text1
stringlengths 1
3.21k
| text2
stringlengths 1
3.21k
| label
float32 0
1
|
|---|---|---|
##it referendum in 2016. i am strictly neutral on brexit as a public official. i knew then that our job was to work out how to implement something that, let's be honest, had not been planned. in the area of financial services, clearing was going to be probably the hardest area for us, because β and i will come back to this point β it is inherently international in many parts, and particularly the parts we do in london. i knew immediately after the referendum that it was critical for the uk not to become isolated and certainly not isolationist. that would be the road to a very bad outcome for the city of london. we needed friends, both in deeds and words, those who would be prepared to stand by us, and put up with uncertainty while we worked out the best course. chris, you and mike were those people β friends when we were in some need. 1 / 5 bis - central bankers'speeches now, it is the case that, as a internationalist, mike arrived in the world of clearing at the right time. it is a fairly esoteric activity, always important, but also often in the background. we quite like it to be humming away safely in the background. but the global financial crisis had emphasised that we had undervalued its importance, that the world would have been safer if we had put it more into the centre of the financial system. but, to do that it must be done safely and soundly. unsafe clearing would be worse than no clearing, it would amount to concentrating the risk in one unsafe house. and so, if we are asked to list the very big financial system changes post financial crisis, we should naturally start by saying that we have put clearing at the heart of the system. central counterparties ( ccps ) are a key to mitigating counterparty credit risk, which has become even more relevant following the crisis and, in so doing, bring significant financial stability benefits. the experience of the collapse of lehman brothers demonstrated that ccps should be able to dampen the shock of a major counterparty credit failure. one of my abiding memories of the lehman weekend was the attempt to organise an ad - hoc trade position compression exercise, to net down the positions. it wasn't possible, and the hard lesson was that only permanent institutional structures with clearing houses at their heart can achieve the ends we desired. but, of course, we know that ccps, can pose significant risks
|
to the stability of the financial system if they are not properly managed. a consequence of central clearing is that ccps themselves become a financial network which can bring about the contagion of financial instability if they are not robustly established and operated. in line with g20 commitments following the financial crisis, the introduction of mandatory clearing for various classes of over - the - counter derivatives has driven an increase in the systemic importance of ccps. in the banking world, that tendency for banks to grow and become more globally systemic led to hostility to allowing very large banks which could be too big to fail. clearing is different. its not just that clearing didn't cause the crisis, though just to be clear, it didn't. rather, its more than that. up to some point, and that point can naturally be large, there are benefits of scale and scope in clearing. yes, there is contagion risk if a ccp fails, and especially where it is large in its market, but there are real benefits of scope and scale. and, this naturally leads to the international dimension that mike so much emphasised. the global nature of many financial markets means that clearing is naturally a cross - border activity. cross - border clearing also brings significant benefits. a single ccp operating across multiple jurisdictions and currencies can provide efficiencies and reduce risk through multilateral settling of exposures across counterparties in different jurisdictions. this puts an obligation on us as regulators of clearing houses. we have a duty to enable the safe operation of the global financial system. public authorities have risen to this duty, supervising standards on ccps have been strengthened and new international standards have driven the establishment of credible ccp resolution regimes. we also have a deep sense of responsibility for the impact of our actions on 2 / 5 bis - central bankers'speeches other countries. and, we take this very seriously, as we must. in the uk, as the regulator we are required in any exercise of our rule - making power to consider the effects of these rules on the financial stability of any country where one of our clearing houses provides services, and we must act in a way that does not favour one jurisdiction over another. this is of course all common sense. we all recognise that the interconnectedness of global markets means that any shocks in one part of the world can quickly reverberate and cause stress elsewhere. but common sense though it is, i can tell you that it's a lot
| 1 |
speech measure twice, cut once may 11, 2021 john c. williams, president and chief executive officer remarks at sofr symposium : the final year ( part ii ) ( delivered via videoconference ) as prepared for delivery it's a great pleasure once again to be sharing a platform with andrew bailey as we discuss the transition away from the london interbank offered rate ( libor ). while it's no surprise that our work often brings us together, andrew and i have joined forces on this issue to such a great extent because the libor transition is essential to the integrity of the global financial system. given its ramifications for institutions, markets, and economies around the world, strong cooperation at the international level is of critical importance. as the saying goes, time flies, and it's hard to believe that we've reached 2021. it's been more than a decade since libor has been exposed as a flawed and unreliable reference rate. and, with only 235 days until january 1, 2022, i am pleased to say that the endgame for libor is clearly in sight. 1 this transition has been a monumental feat. the enormous amount of progress was made possible by a significant and coordinated effort across the globe, as well as in the united states. i must also mention that the alternative reference rates committee ( arrc ) has done outstanding work in preparing for the move off libor and, equally important, positioning us with a safe and strong foundation for the post - libor world. 2 and even as i acknowledge all the progress that has been achieved, it's important to remind everyone that there is still a lot to be done to move off libor by the end of the year. this morning i'm going to talk about key principles that we should keep in mind as we build a successful postlibor world. before i continue, let me give the usual disclaimer that the views i express are mine alone and do not necessarily reflect those of the federal open market committee or anyone else in the federal reserve system. measure twice, cut once i want to take you back to only a few years ago, when i was in junior high school. at that time, ticktock was the sound coming from the clock on the wall, and a mobile device was a transistor radio. i was a young student β not of economics, but woodworking. with tools and planks in hand, i learned the number one rule of that craft
|
: β measure twice, cut once. β by continuing our site, agree yet to our of ause and privacy statement. but youas canwe learn more about we use cookies by fast forward to touse today, andyou i have to terms pursue career in carpentry. prepare for ahow post - libor world, the same adage runs through my mind. we must take great care, because the decisions made today will determine reviewing our privacy statement. if the libor transition is ultimately successful. the past decade has shown us that the problem with using libor as a benchmark interest rate has been an extremely risky one to have β and to solve. 3 it's important that we focus not only on making the transition, but also on getting the transition right. we've learned how challenging and costly it is to move away from a widely used unsound reference rate. it's essential that we move forward in a way that ensures that we do not have to go through such a transition again in our lifetimes. i know i wouldn't wish that on anyone. a foundation for the future this adage has many applications, but it's especially important to keep in mind when laying a foundation β because the foundation is everything. back when i lived in california, we bought a victorian house built in the 1890s. the attraction of the house was that it had lots of rooms and spaces for the family to live. but, the existing foundation was crumbling and not even attached to the house. in a major earthquake, the house would have quickly toppled over. we had a new foundation installed, and my mother asked to see before and after pictures. i responded that one picture would do since all the work was done underground and out of sight. the difference was that this house would last another 100 years, while the old house would have lasted only until the next earthquake. i see the current juncture in the transition away from libor to a new reference rate regime in much the same way. we have seen the development of several reference rates that may meet various needs, including creditsensitive rates. 4 separately, the arrc just announced the indicators that it will consider in recommending a forward - looking secured overnight financing rate ( sofr ) term rate, which with continued market progress, it believes can be achieved relatively soon. 5 these are valuable steps in the transition to the new post - libor world β but in my house metaphor, these represent the
| 1 |
to securitize a group of mortgages with an average primary mortgage rate of 4 percent. the originator pays a fee of about 50 basis points to fannie mae, freddie mac or ginnie mae, in return for a guarantee on the principal and interest payments of the underlying loans. the originator is also required to retain at least 25 basis points to cover costs associated with servicing the loan. since coupon rates on fed funds equivalents are calculated by comparing the change in the 10 - year treasury yield due to asset purchases to the change that historically occurred following movements in the target federal funds rate. this is a simple framework, so the uncertainty around this measure is likely large. for more information on the tba market, see vickery and wright ( 2013 ). bis central bankers β speeches agency mbs are offered in 50 basis point increments, the originator might choose to sell the remaining cash flows to investors in the tba market in the form of an agency mbs with a coupon rate of 3 percent and retain the remaining 25 basis points. 9, 10 in this case, the 3 percent tba contract would be the production coupon. 11 the desk focuses its purchases in production coupons because these securities are the most liquid segment of the tba market and their yields are closely tied to the primary mortgage rate through the dynamics i just described. purchases are distributed across different agencies, maturities, and coupons in amounts that are roughly proportional to anticipated gross issuance of those securities. purchases lower the yield on these securities relative to where they would otherwise be, which should enable originators to offer lower mortgage rates to borrowers. 12 lower borrowing rates should in turn help stimulate demand in the housing market, support home prices, and increase mortgage borrowers β purchasing power. as i mentioned before, asset purchases affect interest rates in part by removing risk from investors β portfolios. although it will not be the case in all interest rate environments, currently, purchasing newly issued production coupons removes from private hands securities that generally have greater exposure to duration risk, since the borrowers whose loans back these lower coupon agency mbs have limited incentive to refinance. 13 moreover, by purchasing in the tba market, investors also ultimately deliver securities that have relatively more prepayment risk than the more valuable securities that trade as specified pools. one difficulty with purchasing in a manner that is roughly proportional to anticipated gross issuance is that it can be difficult to forecast
|
should pay close attention to the risk of prolonging the period of accommodative financial conditions, which may lead to swings in economic activity and prices in the future, as the recent experience of the world economy suggests. in conducting monetary policy, the bank will continue to carefully assess the future outlook for economic activity and prices, closely considering the likelihood of its projections as well as factors posing upside or downside risks, and will implement its policies in an accordingly flexible manner. moreover, since global financial markets are expected to remain strained for some time and there are various uncertainties in the outlook for economic activity and prices, it is essential for the bank to maintain market stability. the world's economies now face serious challenges. the japanese economy is no exception. uncertainties remain elevated both in financial markets, real economic activity, and inflation. to deal with these challenges, we believe it is important to explain carefully how we assess economic conditions and how we conduct monetary policy. to this end, we, the policy makers, must be good communicators. providing necessary information appropriately will enhance the credibility of our policy - making. also, as globalization proceeds, it has become increasingly important to communicate internationally. i think these thoughts can be shared with people like you who are professionals in the field of communication. in closing, before i leave you i would like to express our strong commitment to make appropriate economic assessments and policy decisions, and to explain them to the public appropriately in a timely manner. thank you very much for your kind attention.
| 0 |
for foreign currency bank deposits to ba3 from b1 and the country ceiling for foreign currency bonds to ba1 from ba3. the change in the foreign currency bond ceiling is based on a revised assessment of the risk of an external payments moratorium to low from moderate. - the outlook on the ratings is stable. the upgrade was prompted by the relatively high degree of resiliency exhibited by both the country β s financial system and external payments position in the face of the global financial and economic crises. international reserves of the central bank are at a historic high and exceptional policy measures have not been required to shield the banking system from global shocks.
|
to build up our dollar reserves. one of the lessons we learned from the 1997 asian financial crisis was the value of building up our international reserves for self insurance. based on revised data, as of end - july 2009, our reserves have risen to us $ 40. 0 billion. this is enough to cover about 6. 9 months of imports of goods and payments of services and income, or alternatively, it could cover our short - term external debt payments about three times over. thus, even as we face a slowdown in external demand, the stronger external liquidity position provides us some cushion against shifts in capital flows. our financial markets are showing some signs of recovery. credit spreads have narrowed, the peso has stabilized and its volatility has decreased, and the stock market is on an upswing. our banking system has remained sound and stable. the banking system β s asset base has been expanding steadily, supported by sustained growth in deposits. as of end of april 2009, the total resources of the banking system stood at p5. 8 trillion. banks have been offloading their non - performing assets and problem loans. as a result, the npl ratio is now at the pre - asian crisis level of around 4. 0 percent. furthermore, the profitability of the banking system has remained resilient, although with some moderation of late. banks have remained adequately capitalized at levels above both the bsp - regulatory requirement of 10 percent and the international ( bis ) standard of 8. 0 percent. bank lending growth has remained healthy, in part reflecting the easing of monetary policy since the fourth quarter of 2008. credit flows continued to support the productive sectors of the economy even against the backdrop of tight liquidity conditions in global financial markets. it is the bsp β s commitment to ensure that liquidity conditions are supportive of the spending and investment needs of firms and households, while keeping a watchful eye on price stability. the recent lowering of the risks to inflation allowed the bsp to cut its policy rates by a total of 200 basis points since december 2008. the bsp β s decision to ease the monetary policy stance was based on the monetary board β s assessment that inflation would stay within target over the course of the policy horizon. this 200 basis - point cumulative reduction in the policy rate will help stimulate economic growth or help moderate the slowdown by bringing down the cost of borrowing and reduce the financial burdens on firms and households. this will help us avoid or at least
| 1 |
is around 1 %, compared to 1Β½ % in the uk. and yet, the euro area β s fiscal deficit is half that in the uk. it structural deficit, according to the imf, is less than one third as large. it is difficult to avoid the conclusion that, if the euro zone were a country, fiscal policy would be substantially more supportive. however, it is tighter than in the uk, even though europe still lacks other effective risk sharing mechanisms and is relatively inflexible. a more constructive fiscal policy would help recycle surplus private savings and mitigate the tail risk of stagnation. it would also bridge the drag from structural reforms on nominal spending and would be consistent with the longer term direction of travel towards greater integration. it would be bold, and it would be favoured by fortune. bis central bankers β speeches 5. conclusion jim flaherty understood the importance of having a plan, and implementing it diligently and clearly. not just because, as policymakers, that is our job. but also because in the absence of such a plan, businesses and households would shy away from the risk - taking we need for a sustained global expansion. europe needs a comprehensive, coherent plan to anchor expectations, build confidence and escape its debt trap. that plan begins but does not end with the monetary policy boldness of the ecb. that plan includes difficult structural reforms, but cannot be wholly reliant on them. that plan requires greater private risk sharing via banking and capital markets unions. but that plan also needs to recognise that private risk sharing will never fully replace public risk sharing so that plan should include what every other successful currency union has at its heart : mechanisms to share fiscal sovereignty. as of this evening, progress on structural reforms in the euro area remains uneven. cross border risk sharing through the financial system has slid backwards. europe β s leaders do not currently foresee fiscal union as part of monetary union. 24 such timidity has costs. i think we all know what jim flaherty would have said about that. as president draghi recently noted, β in other political unions, cohesion is maintained through a strong common identity, but often also through permanent fiscal transfers between richer and poorer regions that even out incomes ex post. in the euro area, such one - way transfers between countries are not foreseen β¦ β bis central bankers β speeches chart 1 : chart 2 : house prices ( a ) rose significantly during the boom years across euro
|
for example, some empirical work by former deputy governor charlie bean suggests that setting bank rate around 200 basis points higher than it was over the over the period 2003 β 2006 would have reduced the growth in the ratio of household debt to gdp by just 2 percentage points from 2003 β 2007 at a cost of gdp growth over this period being 2. 6 percentage points lower ( bean et al 2010 ). β’ by contrast, the targeted nature of the tools available to the financial policy committee under the current institutional framework in the uk makes them a natural first line of defence for dealing with build - ups in financial system vulnerability while minimising the knock - on effects to the rest of the economy β as was recognised in the financial stability knockout built into the mpc β s forward guidance. these tools can be broken into two groups : β those that are intended to directly affect the build - up of imbalances : for example, the fpc β s ability to impose sectoral capital requirements and its power to limit loan - to - value and debt - to - income ratios in the residential housing market. β those intended to improve the resilience of the financial system in the event of shocks and thus reduce the severity of a cyclical downswing, including the power to affect bank balance sheets through a counter - cyclical capital buffer, and a leverage ratio. β’ the bank β s actions in the residential housing market in june 2014 provide an illustration of the benefits of directing targeted macroprudential policy tools at sectoral financial stability risks vis - a - vis raising interest rates. motivated by concerns over the growth of household indebtedness, the fpc recommended that no more than 15 % of mortgages originated could have a loan - to - income ratio above 4. 5. and in response to fears that households on variable rate mortgages could struggle to meet mortgage repayments if interest rates rose significantly in future, the bank recommended a minimum 3 percentage point interest rate stress be applied at origination. so in a first best world where the institutional set up and macroprudential tools are available, i would let them do the leaning first rather than bis central bankers β speeches wield the heavy hammer of monetary policy. so far, this is the approach we have taken in the uk. β’ let me finish with a few words on the development of macro - prudential frameworks across the globe. for the most part good progress has been made in setting up effective macroprudential frameworks at
| 0.5 |
; 3 / 4 bis central bankers'speeches ( c ) infrastructure must be efficient, safe, and resilient ; a financial sector must ultimately be purposeful in supporting the broad spectrum of economic activities including to facilitate savings, investments, insurance, payments for goods and services and credit intermediation. i am sure that the forum today will be a good occasion to exchange views and to gather new insights. 4 / 4 bis central bankers'speeches
|
glenn stevens : inflation, deflation and all that speech by mr glenn stevens, deputy governor of the reserve bank of australia, to australian business economists 2002 forecasting conference dinner, sydney, 4 december 2002. * * * introduction in the formative years of the current generation of economists, inflation was considered to be one of the most pressing macroeconomic problems. that's not surprising, since most of the net rise in prices that has occurred in human history took place between the late 1940s and about 1990, as a plot of any price index in any industrial country would show. in australia's case, it was observable during the 1950s that, in periods of business cycle downturn, prices stopped rising but didn't actually fall. this was in contrast to the pre - world war ii experience, where price levels did fall during recessions. by the second half of the 1960s, it was even clearer that the price level had acquired a persistent upward trend, and around that time it became normal to look at the price level in its first difference form ( i. e. the inflation rate ) rather than its level. as all of us here remember only too well, inflation reached nearly 20 per cent during the mid 1970s. thereafter polices aimed at reducing it, with mixed success at first, but more lasting success in the aftermath of the early - 1990s downturn. a number of other countries had more clearly broken the back of serious inflation in the early 1980s ; we took a little longer. but in general it could be said that the period of really serious inflation in the western world lasted from the late 1960s until the early 1990s. the subsequent decade has been a period of low inflation almost everywhere. most recently, with a global business cycle downturn, inflation globally has declined further, and is currently low to very low in most places. so it is natural to ask whether, after a generation worrying about inflation, we might be faced with deflation. certainly the word'deflation'is used with much greater frequency than it has been for a long time. its use usually conjures up some vague notion of the great depression, which was the last time a widespread deflation occurred. so it is worth examining this in more detail. i want first to be clear what we mean by deflation, then to ask whether it is in fact occurring. then i want to ask whether we should worry about it, and if so, what we might do to counter it. as a
| 0 |
those under which other central banks did so. it is claimed that this reduces the impact on bond yields. but, in fact if one standardises the size of the various programmes and takes into account cf. michael a s joyce, zhuoshi liu, ian tonks ( 2014 ) : institutional investor portfolio allocation, quantitative easing and the global financial crisis, bank of england working paper no. 510, http : / / www. bankofengland. co. uk / research / documents / workingpapers / 2014 / wp510. pdf. bis central bankers β speeches anticipation effects, the overall impact of our programme on bond yields was comparable in size to that observed in other jurisdictions such as the us and the uk. conditions also differ because financial structures differ. in the euro area, corporate debt financing mainly takes place via banks, as opposed to capital markets in the united states. there is, however, no reason, once the transmission channel is not impaired by banks β poor balance sheets, why this difference should impede the effectiveness of a broad - based asset purchase programme that works through a multitude of channels. the programmes of both the bank of england and the bank of japan were effective and the respective economies are almost as bank - based as the euro area. one criticism is that we should have implemented our asset purchase programme much earlier. but it is not that we have not been acting last year. in a speech in amsterdam in april last year i laid out three contingencies that would warrant a monetary policy reaction. these were, first, an unwarranted tightening of monetary policy stance ( e. g. from developments in short - term money markets ) that could be tackled through more conventional measures. second, a further impairment in the transmission of our stance, in particular via the bank lending channel, for which a targeted ltro or an abs purchase programme might be the right response. and third, a worsening of the medium - term outlook for inflation, which would warrant a more broad - based asset purchase programme. as these contingencies materialised we acted, first in june with the announcement of the tltro and abs purchase programme. then, as medium to long - term inflation expectations started to drift downward in the summer and the risks of a too prolonged period of low inflation were rising, we broadened our asset purchase programme with covered bonds in september and public sector securities last january. summing up, market reactions both before and after our announcement, as well as
|
the global financial markets and, in particular, exchange rate pressures. a good example is the experience with monetary policy during the last housing boom from 2003 β 2007. during that time, monetary policy lost a degree of traction as relatively high policy rates and market returns attracted strong capital inflows, resulting in a high exchange rate and downward pressure on long - term interest rates. borrowers responded by locking in longer term financing at relatively low rates, thereby reducing the impact of official cash rate ( ocr ) increases. this meant that larger increases in the ocr were required to control inflation, putting additional upward pressure on the new zealand dollar exchange rate. there were loud calls at the time for the use of alternative policy instruments to assist monetary policy. possible candidates included macro - prudential policy and tax measures, such as a capital gains tax or a mortgage interest levy ( treasury and rbnz ( 2006 ) ). with hindsight, the use of another policy instrument would have been helpful during this period, to assist in slowing domestic demand and inflation pressure, with less of the work having to be done by the ocr and the exchange rate. lvr restrictions may have been able to assist, given the rapid rates of credit and house price growth at the time which presented risks for financial stability as well as price stability. macro - prudential tools may also have been a useful complement to monetary policy in the economic downturn from 2008. if banks had entered the recession with more stable sources of funding and larger capital buffers, then the tightening in credit conditions that ensued after the gfc may have been ameliorated, potentially reducing the need to ease monetary policy as significantly. in this way, the use of macro - prudential adjustments in downturn situations can lower the risk of running up against the zero lower bound on interest rates. but there can also be significant costs if macro - prudential policy instruments are used too aggressively in support of monetary policy. all macro - prudential instruments create incentives for financial disintermediation β credit flows that avoid the regulation by moving outside of the regulatory perimeter. over - use of macro - prudential tools in an attempt to these other macro - prudential tools work by forcing banks to temporarily increase capital or funding buffers during periods of rising asset prices and leverage. because the cost of capital and / or core funding is likely to be compressed during such periods, any cycle - dampening effects from these instruments are likely to be
| 0 |
gediminas simkus : central europe's convergence introductory remarks by mr gediminas simkus, chairman of the board of the bank of lithuania, at the10th national bank of poland annual flagship conference on the future of the european economy ( cofee ), session ii " drivers of growth and convergence of central european economies ", warsaw, 21 october 2022. * * * good afternoon, dear governors, colleagues, and guests, first and foremost, let me express my joy of being here in warsaw today for this 10th annual narodowy bank polski flagship conference on the future of the european economy. the future of europe and europe's convergence are topics that are crucially important for our region, especially in today's context. economic convergence is a complex theoretical issue, but also poses practical challenges on various macroeconomic, political, and financial levels. varying speeds of convergence and economic growth among european countries, uncertainty and instability in current international markets, and the threat of a worldwide recession in the wake of russia's unprovoked invasion of ukraine all make the discussions in which we are about to engage in not only desirable but essential. to set the stage for our discussion, let me share a few of my thoughts. i consider zeno's paradox1, a philosophical fable, to be fitting when discussing convergence. this fable tells of the swift achilles racing against a slow - moving tortoise. the paradox is that if the tortoise is given a head start in the race, achilles will never catch him, no matter how fast he runs. the argument for this paradox is rather straightforward : achilles must first reach the point where the tortoise was when achilles started, but by that time, the tortoise will have moved further ahead. this story of different speeds and different starting points in time, in my opinion, is analogous to different speeds of convergence. countries differ in their rates of synchronization and growth, their response to exogenous shocks or fragmentation risks, and the macroeconomic adjustment policies they adopt. furthermore, each country in central europe is distinct in its economic, political, social, and even cultural institutions, and the countries'historical context has determined where they each started out on their convergence paths. the collision of all these variables gives rise to theoretical and practical challenges. and that is why we are here. allow me to illustrate my point with this chart depicting convergence trajectories of total factor productivities
|
vitas vasiliauskas : welcome speech - bank of lithuania real estate conference welcome speech by mr vitas vasiliauskas, chairman of the board of the bank of lithuania, at the virtual bank of lithuania real estate conference, 24 november 2020. * * * check against delivery good morning, dear real estate experts, conference attendees, dear colleagues, i am happy to welcome all of you at the eighth annual bank of lithuania real estate conference. throughout its history, our real estate conference has been held at various venues. this year β not exactly by choice β we are meeting virtually for the first time ever. i must admit β this time we are acting in a pro - cyclical manner. the bank of lithuania was able to save money by not having to rent a separate physical space for the conference. however, this also means, of course, that the commercial real estate market and, perhaps, some of the conference participants or attendees have lost some of their income. therefore, the pandemic has inevitably in one way or another affected everyone and everything, including the foundations of the lithuanian real estate market. for instance, we have observed a slowdown in the growth of house prices after the previous lockdown. expectations of the real estate industry have also taken a turn for the worse : our surveys show that the majority of commercial banks have started to expect a fall in real estate prices, particularly in the segment of commercial real estate. however, the predictions of a looming market crash have not come true. on the contrary β the housing market has gotten over the initial scare and recovered back to the new highs. towards autumn, new house sales already exceeded the average rate of several previous years. and today, we hear more voices discussing new record numbers of transactions in the housing market. what were the reasons behind the resilience of the housing market? we do have certain answers, but they are not yet complete and, probably, not definitive. i am therefore eagerly looking forward to today β s discussions and, in order to kick - start them, i will provide several possible explanations. first, i would like to mention positive demographic changes, particularly in vilnius β our capital city. in 2019, we still had doubts as to whether the growth of lithuania β s population was a one - off phenomenon. this year, however, it has become apparent : the country β s population is growing for the second consecutive year, and this trend is likely to continue, which is in turn a substantial
| 0.5 |
joseph yam : banking sector risks and challenges luncheon talk by mr joseph yam, chief executive of the hong kong monetary authority, at the hong kong institute of bankers, hong kong, 16 june 2004. * * * the turnaround thank you for inviting me to talk to you today. it is a pleasure to be here and i am delighted to see such an enthusiastic attendance. i was recently looking over past speeches ( not, let me assure you, with the aim of recycling them ), and i noted that the last time i spoke at one of the institute β s lunches was on 24 october 2001. this has prompted me to reflect on how much we have all been through over the past 32 months - both as a financial community and in the larger community. when i last spoke to you the world was just six weeks on from the 9 - 11 attacks. there was a strong sense that we were heading for difficult times, with a worsening global environment, and with deepening deflation, unemployment, a budget deficit, falling asset prices and a rising number of negative equity mortgages within hong kong. conditions were likely to get worse before they got better, i concluded. well, after a period of great difficulty, in which things got considerably worse than i think any of us had imagined, conditions are now at last improving. since around the middle of last year hong kong has been enjoying a strong and broadening recovery. the economy has now regained much of its dynamism. the key economic numbers are providing the confirmation. economic growth has been impressive. the unemployment rate has been coming down, albeit slowly. deflationary pressure has been easing. the external sector has been active and we are running a substantial current account surplus. the residential property market, on which the wealth of many in our community depends, has bottomed out from a falling trend that had lasted for over five years. domestic consumption has been picking up. of more direct interest to us in the hkma, the risks to monetary and banking stability, which had been worrying us for some time, have receded. the very fast dissipation in the number of cases of personal bankruptcy and negative equity mortgages is very welcome indeed. the turnaround in the hong kong economy and, consequently, the improvement in the asset quality of banks, were made possible by the more favourable global economic environment and by measures taken to strengthen economic ties between hong kong and the mainland. indeed, banks in hong kong have also
|
. in addition to protection against technology - related crime, the it framework of banks also requires business continuity planning ( or bcp ). banks in hong kong made great strides in bcp during the preparations for the onslaught of the y2k bug. although the onslaught never came, we were soon reminded of the importance of bcp by the 9 - 11 attack, which alerted us to the need for robustness in payment, clearing and settlement systems, among other things. then the outbreak of sars last year put the bcp capability of banks in hong kong to a real test. i am pleased to say that the contingency arrangements of banks - whether of a technical or personnel nature - performed very well during that difficult time. nevertheless, the recurrence of disasters and their unpredictable nature should always be a feature of bcp and its continuous review. indeed, the probability of occurrence of these events seems to have increased, along with heightened geo - political tension and the trend of globalisation, not just of trade and markets but also of terrorism and disease. a further area that falls broadly under technology risk comes from outsourcing. continuing pressure on profitability will no doubt result in more banks seeking to outsource their operations to lower - cost centres outside of hong kong. this will in turn give rise to additional operational risks for banks, including the risks of service outage and leakage of confidential customer data. my main observation from recent experience with handling technology risk is that bank management should adopt a more proactive approach towards increasing the overall robustness of the it environment, from both the crime prevention and bcp perspectives. in dealing with these it - related incidents, we noticed the concerns sometimes expressed by bank management about the likelihood of causing unnecessary public panic if these matters were given publicity. many preferred to deal with the problems quietly. the desire to be cautious and to avoid negative publicity is quite understandable. however, we have found that, far from causing panic, our insistence on publicity has been helpful in alerting members of the public of the nature of risks that they are exposed to as bank customers and how they can protect themselves. it enhances public education on the issues at hand and promotes the exercise of a degree of care by bank customers that the situation demands, not just to protect themselves but also to help in protecting the integrity of the system. interestingly, nowadays, we sometimes receive reports of fake web - sites from members of the public even before the banks affected become aware
| 1 |
mar guΓ°mundsson : capital flows and systemic risk in iceland panel comments by mr mar guΓ°mundsson, governor of the central bank of iceland, in norges bank's ( central bank of norway ) 200th anniversary symposium, oslo, 16 june 2016. * * * in my short introductory remarks, i would like to discuss what i consider to be one of the key factors behind the financial crisis in iceland : the interaction between capital flows and systemic risk. i will focus in particular on those aspects that have more general relevance and herald unsolved problems for economic management and financial stability in small, open, and financially integrated economies ( sofies ), such as iceland was before the crisis and now strives to be again, at least up to a degree. the saga of iceland β s experience during the great financial crisis had two separate but interrelated sub - stories. the first story was related to iceland β s boom - bust cycle and problems with macroeconomic management in small, open, and financially integrated economies. this is a story that has played out many times around the globe, and many of its elements have been seen before in iceland. it might have been somewhat more extreme this time around, but it wasn β t fundamentally different. strong capital inflows that met with an insufficient policy response and contributed to huge imbalances in the domestic economy were a key part of the story. i will come back to this later. the second story was the rise and fall of three cross - border banks operating on the basis of eu legislation ( the european β passport β ). this story was much more unique, as it was part of the first banking crisis in europe since the eu single market was formed in the early 1990s. taking advantage of this framework and the prevailing international conditions of ample and cheap credit, these banks grew phenomenally, in less than five years, to almost ten times iceland β s gdp, with most of the expansion being crossborder β or maybe more aptly put, off - border, as the bulk of both financing and investment took place abroad. the result was very big fx - denominated balance sheets with the usual maturity transformation that banks, as we know them, are all about. however, the safety net that we have in national settings to back them up, including lolr facilities, was not there. it was an accident waiting to happen, and so it did. i will be very brief on how the failure of these cross -
|
and p. lowe ( 2002 ), asset prices, financial and monetary stability : exploring the nexus β, bis working papers, no. 114. bordo, m. and o. jeanne ( 2002 ), β monetary policy and asset prices : does β benign neglect β make sense? β international finance, 5 ( 2 ). adrian, t. and h. s. shin ( 2008 ), β financial intermediaries, financial stability and monetary policy β, paper presented at federal reserve bank of kansas city β s symposium, jackson hole, august 2008. leverage. given the interlinkages existing in the global system, today this is true not only in the anglo - saxon systems, but also in the more bank - oriented european context. therefore, while monetary policy should continue to focus on delivering price stability, it should aim at a greater symmetry throughout the cycle and cannot afford to neglect the modifications and innovations affecting the structure of the financial system. we should not, however, underestimate the enormous informational challenge we have to confront. we need to improve our analyses and tools to be able to better assess the risks of a systemic crisis, quantify the effects that our actions may have to mitigate those risks and develop a deeper understanding of the two - way linkages between the financial and real sectors. in this respect, a closer interaction between macroeconomic and macroprudential analyses is essential. this requires stronger cooperation and information sharing among authorities both domestically and cross - border. moreover, greater transparency and improved disclosure practices in the private sector are necessary to be able to fully assess the conditions of the financial system and formulate the appropriate monetary policy. in this sense, monetary policy and policies to achieve financial stability are closely linked. the crisis we are facing is one of the most severe and complex of our times. the challenges will be substantial : restore price stability that would support growth, and ensure that the needed adjustments in bank and households balance sheets and in internal and external macroeconomic imbalances take place in an orderly manner. this will require action on the monetary, fiscal, and regulatory front. it will also require decisive action by the private sector to repair balance sheets, strengthen corporate governance, and improve the functioning of markets. history has repeatedly shown that needed reforms are ignored until a crisis forces action, and that the will to reform quickly dissipates after the crisis has passed. this crisis is no different, and this is an opportunity to strengthen the structure of the financial services industry
| 0 |
banking sector. page 4 of 6 thirdly, the envisaged deposit insurance scheme would be funded by the banks themselves, and all registered banks would be obliged to contribute to the fund. the paper proposes two possible funding options that were considered at the time. however, the most cost - efficient funding mechanism is still being discussed with the banking sector, and the ultimate decision may well differ from the proposals in the paper. it is important that the deposit insurance scheme is funded in such a way that the cost to the banking sector does not exceed the financial stability benefits, and that there is sufficient funding available to make the deposit insurance scheme effective. it is also important to have emergency funding available in the event that the deposit insurance scheme experiences a funding shortfall. emergency funding arrangements should include prearranged and guaranteed sources of liquidity funding and be legislated. this is, however, subject to the proviso that such emergency funding is subsequently recovered from the remaining banks after the failure event. fourthly, the build - up of a fund is but one aspect of the deposit insurance scheme. equally important is the availability of accurate depositor information as well as it3 systems and mechanisms to enable the prompt payout of deposits, supported by a sound legal framework, effective operational controls, and a strong governance framework. there will be much work for both the deposit insurance scheme and the banks once the legislation is in place. in this regard, the international association of deposit insurers, of which south africa is currently an associate member, has developed a set of tried and tested core principles to guide us in the development of a world - class scheme. there are also some more detailed areas that will require further research and deliberation, for example how exactly pooled accounts should be treated and how the small cooperative financial institutions should fit into the deposit insurance scheme framework. these aspects are important and will receive special attention in the coming months, without delaying the legislative processes. we appreciate your interest in this important initiative as a major part of the success of the deposit insurance scheme will depend on the public β s awareness of the scheme and knowledge about how it works. enhancing such awareness will be an ongoing task of the 3 information technology page 5 of 6 deposit insurance scheme, in which the media will be our close allies. the workshop today is a good start. finally, we would like to remind you that there is also an opportunity to submit written comments on the deposit insurance scheme paper until 31 august 2017.
