lead in mitigating the macro - economic consequences of this prolonged public health emergency. efforts that monetary policy can support by keeping financing costs low for all borrowers second, the macro - economic implications of the unprecedented corona shock and continuing elevated levels of uncertainty require coordination of efforts from all policy areas. most importantly in this context, between monetary and fiscal authorities. unlike the period of the european sovereign debt crisis, the current constellation of policies has been characterized by a massive easing of both fiscal and monetary policy. looking forward, however, i see two possible scenarios that we may wish to avoid. the first scenario is one in which, in the aftermath of the public health crisis, fiscal authorities withdraw their support for the economy too early, in the aftermath of the public health crisis. this would entail a further stretching of monetary policy to its borders and beyond, as inflation may continue to remain below target. the second scenario is the one depicted recently by charles goodhart, in which the downward trend of inflation is reversed on the back of a reversal of demographic and globalization trends, rising labor bargaining power, and rising interest rates. he argues that the covid - 19 pandemic may accelerate this reversal. if inflation indeed were to rise sharply and debt were to be stuck at high levels, monetary policy would be caught between a rock and a hard place. this could end up a test for safeguarding monetary dominance and avoiding a regime of fiscal dominance. the next generation eu covid - 19 recovery package could play an important role in steering away from these two scenarios. by conditioning the funds on growth - enhancing structural reforms, the package may further reinforce efforts to have fiscal and monetary policy optimally interact ; a crucial ingredient to avoid the two scenarios and to return towards a good post - corona equilibrium. only then will we be able to effectively stabilize the economy, prevent long - term ( hysteresis ) effects and pave the road for a sustained recovery. and with this, let me conclude.
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ecb β s willingness, on specific terms and conditions, to act as buyer of last resort of government debt. this eliminated speculative risk premia and helped restore the transmission of monetary policy. yet in the aftermath of the crisis, binding budgetary restrictions still forced countries to cut public spending and raise taxes. this not only hurt economic growth, but also shifted the burden of macroeconomic stabilization onto the shoulders of the ecb. to make matters worse, this happened in an environment of persistently low interest rates that, as we have seen, makes traditional monetary instruments much less effective. as countercyclical monetary policy at the euro area wide level was unable to offset procyclical fiscal policies at the national level, the recession was prolonged and the subsequent recovery was off to a slow start. [ figure 5 ] figure 5. monetary and ο¬scal policy in the euro area were misaligned the following chart illustrates the lack of coordination between monetary and fiscal policy in the euro area during and after the european sovereign debt crisis. the bars show the change in the primary budget balance as a percentage of potential output for the euro area as a whole. positive numbers indicate a discretionary fiscal tightening, negative numbers indicate fiscal loosening. the red bars indicate the years when fiscal policy was procyclical and green bars the years in which fiscal policy was countercyclical. while fiscal policy was initially countercyclical during the global financial crisis, it turned procyclical during much of the european debt crisis. this reflected choices in fiscal policy that were often understandable from a national perspective. but, at a european level, these choices led to an aggregate fiscal stance that was not supportive to economic recovery. monetary policy, on the other hand, was steadily accommodative during those years, as evident from the ecb β s expanding balance sheet. in the chart, this is shown by the solid white line. so during most of the sovereign debt crisis, monetary and fiscal policy behaved out of sync, rather than working in tandem to stabilize the economy. now let β s look in the same chart at what happened more recently, during the covid crisis. this time, the policy response was entirely different. both monetary and fiscal policy responded to the crisis with unprecedented heft and synchronicity. what helped, of course, was the much more symmetric nature of this crisis compared to the previous one. every country in europe was hit in a similar fashion, and in every
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roskilde bank's operations. representatives of any association or similar organisation that may be established by old shareholders in roskilde bank to safeguard a significant part of their interests would be welcome to participate in regular meetings to discuss the activities of the new bank and the discontinuation process in general. i would like to emphasise that this is indeed an extraordinary situation. roskilde bank suffered from very substantial exposure to the property market, unfavourably combined with a lenient credit culture. as a result, the bank was unable to survive on its own, and we had to step in to ensure responsible discontinuation.
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that several other danish banks are also relying on the international capital markets as a source of financing. consequently, any losses on loans to roskilde bank may have an adverse knock - on effect on other danish banks. since friday evening, we have negotiated with the parties concerned β roskilde bank's management and board of directors, the danish financial sector, the danish financial supervisory authority and the government β in order to reach a solution for roskilde bank that would mitigate the adverse effects. today, i am pleased to announce that we have found a solution that has met with full support from all parties. danmarks nationalbank and " det private beredskab " have entered into an agreement with the board of directors of roskilde bank on taking over all assets and liabilities of roskilde bank, except subordinated loan capital, hybrid core capital and an encapsulated savings bank fund. the operations of roskilde bank will continue in a new bank to which danmarks nationalbank and " det private beredskab " are expected to contribute kr. 4. 5 billion. the purpose of the new bank is to continue banking business in order to maximise the proceeds from the discontinuation of the business taken over from roskilde bank. managing director sΓΈren kaare - andersen will be managing director of the new bank, also called roskilde bank. together with " det private beredskab ", we are in the process of composing a well - qualified board of directors for the new bank. at the same time, danmarks nationalbank has agreed with three danish banks β danske bank, nykredit and nordea β that they are to make a number of experienced credit experts available to the new roskilde bank. they are to help improve the general credit culture and participate in a full - scale review of existing credit exposures with a view to gaining an overall picture. unfortunately, under the current circumstances, this takeover agreement means that the shareholders and depositors of supplementary capital and hybrid core capital have probably lost their money. however, the agreed structure implies that on completion of the discontinuation process, any funds left after remuneration of the contributed share capital will be allocated to the owners of subordinated loan capital and the old shareholders of roskilde bank in that order. danmarks nationalbank and " det private beredskab " aim to ensure transparency in the discontinuation of
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finally, i would like to leave you with these words from steve jobs as food for thought, β i am convinced that about half of what separates the successful entrepreneurs from the nonsuccessful ones is pure perseverance. β let β s persevere, and make namibia a truly competitive, global player. ladies and gentlemen, it is therefore a great honour for me to present the awards to the winners of the business idea competition. i thank you! bis central bankers β speeches
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identified would hold up to empirical assessment, the crucial questions would remain as to how big or how integrated financial firms need to be in order to attain these economies. the relative dearth of work that would help answer these questions can be attributed to a number of factors. 5 first, the sample size of the very largest firms is obviously small, limiting the ability of researchers to derive precise statistical relationships between cost, on the one hand, and firm scale and scope, on the other. this problem of sample size is exacerbated by the fact that there has been tremendous growth in the size, complexity, and concentration of the financial sector over the past 15 years or so. second, there are serious limitations on the data available to researchers, and thus any useful discussion of an analytic agenda for research on financial industry structure must include an agenda for overcoming proprietary and other constraints on developing appropriate data sources. for example, data on the use of a variety of financial services by specific customers is generally unavailable to researchers. third, even if appropriate data become available, it may be quite difficult to isolate costs for particular banking activities, given the number of products and activities offered by even moderately complex financial institutions. two additional considerations bear mentioning in mapping out the issues associated with scale and scope economies in the financial sector. the first is a well - known qualification to the proposition that scale and scope can be beneficial β the possibility that firms may grow so large as to face diseconomies of scope and scale. although existing empirical work is again scant, one often hears the suggestion that complexity and agency problems may lead to diseconomies for financial firms under certain circumstances, a proposition that should be considered alongside the hypotheses for positive scale and scope effects. 6 the second point is that the size and composition of a financial firm β s balance sheet play a complicated role in producing economies of scope and scale. to be sure, a large trading book or custody business might produce social benefits by allowing a bank to match or clear both sides of transactions at lower cost. and large balance sheets would appear to enable banks to diversify or hedge their positions and to access a variety of funding sources, thereby reducing their cost of capital. but conventional io - type analysis, which would tend to interpret lower funding costs as evidence of scale economies, is potentially misleading. in essence, a more sophisticated product to its clients, which may also choose such a firm in part because they can be assured they have retained the most
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efforts do not stop here. just to share a few examples of our discussion with mainland regulators on further enhancements. for wealth management connect, we are exploring ways to widen the product scope, enhance sales and promotion arrangements, and allow more financial institutions to participate. we are making progress and i look forward to sharing more with you in the very near term. for bond connect, we are looking to provide more interest rate risk management and liquidity management tools to global investors while expanding the list of southbound market makers. to further develop the recently launched rmb counter in the stock market, we are exploring the inclusion of the rmb counters in southbound stock connect. all of the above will deepen the two - way opening - up of mainland financial markets while further consolidate hong kong's role as an international financial centre. rmb internationalisation but hong kong's edge as the leading offshore rmb business hub is not just a matter of our mutual market access with the mainland. in fact, hong kong has the largest offshore rmb liquidity pool, occupies the top position for global rmb payments, and has a mature rmb business ecosystem which has been enhanced over the years. looking ahead, the long - term economic growth and capital account opening process of china would continue to provide impetus to further advancements of offshore rmb business. market participants would find rmb useful for their crossborder trade settlement as well as investment diversification amid the challenging global macroeconomic conditions. to meet growing rmb business demand, we will continue our efforts in enhancing rmb liquidity, product and infrastructure in our offshore rmb market. meanwhile, the tma has recently formed a working group of experienced rmb 3 / 6 bis - central bankers'speeches specialists from banks in hong kong to gather views on offshore rmb market development. i look forward to the working group's proposals on opportunities and concrete steps in taking things forward. enhancement of our offshore rmb business platform allows us to strengthen our intermediary role which connects china and the rest of the world, and in turn promote wider use of rmb in the international markets. an increasing number of economies, including those in the middle east and the asean, want to use the rmb to settle their trade with china. so we are working with banks to promote more participation in our offshore rmb market from asean and the middle east. we think the industry can really play a big role in overseas promotion events. we also welcome the industry to build
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credits, foreign direct investment and portfolio flows, have dropped significantly in the last few years. in the case of bank credits, total flows declined by about us $ 200 billion during the 1997 - 1998 period, although the decline has been at a more moderate pace in the last two years. in the light of this, it is important that the bank plays a catalytic role in mobilising resources within and outside of the region. one approach to this challenge would be for the bank to return to basics and improve the three channels of financial intermediation, namely, banking, equity and debt, through a number of measures. first, the bank could increase investment in the financial infrastructure in asia. just as physical infrastructure, such as airports and highways, facilitates the movement of people and goods, financial infrastructure, such as the payment and settlement systems for the banking and securities sectors, facilitates the safe and efficient movement of money. the importance of a robust payment and settlement system in this region is underscored by the events of 11 september. secondly, the bank could expand the technical assistance programme to assist economies in restructuring the banking sector. small and medium - sized enterprises employ the most workers in asia and they are mostly dependent on bank financing. the banking sector in asia, devastated by the asian financial crisis, has not fully recovered. banks understandably are adopting a very conservative lending strategy towards companies with a lower credit rating, such as small and medium - sized enterprises. the bank β s assistance in speeding up the banking sector reform would help smes to get back on their own feet, thereby reducing unemployment and poverty. thirdly, the bank could expand assistance in building up the institutional capacity of individual economies to improve corporate governance in the private sector. emphasis should also be made to improve the auditing, disclosure and transparency standards of publicly - listed companies. as seen in the asian crisis and again in the enron incident, good corporate governance is critical to restoring investor confidence in the equity markets. fourthly and lastly, the bank could assist with the development of the bond market in asia. clearly the financial intermediation process cannot be dominated by one or two intermediaries. earlier, in 1990, when it was the banks in the united states that seized up as a consequence of a collapse in the value of real estate collateral, the capital markets were able to substitute for the loss of bank intermediation. in asia, there is considerable room to develop a bond market to serve as a back - up in
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employment and economic growth. it also plays a pivotal role in our risk analysis efforts. take, for example, the risk controlling function and its analysis related to the many counterparties with whom the bundesbank conducts financial transactions or purchases securities. by combining diverse sets of data and information, artificial intelligence helps us identify potential financial difficulties of a counterparty at an early stage. given the sheer volume and complexity of the data involved, collecting and evaluating this information manually would be nearly impossible. through the strategic application of artificial intelligence, we can detect risks more quickly and with greater precision, allowing us to take timely and informed action. we are also using an artificial intelligence platform that allows access to the latest language models in a secure environment. it is a chatbot that works in a very similar way to chatgpt β only ours has different requirements, for example in terms of data governance. the requests are neither stored in the cloud nor used for training purposes. 3 future of finance the international financial architecture, markets and instruments are currently changing due to ongoing economic fragmentation and technological advances. against this backdrop, there are several reasons in favour of the digital euro. the first reason is related to autonomy and sovereignty. so far, there is no sovereign pan - european solution for payment in the digital space. as a result, there is a risk that europe will become overly dependent on us providers for critical infrastructure. a digital version of the euro will facilitate a european - based ecosystem around payments. another reason is related to efficiency. we are seeing very strong fragmentation in the european payment market and increasing concentration through international card systems that are all us - based. the digital euro establishes standards that simplify competition. lastly, we also have to consider resilience. with the digital euro, we are safeguarding ourselves against competing currencies and stablecoins. the digital euro would be the next step in the development of the euro and would bring central bank money into the digital age. the bundesbank is a key player in the development of a digital euro thanks, amongst other things, to its it expertise in payment systems and in the area of tech trends. 2 / 3 bis - central bankers'speeches 4 cybersecurity cybersecurity is a decisive factor for the stability of the global economy and the functioning of our modern society. operators of critical infrastructure, such as the bundesbank, are under growing pressure from targeted cyber attacks. of course, the bundesbank, too, is subject to the
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most common types of attacks like phishing or denial of service attacks. to give you an example : on average, we receive a phishing attack every 5 minutes. that's why the principle " secure by design " is of crucial importance from the very beginning when developing and operating it solutions and services. the bundesbank has just rolled out a new governance model for it security in order to create the basis for effectively counteracting growing threats. concretely, we are appointing a designated " security architect " in each bundesbank department who serves as the go - to person for all architecture - related security concerns. the security architect will support product owners and agile teams in implementing security processes and regularly evaluating the impact of securityrelevant information. this role is complemented by " security champions " within each product team. these champions will help maintain the required level of information security throughout the entire product lifecycle, including regular checks for new vulnerabilities. the governance model includes not only dedicated roles and responsibilities but also professional development and training measures for all staff in order to sensitise them to the fact that it security is a critical discipline for everyone. 5 conclusion to conclude : by keeping up with technological developments, playing an active role in providing future forms of payment and of course safeguarding our security, the bundesbank contributes to the competiveness of the german and european economy. this is more relevant than ever in the current geopolitical context. that's why i'm thrilled to participate in this excellent conference and exchange. 3 / 3 bis - central bankers'speeches
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. during the remaining part of my speech, i shall elaborate on this subject. in doing so, i would first like to shed some light on the rationale behind macroeconomic projections and the method used before talking about the importance and use of projections in monetary policy. the rationale behind macroeconomic projections and the method used forecasting and utilising projections of the likely development of key economic variables is key to effective central banking. why is this so? the main reason for this is that monetary policy measures affect the economy only after a long, variable und uncertain time lag. a stability - oriented monetary policy should therefore not merely respond to actual data on inflation and the real economy. rather, it should act in a pre - emptive manner and, in turn, should not wait for risks to price stability to materialise. metaphorically speaking, obviously, a stability - oriented monetary policy cannot be conducted by looking through the rear - view mirror β in other words, by focusing on past inflation and real economic data. moreover, looking through the side window β that is relying primarily on current observations of growth and inflation β is not sufficient either, since the long and variable lags of monetary policy transmission mean that today β s inflation can no longer be influenced by current monetary policy decisions. thus, the only viable option for monetary policy is to act in a forward - looking manner in order to ensure price stability over the medium term. therefore, ( at least implicit ) forecasts for inflation and real gdp growth are tools used by most central banks nowadays for assessing the appropriateness of the current monetary policy stance. in this context, three particular questions arise : β what are the specific characteristics of economic forecasts? β, β how can these characteristics be conveyed to the general public? β, and β how can monetary policy make use of macroeconomic projections? β 3. 1 central forecast and uncertainty especially with respect to the first two questions, i do not want to go into too many mathematical details regarding forecasting techniques, as this would make my remarks a highly technical presentation. i would prefer to concentrate instead on the fundamental and most important elements of forecasting. so, where to start if one wants to generate a forecast? as we are living in an ever - changing economic environment, the starting point of every forecast is a set of forward - looking assumptions, at least with respect to main economic variables such as future market interest rates, exchange rates, crude oil prices and both world trade and growth. the
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and up to the present day : first, to strengthen the stability of the international banking system, and, second, to eliminate or mitigate distortions in international competition among banks due to differences in national regulation. undoubtedly, the main achievements of the first basel capital accord were that it represented a significant step towards international harmonisation of banking regulation β it was later applied by more than 100 countries β and that, for the first time, it put the focus on the relationship between the capital that banks hold and the weighted risks that banks take. after its implementation, it was not long before basel i came in for increasing criticism. first, it did not adequately cover all the risks to which banks were exposed. second, the risk weightings were presented in a very crude form that was an inadequate reflection of the actual underlying risks. despite such early warning signs, it was a long road that led to the implementation of basel ii. in the interim, financial turbulence, namely the mexican crisis ( 1994 - 95 ) and the asian crisis ( 1997 - 98 ) had further heightened the awareness among the g10 countries of the need for greater international cooperation in financial market oversight. as a consequence, the financial stability forum was founded in 1999 and the first working groups were entrusted with drawing up appropriate measures for financial regulation. out of this process the basel ii framework with its three pillars that you are all aware of was born and finally published in june 2004. basel ii was scheduled for implementation by end of 2006. however, owing to its complexity β especially with regard to the different approaches to assessing the minimum capital requirements β the timetable allowed fairly long transition periods for the change of supervisory regime. as a result, basel ii had not yet been fully implemented by most credit institutions when the subprime crisis emerged in the summer of 2007. in particular, many banks β including the eu ones β applied the new basel ii capital rules for the first time in 2008. consequently, we still have only a restricted knowledge, based on real data, of how basel ii works in practice. and, most notably, we cannot blame basel ii for the recent financial crisis. nevertheless, the financial crisis has highlighted deficiencies in financial regulation within and beyond the supervisory framework of basel ii that have to be addressed based on a thorough analysis. challenges in strengthening financial stability 3. 1 banking regulation the search for the underlying causes of the financial crisis has been intense. although a definitive assessment is still outstanding, it is widely agreed that the seeds of the crisis were
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usha thorat : risk management β priorities for the indian banking sector opening remarks by smt usha thorat, deputy governor of the reserve bank of india, at the panel discussion on β risk management : priorities for the indian banking sector β, at β bancon β indian banking conclave 2009 β 10 β, mumbai, 12 january 2010. * * * 1. the new decade is predicted to be more transformational than the first decade of this millennium for the indian economy and the indian financial system. if the last ten years have seen transformation in terms of consistently higher growth rates, adoption of core banking solutions, transformation in the payments systems and greater integration with the global economy, the coming decade will see unprecedented volume of business for the indian financial system as it tries to meet the challenges and requirements of rapid and inclusive growth. information technology ( it ) has made it possible for banks to deal with large numbers and such growth in volume and value of business will obviously imply huge challenges for risk management, which in turn will have to depend on human resources and it in dealing with the new normal β a theme so apt for this conference. 2. the major challenge is, clearly, having the human resources of the right kind and numbers and the ability to retain skilled personnel. from having personnel to deliver banking services to the poorest, to having the expertise to deliver sophisticated financial products and adopt consistent risk management practices across the organisation, will be the key to managing huge organisations optimally. 3. if one of the reasons for the global financial crisis was that the financial sector grew out of sync with the real sector in the advanced economies, in india the position is different in that the financial system has to ensure that it meets the requirements of the growing real sector. risk is inherent in banking as banks essentially trade in risk in the process of maturity transformation. therefore, banks cannot afford to be risk avoiders. at the same time β banker β s prudence β, something that is critical to safety of the depositors β funds, has to be the underlying philosophy at all times. the risk return relationship has to be optimally balanced for welfare enhancing outcomes. 4. the crisis has thrown up some critical issues relevant to risk management policies : β’ the business model matters. banks that were extremely aggressive in the trading books were clearly more affected. those that had a fair degree of traditional banking were less affected. β’ there has to be an intuitive approach to risk. despite huge growth in leverage and huge expansion of β
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. meanwhile, in november 2014, guidelines on monitoring tools for intraday liquidity management were issued. lcr intends to promote the short - term resilience of banks to potential liquidity disruptions. it requires that the banks have adequate high quality liquid assets ( hqla ) to withstand a 30 - day liquidity shock. these hqlas should be available with the bank to cover net cash outflows that are expected to occur in a severe stress scenario. nsfr on the other hand supplements the lcr and has a time horizon of one year. it has been developed to provide a sustainable maturity structure of assets and liabilities. i will now delve in some detail into these standards. i want to touch upon some of the regulations, our views on them and provide the rationale for the rules as accepted by us. the indian framework for lcr requirements was issued on june 9, 2014 through the publication of final guidelines on the lcr, liquidity risk monitoring tools and lcr disclosure standards, where implementation of the lcr has been phased in from january 1, 2015 with a minimum mandatory requirement at 60 per cent, which will gradually increase to 100 per cent by january 1, 2019. the nsfr draft guidelines were issued in may 2015 and india is committed to the scheduled implementation of nsfr from january 1, 2018. whenever there is a discussion on lcr the reference to slr requirements running parallel is inevitable. as i have already mentioned, slr has been the mainstay for liquidity risk management for indian banks. slr is similar to lcr in composition except that lcr is a more sophisticated tool to ensure liquidity under stressed conditions that takes account of the liquidity profile of both assets and liabilities. lcr does not impound the funds of banks for lending beyond what is assumed to be necessary to maintain their liquidity on an on - going basis. moreover, as lcr permits other securities apart from g - secs, it is expected to give a fillip to markets other than g - sec market, especially the corporate bond market. furthermore, lcr is an internationally accepted standard and its implementation brings convergence with global standards. non - compliance with basel rules can have major ramifications for the banks of a jurisdiction. of course, every jurisdiction factors in the domestic conditions to the extent permissible. with the advent of peer review under bcbs β regulatory consistency assessment program ( rcap ), the guidelines put in place by each jurisdiction
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mr. george gives an assessment of where the uk economy has come from and where it is headed speech by the governor of the bank of england, mr. e. a. j. george, given at the institute of directors annual dinner in london on 19 / 11 / 98. my lord and president, deputy lord mayor, your excellency, my lords, ladies and gentlemen. let me put some of the recent newspaper headlines alongside the facts, in order to put things in perspective. first, on the world economy, the headlines read : β’ β’ β’ meltdown warning in the wake of economic slowdown. g7 nations try to halt slide to depression. last ditch bid to avert global crisis. and these are just the supposedly serious newspapers! the facts are that world output growth is expected by the imf to be 2 % this year and 21 / 2 % next - compared with 4 % in 1997. and the oecd expects growth in the oecd area of 21 / 4 % this year, 13 / 4 % in 1999, recovering to 21 / 4 % in the year 2000 - compared with 3 % in 1997. that certainly is a very marked slowdown, but it is hardly meltdown or recession. and on our own economy - the headlines read : β’ β’ recession looms. the economy is hurtling headlong towards recession. and even : β’ it β s official - the economy is shrinking. the facts are that for the past 6Β½ years the british economy as a whole has grown at an average annual rate of over 3 % - which is well above its long term trend rate of some 2 % - or, if you are optimistic, some 2Β½ %. and we were still growing, at an annual rate of some 2 % in each of the last two quarters, on the latest published data. at the time these headlines were written a month or so ago not one of the 28 independent professional forecasting organisations surveyed by consensus forecasts was expecting output to fall in 1999 ; and their average expectation was for 1 % growth next year. that is broadly in line with our own latest best guess in the mpc. your own most recent iod forecast in september suggested slightly stronger growth next year. it is true that consensus forecasts have since revised down their mean expectation - to just over ΒΎ % growth ; but even now only one of the 28 contributors expects output to fall. on unemployment in the uk the headlines read : * jobs gloom deepens as
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risked overheating, particularly in the labour market, where reports of shortages not just of skilled but even of unskilled workers, were becoming widespread. the situation was seriously complicated by an increasing imbalance between the domestic and the internationally exposed sectors of the economy. domestic demand for goods, and particularly for services, was unsustainably strong, and large parts of the economy were doing very well on the back of that - though they didn β t make too much of a song and dance about it. but other sectors, those most exposed to international competition - most of agriculture, large parts of manufacturing and some service sectors - were already then having a much more difficult time. understandably, they were more vociferous. they had been hit, initially, by the exaggerated strength of sterling against the major european currencies in the run up to decisions about the euro. and they were hit, subsequently, by the successive waves of turmoil spreading through the world economy which saw exchange rates fall and demand dry up in asia and elsewhere. so, faced with this dilemma, what were we to do? it is true that the external factors - unhelpful as they were in a more fundamental sense, in terms of the imbalance in the economy - did act as a restraining influence on overall aggregate demand and on inflation, and that meant we had somewhat more time than we would otherwise have had to moderate the growth of domestic demand. but even allowing for that we in fact had no choice but to tighten policy. it wasn β t that we didn β t know that the internationally - exposed sectors were under the hammer we β d have had to be blind as well as deaf not to have known. our problem was that if we had held back more than we did, in order to shelter the exposed sectors, we would have put the whole economy - including the sectors we were trying to protect - at risk of accelerating inflation. and that would have meant eventually having to tighten policy more abruptly, which would much more certainly have plunged the economy into serious recession, a bit further down the road. the harsh reality is that monetary policy can only target the economy as a whole - it cannot realistically seek to shelter particular businesses or particular sectors or particular regions, however much we might all wish it were otherwise. and, in relation to the economy as a whole, the effective choice in the situation we faced was not whether or not to tighten, but whether to tighten sooner, and by less, or
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tarisa watanagase : inflation targeting β a reflection on thailand β s experience opening remarks by dr tarisa watanagase, governor of the bank of thailand, at the bank of thailand β s international symposium on β challenges to inflation targeting in emerging market countries, β bangkok, 13 november 2006. * * * honorable guests, distinguished participants, ladies and gentlemen, first, i would like to extend a very warm welcome to all of you here today. this is the second time that the bank of thailand organizes a symposium at an international level. our first international symposium, β practical experiences on inflation targeting, β was held in october 2000, a few months after we had adopted inflation targeting as a new monetary policy framework for thailand. but this symposium today is the first one that brings together central bank governors, senior central bank executives, world - renowned academics and policy experts from leading international organizations. many of you have extremely tight schedules and some have to travel a very long distance. i would like to express our great appreciation for your presence and very much hope that what we will learn together in this symposium is beneficial to all of us. ladies and gentlemen, thailand formally adopted inflation targeting as a monetary policy framework on may 23, 2000. the change in policy regime was a result of our search for an appropriate nominal anchor after the floating of the thai baht in july 1997. in the interim period, we used monetary aggregates as our policy target. it was during that time that we came to recognize that the relationship among monetary aggregates, inflation, and output in thailand did not have sufficient stability and predictability to make monetary aggregates a good nominal anchor of our monetary policy. inflation targeting then appeared as a natural choice for our new monetary policy regime. from that day onward, price stability has become the bank of thailand β s overriding policy objective. the core inflation rate was, as it is now, to be kept within a 0 - 3. 5 percent range. when thailand adopted an inflation target some six years ago, the policy regime was a relatively uncharted territory for emerging market economies. although the history of inflation targeting dates back to 1990 with the adoption of an inflation target by the reserve bank of new zealand, prior to 1998, inflation targeting was pursued mostly by developed economies. the first substantial crosscountry study of inflation targeting, published by ben bernanke, thomas laubach, frederick mishkin and adam posen, who is here today, in 1999,
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fit their livelihood. secondly, to ensure quality of usage, we need to enhance financial literacy. with higher financial literacy, the poor could utilize the services more efficiently and productively, for example, having the ability to turn received credits into income and savings and so on. finally, we need a good system of consumer protection in order to ensure fair and transparent provision of financial services. i believe that financial regulators have an important role to play in all three areas. the fact that we are all here today, already signifies our commitment to addressing such issues, thus ascertaining the success of financial inclusion. not just for our own sake, but also for the sake of our friends around the world. after having seen this morning β s agenda, i am certain that there will be plenty of great discussions among us today. i myself am very interested to hear us take the current policy challenges further, arriving at how best we think afi can play a role in tackling such issues. of course, us working together to ensure the sustainability of the afi community together with our policy impact would also be key. i look forward to discussing our proposals of potential afi flagship projects, all of which, i believe would make significant contributions to the global efforts on financial inclusion. in this connection, the bank of thailand will be presenting our proposal on β using survey data to design financial inclusion policy β for your consideration. the project findings would not only provide a useful international research contribution in the area of financial inclusion, but also an easily replicable exercise for anyone to conduct and repeat over time, thus adding to the stock of critical grass - root information on financial access. finally, i also look forward to discussing with you on the governance and other related issues of our start - up committee. without further ado, let us now give our attention to alfred who will be updating us on afi β s latest progress and lead us through the rest of today β s agenda. thank you for your attention. alfred, the floor is yours.
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have come about through the lessons from our own past. the bsp together with the banking industry will remain steadfast in our reform effort. if we are to serve our public, we must continue to be responsive to their needs and to ensure that we act responsibly, mindful of the trust bequeathed by our public on us. the term β fiduciary responsibility β is not just a mantra that is conveniently brought out as the need arises but it is instead a social contract with our most basic constituent. this is the way forward and this is the high bar that must be set if we are to see responsive and responsible banking bear fruit. i have seen our market rise with resiliency when it was down. i have every bit of confidence to know that it will find the answer to the difficult questions when our present position is that of relative strength. it is after all, all about who we are who we serve, and, now is the time to show what we are made of. thank you very much and good morning.
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two different policies, with quite different results in terms of price stability and growth, because of substantial differences in the underlying rigidities of their economies, in particular with respect to the reaction to exogenous shocks, such as an oil price increase. yet, one popular way to conduct this comparative analysis, often presented in market analysts β newsletters, is to estimate policy reaction functions of different central banks ( for example taylor rules ) to infer central bank preferences. this may be a quite misleading exercise, because it does not take into account the differences in the structure of the economies. 9 just to give an example, several studies analysing ecb policy come to the conclusion that it has reacted timidly to inflation. this may appear somewhat counterintuitive given the importance attached to price stability in the ecb mandate. 10 this result is instead quite consistent with what i have explained earlier, i. e. the optimal policy response to a shock depends very much on how economic agents themselves react to such a shock and on their expectation of the central bank β s reaction. if a shock does not lead to a permanent pass - through on inflation and the central bank is credibly committed to price stability, it is optimal for a central bank not to react. 11 looking at the estimated taylor rule coefficients only, the central bank would appear as quite dovish, while it is instead quite hawkish and expected to be so. 12 * * * moving to the end of my talk, i would like to emphasise that interacting with markets and trying to shape expectations is not an easy job. central banks are highly committed to this, and they try to do it with all the instruments that are available to them. however, it would be misleading to think that central banks act in a vacuum, with no constraints. as i have tried to explain, central banks have to face several constraints, most of which - i have to say - are often forgotten by analysts, commentators and academics. effective communication is essential because it enables the central bank to guide agents β behaviour and expectations, thereby keeping its policy line consistent with its objective and its assessment of economic conditions. this may require specific skills, although i would not go to the extreme of associating central bankers to artists or famous athletes, as mervyn king did in a recent speech, in which he associated a steady - hand monetary policy to the straight line followed by diego armando maradona when he scored his second goal against england in a famous
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market. for obvious reasons, this move is not only uplifting to the technological advancement and capability of the matero community through the provision of modern banking services like the autobank, but also goes a long way in assisting the bank of zambia, as a monetary authority, to have a firm control over the implementation of monetary policy. you would agree with me that it is quite difficult for a central bank, like ours, to implement monetary policy effectively in an environment characterised by inadequate banking facilities. it is for this reason therefore that i commend the management of stanbic bank zambia for bringing banking facilities closer to the people. in this regard, i wish to assure you that on our part we shall continue to support you in your endeavours to open more of such branches, because we firmly believe that you are making our work and that of the government much easier. however, may i take this opportunity to advise the management of stanbic zambia that if you want this branch or many of such branches you intend to open in future to be beneficial to the communities in which they operate, kindly be flexible on the requirements for opening accounts as well as lowering the minimum account balances to be maintained by your clients. i say so because communities like matero and the surrounding areas comprise mainly of people who are in the informal sector. therefore, it would be unreasonable for you to ask an unemployed prospective customer to bring a letter from their employer before an account could be opened with your branch! in other words, i strongly urge you to tailor your banking services to the needs of the community you operate in. finally, let me also take this opportunity to urge the other commercial banks operating in zambia to emulate stanbic bank zambia by establishing community banking branches. as your regulator and supervisor, we take a lot of pride in seeing commercial banks coming up with innovative and progressive financial services, such as community banking. i believe that it is through the provision of such tailor - made banking services that banks would meaningfully fulfil their role as financial intermediaries in our economy. with these few remarks, ladies and gentlemen, it is now my honour and privilege to declare the stanbic bank matero branch officially open. i thank you.
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gentlemen, it is very clear that small - scale cross - border trade plays a very vital role in our economies, particularly in generating income, creating employment and alleviating poverty. however, ladies and gentlemen, the small - scale cross - border trade faces a lot of barriers and impediments, including lack of access to financial and payment services such as currency exchange and transmission facilities. traders from both sides of the border are forced to carry cash and must first convert funds into united states dollars from their respective countries and then into the domestic currency of the country they are purchasing goods or services from. by so doing, cross - border traders face many risks including theft, exchange losses and other conversion costs. ladies and gentlemen, although there have been some bilateral efforts towards formalising and facilitating small - scale cross - border trade in southern africa, these have not been bis central bankers β speeches enough. for instance, zimbabwe signed a memorandum of understanding with malawi to facilitate informal trade, especially between small and medium - sized enterprises. mozambique and zambia also signed a memorandum of understanding to facilitate the repatriation of currencies of the two countries that are accumulated by traders located along the common border areas. it is expected that this memorandum of understanding will be expanded to include malawi. the lack of financial and payment services has not only hindered small - scale cross border trade but also led to the establishment and entrenchment of parallel currency markets at the borders. needless to say, these are associated with vices such as counterfeiting, facilitating illegal trade, as well as enhancing cross - border money laundering activities. moreover, to us monetary authorities, illegal cross - border local currency circulation creates the potential for complicating the conduct of monetary policy, especially if a significant amount of a country β s domestic currency is being used outside its jurisdiction. the volumes of goods and services traded and amount of currency handled by individual traders may seem small. however, they are collectively significant and have implications for the conduct of monetary policy. for instance, the world bank estimates small - scale border trade in southern africa to be around $ 17. 6 billion. other studies have estimated that small - scale cross - border trading accounts for about 42 % of gdp in sub - saharan africa. ladies and gentlemen, it is for this reason that this roundtable symposium has been convened with the following objectives : 1. to stimulate broader interest in the topic of small scale cross border trade ; 2. to initiate an inquiry into the
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by sub - industries, such as agricultural and animal husbandry, textile, light industry, machinery, and so on. they were in charge of import and export of their respective sub - industry and adopted different financial rules. there was no competition among the companies. in order to attract foreign investment, china introduced the first sino - foreign joint venture law in 1979, after which domestic companies competed from foreign companies and industry segmentation and monopolies began to fall apart. competition has driven the soes to make great progress. industries with more sufficient opening - up and fiercer competition have developed more rapidly. the manufacturing industry has flourished. 1 / 4 bis central bankers'speeches 2. opening - up has promoted domestic policy reform the opening - up has strongly impacted the traditional centrally planned policy making system, and triggered a series of major domestic reforms, including pricing system reform, value - added tax reform, export tax refund reform, market - based exchange rate regime reform, and negotiation for accession to gatt and wto. in the early 1980s, in order to attract foreign investment, the domestic policy system must move more closer toward the market rules and provide a level playing field. subsequent consideration was to make sure chinese enterprises compete fairly in the international market. fair competition and opening - up are inter - connected. it involves not only competition between chinese and foreign - funded companies, but also equal and adequate competition among chinese companies. opening - up accelerated the access of domestic private capital, and subsequently brought in the concept of national treatment. market access criteria should be the same for domestic and foreign - funded companies. the opening - up facilitated three major policy reforms, i. e., trade and investment liberalization, market - based exchange rate regime reform, easing of exchange control, including lowering the market access threshold. as a result, competition and market gradually became generally applicable policy mechanism. 3. service industry has opened up in a similar process in the past, economists treated the service industry as a non - tradable industry. however, with the rapid progress of information technology, transportation and globalization, many services became tradable. people began to say that β the world is flat β. the opening - up of the service industry in china followed a similar pattern of the manufacturing industry : opening - up brought in competition, boosted efficiency and quality of service, and facilitated domestic policy reform. in the industrial field, the market competition rules are not applicable to a very small number of industries such as defense industry,
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##utely resolved risks of some high - risk financial holding groups, intensively rectified the financial order and conducted the special program on addressing internet financial risks. financial institutional reform continuously deepened remarkable achievements have been made in the reform of large state - owned commercial banks. in 1979, in order to support β loans for government grants β reform, the central government established various state - owned specialized banks, gradually discarded the division of work among these banks, split off their policy - related businesses, and transformed them into market 2 / 11 bis central bankers'speeches competitors. however, due to deficiencies in financial standards and rules, imperfect corporate governance structure and inadequate capital, as well as the impact of the 1997 asian financial crisis, there was a massive build - up of non - performing loans in the banking sector. at that time, some scholars at home and abroad believed china β s large state - owned commercial banks were on the brink of β technical bankruptcy β. in response, the chinese government issued special treasury bonds and established four asset management companies that specialized in receiving and disposing non - performing loans of rmb 1. 4 trillion hived off from state - owned commercial banks. however, deeper reforms like the institutional reform of large state - owned commercial banks remained untouched. in february 2002, it was clarified at the second national financial work conference that large state - owned commercial banks should be transformed into joint - stock companies and those with appropriate conditions could get listed. in 2003, the central government decided that the pbc should take the lead in researches on the reform of large state - owned commercial banks. the pbc then proposed creatively to inject the state β s foreign exchange ( fx ) reserves into large commercial banks, and designed a four - step reform program which included writing off actual capital losses, splitting off and disposing of non - performing assets, injecting fx reserves and getting listed on domestic or foreign markets. in september 2003, upon the deliberation and approval of the cpc central committee, the state council approved the general plan for transforming large state - owned commercial banks into joint - stock banks, of which the drafting was led by the pbc. according to the plan, bank of communications ( bocom ), china construction bank ( ccb ), bank of china ( boc ), industrial and commercial bank of china ( icbc ) and agricultural bank of china ( abc ) successively underwent shareholding reforms, stripped off non - performing assets, significantly shored up
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the remainder of the year. at the same time, it appears that inflation and inflation expectations have eased. i encourage you to not only focus on economic conditions that affect the bond market, but to also pay attention to emerging regulatory issues. the depth and diversity of bond markets will continue to support economic expansion as long as investors can rely on the integrity of information about issuers and characteristics of specific securities.
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funding. a locom accounting model applied to such instruments is not consistent with this important management function. we have always expected banks to regularly review the fair values of all their securities. but the concept of β tainting β due to realized losses from the available - for - sale portfolio had not been widely applied in such a narrow way. covitz, daniel and steven a. sharpe, β which firms use interest rate derivatives to hedge? an analysis of debt structure and derivative positions at nonfinancial corporations, β working paper, july 2004. i commend the financial accounting standards board ( fasb ) for listening to questions raised by preparers, auditors, and bank regulators and agreeing to defer the effective date for the troublesome paragraph 16 from the third to the fourth quarter. it has also issued some implementation guidance, and has a comment period that runs until october 25. i would encourage you to read the new guidance, and to provide comments if you feel additional clarification is needed. pay particular attention to the facts and circumstances that should be considered. note that the guidance allows sales of available - for - sale securities at a loss for the same reasons that you can sell held - to - maturity securities without tainting the remaining portfolio, for example mergers and changes in regulatory capital. the guidance also permits sales for unexpected and significant changes in liquidity needs or increases in interest rates. in practice, eitf 03 - 01 should make all organizations with available - for - sale securities review their procedures for identifying impairment. clearly, investors should continue their current practice of monitoring for credit downgrades and changes in prepayment speeds, especially for mortgage - backed securities booked at a premium and interest - only strips. but in addition, the trigger for recognizing impairment is no longer an intent to sell, but rather whether the investor no longer intends to hold the security until fair value recovers to its amortized cost. also note that the disclosure aspects of eitf 03 - 01 do apply in third quarter financial statements. the major change is separate disclosure of securities whose fair value is below carrying cost. organizations now must disclose separately the amount of securities that have been in a continuous unrealized loss position for more than one year, and in the narrative discuss why the loss has not yet been recognized. fair value and regulatory capital issues as you know, the basel ii effort to revise bank risk - based capital standards is now in its final stages and moving toward implementation. importantly
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because of that lag, in setting policy, one wants to emphasize those changes in prices that affect the underlying trend of inflation and downplay temporary fluctuations in very volatile components of the consumer price index. that is why, unlike some other central banks, we have explicitly chosen to focus on the underlying trend of inflation and use a core rate as our operating guide. the core rate excludes the eight most volatile components of the consumer price index as well as the effects of changes in indirect taxes. but i should add that the central bank can downplay those temporary price changes only if there is good reason to believe that they will not feed into other prices in the economy and affect inflation expectations. the reason we have been able to do that is because the inflation targets have helped to establish monetary credibility and to anchor inflation expectations. inflation targeting and a flexible exchange rate my review of canada β s current monetary policy framework would not be complete without reference to its other key element - our flexible exchange rate. monetary policy can pursue only one objective - keeping inflation low as a means to promote the economic well - being of canadians. in pursuing that goal, we have chosen an inflation target as our anchor. and that means that we have to have a floating exchange rate. but i want to emphasize that canada is a small and very open economy, with a structure of production and trade that differs significantly from that of the united states. a floating exchange rate is important because it facilitates the adjustment to economic disturbances, such as fluctuations in the world demand for, and prices of, our products. it also facilitates adjustment to changes in savings and investment flows. over the last few years, more countries around the world have moved to flexible exchange rate systems and have adopted inflation targets as their monetary policy anchor. today, i have given you a flavour of the canadian experience in this area, and i have talked about some of the lessons we have learned over the past decade. i hope that this has provided you with some useful insights. let me now turn to recent economic developments and the outlook for the canadian economy. recent economic developments and prospects in canada the immediate impact and the fallout from last september β s tragic events here in new york, and elsewhere in the united states, led to a sharp increase in economic uncertainty around the world, exacerbating the effects of the global economic slowdown that had become more evident by last summer. in those circumstances, the bank of canada moved quickly and aggressively to lower interest rates. the aim was to
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radovan jelasic : future of the capital market in the balkans speech by mr radovan jelasic, governor of the national bank of serbia, to participants of the economist media group conference β future of the capital market in the balkans β, belgrade, 24 june 2008. * * * ladies and gentlemen eight years into the transition of the serbian economy, we may safely say that our financial sector has become and, judging from how things stand now, shall remain bankcentric. such observation is based on the following two facts : 1. the share of the banking sector in total assets of the financial sector ( banks, insurance companies, leasing providers and voluntary pension funds ) remained more or less constant at around 90 % throughout the period from 2003 to 2007! 2. legislative activities on faster development of the capital market have been stuck in the doldrums for almost two years now! to illustrate, securities act, law on compulsory motor vehicle insurance, law on the market of securities and other financial instruments, law on personal income tax and law on corporate profit tax are all either in the final phases of completion or were completed and sent off to the assembly of the republic of serbia for adoption only to be placed on the long waiting list of issues to be discussed! there is no denying that voluntary pension funds and insurance companies are still hoping for a chance to invest in high - quality listed securities. they, however, remain in very short supply. let us remember that there are only four listed securities in serbia at the moment : besides bonds issued against frozen foreign currency savings deposits, we only have tigar, energoprojekt and soya protein securities. what is happening with the remaining 1800 shares quoted on the stock market? why aren β t they listed? could it be that somebody has turned them down β which i doubt, does not want to list them β which is also highly unlikely as they represent a good investment, or is unable to list them β which is most likely! one thing is for sure, it does not only take a law to create a capital market. and serbia is a very good illustration of the fact. enactment of adequate legislation is a necessary, but not a sufficient prerequisite for setting up the capital market. one of the key links in the chain of development of the capital market should be the pension system reform. last week we were visited by mr. klaus schmidt hebbel from the central bank of chile. he will be working as chief economist
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high - risk firms almost unlimited access to funds generated through their new access to the safety net. finally, following a series of crises during the late 1980s and 1990s, the government confirmed that because of systemic impact, some institutions were just too big to fail β the largest institutions could put money in nearly any asset regardless of risk, and their creditors would not be held accountable for the risk taken. predictably, the industry β s risk profile increased dramatically. the sifi was born. is it any wonder then that in the fall of 2008 we experienced the greatest financial crisis since the great depression? financial institutions had again become irresponsible in their lending practices. they had increased their leverage ratios to unprecedented levels. they became β dry kindle β for a financial fire and, with the end of the housing boom, the match was struck. now, with their bailout costs amounting to billions of taxpayer dollars, sifis are larger than ever. strikingly, they are arguing that they should not be held to stronger capital standards if the united states hopes to remain globally competitive. that assertion is nonsense. the remainder of my remarks today will describe how the united states can achieve a stronger, more stable financial system in order to secure its future as a global economic leader. proposal to reduce costs and risks to the safety net and financial system following this financial crisis, congress and the administration turned to the work of repair and reform. once again, the american public got the standard remedies β more and increasingly complex regulation and supervision. the dodd - frank reforms have all been introduced before, but financial markets skirted them. supervisory authority existed, but it was used lightly because of political pressure and the misperceptions that free markets, with generous public support, could self - regulate. dodd - frank adds new layers of these same tools, but it fails to employ one remedy used in the past to assure a more stable financial system β simplification of our financial structure through glass - steagall - type boundaries. to this end, there are two principles that should guide our efforts to restore such boundaries. first, institutions that have access to the safety net should be restricted to certain core activities that the safety net was intended to protect bis central bankers β speeches β making loans and taking deposits β and related activities consistent with the presence of the safety net. second, the shadow banking system should be reformed in its use of money market funds and short - term repurchase agreements β the repo
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market. this step will better assure that the safety net is not ultimately called upon to bail them out in crisis. consistent with the first principle, banking organizations with access to the safety net should be generally confined to the following activities : commercial banking, underwriting securities and advisory services, and asset and wealth management services. underwriting, advisory, and asset and wealth management services are mostly fee - based services that do not put much of a firm β s capital at risk. in addition, asset and wealth management services are similar to the trust services that have always been allowable for banks. restricting activities of banking organizations in contrast, banking organizations should be expressly prohibited from activities that include dealing and market - making, brokerage, and proprietary trading, which expose the safety net but have little in common with core banking services. 1 thus, banking organizations would not be allowed to do trading, either proprietary or for customers, or make markets because such activity requires the ability to do trading. in addition, allowing within the protection of the safety net, they create expansive risks that are difficult to assess, monitor or control. thus, banking organizations would not be allowed to do trading, either proprietary or for customers, or make markets because such activity requires the ability to do trading. in addition, allowing customer but not proprietary trading would make it easy to game the system by β concealing β proprietary trading as part of the inventory necessary to conduct customer trading. also, prime brokerage services not only require the ability to conduct trading activities but also essentially allow companies to finance their activities with highly unstable uninsured β deposits. β this combination of factors, as we have recently witnessed, leads to unstable markets and government bailouts. critics of this proposal contend that institutions grow to be large and complex because of economies of scale and scope and they need the size and related complexities to be profitable and to compete globally. they believe firms must have broad, mostly unrestricted access to all financial activities to provide one - stop shopping and compete on a global basis. arguments also are given that large banks and securities firms are necessary to make efficient markets for securities trading essential for carrying out monetary policy. these arguments are unconvincing and, in fact, mislead. first, yes, it would be unfortunate if restricting activities were to drive u. s. banks and jobs to other countries. however, we have 200 years of banking success in this country to refute that assertion. more recently, under glass - steaga
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continuous flow of credit to the economy. 50. the ratio of non - performing loans to total loans of commercial banks has increased to 5. 3 per cent in june 2020, from 4. 5 per cent in march 2020. the bank has established a task force on banking resilience, comprising the mauritius bankers association limited and bankers, to closely monitor the impact of covid - 19 on the banking system. 51. the bank continues to deploy its financial stability surveillance toolkit to assess any potential risks to the financial system. 52. the bank stands ready to introduce additional regulatory measures to contain the effects of a more pronounced setback in key sectors of the mauritian economy on the banking system. 53. you will recall i had appealed to the public to use electronic payments channels back in march 2020. indeed, electronic payment transactions β in particular mobile payments β have recorded significant increase since. 54. i am pleased to announce that all banks offering domestic retail payments have successfully on - boarded the instant payment system ( ips ) in august 2020. there is growing interest from fintech and psp companies to use the ips, as it provides an enabling platform for innovation in the payments domain. 55. as mauritius moves to a digital era, i continue to encourage the public at large to make greater use of electronic payment channels. mpc decision 56. i now come to the decision of the mpc today. 57. the mpc discussed the global economic context and the performance of the domestic 4 / 5 bis central bankers'speeches economy. 58. the domestic economy is still facing the disruptive effects of the covid - 19 pandemic. the contraction in major trading partners β output would result in weaker demand for our exports. 59. consequently, bank staff has revised its projection for real gdp growth for 2020, from β 12. 5 per cent to β 13. 0 per cent. for 2021, real gdp is projected to grow at about 7. 5 per cent. 60. domestic inflation continues to remain low and stable, as demand - side and supply - side pressures remain at bay. in the absence of further exogenous shocks, bank staff is projecting headline inflation at about 2. 5 per cent in both 2020 and 2021. 61. considering the international and domestic economic outlook, the mpc views that the current monetary policy stance of maintaining the krr at 1. 85 per cent per annum is appropriate. 62. the mpc will continue to monitor the economic situation closely and
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2 months. let me say a word about exchange rate, a subject of much interest right now. as a matter of policy, the bank allows the free play of market forces to determine the exchange value of the rupee. our intervention in the domestic foreign exchange market is not aimed at offsetting market forces, or at targeting any specific exchange rate. our only objective is to smooth out unwarranted volatility in the rupee exchange rate and improve the functioning of the market. in a brief interview that i gave to the β business standard β newspaper in india last week, i said that even if our economy was suffering from a deluge of foreign exchange inflows, most of the foreign exchange operations were confined to the spot market. this is why we want to encourage the development of a vibrant futures and forward market that will help in creating an active foreign exchange market and introduce newer instruments for exporters and entrepreneurs to hedge and trade in the financial services sector. as regards the issue of risk management, it is a correct practice these days to use derivatives to hedge against unwanted volatilities. derivatives can bring substantial benefits to the commercial community, in facilitating hedging and business planning. such instruments enable financial institutions to offer a progressively wider range of services and achieve greater efficiency in the intermediation process. unfortunately, this is one area where mauritius is lagging behind. the market for derivatives has not picked up significantly compared to other emerging market economies. i strongly believe that the domestic financial market is mature enough to engage in derivatives trading under proper regulation. the bank is now considering the necessary measures that need to be implemented to stimulate the development of this market. i know that. in many quarters, derivatives have a murky reputation. we do not believe that derivatives necessarily lead to market manipulation, which would be bad for a small market like ours. rather, we see derivatives as enhancing the efficiency of financial markets and this is why we are determined to put in place in the near future the necessary building blocks for its rapid development. we are conscious that derivatives involve multiple extra policy responsibilities for the bank. derivatives and derivatives - trading have the potential to bring disaster if not properly supervised. therefore one of the areas that the bank will concentrate upon therefore is to ensure that risks are properly identified, and managed, and that downside risks which might threaten systemic stability are avoided. as we move into these new pastures designed to deepen the financial market and broaden the range of financial products and instruments
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long term. the bank of albania sticks to the opinion that the public finance consolidation should anchor to an effective and transparent fiscal rule. this rule would increase the short - term flexibility of public finances and reduce the fiscal adjustment cost. second, the overall economic and financial stability is a prerequisite for a rapid economic growth. the monetary policy has been and will remain oriented toward meeting our inflation target. in line with the cyclical situation, this policy has provided its stimulus through the key interest rate cut and ongoing liquidity injection into the banking system. we have also revised the banking system regulatory basis from the viewpoint of easing it, in order to stimulate lending by the banking system. i avail myself of the opportunity to reiterate that the banking system remains profitable, liquid and well - capitalised. safeguarding the stability of this system will always be on our focus. bis central bankers β speeches third, reducing uncertainties and risk premiums in the economy is an important priority. as i have already stated, these uncertainties stem, to a great extent, from the foreign market, but a part of them stems from the albanian economy. without intending to make a list, i will mention just a few : β’ reducing informality should be a primary objective. besides outflows in public finances, informality brings hidden costs in terms of diminishing competition, inefficiency in terms of lack of balance sheet transparency, and artificially increased financing costs to businesses. β’ fostering the financial system infrastructure protection is another aspect deserving attention. the bank of albania signed and has already made effective a cooperation agreement with the people β s bank of china, which also provides for the possibility to obtain liquidity in case of need. an important step in this regard is the agreement between the deposit insurance agency and the european bank for reconstruction and development to increase the deposit insurance coverage. we deem that there is room for other agreements with international financial institutions specialised in providing funds and assistance. establishing collective public protection releases the financial system and businesses from setting up individual protection. besides, it may be transformed into a necessary source of funds for the albanian economy. β’ improving the business climate further and observing the contract enforcement. the business climate is a rather complex issue, but i would highlight two issues here. first, the payment of deferred budget liabilities as a priority. in spite of the financial cost, it is an important step for easing the debt burden in the economy and signalling the political willingness to guarantee
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contrary, it would undermine the long - term sustainability of fiscal positions and thereby weigh heavily on future growth. public finances in europe are already characterised by a large sustainability gap. future pension obligations in most countries are several times higher than the explicit debt burden revealed in the national accounts. by a very rough calculation, it would, for example, take germany three and a half years β output to honour its combined explicit and implicit debt. if future generations are to handle this sizeable burden - in germany as well as elsewhere - there is, first, no way of getting around a tough course of fiscal consolidation, which has to be augmented, second, by coherent policies to lift growth potential - as agreed on in the lisbon agenda. i appreciate the fact that, last year, germany directed its attention to structural reforms in the spirit of the lisbon agenda - even if this was driven more by the β push β of persistent economic stagnation than by the β pull β of the lisbon vision. under the federal government β s β agenda 2010 β, labour market flexibility has been improved in terms of the institutional framework, collective wage bargaining agreements and working hours. reforms in the social security systems have been enacted and will help to contain the implicit debt burden. among the remaining tasks, priority status should be given to untying the link between labour costs and social security and to raising the statutory retirement age. 5. concluding remark stability and growth go hand in hand. the lisbon agenda and the stability and growth pact complement each other in lifting the eu β s growth potential. both are needed and we should not say goodbye to either of them.