|
we encourage you to make use of this opportunity as it will assist us in making the best policy choices. thank you. page 6 of 6
| 1 |
, but we do want to step in where liquidity evaporates. as the bank of england recently demonstrated, in a crisis a central bank has extraordinary abilities to stabilise conditions, buying time for markets to better read current conditions and to adjust. strong countries have good emergency response systems, and in a real crisis the south african reserve bank was there to backstop the system and return it to normal functioning. such extraordinary policy actions work best when the underlying financial structure is sound, in particular where the debt structure has a long maturity. this is an important reason why our yield curve is steep : long - term debt is genuinely being held, in volumes, by private investors, and it is priced accordingly. the point is : the news is in the price, and it is an attractive price. it is not an artificially low price, held down by policies that we cannot sustain or that are inconsistent with our economic conditions. there is another reason the prices of south african assets are attractive, and that is the exchange rate. as you know, in south africa we have a free - floating exchange rate, and we are very tolerant of exchange rate fluctuations. this is because we have low levels of foreign exchange debt, and we have inflation expectations that do not react strongly to exchange rate movements. this means the currency is free to adjust to global conditions, and when it depreciates, as it has done recently, it makes south african assets very attractive in foreign currency terms. you could say this is a strategy of attracting the smart money : when the currency moves a lot the smartest people buy, and this helps reverse the outflows. let me conclude with a reminder that appropriate policy targets, as well as policy consistency and complementarity are important characteristics of successful economies. increasing debt levels and high inflation are features of bad policy, imbalance and instability, not of sustainable economic growth. we have moved firmly back into a trajectory focused on sustainable fiscal policy, and with monetary policy capable and willing to reduce inflation, the investment environment in the country will continue to improve. i have spoken recently about adjustments to our inflation target itself, which i believe would be in line with the original planning for our inflation - targeting framework and deliver better economic results. i hold firmly that a better inflation target is like the example of a us $ 100 bill lying on the sidewalk, waiting for us to believe our eyes and pick it up. these steps are not enough to achieve the stronger economic growth rates the
|
into the household sector slowly but steadily. wages per worker have been somewhat weak mainly due to the following factors : firms, particularly small ones, have been restraining labor costs in the face of greater exposure to global competition and capital market discipline, and increased materials prices ; and with the high - salaried baby - boomer generation retiring, an increasing number of relatively low - salaried workers, such as new graduates and part - time workers, have been recruited. meanwhile, the number of employees has been increasing at a year - on - year rate of around 1 percent, and employee income has continued rising moderately. at the same time, strength in the corporate sector has been filtering through into the household sector via various channels, for example, increased dividends. while spending on clothes and other daily necessities has been somewhat weak, growth in spending in areas where firms have increasingly been providing new products and services designed to meet consumer needs has been high as evidenced by, for example, strong sales of digital appliances. spending behavior has thus varied with the type of goods and services, but private consumption, taken as a whole, has remained firm. in sum, our economy is currently experiencing moderate expansion. the virtuous circle of growth in production, income, and spending is likely to remain intact against the background of the expansion of the global market and the extremely accommodative financial conditions, although there are uncertainties regarding overseas economies and global financial markets. in this situation, upward pressures on prices are likely to build up gradually. looking at recent developments in price indices, while the domestic corporate goods price index ( cgpi ) has been rising mainly due to increases in international commodity prices, higher materials prices have not been passed through to the retail level as much as at the wholesale level. this seems to indicate that with intensifying competition among firms due partly to globalization and deregulation, many firms are restraining increases in prices through improvements in productivity and various cost reduction measures. in this situation, the year - on - year rate of change in the consumer price index ( cpi, excluding fresh food ) has remained at around 0 percent. however, if the economy continues to grow at a rate exceeding its potential, resource utilization, namely in labor and production capacity, will increase further. in such a situation, it is expected that supply and demand conditions for consumer goods and services will further tighten and that this will exert upward pressure on consumer prices as more firms pass on higher costs to consumers
| 0 |
##ing on specific industries and sections of the population. 3 however, the rise of certain companies and sectors, and the decline or even disappearance of others, cannot be put down to international trade alone. the impact of technological progress in driving structural change is at least as strong. 4 free trade thus often finds itself cast in the role of scapegoat for what is in any case a perpetual process. there is no escaping the reality of this ongoing structural change if a country wants to maintain its competitiveness over the long term. there have also been increasing calls of late for free trade to be curbed because it is not β fair β for certain countries. in this context, the concept of β fairness β is applied in entirely different ways. it is used in assessing bilateral trading relationships, for example, or in connection with alleged violations of existing trade rules. i would like to briefly address both these aspects. it seems rather odd to insist that trade between two countries can only be regarded as fair if the bilateral balance of trade is in equilibrium. trade between the actors in these countries is voluntary, and therefore only takes place if all of the participants stand to benefit from the exchange. such trade is not a zero - sum game in which one side β s gain is the other side β s loss. the view that the trade balance between two countries should be in equilibrium ignores both the reality of global value chains and also the very essence of specialisation. today semifinished products and intermediate inputs can move back and forward across national borders cf. autor et al. ( 2016 ), for example. cf. world trade organization ( 2017 ), for example. page 3 / 9 many times before the end product is complete. simply netting bilateral trade flows is no basis for judging whether trade is fair or not. bilateral trade balances that are not in equilibrium are not a problem per se, and are instead much more an expression of the respective parties focusing on their own strengths. a country β s deficit with one trading partner can be financed through its surplus with another. that said, i do not want to paint too rosy a picture of the current trading system. this brings me to the second facet of the concept of β fairness β. the accusation that not all countries play by the rules of global trade is not without justification. chart 3 shows that the number of tariff and non - tariff barriers to trade has increased again of late β with the latter often opaque and thus potentially even more damaging than customs duty
|
mario draghi : one year of ecb banking supervision speech by mr mario draghi, president of the european central bank, at the ecb forum on banking supervision, frankfurt am main, 4 november 2015. * * * ladies and gentlemen, back in 2012, when it was decided to establish a single supervisory mechanism ( ssm ), many a critic claimed that either it was impossible, or that it would take forever. and yet here we are, marking the first anniversary of the ssm with this conference, reflecting no longer so much on the structure of supervision, but on its content. now, the critics tell us that other necessary improvements to the institutional architecture of the euro area, and of the eu, are either impossible, or will not happen during our lifetime. you will forgive me for not being convinced. the establishment of the ssm was neither the start, nor the end of the suite of institutional reforms that we must undertake to restore in europe the stability that is the premise for a return to prosperity. but it was a crucial step and in many ways it was the key to going further. let me put the ssm β s significance in a broader perspective : in the early years of the euro, we lived under the illusion that we had established a fullfledged monetary union. there can, however, only be a single money if there is a single banking system. for money to be truly one, it has to be truly fungible independent of its form and independent of its location. in particular, deposits, which are the most widespread form of money, have to inspire the same level of confidence wherever they are located. to ensure that deposits are truly as safe everywhere across the euro area, the likelihood that a bank fails has to be independent of the jurisdiction where it is established. resolution has to follow the same process in the event that a bank fails. and, when push comes to shove, depositors must be afforded similar protection wherever they are located. fundamentally, this was and remains the agenda of banking union. and it is why banking union was conceived with three pillars : a single supervisory mechanism, a single resolution mechanism, and a uniform deposit insurance scheme, which remains to be specified. for money to be truly one, we need all three. supervision had to come first, not because it was the easiest to establish, but because it was the necessary condition to proceed with the other pillars of banking union. that the ssm was established at the ecb owes much
| 0 |
prices ; hence, restructuring measures were necessary to address inherent risks in the financial institutions, which were coming from : bis central bankers β speeches β’ high leverage ; β’ falling asset quality ; β’ funding constraints ; β’ insufficient capitalization ; β’ fragmentation and conflicts of interest in supervision ; such measures were associated with public intervention in the financial system ( mostly banks ), increasing further the linkage between β banks and sovereigns β and creating more β moral hazard β. at this point, a financial regulatory reform was necessary at international level, to address such risks. under the guidance of the g20, broader and more comprehensive regulatory reforms were designed, with a special contribution by basel committee, the financial stability board, imf / wb group and many other. such reforms were aiming to : β’ strengthen the resilience of the financial system ; β’ avoid future similar crisis ; in more details, such reforms included : β’ improving the surveillance superstructure of the financial system, through : β establishing institutions with macro - prudential powers to monitor, assess and address systemic risk ( in eu β esrb, ecb ; in us β fsoc ; in uk β fpc ; etc. ) ; β reducing fragmentation and possible conflicts of interest in supervision, and achieve supervision consistency : notably in eu through the β banking union / single supervisory mechanism β : ecb β eba β esrb ; in uk β boe β pra β fpc ; β new directives to ensure timing and effective restructuring of banking business ( brrd ) ; β better design and use of tools to assess resilience of financial institutions to risks, like stress - testing ( in eu β eba / ecb ) ; β’ improving the financial system infrastructure, through : β better protecting the β core β banking activity from other activities like β proprietary investment β through new rules and proposals ( in us β the β volcker β rule ; in uk β proposals of the β vickers β commission ; in eu β proposals in β liikanen β report ) ; β improving clearing and settlement of securities transactions and streamlining financial reporting ; β improving deposit guarantee schemes β’ improving in banks under β basel iii β : β the quantity and quality of the capital ; β the funding structure β their risk management requirements and capabilities ; to summarize, the legacy of previous financial excesses and the following crisis, is a changing financial landscape ultimately determined by international financial regulatory reform, local financial market characteristics and the crisis impact itself. bis central bankers β speeches following
|
has been drafted and is pending approval by the parliament. this law regulates the licensing, supervision and activity of the slas in compliance with the best standards. in close collaboration with the albanian deposit insurance agency, amendments to the law on deposits insurance have been drafted. these amendments consist in new norms addressing the slas and include legal persons in the insurance deposits scheme. the past year was successful also regarding the information technology. although such projects are less visible to the public, they are of key importance. at the beginning of 2015, the afisar system started operation - this is the central electronic register for the documentation of each element that accompanies the issue and transactions with securities issued by the albanian state. in the meantime, other successes achieved with regard to information technology include : β’ automation of the reporting system of banks to the bank of albania ; β’ integration and optimisation of the it network utilisation, thus reducing operational costs of the bank of albania ; β’ automation of accounting operations at boa branches ; β’ and increase of information processing and storing capacities. bis central bankers β speeches bigger challenges lie ahead of us in 2016. another important objective is boosting credit to support the private sector, certainly at lower interest rates. the business plans of banks for 2016 render us optimistic in this regard. meanwhile, once again i emphasise that our monetary policy stance will remain accommodative in 2016. furthermore, private sector's demand will be low throughout 2016, thus creating premises to increasingly channel the banking system's liquidity to the private sector. i would like to guarantee the banking system in albania that the bank of albania will be a reliable, open and serious partner, in compliance with its mandate, implying its supervisory function. one of the main aspects in our work will be the compilation of a particular law to deal with banks facing a difficult financial situation, also known in our daily jargon as the resolution law. this is in the light of an important contemporary directive of european union, which we are working to introduce in our banking legislation. last, but not least, we will continue our efforts during 2016 for the further institutional perfection the bank of albania, aiming a fast approximation to the model of escb central banks. the new organisational structure and the three - year development strategy of the bank of albania will guide a set of decisions of the bank of albania's supervisory council to improve legal and sub - legal acts. the daily activity of the bank of albania's departments,
| 0.5 |
mar - 08 14 - mar - 08 29 - feb - 08 15 - feb - 08 01 - feb - 08 18 - ene - 08 04 - ene - 08 19 - dic - 08 05 - dic - 08 21 - nov - 08 real growth of the deposits in the financial system * deposit real growth rates 07 - nov - 08 chart 8 basis points chart 7 spread between the average deposit interest rate and the policy rate - 140 - 160 - 180 - 200 - 220 - 240 - 260 - 280 - 300 * deflated by cpi ex - food credit growth remained strong even for foreign - owned banks ( chart 9 ), which work as subsidiaries in colombia and are subject to the same regulatory framework as domestic banks. however, lending interest rate spreads did rise in october 2008 thus reflecting a larger risk premium, especially for prime and corporate treasury loans ( chart 10 ). our financial system survey showed tightening local credit conditions in the fourth quarter ( chart 11 ) and both firms and banks reported anecdotal evidence regarding more expensive credit with shorter maturities. interestingly, throughout 2009 the behavior of foreign and domestic banks in the local loan market has diverged. foreign banks have drastically cut their exposure to consumer credit while domestic banks have kept high rates of growth of loans ( chart 9 ). at the same time the external credit lines available to the colombian banks were reduced and their cost raised ( chart 12 ). nonetheless, the use of those lines remained below the approved amounts and declined along with them ( chart 13 ). this reflected, among other things, a dramatic fall in the demand for funding linked to international trade ( chart 14 ). chart 9 real growth of the colombian financial system loans 25, 0 % 20, 0 % % 15, 0 % 10, 0 % 5, 0 % 0, 0 % local banks foreign banks 4 / 08 / 2009 4 / 07 / 2009 4 / 06 / 2009 4 / 05 / 2009 4 / 04 / 2009 4 / 03 / 2009 4 / 02 / 2009 4 / 01 / 2009 4 / 12 / 2008 4 / 11 / 2008 4 / 10 / 2008 4 / 09 / 2008 4 / 08 / 2008 4 / 07 / 2008 4 / 06 / 2008 4 / 05 / 2008 4 / 04 / 2008 4 / 03 / 2008 4 / 02 / 2008 4 / 01 / 2008 - 5, 0 % total * deflated by cpi ex - food chart 10 lending - deposit interest rate spreads basis points average lending rate - deposit rate
|
only a portion of this increase is due to temporary agricultural supply conditions attributed to el nino weather. demand shocks that threatened persistent hikes in future inflation and imbalances that can jeopardize the sustainability of economic growth have been responsible for the rest. other evidence revealed an excess of demand above supply in colombia, which, although moderate, is still visible. the various statistical techniques used to analyze the difference between actual and potential output ( the gdp gap ) all suggest the former exceeds the latter by somewhere between 1 to 2. 5 percentage points. most of the capacity indicators are close to historically high levels. another very straightforward piece of evidence is by how much our current gdp growth rates lie above historical averages. this year, the annual growth rate during the first semester was 7. 6 %, which is the highest for the first 6 months of a year since we have had quarterly data at our disposal. a situation where economic growth surpasses its historic average and the gdp gap that keeps positive represents a serious risk of inflation. this demand pressure is also visible in our imports. nominal imports in dollars have increased at an average annual rate of 34 % since 2006. this is much higher than the 7. 7 % average growth observed since 1994. nominal exports in dollars have soared as well, but less than imports. this means the current account deficit has risen every quarter since 2006. in summary, our challenge in the second half of 2006 and the first of 2007 was to deal with inflationary demand. since april 2006, our monetary policy response has been to raise the banco de la republica β s intervention interest rates by 325 basis points. as of may 2007, these hikes have been supplemented with a 24 % average marginal reserve requirement on liabilities in the banking system. what i want to emphasize is that in situations such as the job of keeping inflation close to a well β defined target is the same as keeping growth on a sustainable path. there was no trade - off. the growth rate of 11 % in domestic demand during the first quarter of 2007 was too high. had we let demand continue to grow at high rates, it would have meant not only excess inflation, but a worsening - quality and more risky investment, as well as an unsustainable current account deficit. let me also assure you that my colleagues and i at banco de la republica and in other areas of the government are very much aware that for growth to bring lasting benefits, it must be sustainable. we have public
| 0.5 |
banks. in this same 20 - year period, the number of big bank offices increased by about 42 percent, and the number of offices per big bank more than tripled, from just under 17 to nearly 55. the net effect was a decline of more than 25 percent in the share of banking statistics in this paragraph and the next are based on a definition of the term " community bank " that includes independent commercial banks and thrifts with assets less than $ 1 billion and banks and thrifts that are subsidiaries of holding companies with total banking assets less than $ 1 billion, all in 2008 dollars. the term " big bank " is defined to include all other commercial banks and thrifts. offices operated by community banks. the shares of deposits, banking assets, and small business loans held by community banks have declined substantially as well. these declines can be explained by a number of factors, including legal developments, technological advances, and changes in the business strategies of larger banks and nonbank financial service providers. for example, deregulation has allowed banks to expand their geographic reach, facilitating the formation of a number of large, geographically diversified banking organizations. these large banking organizations can now be found in many local markets, competing for business with the community banks that call those markets home. here in north carolina, the number of large banks with a branch presence in the state has more than doubled over the past twenty years, from 18 to 39. at the same time, technological advances have made information about households and small businesses more readily available, allowing some ( typically large ) institutions to substitute credit scoring for more costly traditional techniques in the underwriting of some types of consumer and small business loans. this development has allowed larger banks to compete more effectively with community banks in providing these types of loans. another salient change in the competitive environment is that non - bank financial service providers have become increasingly important participants in the financial services sector, capturing a large and growing share of the retail financial services business. for example, while the number of credit unions has declined by 42 percent since 1989, credit union deposits have more than quadrupled, and credit unions have increased their share of national deposits from 4. 7 percent to 8. 5 percent. in addition, some credit unions have shifted from the traditional membership based on a common interest to membership that encompasses anyone who lives or works within one or more local banking markets. in the last few years, some credit unions have also moved beyond their traditional focus on consumer services to
|
, and i think we and they have been well served by a culture that emphasizes objective, expert analysis ; professionalism ; dedication ; and independence from political influence. whatever the fed may have achieved in recent years reflects the efforts of many people who are committed, individually and collectively, to pursuing the public interest. although the fed undoubtedly will face some difficult challenges in the years ahead, our people and our values make me confident that our institution will meet those challenges successfully. references adrian, tobias, daniel covitz, and nellie liang ( 2013 ). β financial stability monitoring, β finance and economics discussion series 2013 β 21. washington : board of governors of the federal reserve system, october. bis central bankers β speeches bagehot, walter ( [ 1873 ] 1897 ). lombard street : a description of the money market. new york : charles scribner β s sons. bernanke, ben s. ( 2013 ). β the crisis as a classic financial panic, β speech delivered at the fourteenth jacques polak annual research conference sponsored by the international monetary fund, washington, november 8. board of governors of the federal reserve system ( 2007a ). β fomc announces it will increase the frequency and expand the content of economic projections released to the public, β press release, november 14. β β β ( 2007b ). β minutes of federal open market committee, october 30 β 31, 2007, β press release, november 20. β β β ( 2012a ). β federal reserve issues fomc statement, β press release, december 12. β β β ( 2012b ). β federal reserve issues fomc statement of longer - run goals and policy strategy, β press release, january 25. β β β ( 2013 ). β federal reserve issues fomc statement, β press release, december 18. chen, han, vasco curdia, and andrea ferrero ( 2011 ). β the macroeconomic effects of large - scale asset purchase programs, β federal reserve bank of new york staff reports 527. new york : federal reserve bank of new york, december. chung, hess, jean - philippe laforte, david reifschneider, and john c. williams ( 2012 ). β have we underestimated the likelihood and severity of zero lower bound events? β journal of money, credit and banking, vol. 44 ( february supplement ), pp. 47 β 82. congressional budget office ( 2013 ). estimated impact
| 0.5 |
long remaining maturity. how expensive it will be to fund this portfolio will therefore depend on the development of the repo rate for a long time to come. according to the current assessments made both by ourselves and others, it is more likely that the bonds that we have purchased in recent months will lead to losses rather than profits for the riksbank. for example, the yield on ten - year government bonds is now 0. 2 per cent. the riksbank does not make forecasts for the repo rate for more than three years in the future. even within this limited time horizon, interest rate developments are very uncertain, but let us in any case assume that the repo rate develops in line with the forecast. and let us assume that the repo rate then continues to rise slowly towards 4 per cent ( see chart 5 ). 14 the average interest rate level up until the bond matures in 2026 will then be 1. 2 per cent. paying on average 1. 2 per cent in interest and receiving on average 0. 2 per cent in interest represents a loss of 1 per cent a year. overall, this would be about 10 per cent up until the bond matures. this loss can be seen in chart 5 as the difference between the repo rate, i. e. the funding cost, and the forward curve that follows from the pricing of the bonds. this difference increases from about 0. 3 percentage points on short - term maturities to about 2 percentage points on the ten - year horizon, and is hence on average 1 per cent. the example shows that the interest rate risk and the possible loss are particularly large when we purchase bonds with long maturities. but ten - year bonds are not, as i have said, representative of the bonds purchased by the riksbank. a more representative bond has a maturity of five years. for a five - year bond purchased today, the loss will be between 3 and 4 per cent of the purchase sum if the interest rate develops as in this example. this is of a similar magnitude to the calculations based on the estimated term premium. 12 this forecast is based on the national institute of economic research β s interest rate forecasts. the low interest rates have also led to an increase in the market value of the foreign exchange reserve, which has contributed significantly to an improvement in the riksbank β s reported profit. this improvement is however almost entirely an accounting illusion that will be counterbalanced by lower profit in the period
|
the money market participants in prospera β s survey thought at the time that the repo rate would be brought back into positive territory towards the end of 2016 and then continue to increase. one can say that the riksbank purchased government bonds that gave a return of approximately zero but that were expected to be funded according to the repo rate forecast. the chart shows that the riksbank therefore expected to make a loss, as the funding costs were expected to be higher than the yield. 11 chart 4. actual and expected interest rate developments per cent repo rate survey mpr february 2015 mpr october 2016 - 1 - 1 note. survey responses show the mean value for the repo - rate expectations of money market participants in february 2015. β mpr β refers to the riksbank β s forecast for the repo rate in its monetary policy reports. sources : statistics sweden and tns sifo prospera but chart 4 also shows that the repo rate has so far turned out to be much lower than the interest rate forecasts. the bonds have therefore risen in value and the funding of the bond purchases seems to become cheaper than expected, something which, at least in the short term, has led to higher profits than expected for the riksbank. this is 11 an alternative measure of the future repo rate is provided by the market β s pricing of certain derivatives. this pricing suggested that the repo rate would increase more slowly than in the riksbank β s forecast, but the bond purchases would realise losses also according to these market - based expectations. 6 reflected in, for example, the forecast for the riksbank β s dividend - qualifying profit in 2015 and 2016. 12 at the end of 2014, a total loss of just over sek 10 billion was expected for those two years. 13 in march 2015, when bond purchases had begun on a small scale, the expected loss had risen to almost sek 14 billion. the latest forecast, from october this year, has the benefit of hindsight and indicates that the outcome will instead be a profit of almost sek 13 billion. losses likely in the period ahead the fact that the riksbank β s bond purchases have so far been profitable does not mean that this will always be the case. for example, the ever - lower interest rates have made bond purchases after the spring of 2015 increasingly costly. the riksbank has now purchased bonds for about sek 275 billion and several bonds have a
| 1 |
million us $ 12. 0 billion data not available but perhaps rising rs. 161 billion 8 % positive exports tax revenues rupee - dollar parity foreign direct investment foreign exchange reserves poverty incidence us $ 88 million per month us $ 7. 8 billion rs. 391 billion depreciating us $ 472 million us $ 1. 6 billion 33 % gdp growth rate inflation fiscal deficit / gdp current account / gdp public debt / gdp external debt / gdp interest payments / govt. revenues remittances positive positive positive positive positive negative positive negative note : all indicators in column 1 pertain to 1998 - 99 or october 1999. all indicators in column 2 pertain to 2004 - 05 or end october 2004.