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germany and other countries almost a week ago, many people have asked how this affects the riksbank β s actions. as stated already on several occasions, the answer is : not much as long as the conditions for inflation have not changed. the riksbank targets inflation and it is this target that guides policy. in view of what has happened in the past month, there is reason, finally, to highlight a couple of points in the report. the first is that monetary policy is being conducted against the background of an economic upswing. a gradual increase in capacity utilisation is therefore probable. sweden does not differ from germany in that particular respect. the other point is the diminished risk of a development that is appreciably weaker than in the main scenario ; this assessment is supported by the latest statistics. in the light of the rising activity, the main difficulty in assessing future inflation currently lies in an uncertainty about developments on the supply side, wage formation in particular. it is difficult to foresee how the swedish economy will react to a broad economic upswing. it is therefore important, not least on that account, to analyse incoming information.
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cecilia skingsley : are non - banks reshaping the retail payments market? speech by ms cecilia skingsley, deputy governor of the sveriges riksbank, at the conference β non - banks in payment market : challenges and opportunities β, organised by the bank of lithuania and the sveriges riksbank, vilnius, 8 october 2015. * * * the retail payments market is undergoing a structural change, potentially unparalleled with anything we have seen in a long time. this gives rise to a number of important questions as regards competition and cooperation, regulation and where this development may take us in the long run. an interesting and important market the retail payments market is an interesting and important market. important because it underpins the modern economy. if we were unable to pay in a safe and efficient way, the economy would soon grind to a halt when markets for goods and services stopped functioning. interesting because of its rapid development. it is here the action is. on a global level, the payments market has grown by some 8 per cent a year for a decade. growth has been higher not only in the developing world, reflecting overall higher economic growth rates, but also in europe and north america, where it has been some four per cent annually. given the financial crisis and the relatively low economic growth, this is a healthy growth rate. on a global level, estimates indicates that the retail payments market is worth several hundred us billions in revenue from transactions. if we add account - related revenues and interest rate and penalty fees from credit cards, the figures increase further. with this growth rate and potential revenue, it is no wonder that the retail payments market attracts so much attention. there are other factors that help explain why so much has happened over the last few years and that continue to drive the development. the rapid techno - logical development of smartphones, tablets, and high - speed internet connection is one of the most important factors. today, approximately half of all adults in the world have a smartphone and this share is likely to increase significantly. some 40 percent of the global population use internet. this technology is widespread and accessible at a reasonable cost and it has changed the way we shop. we purchase goods and services in new ways and because of this we also demand payment services that are suited to this new type of interaction. e - commerce is the prime example. this year some 38 billion e - commerce transactions will take place. we interact with e - merchants who we have no
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9 / 8 / 2017 remarks at the bank of china sydney branch's 75th anniversary celebration dinner | speeches | rba speech remarks at the bank of china sydney branch's 75th anniversary celebration dinner philip lowe governor sydney β 8 september 2017 [ acknowledgement of special guests and hosts ] it is an honour to be here this evening to celebrate the 75th anniversary of the opening of the bank of china's first branch in australia. on behalf of the reserve bank of australia, i would like to pass on our warmest congratulations. the story of how the bank of china came to establish a branch in australia in 1942 is a story of resilience and friendship. over recent weeks i have had the opportunity to read about this story through the yellowed pages of the reserve bank's archives. when conflict came to singapore in 1942, mr parkane hwang from the bank of china's singapore branch decamped to what was then known as batavia. from there, he sought a visa to travel to australia to establish a branch of the bank of china in sydney. it must have been a difficult and stressful time. true to australia's welcoming nature, especially to those in need, the visa was granted. by midyear, the branch was in operation, with mr hwang's deputy from the singapore branch, mr s. c. lu, as its representative. in those days it was quicker to get a banking licence than it is today! it is clear from our archives that the granting of this licence was a significant sign of friendship by australia towards china. it was very unusual at the time to grant such licences. upon the licence being granted, one of my predecessors as governor β governor h. t. armitage of the commonwealth bank of australia, which at the time carried out central banking functions β wrote to mr lu to congratulate the bank of china on the new branch. i would like to read from that letter, as 75 years later i could not have put it better myself. governor armitage wrote : http : / / www. rba. gov. au / speeches / 2017 / sp - gov - 2017 - 09 - 08. html 1 / 3 9 / 8 / 2017 remarks at the bank of china sydney branch's 75th anniversary celebration dinner | speeches | rba β i feel sure that the entry of your bank into the australian banking system will not only be of inestimable value in facilitating business relationships between china and australia
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slower but still pretty good growth in asia. but at the same time, expected higher contract prices for coal and iron ore, which are about to take effect, will, all other things equal, lift australia β s terms of trade by perhaps a further 15 per cent, adding some 2 to 3 per cent to national income over the next year or so. this expansionary impetus comes after the earlier rise of some 40 per cent over the previous five years. so the world economy presents some considerable cross currents for australia. the biggest terms of trade boom for 50 years is coinciding with one of the most serious malfunctions in developed country capital markets for a long time. looking to domestic conditions, most indicators of actual economic performance for the early part of 2008 have remained quite strong. employment has been very robust, and survey based measures of actual business conditions have remained strong, even if off their late 2007 highs. we do think, however, that demand growth in australia is now in the process of moderating. the demand for credit by households has also been weakening over recent months. measures of confidence have declined. while those measures can provide false signals, our assessment is that a change in trend is occurring, and we are hearing that from businesses we talk to. a tightening in financial conditions, lower share prices and heightened concerns over the global financial problems will all have played a part in this change. the likely extent and persistence of this slowing in demand is quite uncertain, as these things usually are. there remain powerful conflicting forces at work, so we can expect that difficult issues for judgment will remain with us for some time. these are issues with which the rba board has to grapple. at its meeting this week, the board reached the view that, for the time being, policy settings should remain unchanged. the current rate of inflation is clearly uncomfortably high, and were expectations of high ongoing inflation to take root, it would be even more difficult to reduce inflation again. hence, policymakers are obliged to have in place a policy setting that represents a credible response to evident inflation pressures. but the significant tightening in financial conditions that has occurred since mid 2007 is a strong response. short term interest rates are towards the top end of the range experienced during the low inflation period. the board is also conscious that some non price tightening of credit conditions is probably occurring at the margin. these factors should be working to slow demand. there is at least some evidence that a moderation in demand is occurring.
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be examined in its totality for practicable implementation at all offices / departments. i am sure that most of the newer software programmes would have all the essential and desirable features as mandatory part of their architecture. the software that are currently in use would have to be scrutinised from the point of view of conformity to the minimum security requirements that i had dwelt upon. as leaders who would be using technology as a cutting edge towards excellence in services, you would all agree that these key requirements of security are required to be addressed in the sessions of today. it is gratifying to note the initiative taken by iba in organizing such seminars and conferences which facilitate transfer of knowledge. i am sure that the deliberations of the day would be enriching to all the delegates. i wish the conference all success. thank you.
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v leeladhar : challenges in banking security inaugural speech by mr v leeladhar, deputy governor of the reserve bank of india, at the banking security conference - 2005, arranged by the indian banks β association, mumbai, 22 june 2005. * * * fellow participants and colleagues, it gives me great pleasure to be in your midst, as we commence this workshop on banking security. i am particularly happy to be here to address a group of involved persons who are the harbingers of change - so to say - in the use of technology in banking. banking as a business involves the management of risks. while much has been said about the financial risks, the risks arising out of the large scale implementation of technology is of recent origin, with banks having taken to large scale use of technology for their normal day - to - day business. security in banks has thus assumed significant proportions, comprising both physical aspects in addition to those relating to information, information systems and information technology, all of which have an impact on the reputational risk of a financial organisation. in a world where geographical barriers are losing significance and the death of distances is already a reality, it is but essential that security be given prime importance in a transnational scenario where large sums of money are at stake. while the challenges related to physical security are those which can be confronted with relative ease, the position is much more complicated in respect of it security. it is widely accepted that security is as effective as the weakest link in a chain. and, in the case of banking, the weakest link, in my view, does not relate to the components of technology ( which do have an implication although ), but on the person who is part of the information supply chain, and is typically the insider in the bank itself. this reminds me of an interesting or rather disturbing question one of the top police officials asked of the bankers in a security conference. β are you keeping a track of some sort of the officials who left the organization? are you at least aware where they are now? β there was complete silence around the table. he went on to clarify that most of the financial crimes had insider links. this is supported by studies carried out by international organisations. these studies have indicated that a substantial portion of the breach of security in financial institutions have occurred on account of, or have been triggered with the aid of internal exposures or internal controls being compromised. against this backdrop, the security requirements of the banking sector need to be assigned high
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incentives, the efficiency of reserves redistribution through the system improves, and market functioning is enhanced. in aggregate, this activity can prevent rates from rising further, all else being equal. the point at which banks, in aggregate, have a relatively immutable demand for reserves, and are unwilling to lend them out, is evident when a small decrease in the supply of reserves results in a sharp increase in the cost to borrow them. our monetary policy tools are well positioned to help us avoid this outcome. but, of course, greater willingness of banks to reallocate across close substitutes should help avoid the emergence of sudden pressures in money markets by reducing money market frictions. in 2021, the federal reserve launched the srf, which, along with the discount window, should help cap upward pressure in repo markets that could spill over into the federal funds market. use of these facilities also increases the supply of reserves in the system. the enhanced clarity for firms that fed facilities are a fully acceptable venue to get same - day liquidity for their hqla should help reassure firms about holding reserves and their close substitutes, such as treasury securities, in their liquidity portfolios. of course, as i stated earlier, for the largest banks, there is a requirement that they hold highly liquid assets to address their own liquidity risks. they must also be ready to use private markets to monetize these assets. it is also critical that banks recognize and manage the interest rate and liquidity risk of their securities portfolios to ensure those securities held for liquidity purposes can be monetized in stress without creating other adverse effects on a firm's safety and soundness. in 2022 and 2023, certain large banks did not effectively manage the risks of rising rates, and suffered significant fair value losses on their securities holdings, including those in held - to - maturity ( htm ) portfolios. these losses affected their ability to respond to liquidity stress, as monetizing the assets could result in realizing losses. when the banking stress hit in march 2023, these securities could not be sold to meet stressed outflows because large unrealized losses inhibited their sale without significant capital implications. this is further complicated in the case of htm securities, which cannot be sold without risking revaluing a firm's entire htm portfolio. selling htm securities to generate liquidity would therefore have had a particularly large effect on these firms'capital levels, likely increasing the stress on these firms.
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significant losses. to address these gaps, we are considering a partial limit on the extent of reliance on htm assets in larger banks'liquidity buffers, such as those held under the lcr and ilst requirements. these adjustments would address the known challenges of banks being able to use these assets in stress conditions. finally, we are reviewing the treatment of a handful of types of deposits in the current liquidity framework. observed behavior of different deposit types during times of stress suggests the need to recalibrate deposit outflow assumptions in our rules for certain types of depositors. we are also revisiting the scope of application of our current liquidity framework for large banks. 4 / 5 bis - central bankers'speeches these enhancements to our liquidity regulations will help bolster firms'ability to manage liquidity shocks, and they will also be well integrated with our monetary policy tools and framework. modernizing our tools to meet current and future needs turning back to the discount window, i also want to note that the discount window has served its role well in recent years, and that we are also engaging in ongoing work to improve its operations. given the crucial role of the discount window in providing ready access to liquidity in a wide variety of market conditions, we continuously work to assess and improve its functionality while engaging with current and potential users of the window. among the steps we have taken recently include that we now have an online portal, discount window direct, that allows firms to request and prepay discount window loans in a more streamlined manner than was previously possible. we also recently published a request for information on discount window operations and daylight credit asking about key components of these functions. feedback from the public will help us prioritize areas for improvement, so i strongly encourage anyone with an interest in this topic to weigh in during the comment period. your feedback will help us ensure that the discount window continues to improve in its role of providing ready access to funding under a variety of market conditions. thank you. 1 the views i express here are my own and not necessarily those of my colleagues on the board of governors of the federal reserve system or the federal open market committee. 2 see michael s. barr ( 2023 ), " the 2023 u. s. treasury market conference, " speech delivered at the federal reserve bank of new york, new york, november 16. 3 see " subparts d and o - enhanced prudential standards " in board of governors of the federal reserve system
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provides room for our banks to continue lending and providing relief measures to customers during the covid - 19 outbreak. 14. and our capital markets are thriving. hong kong was the world β s leading ipo centre last year. although global markets were tested by extreme volatility in the first quarter, our capital markets have continued to function without incident. as several large chinese companies that had listed in the us seek secondary listings in hong kong this year, we should once again achieve a very high ranking in the global ipo league table. 15. none of this happened by luck or by chance. the resilience we see now is the result of sustained efforts over many years. it β s the result of building capital and liquidity buffers into the banking system ; and prudently managing the reserves that support the linked exchange rate system. it β s the result of enhancing our own β and the banks β β operational resilience and business continuity plans. it β s the result of communicating effectively with stakeholders to maintain confidence in the financial system. 16. so this quality of resilience is the product of a long term investment in the many factors that make our system strong. abundance of opportunities 17. the second quality of an international financial centre that i want to talk about is its ability to generate opportunities for investors. advanced financial centres like hong kong compete fiercely with each other. we succeed by offering investors opportunities so that they can succeed. that means we need to keep innovating, exploring new frontiers and developing our value proposition. 18. hong kong β s advantages in offering opportunities to global investors is mainly down to three macro trends. i believe these will provide the impetus for us to continue growing and outperforming. 19. first of all, financial liberalisation on the mainland creates enormous opportunities for hong kong. we have always been the dominant financial gateway between the mainland and the rest of the world. today, more than half of international investors β stock and bond investments on the mainland are made through hong kong. we have also announced a pilot scheme for wealth management connect and have other initiatives under development in the greater bay area. 20. with our unique advantages and strengths β including the common law system and world2 / 4 bis central bankers'speeches class financial regulations and market practices β hong kong will remain the leading portal for international investors seeking opportunities on the mainland. 21. t he second trend that is creating opportunity in β and for β hong kong is fintech development. we
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is not unlimited. third, the policy actions taken in the area of fiscal and monetary policy β as well as macroprudential and supervisory policy β have been necessary to mitigate the amplification of the immediate shock, enable the financial system to support households and businesses through the crisis, and to minimise the extent of longer - term difficulties. as a result of the pandemic we have seen over one million people in receipt of state income support. alongside the domestic economic shock, ireland remains sensitive to global developments, both the near - term global downturn and financial market conditions as well as any longer - term structural changes that might be triggered by the experience of the pandemic. closer to home, the outcome of the negotiations on the future eu - uk relationship is also of relevance to the macro - financial outlook. the immediate strain on households and businesses as a result of the economic shock has resulted in a necessary increase in public spending : fiscal policy is the first line of defence given the unprecedented collapse in economic activity. government support is also necessary to 1 / 2 bis central bankers'speeches minimise the risk of a long - term fall in the productive capacity of the economy due to covid - 19. the necessary intervention will result in much higher public debt than what would otherwise have been the case. the implications of this will be addressed in the bank β s next quarterly bulletin due to be published on 3 july. the near - term liquidity challenges faced by households and businesses as a result of the covid - 19 shock are significant and depending on future developments could result in solvency issues emerging. in the months ahead minimising the extent to which these liquidity issues are followed by solvency issues will be important. the banking system has a role to play, and it must do so in a sustainable way. temporary payment breaks that have been introduced are partly offsetting the immediate liquidity shock households and businesses are facing, but a portion may ultimately require longer - term solutions. in such cases, the central bank expects lenders to ensure appropriate solutions, including forbearance, are available. we expect lenders to engage with borrowers well in advance of the expiry of the payment break to support customers, and our existing arrears handling frameworks, including the statutory code of conduct on mortgage arrears ( ccma ), will apply in the normal manner. those frameworks are designed to protect the interests of borrowers, particularly in times where they
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unions are able to place greater emphasis on real factors, such as productivity, that will help to boost income and living standards. 3. inflation targeting : is the target set too low? now i would like to turn to concerns by some analysts that the level of the inflation target is set too low. this is measured by the standard deviation of inflation, which fell from about 3 in the 1980s to 0. 7 in the last part of the 1990s. johnson ( 1997 ). in addition, long - term inflation expectations would appear to be better anchored in canada than in the united states. see kozicki and tinsley ( 2002 ). perrier and amano ( 2000 ). dodge ( 2002a ). inflation targets, whether in canada or elsewhere, have typically not been set at zero. one argument for excluding zero is that there is downward rigidity in nominal wages. more specifically, it says that a little inflation is needed to β grease the wheels β of the labour market because nominal wages are downwardly rigid. thus, it is argued that the target for the inflation rate should be in the 2 to 4 per cent range to facilitate adjustments in the real wage. 21 you will recall that, in canada, the target range is set at 1 to 3 per cent. one reason behind this argument is the belief that inflation allows firms to provide real wage increases to workers whose productivity is rising, while reducing real wages to less - productive staff without having to cut nominal wages. 22 therefore, for firms to achieve the desired adjustment in real wages in the face of adverse demand shocks, inflation would have to be above zero. otherwise, unemployment would rise, perhaps at an increasing rate, as inflation approaches zero, because firms would have to resort to layoffs to keep wage bills at their desired level. why might nominal wages be downwardly rigid? this could result from money illusion - for example, workers refusing to accept nominal wage cuts when, in fact, they may have suffered a similar reduction in real wages in the past because of inflation. firms might also be reluctant to cut nominal wages because of notions of fairness. they might also have concerns that such cuts would adversely affect the quality of candidates they seek to attract, or lead to higher quit rates. on the face of it, downward nominal wage rigidity would seem to have little relevance for canada. 23 as i will discuss in more detail later, in the late 1990s, the unemployment rate fell sharply even though inflation had stabilized around 2 per cent
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without the noise of variable inflation. this, in turn, leads to a more efficient bargaining process with lower transactions costs and less loss of output, 54 as well as to a more productive allocation of labour in the economy. this has contributed to an economic environment where there are rising employment / population ratios, higher participation rates, and lower unemployment rates. longworth ( 2002 ).
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money supply. but none of these methods provided a suitable medium - term anchor for inflation expectations. this made it difficult for individuals and businesses to form long - range plans with any degree of certainty. on the fiscal side, the picture was pretty grim at the start of the 1990s and getting worse. public sector deficits would eventually peak at around 8 per cent of canada β s gdp, and public debt levels were continuing to mount. clearly, the situation was not sustainable. adjustments were urgently needed. the first of these adjustments came in 1991, when the bank and the government of canada agreed to adopt a series of explicit inflation - control targets. the agreement called for an inflation target - defined in terms of the annual rate of increase of the consumer price index - that descended gradually to 2 per cent, the midpoint of a 1 to 3 per cent range. that initial agreement has been extended three times, with the latest agreement covering the period to the end of 2006. in each case, the midpoint of the inflation - control target range has been kept at 2 per cent. this framework has worked well - better than might have been expected. by january 1992, inflation was already close to 2 per cent, and from the end of 1994 to today, inflation has averaged almost exactly 2 per cent. moreover, not only has inflation fallen, it has become more stable. indeed, the trend of inflation - as measured by what we call core inflation - has stayed within the target range almost continuously for the past 10 years. just as importantly, we found that, after a few years of inflation targeting, the inflation expectations of canadians fell into line with the 2 per cent target. and expectations have remained close to the target in recent years. the point of all this is that we have been successful in using monetary policy to create an economic environment of low, stable, and predictable inflation. with a credible monetary policy, the whole nature of the inflation process has changed. inflation itself has become more stable and, in turn, this has led to a more stable and better - functioning economy. the second big adjustment began in earnest around the middle of the 1990s. as i said before, at that time, canada was facing an unsustainable fiscal situation. compounding this immediate fiscal problem were the looming challenges posed by our aging population. spending had to be put on a viable long - term course, and the ratio of public debt to gdp on a steady downward track. by the middle of the decade, governments
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given the tight fiscal policy of the time, the lower dollar - in the context of an easing in monetary policy - played an appropriate role in encouraging foreign demand for canadian products at a time when domestic demand was weak. further, while the lower currency cushioned the shock of falling commodity prices on resource producers, it also boosted the profitability of other sectors that were able to expand in the wake of free - trade agreements and strong foreign demand. this helped to facilitate the transfer of resources within the economy from sectors that were shrinking to those that were growing. the depreciating canadian dollar of the 1990s also changed the relative price of labour and capital. at the time, there was a fair bit of excess labour in the economy, because of the structural adjustments that were taking place. the lower dollar raised the cost of machinery and equipment relative to labour. and that made it easier for some of the labour that was released by the shrinking sectors of the economy to be absorbed by those that were growing. future trends in the economy that β s a quick look back at the 1990s. so what can we expect in the future? what are the major issues that we will have to grapple with in the coming decades? what adjustments will be needed? i don β t have a crystal ball, but a couple of issues seem fairly clear to me. as i already mentioned, the first important issue is demographics. the canadian economy must prepare for the retirement of the baby boomers. under current projections, canada β s working - age population - those 15 to 64 years of age - will start to decline in about 15 years. given this demographic outlook, there are two points to be made. the first is that we need to continue to lower our ratio of public debt to gdp. this will help to ensure that canada will be able to support its growing elderly population. the second point is that we will need to make adjustments to help us deal with a labour force that will soon be shrinking in relative terms and, ultimately, in absolute terms as well. what kinds of adjustments? we will need to make sure that the older segment of the working - age population is not discouraged from participating in the labour force. but more importantly, we need to raise productivity if canadians are to continue to enjoy rising incomes. it will not be easy to get those productivity gains. we will need to see greater investment in new, improved machinery and equipment. we will need to see more and better application of information and communications technology. we
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agus d w martowardojo : inauguration of indonesia payment system forum speech by mr agus d w martowardojo, governor of bank indonesia, at the inauguration of indonesia payment system forum ( fspi ), jakarta, 27 august 2015. * * * distinguished, β’ minister of finance of ri, bambang brodjonegoro β’ minister of trade of ri, thomas lembong β’ member of board of commissioners of financial services authority, firdaus djaelani β’ deputy commissioner for bank supervision financial services authority, mulya e. siregar β’ deputy governor of bank indonesia, ronald waas β’ director general for treasury of ministry of finance, marwanto harjowiryono β’ director general for domestic trade of ministry of trade, srie agustina β’ director general for application and information of ministry of communication and information, bambang heru tjahjono β’ chair of indonesia payment system association, darmadi sutanto β’ officials of ministry of finance, ministry of trade, ministry of communication and information, and financial services authority β’ heads of working units in bank indonesia β’ distinguished ladies and gentlemen, assalammualaikum wr wb, good afternoon and may god bless us all, β salam β 1. to begin our meeting this afternoon, i would like to invite all of you to praise god the almighty. because of god β s blessings, we have the opportunity to gather to witness the inauguration of indonesia payment system forum or fspi. please also allow me to extend my gratitude and appreciation to all parties supporting the process of fspi establishment. 2. as a cross - institutional forum, fspi is expected to become a forum of effective coordination, communication, and harmony between bank indonesia, financial services authority, ministry of finance, ministry of trade, and ministry of communication and information in supporting the implementation and development of payment system in indonesia. 3. with a close synergy through fspi, it is expected that a smooth, safe, efficient, and reliable national payment system for all indonesian people may be realized. furthermore, all stakeholders will also benefit from the planned collaboration. bis central bankers β speeches distinguished ladies and gentlemen, β background of fspi establishment β 4. following the current development of indonesia β s economy, we observe at least 3 ( three ) issues of indonesia β s economic management under the international spotlight. first, the ability in execution and implementation of policies. second, transparency in policy
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##dependence of economy between nations, various efforts have been made to allow development of more efficient cross - country clearing and settlement mechanism. 23. as we all know, the economic integration trend of asean economic community will affect the dynamic national payment system industry. in order to reduce economic constraints between countries, payment system industry will receive challenges from the regional industries. we need to act on it by increasing competitiveness and bis central bankers β speeches service quality in order to create fair competitiveness climate by prioritizing national interests. distinguished ladies and gentlemen, β objectives of fspi establishment β 24. the different challenges i mention above require our preparedness. however, we realize that to respond to such challenges, a strong collaboration is needed. 25. the relevant ministries and authorities will play a very important role to establish a better payment system in indonesia. different initiatives by the government may serve as an effective drive, such as by facilitating social support distribution, services related to tax and non - tax state revenue, and efforts to drive transactions through e - commerce. 26. last but not least, the roles of industries to provide infrastructures and services and consumers as the users will definitely serve as a very constructive part for the future development of national payment system, primarily in identifying needs and evaluating development plan feasibility. 27. therefore, we consider it necessary for us to communicate, coordinate, and collaborate in indonesia payment system forum. we consider that ministries, authorities, and institutions you lead play vital and strategic roles to harmonize various regulations, implement joint programs, and formulate the future direction of payment system policies. in addition, with the collaboration, different innovations in payment system are also expected to be made. distinguished ladies and gentlemen, β closing β 28. to conclude, i believe that fspi will be able to produce feedbacks, ideas, breakthroughs, and anticipatory ideas in the episode of indonesia β s payment system journey in the future. 29. the inauguration and signing of fspi charter today are expected to serve as a symbol of our commitment, where the steering committee and technical committee of fspi are prepared to play their roles optimally. 30. i would like to congratulate the steering committee and technical committee of fspi, and please allow me to hereby inaugurate the establishment of indonesia payment system forum. thank you. wassalamu β alaikum wr. wb. bis central bankers β speeches
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wu xiaoling : be objective and scrupulous to promote china β s financial theoretic research speech by ms wu xiaoling, deputy governor of the people β s bank of china, celebrating the publication of professor huang da's books, beijing, 3 june 2005. * * * professor huang da, distinguished guests : today, experts and scholars from the financial sector, education sector and publishing sector gather at the great hall of the people celebrating the publication of the collected works of huang da as an effort to promote china β s financial theory development. this is an important event for developing philosophical science and advancing china β s financial theoretic study. on behalf of mr. zhou xiaochuan, governor of the people β s bank of china and the president of the china financial institute as well as the two institutions, i warmly congratulate the publication of the collected works of huang da and the convening of the conference. professor huang da is a famous economist and educator, well known both at home and abroad. he is one of the scholars who first conducted monetary theory research in china and who established the discipline of finance in china. as early as when the people β s republic of china was founded, professor huang da began to conduct education and research activities on finance. with a scrupulous attitude, he has long conducted research on theoretical and empirical issues of china β s money, banking, price, public finance and macroeconomic development, etc. his research work has been essential to the development of fiscal and finance research framework and the evolution of financial theory study in china. given his outstanding contribution and position in financial research, he was a deputy to the eighth national people β s congress ( npc ), a member of the npc β s financial and economic committee and the president of the renmin university. he was also appointed a member of the first monetary policy committee of the people β s bank of china and the head of china financial institute. at present, he remains its honorary president. the collected works of huang da centralized his research work on financial theory. as we cheer for the publication of the collected works, we shall not forget the efforts of researchers on financial theory development in a time horizon ever since the founding of the people β s republic of china, in particular from the commencement of economic reform and opening up. with these efforts, a solid theoretical foundation has been laid for future development of the financial discipline and the reform of china β s financial system. however, we shall
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up and running by the end of this june. regulators are soliciting opinions on its operational rules. these rules suggest that there will be fewer emission quotas that are freely allocated to polluters previously, and financial regulators should be involved in the supervision of the carbon market. the carbon market should be a financial market in nature and allow carbon financial derivatives trading. this will make sure that all risks are fully priced in so that the carbon price plays a better role of serving either as an incentive or a constraint. international coordination matters a lot if we are to succeed in the above undertakings. the fund plays a unique role in this regard. the fund plans to integrate climate change into its surveillance and include climate risk scenario analysis in its financial sector assessment. it is also leading the efforts on closing the data gaps under the network for greening the financial system ( ngfs ). we support all these efforts, and look forward to more research findings and policy advice from the fund. we stand ready to strengthen capacity building cooperation with the fund. the pbc has provided experience sharing to developing countries in drafting green taxonomy. the fund also places great value on capacity building. we could offer joint climate risk management training programs via the china - imf capacity development center. in a nutshell, central banks could contribute to the net zero goal in many ways, such as developing a strong policy system, a diversified market system, and enhancing international coordination. much still needs to be done and today β s seminar is just a beginning. i look forward to working with all of you to produce more deliverables. thank you. 2 / 2 bis central bankers'speeches
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, and sometimes conflicting, roles β namely, being policymaker, regulator, operator, and owner at the same time. the bill will set principles to dismantle these distinct roles into separate governing entities. the revision of the trade competition act will ensure a fairer and more competitive environment among business. lastly, the business securities act helps improve credit access for small and medium sized firms to funding by allowing inventories, machineries, and intellectual property as collateral. the second group of legal amendments aims to enhance productivity. there are four laws that might be of your interest. the licensing facilitation act helps acquiring permits easier and more transparent for all businesses. the royal decree on review of laws and regulations requires that all laws and regulations be reviewed once every five years to ensure that necessary adjustment be made to accommodate dynamic changes in business practices. the payment system bill is meant to replace the old governing laws and regulations that are dispersed under many different authorities, especially electronics and digital payments, and allow the bank of thailand to be the sole regulator in this field. the eastern economic corridor bill will establish a special economic zone across three provinces to attract investment in industries of the future with extensive infrastructure investments to support transport, logistics, and public utilities. the last group of legal reform is to strengthen long - term sustainability. the fiscal responsibility bill will impose fiscal discipline through improvement in public spending transparency and governance of overall fiscal management. more importantly, future governments will find it very difficult to conduct open - ended populist policies, as the law will require the government to calculate costs and identify sources of fund ex - ante. the introduction of the inheritance tax act and the land and building tax bill will augment prudent spending by expanding the government β s ability to collect revenue and ensure a better tax structure to deal with future liabilities, promote greater fiscal balance, and reduce wealth inequality. all these developments will promote administrative efficiency and improve ease of doing business in thailand. putting the aforementioned laws into practice will change thailand β s business and financial landscape regardless of which political party steps into power after the next election. they will contribute to better governance and equality, higher productivity, and long - term sustainability of the country. however, i should point out that, as for all reform initiatives, effectiveness in execution will be the bottom line of their success. ladies and gentlemen, as for the bank of thailand, we also play an important role in upgrading thailand β s financial infrastructure and regulatory reform within our responsibility. in the
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policy maintaining economic balance is key to the making of monetary policy, as it is one of the most important pre - requisites of macroeconomic stability. in practice, this means that as the economic activity returns to normalcy, monetary policy stance must similarly be normalized. failure to do so will add undue pressure on inflation, ultimately posing risks to macroeconomic stability. thus this year, the monetary policy committee ( mpc ) will need to continue normalizing monetary policy. the amount and pacing of policy interest rate adjustments this year will be consistent with the outlook for growth and inflation as well as the surrounding risks. as always, the policy decisions will be grounded on informed and prudent deliberation by the mpc, with an aim of keeping core inflation within the target band as mandated by law. because many shocks, both of temporary and structural nature, cannot be foreseen, it is difficult to say beforehand what level of policy interest rate should be appropriate for this year. however, sustained negative real interest rates are usually not consistent with fostering economic balance. bis central bankers β speeches timely adjustments in policy interest rate will help keep inflation pressure in check, which in turn lead to low and sustainable borrowing costs in the long run. the bank of thailand has taken steps to enhance the transparency of monetary policy making, by announcing the mpc voting result together with the statement for the first time early this month. the first minutes of the meeting has also been released this morning. it is hoped that these information will help businesses and households understand the rationales behind the mpc policy decisions, and enable them to make better and more informed economic decisions. exchange rate policy the bank of thailand adheres to our policy framework, where exchange rate is not a policy instrument and hence is market - determined. however, recognizing the risks of high volatility in capital movements looking ahead, the bank of thailand has followed a three - part approach. the first is to develop a systematic capital flows master plan, with sequencing appropriate for the development of the thai economy and the evolving international financial market. part of this plan is to relax regulations that hinder thai residents from investing abroad, in order to foster more balanced capital flows. secondly, the bank of thailand will encourage the use of appropriate financial hedging instruments, in order to strengthen the risk management capability of the private sector, especially the small and medium - sized businesses. given the possibility of more volatility in the financial market looking ahead including the
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labour incomes and, to a lesser extent, capital grants. it has not involved forgoing the fundamental goals of the welfare state. in the field of pensions, in 2005 germany introduced a rule limiting the revaluation of pension benefits in periods of a rising ratio of pension beneficiaries to contributors. there is also provision for the gradual raising of the standard retirement age from the current 65 to 67 by 2029. a number of measures have also affected unemployment benefits and active labour market policies, with the aim of rationalizing the assignment of benefits and strengthening the incentives for the unemployed to accept job offers. the financing of the health system has been reformed to redistribute the costs between the public sector and patients, so as to make users more responsible. public employment costs have been curbed by reducing the number of persons employed by an average of 1. 5 per cent per year, and by even more pronounced wage moderation than in the private sector. the proposal for reform of the federal state is designed to increase the degree of financial autonomy of the various levels of government. the planning document β s proposal that the related parliamentary resolution indicate a ceiling for primary expenditure is a step in the right direction. this limit should be lower than or at most equal to the level set in the projection on a current legislation basis, and separate caps should be set for current and capital expenditure. in the future these caps should not apply to spending by local authorities, in whose regard the government last year redrafted the rules of the domestic stability pact, making the crucial criterion not a spending limit but a constraint on the final budget balance, so as to combine spending autonomy with fiscal accountability. it would be consistent with this approach for local authorities themselves to adopt rules on expenditure. compliance with budget constraints must be based on an appropriate system of incentives and penalties. the limits set at central level should also cover transfers to local government. special attention must be devoted to the healthcare system, which is the principal component of local government expenditure and has recorded a sharp increase in recent years. between 1998 and 2006 the ratio of health spending to gdp rose by about 1. 5 percentage points, accounting for about 60 per cent of the entire increase in general government primary expenditure. the recent enabling bill for the implementation of article 119 of the constitution lays the basis for the gradual abandonment of past spending as the standard for assigning resources to local entities in favour of standardized indicators of costs and requirements. this is the first step towards designing a system
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well as to the demand side. observers conventionally assess the outlook for growth by looking at the prospects for demand components, adding them up, and then assuming that supply will respond. anything that stimulates demand is thought to be β good for the economy β. but over recent years, we have increasingly been reminded that it is the economy β s supply side performance β the quantity and quality of the capital stock, the availability of labour and the productivity with which both those factors are used β that ultimately determines its rate of growth over the long term. demand management policies β monetary policy and government spending and taxation measures designed to have a broad economic impact β can usually ensure that there is adequate expenditure to use the economy β s productive resources. but while we can, in most circumstances, create additional demand, it is much harder to create additional supply. unless additional supply is somehow forthcoming, however, expanding demand just produces overheating and inflation. inflation did pick up in australia during the middle years of the current decade, from 2. 4 per cent in 2003, to 2. 6 per cent in 2004, 2. 8 per cent in 2005, and 4 per cent by mid 2006. that peak in the cpi inflation rate was affected by some temporary factors, which have now reversed. but measures of inflation designed to extract the underlying trend showed a pick - up too, from about 2Β½ per cent to 3 per cent during the first half of last year. the most recent data for inflation, however, showed a more welcome trend, with underlying measures of inflation running at a reduced pace and the cpi rate on its way down as well. in our statement on monetary policy released about six weeks ago, our judgement was that underlying inflation would probably run at about 2Β½ per cent for the year 2007, which was a slight downward revision to earlier expectations. data on labour costs received since then add credence to that forecast. compared with what we expected a year ago, then, growth has turned out to be stronger, employment higher, but underlying inflation a little lower, and wages growth has been steady in the face of unanticipated labour market strength. this is quite a favourable set of outcomes, and should prompt us to ask how it all fits together. one possibility is that all we are observing is lags at work. earlier national accounts showed a weakening in growth from mid 2005 through to mid 2006. perhaps this led, with a lag, to the slowing in prices recorded in recent quarters
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developments within the banking system as a whole or on the assets markets. typical macroprudential tools include the new capital buffers that banks are required to hold and which can be required to be increased in the face of overheated credit markets, or which may be graduated according to bank size so that systemically important banks are required to maintain higher capital levels than others. responsibility and competence in the field of macroprudential policy will be both at eurosystem and national level. the other area of initiatives is regulation of banking structures, for which the european commission is expected to submit a proposal in the immediate weeks ahead. the idea is that financial operations involving the highest risk are to be separated from ordinary deposit banking, to be carried out by special - purpose subsidiaries. this type of structural regulation seeks to prevent deposit protection provided to deposit banks from turning into an incentive for unhealthy risk - taking, where speculators benefit privately from profits, but do not take losses, β privatising profits and socialising losses β, as the saying goes. the commission β s proposal for structural regulation will take a stand on the propositions made by the eu β s high - level expert group of which i chaired. legislation relating to structural regulation, similar to those outlined in our report, is already underway in, for example, france, germany and the uk. i hope the commission β s forthcoming proposal will lead to as uniform legislation as possible on this issue in europe. the eurosystem, a special case the range of central bank tasks is becoming wider than it was before the onset of the crisis. this is a global phenomenon. the eurosystem β in other words, the ecb and the euro area central banks β form in this context a special case of their own, which is explained by the structure of economic and monetary union and also by europe β s internal political dynamics. the status assigned to the ecb and its practical policy - making have largely corresponded to the principles of β modern central banking β crystallised by fischer that i mentioned at the beginning : a clearly defined mandate, independence including safeguards against demands from governments pressing for central bank credit, and accountability. however, the ecb is different from the world β s other leading central banks. as a central bank common to many countries, its independence is of particular relevance. this is because the countries in monetary union have given up their monetary policy sovereignty. they made their decisions on joining monetary union as sovereign decision
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panayotis thomopoulos : the financial environment in southeast europe speech by mr panayotis thomopoulos, deputy governor of the bank of greece, at the second international banking forum for the southeast european markets economist conference, athens, 4 december 2003. * * * it is a great pleasure to address this banking forum at this juncture as i believe that the economies are turning the corner and can now start enjoying the benefits of stability and growth within the framework of closer ties with the european union. after a difficult and hesitant start in the 1990s, there is now clear evidence that the transition economies of southeastern europe have improved their macroeconomic management and enhanced their financial systems so that they can look forward to sustained and high - quality growth. greece, as the only member of the european union in the region, has a clear interest in promoting the stability and growth of all our neighbors, and i can be proud that both the public and the private sectors of greece have played a role in the emerging success story of southeastern europe. we see our neighbors'economies mainly as complementary to our own, not as competitors, and the many greek businesses that are active in the region, especially in the financial sector, are proof of the increasing collaboration between my country and its neighbors. i believe that greece will continue to make a positive contribution to the economies of the region, but, i must admit, that i draw comfort from the fact that greece is now surrounded by open, dynamic economies, and i would add friendly countries. it would be an understatement to say that we have turned a page of our history. in effect, the collapse of communism ended not the thirty, or hundred years wars, but more than one thousand years of intrabalkan conflicts and greece is fully supporting balkan countries'e. u. membership, which would further strengthen the political and economic ties between all balkan countries. let me start with a short look at the international environment that the countries in southeastern europe are facing. the overall economic situation has improved significantly during the last few months. after months when expectations of a recovery were based mostly on so - called " soft data, " like surveys of consumer and business confidence, we are now seeing real " hard data " that point to the resumption of growth in all the main regions of the world economy. all members of the eu have now emerged from recession, although the growth rate is not what we would have wished it to be. growth in the eurozone should accelerate slowly,
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decline in credit risk premiums. various potential transmission channels of the quantitative easing were discussed among economists at the time the bank introduced the policy. one of these channels is the portfolio rebalance channel : as the proportion of safe assets such as the current account balances at the bank increases in the asset portfolios of financial institutions, they are expected to adjust their portfolios, typically by increasing holdings of riskier assets such as loans. looking back on the period under the quantitative easing policy, we are not yet sure whether this channel actually worked or not. the accommodative environment contributed finally to putting the economy back onto a solid recovery path. the year - on - year rate of change in the core cpi rose to the surface in october 2005 and turned positive the following month. under these circumstances, the bank decided to terminate the quantitative easing policy in march 2006. more specifically, the bank decided to change the operating target for money market operations from the outstanding balance of current accounts at the bank to the uncollateralized overnight call rate. under the new scheme, the bank currently encourages the uncollateralized overnight call rate to remain at effectively zero percent. during the period of the adjustment process, japanese firms have been innovating continuously to strengthen their competitiveness. they have also expanded the global supply - chain network with a particular emphasis on developing their strategic linkages with asian counterparts. meanwhile, the japanese banks have overcome the non - performing loan problem and are currently better positioned to respond to the demands for sophisticated financial services of the times. such revitalization of both firms and banks should improve the efficiency of the market mechanism, thereby enabling a better allocation of resources. 4. several questions to be discussed in what follows, let me raise several questions that i hope are discussed at this conference. first, how have financial markets functioned in the historically low interest rate environment? have any unexpected effects of the low interest rate policy been detected in the financial markets? second, has the interaction between financial markets and the real economy changed in a low interest rate environment? for instance, have the roles played by financial markets and asset prices in the transmission mechanism of monetary policy changed? third, what are the consequences of a prolonged low interest rate environment? in particular, does the low interest rate policy pose potential risks to both financial markets and the real economy? fourth, how can we evaluate the recent low interest rate policy from historical and international perspectives? for instance, can we derive policy implications by comparing
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bis central bankers β speeches ( i ) the government succeeds in the implementation of the needed fiscal stimulus, including the reduction in arrears to contractors ; ( ii ) the central bank increases its intervention in the foreign exchange market as needed ; ( iii ) the business sector operates with the needed trust and confidence, avoiding the tendency to warehouse foreign exchange ; ( iv ) the banks accept the need for a larger reduction in interest rates and banking spreads ; and ( v ) where all the parties contribute to easing the industrial relations climate and generally helping to restore confidence. this is a tall order, but absolutely necessary. achieving medium term growth and stability presents even greater challenges, but the immediate reactivation in economic activity will boost confidence and provide the breathing space for this greater challenge. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches
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reassess regularly such equivalences - the second lever is the use of forum for information sharing and cooperation among supervisors. significant progress has been made in that direction that should bear fruit. in europe, the introduction of resolution and aml colleges for banks and of oversight colleges for ccps have been helpful to increase the involvement of home and host countries in the supervision of cross - border groups or entities. however, we should also recognize that convergence of regulation and cooperation between supervisors may also have their limits in some circumstances. this is certainly the case when considering the regulation and supervision of central clearing activities, given their systemicity and their natural trend to concentrate and eliminate substitutes. in such market we indeed observe the emergence of monopolistic situations and systemic risk is associated to the possibility of the default of such market infrastructures. we should therefore make sure that we β all collectively - are shielded from a too strong market concentration in terms of clearing, which create risks that can β t be addressed by cooperation among their supervisors and overseers. conflicting interests may indeed arise between ( i ) the authorities in charge of the oversight of the ccp, and its financial resilience, and ( ii ) the authorities in charge of the financial stability of the offshore markets served, especially in times of crisis, as we have seen in europe during the sovereign debt crisis. to prevent such situation levers to be used include in my view a location policy of clearing activities and direct oversight by authorities in charge with the financial stability of the markets served. 3 / 3 bis central bankers'speeches
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, the new palgrave dictionary of economics, 2008. iii diev pavel, kalantzis yannick, lalliard antoine, mogliani matteo, β comment expliquer la faiblesse de l β inflation en zone euro depuis 2013? β, le bulletin de la banque de france nΒ°234 : article 7, april 2021. comparison of the average of real and nominal 10y rates on the period jan β apr 2021, among ea, us, japan, uk and canada. iv die geldpolitik der ezb in der corona β krise, isabel schnabel webinar von sven giegold mit der heinrich β boll β stiftung, april 2021 v see β the ecb β s monetary policy in the pandemic : meeting the challenge β, speech by p. lane, october 2020, and references therein. vi letter to frederick william, prince of prussia ( 28 november 1770 ).
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bank had a residential mortgage portfolio that was not particularly exposed to risk. the bank had, however, expanded rapidly over several years, an expansion that was partly based on short - term market funding. when funding markets failed, the bank promptly encountered liquidity problems and was compelled to turn to the bank of england for support. when it became known that the bank had sought government support, depositors quickly lost confidence and the uk experienced its first bank run since 1866. many other banks that were considered to be solid under the applicable regulation also encountered problems when financial market confidence evaporated. something worked : the imf, g20 and wto the imf is an organisation for international cooperation based on a system of mutual assistance among member countries. the imf provides loans to countries experiencing balance of payments problems. the loans are financed by member countries. if the problems stem from economic policy mismanagement, the loan will be subject to specific requirements such as measures to correct policy. when the crisis occurred, the imf reacted swiftly to accommodate the increased need for imf services. the imf β s role as lender and interlocutor with the authorities in crisis - hit countries probably helped to limit the crisis. the imf provided support and assistance to countries that were directly affected by the crisis and countries that were innocent bystanders. the sharp increase in imf lending reduced the financial resources of the organization. member countries have now increased their contributions to the imf. during the financial crisis, the g20 has played a prominent role in the international coordination of economic policy. the group launched several important initiatives during the crisis, which were subsequently placed under the responsibility of the imf. all countries stand to benefit from the establishment of international meeting places that the major economies consider to be of interest. however, unlike the imf, the g20 is not a representative body for all countries. even if the g20 account for a large share of global output, most countries are not included, such as low - income countries and regions like most of africa, the middle east and the nordic countries. one possibility is to develop the g20 based on the imf model where countries are represented through constituencies. small 163 / 2009 countries like norway, or at least the nordic countries, could then be represented in a forum for discussion of the policies of major economies. in the wake of the great depression of the 1930s, protectionist measures were introduced in many countries. customs duties were increased to shield domestic
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led to higher demand for inputs, and the prices of oil and other raw materials increased. on the other hand, global consumer price growth was pulled down by exports of cheap goods from china and other countries with low production costs. interest rates were lowered in many countries to prevent very low inflation or deflation. in china, a large share of income was saved, either in the form of investment in new production equipment or financial assets. the increased supply of financial savings pushed down global long - term interest rates. lower interest rates encouraged consumers and businesses in other countries to borrow capital from china and other surplus countries. the foreign debt of countries such as the us and uk accumulated rapidly in the years leading up to the crisis. historically low interest rates prompted fund managers in western countries to seek out new alternatives in their search for high yields. new financial savings products were developed and spread to investors around the world. it was often difficult, or even impossible, for investors to value the risk underlying the products. yield potentials can also be increased by leveraging securities purchases. as long as prices rise, the return on equity will increase with the degree of leveraging. on the other hand, the risk of being left with debt, and little or no equity capital, increases when prices fall. in the years ahead of the crisis, high debt leveraging still appeared to be an attractive proposition in an environment of low credit risk and a glut of cheap credit. the result was a surge in debt accumulation in the years preceding the crisis. prices in securities and property markets soared. the build - up of macroeconomic imbalances in the years prior to the crisis increased vulnerabilities and the potential amplitude of a downswing. many observers warned of the risks associated with these developments but no one foresaw how the crisis would unfold, when it would erupt, or its severity. the global financial crisis has revealed weaknesses in the financial system. in retrospect, it is clear that financial sector regulation was not adequate. regulation was primarily designed to ensure that individual banks had sufficient equity capital to protect lenders and depositors against losses, rather than ensuring stability in the system as a whole. for example, there were no requirements stipulating the size of liquid assets a bank must hold to weather periods of failure in market funding. nor were there any minimum requirements as to funding stability. an example of the importance of these conditions is the collapse of the british bank northern rock in september 2007. the
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christina papaconstantinou : address - single supervisory mechanism integration project event address by ms christina papaconstantinou, deputy governor of the bank of greece, to the staff of the supervisory departments at the " ssm integration project event ", athens, 11 march 2024. * * * good morning. i am very pleased to be here with you on the occasion of the 10th anniversary of the single supervisory mechanism. as we know, the single supervisory mechanism was set up to safeguard confidence in the european banking system, increase its resilience, strengthen financial stability and create a level playing field among european banks. the global financial crisis revealed significant gaps in the supervision of banking institutions in europe, related to a fragmented supervisory framework, diverse supervisory tools and practices, lack of coordination and consultation. these gaps acted to impair the resilience of banks, hence of economies too. a single european approach to banking supervision which, while taking into account national specificities, creates an environment where all supervisors operate by the same rules and have the same tools, contributes to addressing these weaknesses. european banks are now in a much better position to cope with severe turmoil and shocks ( like those we experienced about a year ago ) than they were before the global financial crisis. the same holds true for greek banks, despite the serious challenges of the past. this is why we acknowledge that having the single supervisory mechanism in place was instrumental in providing an effective response to the crisis in the greek banking system in the aftermath of the sovereign debt crisis. managing the crisis together with the ssm meant stronger cooperation, exchange and productive interaction from the very start. the experience we have gained so far shows that collaboration and integration between the european central bank and the national supervisory authorities is key if we are to keep evolving amid rapid change ( including a changing climate, technological progress, etc. ) and ongoing challenges ( such as geopolitical risks ), demonstrating the necessary flexibility and adaptability. collaboration within the single supervisory mechanism has helped us and, as national supervisory authority, we have indeed evolved and have significantly upgraded our supervisory function : we have standardised several processes, developed manuals and methodologies for ongoing and on - site supervision, while at the same time becoming more extrovert. significant emphasis has also been placed on the need for continuous training of our staff. 1 / 2 bis - central bankers'speeches we at the bank of greece have been devoting significant resources to the single supervisory mechanism. our supervisory departments have committed more
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yannis stournaras : global financial and economic crisis β challenges and prospects speech by mr yannis stournaras, governor of the bank of greece, at the 2014 multinational finance society winter conference β global financial and economic crisis : challenges and prospects β, co - organized by the centre of planning and economic research and the multinational finance society, athens, 14 december 2014. * * * ladies and gentlemen, it is a pleasure to address such a distinguished audience, on a topic that unfortunately is not yet history. governments and central banks certainly managed to safeguard financial stability in turbulent times. however, certain repercussions of the crisis have not yet been fully dealt with and some vulnerabilities may reappear. in this sense, looking back with a critical view may help us understand the factors that put at risk the global economic recovery. the global financial and economic crisis that was triggered by a distortion in the u. s. subprime mortgage market, highlighted serious weaknesses in the financial regulatory frameworks of the globalized and broadly interrelated national markets. as a result, the validity of the theory of self - correcting market mechanisms has been strongly contested. global financial crisis β’ the roots of the global financial crisis can be traced back to both macroeconomic and microeconomic factors. on the macro level, global imbalances for over a decade before the crisis resulted in ample liquidity in world financial markets and in low interest rates, facilitating high levels of leverage, excessive dependence on unsustainable short - term financing and weak risk management. β’ at the same time, on the micro level, financial innovation and the investors β β search for yield β led to the creation of complex financial instruments with an obscure credit risk distribution. the originate - to - distribute model, according to which loans are traded between investors, became widespread practice. this led, in effect, to a loosening of lending criteria and facilitated the creation of the aforementioned complex credit instruments. β’ over time, excessive credit risk and liquidity accumulated in the so - called β investment vehicles. β the placement of credit institutions in such vehicles was not recorded on their balance sheets, and as a result, the associated risks slipped through the cracks of internal control mechanisms. moreover, the opacity and the uncertain dispersion of risks of these instruments were further exacerbated by the rapid growth of the derivatives market, in particular of derivatives traded outside regulated markets ( β over the counter β ). β’ as
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is already fading from collective memory. given the deceptive tranquillity in the financial markets, we are at risk of forgetting what the crisis has taught us about public finances. but that would have dire consequences. as i emphasised in my opening remarks yesterday, the markets do anticipate that reforms will be finalised and that public budgets will be consolidated. thus, any doubts over the sustainability of public finances can send huge shockwaves across the euro area. in addition, mountains of private and public debt block the way towards sustainable economic growth. and on a side note : at this stage of integration in the euro area, euro - bonds would not be the right path to choose as they would weaken the incentives for prudent fiscal policy. nevertheless, to me, the recent debate about the stability and growth pact shows something else. it seems that there is an expectation that, in the end, monetary policy will provide the bis central bankers β speeches ultimate backstop. this expectation, however, is dangerous and cannot be the guideline for policy action β or rather inaction. monetary policy certainly helped prevent the crisis from escalating. still, there is one thing we should be clear about : monetary policy cannot solve the underlying causes of the crisis. it can only buy time. and it is up to national governments to use that time to dig out the root causes of the crisis. failing to do so will push us back into dangerous territory. we must not let that happen. 4. conclusion ladies and gentlemen i have presented what i consider to be good news. the german economy is gaining in strength and the euro area has embarked on the path to recovery. nevertheless, we should keep in mind, what the irish horse racing jockey tony mccoy said : β there is no place for arrogance or complacency in racing because you are up there one minute and on your backside the next β. keeping up economically is certainly a race and we should avoid the risk of landing on our backside. thus, my warning : beware complacency. as a final point, let me emphasise that i have very much enjoyed attending this seminar. it has certainly helped strengthen the ties between the central bank of the republic of turkey and the deutsche bundesbank. personally, i am looking forward to more visits next year when turkey assumes the g20 presidency. thank you very much. bis central bankers β speeches
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andreas dombret : germany and the euro area β beware complacency speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at a joint seminar of the central bank of the republic of turkey and the deutsche bundesbank, istanbul, 5 july 2014. * 1. * * introduction ladies and gentlemen as i pointed out in my opening remarks yesterday, i am happy to be here in istanbul to attend this joint seminar of the central bank of the republic of turkey and the deutsche bundesbank. over the past two days we have shared ideas about macroprudential policy, and we have improved these ideas through discussion. at this point, i wish to change the perspective and take a closer look at the real economy and the macroeconomic situation in germany. and as germany is part of a monetary union, my presentation would be incomplete without discussing the situation of the euro area as well. 2. germany : no time for complacency looking to the past, the german economy has shown a remarkable development. as late as 2004, the economist magazine dubbed germany β the sick man of europe β. plagued by high unemployment and a lack of competitiveness, germany undertook structural reforms that were as painful as they were successful. germany left the sick - bed and took bold steps towards recovery β only to be hit full - force by the fall - out of the financial crisis. in 2009, amidst a global recession, german gdp dropped by 5. 1 %. for germany this was by far the biggest downturn in post - war history. however, the economy recovered quickly and in 2011, german gdp had returned to its pre - crisis level β sooner than in any other country in the euro area. what is the story behind this v - shaped recovery, the big drop and the quick rebound? from a general point of view, it was the structural reforms i mentioned before that prepared the ground for the strong recovery following the crisis. nevertheless, the distinctive pattern of a severe drop and a rapid recovery highlights a specific feature of the german economy : its pronounced export orientation. when the global economy faltered in 2009, germany was hit far worse than other countries. but when the global economy began to recover in 2010, germany followed suit. exports were the major driving force behind the upturn in the german economy. this strong influence of international trade worried some observers. many felt that germany β s reliance on exports was risky, as it exposed germany to the ups
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while some other banks in the same jurisdiction, might adopt the standardised approach. since the irb approach is more risk sensitive vis - a - vis the standardised approach, a small change in the degree of risk could result in a large additional capital requirement for the banks following the irb approach - which would dissuade such banks from assuming high - risk exposures. from a systemic point of view, therefore, the banks adopting the standardised approach, and consequently, having a greater concentration of high - risk assets in their portfolio, could perhaps become vulnerable in times of economic downturns. these issues would need to be appropriately taken into account while deciding on the implementation of the basel ii. implementation challenges in developing countries even though it has been mentioned in several places that over 100 countries had implemented basel i, the assessments done in 71 countries as a part of financial sector assessment program ( fsap ) have revealed many deficiencies in the areas of risk management, consolidated supervision and corrective action for undercapitalised institutions, which are considered to be crucial to sound supervision and proper basel ii implementation. while a supervisory system which is fully or largely compliant with basel core principle 6, which incorporates basel i as the capital adequacy standard, is considered necessary for moving to basel ii, the assessments reveal that about 37 % of these countries had not complied with this core principle. the remaining countries were at various stages of compliance. given this level of compliance, the challenges that are likely to be faced by the developing economies in implementing the basel ii framework, will be daunting. as acknowledged by the imf, they do not have adequate internal expertise to assess and assist basel ii implementation in various jurisdictions. given the complexities of financial regulation and the added complexities of the basel ii framework, which will have to be specifically tailored to suit the domestic economies and the domestic banking systems, the regulators are right in insisting on the freedom and flexibility for adopting and implementing an appropriate roadmap without being constrained by any external pressures, direct or indirect. the ideal solution for managing a complex task of this nature is through mutual cooperation and assistance amongst the central banks. dangers of asymmetry in financial intermediation a likely scenario, which might arise post - basel ii implementation, is the asymmetry in regulatory regime amongst the competing broad segments of the financial sector viz., banking, securities and insurance sectors. while the commercial banking sector is expected to migrate to the basel ii regimen