|
. e. less negative, interest rates, which led to an upward drift in saron, shown by the black line in chart 4. these upward pressures on saron and other short - term money market rates, while anticipated, were not desirable from a monetary policy perspective. since last november, the snb has conducted a number of operations to keep secured shortterm money market rates close to the snb policy rate. between november 2019 and july 2020, and in particular since the end of march, we conducted several fine - tuning operations in the overnight segment of the repo market. these operations are shown as red diamonds in chart 4. in a fine - tuning operation, the snb places so - called β cash provider quotes β directly on the repo trading platform, which any repo market participant can then β hit β if they choose to do so. when the snb offers funds at a particular quote, cash takers have no reason to accept liquidity at a higher β that is, less attractive β interest rate. with these fine - tuning operations, the snb can cap repo rates and limit upward spikes. since july, we have further supported the gradual convergence of saron towards the snb policy rate by auctioning one - month funds on the repo platform. these auctions are depicted as blue triangles towards the right - hand edge of chart 4. unlike fine - tuning operations, with which the snb caps interest rates, the snb β s one - month auctions offer liquidity on a medium - term basis. banks can satisfy some of their demand for liquidity by participating in these auctions. as the participating banks are then no longer as dependent on the secured interbank market for obtaining the desired amount of liquidity, aggregate demand for overnight liquidity in the repo market falls, thereby reducing upward pressures on saron. we also wish to note that, over time, liquidity can be redistributed between banks via other channels than just the repo market. for instance, liquidity redistribution may take place via the transfer of customer deposits and longer - term deposits between banks. naturally, such adjustment processes take some time. let me summarise the key points we have made so far. the steering of short - term money market rates continues to work β even in negative territory. three interest rates play a key role page 10 / 13 here. the snb policy rate is used to communicate the monetary policy decision and, in
| 0 |
better served by the bank of thailand empowered by the new financial institutions businesses act currently in legislative process. it is my belief that good corporate governance is key to safe and strong financial system because prudent and capable bank management that adheres to its professionalism overseen by independent and financial literate board of directors will be responsible to not only its shareholders but also depositors and consumers in all aspects of its business, including retail banking. in order to put such belief into a concrete form, the bank of thailand has announced guidelines supporting the practice of good corporate governance of banks β board and management. 5. conclusion the discussion thus far has covered various aspects of the question posed to me - what do regulators really want? - by now you will have already known my answers to this question. in essence, it is our hope that industry participants will make their best effort to do their job as well as we do ours to meet the challenges set out in the financial sector master plan : β’ providing financial services for all potential users indiscriminately to those in urban and rural areas, whereby viable users with simple needs and those with more sophisticated needs have access to financial products and services commensurate to their depth of financial literacy and risk appetite at reasonable price. β’ developing a competitive, efficient, stable, and balanced financial system β’ fostering fairness and protection for customers whereby financial institutions follow good corporate governance principles and consumers receive adequate information and advice from various financial institutions to make informed investment decisions. thank you.
|
compliance on the part of financial institutions. regulation and guidelines are also subject to regular review and revision to make sure that they are up to date and in tune with technological changes and market developments. to ensure that our supervisors competently meet these challenges, we have undertaken steps to enhance their supervisory capacity. the school for examiners was established to provide training programs ranging from basic concepts of bank supervision to how to lead a team in bank examination based on risk - based supervision. specifically, we are working to enhance quantitative skills necessary for comprehensive implementation of basel ii and financial engineering skills to keep pace with the developments of new financial products and package risks. to maintain stability : the prime concern shared by regulators of financial institutions is a stable financial system that is resilient to shocks and supports efficient allocation of resources in the real economy. one of the pitfalls of the retail banking market in thailand before the asian crisis was information asymmetry whereby creditors only had partial knowledge of their debtors β financial indebtedness, including history of repayment. to address this weakness, two credit bureaus were set up so that banks can accurately assess the risk profile and repayment ability of a debtor. this in turn enables banks to differentiate good debtors from more risky ones, and charge them commensurate to their risk profiles. in view of bank oversight, the bank of thailand has reoriented its focus on supervisory framework away from solo - basis transaction - testing analysis, towards risk - based supervision on consolidated basis. to fulfill this objective, we have already issued guidelines on all key risk categories and undertaken internal reform and capacity building to meet the challenge posed by comprehensive risk - based supervision. an example in this area is the development of examiners β manuals that are regularly revised to ensure consistently high standards of supervision. 4. going forward ladies and gentlemen, in the next few years, thailand anticipates both opportunities and threats in the retail banking sector for existing banks in the light of the implementation of the financial sector master plan. as regards the focus of regulators, more attention will be given to watchful monitoring of the use of credit cards, monitoring of non - bank credit institutions, and observance of governance by market participants. the changing landscape of financial system to be brought about by the financial sector master plan will create opportunities for present market participants that have the courage to explore the niche and capability to satisfy the specialized needs of this group of customers. they come in the form of a new type
| 1 |
german has talked about it : 6 % of financing from the financial sector to the private sector, 6 % of gdp, and 8 % of capitalization from the capital market in the argentine economy. moreover, the bcra has sterilized the savings of argentine companies for usd60, 000 million through leliqs and repo transactions. although this might be seen as a macroeconomic problem, in fact, it is an opportunity. considering its domestic savings, argentina has great capacity to expand investment and financing, and that is how we understand it. thus, while solving the external restriction and inflationary inertia problems, it is also necessary to develop the capital market. this is a complex process because it does not only involve macroeconomic problems but also economic agents'performance problems. from the moment statistics started to be produced in this regard, argentina has built up foreign assets amounting to usd190, 000 million. in the balance of payments, argentina's residents are world creditors for usd380, 000 million. since 2006, argentina has imported u. s. banknotes for usd171, 000 million. therefore, we need to solve the problem of inertia and the lack of capital market to overcome these high levels of inflation. the capacity or possibility of economic growth is necessary but not enough for us to achieve this objective. i would like to thank you, once again, for joining us in this conference. i would like to thank those who have presented their ideas, the economic research deputy general management office, and the institutional and international relations departments of the bcra for the success of this conference. we hope that this tradition continues in the coming years. thank you. 3 / 3 bis - central bankers'speeches
|
the convertibility system. argentina was able to grow because it was undergoing an external debt restructuring process and the price of commodities provided enough margin to avoid external restriction. so, i believe we can learn from our own experience. during the last jackson hole economic symposium, jerome powell said that inflation was a problem of imbalance between supply and demand. he said something that is 1 / 3 bis - central bankers'speeches also true : central banks can restrict demand though they have few tools to expand supply ; and, when they have to act, they do so accordingly. what underlies my argument is that growth is the way to avoid inflationary processes. as i was saying, in argentina, the restriction is in the external and energy sectors. powell said something that we all know : the restriction is in the u. s. labor market and in the long term. if we think of democratic economies with situations of poverty and inequality, very long periods of tightening of demand may have very negative social effects and may also question the credibility of those who carry out the anti - inflationary policy. long periods of high interest rates seeking to reduce inflation have social consequences, and this may also affect the credibility of the institutions that have to curb inflation. i believe that we are also in a special moment of paradigm change. i mentioned it when i opened the conference. charles goodhart and manoj pradhan wrote the great demographic reversal. goodhart wrote this book in 2019 before the pandemic. he stated that the incorporation of china into the global market of industrialized goods caused the inflationary impulses from industrial goods to be reduced due to the low wages paid by china and the enormous labor force it had to expand its exports. in 2000, the ratio of chinese workers'wages to american workers'wages was 34. by 2018, that ratio had dropped to 5 and it posted a downward trend. goodhart's pointed out that the opportunity to take advantage of low wages in the chinese economy had ended. figures support this situation. in 2030, china will have 500 million middle - class people and only 100 million low - income people. in 2015, there were 500 million lowincome people. this means an extraordinary increase in china's domestic absorption and, as i mentioned before, it will not moderate the prices of industrial products. coincidence is not causation. the presence of china in the supply of industrial goods, favored by globalization, has coincided with a long period of price stability and
| 1 |
edward scicluna : price stability and beyond β understanding the impact of the ecb β s strategy review speech by mr edward scicluna, governor of the central bank of malta, at the finance malta conference, valletta, 20 july 2021. * * * the european central bank ( ecb ) recently published its new monetary policy strategy, following a year - long review process that encompassed multiple layers of stakeholders β including the public. all the monetary policy instruments and concepts were minutely examined by both the experts and the governing council. a number of important changes were made as a result of the review β which was last carried out in 2003. the world has changed since then, and central banks β including the ecb β face numerous new challenges. we need to keep in mind that the ecb β s primary mandate β according to the treaty on the functioning of the european union β is price stability. however, the treaty does not specify what price stability means. that is where the ecb β s monetary policy strategy comes in, which quantifies price stability and in turn helps to anchor inflation expectations. for some time, the ecb saw high inflation as being the red flag. this is why the target has till now been an inflation rate of β close to but below 2 % β. what has changed since 2003? structural developments have lowered the so - called β equilibrium real rate of interest β β the interest rate that is consistent with inflation at its target rate and where the economy is operating at its optimum. this equilibrium rate has gone down β while in tandem the global economy has had to weather several major shocks, from the global financial crisis to the pandemic. now, low inflation rates are being seen as just as much of a cause for concern and as a result, the target has now been set to 2 % β over the medium - term β and the red flags are not only rates above that, but also rates below it. this decision was aimed at the possibility that the persistent low - inflation environment was being exacerbated by ambiguity about the level of the inflation aim and a perception of the aim being asymmetric. this decision was taken after an extensive assessment of the ecb β s unconventional monetary instruments, which looked at which ones were effective in raising output, employment and inflation β as well as how they affected each other. the new symmetric target is straightfoward, clear and unambiguous. this means that it will provide a more solid anchor
|
. this applies in particular to the financial sector. thus, for example, while participation in european financial markets will present unprecedented opportunities for risk diversification, this also carries with it an increased danger of contagion should weaknesses develop in specific segments of the market. furthermore, the target payment system will facilitate the transmission of financial risks between different institutions operating within member states, calling for extreme vigilance on the part of the central bank of malta and the mfsa. while most sectors of the maltese economy have been exposed to international competition for a number of years now, and while the financial sector incorporates adequate safeguard measures, there is clearly no room for complacency. as hari vittas, alternate executive director for malta β s constituency in the imf aptly put it during a recent imf economic forum, β the potential benefits of monetary integration may be large, but they are not automatic and can easily be wasted in the absence of good policies. β 1 on balance, however, the benefits of participation in the euro area should more than outweigh the costs, such that over a sufficiently long time span the growth potential of an economy should be higher than it would have been outside the union. this expectation is supported by the results of recent research. an extensive study by andrew k rose of the university of california at berkeley, for example, concludes that a currency union results in approximately a doubling of trade. within the euro zone, moreover, it is estimated that trade volumes have increased by 15 per cent, beyond what can be explained by growth and other factors. recognizing such benefits of emu, many credit rating agencies foresee an upgrade in the ratings of those new member states that are among the first to adopt the euro, 2 although they generally emphasize that what matters is establishing a track record with respect to the implementation of reforms, especially fiscal consolidation. 3 the broader macroeconomic challenge these observations notwithstanding, premature participation in a currency union is nevertheless associated with some potential pitfalls. these result from the loss of monetary and exchange rate policy as a tool for stabilisation purposes. as i will shortly explain, however, the arguments typically advanced against participation in a currency union are not very strong in malta β s case. it is sometimes argued, for example, that the maltese economy might be on a different point on the business cycle relative to the euro area, warranting a different monetary policy stance from that of the imf survey. adopting the euro. vol. 33. number 10
| 0.5 |
, and that things will likely stay that way until the next scientific or technological revolution. 4 r - star descends these global shifts in demographics and productivity have two important implications for the future of our economies and for monetary policy. first, slower population and productivity growth translate directly into slower trend economic growth. second, these trends have contributed to dramatic declines in the longer - term normal or β neutral β real rate of interest, or r - star. slower trend growth reduces the demand for investment, while longer life expectancy tends to increase household saving. 5 this combination of lower demand for and higher supply of savings, along with other factors, has pushed down r - star. with open capital markets, these global changes in supply and demand affect r - star globally. the evidence of a sizable decline in r - star across economies is compelling. the weighted average of estimates for five major economic areas β canada, the euro area, japan, the united kingdom, and the united states β has declined to half a percent ( figure 8 ). 6 that β s 2 percentage points below the average natural rate that prevailed in the two decades before the financial crisis. a striking aspect of these estimates is that they show no signs of moving back to previously normal levels, even though economies have recovered from the crisis. given the demographic waves and sustained productivity growth slowdown around the world, i see no reason to expect r - star to revert to higher levels in the foreseeable future. the global decline in r - star will continue to pose significant challenges for monetary policy. given the limited policy space for interest rate cuts in future downturns, recoveries will be slow and inflation below target. the limitation in the ability of central banks to offset downturns results in an adverse feedback loop, whereby expectations of low future inflation drag down current inflation and further reduce available policy space. 7 2 / 4 bis central bankers'speeches new facts, new approaches policymakers around the globe need to prepare for the challenges of navigating the new realities of slow global growth and low r - star. this necessitates new thinking and approaches to monetary, fiscal, and other economic policies. starting with monetary policy, central banks should revisit and reassess their policy frameworks, strategies, and toolkits, to maximize efficacy in a low r - star world. the bank of canada already regularly does this, and the federal reserve is currently undergoing a review of its framework and strategy. 8 absent such changes,
|
central banks will be severely challenged to achieve stable economies and well - anchored inflation expectations. outside of monetary policy, there are a number of avenues by which fiscal authorities can enhance the resilience of economies to negative shocks. one is to strengthen the β automatic stabilizers β that provide a boost to the economy during a downturn. a second is to align debt management decisions more with monetary policy. for example, during a downturn, the fiscal authority could choose to shorten the duration of debt issuance to reinforce the effects of central bank quantitative easing. third, regulatory and supervisory policies that support the resilience of the financial system can limit the economic effects of negative shocks. finally, fiscal and other economic policies can attack directly the sources of slow growth and low r - star. this includes raising public and private investment in human and physical capital, infrastructure, science and technology, and policies aimed at removing barriers to participation in the labor force and the economy more broadly. conclusion the facts have changed, and so it is time our change our minds also. it is often said that change is hard. but, experience teaches us that it is better to prepare for the future than wait too long. ultimately, failure to prepare often means preparation for failure. 1 this is not true for all population groups. see anne case and angus deaton, mortality and morbidity in the 21st century, brookings papers on economic activity, spring 2017, in which they document declining life expectancy for middle - aged, less - educated non - hispanic whites in the united states since the year 2000. 2 united nations, world populations prospects : key findings and advance tables, 2015 revision. 3 antonin bergeaud, gilbert cette, and remy lecat, productivity trends in advanced countries between 1890 and 2012, review of income and wealth, volume 62, issue 3, pp. 420 β 44 ( september 2016 ). 4 robert j. gordon, the rise and fall of american growth : the u. s. standard of living since the civil war, princeton university press, princeton, new jersey, 2016. 5 carlos carvalho, andrea ferrero, and fernanda nechio. demographics and real interest rates : inspecting the mechanism, european economic review, volume 88, pp. 208 β 26, 2016 ; etienne gagnon, benjamin k. johannsen, and david lopez - salido. understanding the new normal : the role of demographics. finance and economics discussion series, board of governors of the
| 1 |
challenge in the years ahead. i believe the key solution here lies in productivity increases in agriculture and energy in the medium term. regarding agriculture, this necessity is much more evident in emerging markets β in order to keep up with the demand growth, considering the higher share of food in the consumption basket. rapid employment shift from agriculture to manufacturing & services, and the labor - intensive structure of production necessitates a reformation in this sector. likewise, a similar productivity improvement is inevitable for energy both in emerging and developed economies. however, given the limited supply of resources, efficient energy use gains a crucial role at this point. according to the international energy agency, improved energy efficiency in buildings, industrial processes and transportation could reduce the world β s energy needs in 2050 by one third ( sophie hebden : β invest in clean technology says iea report β, 2006 ). in this context, energy efficiency together with renewable energy, energy obtained from natural resources, are said to be the twin pillars of sustainable energy policy. bis central bankers β speeches dear participants, against this backdrop, in the remaining part of my speech, i would like to share our experience in dealing with commodity price volatility, especially in the context of monetary and fiscal policy. volatility in oil and other commodity prices has both direct and indirect effects on inflation. in this manner, there is a debate in the literature on how a central bank should respond to the changes in commodity prices. since oil and other commodity - based products are an important component of consumption basket, it is impossible to avoid the so called β firstround effects β of commodity prices, which in turn translates itself into inflation volatility. however, temporary movements in commodity prices do not affect the mediumterm inflation trend, as long as they do not disrupt the general pricing behavior. therefore, central banks acting on a medium - term perspective, typically do not give sharp policy responses to these primary effects as doing so may have strong negative impacts on the social welfare. on the other hand, a persistent increase in commodity prices may adversely affect inflation expectations and therefore pricing behavior of economic agents. this may entail prolonged increases in general price level and, accordingly, high costs associated with increasing inflation. therefore, it is important for central banks to pay close attention to the evolution of inflation and inflation expectations in order to contain the second - round effects of the increases in commodity prices. at the central bank of turkey, we frequently state that we will not react
|
. needless to say, the course of commodity prices has implications on many other key macro variables. for example, as a net energy - commodity importer, turkey β s dependence on energy imports makes the current account balance more sensitive to volatility in commodity prices. recent uncertainty surrounding the energy market is not comparable to any other period in the near history. moreover, there is a significant risk that commodity prices stay volatile due to uncertainties regarding global economy and the exceptionally loose monetary policies across the globe. therefore, medium - term outlook for commodity prices is unusually hard to predict. in the long term, supply conditions and structural policies should adjust to stabilize the energy and other commodity prices. the recent concrete steps as part of the medium term programs in turkey, aiming at curtailing the dependence on energy imports by switching towards domestically produced and renewable energy sources, have important implications also for decreasing the sensitivity of current account balances to international price movements. the key question here is how to smooth out the impact of the volatility in energy and other commodity prices on the domestic economy in the short to medium term, while there is a heightened degree of uncertainty regarding financial and real factors. introducing a fixed element into the sales tax on gasoline or other energy prices might be an effective method in dealing with this issue. in the case of turkey, for example, there are two types of taxes on the retail gasoline prices. the first one is the vat that is proportional to the price ; the second one is the special consumption tax ( sct ) that is a fixed tax. the sct forms a significant portion of the retail gasoline prices and attenuate the volatility of final prices that consumers face, since it is not a proportional tax. this tax structure not only smooths out the fluctuations in retail gasoline prices but also avoids the need for subsidies, discretionary choices and associated fiscal costs. this conference serves as a perfect platform to discuss alternative methodologies on these issues. once again i would like to welcome you all to istanbul and hope that we will address some of the challenges regarding commodity prices and the global economy in this meeting. thank you. bis central bankers β speeches
| 1 |
been prohibitive. with advent of internet and wireless communication systems gaining wide acceptability, this situation is, however, rapidly changing, and possibilities for cost - efficient sale and distribution of government securities are increasing. leveraging such new technology to access a broader set of potential investors could also have implications for the design and functioning of the market and could change investor profiles. in order to promote retail participation, it is essential to promote financial literacy and investor education, ease access to the g - sec market by leveraging technology and incentivising intermediaries including use obligation in primary dealers / banks, etc. to place securities with end investors ; incentivising collective investment vehicles, such as, mutual funds, to cater to investment needs of the retail investors in g - sec market. 11. they can also serve as an alternative placement for funds other than bank deposits, inducing more competition in this part of the financial sector, and can be a cost - effective way for the government to reach retail investors. measures taken by the reserve bank of india notwithstanding the predominantly institutional character of the g - sec market, reserve bank of india has recognised merit in promoting retail participation and has initiated several policy measures to this end ( box 1 ). box 1 initiatives taken by government and the reserve bank of india to develop retailing of g - sec the government securities act, 2006 : the act has several features, such as, allowing pledging the government securities for availing loans, legal recognition of ownership to holdings in gilt accounts, introduction of nomination facility, etc. to facilitate retail investors holding g - sec. non - competitive bidding in primary auctions : non - competitive bidding facility has been allowed in the auction of dated central government securities. this facility is open to any person including firms, companies, corporate bodies, institutions, provident funds and trusts not maintaining a current account or an sgl account with the reserve bank. introduction of odd lot : a separate odd - lot segment has been created for the purpose of retail participation wherein the minimum market lot size has been kept at βΉ10, 000 for g - sec and βΉ25, 000 for t - bills. odd lot segment has trades below βΉ50 million. improvement in settlement mechanism : a new settlement mechanism ( multi modal settlement ) through commercial banks has been put in place for entities not maintaining a current account with the reserve bank and not regulated by reserve bank. retail debt segment on stock exchange : reserve bank has permitted trading of g - sec on stock
|
luxury brand, so too we ground our tourism at the top end, where the returns are highest. recent investments, ongoing projects and forecast investment in tourism all fortify barbados β competitive position in the top end of the market. that is why the four seasons is such an appropriate and timely investment, and an excellent opportunity for the nis to diversify its portfolio in the interests of the economic development of the country. a second strength of barbados β tourism is market diversification. visitors come from caricom countries, the us, and elsewhere, as well as the uk, our largest market. thirdly, the barbadian vacation experience is quite varied, in terms of the cultural and sporting activities on offer, although this is an area where much additional investment is needed, to enrich the visitors β menu of choices. our foremost challenge in tourism, one which affects other leading bis central bankers β speeches sectors as well, is to achieve and maintain acceptable professional standards of service at all times. the international business and financial services sector ( ibfs ) thirty years of effort and initiative have yielded barbados an ibfs sector which is second in importance as a foreign exchange earner, though a long way behind tourism. we have inherited natural advantages of climate, good international connections, the english language, and a convenient time zone. we have added a network of double taxation agreements, a strong regulatory system which is constantly updated as international guidance dictates, and a small pool of domestic expertise. i will end this talk with my reflections on the challenges we face in the ibfs sector, but first a few words on the other two pillars of the barbadian economy β s growth. agriculture and agro - industry our major success, one that we share with our caribbean neighbours, is in the rum industry. the caribbean, with help from the eu, has invested in the production and marketing of aged rums, and barbados now earns more from the export of rum than from sugar exports. however, a strategy has not yet been put in place to integrate sugar cane and other agricultural production into a layered, mutually reinforcing agricultural and agro - industrial sector. i believe that an integrated sector, building on the established institutions in agriculture and food processing, has significant potential for foreign exchange earnings and growth. alternative energy the substitution of alternative energy sources for fossil fuels as an energy source is the area where barbados can make substantial savings in foreign exchange spending. the technologies for this are now commercially available, and
| 0 |
a source of funding, perhaps because of a decline in their own financial condition or because of a tightening in other aspects of credit supply, they may end up facing higher interest rates than would otherwise be the case. conclusion in conclusion, the health of the u. s. economy depends importantly on the vitality of the small business sector, and continued access to credit on competitive terms is necessary for that vitality. on balance, since last fall credit supply conditions have almost surely tightened for the vast majority of small businesses. credit appears to be generally available, but at a higher cost. only a small fraction of small business owners report that credit is their main business concern. demand for their products is much more problematic. looking forward, continuing declines in the value of small businesses'real estate assets have the potential to substantially affect the ability of those small businesses to borrow. similarly, declines in the value of real estate may affect the ability and willingness of banks and other lenders to supply loans. indeed, this is likely already occurring to some extent at some banks across the full spectrum of bank sizes. lastly, because of interdependencies between small business and household finance, declines in the financial condition of households can also affect both the terms of those households'small businesses loans and their ability to borrow. for all of these reasons, the federal reserve will continue to monitor closely the effects of financial market conditions on small business access to credit. more generally, i assure you that the good health of the small business sector is an important consideration for the federal reserve as we strive to fulfill the dual mandate given to us by the congress to promote both price stability and sustainable economic growth.
|
' s spread ) rose modestly from the corresponding survey week of three months earlier. of particular importance for small businesses, however, are the facts that these spreads jumped significantly both on loans originated by smaller u. s. banks and on smaller commercial loans β that is, those loans below $ 100, 000. despite tighter credit standards and loan terms, growth in the dollar amount of commercial loans at u. s. banks was quite well maintained in the first quarter of 2008. particularly noteworthy from the point of view of small businesses is the fact that after growing almost 20 percent in the fourth quarter of 2007, commercial loans at small banks continued to expand at a rate of almost 12 percent in this year's first quarter. 3 thus, although slowing somewhat, commercial loan growth has held up in recent months even though banks'terms have tightened and economic growth has slowed, the latter driving down the demand for small business and other commercial loans. on balance, this suggests that credit is generally available, albeit at a higher cost. another source of information about small business credit supply conditions is the monthly survey of the national federation of independent businesses ( nfib ). the results of the most recent nfib survey, conducted in march, suggest that credit supply conditions for small businesses have held up fairly well over the past several months. for example, over the past few quarters only about 3 percent of survey respondents have reported that financing conditions and interest rates were their main business concern, and for march that number was only 2 percent. 4 in addition, according to the nfib survey, the average short - term interest rate paid by borrowers has remained at the low end of its historical range. on a less board of governors of the federal reserve system ( 2008 ), " the january 2008 senior loan officer opinion survey on bank lending practices " ( january ). in october, a net 10 percent of banks reported tightening lending standards to smaller firms. the net percent of banks is defined as the percent tightening less the percent easing standards. the first quarter's numbers have been adjusted for some statistical anomalies in february. these levels are far below their peaks of the early 1980s, when more than one - third of respondents reported that financing conditions were their main concern. positive note, in recent months the net percentage of nfib survey respondents that reported credit was harder to obtain over the previous three months and the net percentage that expected credit conditions to tighten over the next three months have been at the upper end
| 1 |
november and december the riksbank therefore reduced the repo rate from 4. 10 to 3. 40 %. the early months of this year were marked by continued repercussions of the asian crisis in the world economy, with weaker international demand. in order to prevent this from leading to a dampening of economic developments in sweden and an even lower rate of inflation, in february and march the riksbank reduced the repo rate in two more steps to 2. 90 %. since then the situation has stabilised. an easing of monetary policy in many parts of the world as well as in sweden has been an important factor behind the better tendencies in recent months and the more positive forecasts. even though the statistics show a stronger economic trend, inflation has been in line with the riksbank β s forecasts. for this reason the repo rate has been kept unchanged since march. in august the 12 - month rate of cpi inflation was 0. 6 % and inflation β s underlying rate, measured by undix, was 1. 5 %. it is changes in indirect taxes and subsidies, together with house mortgage interest expenditure, that are continuing to result in an underlying rate of inflation that is higher than cpi inflation. economic prospects from 1999 to 2001 we are now moving into a period of strong growth, externally as well as in sweden. as regards the international picture, the riksbank judges that annual growth in the oecd area up to the end of 2001 will amount to not quite 2. 5 %. it looks as though effects of the asian crisis are now dying away and that emerging market growth will become stronger in the next two years, above all in the crisis - hit countries in southeast asia but to some extent also in latin america and eastern europe. in japan, too, the earlier risk of negative growth has turned into cautious optimism about an upturn. prospects for the euro area have likewise improved, with a recovery in manufacturing and stronger consumer confidence. in the united states there seems to have been a further extension of the upward phase this year and a slowdown may be softer and more cautious than anticipated earlier. even with stronger international growth, external price pressure is likely to be weak. for one thing, after the asian crisis there is still some unutilised capacity on the whole in the global economy. other factors are increased price competition and an expected appreciation of the krona. economic prospects in sweden also look brighter. besides the positive cyclical signals from abroad
|
and their expected effects on the swedish economy, there is the stronger growth of domestic demand. firms as well as households are optimistic about the future. there are a number of reasons for this. real wages and employment are rising rapidly and public sector finances are becoming stronger. fiscal policy in 2000 and 2001 is now assumed to be somewhat more expansionary. all in all, gdp growth is judged to be 3. 6 % in 1999, 3. 8 % in 2000 and 3. 0 % in 2001. these assessments are based on the technical assumption that the repo rate is kept unchanged. the strong growth trend means that in the coming years the economy β s unutilised resources at present will be utilised more quickly than the riksbank envisaged earlier. inflation is accordingly judged to move up somewhat faster than the riksbank assumed earlier. in the main scenario the underlying rate of inflation, measured as undix, is judged to be 1. 8 % twelve months ahead and 2. 1 % after twenty - four months. cpi inflation is judged in turn to be 1. 1 % after twelve months and 2. 0 % in twenty - four months β time. thus, cpi inflation will be moving closer to underlying inflation. one reason for this is that the downward effect on inflation from house mortgage interest expenditure is diminishing. in other words, just as the previous marked fall in interest rates held back cpi inflation so that it was well below the underlying trend, so house mortgage interest expenditure is now tending to bring them closer together. as i have pointed out before to this committee, monetary policy ought to disregard these direct effects of interest rates because repo rate adjustments mean that they are accentuated. it is also for this reason that the riksbank is currently focusing monetary policy on inflation β s underlying rate, measured as undix. transitory factors β changes in indirect taxes, subsidies and house mortgage interest expenditure β are judged to have a downward cpi effect of 0. 5 percentage points in one year β s time. the contribution from interest expenditure is still negative because the process whereby house mortgage loans at high rates are renewed at the present lower level is still in progress. as the earlier house mortgage loans had a long duration, this process takes time. in two years β time, however, the cpi contribution from transitory factors is judged to be an upward effect of 0. 1 percentage point. the fact that so far, at least, the strong growth has not generated an acceleration
| 1 |
. even if the riksbank's assessment is that the most acute phase of the crisis may subside over the next few months, it will probably take time before conditions return to normal. confidence must be restored on several levels and that takes time.
|
left to its fate and there was rapidly growing concern that other institutions would follow suit. credit flows dried up almost completely and investors essentially dared to invest only in government bonds. companies had already experienced a tightening of credit terms ; opportunities for loan financing now essentially disappeared. in this phase of the crisis, around mid september this year, the effects on the swedish financial system became clear. when banks'access to liquidity dried up on every market, this hit all banks, including those that are financially strong, like the swedish banks. many central banks around the world had been taking measures for some time to strengthen liquidity in banking systems but the riksbank had not needed to act. the interbank market and other short - term markets had worked, though interest rates had climbed sharply. when the crisis had a more tangible impact on sweden, the riksbank also implemented a series of interventions. meanwhile, central banks in the rest of the world continued with their interventions and governments approved crisis packages to guarantee financial stability. against the backdrop of this summary of events in the financial sector over the past year, today i will speak about the effects of this financial crisis on the riksbank's work of maintaining a safe and effective payments system. but first i would like to briefly describe how we carry out this work under normal circumstances. i will also conclude with a comment on the crisis β effects on monetary policy. work with financial stability under normal circumstances the task of maintaining a safe and effective payments system includes the role of the riksbank as the banks'bank. this task includes maintaining the rix payment system for payments in swedish kronor. participants in the system may borrow during the day and overnight to cover temporary deficits. the task also includes continuous oversight of the financial system. for some time the riksbank has had a well - designed analytical apparatus for early detection of changes and vulnerabilities that could develop into a serious systemic crisis. above all, its purpose is the timely detection of vulnerabilities in banks that are of central importance for the payments system, which requires knowledge of the status of the various institutions and how the market functions. this in turn presumes continuous follow - up, where frequent contacts with financial market participants play an important role. these established contacts are essential in a crisis situation, both to determine the type of measure that is needed and to ensure timely implementation. ten years ago we began to publish stability reports twice a year. these reports provide a basic
| 1 |
of the esm, the launch of the banking union, the introduction of new budgetary rules and the extension of multilateral supervision to macro imbalances. however, what we have done so far is not enough. those measures were often enacted in emergency conditions, and risked producing overlaps, redundancies and sometimes genuine mistakes. in effect, the reaction to the crisis relied almost exclusively on monetary policy. the ecb acted boldly to preserve price stability and to support the real economy. in the absence of its monetary policy measures, economic conditions would have been much worse, possibly leading to a deflationary spiral. going forward, it will be necessary to increase the incentives for reform and the coordination of economic and structural policies, and shift from an intergovernmental form of management based on the peer review of national policies to the formulation of genuinely common policies. the plan published by the european commission in november 2012 and the report of the president of the european council in june of the same year set the stage for a further strengthening of the emu. the ssm has been a success story. it rapidly became operational in supervising the largest banks and, in the euro area, it has contributed to stabilization, which is a prerequisite for economic growth. however, the banking union is still incomplete due to disagreement on the next steps to be taken. the capital markets union is still embryonic, in spite of the fact that the free movement of capital is a long - standing objective of the european union, dating back to the treaty of rome. finally, some form of fiscal capacity at the euro - area level would improve the management of cyclical conditions in various economies and in the euro area overall. to be fully effective, it would require the introduction of common debt instruments. but, in order to move forward in the integration process we need, above all, to rebuild mutual trust, both at the political level and among citizens. the first step must be to tackle the weaknesses of individual countries, but such an effort must be sustained by progress in the european construction. this is a demanding agenda, but as the late president of the italian republic, ciampi, noted about thirty years ago β for the civilization to which we belong [ european integration ] is the only way to avoid losing the thread that was broken by two world wars and retied by those with the vision to imagine europe as a community. β without an integrated europe, we may not be able to influence global phenomena such
|
scale economies and stimulated efficiency and competition, with positive effects on employment and welfare. the eec subsequently evolved into the eu, becoming an area where member states cooperate on a wide set of policies and citizens enjoy freedom and peace. in 1999 we introduced the euro, and even during the crisis we accomplished a lot in terms of deepening the union. and yet, this anniversary takes place in a period of heightened uncertainty. the anxieties generated by the crisis and geopolitical tensions β including the large migrant flows and civil war in nearby countries β have aroused uneasy sentiments among european citizens, thus giving further ammunition to anti - european movements, and narrowing the focus of the economic and political debate to mostly domestic and short - term issues. the divergent views of the member states on fundamental issues β from migration to economic policy β weaken the eu in the eyes of the international community and in those of european citizens. the reaction of public opinion has been one of concern and rejection. the european project is sometimes perceived as a bureaucratic superstructure and a source of redundant regulations ; it is seen more and more as part of the problem, less and less as the solution. should this situation persist, the future of the economic and monetary union ( emu ), and even of the eu itself, cannot β and should not β be taken for granted. in my opinion, the necessary ingredients to strengthen the european project are precisely those that inspired the choices of the founding fathers. first, an unfailing faith in the importance of european integration. as donald tusk, president of the european council, has asked european leaders, somewhat rhetorically : β if we do not believe in ourselves, in the deeper purpose of integration, why should anyone else? β second, it must be clear that, as president draghi recently affirmed, for the emu to be viable β members have to be better off inside than they would be outside β¦ if there are parts of the euro area that are worse off inside the union, doubts may grow about whether they might ultimately have to leave β. finally, we must be able to design and put in place institutional arrangements and policies to address the pragmatic and pressing needs of all european citizens. with these objectives in mind, we must admit that up to now we have not been able to claim success. true, during the financial crisis european institutions and member states have demonstrated their willingness to invest in the european project. measures have been taken to strengthen the emu, such as the establishment
| 1 |
industry. difficulties are bound to arise in every region across the globe, and could have adverse ( if temporary ) economic effects. unless resolute steps are taken to resolve the year 2000 issues in all parts of the world, serious consequences are inevitable. the bundesbank β s preparation for y2k although you may get a different impression from recent media reports, in germany preparation for the century - datechange is in full swing and not at all behind the progress in other western european countries. let me describe briefly the activities in the financial sector, seen from a central banker β s perspective. the bundesbank - like other eu central banks - is confronted with the y2k problem in many respects. internal preparatory work for the year 2000 change started in good time. the bank β s management set july 1, 1999 as the deadline for making all affected systems and technical devices year - 2000 - proof. by that date, all computer - infrastructure facilities ( systems and networks ) and data - processing application procedures will be available in tested year 2000 - proof versions. an earlier date is not possible, because conversion work for stage three of european monetary union is to be completed as a priority. in this context, by the way, a lot of preparatory work, mainly in applications for accounting and payment systems, will automatically be included with respect to y2k. with regard to the context of national payment and settlement systems, however, the bundesbank acts as a key service provider but also as a central co - ordinator for cashless payments. the bank β s clearing facilities offer all credit institutions involved in payments a competitively neutral payment service for settling large - value and retail payments. naturally, we have a strong interest in the smooth functioning of our it - infrastructure. so i am happy to tell you that the bundesbank has created a test environment for its public and private clients that is already in use. in the area of large - value payments as in the other procedures of electronic access, the bundesbank is offering interface tests for verifying year - 2000 - compatibility in interbank settlements. the electronic access test - centers are also available for the tests. customers and software manufacturers can make direct arrangements with the relevant test center for the tests to be conducted. in the field of retail payments, the bundesbank, as the primary β interface β, provides its customers with the year - 2000 - compatible processing of payment data. it will also ensure that its data - processing
|
as well. and it applies to the european debt crisis in equal measure. twenty - five years ago, the european council tasked a group of central bank governors chaired by jacques delors, then president of the european commission, with identifying ways in which a european monetary union could be structured. the delors committee β s insights can teach us a number of key lessons to this very day. for many of the problems weighing down on monetary union today had already been flagged and discussed by the delors committee all of 25 years ago. that makes it worthwhile taking a look back in time. bis central bankers β speeches my talk today will therefore be made up of three sections. in the first section, i would like to look at the delors committee β s key insights. in the second part, i would like to examine why monetary union began to flounder, and i will then use these conclusions in the third section to develop proposals for strengthening the existing framework. new problems, old questions a single currency fosters economic relationships between different countries. yet at the same time, it also increases the dependencies between them. this insight was a recurring theme throughout discussions within the delors committee. their line of thinking was based on the economic policy experiences of the 1970s and 1980s. that era of oil price shocks posed a major challenge to monetary policymakers. it became evident that countries with independent central banks had significantly lower inflation rates than those in which central banks followed politicians β instructions β while simultaneously achieving equal or even higher levels of growth. what we learned back then was that price stability does not run counter to economic prosperity, but complements and steadies it. but we learned something else, too. that an independent central bank is necessary for stable prices ; but more than that is needed. a country suffering excessive public debt and a lack of competitiveness can cause upheaval within a currency area, and this can also impact on monetary policymakers β ability to fulfil their primary objective of ensuring price stability. in a currency union, monetary policy can only serve its purpose if each member state β s economic policy is consistent with the requirements of a single currency. the members of the delors committee discussed two possibilities of ensuring sustainable economic and fiscal policies. the first option was to transfer these decisions to the european level. this line of thinking was supported, among others, by alexandre lamfalussy, then managing director of the bank for international settlements ( bis ). the other option was the
| 0.5 |
greater risks to financial stability and price stability in the future. the eurosystem has applied a number of unconventional measures to maintain financial stability. these measures helped to prevent an escalation of the financial turmoil and constitute a virtually unlimited supply of liquidity to banks. but monetary policy cannot substitute for other policies and must not compensate for policy inaction in other areas. if the eurosystem funds banks that are not financially sound, and does so against inadequate collateral, it redistributes risks among national taxpayers. such implicit transfers are beyond bis central bankers β speeches the mandate of the euro area β s central banks. rescuing banks using taxpayers β money is something that should only be decided by national parliaments. otherwise, monetary policy would nurture the deficit bias that is inherent to a monetary union of sovereign states. in this regard, the situation of the eurosystem is fundamentally different from that of the federal reserve or that of the bank of england. moreover, extensive and protracted funding of banks by the eurosystem replaces or displaces private investors. this breeds the risk that some banks will not reform unviable business models. so far, progress in this regard has been very limited in a number of euroarea countries. and the eurosystem has also relieved stress in the sovereign bond market. however, we should not forget that market interest rates are an important signal for governments regarding the state of their finances and that they are an important incentive for reforms. of course, markets do not always get it right. they may have underestimated sovereign risks for a long time and now they are overestimating it. but past experience taught us that their signal is still the most powerful incentive we have. at any rate, i would not rely on political insight or political rules alone. after all, monetary policy must not lose sight of its primary objective : to maintain price stability in the euro area as a whole. what does this mean? let us say that monetary policy becomes too expansionary for germany, for instance. if this happens, germany has to deal with this using other, national instruments. but by the same token, we could say this : even if we are concerned about the impact on the peripheral countries, monetary policymakers must do what is necessary once upside risks for euro - area inflation increase. delivering on its primary goal of maintaining price stability is essential for safeguarding the most precious resource a central bank can command : credibility. to sum up : what we
|
of the member countries β financial cycles may be an important issue when it comes to designing these policies. the european systemic risk board was set up in late 2010 as the authority responsible for macroprudential oversight in the european union, empowered to issue warnings and recommendations in this connection under the β act or explain β principle. further institutional developments have since followed. thus, without going into the details of the organisation of macroprudential regulation and supervision in the euro area, the member countries are moving ahead with the creation of national macroprudential authorities, while the ecb has been assigned responsibilities in european regulation. the institutional form of the national macroprudential authorities depends on the specific characteristics of each country, although, on the recommendations of the european systemic risk board, their common feature has to be the major role played in one way or another by the central banks. challenges for the banking sector posed by changes in international regulation and supervision let me conclude by looking at the challenges for the banking sector derived from the major changes in banking regulation and supervision in the international sphere. i shall briefly describe the basic matters being discussed by the financial stability board, or, as we all call it, the fsb. in november 2008, the g20 agreed on an ambitious β action plan β and asked the fsb to overhaul international financial regulation, a reform which was to go to the root of the crisis and pave the way for a sounder and safer financial system allowing sustainable financing of economic growth. the task has been both extensive and intensive. a substantial portion of the reforms needed to fulfil the mandate from the g20 have already been agreed, particularly with regard to the banking industry. apart from the reform of the basel framework for banks ( commonly known as basel iii ), a basic pillar of the regulatory reform undertaken by the fsb is the new treatment of so - called β systemic institutions β. or, in other words, the problem posed by institutions which are too big and complex to fail, meaning the authorities have to recapitalise them with public funds when they are in distress. identifying an institution as β systemic β has consequences. they are subject to larger capital charges and to a stricter supervisory regime aimed at reducing the likelihood of them getting into difficulties. that said, if there is in fact a key differentiating factor to reduce the impact of the potential failure of a systemic institution, it is unquestionably the new resolution framework. this new framework encompasses ( a )
| 0 |
unexpected. in this regard, important steps forward have been taken. since the beginning of the gradual reduction of monetary accommodation, one - year overnight index swaps have picked up from negative levels to 3. 3 per cent, while ten - year ones have gone from barely positive values up to 2. 6 per cent. in real terms, using index - linked swap rates as a deflator, the interest rates currently stand at about 0. 9 and 0. 3 per cent respectively, from around - 4 and - 2 per cent at end - 2021. monetary tightening can now continue with suitable caution and with careful consideration of the implications for the economy and for the inflation outlook of the measures already adopted as well as of the information on how they develop. in any case, it remains essential to continue to balance the risk of an excessively gradual recalibration, which could cause inflation to become entrenched in expectations and in wage - setting processes, with the risk of monetary conditions becoming too tight. this in turn would result in significant repercussions for economic activity, financial stability and, ultimately, medium - term price developments. as i have recently said, i believe equal weight should be assigned to both risks, in line with the symmetrical price stability objective which we must achieve to fulfil our mandate. however, price stability does not depend on monetary policy alone, but also on firms'business strategies, agreements on labour costs and fiscal policy. in order to bring inflation back to its target, it is crucial for representative of workers and employers in all euro - area economies to make responsible decisions, to ensure that price and wage dynamics remain consistent with preserving monetary stability. in real terms, wage growth is limited by the performance of productivity. especially in italy, where both productivity and real wages have stagnated for too long, the investments and the reforms envisaged under the national recovery and resilience plan will play a fundamental role in creating a more favourable business environment. price stability also requires that public finances be kept under control in all countries. balanced policies are required, not only to prevent demand from overheating and inflation from declining more slowly, but also to stave off the risks associated with a negative perception, even if not entirely warranted, of the sustainability of public finances. fiscal policies, through temporary and targeted measures, can certainly help ease the effects of inflation on the weakest sections of the population ; however, this should be done through a redistribution among income earn
|
, and the accent began to be placed on government failures. governments, central banks and other regulators were blamed for failing to prevent those developments. this eventually led to an ideological swing : a push to reduce the magnitude of state intervention. the failures of the β regulated economy, β the pace of technological advance and the rapid expansion of international trade after the end of the cold war fuelled a protracted process of financial deregulation that was halted only by the financial crisis that broke out in 2007. the latter triggered a move toward re - regulation β or better regulation β that is still under way. the pendulum keeps swinging and will certainly continue to do so. β but despite the negative perception of banking and finance, blind backlash is a danger to be avoided. as amartya sen argued, finance is essential to the functioning of the real economy. and i share dr reddy β s view that finance is a force for good. it is crucial for sharing and allocating risk, especially for poorer societies and people, insofar as risk aversion decreases with wealth. it is crucial for transferring resources over time and removing the liquidity constraints that hamper the economy and the exploitation of ideas. it is very important in promoting economic growth, especially by fostering innovation. we have countless historical examples of good financial innovations. think, for example, of the β letters of exchange β introduced by italian merchants in the middle ages : they were probably the first fiduciary money, and trade benefited enormously from this financial instrument. more recently, consider the development of β micro - finance β in the 1970s : an innovation that has enhanced financial inclusion, helping poor borrowers to smooth their income and cope with illness or other temporary shocks. and, in the last two decades, recall the role of the β venture capital β industry in the promotion of successful innovative corporations such as apple, intel and google. i would now like to offer a few thoughts on issues related to what has gone wrong in the financial system in the last few decades. i will consider four points : β financial market participants tend not to be aware of the fundamental nonstationarity of economic developments. the wave of financial innovation in the 2000s was fuelled by the idea, in principle correct and fruitful, that the proliferation of new ( and complex ) financial instruments, allowing agents to insure against many dimensions of risk, was a way to β complete the markets β, to get closer to the theoretical arrow - debreu world,
| 0.5 |
, ensure the stability and integrity of our financial systems. mr. chairman, in a strange and a paradoxical sort of a way, it is somewhat β fortunate β that the current financial crisis shocked ( and indeed, almost ruined ) the worlds financial system, at the present stage of evolution of the worldwide financial landscape. if, on the other hand, this crisis had not impacted us at this time of history and consequently we had happily progressed at the same pace for a further 10 years or so, and then in 2017 or 2018 this shock had hit us, can anyone imagine the magnitude of the disaster at that time? in fact, i am quite sure that, if that eventuality had taken place, this crisis would have been too much for the world β s financial system to bear, and the resulting catastrophe would have crippled the world β s financial systems, as well as the world β s political, security and social systems with disastrous consequences. perhaps some keen film maker might even consider doing a simulation of such a scenario, and then making a gripping and horror filled movie, allowing those of us with horror appetites to experience such a dreadful tragedy! mr. chairman, while we are putting into effect various initiatives to improve our processes and procedures to respond to the crises, we must also be conscious that we should not throw the baby out with the soiled bath water. yes, the bath water has been terribly muddied and needs to be replenished. however, at the same time we must realize that the baby although rather dirty, is still quite wonderful. the world β s current financial system with all its imperfections, can still deliver enormous value. already, the bold and far reaching steps introduced by many governments and regulatory authorities as well as by the β victims β of destability, have shown us that the β baby β could recover and grow. in fact, many economies are showing signs of recovery and are seeing light at the end of their respective tunnels. in the light of these developments, we must maintain our energy levels and optimism. even in the midst of the crisis, we have observed many systems that are solid, and frameworks and institutions that are strong, reliable and credible. these institutions must be recognized and encouraged to provide the leadership and direction to bring stability and credibility back, quickly. it is also time for the productive sectors of economies to re - invigorate themselves and deliver higher outputs, so as to support a faster turn - around. mr. chairman,
|
. new york, june 21, 2022 ). - 9at a more basic level, we need to focus on access to fast, efficient digital payments. this is a matter both of efficiency and of fairness. low - income households can ill afford to wait days for their income checks to clear, nor can small businesses. a three - day payment delay is an annoyance to someone with savings and ample credit, but it is a costly burden, and sometimes a serious problem for others. and overdraft and insufficient funds fees hit lmi households hard. i have been working on issues of financial inclusion for a significant portion of my career as a public official and as an academic. i am so pleased with the progress made toward instant payments under the leadership of vice chair brainard and chair powell, and i am looking forward to doing whatever i can to support this work, including the launch of the fednow service. the federal reserve has a responsibility to facilitate payments that work well for everyone, and we are committed to doing so. community reinvestment rounding out my discussion of access to financial services, i will end my remarks today by touching on the importance of the community reinvestment act ( cra ). the cra, first passed in 1977, encourages insured depository institutions to meet the credit needs of the communities in which they are chartered, including lmi neighborhoods, consistent with the safe and sound operation of such institutions. 9 the cra was designed to address past abuses of financial institutions, such as redlining. the cra sends the unequivocal message that there is no place for discrimination in the financial system, and that every community and every borrower deserve to be treated fairly. earlier this year the occ, the fed, and the fdic jointly invited comment on a proposal designed to strengthen and modernize cra regulations to achieve the β what is the community reinvestment act ( cra )? β board of governors, last modified august 24, 2022, https : / / www. federalreserve. gov / consumerscommunities / cra _ about. htm. - 10 objectives of the law. i strongly support the goals of the proposal and look forward to contributing to the important work underway, again led by vice chair brainard. so, to wrap up, i have tried to lay out my approach and a bit of my near - term agenda, as vice chair for supervision, for making the financial system safer and fair
| 0 |
with the call by the leaders of the group of twenty ( g20 ) in april 2009 to strengthen accounting recognition of loan loss provisions by incorporating a broader range of credit information. one of the consequences of this new framework is the fact that while, in the past, a loss event had to have occurred before an impairment was raised by a bank. the standard now requires that loss provisions be raised earlier and take into account not only past and present page 3 of 9 information but also forward - looking information, which emphasises the future probability of credit losses in determining them. this standard is aimed at resolving the weaknesses identified during the global financial crisis of β too little, too late β referred to above, and this will hopefully result in a more robust financial system that is more resilient and hence better able to withstand shocks. the adoption of ifrs 9 will give rise to higher levels of credit impairments. a study undertaken by the european banking authority estimated that the implementation of ifrs 9 would give rise to an average increase of 13 % in loss provisions compared to the current levels under ias 39 ; it is further expected that the core equity tier ( cet ) 1 ratios will decrease by an average of 45 basis points. smaller banks, which mainly use the standardised approach to measuring credit risk, estimate a larger impact on their own fund ratios than the larger banks. estimates of the exact impact differ, however, and only time will tell which of these estimates was accurate. there are those that argue that the adoption of ifrs 9 may in fact increase procyclicality, because during recessionary conditions there may be a sharp fall in cet 1 capital levels and this, in turn, may lead to a sharp easing in credit extension due to the so - called β cliff effect β of the staged approach prescribed by ifrs 9. others, notably the bis, reject this argument on the basis that banks, after the global financial crisis, are now better capitalised with higher buffers and thus are better able to absorb losses. they further argue that the early loss recognition of credit losses enables a quicker β clean - up β of banks β balance sheets, thus enabling them to support economic recovery. this debate is clearly not yet settled and we will need to wait and see how this plays out during the next recession. the economic impact is, however, not only limited to the level of losses and the timing of the recognition ; the implementation of ifrs 9 is also likely to impact on the
|
the publication of an integrated report by the large and medium size audit firms as this may contribute to improve transparency around transformation initiatives and could assist to accelerate transformation within this sector. full disclosure regarding compliance with governance frameworks such as king iv could also assist in improving governance arrangements within these firms. while this list is not exhaustive, it would be useful if there were a public discourse around these policy questions. we firmly believe that the implementation of some of these proposals may go some way to strengthening the governance within the audit and accounting professions and could assist to further support and possibly strengthen the trust that society places in them. page 8 of 9 conclusion the saying goes that change is the only constant in life. ifrs 9 certainly represents a major change for the banking industry. it is certainly a change that needs to be embraced. the regulated sector will be looking towards their regulators for guidance, hence we need to be up to date and well versed in order to be able to provide effective guidance. to this end banks, auditors and regulators will have to work together to ensure that the implementation of ifrs 9 will be a success. i hope that this workshop will contribute towards this goal. i am sure that during the next one and a half days, there will be very interesting and fruitful discussions that will benefit all the jurisdictions present here today and even after the workshops, i am sure conversations will continue. i wish you well on your ifrs 9 implementation journey and hope you will enjoy the workshop. thank you. page 9 of 9
| 1 |
timing of this near - term monetary policy tightening. these actions will get us into the second half of the year, when we will have six months of inflation data, and we can assess what the appropriate path will be for the rest of 2022. our goal is a soft landing for the economy that keeps output and employment growing at a healthy pace and inflation moving toward the fomc β s 2 percent objective. 1 these views are my own and do not represent any position of the board of governors or other federal reserve policymakers. 2 in december, i discussed lessons from the pandemic for economic forecasters, which included a review of forecasting misses for output and inflation. see christopher j. waller ( 2021 ), β a hopeless and imperative endeavor : lessons from the pandemic for economic forecasters, β speech delivered at the forecasters club of new york, new york, december 17. 3 see waller, β a hopeless and imperative endeavor, β in note 2. 6 / 6 bis central bankers'speeches
|
vis - a - vis the euro and the usd. the bank of albania considers that the balance of factors affecting the exchange rate seems more stable for 2010. the bank of albania continued to inject the required liquidity in january in order to buttress its interest rate cut move and the relaxation of monetary conditions in october 2009. these injections were followed by the decline of interest rates in the interbank market, the decline of the government t - bill yields and the downward all loans and deposits β interest rates. the interbank market attested to the further increase of trading volumes signalling the efforts for a more effective liquidity management by the banking system. the recovery of lending will substantially condition the performance of the albanian economy over the following period. its recovery will push the demand for borrowing by the economic agents and at the same time will provide more favourable lending conditions by the banking sector. the bank of albania has taken the proper measures in this regard, supplying the banking system with appropriate liquidity and taking the necessary measures to lower the borrowing cost. however, it expects a more complete reflection of these measures by the banking system. we believe that, without prejudice to the best and prudent lending practices, there is room for a more encouraging behaviour of the banking system in terms of boosting consumption and private investments in economy. * * * after discussing the current and expected economic performance, the supervisory council of the bank of albania concluded that the inflationary pressures will mount in the short term ; however they are expected to quickly fall in the medium term. the slower money growth, the low domestic demand, the moderate growth rates of economic activity, the low capacity utilization by businesses and the stable inflation expectations will balance the pressures exerted by the exchange rate and higher administered and foreign prices. the bank of albania has been carefully monitoring the economic and financial situation in the regional countries and their expected performance in the future. the possible implications for the albanian economy through the trade and financial channels remain at the focus of our analysis. considering the economic situation and political realities in the euro area β s economy, we conclude that the transmission of these concerns to other economies will be contained. moreover, the bank of albania believes that the albanian economy enjoys firm macroeconomic balances, sufficient to cope with all potential shocks over our economy. in conclusion, the supervisory council decided to keep the key interest rate unchanged at 5. 25 percent. this decision helps to maintain and consolidate the macroeconomic balances further, considering macroeconomic stability key precon