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their local currency and the us dollar. the six - monthly surveys of the oesterreichische nationalbank in eastern and south - eastern europe show that confidence in the euro in the eastern eu countries fell steadily between 2007 and 2011. this loss of confidence is also seen in southeast europe, although it is less pronounced. since 2012, confidence has grown again ; only in the czech republic was the view still held last year that the euro is probably not stable or trustworthy in the medium term. when one compares confidence in the euro with confidence in the domestic currency, the euro enjoys, in almost all cases, and even during the debt crises in greece and cyprus, more trust than the respective national currency. the euro is trusted internationally not only because of its stable value. users of euro banknotes and coins appreciate the very low counterfeit rate. while the number of genuine bis central bankers β speeches euro banknotes in circulation has almost doubled since the introduction of the single currency, the quantity of counterfeit notes has remained largely unchanged. after an initial period of about one - and - a - half years, the number of counterfeits detected in payment transactions had stabilised at around 50, 000 β 60, 000 pieces per month and with some variations the value has been very constant at this level for a good ten years. annual losses have been stable for years at β¬30 β β¬40 million. the β banknote recirculation framework β ensures that no counterfeit notes can enter circulation via automated teller machines ( atms ). all banks and cash - in - transit companies are required, according to an ecb decision, to reliably authenticate notes received from customers. only then are they suitable for stocking atms. the most often counterfeited denominations are the β¬20 and β¬50, which together account for around 80 % of all fakes. in relation to the total volume the proportion of counterfeit euro banknotes thus remains within very moderate limits and is in no way worrying. to maintain that situation, the first series of euro banknotes is gradually being replaced by new notes with improved, up - to - date security features. to ensure broad acceptance of the new notes, various stakeholders were involved during the design phase. focus group interviews and consultations involving associations of blind and visually impaired people influenced the design and characteristics of the security features. the new series is based on the concept of β evolution not revolution β. this means that banknote equipment should be able to
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will willingly answer your questions. i invite professor andre sapir to take the floor and i wish you a rewarding debate. thank you. 2 / 2 bis central bankers'speeches
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. in the short term, this is above all due to the fact that price momentum in the case of some categories of goods has slowed more quickly than had been expected in december. in the medium term, lower second - round effects are leading to a downward revision. over the entire forecast horizon, the conditional inflation forecast is within the range of price stability ( cf. chart ). the forecast puts average annual inflation at 1. 4 % for 2024, 1. 2 % for 2025 and 1. 1 % for 2026 ( cf. table ). our forecast is based on the assumption that the snb policy rate is 1. 5 % over the entire forecast horizon. page 2 / 6 zurich, 21 march 2024 thomas jordan, martin schlegel and antoine martin news conference global economic outlook let me now turn to the global economic outlook. the global economy grew moderately in the fourth quarter of 2023. however, developments continued to vary greatly between the individual economic areas. the us economy again showed robust growth, while activity was modest in many other countries. having declined rapidly in many countries in 2023, inflation has decreased at a somewhat slower pace in recent months. inflation in many countries remains above central banks β targets. against this background, many central banks have left their restrictive monetary policy unchanged for the time being. global economic growth is likely to remain moderate in the coming quarters, in particular due to the tightening of monetary policy in the last two years and less expansionary fiscal policy. inflation is likely to decline further, not least due to the restrictive monetary policy. our scenario for the global economy is still subject to significant risks. inflation could remain elevated for longer in some countries, necessitating a tighter monetary policy there than expected in our baseline scenario. equally, geopolitical tensions could increase. it therefore cannot be ruled out that global economic activity will be weaker than assumed. swiss economic outlook how does the economic situation look in switzerland? gdp growth was moderate in the fourth quarter of last year. the services sector expanded again, while value added in manufacturing stagnated. this was above all attributable to the subdued momentum in the manufacturing sector globally, but especially in germany. unemployment rose somewhat further, and the utilisation of overall production capacity was normal. growth is likely to remain modest in the coming quarters. the weak demand from abroad and the appreciation of the swiss franc in real terms over the past year are having a dampening effect. overall, switzerland
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mr ferguson asks whether information technology is the key to higher productivity growth in the united states and abroad remarks by mr robert w ferguson jr, member of the board of governors of the us federal reserve system, before the 2000 global economic and investment outlook conference at the carnegie bosch institute, pittsburgh on 21 september 1999. * * * the last few years have seen an explosion in the uses of information technology throughout the american economy. at the same time, trend us productivity growth appears to have risen to its highest rate since the 1970s. casual empiricism would suggest a connection β that the enormous investment in computer technology that has been going on for at least twenty years has finally started to bear fruit. but although information technology is available, at least in theory, to the whole world, the recent surge in productivity growth appears to have been stronger in the united states than elsewhere, including the other industrialized countries. this raises the interesting questions of what else besides simple availability is needed to translate the promise of information technology into real productivity gains and whether β whatever it is β the united states has more of it? these questions are impossible to answer with precision, so the purpose of my talk this afternoon is to identify particular features of the american economy that might contribute to an especially hospitable climate for translating the potential gains from information technology into actual productivity growth. i also want to be careful not to suggest that gains from the use of information technology can safely be assumed to go on indefinitely at their recent pace. the recent technical advances represent a continuation of a long string of fundamental leaps in technology that have worked their way through the economic system over many years, boosting productivity growth in the process, but how long a particular innovation has a beneficial effect on productivity growth is difficult to say. that depends on the rate of investment in the equipment that embodies the new technology, the rate at which the labor force is able to acquire needed skills, and, of course, on the fundamental potential of the technology itself. history demonstrates that the boost to productivity growth from a particular technological advance is not unlimited and eventually will be fully exploited. just as β trees do not grow to the sky β, so, too, increases in the rate of productivity growth from any given advance are not without limits. one should be cautious in extrapolating from past trends. what we do know what we do know is that the use of information technology, at least in the united states, has been growing by leaps and bounds. for example
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the process of identifying the regulatory gaps. this is taking place within an international discussion, which the ecb strongly supports. the ultimate aim must be to extend the regulatory net to cover all instruments, institutions and markets that are either systemically important or which play a key role for the functioning of markets. hedge funds and credit rating agencies are at the centre of the debate. in europe, the discussions on proposed regulatory initiatives to establish a harmonised framework for credit rating agencies and on assessing possible initiatives for hedge funds are important. the proposed regulatory framework for the registration and oversight of rating agencies β with an important role for the committee of european securities supervisors and the committee of european banking supervisors β goes in the right direction. i also welcome the commission β s initiative to launch a public consultation on hedge funds, to which the eurosystem will contribute. let me stress that both initiatives, on rating agencies and hedge funds, warrant strong international coordination. the g20, of which the ecb is a member, is setting the key milestones in this context. the outcome of this debate should be an international agreement about the key features of the new regulatory paradigm. i mentioned the otc derivatives market ; this is a prime example of a systemically important market that requires more transparency and a better infrastructure. the ecb β s governing council has already called for a strengthening of the infrastructure for this market in view of its systemic importance. we also support the position of ecofin, which in december 2008 endorsed the idea of introducing a european ccp for otc credit default swap markets. and we see considerable merit in having this infrastructure located within the euro area. iii. the eu β s supervisory framework let me now come to the third and last element of my reflections this morning : the supervisory framework in europe. many issues are currently under consideration. i would like to focus on a dimension that is very relevant from a central banking perspective, namely macro - prudential supervision. macro - prudential supervision of the financial system by central banks needs to be strengthened. there is an international consensus emerging on this need, in the context of the lessons from the financial crisis. the ecb and the eurosystem have the technical capacity to assume a stronger role in macro - prudential supervision. indeed, it would be a natural extension of the mandate already assigned to us by the treaty, namely to contribute to financial stability. the tasks of macro - prudential supervision include the monitoring and analysis of financial stability,
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boosting broad based growth. on the financial sector front, the central bank in conjunction with the government will scale up reforms to enhance the sector β s competitiveness, efficiency, access and stability as well as making kenya a financial hub in the medium term. the banking sector is also expected to continue with its β excellent performance underpinned by regional expansion and lowered cost of business as the various reforms take root. looking ahead for monetary policy, the priority is to reverse inflation and inflationary expectations and exchange rate volatility to protect the economic growth base. tight monetary policy will be sustained until inflationary pressures have been reversed and the foreign exchange market stabilized. from a historical perspective, we have seen the same measures work and we still have confidence it will work in 2012. the bank will also continue with regular interactions with key stakeholders including market players to enhance the effectiveness of the transmission mechanism of monetary policy and other policy strategy actions. in closing, ladies and gentlemen, let me thank you all for the support and cooperation in developing the financial sector. i look forward to more fruitful collaboration and partnership going forward and in addressing any challenges facing the sector. lastly, let me end by wishing you all a happy holiday season and fruitful 2012. thank you. bis central bankers β speeches
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implementation frameworks and to assess a number of issues related to the consideration of alternative frameworks. i hope the work and ideas presented and discussed over the next two days will spur subsequent research on these issues and promote further collaboration among all of you. as i have often stressed before, in addition to its responsibilities for monetary policy and financial regulation and supervision, the federal reserve takes very seriously its role as a research institution. i want to thank our research conference committee for putting together this high - caliber research conference, which has gathered distinguished speakers and guests from around the world and, i am sure, will add to our understanding of the implementation and transmission of monetary policy. welcome to the federal reserve board. i hope you all have enjoyable and productive discussions over the next two days. bis central bankers β speeches
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mario draghi : ecb press conference β introductory statement introductory statement by mr mario draghi, president of the european central bank, and mr vitor constancio, vice - president of the european central bank, frankfurt am main, 4 july 2013. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. we will now report on the outcome of today β s meeting of the governing council, which was also attended by the commission vice - president, mr. rehn. based on our regular economic and monetary analyses, we decided to keep the key ecb interest rates unchanged. incoming information has confirmed our previous assessment. underlying price pressures in the euro area are expected to remain subdued over the medium term. in keeping with this picture, monetary and, in particular, credit dynamics remain subdued. inflation expectations for the euro area continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. at the same time, recent confidence indicators based on survey data have shown some further improvement from low levels. our monetary policy stance is geared towards maintaining the degree of monetary accommodation warranted by the outlook for price stability and promoting stable money market conditions. it thereby provides support to a recovery in economic activity later in the year and in 2014. looking ahead, our monetary policy stance will remain accommodative for as long as necessary. the governing council expects the key ecb interest rates to remain at present or lower levels for an extended period of time. this expectation is based on the overall subdued outlook for inflation extending into the medium term, given the broad - based weakness in the real economy and subdued monetary dynamics. in the period ahead, we will monitor all incoming information on economic and monetary developments and assess any impact on the outlook for price stability. let me now explain our assessment in greater detail, starting with the economic analysis. real gdp declined by 0. 3 % in the first quarter of 2013, following a contraction of 0. 6 % in the last quarter of 2012. at the same time, labour market conditions remain weak. recent developments in cyclical indicators, particularly those based on survey data, indicate some further improvement from low levels. looking ahead to later in the year and to 2014, euro area export growth should benefit from a gradual recovery in global demand, while domestic demand should be supported by the accommodative monetary policy stance as well as the recent gains
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janet l yellen : remarks accepting the 2017 paul h douglas award for ethics in government speech by ms janet l yellen, chair of the board of governors of the federal reserve system, at the institute of government and public affairs at the university of illinois, washington dc, 7 november 2017. * * * thank you for the honor of sharing this award with such a worthy person, my friend and former colleague ben bernanke, and also for the honor of being associated with the exemplary life and legacy of paul douglas. sen. douglas β s contributions to ethics in government are an important aspect of that legacy, but since ben and i are the first economists to win this award, i would also like to give due credit to professor douglas for his contributions to economics. working with the mathematician charles cobb, douglas gathered data and created a statistical model that advanced economists β understanding of the relative contributions to production made by capital and labor. this work demonstrated many of the methods that economists would come to use and continue to use to this day. douglas constructed empirical measures of key economic concepts. he then employed what were, for the time, advanced statistical techniques to analyze these data, thereby shedding light on a basic economic relationship. as one recent commentator put it, work such as douglas β s was part of β a growing literature,,, [ that ] played an important role in shaping the approach to combining statistical methods and economic theory that would become the standard econometric practice in the later decades of the 20th century. " 1 but, of course, paul douglas was much more than an economist. from an early age, he always seemed to be the man in the middle, seen by the two sides of a dispute as intelligent, knowledgeable, and impartial enough to be trusted to seek a solution. he mediated labor disputes and advised local government officials in illinois. he also helped governors in pennsylvania and new york develop what became social security, unemployment insurance, and the idea of publicly owned power utilities. after losing his first election for the u. s. senate in 1942, at the age of 49 he enlisted in the u. s. marines and was awarded a bronze star and purple heart for his service in the pacific. later, after he was elected to the senate, douglas was a champion of consumer protection laws, including the 1968 truth in lending act, and was a leading supporter of civil rights legislation. one of paul douglas β s most important achievements in public life was to promote ethics in government
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years, higher wages have been partly offset by squeezing corporate margins, particularly in market services. another factor may be the possibility of a downward drift in long - term price expectations that could have followed from the prolonged period of low inflation. last, but not least, structural changes may have impacted the process of price and wage formation, in the context of increased digitalisation and globalisation of our economies, and diminishing bargaining power of workers. still, the quantitative weight of these structural factors is less than clear and has not achieved consensus among economists. i. b. the future : the return of inflation? the current debate on a potential return of inflation may be legitimate in the us ii, but not in the euro area. in the us, the ongoing recovery is much faster than what was observed after previous crises and the output gap is projected to close and become positive in the course of 2021. the inflation surge could nevertheless be transient, and then hopefully stabilise in a new regime of β controlled reflation β. the jump in euro area headline inflation in early 2021 did come as a surprise ( it rose from - 0. 3 % to + 1. 3 % ) ; nonetheless, the causes of this increase are temporary in nature, like the recent rebound in oil prices, the reversal of the vat rate cut in germany and from modified weights in the hicp basket. over the medium term, the persistence of substantial economic slack over the projection horizon, despite a significant page 5 sur 9 recovery from the second half of this year, will weigh on inflation. all in all, the march 2021 ecb projections show that headline inflation would remain weak, at 1. 4 % in 2023. inflation is therefore not yet where we would like it to be, back towards 2 % over the medium term. our inflation objective must be understood as simple, symmetric and medium - term oriented. iii β simple β means that we could reexamine oversophisticated qualifiers still associated with the 2 % figure. β symmetric β refers to the fact that our objective is a target and not a ceiling : we might be ready to accept inflation higher than 2 % for some time. finally β medium term β means that we assess inflation performance over a long enough period, looking forward, but also not ignoring the past. keeping this inflation objective in mind, allow me to reflect on our current and future monetary policy, and design a reinforcing β equilibrium triangle β : the first corner of this triangle is
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- linear forward guidance, mentioning explicitly our tolerance for inflation overshooting, with reference to past inflation shortfalls. it is the combination of these three levers that should be used as the foundations of the β equilibrium triangle β of our monetary policy in this next phase of the covid crisis. ii. wider expectations are emerging let us return to the question of broadening public expectations of central banks. central banks are facing the risk of being considered not only the only game in town, but also the all - purpose game. that said, the reality of climate change, rising inequality β which i will touch briefly β and risks to financial stability β which you invited me to focus on β are all elements to be taken into account, and as such are parts of the ecb β s strategic review, more than the fed β s one. ii. a. climate change considering climate change is neither a mission creep, nor a mere militant conviction or a fad. it is an imperative : climate change does affect our ability to achieve price stability, our primary objective. on one side, extreme physical risk or more gradual transition risks will, and do already, affect supply. on the other side, the implementation of policies to mitigate climate change such as carbon taxes, emission targets or border adjustment tariffs will also affect input and consumer prices. for example the recent jump in headline inflation in the euro area illustrates these two points. part of the recent increase in energy prices was linked to higher electricity prices in spain due to unusually cold weather and the introduction of a carbon surcharge on prices of liquid fuels and gas in germany. in my view, there are three measures we central bankers can take. vi the first is to incorporate climate change into our macroeconomic models. second, we must gradually decarbonise our balance sheets in a pragmatic and targeted way by adapting the valuation of our assets. third, by disclosing the criteria by which we value assets, we can set a standard that others will follow. and market neutrality β which should take into account the mispricing of climate risks β should not put a brake on carbon neutrality. ii. b. inequalities page 7 sur 9 monetary policy inevitably has redistributive effects. it transfers revenue between lenders and borrowers, and affects asset prices and hence wealth. the evidence is preliminary but it suggests that the effects of more accommodative monetary policy has reduced income inequality by boosting revenues thanks to
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labour force in the global economy has doubled from 1. 5 to 3 billion, reflecting the opening up of china, india and the former soviet bloc. 14 as a consequence, the price of a wide range of manufactured goods has declined. in addition, through various channels, this process of wage moderation and reduced inflationary pressure in the manufacturing sector has affected wage dynamics also in the services sector, mainly as a result of outsourcing. altogether, these effects have helped dampen inflationary pressures. this is what the figures seem to tell us : on the basis of a simple accounting method, the ecb β s staff estimated that the larger imports from low - cost countries had a dampening effect on overall euro area manufacturing import prices of around two percentage points per annum, on average, between the mid - 1990s and mid - 2000s. 15 yet there are other, opposing forces. certain resources have become relatively scarcer given the increasing demand from emerging economies. in particular, the strong growth seen in some of the largest economies, notably china and india, has likely contributed to recent increases in the prices of energy and other commodities, as well as of food products. accordingly, this may have been a source of upward pressure on inflation over the past few years. arguably, it is difficult to make an exact assessment of this contribution, as commodity prices are also affected by supply conditions and geopolitical factors. however, according to one study, the rapid growth in emerging countries and their increasing share in world trade and gdp may have contributed to an increase in oil prices by as much as 40 %, and real metal prices by as much as 10 % in the first five years of the new millennium. 16 this illustrates why it is important for central bankers to do what is needed to avoid what are known as β second - round effects β and to anchor inflation expectations through forward - looking monetary policies. see european audiovisual observatory, ( http : / / www. obs. coe. int / oea _ publ / market / focus. html ). see internet world stats ( http : / / www. internetworldstats. com / stats. htm ). on this issue, see also the speech by l. papademos entitled β globalisation, inflation, imbalances and monetary policy β, delivered in st. louis on 25 may 2006. freeman, r. ( 2006 ), β the great doubling : the challenge of the new global labour market β, august 2006
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the doubling of the new arrangements to borrow, as well as the renewal of the bilateral borrowing agreements to meet the members β high and growing overall demand for fund resources and the shift towards uct arrangements. we welcome the work on the 16th general review of quotas and reaffirm our commitment to a strong, quota - based, and adequately resourced imf at the center of the global financial safety net. 2 / 2 bis central bankers'speeches
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β most of all for the one who can run faster! in addition to measures relating to price stability, exchange rate and the financial sector, other measures enacted by the nbs relate to : - - natural persons β no change in the classification of receivables, even if : o loan repayment period is extended for one year ; o foreign currency - indexed loans are converted into dinar loans, and chfindexed loans are converted into eur - indexed loans ; o indexed financial lease receivables exceed the 30 / 50 % ratio due to depreciation of the dinar. banks : - o reserve requirements on foreign credit, subordinated credit and financial leasing are abolished ( until june 2010 ) ; o reserves for general banking risks are abolished in the event of expansive growth ; o gross household lending / share capital = 150 % β no penalty in the event of non - compliance caused by the depreciation of the dinar. legal entities : o loans for agriculture and loans to entrepreneurs for other activities are exempted from the gross household lending to share capital ratio ( 150 % ) o negotiations with the eib on a loan of eur 250 million to smes, and negotiations with other international financial institutions ( e. g. ebrd, kfw ) and governments ( e. g. italy ). true, the list of measures relating to legal entities is the shortest, but we are making intensive efforts to lengthen it. but, what have other countries done so far? the governments have a ) greatly improved the deposit insurance scheme, b ) promised notable support to the financial sector in order to strengthen the capital base, c ) announced substantial public works, primarily in infrastructure. from their part, central banks a ) provided substantial additional liquidity, and b ) cut the key policy rate in order to lower the cost of credit. in terms of specific activities, however, central banks have done their part, but the measures announced by governments ( excluding deposit insurance ) are still being elaborated. for example, not a single euro has yet been approved to austrian banks simply because the authorities waited for an approval of terms from brussels. the 21st century and market economy call for different models and methods than a decade or two ago. but before we go into details, it is important to pay attention to the following facts : - the ownership structure of both enterprises and banks has changed significantly, and this will have a major impact on the way we confront the current challenges ; -
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jorgovanka tabakovi : 150 years of the serbian dinar speech by dr jorgovanka tabakovi, governor of the national bank of serbia, at the opening of exhibition " 150 years of the serbian dinar ", belgrade, 21 december 2023. * * * ladies and gentlemen, dear colleagues and associates, dear friends, it is on rare occasions that one feels such pride. privileged to bear witness to a century and a half of history and tradition. honoured to attempt to fortify and further elevate such long history and defiance of numerous challenges with one's actions, words and aspirations. welcome to our house, the national bank of serbia, on this β i can safely say β historical event, when we celebrate 150 years of the serbian dinar as the national currency. there are few nations in the world that can boast the fact that they have had their own currency for a century and a half. it has long been known that in addition to the traditional symbols of statehood β the coat - of - arms, flag and anthem β the spirit and strength of a state are also made of its tradition, culture and the national currency. how long these symbols of statehood last shows how young or how long - lasting a nation is, how stable and how resilient it is. they are also a mirror of history and an achievement of a nation, having a critical importance to the nation's sovereignty and image in the world. to have a stable and solid currency of your own is perhaps more relevant today than ever before. in an environment of continually increasing uncertainty, amid a series of crises that have overlapped over the past four years, the global economic and financial landscape has been permeated with the interests of major powers. the globalisation process we have known for decades has taken a different turn, and the most influential economies are trying to gather around them groups of countries that dictate economic flows. the instruments in this fight include strengthening national currencies, as well as attempts by some groups of countries to create a supranational, common currency. against such backdrop, it is necessary to preserve the independence of monetary policy and decision - making which directs domestic economic flows. for two centuries, the world of global finance has been familiar with the statement : " give me control over a nation's money supply, and i care not who makes its laws. " this clearly shows that the strength of a country in the economic, as
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account deficit, it has a number of shortcomings because it is inconsistent with some other developments we observe in the global economy. for an explanation to have any plausibility, it must be consistent with all the five simultaneous developments listed above. in my view, the most promising explanation at present is one which starts with the surplus countries and focuses on why national savings are so much higher than national investment in those countries. 2 see mann ( 1999 and 2002 ), obsfeld and rogoff ( 2000 and 2004 ) and peterson ( 2004 ). ben bernanke, while a governor of the us federal reserve board, gave the best explanation along these lines. he originally called it the β glut of savings β argument, but it could more appropriately be called the β dearth of investment β argument because there has not really been an increase in world savings, only a redistribution. alternatively, we could call it the β glut of savings in surplus countries β argument. see bernanke ( 2005a, 2005b ). 1 / 10 although it is not, in itself, a complete explanation of everything that has happened, it is the most plausible in that it is consistent with all the five developments listed above. 2. the excess of savings in the surplus countries the best starting point for any explanation is to recognise that there is a wide disparity between saving rates in different countries. broadly speaking, asian countries tend to have high saving rates, anglosaxon ones low saving rates, and other countries somewhere in between ( row 1 of table 1 ). for balance of payments purposes, this would not matter if investment rates in each country matched the saving rate, but this is not the case ( row 2 of table 1 ). in countries with high saving rates, investment rates, while high, are not as high as the saving rate, and these countries run a current account surplus. the opposite applies in the low saving countries. to understand developments in current accounts, we have to understand developments in saving and investment ratios in different countries and regions. in short, asian countries have more savings than they wish to invest in their own countries, and so they have to invest or lend abroad. this is the most basic of all balance of payments identities. other countries that invest more than they save have to finance their investment by using the savings of foreigners. the actual channel can take many forms, but that is not crucial to the story. to complicate the story slightly,
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i j macfarlane : what are the global imbalances? speech by mr i j macfarlane, governor of the reserve bank of australia, at the economic society of australia dinner, melbourne, 28 september 2005. * 1. * * introduction i have given a number of speeches to the economic society over the years, and it is a pleasure to be doing so again tonight. the last time i gave the closing address to the conference of economists was in 1997 in hobart. the subject i want to speak about tonight is one which has loomed particularly large in international macro - economic discussion in the period since then. i refer to the subject of global imbalances in international payments. most of the discussion, at least until quite recently, focussed on the large us current account deficit and questioned its sustainability and the risks it posed to the world economy. tonight i would like to approach the subject of global payments imbalances from a broader perspective. in doing so, the focus of attention is shifted towards asia, recognition is given to the weakness of europe, and the united states is cast into an accommodating role, rather than an initiating one. when we look at the global economy over the past half dozen years, there are a number of developments that have been difficult to satisfactorily understand and explain. i suggest that the following five developments are the central ones in need of an explanation. 1. why did the us current account deficit start to widen sharply after 1997, reach such a high percentage of gdp, and yet has been relatively easily financed? 2. why has asia run such large current account surpluses and built up such a high level of international reserves? 3. why did the world's central banks push short - term interest rates to their lowest level for a century, and why has this apparently easy monetary policy not led to an appreciable pick - up in inflation? 4. why have bond yields been so low, and why have they stayed low even when short - term interest rates have been raised? 5. against this background of wide payments imbalances, why have the margins for risk in corporate and emerging market debt been so exceptionally low? a number of explanations have been put forward to account for each of these developments. the most common explanation has started with the widening us current account deficit, and attributed it mainly to excessive spending and borrowing and insufficient saving by us households and the us government. 1 while this explanation is consistent with the widening us current
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insights which require further analysis, research and dialogue. however, pondering on the lessons learnt and the insights gained should not lead to β analysis paralysis β or unnecessary pontification. it is important to interrogate the efficiencies and benefits that new technology may introduce. in the context of dlt - based platforms in financial markets, potential efficiencies relate to : β’ increased transparency in the holding of securities ; β’ reduction in costs due to automation ; and β’ the removal of multiple manual reconciliation processes across a network of intermediaries. one of the primary risks stems from the lack of regulatory certainty as the existing legal and regulatory frameworks for financial markets were not designed for trading, clearing or settling on dlt. promoting responsible innovation this looks at how innovation should be done in a way that the financial system is taken forward to benefit society as a whole. this includes contributing to achieving objectives such as : β’ improving efficiency ; β’ lowering barriers to entry for financial activity ; and β’ addressing any challenges restricting access to meaningful financial services. policy and regulatory implications the insights gained through practical exploration should lead to greater regulatory clarity β both for innovators and for regulators β and should be in the broader interest of ensuring a level playing field for all market participants. as financial services regulators in south africa, we follow an activity - based and technology - neutral approach, although we are not technology - blind. it may well be that innovation enabled by dlt may change the risks involved in a particular business page 5 of 6 process, for instance reducing or even eliminating counterparty risk, which may in turn require us to reconsider the appropriateness of specific regulations. regulators need to move with caution when considering developments before they implement any regulatory changes. they should be fully appreciative that regulated entities require clarity before fully committing to entering dlt - based markets. conclusion as i conclude, some may ask whether central banks and regulators will still be relevant in a world based on some of the decentralised principles explored in project khokha. from a regulatory perspective, i think it is unlikely that decentralised markets will be suitable in all instances or that decentralisation will guarantee the achievement of public policy objectives such as consumer protection, financial stability as well as safety and soundness, which fall within the mandates of central banks and regulators. the role of central banks, regulators and policymakers should, however, evolve with financial markets to ensure that we continue to fulfil our mandates in future financial markets