| 0 |
goods, and geopolitical factors and oil prices. in these circumstances, the recent weakness in domestic stock prices and its potential adverse effects on the financial system and the economy should be monitored carefully. on the price front, import prices are declining mainly due to the u. s. dollar β s depreciation against the yen from spring toward summer, but international commodity prices including crude oil have recently risen. domestic wholesale prices have weakened, reflecting the decrease in import prices to date. moreover, consumer prices remain on a gradual downtrend and corporate services prices continue to decline. as for the conditions surrounding price developments, the balance between supply and demand is expected to keep exerting downward pressure on prices for a while amid persistently weak domestic demand, although the completion of inventory adjustment and the rise in capacity utilization rates will support prices to some degree. moreover, factors such as the ongoing technological innovations in machinery, deregulation, and the streamlining of distribution channels will continue to restrain prices. this report is based on data and information available at the time of the bank of japan monetary policy meeting held on september 17 and 18, 2002. the bank β s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on september 17 and 18 as the basis for monetary policy decisions. under these circumstances, domestic wholesale prices are projected to continue to be weak for a while. consumer prices are expected to stay on a declining trend for the time being at the current gradual pace. while the slower growth in imports of consumer goods is expected to alleviate the downward pressure on prices to some extent, the faster pace of decline in wages may possibly reinforce the ongoing decline in prices, especially for services prices. as for the financial market, the outstanding balance of the current accounts at the bank of japan is moving around 15 trillion yen as the bank continues to provide ample liquidity. under these circumstances, in the short - term money markets, more market participants have come to feel that there is an excess of liquidity in the market and the overnight call rate continues to move at very close to zero percent. also, longer - term interest rates are declining. yields on long - term government bonds followed a downtrend in line with a decline in yields on overseas long - term government bonds and in domestic and overseas stock prices, in addition to widespread perceptions among market participants that there is an excess of liquidity. yield spreads between private bonds ( bank bonds and corporate bonds ) and government bonds
|
i mentioned earlier, the year - on - year growth in the goods price index based on the point - of - sale ( pos ) data collected through chain stores appears to have slowed. the price index based on the pos data covers only around 20 percent of the consumer price index ( cpi ) in terms of its weight, so the trend in the pos data - based index may not necessarily affect overall prices immediately. service prices, which have a substantial weight in the cpi, may have a pent - up potential for a rise following the recent increase in hourly wages for non - regular employees. unlike changes in food and clothing prices, changes in prices of individual services, which are provided by many small firms, are seldom featured in media reports, making it difficult to keep track of them. therefore, looking at consumer price statistics is the only way to examine the trend of overall service prices. as for the outlook, while the year - on - year growth rate of prices of food products and durable consumer goods are expected to peak out as indicated by the pos data, the key will be the extent to which prices of individual services, with their pent - up potential for a rise, can offset that. however, house rent and imputed rent, which have a large weight in service prices, are strongly correlated with wages, and given the results of the labor - management wage negotiations this spring, it may be difficult to expect much of a rise in rents. house rent and imputed rent are not adjusted for quality associated with the passage of time, so the presence of a downward bias in consumer price statistics has been pointed out. with respect to public service prices, which also have a large weight, there are various factors that constrain price bis central bankers β speeches increases. one such factor is the norm applied to prices by those who are reluctant to tolerate a hike in fees for public services. in consideration of all these factors, it is highly uncertain whether or not an increase in service prices will offset an expected drop in the year - on - year growth rate of goods prices, resulting in a higher growth or a similar rate of growth in overall prices. although people β s inflation expectations over the medium to long term are relatively stable, their expectations over the short term have been affected in a backward - looking manner by the recent price trend that reflects energy price movements. this is clearly apparent in firms β inflation expectations indicated in the tankan ( short - term economic survey of enterprises in
| 0.5 |
brian wynter : bank of jamaica modernisation and independence - a new central bank for the new jamaican economy speech by mr brian wynter, governor of the bank of jamaica, at the 3rd caribbean finance & investment forum " bank of jamaica modernisation and independence - a new central bank for the new jamaican economy ", organised by latinfinance, kingston, 1 november 2018. * * * mr chairman, mr taimur ahmad, chief executive officer, latinfinance, distinguished ladies and gentlemen, good afternoon. last week, the government tabled in parliament a bill to amend the bank of jamaica act and related legislation. if passed, this would make bank of jamaica the first central bank in the english - speaking caribbean to have legislative independence. it is interesting to note that this potentially seismic shift in jamaica's economic fortunes was broadly met by quizzical faces and comments like : " i thought they were already independent ". to shed some light on why people reacted in this way and why i have referred to it as a potentially seismic shift, i will sketch a map of bank of jamaica's transformation and draw a picture of the intended destination. i would like to show you, in short, why we are doing what we are doing. bank of jamaica has enjoyed de facto independence since the 1990s and the process of modernisation can perhaps be dated back to the early 2000s. modernisation began with the bank operating with what the imf refers to as an inflation - targeting'lite'regime. inflation - targeting is a monetary policy regime where the inflation objective is announced to the public and the central bank uses various monetary policy tools to guide inflation outcomes towards the preannounced inflation objective. the bank was initially able to reduce inflation from 9. 2 percent in 1997 to 7. 3 percent in 2002 using a base money targeting approach. since then, the bank transitioned to using interest rates as the primary operating tool. if you examine the success of that transition, particularly in the last decade or so, you would note that we are now in an era of lower inflation that has been more stable and more predictable than it was in the past. at september 2018, 12 - month inflation was 4. 3 per cent, within the bank's target of 4. 0 per cent to 6. 0 per cent, having fallen to as low as 1. 7 per cent in 2016. in effect, the bank has been operating independently using modern approaches for quite a long time and it has
|
already been quite successful, although this has occurred without the full measures being in place for accountability and transparency. by improving these, we can do better. in addition, the bank has strengthened and modernised its supervisory capabilities. full supervisory autonomy was established in line with the basel core principles with the implementation in 2015 of the banking services act, 2014. statutory responsibility for 1 / 3 bis - central bankers'speeches the maintenance of overall financial system stability, that is, responsibility for macroprudential surveillance and measures, was added to the bank's mandate through amendments to the bank of jamaica act in 2015. so it is not surprising that some people think that bank of jamaica is already independent even though it is not. now, i would like to outline why i believe that establishing de jure central bank independence could represent a seismic shift in jamaica's economic fortunes. returning to my map, since 2013, jamaica has been pursuing economic reform programmes with the support of the international monetary fund. the main pillars of these programmes have been ( i ) structural reforms to boost growth and employment ; ( ii ) actions to improve price and non - price competitiveness ; and ( iii ) sizable fiscal adjustments, supported by extensive fiscal reforms. the outcome has been the best macroeconomic environment in jamaica for generations. jamaica currently has low interest rates, low inflation and declining unemployment while output growth is accelerating. investors have taken note of changes in jamaica's fiscal management. yields on government of jamaica global bonds have been trading below their emerging market counterparts even as uncertainties in emerging markets have been increasing. and goj jamaican - dollar bond yields, unusually, have been even lower than yields on usdollar - denominated global bonds. you probably can proffer a number of reasons why domestic bond yields have been lower than global bond yields, but, whatever explanation you favour, you have to conclude that the sure money is currently on jamaica. this is the background against which the proposals for modernising the central bank should be seen. for those of you who have not yet had a chance to examine the bill, let me give you a few highlights. the bank will be given a clear legal mandate that identifies the maintenance of price stability and financial stability as the bank's principal objectives, with price stability as the primary objective. to oversee the delivery of the mandate, there will be a change to the tenure of board members, staggering their appointments and making the tenure long enough to provide for personal independence and the development of sufficient
| 1 |
the united states 8 % ; japan 9 % ; france 10 % ; united kingdom and italy 14 % ; spain 15 % on average. 3. 3 central banks β more prominent role the final issue i would like to briefly touch upon is what many see as the increasing powers of central banks, which also has a bearing on their independence. according to harold james, β the pendulum is (... ) swinging back β towards more politically controlled central banks. β the new post - crisis vision of the central bank, β he continues, β is often a very different sort of institution from the 1990s vision of a mechanism for guaranteeing price stability. β 10 as a result of the most recent crisis central banks have assumed a much broader role and been assigned new functions. the far reaching implications of central bank decisions have prompted a debate about the limits of their mandates and the legitimacy of their actions. with respect to the euro area, some have even dubbed the ecb the only game in town. these days the ecb β s role in greece β s fate has spurred an intense debate. greece is certainly the focal and dominating topic at the moment. and no one can seriously say right now if these days will mark a turning point in european monetary history, challenging the irreversibility of euro membership or heralding the move towards a transfer union. greece is a topic that shows us in no uncertain terms that, despite the deeper integration that the crisis brought about in europe, the euro - area member states are ultimately still responsible for their own affairs. they can decide for themselves not to service their debts, to collect taxes inadequately, and β this is something i particularly fear in the case of greece β to lead their country β s economy into deep trouble. the greek government has not only walked out on the previous agreements, but has been widely criticised as an unreliable negotiating partner. a little over a week ago, the assistance programme finally came to an end, and the greek government has stopped honouring its payment obligations towards public creditors such as the imf. in addition, a clear majority of the greek general public have spoken out in a referendum against contributing any further to the solvency of their country through additional consolidation measures and reforms. what is the role of central banks in this situation? central banks β although they have the means β have no mandate, in my view, to safeguard the solvency of banks and governments. that kind of implicit redistribution is a matter for governments or parliaments, if at
|
, job availability and better living conditions migrated so far to the eu - 15. this has led to severe tensions in many industries pushing wages and unit labour costs up. high corporate profits have provided a cushion yet, but, if this situation continues, many companies will be forced to raise prices to remain profitable. 4. rising unit labour costs. growing tension on the labour market is present in all cee countries, but baltic and balkan states seem to be the most threatened by rising labour costs. annual average dynamics of unit labour costs in the second quarter of 2007 in cee accounted to 8 per cent and in the group of baltic and balkan states the figure was over two times higher. this shows that sooner or later ( rather sooner ) enterprises will stop cutting their profit margins and will be forced to pass growing operational costs on consumers. 5. challenges to keep fast productivity growth. we live in a global knowledge economy, which is driven by innovation β technological, business - process or customer related. the crucial factor to succeed in the global knowledge economy is the country β s ability to develop intellectual capital. only those who understand the importance of innovations for growth will thrive and prosper in the coming decades. unfortunately, cee region lags badly behind the leaders in terms of its current and future ability to generate innovation. one of indicators measuring current ability to innovate is the number of researchers. in the mid - 1990s cee - 4 ( the czech republic, hungary, poland and slovakia ) and asian nies had similar number of researchers per million people, while two years ago nies had almost twice as many persons employed in r & d per million people in comparison with cee - 4. future knowledge potential of particular country or region can be measured by tertiary enrolment ratio. tertiary enrolment ratio in the cee - 4 countries improved to 50 percent in 2004, but still remains well below 62 percent in the eu - 15 and 82 percent in the united states.. because of a relatively small population and a number of structural deficiencies it is very unlikely, that increase in the number of students in cee - 4 that have occurred in recent decade will translate into higher innovation potential in the coming years, unless a dramatic change in policies in cee - 4 is made. this is also confirmed by a dramatically low number of patents registered in the cee countries and extremely low number of scientific publications. as the ability to generate great ideas in the cee region is limited, it seems that
| 0 |
from the strategic point of view the consolidation of research requires the improvement of economic data, the enhancement of cooperation between the public administration institutions and the academia, as well as between various countries, and the absorption and increase of human capacities in this area. following my speech i would like to briefly explore these three issues. economic research uses the economic data as its core input. consequently, the availability and quality of economic data represent a key factor to the development of timely and accurate economic research, to the maximisation of benefiting from them, as well as to the minimization of wrong decision - making and the costs it carries over. unfortunately, the availability and quality of these data cannot be labelled as satisfactory. in addition to problems of collecting and calculating the statistical basis, the data base is related to and influenced by the speed and various stages of the development of the albanian economy and by the changes of policies promoted by the taking place of these stages. the bank of albania has continuously and will constantly call on the improvement of economic data. in this context, today β s workshop places special emphasis on the discussion of the estimations and approximation of some economic time series for some important economic indicators, as well as on their role in the development, ethics and the quality of research of empirical nature. economic research is essential for a wide range of areas. hence, no institution can and less can a small central bank cope by itself with all the needs for economic research. quite contrary, the institutions need to identify the areas and issues of economic research where they possess certain comparative advantages and then, closely cooperate with each other. in this context, the cooperation between the institutions of public administration and the academia, the cooperation between different countries and the establishment of research nets on various areas are of prime importance. they would not only enhance the efficiency in carrying out the research, but also stimulate the professional critique and opposition and reach higher standards. the research mission described above, clear and well - defined within the framework of a central bank should not be understood as an isolate mission. the studies can not take place in a closed environment. they need debate and exchange of ideas with the academy, business and other interested stakeholders. in this regard, it is my pleasure to state that the bank of albania has made its research subject to reviews in activities organized particularly for this purpose ( inflation targeting, round tables, friday workshops, etc ). i invite you to do the same thing even during this activity. in view of debate and discussion, we
|
problems, the bank of albania deems that banking system β s balances are sound, sufficiently liquid, and well capitalised to comply with the economy β s demand for monetary assets. the positive position of its balances triggered the lending growth during the past years, while many countries in our region experienced contraction of lending. the banking system has reviewed and tightened lending standards during the last years ; this behaviour to enhance the financial discipline of the economy is welcomed and shall positively support the long - term growth of albania. on the other side, credit performance is increasingly experiencing the lack of demand, which is triggered by the consumers and businesses reluctance to carry out expenses and investments. bank of albania deems that, notwithstanding the cyclical situation of albania β s economy, the perspectives on medium and long - term development remain positive. this is reflected by the interest of foreign investors to increase their exposure toward the albanian economy. in particular, economy sectors related to exports, tourism and agriculture, which serves to the domestic and regional markets, provide unused development potentials. bank of albania deems that, within the sound business β logic parameters, the albanian entrepreneurs and consumers have room for a more active approach toward the growth of investments and their consumption. financial markets showed low interest rate fluctuation and operated under sufficient liquidity terms in the second quarter of 2012. the transmission of reduced rates is also observable in lek deposits market, followed by normal growth pace of deposits. by contrast, government security yields increased in the primary market, particularly the long - term yields. this performance has reflected the re - positioning of some agents in this market and the demand for financing in this period, without implying a shift of inflationary pressures. at the beginning of july, ratios improved and borrowing costs were reduced in the primary market. the second quarter also transmitted signals on eased interest rates on all credits from banks. nevertheless, credit - lending paces remain low and mainly designated for short - term use, leading to fluctuating interest rates. the introduction of new financial intermediaries, specialised in channelling the public savings to government securities, was a positive development, worth mentioning in the analysis of financial markets for the first half of year. his development along with the increased public interest on government securities, enhances the deepness of our financial system, improves liquidity, enhances its risk management capability, limits the interest rates fluctuation, increases the albanian public debt stability and provides pressures to reduce the financing cost of the public
| 0.5 |
reason is that many of them have a fiduciary duty towards their clients, and have not yet asked, let alone received, a mandate to sacrifice returns for sustainability, should this become necessary. an investor trusting her savings to a fund manager, or an insurance company, has probably been attracted by the win - win narrative emerging from the data thus far ( sustainable investing is good for the planet as well as for the investor β s wallet ), but might well change her investment choices if conditions changed. in that case, the intermediary would have to follow its client β s guidelines. furthermore, whereas many investors express a demand for sustainable assets, others do not ; intermediaries featuring both investor types among their clients can hardly make pledges on behalf of the latter. in sum, net zero pledges by financial intermediaries should be more appropriately viewed as conditional commitments, as they could be incompatible with a sacrifice in terms of return which might at some stage materialize and which the intermediary β s shareholders, or its clients, might be unwilling to accept. unless this issue is addressed, the net zero pledge framework set up by the financial industry in recent years might be at risk of unraveling, if and when difficulties materialize. some recent developments give food for thought. 11 second, there are reasons to doubt that investors would be willing to prioritize sustainability at the expense of profitability. even if some were, recent theoretical analyses suggest that their efforts could be undermined by opportunistic investors focused solely on the risk - return paradigm, who would invest in companies not interested in sustainability standards. there is therefore a risk of β carbon leakage β : responsible investors would give up their returns to the benefit of other investors, with limited effects in terms of progress on the climate front ; 12 this might be yet another instance of the β waterbed effect β which mars economic policies in many areas. 4. conclusions a strategy to promote an orderly transition of the economic system towards the paris goals should be multi - pronged. for instance, some large us banks that are members of the gfanz are reconsidering their decarbonization targets, due to concerns about litigation risk. vanguard group has recently announced the intention to pull out of net zero asset managers initiative ( part of gfanz ), explaining it wants to demonstrate independence and clarify its views for investors. following a series of controversies over its sustainability stance, blackrock has announced plans to allow
|
karnit flug : the state of the israeli economy and challenges ahead main points of a speech by dr karnit flug, governor of the bank of israel, at the β calcalist β capital markets conference, tel aviv, 19 november 2013. * * * i will begin by presenting the state of the israeli economy and the challenges we face in the short term, and will then provide a brief discussion of the long - term challenges as well. the israeli market, as we know, is heavily influenced by the global environment. we are in an environment of global economic moderation, with a very moderate recovery in the advanced economies, and expectations are that this process will continue in the coming year. with that, the emerging economies are in a slowdown, and the expectation is that growth will continue to be relatively moderate for these countries. global trade, whose influence on the israeli economy is very large, is growing at a very moderate pace, and despite the fact that we expect its growth to accelerate in the coming year, it will still be relatively moderate. inflation in the vast majority of advanced economies is low, and with this background, we are witnessing extremely low interest rates and very intensive monetary accommodation in the major markets. growth in the israeli market is higher than in the other advanced economies over the past few years, including during the crisis, however it is closely correlated to them. the data published for the third quarter point to moderate growth of 2. 2 percent. this is a disappointing figure, and the main factor pulling growth downwards is exports, while consumption is what is currently pulling forward. on the assumption that world economic growth recovers as expected, we expect continued growth of 3. 4 percent in 2014, but it is important to mention that excluding the effects of natural gas production, lower growth is expected, and since natural gas production does not make a significant contribution in the short term to growth in employment, we expect growth in unemployment in the coming year. an overall view of the labor market shows that it is strong, as reflected in continued growth in the employment rate, and continued decline in the unemployment rate to such low levels that we have not seen in many years. this is the aggregate picture, and it is certainly a good picture. at the same time, if we look a little closer, we see a picture that is somewhat less rosy : an assessment of the composition of the labor market shows that growth in the number of employed persons is concentrated in the public services,
| 0 |
the large exposure limits for private - sector borrowers. that way, even if these borrowers were to default, banks would still have enough capital at their disposal. if the preferential regulatory treatment of sovereign debt were done away with, this would also increase investors β incentives to take greater account of the differing risk profiles of the individual states, which in turn would thus strengthen the disciplinary function of capital markets. countries that pursue unsustainable policies would then face rising risk premiums. where political action needs to be taken is known β however, the eu now needs to demonstrate that it is, in fact, willing to act. there is a similar political constellation regarding the topic of deposit protection. under the european commission β s current proposal, existing national protection schemes β which are already operating under standards which have been harmonised across europe β will gradually be replaced by a european deposit protection scheme. although we have a single supervisory mechanism in europe under which banks are supervised according to uniform european guidelines and harmonised rules, as well as a single resolution mechanism to go with it, the financial situation of the supervised institutions hinges on the state of the economy, as well as, of course, the legal framework of the affected country. insolvency, for instance, is still governed by a patchwork of very different national regimes. rushing all too madly to introduce a european deposit insurance scheme would not only create an unfair situation in which some banks would be more likely to dig quite deeply into the shared pot ; it would also tend to reduce the pressure on member states to conduct reforms. let me once again reiterate the guiding theme of my foregoing remarks : there is an in - built conflict between short - term relief and the balance between actions and responsibility for their consequences, and thus also the basis for a rules - based order that can function in the long run. it is not only at the eu level but also, and in particular, member states where unpleasant structural reforms have to be undertaken in order to make the eu less vulnerable to crises. time is of the essence and, given the challenges we are facing in the eu, should not be wasted. 4. conclusion ladies and gentlemen, at this hour, the uk β s future in the eu is balanced on a knife edge. we won β t have to wait longer than tomorrow to learn how the uk has voted : whether it wishes to remain a member bis central bankers β speeches of the eu or to leave. however, we should not worry
|
of the bank of uganda intervention into the uganda commercial bank through the sale of its assets to stanbic bank further strengthened the financial sector. stanbic has not only retained all the branches of ucb, it has improved service quality, outreach and efficiency. they have also successfully introduced automatic teller machines throughout their branch network which has substantially increased convenience and reduced transactions costs. as a result of these reforms, public confidence in the financial sector has greatly improved. over a period of the last ten years, the banking sector has registered a tremendous increase of shs. 2, 591. 2bn. in total assets from shs. 723. 7bn. in 1995 to shs. 3, 315. 0bn. in 2004. total deposits grew by shs. 2, 052. 9bn. from shs. 383. 0bn. to shs. 2, 435. 9bn. during the same period while total loans went up by shs. 673. 2bn. from shs. 303. 5bn. to shs. 976. 7bn. over the period 1988 to 2004, non - banking financial institutions recorded growth of assets amounting to shs. 139. 02bn. from shs. 56. 78bn. to shs. 195. 79bn. deposit liabilities grew by shs. 94. 46bn. from shs. 17. 89bn. to shs. 112. 35bn. the loan portfolio grew by shs. 72. 245bn. from shs. 18. 99bn. to shs. 91. 24bn. over the same period. overall, the asset quality and profitability of the commercial banks have substantially improved, although it is troubling to see that banks β balance sheets still reflect a strong preference for liquid and low - risk assets, and the margin between interest rates paid on deposits and lending rates is still unconscionably high. the quality of the bank β s risk portfolio has improved tremendously with non - performing assets ratio falling from 29 % of the portfolio in 1998 to 2. 6 % in september 2004. however, the maturity structure of loans, and the degree of concentration need to be reviewed. on the maturity structure only 12 % of all loans, 35 % of loan volume, 17 % of total deposits and less than 0. 5 % of time deposits have a maturity structure of more than one year. there is also a high degree of
| 0 |
ignazio visco : translating a shared vision into a winning story welcoming remarks by mr ignazio visco, governor of the bank of italy, at the t2s launch celebration, milan, 2 july 2015. * * * good afternoon. president draghi, colleagues of the european central bank, of the european parliament and the eu commission, ladies and gentlemen, it is my pleasure and privilege to welcome you all here today, in milan ( the destination of the year, let me say in passing ), to share this important moment : the launch of the target2securities platform. for the euro area and the eurosystem, we are now living through what is, to say the least, a challenging period. this acknowledged, we must nonetheless recognize that t2s is a major achievement. this ambitious project is now reality thanks to the combined effort and cooperation of 21 countries - represented by their central banks, central securities depositories and financial market institutions - together with the european institutions : the ecb, the parliament and the commission. the t2s platform that has been built by four national central banks β banca d β italia, deutsche bundesbank, banque de france, banco de espana ( the so - called 4cbs ) - is now in operation with a first group of securities depositories and their linked - in user communities for the settlement of securities transactions in euro. by february 2017, at the end of the migration period, the platform will be deployed across europe, covering the vast majority of securities transactions in euro. the activities that took place over the migration weekend of 20 - 21 june ran smoothly. they were coordinated by the teams from the 4cbs and the ecb. since the 22nd, banca d β italia and bundesbank have had the responsibility for operating the platform. the t2s project was large and complex, involving many stakeholders. we have come a long way : from the start of the specification phase to the go - live, the project took seven years. the 4cbs, mandated by the eurosystem, developed and implemented the platform. this has been a demanding task, one to which our institutions have devoted substantial resources. aside from the role of developer and operator of t2s, the four central banks have been actively involved in the project through the participation in technical and steering structures with an important role in the governance of the platform. the participation of securities depositories in t2s is voluntary
|
considerable progress has been made in licensing two dtms, the central bank is concerned at the slow uptake of this new avenue for microfinance institutions to be mainstreamed into the financial sector. we are therefore engaging the microfinance industry through its umbrella body the association of microfinance institutions ( amfi ). this engagement aims at identifying the bottlenecks for microfinance institutions some of which include : costs associated with roll out of branch networks and ict infrastructure. restructuring of shareholding of microfinance institutions to comply with shareholding restrictions specified in the microfinance act. the act restricts shareholding by an individual or entity to 25 % of the institution β s share capital. mfis are constituted in various forms including non governmental organisations and trusts. under the act, transforming mfis are required to be incorporated as limited liability companies registered under the companies act. the incorporation process takes considerable time and expense and may deter some mfis from applying for a dtm license. anecdotal evidence also seems to suggest a β wait and see β approach by a number of potential deposit taking mfis as they assess the experience and performance of the pioneer regulated dtms. the central bank would like to take upon itself the task of dislodging the β waiting option β from this sector of the market. the central bank of kenya is currently drawing up proposals for review of the microfinance legal and regulatory framework. i should stress that the bank will continue to consult with market players as this process moves forward. we therefore, look forward to drawing valuable lessons from this summit to enhance kenya β s microfinance legal and regulatory framework. we stand ready to advice, cultivate partnership and only regulate when rules are flouted. with these few remarks, ladies and gentlemen, it is now my honour to welcome the deputy prime minister and minister for finance, hon. uhuru kenyatta to make some remarks to this summit and to invite his excellency the president of the republic of kenya to officially open the africa - middle east microcredit summit. thank you.
| 0 |
andreas dombret : the glass is half full β seven years of regulatory reform in the financial sector keynote address by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the euromoney conference β the public sector financing forum β, frankfurt am main, 30 september 2015. * 1. * * introduction ladies and gentlemen thank you for inviting me to speak at today β s public sector financing forum. it is a great pleasure to be here. the focal point you have chosen for this forum β the low - interest - rate environment β is indeed highly topical, and has been keeping us all very busy lately. a case in point is the survey that the bundesbank and bafin recently conducted among german banks on the challenges posed by low interest rates β more on that later. as you all know, the financial sector still faces a truly challenging environment. while the worst aspects of the crisis and its consequences have been weathered successfully, circumstances remain difficult. in my speech today, i will be discussing these circumstances and also shedding some light on what we have to do to complete the post - crisis regulatory reforms. i will argue that we have come a long way but that we are not done yet. nevertheless, since we have accomplished the majority of reforms, my message is this : the glass is half full, not half empty. 2. a truly challenging environment before i talk about regulation, let me sketch the truly challenging environment that now exists, and let me emphasise four factors. first, after the crisis, banks faced substantial deleveraging pressure. adjusting risk taking and funding strategies was necessary in order to survive and meet new regulatory demands. as the process of phasing in the regulatory reforms will continue until 2019, many institutions still need to deleverage further. second, all financial institutions β but banks in particular β need to adapt to new technological demands for renewal. digitalisation offers substantial challenges and opportunities at the same time. in any event, it has the potential to reshape the banking sector. the third factor is the high degree of investment uncertainty. unfortunately, in the current economic setting, there remains a high degree of uncertainty about the economic trajectory. what regulators can do, however, is pave the way for a sustainable recovery in the financial sector within a strong framework of rules β and combine this with reasonable phasing - in horizons. the fourth factor in the difficult environment is the low interest rate setting in which you all have
|
β too big to fail β could not be held accountable for their actions. looking ahead, there won β t just be recovery and resolution plans for credit institutions ; clearly defined liability cascades will be established, too, so as to ensure that the taxpayer really is last in line to foot the bill β that is to say, after shareholders and creditors have been bailed in, and then only in absolutely exceptional cases. but, to put this theoretical resolution model into practice, institutions will need to hold a certain amount of additional debt which, should the need arise, will be transformed into loss - absorbing capital. for global systemically important financial institutions, this will be achieved by way of the tlac standard, which the fsb will finalise this autumn. the same principle applies to the european institutions, but implementation here is based on what is known as the mrel standard, which differs in some respects from the tlac requirement. one difference is that all institutions will be required to satisfy the mrel requirements, not just the systemically important ones. another is that the minimum requirements will be set individually for each institution by the competent resolution authority. these new standards will have a transformative impact on the market for loss - absorbing debt capital. they will introduce attractive new instruments that offer high returns for investors, particularly for those outside the banking sector. and the disclosure requirements under these standards will give investors the transparency they need to make well - founded decisions. these reforms together with those that have already been accomplished will strengthen institutions β stability and systemic resilience. nevertheless, when speaking about regulatory reforms, we have to bear in mind that most of those which i have mentioned only affect the regulated banking sector. in the context of low interest rates and tougher regulation, there are incentives for regulatory arbitrage through the shifting of assets from the regulated banking sector to somewhere outside the regulatory perimeter. and we are seeing significant movement in this direction. that is why the g20 has agreed on a roadmap for regulating the shadow banking sector. work is being conducted simultaneously by the fsb, the basel committee and iosco. the objective is to ensure that shadow bank - like risks to financial stability emerging outside the regular banking system are subject to appropriate oversight and regulation. yet, we are careful not to inhibit sustainable market - based financing models that do not pose such risks. one good example of a well - designed instrument is the basel committee β s standard for measuring and controlling large exposures. while
| 1 |
prices ( henry hub ) have declined from over of us $ 12 per mmbtu in june to an average of us $ 6 per mmbtu in december 2008. several planned investments in the sector have been postponed because of financing problems or market uncertainties. we have also seen an otherwise struggling stock market take a sharp drop β by 27 per cent β between june and december 2008. our households, like those elsewhere have observed financial turmoil abroad and have become more cautious β much to the disappointment of the merchants who were depending on christmas sales for a large part of their income. there are indications of a marked slowdown in housing activity, in part due to high interest rates but perhaps more so as a consequence of the unwinding of the construction and real estate boom of the last years. in addition, our manufacturing sector has begun to face the impact of the declining external and domestic demand. it β s amazing how it takes difficult times like these to appreciate the inter - connectedness of our economy. a fall in demand and energy prices affects not only the large energy companies but a whole host of smaller companies and entrepreneurs who provide services to these companies. the energy sector also accounts for an important part of construction and thus the downturn in the sector exerts a downward pull on construction activity. the manufacturing sector is being affected by a fall in demand from regional markets and the slowdown in tourism and construction. since the non - energy sector is the major generator of incomes, its fortunes have a ripple effect on private demand and on the overall level of investment and employment. and this brings us to the role of government in the present scenario. as you know, over the past few years, the government has taken an active role in promoting economic transformation, including through a significant increase in expenditure on infrastructure and social services. in addition to serving as a catalyst to growth and capacity expansion, government expenditure has also contributed to an unacceptable surge in domestic inflation ( aided no doubt by an unprecedented increase in international food prices ). conscious of the need to reduce inflation the government initially sought to match a projected reduction in energy sector revenues by a compensating cut in expenditures. thus, on november 30, 2008 in response to an expected shortfall in energy sector revenues of tt $ 5. 3 billion, the government announced expenditure cuts of tt $ 5. 0 billion. yesterday the government announced that as a result of the continuing fall in energy prices the revenue shortfall is likely to be some $ 2. 3 billion
|
sabine lautenschlager : interview with politico interview 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, with politico, conducted by politico on 14 january 2019 and published on 17 january 2019. * * * are we heading for a clash between regulators and banks? no, i don β t believe so. firstly, the kind of increases in capital requirements you will see are an improvement of the rules in regards to risk sensitivity, which are very bank specific, depending on their business model. it is not an average increase of capital for all banks, as such. second, the basel implementation is spread over nine years until 2027 β nine years! are banks overplaying this? i think that most of them are overplaying it. you always need to look at whether risk sensitivities are considered adequately. but that is up to the supervisor. the rules in basel are general abstract rules. former ecb executive board member vitor constancio warned against the risks of shadow banking, and luis de guindos has continued along that line β¦ i fully agree with him. as banks are regulated more strongly, some business has become much costlier for them to take on. a lot of business moved over into the shadow banking sector, which is interlinked to the banking sector. this is why this sector is so important to look at, not as a banking supervisor, but from a financial stability point of view. for me, the first step would be to ensure that you have much more knowledge about a sector that is growing and increasing in importance. they influence liquidity in some asset classes in the market and might thus have strong implications for financial stability. how do we do that? stronger disclosure rules? i would first like to know what is the exposure, what is the risk, what are the interconnections in the sector. then i β d ask myself, do we need more rules? so, more reporting, yes. a different way of reporting. because the current setup is insufficient? yes, it is insufficient. somebody has to look into it. if these are global players, perhaps the global standard setters should look at it. and not only in a static way. the mistake you should never do is only to look at what you have in your balance sheet. you also need to look at the flows in
| 0 |
joseph yam : central bank authority, accountability, transparency and effectiveness closing remarks by mr joseph yam, chief executive of the hong kong monetary authority, at the bis meeting of the central bank governance network, hong kong, 18 - 19 november 2004. * * * braver people than myself have, earlier this morning, attempted to distil the multiple discussions that have taken place over the last day and a half. and they have all had the advantage of actually having attended the discussions. i shall not attempt to imitate them - though i should add that i have been keeping myself closely informed of your deliberations through the enjoyable discussions i have had with many of you in the margins. by all accounts, this has been an extremely fruitful meeting. let me instead try to capture some of the themes and preoccupations which have figured prominently in discussions about central bank governance, and which will, i have no doubt, provide the impetus for further discussions within this network. these discussions tend to revolve around four interlocking and overlapping areas of concern : 1. the sources of authority for central banks ; 2. the process of accountability within central banks, and, beyond them, to the larger body politic ; 3. the role and challenges of transparency ; and 4. the methods for achieving effectiveness in our operations through proper organisation and planning. the issue of authority for central banks begins, in all cases, with the law, and includes the obvious questions of what kind of law is suitable for a particular central bank ; how you change a law that is no longer suitable ; and what is the optimal timing and strategy for changing the law. but, as your discussions have stressed, there is more to this than the mere word of the law. an interesting aspect of the sharing of experience here has been the extent to which central banks have worked with - and sometimes around - laws that have become inadequate to the needs of modern central banking. as i mentioned in my opening remarks, in the case of the hkma it has been a question of working without the law, since hong kong has no formal central bank law, and we rely on just a few lines of a single statute for our authority. a further point that has been made strongly is the need to base the legitimacy, the credibility of a central bank on something more than just statutes and regulations. this brings into play the question of accountability, through both formal and informal channels. i know that a great deal of your discussion has
|
eddie yue : remarks at media standup remarks by mr eddie yue, chief executive of the hong kong monetary authority, at media standup, hong kong, 2 october 2019. * * * ladies and gentlemen, 1. today is my first working day as the chief executive of the hkma. apart from the transition to a new position, i will also be faced with a challenging external and domestic environment. this includes the weakening of global economic momentum, uncertainties over the chinaus trade conflict and brexit, unpredictable monetary policy stance across central banks especially in the us, and the social events in hong kong in recent months. all these have presented huge challenges and uncertainties for the hong kong economy. 2. our key priority in the next few years is to maintain hong kong β s monetary and financial stability. 3. and, the foundation for this stability is the linked exchange rate system ( β the link β ), which has helped hong kong weather different financial storms since 1983. i β ve been involved in the operation of the link throughout my career in the hkma and i have also gone through two financial crises. i firmly believe that the link is the most appropriate monetary system for hong kong. we see no need and have no intention of changing this well - established system. 4. our banking system is also robust and sound. i β m confident that hong kong β s financial system is well positioned to cope with market volatilities. 5. we will also reinforce hong kong β s role as a premier international financial centre. one key driver is the rapid development of fintech. while the hkma has done a great deal in the past few years in promoting fintech, there is still room to further apply new technology in finance in the coming years. this includes, for example, fostering a better ecosystem for regulatory technology ( or regtech ) and supervisory technology ( or suptech ). we are also aware that any new risks associated with the increasing use of technology have to be managed. these include for example cyber and data security. we will work with the industry to address these risks. 6. we are also committed to promoting market development opportunities, especially in strengthening the role of hong kong as the gateway to the mainland β s capital markets, in the greater bay area development, and also in green finance. 7. these are rough times. but my colleagues and i will continue to discharge our duties in a professional manner and do our best to serve the people of hong
| 0.5 |
##ciable accommodation should the ongoing expansion falter in the near term. in addition to taking the federal funds rate back down to nearly zero, the fomc could resume asset purchases and announce its intention to keep the federal funds rate at this level until conditions had improved markedly β although with long - term interest rates already quite low, the net stimulus that would result might be somewhat reduced. despite these caveats, i expect that forward guidance and asset purchases will remain important components of the fed β s policy toolkit. in addition, it is critical that the federal reserve and other supervisory agencies continue to do all they can to ensure a strong and resilient financial system. that said, these tools are not a panacea, and future policymakers could find that they are not adequate to deal with deep and prolonged economic downturns. as shown in figure 2, the 10 - year treasury yield in the simulation starts out at just over 4 percent, well below its level pre - crisis, suggesting that there may be less room to push down long - term interest rates in the future than in the past. another potential source of overstatement could be the frb / us assumption that changes in long - term interest rates, whether driven by shifts in term premiums or shifts in the expected path of short - term interest rates, have the same influence on real activity, as there is some empirical evidence that the estimated sensitivity of spending to movements in term premiums alone may be relatively small ; see michael t. kiley ( 2014 ), β the aggregate demand effects of short - and long - term interest rates, β international journal of central banking, vol. 10 ( december ), pp. 69 β 104. on the other hand, the effectiveness of forward guidance in the frb / us model is materially less than it is in some other models, implying that the frb / us simulation results could potentially understate the stimulus provided by the announcement of a lower - for - longer policy. see hess chung ( 2015 ), β the effects of forward guidance in three macro models, β feds notes ( washington : board of governors of the federal reserve system, february 26 ). in principle, the federal funds rate in the longer run could also turn out to be lower than currently predicted if inflation were to remain persistently below 2 percent. however, because a higher rate of inflation can arguably be achieved over time through a sufficiently tight labor market, this risk seems low to me as
|
reinvestment act is broad and deep. commenters across the board applauded the significant volume of cra loans and investments that have supported lmi households and communities, as well as the benefits households and communities have realized from the cra β s focus on local retail financial services, small business lending, and community development lending, investments, and services. and they asked that the three banking agencies work together toward a joint rulemaking proposal so that cra policies can be clearly and consistently applied across agencies. second, there are some good ideas about how to modernize the procedures for setting the area in which the agencies assess a bank β s cra activities while retaining the core focus on place. this is not a simple challenge, and this morning β s panel identified some promising solutions to the challenge of modernizing the definition of assessment areas to keep up with changes in banks β business models. i appreciated the panelists β insights on how to balance the importance of place with various business models, including to reflect the extensive use of digital channels and other changes in the banking industry. the public comments we have read so far suggest 1 / 3 bis central bankers'speeches general agreement that there is a need for an update β but not a complete overhaul β of assessment areas through a balanced package of reforms. we have heard general support for assessment areas that reflect each bank β s business model, recognizing that branch - based assessment areas work for many banks but that additional or different assessment areas may be appropriate for others. third, we have received helpful input on tailoring cra regulations to banks of different sizes and business models. many of the comments we reviewed expressed support for retaining different performance tests for different types of banks, including the strategic plan option. we also heard this at the regional roundtables, where banker participants ranged from small community banks to large internet - only banks. it was clear that cra regulations cannot be one - size - fits - all. fourth, we have heard some good suggestions for ensuring that any modernization of assessment areas should keep in focus the goal of encouraging banks to seek out opportunities in underserved areas, including in this morning β s panel on assessment areas. the concern about cra hotspots and credit deserts was echoed in the comment letters, and several commenters offered helpful suggestions for addressing this problem going forward. and the need to create incentives for cra capital to reach underserved communities was a theme we heard in our regional roundtables from both bankers and
| 0.5 |
institutions, responsible for the processing of all financial market transactions, including a crucial role in the control of risk. professionals constantly have to re - tool, re - equip and fully update themselves to meet the exigencies of the marketplace. with so much of innovation and technological progress taking place in the world of finance, there is no place for players having limited skills and knowledge in treasury management. the market punishes those who lag behind. one of the challenges in treasury management is to keep abreast of latest techniques and trends in the marketplace and make the most out of them. the biggest challenge for most of our market participants remains the interpretation of economic indicators, changes in policy signals and predicting the course of economic events that affect financial markets. it β s tantamount to becoming good crystal ball readers in the money and foreign exchange markets. treasury management is also the management of risks. with the globalization of financial markets, financial institutions around the world are exposed to a multiplicity of risks. movements in the rates of interests and volatility of exchange rates in an increasingly complex environment have made the process of managing risks a critical aspect of treasury management. may i however state that my recent experience in the domestic financial market tends to suggest that our treasury managers seem to be acquiring expertise in predicting changes in the interest rate policy stance of the bank of mauritius. but a very limited number of treasury managers seem to be able to foresee at times movements in exchange rates. this is quite understandable ; it is not in the realm of mortals like us to accurately predict exchange rate movements. credit risks, market risks, exchange risks, payment and settlement risks and so on and so forth are all risks that textbooks teach us how to mathematically measure. textbooks also teach us the various ways and means of protecting against risks. operational risk however is a type of risk that no financial institution has ever been able to guard itself against. no financial institution or any other enterprises, in particular treasury management units in any of these organizations, should ever dare to overlook operational risks. it is worth stating that many of the lessons learned from those headlines cases cited violations of the fundamental tenets of internal control, particularly those pertaining to operational risks. lately we have observed that some institutions have been reviewing their treasury operations. the bank of mauritius views these undertakings as positive moves towards improving efficiency in management. in any treasury management unit it is essential to have a modularly flexible treasury system, which can adapt to the conditions of a
|
r basant roi : treasury and risk management address by mr r basant roi, governor of the bank of mauritius, at the financial markets association of mauritius workshop on treasury and risk management, 10 september 2003. * * * president and members of the financial markets association of mauritius ladies and gentlemen good morning. thank you chairman for the invitation to briefly address this gathering of financial market participants this morning at the opening ceremony of the treasury and risk management workshop. as far as i recall, this is the first time that such a workshop is being organized by your association for the benefit of its members and for professionals involved in treasury and risk management. since the breakdown of the bretton woods system in the early 1970s treasury management has assumed an increasingly greater importance in our economic life. with the globalisation of financial markets treasury management has become more demanding than before. until five years ago treasury management was not assigned the same importance that ought to have been given by corporate bodies in mauritius. it is absolutely essential that in today β s world efficient treasury management occupies a seat of importance in the management of enterprises. i congratulate your association for having taken the initiative to hold this workshop. i strongly believe that we should keep ourselves abreast of the latest developments in asset and liability management, risk management techniques and derivative instruments. this workshop is positively a first step forward. i would first and foremost like to make an observation. treasury management is not specific to banks and other financial institutions. it does concern all of us who are in the business of managing financial resources in a globalised financial market. enterprises producing goods and services, exporters, importers or any other economic agent that has got to manage its finance necessarily requires expertise in treasury management. in 1999, i was surprised to learn that an exporter with a turnover of over rs2 billion did not have any expertise at all in managing its own finance. in a world economy characterized by stiff competition, every enterprise needs to be good in treasury management. in the last few years i have stressed a lot on good corporate governance as the basis for best business practices and highlighted the urgency for restructuring and consolidation of individual firm so as to enhance micro - economic efficiency. traditionally much of the knowledge and skills of professionals in the wholesale financial markets has been learned on the jobs. this approach has varied from the simple β sit, watch and learn β approach to the sophisticated mentoring system used by some large financial institutions. today treasury operations have grown into one of the key administrative areas of financial
| 1 |
for designing emergency measures to help the economy, and then to draft the economic recovery plan, which a few days ago was approved by the assembly of kosovo through the passage of the law on economic recovery. as a result of our ongoing communications, rfi ( rapid financing instrument ) has been approved by the imf in the amount of 52 million euros to cover urgent and temporary balance of payments needs as a result of the covid - 19 pandemic. also, after coordination with the central banks of the region, the european central bank has approved the request of the cbk to establish a repo financing line in the amount of 100 million euros. this line of financing enables the cbk to borrow liquidity in euro currency from the eurosystem, to address the potential liquidity needs of financial institutions in kosovo in the event of market dysfunction due to the covid - 19 pandemic. seeing that the country's economy was entering a pronounced crisis, where businesses and citizens were facing great financial difficulties, the cbk, based on international best practices and in cooperation with lending institutions in kosovo, undertook a series of measures to help the economy cope more easily with the challenges of this crisis. these measures initially consisted of applying a moratorium on loan repayments without any punitive measures for all borrowers who have been adversely affected by the pandemic. this moratorium has temporarily relieved the borrower of the loan repayment burden, thus improving their liquidity position to finance other needs. following the end of the moratorium period, the cbk has published a guide to loan restructuring in order to establish the criteria on which the loan restructuring process should be based for borrowers who have encountered financial difficulties as a result of the pandemic. the credit restructuring guide has made it possible to ease the credit burden on borrowers without implicating any deterioration in their classification in the kosovo credit register. the measures taken by the cbk were assessed as very adequate, both by the local public and by international financial institutions such as the international monetary fund in the article iv report on kosovo and the world bank. also, the central bank of the republic of kosovo has welcomed the conclusions drawn in the report of the european commission for kosovo for 2019, which recognizes the commitment and reforms undertaken in the financial sector. the ec report has devoted a special space to developments related to the impact of the pandemic on kosovo's economy, highlighting the measures taken by the cbk to assist borrowers
|
and electronic payment instruments and reduce cash, in order to reduce the cost of payment services for the most efficient flow of transactions as well as other positive effects on the economy. we have created the possibility for access to the payment system of non - bank financial institutions, as well as the possibility of having an iban, to increase access to finance, within the concept of " payment account ", where we have also approved the relevant regulation. we have changed the organizational structure, where the responsibility of payment institutions and electronic payment institutions supervision has been added to the mfi / nbfi supervision division, the it systems supervision division has been established, within the credit registry division, the responsibility of register of bank accounts, as well as the department of consumer protection was established where, in addition to the division of consumer complaints of financial services, the division of supervision of market practices was also established. we are in the process of finalizing the draft law on payment services, in compliance with eu directives such as psd2 ( payment services directive 2 ), emd ( e - money directive ), pad ( payment account directive ), and interchange fees, where at the beginning of february we have organized jointly with the world bank and financial institutions the two - day workshop in order to increase knowledge about payment services based on the most advanced developments in this field. the law on the anti money laundering will also be revised and the relevant cbk regulations will be amended in order to fulfill the necessary criteria in this field we are in the process of building infrastructural capacities and human resources to ensure that systems, equipment, knowledge, skills and personnel tools remain relevant and effective in overseeing the risks of new technologies and innovative business models. we have approved the regulation on cash operations as one of the basic criteria towards membership in the sepa payments scheme and access to the european union's fast payments system ( tips ). recently we are in contact with central bank of italy ( banca d'italia ) and we are interested in gathering insights on the current status of the tips clone project, its features, potential implementation in our domestic context, and, possibly, associated costs. we are also working to increase the awareness in our institution and to the supervised institutions for the risks that are linked with digitalization. cyber intrusions pose a risk to the stability of national and international financial systems due to their potential cross - border spillover effects, and are becoming more complex as a result of increasing digitalization, growing
| 0.5 |
an alarmist scenario as exaggerated. in any case, rather than adjusting the voting mechanism, it would be better for the eurosystem to confine itself once again to its proper and primary task : managing monetary policy with the aim of ensuring price stability. the redistribution of risks is a task for fiscal policymakers, who have the necessary democratic legitimacy and are answerable to parliament and, ultimately, to the voters. that is straight out of the central banking text book. but in reality, risks will be redistributed and our representative will be outside the room. what matters is taking part in the meetings where decisions are made β all members of the ecb governing council are always present and entitled to contribute to the discussion. and the concerns that many people express β the implications of central bank measures for us as taxpayers and for price stability β cannot be allayed by changing the voting mechanism. bis central bankers β speeches you have often been a lone voice anyway in many of the decisions made by the ecb governing council. why have you not been able to make your views prevail in the past? in such a fundamental debate about the role of monetary policy, a number of factors play a role, one of which is doubtless the national traditions and history that shape each and every one of us. but nor can one always escape the influence of the economic situation in one β s own country. it makes a difference whether 50 per cent of young people are out of work back home or whether there is almost full employment. however, i do not have the feeling that my arguments are not coming across in the discussions. many of my concerns are shared by colleagues on the governing council. you are the only one voting against! that is far from being true of all decisions. however, when it comes to measures which might be seen as monetary financing of governments, i believe it is particularly important to take a principled stand. but even then the majority on the governing council factors into its decisions concerns which i have put forward. and if you want to mop up the flood of money, the others say : we would rather have five per cent inflation than five per cent unemployment? you seem to be suggesting that my colleagues are not sticking to our mandate. we all feel duty - bound to price stability. and according to our most recent projections, the inflation rate is likely to fall back to below 2 per cent in the next two years. to ensure continuing price stability thereafter, we will have
|
scheduled ucbs, permission to offer internet ( view only ) facility to all ucbs, enhancement of limit under the scheme of bullet payment of gold loans from βΉ 1. 00 lakh to βΉ 2. 00 lakh, permission to offer demat account trading facility and liberalization of opening of off - site atm are some of the steps taken by rbi to strengthen the sector. 17. more avenues have been provided for ucbs to earn fee based income. accordingly, ucbs are now allowed to undertake point of presence ( pop ) services under pension fund regulatory and development authority ( pfrda ), act as pan service agent ( psa ) for providing pan issuance services to its customers and issue β semi - closed pre - paid payment instruments β permitting payment of utility bill / essential services up to a limit of βΉ 10, 000 / 18. rbi has been conducting seminars / workshops / focused training sessions for directors / officers / staff of ucbs. this is an on - going exercise and our goal is to ensure that all directors are covered under the training programme at the earliest. 19. it was decided to make it mandatory to conduct the statutory audit of ucbs with a deposit base of above βΉ 250 million by statutory auditors ( sas ) who will be qualified chartered accountants. however, it was observed that there were large divergences between the audited financial parameters of ucbs and that assessed by inspecting officers. as statutory audit is one of the important inputs based on which on - site supervision is conducted, it is imperative to improve and strengthen the quality of reports of sas. it has therefore been decided to hold workshops / seminars for sas to sensitize them with irac norms issued by rbi. institute of chartered accountants of india ( icai ) is also being advised to prescribe a standard format for statutory audit report of the ucbs. steps taken for strengthening the regulation and supervision of the sector 20. rbi moved to camels pattern of rating of ucbs w. e. f. march 31, 2011 in lieu of earlier system of grading. with the switchover to rating system, there were 697 ucbs in c & d rating which constituted 42. 47 % of the total ucbs as on march 31, 2011. the number of c & d rated ucbs has declined to 339 constituting 21. 50 % of total number of ucbs as at the end of march 31, 2015. the number of ucbs in a & b rating increased from 94
| 0 |
innovative solutions because they have the confidence that there would be no adverse unintended consequences to financial stability and integrity. empirical data can also support standard - setting bodies in designing differentiated guidance for financial services for low - income households and smes. while the importance of data collection is obvious, there tends to be under investment and an β attention deficit β among decision makers on such a critical matter. second, it is crucial to build the capacity of regulators, supervisors and financial institutions so that the ecosystem has the requisite capacity to implement proportionality in practice. the basel range of practice survey highlights supervisors β unmet demand for capacity building, as only 30 % of supervisors globally had received training on supervision of banking services for the low income segment. the basel meeting with standard - setting bodies on 2 october 2014 chaired by her majesty queen maxima, the united nations secretary general β s special advocate, also highlighted the importance of technical assistance programmes to build up local knowledge and capacity of national supervisors, so that experience in applying proportionality can be shared. third, it is timely for financial regulators to engage non - financial regulators such as telecommunication authorities at a global and national level, in order for regulation to keep abreast with the latest developments in financial inclusion solutions. technology plays a significant role in rapidly scaling up financial inclusion by lowering the cost of delivery as well as increasing convenience and quality of services for the masses. technology enables us to bypass legacy systems and constraints. for example mobile banking, where banks partner with mobile network operators to offer banking services anywhere, any time and in real time, that has enable reach beyond traditional boundaries without the need for a huge investment in infrastructure. importance of the global symposium to galvanise action this leads on to why we are gathered here at this symposium. the global symposium will discuss and highlight the detailed next steps to implement proportionality in practice. this symposium uniquely brings together the relevant key stakeholders to deliberate the issues of proportionality in practice. the afi β s working group members on digital financial services, sme finance and global standards will share their perspectives on regulatory and supervisory matters. the private sector banks and remittance service providers share practical realities in the market to comply with international standards. in addition, we have international experts from the seacen, toronto centre and world bank, who have a pivotal role in implementing effective projects to advance proportionality in practice. of importance, this symposium will culminate in an outcome statement that captures the actionable recommendations from deliberations among
|
in this respect, have been invaluable. since the launch of the family of banknotes in 2009, currency in circulation has increased by 35 percent. this is attributable mainly to the p200 banknote, which is an indication of its popularity. in fact, by the end of 2013, the p200 banknote accounted for approximately 60 percent of all the paper money in circulation. as a related matter, the management of all currency is now conducted on these premises called the cash management centre. this facility assures efficient handling and delivery of quality service to commercial banks, and generally enhances efficiency in the national cash management cycle. although banknotes and coin continue to be a major medium of exchange in botswana, non - cash transactions, especially electronic transfers, have gained considerable ground. the result is that the average monthly cheque payments have declined by over 50 percent to about p3 billion in the five years to 2013. in the same period, congestion at banking halls for cash withdrawal has been eased, due to the increasing number and usage of automated teller machines ( atms ). equally important, the value of average monthly atm withdrawals has increased by about 50 percent to p1. 3 billion. bis central bankers β speeches in the not - too - distant future, the efficiency of the national payments system will be enhanced by the introduction of the cheque imaging and truncation system, which will reduce the cheque clearing cycle. furthermore, both the accountant general β s office and the botswana unified revenue service will be connected to the bank of botswana through the electronic botswana interbank settlement system. this will greatly improve the speed, security and efficiency of government payment transactions, as well as those of the botswana unified revenue service. director of ceremonies, distinguished guests : there is one last piece of noteworthy information obtained from institutional memory that i would like to share with you. that is, since botswana withdrew from the rand monetary area and introduced its own currency in 1976, it is the first time that a sitting president will, by the end of this ceremony, have coincidentally presided over the renewal of all of the country β s banknotes and coin. congratulations are in order, sir. distinguished guests, ladies and gentlemen : it is now my pleasant duty and honour to invite you to the podium, sir, your excellency the president, so you could deliver your address and ultimately launch the country β s new family of coin, and, at the same time, declare the new coin legal