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. central banks, regulators and policymakers can β and indeed must β play an active role in shaping a potential move to dlt - based markets through playing with purpose, playing in a collaborative way, pondering the implications of innovation, promoting responsible innovation for the public good, and informing an appropriate policy and regulatory response. thank you. page 6 of 6
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is more than mean plus / minus 1. 5 standard deviation over mean price change. trimmed mean : the trimmed mean procedure estimate price change of each commodities, arrange them in increasing order, calculate cumulative weight of the series and cut the commodities for which cumulative weight is less than 8 per cent or greater than 92 per cent. median : this procedure computes price change for all the commodities, arrange them in ascending order, calculate cumulative weight of the new series and take the inflation of the first commodity for which cumulative weight is greater than or equal to 50 per cent. reweighting : in this method, we compute price change, calculate standard deviation of price change for wpi - all commodities as well as each commodities over a period of time, calculate historical standard deviation for each commodity as the difference between wpi - all commodities standard deviation and standard deviation of that commodity. then, we calculate final weight as the reciprocal of historical standard deviation, multiplied by initial weight. * and * * indicate that the core inflation standard deviation is lower and significantly different from the standard deviation of headline inflation at 1 % and 5 % level of significance, respectively. iii. way forward 22. the divergence between alternative inflation measures complicates the conduct of monetary policy in india. accordingly, the reserve bank looks at all the measures of inflation, both overall and disaggregated components, in conjunction with other economic and financial indicators, to assess the underlying inflationary conditions. as indicated by governor dr. subbarao, β the reserve bank has been constantly engaged in the refinements of the various price indices and would continue to provide the necessary support to the government to bring about further improvements in the measurement of inflationary conditions β. 23. in the context of monetary policy formulation, it is important to have a robust primary measure of inflation at the national level. in this direction, the compilation of cpi ( urban ) and cpi ( rural ) could pave the way for a representative cpi for the country. there is also a need to augment the new series of wpi with a service price index to improve its overall coverage. in addition, it would be desirable to initiate steps to develop a producer price index ( ppi ) for the country. moreover, the representativeness of the various price indices could be enhanced by frequent updation of the base year so that it reflects the structural change in the economy. thank you. references barman, r. b. and a. k. nag (
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##ness of wpi has reduced as it does not capture the price movement in the services sector which has a larger and increasing share of gdp β about 65 per cent in 2008 β 09. third, old base periods β for wpi ( 1993 β 94 ), cpi - unme ( 1984 β 85 ), cpi - rl ( 1986 β 87 ), cpi - al ( 1986 β 87 ) and cpi - iw ( 2001 ) β fail to capture the rapid structural changes in the economy. 2 divergence between wpi and cpi 8. why do wpi and cpis differ? they differ in terms of their weighting pattern. first, food has a larger weight in cpi ranging from 46 per cent in cpi - iw to 69 per cent in cpi - al whereas it has a weight of only 27 per cent 3 in wpi. the cpis are, therefore, more sensitive to changes in prices of food items. second, the fuel group has a much higher weight in the wpi ( 14. 2 per cent ) than the cpis ( 5. 5 to 8. 4 per cent ). as a result, movement in international crude prices has a greater bearing on wpi than on the cpis. third, services are not covered under wpi while they are, to different degrees, covered under cpis. consequently, service price inflation has a greater influence on cpis. 9. as the retail market receives commodities from wholesale market, it is expected that the change in the prices of commodities in wholesale market would normally transmit to the retail market. granger causality test in a vector auto - regression ( var ) framework using monthly wpi and cpis indicates that at the trend level cpis lag behind wpi by a month. there is also a long run cointegrating relationship between wpi and cpi. therefore, wpi and cpis in india may not move away from each other in the long - run if this observed relationship continues to hold ( chart 1 ). it may be mentioned that the system of national accounts ( sna ) 1993 has been impressing the national statistical agencies for regular updation of the base. in general, revision of base in every 5 years is an accepted principle in major developed and emerging countries. including manufactured food items. chart 1 long - run relationship between wpi and cpi inflation 10. in addition, annual inflation based on wpi, cpi - iw, gdp deflator, and pfce def
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njuguna ndung β u : initiatives, developments and achievements of the kenya government securities market remarks by prof njuguna ndung β u, governor of the central bank of kenya, at the launch of the ftse - nse kenya government bonds index, nairobi, 3 october 2012. * * * the chairman of the nairobi securities exchange ( nse ) ; chief executive, nse, mr peter mwangi ; officials of the ftse group ; capital and financial market executives ; members of the media ; ladies and gentlemen : at the outset let me thank the nairobi securities exchange chief executive for inviting me to participate in this auspicious moment of the launch of the ftse - nse kenya government bonds index. this achievement is indeed critical for the development of a robust domestic financial market in kenya. today β s event comes at a time when we as market players take pride in the success of our efforts in spearheading market development. this collaboration among market players has been instrumental in developing one of the fastest growing bond markets in africa as the kenyan bond market is ranked among the top in africa. ladies and gentlemen : let me take a few minutes to make some remarks on the initiatives and developments that have underlined the achievements of kenya government securities market. over the last one decade, the central bank of kenya in liaison with stakeholders in the financial sector has contributed significantly to the following successes : 1. longer maturity profile of domestic debt instruments : average maturity profile of government securities rose from 8 months or ratio of 76 : 24 in treasury bills to bonds in june 2001 to 5 years 5 months or ratio 20 : 80 currently. with a well - functioning secondary bond market in place, the government no longer faces rollover risks associated with short term debt instruments. 2. benchmark bonds implementation : successful implementation of treasury bonds benchmarks and reopening to increase their liquidity since april 2009 was a critical step towards addressing the bond market fragmentation problem and in the development of a reliable yield curve in our market. about 16 benchmark bonds have so far been reopened bringing into the market more than ksh. 138 billion and providing critical financing for the national recurrent and development budget as per government β s fiscal policy. 3. project - specific ( infrastructure ) bonds β the government of kenya took a bold step in february 2009 to issue the first project / sector specific bond with an aim to fund key infrastructure projects and set pace for public, private as well as supranational agencies
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. ladies and gentlemen, to be sure, our institutions will not become perfect, and their improvement is a permanent process of trial and error. disagreement is a natural human feature, and concerns will be understandable when put into context ; therefore, our workshop will be ready to openly address skepticism as well. we believe that national central banks like the oenb have a responsibility to encourage debate that goes beyond the deliberations of policymakers. not every aspect of the emu reform project that will be discussed during the next two days may seem realistic for the immediate future. in this context, i would like to say a few words about the timing and sequencing of this very important reform project. in particular, i would like to caution against those voices arguing that emu needs to be fundamentally re - built, or even re - established from scratch, within the next two years and arguing that β otherwise it will fail β. this argumentation, in my view, is extremely dangerous as it puts our already substantial achievements of the past years at stake. offering a contrasting perspective, i would like to recall sir karl popper β s piecemeal approach, and strongly argue for a step - bystep approach. as you may know, also the five presidents β report prudently envisages two different stages toward completing emu. in a first step, changes would build on existing instruments and make the best possible use of the existing treaties, thus increasing their probability of being implemented in practice. only in a second stage, in a rather long - term perspective, the five presidents β report proposes measures of a more far - reaching nature, requiring fundamental treaty changes. we should keep in mind that these days the political feasibility of substantial changes to the treaty seems rather limited, as it is not even clear bis central bankers β speeches how many members the eu might comprise in two years from now and as every single member state may veto a suggested treaty change. thus, unrealistic reform proposals cannot be seen as constructive contributions to the project but are rather politically and psychologically dangerous. to put it in the words of ecb board member benoit coeure, β the eu is a union of democracies and it should be more trustful of the power of democracy to produce the solutions that will address the deep causes of the crisis. β monetary integration is a means to the ends enshrined in article 3 of the treaty, which states that the european union β shall promote economic, social and territorial
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short - sighted view. on the contrary, i would submit that excessive volatility not only frightens investors, but also potentially undermines growth and, in so doing, benefits none of us. as a result, i cannot help but conclude that stable - - and not volatile - - markets are in the best interests of both central banks and the financial community. stability in foreign exchange and other financial markets, along with price stability, is vital to the promotion of sustainable economic growth and rising living standards for everyone. reducing the diversion of resources to deal with uncertainty and volatility allows resources to be directed toward more productive uses and, in so doing, promotes long - term growth by increasing the resource base available to the economy. we have seen in high - inflation economies how the transfer of resources away from productive activities and into financial transactions geared toward dealing with inflation uncertainty can negatively affect growth. we have also seen how a proliferation of tax code dodges can decrease the available resource base. if individuals must spend more time engaging in financial maneuvers because of uncertainty, then more of the economy β s productive capacity is transferred to the activity of handling transactions. an expansion of the financial sector that stems from an increasing number of people employed to handle distortions arising from inflation and its attendant uncertainty is growth that diverts resources better employed elsewhere. by contrast, an expansion of the financial sector that stems from growth of productivity is growth that offers benefits to all. the same basic principle applies to the foreign exchange market. foreign exchange rates are fundamentally determined by market forces and should be free to fluctuate as a vital adjustment mechanism for the global economy. however, excessive volatility, like price instability, can diminish resources otherwise available for productive growth. the economy in which we live and work is a global one, and becomes more so every year. regions and industries in need of private capital and investors requiring adequate returns benefit when money can move across national boundaries without excessive risk or hedging costs. foreign exchange markets that are more stable and more transparent ultimately will better allow investors to allocate their capital efficiently, thereby improving global economic growth. change is difficult in any industry and can put enormous stress on individuals. i β m not ignoring this dynamic. however, i am persuaded that, in the long run, what is good for economic growth is in the best interests of the financial community, and, in turn, benefits the individuals that make up that community. just as u. s. industries went through
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of paramount importance. as the recent surge in cases in some states demonstrates, much is still unknown about how the pandemic will play out in the months ahead. that said, there have been signs that we may be past the worst of the extreme economic distress, and early indications of a recovery have started to emerge. as states began to open up and people returned to eating in restaurants and shopping in stores we've seen sizable increases in consumer spending. we've also seen increases in building permits, signaling a turnaround in the construction industry. 3 people have been getting back to work and the unemployment rate has started to edge down. although this improvement is welcome, the economy is still far from healthy and a full recovery will likely take years to achieve. 1 / 4 bis central bankers'speeches one of the things that's been unique about this recession is the lightning speed of events. traditional macroeconomic data sources β like the labor market report and gdp β are published with lags of weeks or months and don't typically allow one to see the changes within the month or quarter. in response, economists at the federal reserve and elsewhere have increasingly turned to analyzing a wide variety of high - frequency data, which β as the name suggests β are published daily or weekly, with only short reporting lags. 4 high - frequency data give us more timely and granular information about what's going on in the economy in between the standard macro data releases. they also help us paint a more detailed picture of people's behavior and how it's changing in the midst of unprecedented circumstances. these data tell us whether small businesses are hiring and whether people are eating in restaurants, staying in hotels, and boarding airplanes. when states started to reopen, signs from both the standard macro data and the high - frequency granular data have been encouraging. together, they indicate that we've likely seen the low point of the downturn and that the overall economy has begun to recover. even in new york, the hardest hit state, we have seen initial signs of a turnaround. surveys of manufacturing and services firms rebounded significantly in june, following record lows in april and may, and revenues of small businesses in new york have gradually picked up as well. 5 in contrast to these positive signs, we are seeing some indications of a slowing in the pace of recovery in states that are currently experiencing large - scale outbreaks. this is a valuable reminder that the economy's fate is in
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turn for a common payment system in order to handle the payments connected with the policy β s implementation. the arrangements whereby all the national systems are interlinked is called the target system. in the new system, a cross - border payment will normally be made in a matter of seconds, whereas at present in the best case it takes a whole day. the main objective of target is to enable the ecb to implement monetary policy but the new system will also provide a new β highway β for commercial transactions. the extent to which banks and other enterprises use the system will probably depend on the price. all the national central banks in the eu area can join target, whether or not their country is in the euro area. but there is a considerable risk of countries outside the euro area being in a worse position, for instance due to restrictions on intra - day borrowing in euro to counter fluctuations in the payment flows. we have vigorously opposed this threat of discrimination but the issue, along with others, has been deferred and will now be decided by the countries that join the euro area from the start. 3. legal framework a clear legal framework for the euro is essential. economic values, for instance in contracts, bank accounts and pension agreements, must be guaranteed during the changeover period from 1999 to 2002, when the euro and national currencies will exist side by side. the so - called continuity of contracts is regulated in one of the euro statutes but amendments to national laws will also be needed. another legal issue concerns the national central banks. as regards the riksbank, the maastricht treaty calls for a more independent statutory status. this means, for instance, that the status of the governor must be clarified ; grounds for his or her dismissal will have to be explicit, e. g. serious misconduct, etc. neither will the riksbank be able to accept directives, except of a statutory nature, from others, e. g. the government. the composition of the governing board may be a problem ; the appointment of members of parliament to the governing board runs counter to traditions in central europe. 4. debt conversion and issues the countries that join the euro area may - and it is also envisaged that they will issue treasury paper denominated in euro. a member state wishing to convert its stock of debt into euro will be allowed to initiate the appropriate measures. a member state may also take steps whereby private issuers and marketplaces ( e. g. the stockholm
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planned for the coming years, according to government decisions that have already been approved, exceed the expenses permitted as per the fiscal rule by nis 12 billion in 2013, nis 22 billion in 2014, and nis 25 billion in 2015. we must remember that this is the situation after the government took the very rare step of raising vat and direct taxes a short time before elections, and this is a very responsible step from the standpoint of the government. at the beginning of 2013, the government will operate based on the 1 / 12 rule due to the fact that the budget has not yet been approved. however, the law also takes into account expenditure on debt repayments, which were very high in 2012 and are expected to be lower in 2013. therefore, we do not expect marked restraint as a result of the 1 / 12 rule. revenues are projected to be below the expenses limitation. therefore, the government will need to close a gap of more than nis 12 billion in 2013. so what will the government do? the limitation on the budget is a law, which can be changed. i hope that the government does not change this law, since we are coming close to an expenditure level of 43. 5 percent of gdp this year, and we must maintain a safety margin in case of a security crisis. the government will therefore need to reduce the level of planned expenditure, and we obviously must remember that there will still be an increase of about 5 percent in expenses in 2013 over 2012, due to inflation adjustments. but the planned expenses are supposed to increase by 10 percent, and this is even before accounting for the ramifications of operation β pillar of defense β with the ministry of defense. i would not want to trade places with the person who will need to explain to some of the public that β we promised, but we didn β t promise to carry it out β. but that is the work of the politicians. the government will need to decide what to do, and it will be very difficult. if i had to choose, i would prefer that the government meet the deficit target as well as the expenditure rule. however, if it is necessary to change the expenditure rule and to increase it, which is not desirable, i prefer that this be done through an increase in taxes and a significant reduction in the deficit, preferably even to slightly below 3 percent. it is not recommended to delay these decisions. the tensions within the government will only increase as we move farther away from the
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ong chong tee : financial economics opening address by mr ong chong tee, deputy managing director of the monetary authority of singapore, at the skbi annual conference on β financial economics β, at singapore management university ( smu ), singapore, 7 may 2012. * * * professor arnoud de meyer, president of singapore management university distinguished guests, ladies and gentlemen, good morning. introduction it gives me great pleasure to join you today at skbi β s second annual conference on financial economics. since its establishment in 2008, skbi has pursued research on topics in economics and finance relevant to asia and the singapore economy. a recent working paper on β testing for multiple bubbles β by phillips, shi and yu, for example, sheds light on techniques for identifying asset price bubbles, and has useful implications for the surveillance strategies of central banks. 1 i am privileged to join an outstanding line - up of speakers including keynote speaker professor sir james mirrlees. i think some of you may be familiar with his groundbreaking work on optimal tax policy, and his modelling of the key role uncertainty plays in economics. the mirrlees review, a recent review of the uk tax system chaired by sir james, offers invaluable practical lessons on optimal tax design, including specific recommendations for the taxation of savings and wealth. structural change in the singapore economy the perfect financial storm of the recent crisis severely disrupted markets and economies, and also shook key tenets fundamental to our understanding of economics and finance. established beliefs in efficient markets, asset price dynamics, and more, have all been called into question. amid the flux in the global financial and economic landscape, singapore also has its own challenges. resource constraints mean that we have to restructure the economy to depend less on the labour force and more on productivity increases for growth. during this period of transition, important adjustments in domestic resource costs and consumer prices are taking place, alongside the usual cyclical developments confronting the economy. dealing with the confluence of factors affecting domestic prices has been particularly challenging, for us at the central bank and equally so for consumers and businesses. cpi - all items inflation, for instance, has been elevated coming out of the recent financial crisis, averaging 4. 1 % since 2010, much higher than the historical norm of below 2 %. mas core inflation, which excludes changes in accommodation and private road transport costs, averaged a lower 2. 0 % over the same period. consumer price pressures have picked up more recently. cpi - all items inflation
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parcel of the market β s equilibrating process to guide the economy to a sustainable growth path. but mas will be vigilant to the risks that these price developments can set off second - round price effects if left unchecked. the appropriate monetary policy response thus depends on the nature and persistence of the shocks that are affecting prices. herein lies the monetary policy challenge : how do we distinguish between the relative importance of demand and supply factors in driving cost and price increases in the economy? on one hand, there could be a risk of keeping policy too loose and unhinging inflation expectations. on the other hand, stamping out inflation aggressively could forestall the important signalling role of relative price adjustments, as well as add to transitional costs, including the negative impact on growth. let me illustrate with the example of ongoing changes in our labour market. while the shift in foreign worker policy is necessary to allow for a more efficient allocation of resources and a more productive workforce, the latter will take time to come to fruition. during this transitional phase, business costs are likely to rise somewhat as a result of tight labour market conditions, before productivity gains catch up to offset the cost increases. in the short term, the prices of some consumer services β especially those with high labour content β can rise and indeed, have increased in the early months of this year. bis central bankers β speeches reflecting these considerations, the tighter monetary stance adopted by mas in april 2012 was a calibrated move to facilitate the ongoing supply - side adjustments, while anchoring inflation expectations. the policy stance was aimed at keeping the economy on an even keel with gdp growth expected to come in at 1 β 3 % this year. we expect that headline and core inflation will ease gradually through the year, but along a somewhat elevated trajectory. over time, the cumulative appreciation of the exchange rate will temper the pace of price increases in the economy. mas is firmly committed to our objective of price stability over the medium term, even as productivity improvements arising from the significant economic restructuring will help to prevent higher costs from fuelling strong price increases. to ease the immediate burden of price and cost pressures faced by households and businesses during this period of transition, the government has implemented a wide - ranging package of relief measures. these include targeted utility rebates that directly alleviate the higher cost of living for households. similarly, smes received a one - off cash grant in this year β s budget to help offset higher business costs. implications for asset
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private entities as well as policy authorities to sincerely examine what they can do from their respective standpoints, and make positive efforts in a specific manner. for its part, the bank will consistently make contributions as the central bank.
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economy following the nixon shock and the plaza accord as well as various discussions occasionally held in japan. policy authorities in each country need to act appropriately taking the above developments in the global economy into account. in this context, i would like to emphasize the following two points. the first is that the first responsibility of policy authorities in each country is the stability of their own economy, and this holds true in any era. second, however, the way to fulfill this responsibility has changed with the advance in economic and financial globalization. i feel that in the conduct of monetary and foreign exchange policies, it has become increasingly necessary to be aware of the global mechanisms of how one β s own policies and actions affect the world economy and international financial markets and of how these in turn affect one β s own economy. in this context, i think that japan β through the experiences and lessons it holds, such as with regard to balance sheet adjustments, quantitative easing, and the conduct of policy following the plaza accord, which are all relevant to the various problems facing advanced and emerging economies today β can actively participate in discussions and contribute to global economic stability. ii. developments in foreign exchange markets while bearing in mind the developments in overseas economies, i will next touch upon developments in foreign exchange markets. since summer 2010, the u. s. dollar has depreciated to the lowest level since the 1970s in terms of the trade - weighted nominal effective exchange rate, due mainly to market uncertainty about the future of the u. s. economy and associated market expectations of monetary easing ( chart 2 ). the yen at one time appreciated to near 80 yen against the dollar. however, following the fed β s decision of additional monetary easing in early november, the yen has depreciated somewhat against the dollar. meanwhile, with regard to exchange rates vis - a - vis asian currencies, the yen has been following more or less the same trend against the chinese renminbi as against the u. s. dollar, reflecting china β s foreign exchange rate policy. against the korean won, the yen appreciated around spring 2010, but has been more or less unchanged since then ( chart 3 ). in the short run, the appreciation of the yen depresses the revenue and profits of exporting firms, but the effects differ for each currency depending on the structure of trade and are not uniform. for example, japan and korea have recently been in heightened competition in the global market for many final goods such as electronic appliances and automobiles.
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targeting β puzzle β by returning cpi inflation to 2 % at a specific point in time does not, of itself, represent a comprehensive or complete solution to the underlying problem of achieving price stability. it is not β job done, we can now move on β to other issues. on the contrary, to paraphrase thomas jefferson : the price of achieving meaningful price stability is eternal vigilance. for one of the characteristics of a β wicked problem β is that it does not a have a β stopping rule β. in other words, it is not possible to say that a β wicked problem β has been definitively solved, once and for all. converting the β wicked problem β into a β puzzle β appears to make resolution more achievable and likely, but potentially at the risk of missing a key aspect of what makes the underlying problem so challenging. on the mpc, we are focused on returning cpi inflation to the 2 % target in line with our remit. given our mandate, that is what we should, have to and are doing. in parallel, we need to recognise that returning inflation to target is not the end of the story. we have to keep it there on a lasting and sustained basis. even if we return to more benign times in the coming years, the bank of england will still need to make investments in human, analytical, technological and institutional capital to ensure it has the capacity and capability to meet its price stability mandate. and on the basis of those investments, it will need to ensure that shocks that create either inflationary or disinflationary pressures in the future are met with policy responses that support price stability. many of you are studying economics ( or related disciplines ) here at warwick. at the bank, we are always seeking smart and dedicated recruits that want to contribute to our work. even after the mpc has brought cpi inflation back to 2 % β as i am sure it will β you can be sure that there will still be plenty of interesting and important work for you to do at the bank if we succeed in attracting you to threadneedle street. the views expressed in this speech are not necessarily those of the bank of england or the monetary policy committee. i would particularly like to thank saba alam, andrew bailey, harvey daniell, swati dhingra, jonathan haskell, catherine mann and martin seneca for helpful comments on earlier drafts of these remarks. the responsibility for all remaining errors is my own. endnotes 1. friedman
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20th march last year. at first, the outflows were met by running down their holdings of cash, but as the outflows increased, they sought to liquidate some 2 / 6 bis central bankers'speeches of their bank assets β cds and cp. but they found that the market for those assets β which typically comes primarily from dealers buying back their own paper β was closed. the dash for cash meant that the tide was flowing fast against them. as the regulatory system currently works, if mmfs β liquid asset ratios fall towards prescribed thresholds, and they are unable to top up their liquid assets ( cash ) through sales, they are able to β gate β or impose fees on investors, in other words decline to provide immediate liquidity. as with banks, the broader danger of this situation β which is a threat to financial stability β is that such a problem in one fund could trigger contagion to other funds, through fear that they might have the same problem, and thus lead to a highly destabilising run on money market funds. these thresholds can, therefore, also affect the behaviour of fund managers, making liquidity buffers not usable in times of stress, for fear this would fuel investors β desire to run. it is also important to note that another consequence of the rising demand for cash, and the failure to meet that demand by selling assets, was a sharp rise in money market rates. the rise was sharpest at longer money market - tenors, but there was also a pickup in overnight repo rates. this was a particularly serious sign of market dysfunction in what are core markets, and a serious challenge to our ability to implement monetary policy by keeping these rates broadly aligned to the official bank rate. it resulted in an increase in the cost and reduction in the availability of credit β to the financial system, other companies and households β precisely at the time they needed it most. there was therefore a serious threat to both monetary policy and financial stability, in other words both of the core purposes of a central bank. it was an existential moment. we took two actions which eased the pressure, and did so quickly. first, on 19th march the mpc decided to buy gilts in large size and at high speed. at its peak the pace of gilt purchases reached Β£13. 5bn per week, more than twice as fast as in early 2009. the use of this broad monetary policy tool was warranted given the widespread nature of the dash
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the financial and macroeconomic stability in the country. the bnb was to determine the moment, after which the convergence grows into a self - propelled process of struggling for a market share. such a transition entails considerable risks, as it does not lead to sustainable growth rates of both financial intermediation and economic activity and employment. therefore, since the beginning of 2004, the bnb started a process of phasing in measures ( primarily prudential and administrative ) aimed at slowing down bank credit growth to a sustainable level, which would not put to risk the stability of the economy. data indicate the central bank β s policy resulted in a change in commercial banks β behaviour and reduced the growth of bank lending to 32. 4 % at the end of 2005. in the current year, while sustaining the effect of already implemented measures, we expect banking credit to grow with a rate below or near 20 %. as i mentioned earlier, the dynamics of banking intermediation in the country cannot be contemplated in isolation from the process of free movement of capital and the accompanying dynamics of the balance of payments current account. intuitively, many economists tend to seek direct cause and effect relation between bank credit growth and the current account dynamics. they rely on the logic that the growth of banking intermediation increases the possibilities for consumption and investment, which combined with the existence of free trade and the slower response of domestic supply leads to the accumulation of external imbalances. such reasoning is to a great extent rational, but it should not lead, as is clearly manifested in the bnb β s policy, to defining the simple rule that the balance of payments dynamics can be directly controlled through controlling the banking credit rates of growth. this clarification allows me to turn to the next issue i would like to discuss, namely the dynamics of the country β s external position. the stable macroeconomic environment in bulgaria, plus the sustainably high rates of economic growth and the prospects for its membership in the eu brought in an increasing amount of investments. their share in the gdp in the first three quarters of 2005 increased to 26. 6 %, which marks the highest level reached since the beginning of economic reforms in the country. the growth of investments and the concomitant improvement of employment, increase both the current incomes of households, and their expected future incomes, which is associated with increased consumption and decrease in the savings in the economy. as a consequence of these processes, the gap of the balance of payments current account widened
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resident corporations and financial institutions deciding that the rmb served them well as a unit of account, means of payment and store of value for their international transactions. i β m not sure any of us are in a position to predict if and when this will happen. however, i feel that we can say with some confidence that the landscape of the offshore rmb market will change in two respects. first, we are likely to see the increasing maturity of the offshore rmb market, both in terms of the depth and breadth of the market and the efficiency of price - setting and allocation of rmb funds. in more granular terms, this means we will see an expansion and greater diversity of rmb financial activities : up till now, the intermediation of rmb funds has been primarily about placement of bank deposits by personal and corporate customers. in future, it will move more towards issuance and investment of bonds and a wider range of other financial instrument and products. at the same time, i would expect that in future there will be more active borrowing and lending of rmb funds among banks. if so, this would lead to the emergence of a rmb interbank funding market. in addition, i would expect to see increased rmb trading in the forex market, which in turn should lead to the development of more sophisticated instruments. the second change to offshore rmb markets we can confidently expect is the further development and strengthening of links with the onshore rmb market. as a critical piece of infrastructure that supports the internationalisation of rmb, the offshore rmb market cannot operate in isolation. given continued liberalisation of cross - border rmb transactions by the mainland authorities, we will see more and wider channels for the flow of rmb between the onshore and offshore rmb markets. this will be critical for the sustainable development of the offshore rmb market and, thus, the future role of hong kong. role of hong kong and this brings me now to my third point, the development of hong kong as the offshore rmb business centre. let me start by saying that hong kong β s role is not an accident or a result of chance. it stems from our city β s historical and indispensable role facilitating the opening up of the mainland economy. since china β s liberalisation and reform began three decades ago, hong kong has served as the global gateway for trade and investment with the mainland. even to this day, hong kong still intermediates some 30 % of the
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to improve management and speed up technological innovation, reduce consumption of resources and energy, and promote the restructuring and sustainable development of the economy. reform of the exchange rate regime and adjustment of production factor prices substitute and complement each other. they can be implemented in parallel. unwavering efforts should be made to further reform the exchange rate regime and the pricing mechanism of production factors to consolidate the foundation for a balanced and sustainable economic development.