| 0 |
77 interventions since 1997 : only one case involved a depositor payout, while the remaining 76 were interventions other than payout ( 24 alternative interventions and 52 preventive interventions ). 4. international experience the key role of dgss in crisis management is also confirmed in some major non - eu jurisdictions. in the us, for instance, the dgs β s support for the transfer strategies is a pillar in the framework and was successfully used for almost a century, including recently in the early 2023 crises. between march and may 2023, three large regional banks were closed and resolved with a purchase and assumption ( p & a ) transaction and with sizeable support from the federal deposit insurance corporation ( fdic ). 7 to facilitate the resolution of financial institutions, the deposit insurance corporation of japan ( dicj ) has provided financial assistance in 182 cases and injected capital into 34 financial institutions so far. 8 5. changes in the banking environment the banking environment has changed in recent years. technological innovation is perhaps the main driver of change. on the one hand, it is leading credit institutions to adapt their business models and rethink the ways they provide banking services, both in response to customers β new expectations and to changes in product customization and customer service. it is also creating new opportunities in terms of profitability, thanks to efficiency gains and cost reductions. 9 on the other hand, it poses challenges. corporate governance systems should be strengthened in order to increase the digital literacy of management and supervisory bodies. moreover, technology increases the use of outsourcing ( and the associated risks ) as well as competition between intermediaries. 10 finally, financial stability concerns may arise. indeed, the digitalization and internationalization of finance, while providing access to fast payments ( including instant bank transfers ) and mobile banking, may also lead to the amplification of concerns through social media, causing considerable and unexpected deposit withdrawals and risks of bank runs. specifically, the fdic intervened to support the transactions, with a total cost of more than $ 40 billion ( estimated as of 31 december 2023 ). while one intervention ( first republic bank ) was carried out under the least cost requirement, the systemic risk exception was invoked in the other two cases ( silicon valley bank and signature bank ), so the fdic could deviate from the least cost principle. see dicj, annual report 2022 / 2023. many banks are using technology to replace traditional channels. the resulting efficiency gains are bringing
|
up, as all participants, wary of the unknown exposures of all others to the leveraged risk - takers, pull back. but this maintenance of liquidity and the smooth functioning of markets has become central to financial stability because even as regulated institutions have become more sound, they and other participants have come to rely more on markets for their own risk management. hence dislocation can have serious consequences. i am sceptical, incidentally, of the argument that hedge funds and the like necessarily add to liquidity. liquidity means being able to change a position without affecting the price, and depends on someone being prepared to make a price. hedge fund activity adds turnover, which probably means that in good times there is more incentive for price makers. but under conditions of pressure, leveraged investors are more likely to need to use the liquidity of the market than to be able to contribute to it. on such occasions β which is when liquidity is needed most β these funds surely are liquidity takers, not providers. additionally, there is, as tim acknowledges quite clearly, an inherent conflict over certain time horizons between market discipline and competition for business. precisely because hedge funds et al do add to turnover, they have considerable business to direct to financial intermediaries. when the money is flowing into the big funds, and returns have been high, they are more likely to be able to dictate the terms on which the various banks, investment banks, prime brokers and so on can get a share of that business. at those times, market discipline is likely to be eroded. in fact, this raises much broader issues of risk perception and management than hedge funds per se, and here tim makes some very good points. in particular, the emphasis on tail events, and on the uncertainty which surrounds estimates of potential losses, is very well targeted. risk management techniques need to extend beyond calculations of vars and the like β as complex as such calculations already are β and to think about whether the possible size of losses associated with the one - in - a hundred event really are well described by standard distributions drawn from recent history. they need also to contemplate the possibility that the correlations between portfolios will in the future be different from those in history. this point takes on more importance, in my judgement, against the backdrop of the remarkably benign environment of the past decade in many countries. as tim notes, a succession of financial events have been absorbed by capital markets with apparent e
| 0 |
##tisation markets activity was seriously impaired after the subprime crisis due to the stigma attached to any kind of asset - backed securities, and the lack of recognition by investors and regulators of the specific quality of each product. to address some of these problems, the european commission has recently published an interesting proposal for amending the european regulation on prudential requirements for credit institutions and investment firms that introduces a differentiated treatment for high quality securitisations that meet stringent standards in terms of simplicity, transparency and standardization. 5. concluding remarks let me now conclude by highlighting what i think are the main lessons drawn from the recent crisis in connection with credit developments. first, it seems clear that given the large financial imbalances that emerged during the expansionary years, a protracted contraction in credit demand seems not only unavoidable but also positive to restore the ability of the economy to grow on a sustainable basis. yet there is little doubt that frictions on the supply side amplified the contractionary effects of weak demand and that those frictions merit bold policy attention. in any case, policy interventions aimed at revitalising credit during a crisis should be carefully designed and calibrated, duly taking into account that credit flows should not be expected to fully recover until lenders β and borrowers β balance sheets are on sufficiently firm ground. in the case of spain, some of the main constraints affecting credit developments for most of the recent crisis have abated considerably as a result of the improvement in the macroeconomic outlook, the bold banking sector reform and the introduction of various measures at both the national and european level. these positive developments, however, should not be taken as conclusive evidence that the task is complete and that all relevant risks have been dispelled. rather, the consolidation of the recent positive signals in the macroeconomic and financial spheres requires resolve to complete the reforms still pending on various relevant fronts. this should, in my opinion, be bis central bankers β speeches the main priority in seeking to enhance economic growth prospects on a sustainable basis and to mitigate the volatility of the financial and economic cycles. thank you very much for your attention. bis central bankers β speeches
|
national and european level, does also facilitate the normalisation of the economyΒ΄s financial flows. these initiatives include the adoption by the eurosystem of a number of bold, unconventional monetary policy measures, including the introduction of new long - term operations linked to new lending ( the so called tltros ) and the purchase of public and private sector securities. the ongoing improvements to euro area governance arrangements are also operating in the right direction, helping stabilise european financial markets and reducing their fragmentation. one key development in this field is the banking union, which, though still incomplete, marks an unprecedented step towards a genuine european common mechanism of rules and procedures for supervising and resolving banks and protecting their depositors. all in all, the recent normalisation in european financial markets has contributed to a significant easing in financing conditions in those jurisdictions that were previously under higher macrofinancial pressure, including spain. as a result, the cost of lending in these countries has tended to converge gradually to the lower levels observed in the core euro area. at the same time, some measures recently introduced at the national level have also supported the availability of bank financing to smes. specifically, the regulatory definition of an sme has been significantly widened, bringing it in line with that predominating at the european level and so extending the benefits of the lower capital requirements associated with loans to such firms. as a result of the conjunction of the previous developments, most quantitative and qualitative indicators point to a higher dynamism in credit flows in spain which is linked both to supply and demand factors. for instance, data from the central credit register show an upward trend in the number of credit transactions with non - financial corporations which has been driven by an increase in both loan applications and their approval rates. this evidence is moreover consistent with the results of the survey on the access to finance of firms conducted by the ecb on the basis of a sample of european companies. in particular, since the end of 2013, spanish smes have reported an improvement in their perception of access to credit, a signal which is consistent with that from the bank lending survey. 4. policy considerations on sme β s financing allow me to say now a few words on policy considerations regarding the specific case of small firms β financing. undoubtedly, the crisis has been a painful reminder for us that the access of smes to finance may deteriorate suddenly and sharply in periods of high uncertainty. financial institutions, such as those represented here, with a mandate to
| 1 |
dynamics of inflation in south asia 1 good afternoon and a warm welcome to south asian association for regional cooperation ( saarc ) central bank colleagues participating in this first physical seminar under the aegis of saarcfinance after the onset of the pandemic. greetings to ms. dechen pelzom, executive director, royal monetary authority of bhutan. we are delighted to have with us colleagues from the ministry of finance, and virtual participants from our central banks, the bank for international settlements ( bis ) and the international monetary fund ( imf ). i am joined in our appreciation of your participation by colleagues from the reserve bank of india ( rbi ) representing various departments. this seminar marks the fulfilment of the commitment made by india in the 41st meeting of the saarcfinance governor β s group in march 2021. given the developments in our countries and the global inflation crisis gripping the world around us, the seminar β s theme β the dynamics of inflation and its control in south asia - could not have been more timely and relevant. from a broader perspective, seminars and workshops of this type under the mandate of saarcfinance have proved to be an effective avenue for intensifying our engagement through sharing of knowledge and experiences as well as by energising person - to - person keynote address delivered by dr. michael debabrata patra, deputy governor, reserve bank of india ( rbi ) at the saarcfinance seminar hosted by india on august 24, 2022 at new delhi. valuable inputs from smita sharma and soumasree tiwari, and editorial assistance from vineet kumar srivastava are gratefully acknowledged. interactions. our next seminar will be on the saarcfinance database, which will be hosted by the maldives monetary authority. saarc : our history by way of historical background, the south asian association of regional cooperation ( saarc ) was created in 1985 as an expression of the collective desire for fostering shared understanding and collaboration in our region. at present, afghanistan, bangladesh, bhutan, india, nepal, maldives, pakistan and sri lanka are members of the saarc. over the years, our countries have developed strong linkages in the form of trade, remittances and financial transactions, over and above our strong cultural ties and shared history. we now look forward to strengthening our economies with the goal of accelerating economic development and prosperity by tapping into the full growth potential of
|
risks to our growth prospects are slanted to the downside. the dark shadow of stagflation looms over us and our outlook. the indian experience in india, we have adopted an inflation targeting framework since 2016, with a target of 4 per cent defined in terms of headline cpi inflation within a tolerance band of + / - 2 per cent around it. policy decisions are taken by a majority vote by a monetary policy committee ( mpc ). there are strong accountability criteria embedded into the framework by legislation and associated regulations in the case of deviations of inflation outcomes from the target. while inflation averaged under 4 per cent during 2016 - 20, it rose to 6. 2 per cent in 2020 - 21 β the year of the pandemic β s first wave. although it moderated in the following year, i. e., 2021 - 22 to 5. 5 per cent and was projected to ease further to 4. 5 per cent in 2022 - 23 as recently as february 2022, the war in ukraine has altered the outlook drastically. although it appears to be moderating from its peak of 7. 8 per cent in april this year, we would prefer to await more incoming data before we are convinced that this a durable trend. while some easing of international commodity prices and supply chain pressures, both globally and domestically, are positive developments, upside risks remain in the form of potential second order effects and the transmission of input cost pressures to the sticky core component of inflation. for the financial year 2022 - 23 ( april - march ) as a whole, the rbi has projected that headline cpi inflation would average 6. 7 per cent. accordingly, the rbi has embarked on a front - loaded monetary policy response, with a cumulative 140 basis points increase in the policy rate so far, besides narrowing of the policy rate corridor in april that pulled up money market rates by 40 basis points from pandemic lows. in its latest meeting in early august, the monetary policy committee ( mpc ) decided to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth. simultaneously, the rbi is engaged in withdrawal of the liquidity infused into the economy during the pandemic in a calibrated, multi - year time frame. as the inflation forecast performs the role of an intermediate target in the monetary policy framework, the rbi has taken several initiatives to strengthen inflation monitoring and improve the accuracy of forecasting. besides widening the ambit and depth
| 1 |
therefore, you are all encouraged to use the branch and, of course, all other licensed banks in your area, to save money and undertake other financial transactions. similarly, it is my expectation that bank gaborone w ill take full advantage of the botsw ana payments and other public infrastructure, partnership w ith mobile operators and other electronic payments systems, to enhance financial inclusion ; and this includes providing the much - needed support for the informal businesses in botsw ana in general and maun, in particular. distinguished guests, ladies and gentlemen, in addition to w hat i have just said, i w ish to implore the maun community to engage banks w ith viable borrow ing proposals that are sustainable and can yield positive returns. equally, important, and having obtained loans and other credit facilities, borrow ers should honour their obligations by adhering to the repayment programme agreed w ith banks. distinguished guests, i am making this point because the bank of botsw ana is concerned about the recent observed upw ard trend in non - performing loans. while this trend could be, in part, due to sluggish global economic activity and idiosyncratic business performance and environment, there is some evidence of lack of financial discipline on the part of some individuals and poor management practices by some businesses. there is also an undesirable creeping culture, on the part of some customers of banks, of failing to repay their obligations to banks according to the agreed schedule. let me, therefore, take this opportunity to remind you, distinguished guests that, in the main, banks in botsw ana are funded mainly by depositors / savers β funds. therefore the board and management of a bank have a fiduciary duty and responsibility to ensure that the lending and credit underw riting standards are sound ; the bank is managed in a safe and prudent manner, to safeguard depositors β funds and ensure that these borrow ed funds are not lost through uncollectable loans. in this context, i should therefore caution that, w here a borrow er is in default, the bank is entitled to institute law ful, procedural and ethical recovery procedures including attachment and liquidation of property pledged as collateral to recover its money. moreover, providing for a loss or w riting off a loan in the bank β s books, as a non - bankable asset, does not extinguish the debt the customer ow es to the bank. in this case,
|
- border cash deposits and similar inw ard transfers are supported by duly completed and valid documents, w hen processing such transactions. it is also important to indicate that banks have a screening process to ensure that entities and individuals on the international sanctions lists do not use the botsw ana banking system as a conduit for illegal activities and other forms of financial crime. banks also routinely monitor accounts for suspicious activity and file suspicious transactions reports ( str ) w ith the financial intelligence agency. while it is not evidence of illegality, the report triggers appropriate steps, including follow up action by relevant authorities, such as the bank of botsw ana, nonbank financial institutions regulatory authority and other law enforcement agencies. having said that, i can confirm that both the financial intelligence agency and the bank of botsw ana continue to monitor and enforce, in line w ith their respective mandate, local banks'compliance w ith applicable law s, business conduct requirements, as w ell as the anti - money laundering and combatting the financing of terrorism protocols. this leads me to the third topical issue, namely, cybercrime and related other financial crimes. distinguished guests, technology is the future of banking and many of us w elcome the benefits of new information and communication technologies, in various facets of our lives, including enhanced cost - effective access to financial services and the associated convenience of conducting banking and other transactions. how ever, in as much as these technologies increase efficiencies and bring other economic benefits, the speed, scale and the cost of any fraudulent activity perpetrated through these channels can be enormous, ruining the lives of many and causing major harm to institutions and society, in general. these financial crimes can take many forms including unauthorised cash w ithdraw als from customers β bank accounts at automated teller machines ( atms ), identity theft, scanning and cloning of bank cards, disruption or compromising business processes, internal fraud and, more broadly, cyber - crime. if not properly mitigated, these crimes can discourage members of entrusting their savings w ith the public from banks and this could undermine public confidence and trust in the banking system. consequently, w e need to be on guard, as institutions, businesses and individuals to mitigate cybercrime and other forms of financial crime risks. the national banking week message by the bank of botsw ana, in 2011, articulated the issue w ell as follow s that ;
| 1 |
, according to the plan and the agreements reached with our european partners. in 2019 we expect the positive trends in the banking sector to continue altogether, however with possible increased challenges associated with the general economic environment banks operate in. concurrently, in the coming months we will evidence processes of potentially long - term consequences directly impacting the sector, aimed at achieving a qualitatively higher degree of integration of bulgaria into the european financial and institutional infrastructure. 1 / 1 bis central bankers'speeches
|
for the practical preparations for the implementation, if necessary, of the new rules and procedures. hence, our immediate efforts are aimed at making arrangements and developing solutions that would be valid and efficient in the medium and long term. 2 / 2 bis central bankers'speeches
| 0.5 |
opening remarks by gerardo esquivel hernandez, deputy governor of banco de mexico, on the occasion of the 16th annual conference of the international operational risk working group ( iorwg ) mexico city, september 20, 2022 good morning, good afternoon, good evening, everyone. on behalf of banco de mexico, i am pleased to welcome you to the 16th annual conference of the international operational risk working group ( iorwg ), hosted by banco de mexico, and jointly organized along with banco de espana and the federal reserve bank of philadelphia. this event takes place in a context in which the covid - 19 pandemic has tested the resilience of countries and institutions, including central banks. we have faced unprecedented challenges to achieve an extremely difficult balance between different objectives : maintaining the continuity of central banks'operations, prioritizing the health of the staff, and making sure that central banks are able to fully perform their functions and attain their objectives and purposes. although central banks already had operational continuity strategies, most of them were not entirely prepared for the type of contingency we experienced during the pandemic. however, the mere existence of these strategies was a key element that helped us to rapidly find new ways to perform and maintain operations. in fact, the pandemic contingency transformed our institutions into even more resilient organizations, capable of coping with adverse scenarios, by developing prevention, response, adaptation, recovery, and learning mechanisms. the degree of commitment and responsibility that we have with our institutions, which is a fundamental pillar of financial stability in our countries, was truly brought out during this emergency. in terms of resilience, we rapidly adapted our work schemes and transitioned to a general remote work setting which, in the case of banco de mexico, had only been implemented as a business continuity strategy for critical processes and in very specific areas. by doing so, we confirmed that the central bank staff is the most important and valuable asset of the institution. its capabilities, solidarity, adaptability, and flexibility were key elements in getting through the pandemic, and contributed decisively to fulfill the mission of our institution uninterruptedly. the lessons learned from what we have undergone over the last two years will certainly strengthen us as central banks. we must now adjust to the challenges that this new environment imposes on us. we are now moving from a world of face - to - face interaction to a hybrid reality that has allowed us to broaden the possibilities
|
only consistent momentum in credit growth can lead to strong net benefits for the economy. the recent financial reform the recently approved, multi - layered financial reform contains measures that may strengthen the banks β institutional framework, allowing for more robust and sustainable credit expansion, among other benefits. three sets of measures that stand out seek more effective propertyrights protection for creditors, more formal regulation and the promotion of competition among financial intermediaries. on the subject of creditors β property rights, the reform makes significant progress towards correcting problems observed in the application of the bankruptcy law approved in 2000. specifically, the new legislation closes loopholes which debtors had been using to prolong the debt resolution process in areas such as intercompany liabilities, director and manager responsibility, while it makes bridge lending in cases of liquidity crunches more feasible. the reform reduces obstacles to expediency in the judicial process to recover collateral, illustrated by the possibility for debtors to choose the court level and select assets to be seized. an important innovation is the founding of specialized commercial - law courts at the federal level. in the field of regulation, the reform provides rules for the authorities to manage the resolution or liquidation of banks in cases of liquidity squeezes and insolvency. the specifics cover lending of last resort with equity shares as collateral, bank contingency plans for adverse scenarios, and ring - fencing actions, for example, in the case of majority shareholder problems. an expedient bank judicial liquidation process and a legal framework for transfer of assets and liabilities are established. the capital requirements to comply with basel iii guidelines are now mandatory under mexican law. the procedures for applying liquidity requirements are also determined. with respect to competition in the sector, a new law facilitates mortgage substitution by debtors, allowing them to choose banks offering more favorable terms. other measures that work in the same direction include greater facility for the mobility of deposits and consumer loans, meaning that customers can transfer their accounts and loans to other banks with less red tape and shorter delays. importantly, bundled sales of financial products and services are prohibited. these measures will potentially foster a more competitive, consumer - friendly and healthy banking system. along with other reforms, they may contribute to higher potential economic growth. however, as is true with the overall current reform agenda, the effectiveness of these measures will depend heavily on the quality of pending legislation needed to put the changes in place, and adequate implementation. the current economic cycle after a full year of
| 0.5 |
long as necessary. we will continue to follow a datadependent approach to determining the appropriate level and duration of restriction. in particular, our policy rate decisions will continue to be based on our assessment of the inflation outlook in the light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. as requested by you, let me now discuss the financial stability outlook. financial stability is a pre - condition for price stability and vice versa. 2 / 4 bis - central bankers'speeches financial stability in the euro area has proved robust so far, but we continue to assess possible risks, taking into account a wide range of indicators. 2 euro area banks'exposure to the recent banking sector stress which arose in other regions has been limited. but challenges to funding and asset quality may weigh on future profitability. more broadly, as financing conditions tighten, we will gain more insight into the resilience of euro area firms, households and banks. the medium - term orientation of our monetary policy strategy allows us to consider financial stability in monetary policy decisions if this supports the pursuit of price stability. conversely, price stability remains as crucial as ever for durably preserving financial stability. we do not see a trade - off between financial stability and price stability in the euro area. over time, the pursuit of price stability through monetary policy, and of financial stability primarily through macroprudential policy, are complementary. in addition, the ecb has the tools to provide liquidity to the euro area financial system if needed to preserve financial stability and the smooth transmission of monetary policy. we remain committed to price stability. and to support financial stability, it is essential that you, as co - legislators, make tangible progress towards completing the banking union and that you strengthen regulatory policies to further enhance the resilience of the euro area financial sector. conclusion allow me to conclude. in 1998, former ecb president willem duisenberg stressed that the european system of central banks ( escb ) should be open, transparent and accountable, noting that " the most important challenge for the escb is to win the confidence of the citizens of europe ". 3 25 years on, this is still an important challenge, and we are working hard to further foster trust in our institution. but the ecb cannot do this alone. today's dialogue with you, who represent the people of europe, is essential to that endeavour. this is why i am delighted that i have just signed, together
|
with the president of the european parliament, an exchange of letters between our two institutions. building on our close and fruitful dialogue over the past 25 years, this exchange of letters will allow us to better structure our interactions and facilitate effective cooperation. 4 together we must do all we can to keep listening and responding to concerns of european citizens. thank you. i now stand ready to take your questions. 3 / 4 bis - central bankers'speeches 1 recent ecb staff analysis estimates that the tightening of monetary policy since december 2021 will have a downward impact on inflation of two percentage points on average over the period 2023 - 25, compared with a situation in which policy remained unchanged. the bulk of this impact can be attributed to rate policy, with a less material though non - negligible contribution stemming from the reduction in the asset purchase programme portfolio. see european central bank ( 2023 ), " a model - based assessment of the macroeconomic impact of the ecb's monetary policy tightening since december 2021 ", economic bulletin, issue 3. 2 see the latest ecb financial stability review. 3 duisenberg, w. ( 1998 ), " ceremony on the occasion of the establishment of the european system of central banks ", speech, 30 june. 4 see " arrangements in the form of an exchange of letters between the european central bank and the european parliament on structuring the practices for interaction in the area of central banking ", 5 june 2023. 4 / 4 bis - central bankers'speeches
| 1 |
the three costliest events β the tohoku earthquake and tsunami, thai floods and new zealand earthquake β caused a combined insured loss of almost us $ 70 billion. the scale of these losses was unexpected. thailand had not even been viewed as a catastrophe risk zone, and had in fact been used to diversify against catastrophe risks. these events are a timely reminder to the industry to constantly stay ahead of the risk management curve. bis central bankers β speeches 3 + one strategy i understand that allianz embraces a β 3 + one β strategy to achieve sustainable growth. in the spirit of this very happy occasion, allow me to adapt your framework to illustrate its relevance to singapore β s insurance industry as a whole. one, capacity. allianz strives to support its businesses with sufficient capacity to underwrite risks. the establishment of the singapore branch of allianz global corporate and specialty in 2011 reflects a deep commitment to build underwriting capacity in the asia - pacific. in the same way, to be the premier specialist insurance market in asia, singapore must deepen its underwriting expertise in reinsurance and specialty insurance with an asian focus. two, profitability. allianz seeks to be profitable through its operating businesses alone, so as to be as independent as possible from volatility in the financial and capital markets. the global insurance industry continues to face pressure from weak economic growth, soft pricing and persistently low investment yields. insurers can no longer rely on investment income or rate increases alone, to compensate for weak underwriting. likewise, even as singapore β s insurance industry diversifies the span of its activities to include capital markets, it must continue to stay focused on core competencies in underwriting insurance risks. high underwriting standards are critical for sustainable growth. three, internal capabilities. allianz aims to reduce complexity by focusing on core activities, reducing structural inefficiencies, and streamlining processes. likewise, in seeking to strengthen its value proposition as a specialist insurance market with a deep appreciation of asia β s risks, singapore β s insurance industry must invest in asia - focussed data, research and analytics. singapore has achieved a good head - start in a number of areas, such as smu β s centre for silver security for longevity risk and ntu β s institute for catastrophe risk management for catastrophic risks. we must continue to build on these capabilities. finally, + one, synergistic growth. allianz seeks to inculcate
|
systematic cooperation between business lines and markets across the group to deliver profitable growth. likewise, singapore β s insurance market must continue to be underpinned by the strong partnership between industry, academia, and government. research, talent development and market infrastructure are areas where active collaboration is a critical success factor. conclusion the commitment of key industry players such as allianz has been instrumental in establishing singapore as a leading insurance market. on this happy occasion, we are also pleased to announce that singapore has been chosen to host the geneva association general assembly in 2015. the general assembly will bring together global ceos and other stakeholders in the insurance industry over a two - day conference to discuss industry trends. this is only the second time it will be hosted in asia, after japan in 2009. in closing, i thank allianz for growing with singapore. i am confident your strong presence in singapore will serve you well as you continue to extend your asian footprint. once again, congratulations, and a very good evening to all of you. thank you. bis central bankers β speeches
| 1 |
##vi is situated right in the heart of mumbai, the most banked city in the country, and adjoins the bandra - kurla complex, mumbai β s financial district, it did not have a commercial bank branch for a long time, notwithstanding its celebrated entrepreneurial spirit and export performance. the first commercial bank branch was opened in february 2007. in just three years, the bank registered business in excess of rs. 44 crore. enthused by this success, one more bank has opened a branch in dharavi and many more are eager to do so. there are now 9 atms in dharavi, all of them being actively used. how does the other half live? 10. the reality is that money management is a well - understood part of everyday life of the poor, and therefore a key factor in determining their coping strategies. some of you may have come across this recent, thought provoking book, β portfolios of the poor : how the world β s poor live on $ 2 a day β by daryl collins et al. most books on poverty and development, as we know, are β big picture β books that tend to take an aggregate view based on anecdotal evidence or at best statistical work. this book strikes a refreshingly distinct path. what the authors have done is to zoom in on the basics of daily poverty to explore how poor people manage their money. let me cite a paragraph from the review of the book in the new yorker : ten years ago, the authors of this unusual study began collecting detailed yearlong β financial diaries β from households in bangladesh, india, and south africa, with a focus on those living on less than two dollars a day per person. they found, to their surprise, that none of the families lived hand to mouth ; even the poorest relied on complex combinations of financial strategies, including joining savings clubs, buying funeral insurance, and acting as β money guards β for neighbors. these people did things that might seem irrational β borrowing in order to save ; paying interest on savings β but that made sense given their unpredictable incomes and limited options. 11. the dharavi example that i cited earlier is an illustration of how banking the unbanked can be a win - win opportunity. this book is further evidence of the sophistication with which poor people think about their finances. it also demonstrates how bringing them within the fold of formal banking can β make a difference β to their coping strategies. financial inclusion
|
so called prize winning schemes where names of prominent institutions are being used to lure remittances of large amounts of money by promising millions in return. i am informed that these monies are often being paid into banks β accounts by gullible people and then siphoned out. even if such accounts are opened after following kyc norms, the unusual pattern of these transactions can be easily discerned if banks use appropriate technologies for this purpose. it is in this context that in our monetary policy statement for 2010 β 11, we proposed setting up a working group on information security, electronic banking, technology risk management, and tackling cyber frauds. 25. next on my list is the several ways it models can be used to improve the efficiency of banking β for example, for credit appraisal using the score card model, for determination of provisioning to be made against loans and for handling millions of low value accounts without compromising on underwriting and supervisory standards. 26. last, and possibly the most important on my list of priority issues is the need to guard against what can be called a β technology barrier β between the bank and the customer. as we all recognize, technology is a great enabler and provides us huge opportunities for making banking more efficient and more inclusive. at the same time, it is also faceless, and this absence of a β human touch β can be quite intimidating, if not threatening, to those just entering the banking network. banks should, therefore, take extra care to ensure that the poor are not driven away from banking because the technology interface is unfriendly. this requires training the banks β frontline staff and managers as well as business correspondents on the human side of banking. idrbt as facilitator 27. before i close, i will be amiss if i do not acknowledge the impressive contribution of idrbt to β techno - banking β, if i may use such a phrase now. idrbt β s initiatives in developing the infinet, its contribution to the establishment of a messaging platform ( sfms ) and a shared atm - network ( nfs ) have added immense value to our banking sector. idrbt β s performance as a certification authority, as an r & d centre and as an institution for training and education have marked great advances in the indian financial sector. 28. the rangarajan committee which had gone into the issue of repositioning idrbt for the next decade has since
| 1 |
lead in the banking sector computer emergency response team ( cert ) under the department of information communications technology ( dict ), the bsp is developing the financial services cyber resilience plan that will serve as the primary framework covering strategies and plans to strengthen cyber resilience in the financial services industry. second, we are also in the development stage of implementing the advanced suptech engine for risk - based compliance, or what we call asterisc *. 1 / 2 bis central bankers'speeches this is unified regtech and suptech solution that will streamline and automate regulatory supervision, reporting and compliance assessment of bsfis β cybersecurity risk management. third, the bsp continuously engages with the bsfis through the bankers association of the philippines cyber incident database or bapcid. bapcid is currently provided by cyberint, which is a cybersecurity service provider based in israel. it is a web - based portal and an industry cyber threat and best practices sharing platform where participants can report incidents and threats anonymously, receive threat intelligence feeds and threat advisories from the bsp. lastly, the bsp is currently coordinating with relevant government agencies and industry associations for a joint consumer protection campaign and message amplification to raise overall cyber awareness in the country. given the supervisory expectations and industry - wide cybersecurity initiatives, there are several ways israel companies can help bsfis in increasing their cybersecurity capabilities and maturity and the financial sector in general. considering the sophistication and maturity of israel in terms of cybersecurity controls and management, the bsp and the bsfis would greatly appreciate hearing israel β s expertise, knowledge and technology in the following areas : cybersecurity trainings, education, and capacity build - up ; security operations center ( soc ) ; incident response and forensic investigation ; information sharing and threat - intelligence platform ; and set - up and establishment of israel β s financial sector and national certs. in closing, i hope that this session will strengthen ties and cooperation between the philippines and israel so that our respective financial services sectors remain safe, innovative, and resilient in the digital economy. thank you for your attention. 2 / 2 bis central bankers'speeches