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research, and welcome constructive proposals from the participants of the conference on promoting china β s economic and financial theoretic study.
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central bank of chile. figure 5 corporate bond and long - term interest rates ( percent ) jan. 08 may 08 ee. uu. sep. 08 chile jan. 09 chile corporate ( 1 ) nominal 10 - year interest rates in the u. s. ( 2 ) interest rate on central bank's bcu - 5. ( 3 ) interest on domestic 5 - year corporate bond. sources : central bank of chile and lva indices. 3. 0
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, as used to be the case in the past or still is in some large commodity exporters. this is attributed to the significant advances we have made in our foreign exchange, fiscal, and monetary policies. the importance of this cannot be overemphasized, because said progress in macroeconomic policies has allowed us to implement unprecedented expansionary policies that should help chile to overcome successfully the international crisis that hit the world at large in recent months. i will end with some final remarks. economic growth and natural resources one paramount issue in our country β s development is its concentration of natural resources and, very specially, of copper ore. the world evidence shows that there are major differences in growth rates among natural resource abundant economies. one example is botswana, rich in diamonds, which early this decade could account for nearly 40 % of gdp ( acemoglu et al., 2003 ). this country β s per capita gdp grew by an average 6. 6 % per year between 1960 and 2007, which meant that in 2007, its per capital gdp was 19 times the one in 1970. an example to the contrary is the case of nigeria, rich in oil, yet virtually stagnant. its per capita gdp increased by an average 1. 2 % per year over the same period, which meant that in 2007 nigeria had barely 1. 5 times its per capita gdp of 1960. it has been found that, on average, countries rich in natural resources grow less than those that are not ( figure 1 ). based on this evidence, much research effort has been devoted to unraveling the link between economic growth and natural resource abundance, and that is what i intend to briefly cover now. international evidence and discussions on the relationship between natural resources and economic development are varied. some economists, mainly sachs and warner ( 1995, 1997, 2001 ), have argued that rather than a blessing, abundance of natural resources is a curse. the reasons for this are that natural resources can lead to rent - seeking activities diverting scarce resources such as human and physical capital away from activities that favor growth. at the same time, natural resource abundance may cause a persistent real appreciation that may weaken the rest of tradable goods sectors, which is known as the dutch disease. a natural conclusion of these works is that in countries that prevent rentseeking, with human capital abundance, access to credit and macroeconomic policies that promote stability, these damaging effects can be avoided. subsequent studies have been oriented in that direction. several
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accordingly the plan aims for an eclectic mix of development of capital market, more specifically debt market, besides exhorting bank finance. 15. being from the reserve bank, let me ponder more over banks β role in the coming years. bis central bankers β speeches banking sector reforms 16. leading economists most often cite the importance of sound financial sector reforms as being central to a healthy banking system that aids economic growth. india is the largest country in south asia with an extensive financial system characterized by varied financial institutions, comprising of both banks and non - banks. banks are the mainstay of the financial system with bank assets comprising, on average, around 70 percent of gdp during the postreform period. the commercial banking segment comprises of 26 public sector banks in which government has majority equity stake, 20 private sector, including 7 de novo ( which became operational after initiation of economic reforms in 1991 ) private banks, although rbi has recently done away with this distinction and over 40 foreign banks, which operate as branches. 17. prior to the inception of financial sector reforms in 1991, the indian financial system can best be characterized as highly regulated and financially repressed. the prevalence of high reserve requirements, interest rate controls and allocation of financial resources to predesignated sectors adversely affected banks β resource mobilization and allocation. 18. the period 1992 β 97 laid the foundations for reforms in the banking system. the reforms comprised of five major planks : cautious and proper sequencing, mutually reinforcing measures, complementarities between banking reforms and other associated policies ( e. g., monetary, external, etc. ), developing financial infrastructure and nurturing and developing financial markets. some of the salient reforms undertaken in the financial system, included, among others, lowering of statutory reserve requirements ; liberalizing the interest rate regime, first on the lending side and later, on the deposit side ; infusing competition by allowing more liberal entry of foreign banks and permitting the establishment of de novo private banks ; institution of prudential measures ( capital adequacy requirements, income recognition, asset classification and provisioning norms for loans, exposure norms, accounting norms ) and enhanced disclosures and levels of transparency in their annual audited statements to promote market discipline. 19. over the period of reforms beginning 1992 through 2013, real bank assets have grown at a compound annual rate of about 10 % ; the growth rate of deposits and credit both in real terms, during the same period has been roughly of the order of 10
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executing the work, with labour inputs from the villagers themselves so as to keep costs and consequently the loan amount low. there is no subsidy element in the financing. while returning from this village, we passed through another village. it was dark and suddenly as the cars headlights hit the road, we saw women from either side of the road getting up hurriedly. this image starkly brought home the meaning of the mdgs for ensuring human dignity. these cases represent the progress that can be made in achievement of mdgs where there is local leadership, community participation and involvement of the financial sector with the government playing a facilitating role. what is significant is that in both these cases there is no subsidy or budgetary support. the question is whether these are replicable and can we achieve the desired scale? the answer is yes provided the three pillars, viz., the state government, the formal financial system and the community based organisations work together. without connecting rural roads, there is very little that can be achieved by the formal financial system or ngos. hence it is appropriate that due emphasis is being placed on rural roads and rural connectivity. this has to be an area for priority for state funding. the shg movement in india has enabled social and economic inclusion of women. the shg - bank linkage movement where shgs are linked to banks in a gradual way - initially through savings and later through loan products - has been able to ensure financial inclusion to a certain extent. however, there is a need to increase their credit absorptive capacity as a large number of shgs linked to the banking system are utilising the credit only for consumption purposes. they have to migrate to employment generating activities so as to be able to fully reap the benefits of economic freedom. nevertheless, the shgs and in many cases shg federations have played a pivotal role in the creation of social capital and empowerment. there are hundreds of examples where the shgs have worked with ngos and government agencies to bring drinking water to their villages, conduct regular health camps, organise adult literacy camps and generally improve the social status of members. for example, the shg federations active in tamil nadu have been able to provide life insurance products through an internally administered scheme. in kerala, the kutumbashree model set up by the government covers a variety of financial services as also health insurance. the friends of women's world banking ( fwwb ) have started a social security project in association with micro finance agencies / ngos
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its interest in spanish economic history through its annual research grants programme, financing the collection of estudios de historia economica ( or, in banco de espana parlance, β the red books β ). there are now 72 of these studies, the first ones dating back to 1980. the aim of the banco de espana with this collection is to disseminate economic history papers written by its own staff or by researchers to whom it has awarded grants, in order β to enhance knowledge of spanish economic history, paying particular attention to quantitative aspects β. a detailed review of the collection shows that both spanish and foreign historians have collaborated in the project, covering an agenda that includes modern and contemporary issues. although the collection is open to all kinds of quality research, monetary and financial topics predominate. now, i would like to say a few words about our library, which has played a key role in our economic history studies and research. it was set up in 1931, and from the first half of the 1970s professor rojo promoted the formation of a highly specialised library, stepping up the acquisition of new collections and the modernisation and expansion of its services. 3 / 4 the most prized section of the library, the so called fondo de especial valor, comprising more than 16. 000 pieces from the 14th to the 19th centuries ( now in the process of digitalization ), is a testimony to economic thought and practice in spain and europe ; its content encompasses 16th century merchants β instructions, writings of the school of salamanca, the publications of the 17th century arbitristas and the works of 18th century enlightenment thinkers. the collection of royal decrees and proclamations ( around 4, 000 documents, including the 1745 - 1796 compilation ordered by the count of campomanes ), dealing mainly with fiscal, mercantile and monetary matters, enriches the library β s scope with the perspective of legislation topics. the fact that these collections are complemented by others, such as the goldsmiths β - kress library of economic literature and the king β s college collection of the papers of j. m. keynes, both on microfilm, makes the library an excellent repository for undertaking any study of economic history. let me conclude with a few words about today β s iii seminar of economic history that we are opening now. as you can see in the programme, we have about thirty participants from a dozen universities, central banks and research centres. economists from the banco de espana are participating as authors and also as discuss
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meant for the long - term. β’ cyclical measures include mas β ltv limits and mof β s stamp duties. they are designed to prevent households from over - extending themselves in purchasing property during periods of rapid price increases or elevated prices. cyclical measures can be recalibrated according to market conditions. 29 it is too early to unwind cyclical measures as the risk factors have not changed. bis central bankers β speeches β’ property prices remain at elevated levels. prices went up 60 % over last four years but have declined by just 3. 3 % over the last three quarters. β’ global interest rates are still at historical lows. relaxing property measures in the current easy liquidity environment may set off another spiral of price increases. β’ the level of debt among highly leveraged households remains high. for these highly leveraged households, reducing the level of leverage will take time. they need to work with their banks and commit to debt repayment plans. 30 hence on the whole, mas β assessment is that it is premature to ease property cooling measures now. it is important that we secure the gains we have made in stabilising the market and restoring financial prudence. comprehensive measures to safeguard interests of consumers of financial products 31 on the financial regulatory and supervisory front, i will focus on measures being taken to safeguard the interests of consumers of financial products. 32 several measures were announced recently and some will be announced soon. let me set the context for these measures β motivating factors, overall approach, and how the various pieces fit together. 33 three trends are shaping market for financial products. β’ low interest rates globally have spurred investors to seek better returns. β’ growing affluence and financial awareness have generated greater demand for a broader range of retail investment products. β’ there has been an increased sophistication and variety in financial products offered to retail public. 34 against this backdrop, mas is taking a multi - pronged approach to safeguard consumer interests. first, we are enhancing regulatory safeguards for retail investors in unconventional investment schemes. second, we will facilitate retail access to simple, lower cost products. third, mas will help to empower consumers with enhanced disclosure and information access. fourth, we are raising standards of financial advice to consumers. 35 mas issued a consultation paper earlier this week with proposals on the safeguards for retail investors in unconventional investment schemes. let me elaborate here on our thinking and rationale. 36 many retail consumers have ventured into unconventional and unregulated
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on productivity, has been a key contributor to global growth and prosperity since the second world war. openness to trade brings many benefits to the supply side of the economy. these include : larger markets, greater specialization opportunities, and the increased ability to exploit economies of scale and scope ; faster transmission of technology and innovation ; and greater competitive pressure on domestic firms to increase their productivity. collectively, these forces lead to a more efficient allocation of a country β s scarce resources β one that is more closely aligned to its international comparative advantage. as a consequence, consumers can benefit from lower prices, higher real incomes, and greater variety and quality of goods and services. increased openness may also reduce wasteful rentseeking behavior on the part of protected industries and the related costs of corruption. these benefits from open trade are very evident in india. academic research has found substantial gains for india following its dramatic trade reforms in the 1990s, which benefited consumers via lower prices and firms via higher markups. these higher profit margins spurred innovation and provided funds for the development of new products. looking ahead, the upcoming implementation of the goods and services tax in india β which will create a common market internally β is expected to provide many of the same benefits as trade liberalization does internationally. openness to trade has certainly played a large role in the economic ascent of asia. following the rise of japan, korea, taiwan and others, fast growth in china and india has lifted hundreds of millions of people out of extreme poverty β an unprecedented feat in human history. the benefits 2 / 6 bis central bankers'speeches of economic integration and other reforms are exemplified in india β s higher growth rate since the introduction of market reforms in 1991. growth has averaged 6. 5 percent annually in the postreform period, compared to about 4 percent annually over the prior 40 years. indeed, india is the fastest - growing major economy in the world today. reflecting these gains, a number of emerging market countries have been strong supporters of open trade, a sign of how much the world has changed in recent years. a few examples can help to illustrate some of the benefits of globalization. india β s green revolution β which helped to greatly increase its agricultural productivity and food security β was facilitated by u. s. technology and scientists working with their indian counterparts. similarly, as is well known, indian engineers and entrepreneurs have played a key role in the technology sector β s tremendous achievements in recent decades and now lead some of america β s largest companies, including google
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the european union integration worked consciously to induce a level of economic integration in europe that would induce conditions that more closely met the economist's test for an optimal currency area. for most of the emerging markets today, in contrast, the challenge is to establish the conditions that will enable them to live more comfortably in a world where their exchange rates will adjust more freely in response to changing fundamentals. as these economies become more open to capital flows, they will necessarily find it more difficult to occupy the tenuous middle ground with an exchange rate regime that is neither fully fixed nor flexible, but managed in a way that closely tracks the value of the dollar or carefully constrains fluctuations against the dollar. this does not mean that these countries can be indifferent to exchange rate movements or that the exchange rate is irrelevant to the conduct of monetary policy. for many small open emerging economies, price stability and exchange rate stability are obviously intertwined, and a monetary rule that responds effectively to inflation pressure cannot afford to overlook the signals coming from the foreign exchange market. but attempts to target a particular level for the exchange rate or the slope of the change in the rate in response to different conditions will, as the capital account becomes more open, inevitably, come with substantial risks to monetary and financial stability. managing the transition to a more open capital account and a more flexible exchange rate regime is not a simple task. these transitions need to be handled with care and attention to the development of a strong institutional framework for monetary policy and the financial system. the more successful transitions came in contexts where the monetary authorities were independent of political constraint, where balance sheet problems and currency mismatches in the government and the financial system were not acute, where the prevailing legal framework provided reasonable protections for property rights and the enforcement of contract, and where there was effective supervision of the banking system. where these conditions were weaker, the transitions from fixed exchange rate regimes were more traumatic. these conditions seem exacting, and the understandable need for caution often is invoked in defense of protracted and very gradual transitions. a certain degree of caution is wise : there is a great deal of risk in a poorly managed and premature shift toward flexibility. but there is risk in gradualism too. delay magnifies the costs of living with the distortions caused by a managed rate. once relaxed, exchange and capital controls are both difficult and costly to reintroduce, and even relatively modest steps back from an open regime can be damaging to confidence and credibility, without buying
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mohamed s fofana : benefits of microfinance in sierra leone speech by mr mohamed s fofana, deputy governor of the bank of sierra leone, at the official opening ceremony of the procredit bank ( sl ) limited, freetown, 1 february 2008. * * * madam chairperson ministers of government members of the diplomatic corps members of the board of directors, senior management and staff of the procredit bank ( sl ) limited heads of banks and other financial institutions colleagues from the fourth estate distinguished ladies & gentlemen : i am happy to be here this afternoon to address this distinguished audience on the official opening ceremony of the procredit bank ( sl ) limited. the bank of sierra leone issued a licence to procredit bank ( sl ) limited to conduct banking business in sierra leone on 1st august, 2007, and the bank opened its doors on 3 august 2007. its activities, since that time, have been largely focused on microfinance promotion ; taking deposits from and giving credits to small businesses. this is an important mile - stone in sierra leone β s poverty reduction drive, which is consistent with government β s desire to make the microfinance sub sector of the financial industry viable and responsive to the needs of the vast majority of sierra leoneans. madam chair, distinguished guests, the benefits of microfinance are numerous and well documented, especially as they relate to a country β s effort in reducing poverty. i cannot go through all such benefits this afternoon. i will however attempt to highlight a few. credit to small business will enhance the ability of poor households to increase incomes, build assets and reduce their vulnerability in times of economic stress. with better access to micro credit services on a continuing basis, the poor, particularly women, become more active partners and more importantly, pro - active partners, in the development process. madam chair, though micro credit has been used in various forms in the recent past to address the needs of the most vulnerable in post - conflict sierra leone, the providers of the micro credit have had an uncoordinated framework with each implementing its own scheme. this sometimes created an unnecessary duplication and waste in the use of scarce resources. thus, in october 2003, sierra leone adopted a national micro finance policy which provides the fundamental framework and direction for stakeholders operating in the microfinance industry. recognizing the importance of micro finance in reducing poverty, and in anticipation of the growing demand for micro credit products, procredit bank ( sl ) limited decided to increase
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of emerging risks in the traditional banking system that take into account indirect exposures to the non - banking system. - adapt and / or develop methodologies and models to assess the spillover effect of non - bank lenders in times of stress, as well as considering them in traditional stress test assessments. some context on oecd support to the use of cbm : a recent oecd document ( de crescenzio et al., 2015 ) emphasizes that mainly countries facing the β original sin β use cbm. chile is one of them. this issue is important because measures of the β original sin β come from panizza β s work, who will be part of the panel ( eichengreen et al., 2002 ; hausmann and panizza, 2003 ). based on the previous point, it is worth clarifying what kind of cbm are in place in chile. in addition, does the fact that in chile almost all - international bond issuing is in foreign currency represents a constraint / vulnerability for the local financial system? page 1 of 12 central bank of chile september 2019 - financial literacy and educational programs to support better decisions at the household level. 2. background in chile, the current approach to deal with potential vulnerabilities associated to volatile capital flows can be seen as orthodox, as we rely heavily on the importance of a flexible exchange rate regime and capital account openness, in conjunction with a consistent monetary and fiscal policy framework, and a sound banking regulation and supervision. however, it is important to remind to the public that we have come a long way. in fact, nearly 40 years ago, chile faced one of the world β s costlier financial crises precisely because the lack of several of these elements. in particular, fx exposures at a heavily leveraged and unsupervised banking sector contributed to the spread of the banking crisis after the fixed exchange rate regime collapsed in the early 1980s. as a result of this experience, banking regulation and supervision was substantially upgraded. in 1986, the general banking law introduced limitations on currency mismatch, constraints on related party lending, and restrictions for banks to receive goods instead of liquid resources ; all of them, elements that were common practice before the 1982 crisis. paradoxically, what could be considered harsher regulation did not hamper financial deepening. instead, it fostered solvency and credibility of the banking system and allowed its healthy development in the ensuing decades. at the core of this
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easing, deleveraging activities, and financial sector resolution in the major economies. in addition, bis central bankers β speeches this has been reinforced by the building of buffers during the good times. financial intermediaries remain well capitalised with strong buffers, while the international reserves remain sufficient to deal with surges and reversals in capital flows. a more recent development in this decade is greater regional collaboration and cooperation. asia is well ahead in the areas of surveillance arrangements, financial safety nets, and crisis management. these frameworks and arrangements have been built up during the good times. information sharing and the establishment of regional arrangements and platforms, including the building of regional financial infrastructures and markets, are not only to facilitate the efficient intermediation of financial resources, but also to safeguard financial stability in the region. this trend paves the way for coordinated policy actions to manage and mitigate the risks and vulnerabilities to the region. conclusion the global economic and financial environment remains highly dynamic and uncertain. while emerging asia is unmistakably contributing to reshaping the configuration of the global economy and the international financial system, the fundamental underlying factors driving this global transformation needs to be continually reinforced. it will require our own continuous economic and financial transformation. most important will be to ensure the continued economic flexibility of the region to adjust to the rapidly changing global and regional conditions, the strengthening of the connectivity among the emerging economies in general and within the asian region, and to boost further the resilience of the region to withstand any destabilising developments. the asean economies have a distinct advantage. in terms of their economic flexibility, their size and stage of development provides the prospects of having greater agility to adjust to the rapidly changing conditions. in terms of the connectivity, the asean region is a highly cohesive region. historically, it goes a long way back to the 1950s. cooperation and collaboration are evident in most areas of economic activity and in the financial sector, in both the public and private sectors. policy - makers participate in several regional agreements and arrangements. the large economies have the opportunity to leverage on the potential synergies from a greater interface with the asean grouping. to realise the asian potential, continuing the transformative momentum and enhancing the cohesiveness of the region would not be complete without ensuring that the benefits of development is widely shared. experience has shown, even in the advanced economies, that when inequality is high and significant, instability follows. greater inclusiveness within economies and across
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adnan zaylani mohamad zahid : leading in a disruptive world revolutionising takaful keynote address by mr adnan zaylani mohamad zahid, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the takaful rendezvous 2019 β leading in a disruptive world β revolutionising takaful β, kuala lumpur, 8 october 2019. * * * i am delighted to join all of you today at the 2019 takaful rendezvous. this is an important gathering for the finance and business community to exchange ideas on the opportunities and issues facing the global takaful industry. our backdrop today is of an economy and environment that has seen remarkable changes and challenges that emerge in just a short period of time. while we have thought the financial crises of recent times were safely behind us, the global and domestic economy has been beset with an escalating trade war that has rippled far. this has affected the trade and investment climate worldwide and could bring about large downside risks. malaysia β s economy will not be spared from this fallout. at the same time, we have a growing sense of urgency to deal with environmental challenges. globally, the focus is shifting towards climate change and sustainability. closer to home, we have just experienced an episode of the country β s now, alarmingly, annual haze seasonality. undoubtedly, each one of us can feel the impact and risks from environmental degradation on the quality of our daily lives. it will not be long from the time when we can clearly see its negative impact to the economy and financial stability. on a positive note, technology has transformed virtually every aspect of our lives β the way we interact with each other, consume our needs, follow the news, and navigate our movements. by 2018, more than half of the global population have become internet users. here in malaysia, almost 90 % of malaysians are internet users, and more than half of these users conduct banking and financial activities online. digitisation and technology adaptation is already making significant inroads in providing new solutions going forward and has become a key strategy for us to enhance financial inclusion and also protection. while this means financial institutions now have greater avenues to reach consumers, it also entails greater exposure to emerging vulnerabilities and risks such as cyber and technology risks. this needs to be properly managed, otherwise it can potentially trigger grave systemic consequences. in addition, there are also the gradual and structural changes that we cannot ignore.
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mario draghi : ecb press conference β introductory statement introductory statement by mr mario draghi, president of the european central bank, frankfurt am main, 5 september 2013. * * * ladies and gentlemen, i am very pleased to welcome you to our press conference. i will now report on the outcome of today β s meeting of the governing council. based on our regular economic and monetary analyses, we decided to keep the key ecb interest rates unchanged. incoming information and analysis have further underpinned our previous assessment. underlying price pressures in the euro area are expected to remain subdued over the medium term. in keeping with this picture, monetary and, in particular, credit dynamics remain subdued. inflation expectations for the euro area continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. at the same time, real gdp growth in the second quarter was positive, after six quarters of negative output growth, and confidence indicators up to august confirm the expected gradual improvement in economic activity from low levels. our monetary policy stance continues to be geared towards maintaining the degree of monetary accommodation warranted by the outlook for price stability and promoting stable money market conditions. it thereby provides support to a gradual recovery in economic activity. looking ahead, our monetary policy stance will remain accommodative for as long as necessary, in line with the forward guidance provided in july. the governing council confirms that it expects the key ecb interest rates to remain at present or lower levels for an extended period of time. this expectation continues to be based on an unchanged overall subdued outlook for inflation extending into the medium term, given the broad - based weakness in the economy and subdued monetary dynamics. in the period ahead, we will monitor all incoming information on economic and monetary developments and assess any impact on the medium - term outlook for price stability. with regard to money market conditions, these have also been influenced by a gradual reduction in excess liquidity. repayments of funds taken up in the context of the three - year longer - term refinancing operations reflect improvements in financial market confidence, some reduction in financial market fragmentation and the ongoing deleveraging by euro area banks. we will remain particularly attentive to the implications that these developments may have for the stance of monetary policy. let me now explain our assessment in greater detail, starting with the economic analysis. following six quarters of negative output growth, euro area real gdp rose, quarter on quarter, by 0
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slower pace of quarter - on - quarter real gdp growth in the second half of this year than in the first. looking further ahead, the conditions remain in place for the euro area economy to grow at solid rates around potential, although some volatility in the quarterly growth rates is likely to emerge around the turn of the year, mainly reflecting the impact of an increase in indirect taxes in a large euro area country in january 2007. global economic activity has become more balanced across regions and remains robust, thereby providing ongoing support for euro area exports. investment is expected to remain dynamic, benefiting from an extended period of very favourable financing conditions, balance sheet restructuring, accumulated and ongoing strong earnings, and gains in business efficiency. consumption growth in the euro area should also strengthen further over time, in line with developments in real disposable income, as employment conditions continue to improve. risks to the outlook for economic growth are broadly balanced over the shorter term, taking into account, in particular, the recent slowing down in the us economy on the one hand and the recent fall in oil prices on the other. the oil price decline β if it were to prove lasting β has the potential to lead to somewhat stronger demand and output growth than embodied in our current baseline scenario for activity in the coming quarters. over the longer term, risks to growth continue to lie on the downside, relating mainly to the possibility of a renewed increase in oil prices, fears of a rise in protectionist pressures, especially after the suspension of the doha round of trade talks, and possible disorderly developments owing to global imbalances. as regards price developments, according to eurostat β s flash estimate annual hicp inflation was 1. 6 % in october, after having declined to 1. 7 % in september from 2. 3 % in august. the recent decline in inflation is the combined result of favourable base effects, given in particular the strong rise in oil prices a year ago, and the recent significant fall in oil prices. while the outlook for energy prices remains uncertain, on the basis of current energy prices and the higher quotations on futures markets, inflation rates are likely to increase again in the next few months and early 2007. as a consequence, we expect a high degree of short - term volatility in the annual hicp inflation rate. looking through this volatility, however, hicp inflation will remain elevated at a level above 2 % on average in 2006 and is likely to remain so in 2007. risks to
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operations lengthened, running for ten months in bill - purchase operations at the final stage of the quantitative easing policy. β quantitative easing β is often used in a rather vague manner, but the policy action we adopted can be regarded as a pure form of β quantitative easing. β third, the bank adopted β credit easing β in the current terminology. the assets purchased included asset - backed securities ( abss ) and asset - backed commercial papers ( abcps ). fourth, the bank made a commitment to continuing with the zero interest rate policy and the quantitative easing policy. the conditions for commitment were expressed as β until deflationary concerns are dispelled β at the time of the zero interest rate policy and β until core cpi inflation becomes stably zero or above β at the time of the quantitative easing policy. fifth, the bank took unprecedented measures to secure the stability of the financial system, including purchases of stocks held by financial institutions. you may find the striking similarities between the policy measures formerly taken by the bank of japan and those currently taken by central banks in major countries. i never imagined that a host of unconventional measures taken by the bank of japan would be adopted by other central banks just a few years later. i also guess that my colleagues at central banks in other countries never imagined employing such policy measures. of course, such measures are not perfectly identical, reflecting the differences in the structure of financial intermediation and severity of stress in financial markets, as well as the differences in legal and social restrictions on policy measures available for central banks. notwithstanding such differences, the aforementioned striking similarities stand out. it is quite natural that a central bank facing a financial crisis takes similar measures, because a central bank, after all, pursues the same objectives with the same capacity, that is, the capacity to adjust the amount of liquidity in the economy. 3 among the papers contributed to the conference, goodfriend ( 2009 ) argues central banking under financial turmoil by classifying central bank initiatives into monetary policy, credit policy, and interest rate policy. importance of liquidity this leads me to discussing liquidity, which, i think, is the most important concept in understanding the current financial crisis, though it is hardly possible to sort out a single factor. during the expansion period of the credit bubble, it was complacency based on unfounded expectations about the unlimited availability of liquidity behind the aggressive risktaking attitude. by contrast, during the period of bubble bursting, it was fear of the
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haruhiko kuroda : monetary policy β its effects and implementation opening remarks by mr haruhiko kuroda, governor of the bank of japan, at the 2015 bojimes conference, hosted by the institute for monetary and economic studies, bank of japan, tokyo, 4 june 2015. * i. * * introduction good morning, ladies and gentlemen. it is my great honor to say a few words at the beginning of the 22nd boj - imes conference. on behalf of my colleagues at the bank of japan and myself, i would like to express my sincere welcome to all of you. at last year β s conference titled β monetary policy in a post - financial crisis era, β we had active discussions on fundamental issues of monetary policy during the period of slow economic growth following the global financial crisis. since then, there has been further progress in research on the effects of unconventional monetary policy in academic and central bank circles. besides, growing attention has been paid to renewed debate over the slow recovery after the financial crisis, as represented by the thesis of secular stagnation. against the backdrop of these factors, we have selected β monetary policy : its effects and implementation β as the theme of this year β s conference. the aim is not only to keep monetary policy at the center of the discussion, but also to put greater emphasis on implications for policy conduct in practice. i hope that, in light of the progress in monetary policy research and the recent developments in the global economy, we will have frank and lively discussions on the monetary policy challenges that we central bankers currently face. to kick things off, i would like to raise some issues relevant to these challenges. ii. global economic conditions and current issues concerning the conduct of monetary policy over the past year, the global economy as a whole has been recovering moderately. however, we have observed considerable differences in developments of economic activity and prices among countries and regions. in reflection of these differences, diverging directions of monetary policy among the united states, europe, and japan have become increasingly apparent. this certainly was a major feature of monetary policy in the global context for the past year. meanwhile, headline inflation rates dropped globally, due primarily to a plunge in crude oil prices. with these significant developments in mind, i would like to raise three current issues concerning the conduct of monetary policy. the first issue concerns the effects of unconventional monetary policy and its transmission channels. in terms of monetary policy implementation, the european central bank launched the expanded asset purchase programme
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speech hearing of the committee on economic and monetary affairs of the european parliament speech by christine lagarde, president of the ecb, at the hearing of the committee on economic and monetary affairs of the european parliament brussels, 26 september 2022 it is a pleasure to be back here in brussels with you for our third hearing this year. russia β s unjustified war of aggression on ukraine continues to cast a shadow over europe. my thoughts are with the ukrainian people suffering the senseless atrocities of the war. the economic consequences for the euro area have continued to unfold since we last met in june and the outlook is darkening. inflation remains far too high and is likely to stay above our target for an extended period. at our meeting earlier this month, the governing council therefore took the major step to frontload the transition from the prevailing highly accommodative level of policy rates towards levels that will ensure the timely return of inflation to our two per cent medium - term target. in line with the topics chosen for this hearing, i will provide you with a brief overview of the economic outlook and then explain our recent monetary policy decisions in greater detail. the outlook for the euro area economy the euro area economy grew by 0. 8 per cent in the second quarter of 2022, mainly owing to strong consumer spending on services as the economy reopened. economies with large tourism sectors benefited especially, as people travelled more over the summer. the still robust labour market also continued to support economic activity. notwithstanding this, we expect activity to slow substantially in the coming quarters. there are four main reasons behind this. first, high inflation is dampening spending and production throughout the economy, and these headwinds are reinforced by gas supply disruptions. second, the strong demand for services that came with the reopening of the economy is losing steam. third, the weakening in global demand, also in the context of tighter monetary policy in many major economies, and the worsening terms of trade will mean less support for the euro area economy. fourth, uncertainty remains high, as reflected in falling household and business confidence. these developments have led to a downward revision of the latest staff projections for economic growth for the remainder of the current year and throughout 2023. staff now expect the economy to grow by 3. 1 per cent in 2022, 0. 9 per cent in 2023 and 1. 9 per cent in 2024. inflation rose further to 9. 1 per cent in august. energy and food price
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risk assessments performed, statement of compliance etc. ) as this will assist the bank further in its supervisory task. to keep up with worldwide corporate governance developments, the bank is continuously enhancing its risk - based supervision framework. its corporate governance notes ( which date back to 2001 ) are currently being updated to reflect the tasks and responsibilities of the supervisory board more clearly. with actualization of the national ordinance on the supervision of banking and credit institutions at the end of 2015, the supervisory framework of the bank was further strengthened allowing it to impose fines and penalties in case of non - compliance with our laws and regulations. with the institution of the conduct supervision department, more emphasis is being placed by the bank on the supervision of the behavior of the institutions boards in the execution of their responsibilities. i hereby conclude my introductory remarks and pass the word now to mrs. mayesi hammoud who will elaborate further on corporate governance aspects as established by the corporate law of curacao. i wish you further a pleasant stay on our island and hope that the discussions of this morning will be very fruitful.
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technological change had become a pervasive influence on our lives long before i first spoke to this conference in 1998. it continues to be so, and surely it will be a force for the foreseeable future. virtually all industries that have been profoundly affected, and financial services is no exception. i have already mentioned the importance of technological change in improving risk measurement and management at financial institutions as a reason banks have weathered the recent economic downturn. moreover, i fully agree with the many observers who have highlighted the role of technology in breaking down traditional distinctions between commercial banking, investment banking, and insurance products. in this sense, the gramm - leach - bliley act can be thought of as a response to technological change. and, technological change can surely throw us some unexpected curves, as the successfully navigated but hugely expensive adjustments to deal with the century date change showed. i will return in a few moments to the role of technological change in risk measurement and management and its influence on supervisory policy. but first i want to spend a few moments discussing some interesting facets of the impact of change on the technologies used by american households to consume financial services. the process by which technological change becomes embedded in production and consumption has long absorbed the attention of economists. despite this interest, the process remains a considerable mystery, and households β use of financial services is no exception. for example, many academics, regulators, and bankers have for many years forecast that technological change would end use of the paper check and make the brick - and - mortar bank branch obsolete. however, here we are in october 2003 and the paper check is still very much in use, the smart card has not succeeded as predicted, and the number of brick - and - mortar bank offices is still increasing. clearly, there is much that we do not understand. i am not here today to propose any definite answers to the question of why households adopt new technologies in financial services more slowly than we sometimes predict. but i would like to present a few facts that we have gathered over time in our triannual survey of consumer finances that shed some light on this complex topic. in 1995, we began asking households about their use of computers to conduct business with their financial institutions. in that year, barely 4 percent of households with a checking account said they used a computer to consume financial services. by 1998, the year of the next survey, the percentage saying they used a computer had risen to more than 6 percent. in contrast, in 1995
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have become highly important commercial product and could prompt certain institutions to slash their profit margins in order to win customer loyalty. yet, such practices contribute to rapidly pushing up property prices. thus, having observed that liquidity can disappear very rapidly, that central bank intervention must remain exceptional and that excessive maturity transformation increases systemic risk, a preventive approach is called for. such an approach should take into account two aspects : β i will start by discussing basel iii liquidity regulation, while stressing the fundamental goal : reducing liquidity risk and limiting maturity transformation. β nevertheless, whatever changes are made to the regulatory framework, this necessary but one - size - fits - all approach will still be inadequate if it is not accompanied, or even preceded, by new policies to manage maturity transformation by banks. bis central bankers β speeches i. an overview of basel iii liquidity regulation 1. a fundamental goal : preventing excessive maturity transformation risks since banks are in the best position to reduce information asymmetries in credit markets, select and monitor loans and diversify their asset portfolios, they are at the heart of maturity transformation activities. in traditional financial intermediation, banks collect savings and provide liquidity to the whole economy through transactions on their balance sheets. to do this, they transform liquid short - term liabilities into medium - to long - term assets with poor liquidity. this activity generates well - known risks, in particular in terms of interest rates and liquidity. maturity transformation is therefore subject to prudential regulation to ensure that basic security rules are followed. at the seoul summit in november 2010, the g20 leaders endorsed the basel iii framework that overhauls the current prudential regulatory regime. in particular, this is the role of the two new liquidity ratios : β the one - month liquidity ratio or liquidity coverage ratio ( lcr ) has the two - fold objective of preventing short - term liquidity shocks and requiring institutions to selfinsure against liquidity shortages in order to limit refinancing exclusively via the central bank. institutions should in no way consider that they have a guarantee of permanent access to such refinancing. in this respect, the use of foreign currency funding is not always justified by the need to fund assets denominated in these currencies in the absence of a sufficiently broad customer base in the countries concerned. such strategies are also used for arbitrage purposes. they contribute to overall market liquidity but they must remain of a magnitude that allows institutions
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2020. world economic outlook : a long and difficult ascent. october 2020. 20 statista market insights. 21 international monetary fund ( imf ). 2020. global financial stability report. october. 22 beck, t., cecchetti, s. g., grothe, m., kemp, m., pelizzon, l., & serrano, a. s. 2022. will video kill the radio star? digitalisation and the future of banking. european systemic risk board. 23 pengpeng, y., korkmaz, a., zhichao, a. and haigang z. 2022. the rise of digital finance : financial inclusion or debt trap? finance research letters. 47 ( part a ). third, there is evidence to suggest that the buy - now - pay - later and credit card - based spending can facilitate immediate consumption, especially for younger generations and lower their savings. 24 fourth, there can be concerns of mis - selling of financial services to households due to poor digital financial literacy. 25 these shifts in consumer behaviour may require central banks and policymakers to transition from traditional macroeconomic models to agent - based modelling, integration of behavioural economics, nowcasting, policy simulations and advanced liquidity stress tests. they also need to equip themselves with cutting - edge computational tools like machine learning and big data analytics to examine the real - time, highfrequency data received from digital platforms. v. conclusion as we journey towards new frontiers of economic research, i am reminded of the words of john maynard keynes : " the difficulty lies not so much in developing new ideas as in escaping from old ones β. economic research is like exploring a dense forest : each new finding clears a path, but also reveals deeper mysteries. as we prepare, like the 24 cornelli, g., gambacorta, l. and pancotta, l. 2023. buy now, pay later : a cross country analysis. bis quarterly review, december 4, 2023. 25 morgan, p., huang, b. and trinh, long. 2019. the need to promote digital financial literacy for the digital age. policy brief under t20 japan task force 7. march 31, 2019. starship enterprise, in the famous sci - fi television series star trek, to boldly go where no man has gone before, i am reminded of the words of t. s.
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rising food prices. in other words : inflation leaves the zone of β rational inattention β and snaps into the focus of attention. when prices soar across the board, households and firms will adjust their behaviour. [ 4 ] workers will push harder to regain their lost purchasing power, demanding higher wages. firms will try to compensate for lost profit margins by raising prices. typically, contract terms will then become shorter and price adjustments more frequent. however, if inflation expectations were to follow experienced inflation, households and firms would additionally seek compensation for expected future losses as well. claudio borio of the bank for international settlements ( bis ( bank of international settlement ) ) put it this way : β [ inflation ] becomes a more relevant focal point and coordinating device for the decisions of economic agents. β [ 5 ] that is one reason why the bis ( bank of international settlement ) warns that the transition from low - to high - inflation regimes can be self - reinforcing. once a high - inflation regime has become established, the way back would be very costly. monetary policy would then have to act more aggressively to break the new patterns and restore its own credibility. this makes it all the more important to prevent high inflation and new patterns of behaviour from becoming entrenched. 3 scarring effects of personal experiences i am confident that monetary policy in the euro area will succeed in healing the gaping inflation wound by reaching its medium - term target. but β scars β may remain. or in more technical terms : because of experience - based learning, high inflation may have long - term effects. and that has consequences, as the growing body of work by ulrike malmendier and others suggests. people use personal past experience to form their inflation expectations. let me illustrate this with the results of a study that used german reunification as a natural experiment : east germans expect higher inflation than west germans β even decades after reunification. the differences seem to be due to the persistent effect of the inflation shock after reunification. for people in east germany, it contrasted strongly with the norm of zero inflation in the communist era, while west germans were used to moderate price increases. analyses for the us ( united states ) point in the same direction : for example, older generations had already experienced high rates of inflation in the 1970s and early 1980s. and indeed, the over - 60s have had persistently higher inflation expectations over the past decade. if high levels of inflation persist, experience - based learning predicts that expectations of younger cohorts
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the sooner trust and faith begin to grow again in world markets, the sooner they will rise up from this slump, or recession β at the moment we don β t know which term is more appropriate. many things are changing, both in iceland and elsewhere. a new edition of the book β ten little negroes β causes ripples of unrest. of course, there is no reason to ban books, but the unrest caused by this book is actually a positive thing. it is a sign of changing times, enhanced understanding, and diminishing prejudice. when that book was published in the mid - 20th century, hardly anyone thought of it as being hurtful or offensive in any way. but now we see that it can indeed be those things, and this is why the publication of the book and the ensuing discussion are a positive indication of new times and changed perspective. actually, recent decades have seen a fervent effort to recast well - known terms and names for all sorts of phenomena so as to avoid injuring those who, either temporarily or for the long term, might be vulnerable. this is also positive, though some of these philanthropic efforts have gone a bit too far in their enthusiasm. another phenomenon we see is that newly coined terms soon become cloaked in a sort of semi - divinity in iceland β like the term β international expansion, β which no one dares oppose lest he be accused of being an anachronism, devoid of a sense of β vision, β as it is now called, and of not knowing when the time is ripe for action. upon closer scrutiny, the term β international expansion β seems to be nothing more than investment abroad β together with utilisation of knowledge and talent, of course. in that sense, the construction of the aluminium smelter in reydarfjordur can be called alcoa β s international expansion into iceland, though no one has bothered to call it that. but it is : it is investment combined with the utilisation of knowledge of the aluminium industry. that expansion is promising in many ways, of course, and some aspects of it have already generated substantial returns, not least because people took advantage of favourable conditions and external circumstances. for a while, cheap capital was readily available, and some were bold enough to grab the opportunity. but the flip side of expansion, and the side that cannot be ignored, is that iceland is becoming uncomfortably beleaguered by foreign debt. at a time when the icelandic government has
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rapidly reduced its debt and the central bank β s foreign and domestic assets have increased dramatically, other foreign commitments have increased so much that the first two pale into insignificance in comparison. all can still go well, but we are surely at the outer limits of what we can sustain for the long term. the term β international expansion β is so thoroughly bathed in radiance that even when people seem to be invading companies that are owned by the public, the invasion is called β expansion β. and companies whose primary obligation, by law and by the nature of their operations, is to provide the public with specific services at the lowest price possible, suddenly find themselves participating in foreign risk ventures without there having been any rational discussion of the matter beforehand β and all in the name of β international expansion. β in matters such as this, we must proceed with the utmost caution. we icelanders have been successful in our endeavours in the recent past, and we have had the wit to be careful when necessary, but it would be imbecilic to believe that we can loosen our belts β that is, if we want to continue being successful. one of the ways in which we must remain vigilant is to refuse to allow inflation to gain a foothold in our economy. all attempts to dodge this responsibility will harm the icelandic people, with unforeseeable consequences. we must not increase our foreign debt beyond its current limits β on the contrary, it is right and necessary that we reduce our foreign debt and achieve a more favourable balance with abroad. plans for international expansion must therefore be carried out within sensible limits. the immoderate zeal that is so intoxicating may not be allowed to steer our course for the future. we know that, in many ways, our upward climb rests on a bed of clouds. to some extent, this is inevitable, and it is normal that items like intangible assets should be prominent in good times ; but when the sky darkens and the clouds become heavy, the rain can start at a moment β s notice, and little may be left of those assets when the air clears. so we must take care in this as well as in other things. by law, the central bank of iceland is assigned a clearly defined role. the bank takes that role very seriously. it does not ask to be spared criticism of its work and its decisions, but it would appreciate some support in its attempt to keep inflation within tolerable limits
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economic destiny β 5. now, austria has not become a bigger country than it was in those unhappy days, but something else has changed in our favor since then : we are now members of the european union and part of the euro area. in contrast to previous crises, this time our efforts to fight the recession are part of a coordinated european macroeconomic recovery plan upon which the european commission and the eu member states already agreed in november 2008. if we compare the situation with our last recession before entering the eu, which took place in the early 1990s, monetary union with our key trading partners is very helpful as it prevents competitive devaluations by some neighboring countries that harmed our economy back then. in that sense, the euro has worked as a shield for small open economies all over europe. what needs to be done now? policy makers are confronted with two main tasks at the moment. on the one hand they must restore stability in financial markets by bringing back liquidity, recapitalizing banks and getting toxic assets off banks β balance sheets. in europe, we have some examples that can serve as guidance for how to deal with a banking crisis, for instance the swedish and the finnish experience of the early 1990s. ( if anything, our own austrian experience from the 1930s would rather qualify as an example of how not to save banks. ) in austria we have already taken measures to establish confidence among savers, and our government has also presented a stabilization package for banks, to which it has allotted 100 billion euro, which is roughly 1 / 3 of the austrian gdp ; 15 billion euro are reserved for recapitalizing banks, 75 billion for bank guarantees and an additional 10 billion for insuring the domestic deposit protection. in terms of gdp, the austrian banks β stabilization package is among the biggest in the eu. paul krugman ( 2009 ) β the return of depression economics and the crisis of 2008 β, norton, page 4. the second task we now face is to fight the global recession and prevent it from turning into a lasting depression. this is a challenge for both monetary and fiscal policy. the main objective of monetary policy in the euro area has always been to preserve price stability, in the current state of affairs means to prevent deflation. i can assure you that, at the governing council of the ecb we will take all available measures to stabilize the inflationary expectations in the euro area and keep them anchored in positive terrain. we will keep the interest rate very low for as long
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contracts increased most among permanent seasonal workers and permanent part - time workers. it is obvious that itΒ΄s still too early to assess properly the impact of this labour market reform, and any such evaluation will have to consider multiple issues, including employment, labour turnover, human capital accumulation, among others. in the meantime, learning from the experience in other countries about the impact of similar regulatory changes on temporary employment could prove to be useful for the design of a rigorous evaluation of this reform in the case of spain. these issues are covered in the first session. second, another major challenge for the spanish economy is the dismal performance of aggregate productivity, the ultimate and most important engine of economic growth and prosperity. average annual total factor productivity growth over the 2000 - 2019 period was 0. 2 % in spain, as against 0. 5 % in the euro area ( and 0. 9 % in the united states ). among the various determinants of this gap, recent literature has been highlighting the role of the misallocation of resources across firms and the small size of businesses, which has a bearing on the country β s low aggregate productivity. in particular, 35. 7 % of total employment is in firms with less than 10 employees, compared with 28. 5 % in the european union. to tackle this challenge, it is essential to explore the various reasons why our business sector is so skewed towards small, low - productivity firms and to mitigate the effects. for example, as part of a strategy to stimulate business growth, smaller firms with high productivity potential should be helped to access a wider range of external sources of funding on more advantageous conditions, while the policies supporting business innovation should be strengthened. this is the topic of the second session. third, the fight against climate change and the transition towards a more sustainable economy are also important challenges facing the world economy in general and spain in particular. there is for example consensus among the scientific community that the iberian peninsula could be significantly affected by the physical risks associated with climate change and that this impact would be highly uneven across regions. resolutely addressing this challenge will entail a profound structural change in our growth model that will have far - reaching implications for all areas of activity. this transformational process will also, foreseeably, have a very unequal impact across the different regions, industries, firms and households. in this green transition, governments have a leading role to play through, for instance, green taxation, compensatory
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mechanism have to better serve the needs of our countries? bis central bankers β speeches β’ how were the effects of euro area macroprudential measures transmitted to our countries? how can we achieve better policy coordination with eu authorities? β’ what is our insofar experience of participation in supervisory colleges? how effective would you consider these colleges, and what are your concerns about their functioning? a clear understanding of each country β s perspective and experience so far shall be very helpful in that respect. i hope the discussions today will be of practical relevance, and allow us to converge on more concrete proposals for consideration in future vienna initiative meetings. in conclusion, i am confident that today β s meeting is an important step to build a regional approach for addressing our common challenges. sharing experiences will help us all to better understand our own national challenges through putting them in the right context. we may tap into significant synergies in this context, which may be leveraged only through constant cooperation. most importantly, regional cooperation is a prerequisite for achieving better coordination with eu authorities, through better technical expertise, comprehensive region - wide experience, and better negotiating power. as a member of the steering committee of vienna initiative ii, allow me to reiterate my commitment to be a good advocate of our common stance, in this authoritative forum. thank you! bis central bankers β speeches
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ardian fullani : overview of albania β s recent economic and financial market developments speech by mr ardian fullani, governor of the bank of albania, at the technical meeting to promote regional cooperation in the framework of vienna initiative ii, tirana, 3 october 2013. * * * dear representatives of supervisory authorities, i take this opportunity to thank you for your participation in the first regional meeting on the vienna initiative. the performance of eu and regional economies over the last few years have clearly demonstrated that in europe β s highly interconnected markets, the financial tensions, regardless of their origin, go beyond local or regional boundaries. the euro area sovereign crisis, which started as a localized episode in the euro area periphery, evolved gradually into a european predicament involving almost all european union ( eu ) members, heavily affecting non - eu member countries in the cesee region as well. at the core of the transmission mechanism of financial pressures from eu to non - eu countries are large euro area banking groups, which operate throughout the continent with their branches and subsidiaries. in a matter of months, the sovereign - bank vicious cycle encompassing the euro area was exported to non - eu host countries, first through lower risk tolerance and second through interruption of lending to our economies by euro area banks that operate in our region through their branches and subsidiaries. in some countries, lending dampened in the form of the so - called deleveraging, i. e. reduction of lending by eu bank subsidiaries to non - eu host countries, through the simultaneous reduction of their foreign liabilities. in other countries, such as in albania, where eu bank subsidiaries relied heavily in domestic retail funding ( domestic deposits ), the reduction of lending occurred without the corresponding reduction of liabilities. this led to an outflow of domestic funding sources towards eu economies. in both cases, the phenomenon illustrates the reduction of banks exposure to risk, i. e. the derisking process, driven by financial pressures from the parent banks, which they tried to mitigate in part through their business strategy in non - eu host countries. this phenomenon was largely exacerbated by macroprudential decisions and regulatory incentives undertaken at the eu level. requirements of the european banking authority ( eba ) for additional capital on large internationally active banks prompted these eu - based banks to adopt restrictive measures on their activity in the periphery β to save β regulatory capital, under conditions when raising additional capital would be too costly or even impossible in the market. to illustrate the magnitude of
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shocks. but asian foreign policymakers have been quick to respond. to reduce reliance on exports, many asian countries have taken measures to rebalance their economies towards domestic demand. the growing asian demand will help support the global economic recovery ; and in the longer term, contribute to the growth of our global economy. 6. going forward, it is widely expected that asia will continue to lead the global recovery. investors are confident of asia β s prospects due to sound economic fundamentals and fiscal strength. the booming asian economies will present many investment opportunities. in particular, infrastructure financing is likely to be a major driver of demand for investments. the asian development bank estimated that usd $ 8 trillion worth of infrastructure spending is needed in the 10 years leading up to 2020 to support asia β s growth. the demand for capital investments driven by the growth in asia β s real economy will support the development of the region β s capital markets. as investors continue to invest in asia, the depth, accessibility and efficiency of asia β s capital markets will continue to improve. bis central bankers β speeches with proper balance, the continuing inflows of funds, improvements in capital markets and growth in the real economy will create a self - reinforcing virtuous circle. 7. along with the rise of asia, singapore will continue to enhance our position as a global - asia financial and business hub. as a well - connected international financial centre, singapore can be the base for global players to tap into opportunities offered by a rising asia. to do that, we will build on our strengths in areas such as trading, asset management and infrastructure financing. we will also continue to emphasise the importance of strengthening risk management, enhancing transparency, as well as build depth and diversity in the offering of financial products and services. let me cover these areas in turn. 8. first, in the area of strengthening risk management. in the context of the capital markets, we have been building the necessary infrastructure to help market participants better manage their risks. there has been greater concern over counterparty risks since the financial crisis. this fear of counterparty default dented global trading and interbank lending activities. to allow market participants to better manage their counterparty risks, the singapore exchange launched a new clearing service for otc financial derivatives in 2010. this is the first such service in asia. 10 international and local banks have since signed up with sgx to clear their otc financial derivatives, and there are intentions to expand the product suite going forward. this
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jacqueline loh : strengthening shanghai - singapore cooperation β anchoring stability and seizing opportunities welcome address by ms jacqueline loh, deputy managing director of the monetary authority of singapore, at the 3rd singapore - shanghai financial forum, singapore, 12 april 2017. * * * shanghai municipal government, deputy secretary general mr jin xingming shanghai municipal financial services office, director general dr zheng yang distinguished speakers and guests ladies and gentlemen introduction good morning, and welcome to the 3rd singapore - shanghai financial forum. it is a great pleasure to welcome our good friends from shanghai, as well as our strong representation of local stakeholders joining us at the forum today. uncertainty is the new world order the second edition of the forum was held in november last year. since then, global economic activity has firmed, led by robust consumption in the us and a pickup in china β s underlying growth momentum. the eurozone and japan have also registered steady expansions on account of stronger domestic demand and exports, respectively. concurrently, the turnaround in commodity prices last year, followed by an it upswing in q4, have improved the prospects for emerging markets, including the trade - dependent economies here in asia. a range of indicators have picked up in tandem with the strengthening of manufacturing and trade in the region, and forward - looking surveys reaffirm a continued mild improving trend into 2017. within the region, domestic demand has generally been resilient and overall growth this year will receive additional support from the stronger performances of export industries. 3 yet amid this cautious optimism, we should acknowledge the continued unevenness in the strength of the expansion across regions in the global economy, as well as the persistence of policy uncertainties, which will weigh on firms β long - term spending commitments. we are also confronted with the seeming rise of nationalism and growing populism which can have unpredictable effects on policies and growth. against this backdrop, the uncertainty over trade policies and the future of the multilateral trading system is another area of concern of trading nations in asia, as it comes at a time when important underlying structural shifts in global production and trade arrangements are already taking place. 4 in the financial sector, the advent of fintech β driven by unprecedented mobility, connectivity and computing power β possesses the potential to fundamentally change the way intermediation takes place in the financial sector. indeed, it seems that continuous shifts and unrelenting changes are the defining characteristics of the future economic and financial landscape. finding opportunities amidst uncertainty while some degree of uncertainty is inevitable in
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