|
and cost - effective. these allow for interaction between two or more online connected services. mobile smartphones are game changers. they have led to important changes in the payments system as well as in the behavior of market agents. an industry report puts the number of fintech startups in the country at 60 players in 2017. mobile payment and alternative finance firms dominate with 26 and 17 players, respectively. the transaction value of the fintech market in the philippines is estimated to amount to us $ 5. 7 billion in 2018. it is expected to grow at an annual rate of 16. 4 percent. by 2022, the fintech market in the country is projected to amount to us $ 10. 5 billion. digital payments account for the largest share of the market at 98. 9 percent. this translated to an estimated total transaction value of us $ 4. 6 billion in 2017. most of these digital payments are in the form of digital commerce. 1 / 3 bis central bankers'speeches meanwhile, the alternative finance market is estimated to have raised a total amount of us $ 0. 2 million in 2016 and us $ 0. 7 million in 2017. start - up businesses are adopting financial technological innovations to improve their customers β payments experience. these fintech businesses lower costs by employing different business models that involve fewer entities. leveraging on fintech innovations how can we take advantage of these fintech innovations to promote more inclusive growth in the philippines? for one, the philippine government recognizes the huge potential of fintech services to lower remittance costs for the country β s over 10 million migrant workers. transaction costs for remitting us $ 200 currently average at 7. 1 percent of transaction amount globally. this can drop to as low as 2 percent. aside from lower remittance charges, the philippine government is likewise seeking to facilitate for overseas filipinos ( ofs ) other online - based banking and financial management services. fintech innovations can also help drive financial inclusion as access and usage of financial services continue to be limited. the world bank estimates that only 31. 3 percent of the philippine adult population has bank accounts. estimates show that the country β s gdp could increase by more than 14 percent if the financial inclusion gap was closed. an important part of this solution is digital enablement. digital applications and related regulatory initiatives are expected to boost philippine gdp by about 3 percent. they may yield an increase of about 11 percent in the incomes of the population segment earning less than us $ 2 per day
| 0.5 |
wu xiaoling : review of china β s economy in 2005 and outlook for 2006 speech by ms wu xiaoling, deputy governor of the people β s bank of china, at the expert meeting on analysis and forecast of 2006 financial situation in china, beijing, 18 march 2006. * * * in 2005, under the leadership of the state council, all regions in china followed a scientific development approach, further intensified macro - economic management and continued reform and opening - up. the gdp grew by 9. 9 percent, fixed asset investment increased by 25. 7 percent, and cpi moved up by 1. 8 percent. the disposable income of urban and rural residents grew by 9. 6 percent and 6. 2 percent respectively. the registered urban unemployment was 4. 2 percent. trade grew by 23. 2 percent, while the profits of statistically large enterprises rose by 22. 6 percent. broadly speaking, the national economy displayed a good momentum featuring fairly rapid growth, good return, stable price, and good dynamics. in 2006, the outlook of the chinese economy is good and the forecast goals are expected to materialize, i. e. a gdp growth of 8 percent and a cpi increase of around 3 percent. in 2005, the monetary and financial conditions maintained a good momentum of smooth performance in line with economic growth. m2 grew by 17. 6 percent, rmb deposits by 19 percent, loans by 13 percent. the destination and maturity structure of loans became better. short - term working capital loan and bill financing accounted for a substantially larger share, i. e. 47. 7 percent, in the new loan. the excessive growth of medium and long - term loans were checked, its share in the new loan declining by 10. 8 percentage points. the rural area, agricultural sector and farmers received stronger financial support. the exchange rate regime reform was implemented smoothly. exchange rate moved in both directions and its flexibility increased gradually. between july 21 and end of 2005, the highest rmb to dollar exchange rate when market was closed was 8. 0702 yuan, while the lowest reached 8. 1128 yuan. at end 2005, the exchange rate was closed at 1 dollar to 8. 0702 yuan. on march 10, 2006, the rmb exchange rate was 8. 0492 yuan to one dollar. in december, the 7 - day repo rate at the money market was 1. 56 percent. preliminary results were achieved in capital market reform ; the stock market saw a
|
the neutral stance of the monetary policy, the pbc will employ a mix of monetary policy instruments and adjust positions of commercial banks to an appropriate position. secondly, another priority for the monetary policy and financial policy in 2006 is to optimize the allocation of fund while adjusting the aggregate size. bank credit is of an excessively high proportion while direct financing channels are not readily available. this has become a bottleneck in economic performance. the pbc will continue to promote the development of bond market, encourage financial product innovation, build market infrastructure and improve the functions of market for the rapid and sound development of the financial market. we will gradually carry out piloting asset securitization business, and expand the issuance volume of enterprise short - term financing bills. research on expanding the methods and ways of direct financing by enterprises at the inter - bank market will continue in order to launch new products at an appropriate time. financial derivative products innovation will be promoted. we will also improve the market maker and broker system and build a bond registration and custody system. the pbc actively supports the development of fund management sector, nurture institutional investors and gradually expand piloting project of bank invested fund management companies, improve security investment instruments that serve the public, help the transformation of deposits into investment and expand the channels for fund flow into the equity market. thirdly, the pbc will cooperate with the relevant authorities to promote the adjustment of economic structure and maintain external sector balance. rapid increase of foreign exchange reserve and the issue of rmb exchange rate has been the focus of people β s attention. rapid increase of foreign exchange reserve reflects the imbalance of external sector, and is a result of our policy of encouraging export and fdi inflow and restricting the outflow of capital. in order to achieve external sector balance, we need to promote structural adjustment through policies and gradually correct the imbalances. the first part of adjustment is to change the foreign exchange policy of restricting outflow and attracting inflow. the second part is to expand the channels of foreign exchange fund use, change the situation of foreign exchange held by the state and enable the people to hold more foreign exchange. thirdly, capital inflow and outflow channels will be expanded gradually, and overseas investment will be promoted in a sound manner. a complete foreign exchange management system will be built to encourage overseas investment. exchange rate flexibility contributes to adjustment of bop structure. yet, large fluctuation of exchange rate is not conducive to sound performance
| 1 |
masaru hayami : the economy - recent developments and challenges speech by mr masaru hayami, governor of the bank of japan, at kisaragi - kai, tokyo, 30 may 2002. * * * introduction there have finally been some positive signs that japan β s economy has begun to stabilize as we enter the new fiscal year. however, our more than ten years of experience tells us that sustainable growth cannot be realized unless growth potential is strengthened through productivity growth. while economic activity is showing signs of improvement, we should not be complacent. rather we should take advantage of this favorable development and further promote structural reform through specific measures. such efforts will no doubt augment resilience of our economy through rejuvenating business activity and improving consumer confidence. in this sense, this fiscal year will be crucial for our economy in order to return to a sustainable and stable growth path. today, i would like to review recent economic developments and monetary policy management, followed by some of the main issues our financial system now faces. recent economic developments developments in domestic and overseas economies amid the synchronous deceleration in world economies, japan β s economy continued to deteriorate from the beginning of last year. yet, the pace of deterioration has recently somewhat moderated, with production starting to pick up reflecting an increase in exports and the progress of inventory adjustment against the backdrop of a recovery in overseas economies. the us economy had been confronting a contraction phase since around end - 2000 such as retrenchment in the information - technology ( it ) sector, and the tragic events of early september further increased uncertainty. however, due to stabilizing forces such as the progress of inventory adjustments in the it sector and resilient consumer spending as well as effects of monetary and fiscal policy stimulus, there have been increasing signs recently that the us economy is beginning to recover. in march, the federal reserve board thus revised its assessment for the foreseeable future from saying that β the risks are weighted mainly toward conditions that may generate economic weakness β to β the risks are balanced β with respect to prospects for price stability and sustainable economic growth. in response to indications of us economic recovery, exports and production in east asian economies, which are highly dependent on exports to the us, have started to increase and the decline in domestic demand is nearing an end. european economies are also showing some signs of recovery. japan β s economy has also basked in this movement toward recovery in overseas economies, as
|
fact, various private - sector forecasts show that for 2004 growth will be higher compared to 2003, and inflation will remain under 2 percent in the united states, europe, and asia. in such circumstances, central banks have been implementing monetary policy with more attention to the risk of deflation. for example, the federal reserve board announced in its fomc statement in august that β policy accommodation can be maintained for a considerable period. β japan is suffering from deflation, a worse problem than disinflation. this makes a stronger case for the bank to continue implementing an easy monetary policy, compared to other central banks. iii. revitalization of the corporate sector stronger global linkage has some bearing on the commonly observed facts that business sentiment has been slow to improve and fixed investment has not become as active as anticipated in various countries under monetary conditions that are easier than in the comparable stage of past business cycles. this partly reflects residual pressure for adjustment. but it also reflects more intensified competition in the corporate sector together with the progress in globalization, as well as increasing difficulties firms face in sustaining pricing power under the new conditions in which prices are being determined. we may be approaching a stage where corporate profits can only be increased by creating new value - added goods and services, and the investment opportunities for such creation are becoming more difficult to find. for example, in japan, the corporate management and economic framework established during the high - growth period are so firmly embedded that it is a very difficult and challenging task to transform them. in this regard, i have been advocating three directions for firms to pursue with a view to building a new framework for the japanese economy. the first is to boost their competitiveness and generate new consumer demand by creating new value - added goods and services. the second is to increase their business activity in the expanding chinese and other asian markets, and further deepen economic interdependence with them. and the third is to address global challenges such as the development of sustainable energy sources and environmental protection. if firms can make positive contributions in these directions, they will certainly be able to expand the frontier of innovation to revitalize the japanese economy. i hope that such efforts will place the japanese economy in a unique position in terms of the sustainable development of the world economy. iv. current situation of the financial system and challenges the japanese financial system, although still facing severe conditions as a whole, is steadily moving toward restoring its effective functioning. since last fall, there has been a growing
| 0.5 |
ravi menon : introducing mark carney introductory remarks by mr ravi menon, managing director of the monetary authority of singapore, at the 2014 monetary authority of singapore lecture, singapore, 17 november 2014. * * * mr mark carney, governor, bank of england, deputy prime minister and chairman, mas, tharman shanmugaratnam, ambassadors, distinguished guests, friends and colleagues, good morning, welcome to the eighth mas lecture. first held in 2000, the mas lecture has over the years featured several eminent members of the international financial community who have offered their perspectives on important economic and financial issues. today, mark carney joins that distinguished band of leaders in finance, and it is my pleasure to introduce him. carney has the rare distinction of serving as governor for not just one central bank but two : β’ from 2008 to 2013, carney was governor of the bank of canada, playing a major role in helping canada avoid the worst effects of the global financial crisis. β’ and since the middle of last year, he has been governor of the bank of england, the first time that a non - briton has taken the helm of that hallowed institution in its 320 - year history. β’ perhaps the transition was made easier by the fact that the appointments of both the governor of the bank of england and that of the bank of canada are made in the name of the queen. but it is testimony to the strong credentials that carney brought to these jobs : β’ a solid academic grounding β with a phd in economics from oxford university ; β’ extensive experience in the private sector β having spent more than a decade at goldman sachs ; β’ a background in public policy β working on a variety of economic issues at the canadian department of finance ; and β’ most important, a commitment to serve the larger good of society. β’ carney β s topic today is the future of financial reform. he is uniquely well placed to talk about this, having lived and breathed financial reforms in the aftermath of the crisis, especially as the chairman of the financial stability board. β’ under carney β s leadership, the fsb has worked intensely to correct the fault lines that led to the global financial crisis. β’ the fsb, in partnership with various standard setting bodies, has presided over perhaps one of the boldest and most far - reaching set of regulatory reforms in recent memory. β’ we look forward to hearing from carney the progress and implications of that work, the new risks emerging on the financial horizon, and the
|
or to innovate existing processes, we also require that they understand and can manage the associated risks. it is this philosophy that underpins the mas to be among the first regulators in the world to adopt a regulatory sandbox regime. 12 mas regulatory sandbox provides a constrained but more flexible space for players seeking to test new technology or approaches before a full launch. such sandbox pilots are held within defined risk parameters and are time - bound. these restrictions help to limit the impact from unsuccessful applicants but equally important, they allow mas to also understand the new model up close β how it is run, how the technology or its application is used, how the risks are managed and the value proposition to clients before mainstream use and scalability. this will also allow the mas to calibrate our final rules that are appropriate to the new business model or start - up while addressing any level - playing field concerns. as another example, the mas recently issued a consultation paper on changes to our recognised market operator ( or β rmo β ) regime. under the current approach, singapore - based market operators must be approved exchanges if they are systemically important, or else regulated as rmos. but new forms of market places have emerged β such as trading facilities that make use of blockchain technology or peer - to - peer platforms without intermediaries. our regulatory framework will need to be flexible to accommodate innovative business models by market operators with rules that are commensurate with the risks including factors such as retail access and scale of business. 2 / 4 bis central bankers'speeches there have been some queries on our regulatory stance towards crypto - currencies, or more generally, digital tokens and icos ( initial coin offerings ). we have issued a public advisory to caution those who β invest β in crypto - tokens to do so with caution and to understand their characteristics including being volatile and non - legal tender. mas has also issued a guide on digital token offerings last year to explain that our regulatory treatment depends on the digital tokens β inherent characteristics. for utility tokens, which are for restricted usage within a defined set of products or services, these are not subject to mas regulations. on the other hand, for payment tokens which are designed to be an alternate form of a medium of exchange, the intermediaries processing these tokens will come into our regulatory ambit under the proposed payment services bill. this is to ensure that these providers adopt the necessary measures and controls
| 0.5 |
fiat money and discretionary monetary policy. from a monetary angle, it was the consequence of the spread of deposit banking, which ultimately resulted in bank money accounting for the bulk of the money stock. runs on deposits can be seen as collapses of confidence about the stability of the rate of exchange between a unit of central bank money and a unit of commercial bank money. commercial banks had to have sound fundamentals if one - to - one convertibility was to be preserved hence, the need for bank supervision. in the short run interventions, i. e. lending of last resort, could be - and was - used to support the rate. but, as in the more familiar case of foreign exchange interventions, they were no substitute for sound policies ; credit provided too easily and too generously could even generate the risk it was meant to avoid ; today we call it moral hazard. the ambivalent relationship between supervising banks and lending to them ( surveillance and conditional lending, in imf language ) explains why there is no clear - cut answer to the question whether the central bank or a separate agency should be responsible for supervision. seven of the twelve basle committee countries have a separate agency, as against about 10 per cent of countries in the world as a whole. more importantly, even where this solution has been adopted, the centrality of the banking system, and of its money creation prerogatives, in the monetary policy transmission mechanism means that no central bank disregards the β state of health β of its banks or completely rules out lending of last resort in extreme circumstances. 7. the other, perhaps more important, change concerns the context of central banking. this can be seen in terms of both time and space. i began my career in a world of annual accounts and quarterly or monthly statistics, in which paper was the medium and mail the carrier. for the bulk of financial transactions the two parties, the intermediary, the currency of denomination, the relevant laws and courts, and the central bank all belonged to the same jurisdiction. and that jurisdiction was not only economic, as it included the political jurisdiction from which public institutions derive their legitimacy through the democratic process. this simple description never fully coincided with the state of the world, of course, but twenty - five years ago it was still a workable approximation. today, that is no longer true. the advance of data processing and telecommunications technology has been the most powerful single driving force of this change. but the low cost of transportation, the evolution
|
cent ) bis central bankers β speeches figure 5 loan - to - deposit ratio in selected countries ( per cent ) bis central bankers β speeches
| 0.5 |
amando m tetangco, jr : 15th anniversary of the central bank of the philippines remarks by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the bsp 15th anniversary, manila, 3 july 2008. * * * magandang umaga sa inyong lahat! fellow central bankers, on behalf of the monetary board, i greet all of you a happy 15th anniversary! by any measure, this is a milestone we should celebrate and be proud of. why do i say this? well, you and i know that the first 15 years of the bangko sentral ng pilipinas has been fraught with challenges. as an institution starting afresh, we had to reorganize and align our policies in accordance with the clear mandate given to the bangko sentral : to stabilize prices and ensure a sound banking system. soon after, we had to contend with the fallout from the asian financial crisis, political upheavals, natural calamities, and the threats, as well as opportunities, that globalization brings. nevertheless, we always pulled through and emerged the better for it. in the process, we have been able to provide stability to the economy and the country through responsive monetary and banking policies. for this we thank all of you β ladies and gentlemen of the bangko sentral ng pilipinas. let us therefore give ourselves a well - deserved round of applause. once again, let us acknowledge the contributions of former mb members dr. vicente valdepenas, jr. and atty. raul boncan by giving them a big hand. let β s also give a round of applause for our present mb members : secretary romulo neri ; former finance secretary juanita amatong ; atty. nelly favis - villafuerte ; mr. alfredo antonio ; and our brand - new mb member atty. ignacio bunye. palakpakan din po natin ang dalawang na - unang gobernor ng bangko sentral ng pilipinas : si governor gabriel singon at si governor rafael buenaventura! ladies and gentlemen. the collective efforts of central bankers, past and present, have generated recognition for governor singson, governor buenaventura and myself and most of all, for our beloved institution β the bangko sentral ng pilipinas. these are well - deserved recognition that we should be
|
in interest rates, it may be possible to move rates very quickly in response to an important piece of information. but when you are highly uncertain about how to interpret events, it pays to be more cautious and gradual in your approach. to use an analogy with driving β you should slow down in a fog. it follows from this that the " right " amount of movement in interest rates depends very much on the circumstances. sometimes rates will be highly variable, as they were in the 1980s, and sometimes they will be quite stable, as they have been in the most recent decade. in all of this, interest rate stability should be seen not as a goal in itself, but as a by - product of a stable macro - economic environment. let me turn now to the second of my three questions. question 2 : why not leave interest rates to the market? this question, again, is based on a plausible - sounding premise, but the proponents of this view are often rather unclear about what " leaving it to the market " would really mean in an operational sense. it might mean several things. one possible meaning, that will not be discussed here, is that open market operations should be directed actively to controlling growth of the money base and thereby letting interest rates be determined as a residual. since this suggestion involves active intervention by the central bank, it is hardly in keeping with a " leave it to the market " approach. for those in its simplest form, leaving interest rates to the market would mean simply telling the reserve bank to cease all open market operations. it is worth exploring what would be the consequences of such a policy. in a world where the reserve bank was undertaking no open market operations, the amount of cash that underpins the money market ( exchange settlement funds, or what the academics call " highpowered money " ) would depend on the government β s fiscal balance, and it is not hard to see that this would be likely to result in monetary instability. any government deficits not financed by an exactly coincident issue of debt to the public, for example, would mean a rise in cash and a fall in interest rates. similarly, a surplus not exactly matched by debt retirement would lead to a shrinkage of the amount of cash and an escalation of interest rates. in both cases, there would be much more short - run volatility in interest rates than exists at present. this is because the day - to - day fluctuations in the government β s position, which can be quite
| 0 |
at this point, i must commend the department of agriculture which has been at the forefront in working with various players in the industry. as a result, most of the hotels and resorts now use a lot more local produce. in fact a number of hotels have developed their own backyard gardens and are now linked with local suppliers to ensure a steady supply of quality and fresh produce. complementing this is the growing trend and awareness amongst chefs and travellers on the diversity and the richness of our local cuisine and diet. ladies and gentlemen, all too often access to affordable finance has been cited as a major challenge to growth in the sectors i have highlighted this morning. the reserve bank, as the financial sector regulator, is taking a more proactive approach to this issue. our most recent efforts include the streamlining of our export finance facility and import substitution facility into a single entity called the import substitution and export finance facility ( or iseff ). the facility will continue to focus on improving fiji β s balance of payments position by assisting exporters, large scale commercial agricultural farmers and renewable energy businesses to obtain credit at concessional rates of interest. in addition, the bank has further reduced the administrative requirements and streamlined the approval process for funding under the scheme. in february this year the rbf issued a policy to commercial banks β which required them to lend at least four percent of their deposits to businesses in the agriculture sector and a further two percent to the renewable energy sector. in addition, the reserve bank recently required all banks to establish local advisory boards to guide senior expatriate management to better understand, and align their strategies to fiji β s regulatory and supervisory environment, as well as national development objectives, which will include the provision of financial services to the wider community. ladies and gentlemen, the rbf will continue to play a proactive role in ensuring accessible finance is provided to these key sectors with a view of creating opportunities for farmers and families to improve their livelihood and contribute to economic growth. we hope that you will also make the most of the opportunities that the crest agriculture show has to offer and take the time to visit the finance providers and find out about their available services and products. this morning i would also like to introduce and launch a new recipe book that was compiled by a local chef β mr simione toanikeve, whom the reserve bank sponsored in 2010 for training in malaysia. this scholarship came about through the support of the intercontinental hotel group here in fiji and the crowne plaza mu
|
meet fiji β s external payment obligations ; and that our financial system is sound. you may ask how do we do this? the reserve bank independently sets monetary policy by managing the nation β s money supply to achieve a set policy interest rate. in doing so, we indirectly influence the interest rates of commercial banks, that is, the deposit and lending rates. these in turn will lead to changes in the amount of money that is circulating in the financial system and the availability of credit in the economy. our presence here at the crest agriculture show is a testament of our commitment and support to grow what we see as critical sectors of our economy. we are trying our best to raise awareness and bring about unity and support, from all stakeholders, to work together to improve the conditions and living standards of all our fellow citizens in fiji. bis central bankers β speeches the main focus of today β s financing day is to raise awareness and understanding of the different products and facilities that are available from our various financing institutions that have been targeted to assist the agriculture and the renewable and sustainable energy sectors. you might be asking, why are we facilitating finance to these sectors? as a resource - based economy, our greatest competitive advantage lies in the development of our resource - based sectors. this means that we need to continue to work together as a nation to grow fiji and increase the production and utilisation of our own natural resources for both domestic consumption, as well as exports. as such, the agriculture, fisheries and forestry sectors will continue to play an integral role in fiji β s overall development. the agriculture sector, which includes sugar cane, other cash crops, livestock and subsistence farming, is vital to fiji β s economy, contributing notably to fiji β s gross domestic product ( gdp ). the sector provides food and livelihood security, promotes community development in rural areas, generates income for approximately 65 percent of our population, and earns foreign exchange for the country. unfortunately, ladies and gentlemen, boys and girls, the sector has been performing well below par in recent years. as an illustration, for 2010, total agriculture exports were around $ 581 million with sugar earnings accounting for 12 percent or $ 70 million. back in 2008, agricultural exports were much higher at $ 670 million and sugar earnings accounted for 37 percent or $ 248 million. over the past decade, the contribution of the agricultural sector to fiji β s gdp has also declined from 12. 3 percent in 2001 to 9. 2 percent in 2011. the decline in performance in
| 1 |
- performing exposures, could lead to higher market values of these assets. this would support the clean - up of bank balance sheets. alongside these opportunities of capital markets union, we need to recognise that such fundamental changes in the structure of the financial system would require revisiting regulatory approaches. 6 in this regard, i want to highlight three aspects : first, a single rulebook and an integrated supervisor for capital markets are key ingredients to support the integration of capital markets and would ultimately also allow banks to thrive from more stable capital markets. the establishment of esma has been a major step towards fostering convergence of national supervisory practices. but the supervision of securities markets remains at the national level, which fragments the application of eu legislation. esma could play a much larger role in ensuring consistent transposition and effective enforcement of rules agreed at eu level. in the longer term, capital markets union warrants a single european capital markets supervisor. in this context, the move towards direct european supervisory powers for certain segments of capital markets seems justified, particularly when major financial market infrastructures have systemic implications on the entire eu market. a medium - term centralisation of supervision for central counterparties ( ccps ) would enhance the supervisory framework for these highly systemic infrastructures, as well as ensure consistent cross - border supervision. second, an increased non - bank sector should go hand in hand with an expansion of the 3 / 5 bis central bankers'speeches microprudential framework for non - banks. what we need is a coherent and well - supervised regulatory perimeter for non - banks that are engaged in bank - like activities to avoid regulatory arbitrage. at times when risks legitimately shift towards the non - bank sector, heightened vigilance is required to avoid that such risks spill back and compromise the soundness of credit institutions and of the financial system as a whole. for example, large investment firms with substantial cross - border links can pose risks that need to be addressed at the european level. third, an adequate regulation and supervision of the non - bank financial system from a macroprudential perspective will contribute to the resilience of banking union. it is crucial that macroprudential tools become available and operational in the eu for non - banks. 7 in this context, the commission seems to have no intention of proposing changes in the macroprudential policy instruments, which is not helpful. all in all, a more unified set up of regulation and supervision of capital markets and its market participants would increase
|
on the commission β s consultation on the future of the eu macroprudential framework β 8 see directive on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures and amending directive 2012 / 30 / eu. 9 see the giovannini report, the clearing and settlement fiscal compliance expert group fisco, the tax barrier advisory group ( t - bag ) as well as the ecb β s t2s advisory group. 10 the importance of financial market data standards and global identifiers has also been discussed in box 2 of last year β s ecb report on financial integration in europe. 5 / 5 bis central bankers'speeches
| 1 |
, i can mention that, in addition to the enforcement role, we have just announced the creation of new senior level positions with responsibility for markets supervision and policy and risk. supervision will be calibrated to the risks posed by the different firms in the sector and will involve applying the existing rule - book, strengthened as necessary to plug the holes revealed by the crisis. in particular, we will not be slow to implement new stronger rules, being developed as we speak, by international bodies such as the basel committee. despite the extensive powers already available to the regulatory authorities, it would be useful and appropriate to have clarity on a number of additional points ; these are being discussed at present with the department of finance with a view to their inclusion in the proposed legislation restructuring the central bank. one particular area relates to the requirements of confidentiality, which ( as they are currently being interpreted ) seem to go well beyond what is necessary or appropriate for the purpose of ensuring privacy of customers and commercial interests. as things stand, the regulatory staff can end up appearing passive and defensive when called to speak on specific issues in public. a final aspect of safety and soundness to which i would like to refer is the admission of large and complex export - oriented firms into the irish market. i welcome the participation of foreign - owned firms β both those aiming to supply the domestic market and those that are export - oriented β they provide competition and business opportunities. but the crisis has revealed the reputational risks to ireland of having a failure in such an entity. this means that we have to redouble our efforts to ensure that only sound institutions are allowed to enter and that they are comprehensively supervised to ensure that they continue to be sound. i will certainly not allow ireland to become a soft option for firms or activities that are no longer welcome elsewhere. this means more supervisory staff with the necessary skill levels ; these can be paid for by a levy on the supervised firms ( i think we should move towards a 100 % chargeback basis ). i also feel, though, that specific steps need to be taken to ensure that there is no expectation that the state would come in to take exceptional steps to rescue such entities. 3. consumer protection consumer protection cannot and will not be ignored in the regulatory structure. failures here are not as spectacular as a solvency crisis, but can be as damaging to the affected consumers. there will be no downgrading of this aspect of the regulatory work. the statutory codes of conduct for mortgage and sm
|
conducted. i expect that the oireachtas will, in time, decide to authorise some form of inquiry to try to understand the deeper, underlying causes of this crisis so that wider lessons can be learnt for the future. in considering how best to do this, i suggest that new models need to be explored. the crisis is not simply a question of discovering who did what and who knew what. uncovering the deep roots of the crisis will require expertise and broad social scientific understanding more than merely forensic skills.
| 1 |
and national chartering authorities have begun to consider the range of electronic commerce activities that financial institutions may operate or own. we recently issued a proposal on β finder β activities that would allow financial holding companies to provide, or invest in, services that bring together buyers and sellers of nonfinancial products. these activities would encompass, for example, hosting an internet marketplace or operating an internet auction site. we are considering other areas of technology and electronic commerce activities that would be considered permissible for financial organizations while still preserving the core distinctions between banking and commerce. conclusion in conclusion, we can expect financial institutions to continue experimenting with new technologies and electronic, information - based services. i believe that this is an area with great potential, yet the uncertainties are large and the payoff horizon is unknown. banks and supervisors need to recognize that it is acceptable - and even expected - to make some investments that do not pay off. we also know there have been, and will continue to be, technological glitches - computers and web sites go down occasionally, and e - mail gets lost. the new internet world is a punishing one for these routine mistakes, and financial institutions have strong incentives to take precautions and to fix problems well before they reach supervisors β and policymakers β attention. the information - based nature of financial services is unlikely to change. i am confident that banks and other financial institutions will continue to find new and better ways to put technology to their and their customers β best use, and that they will manage the technology and the business risks associated with these investments.
|
triparty repo services for broker - dealers. we have been working intensively with bnym in anticipation of this transition. we have long recognized that any disruptions to these critical market services could have serious consequences for financial stability, and have calibrated our supervisory expectations accordingly. to ensure financial stability, we expect the provision of u. s. government securities settlement services to be robust in nearly all contingencies. as bnym becomes the sole provider, we will raise our expectations even higher. the bank has anticipated and welcomed this higher bar. bnym is one of 8 u. s. - based systemically important banks. the bank is therefore subject to heightened capital and liquidity requirements and a resolution process that explicitly requires planning to ensure the continuity of critical services even in the event of a default. bnym is unique in that it also plays the dominant β and soon the sole β role in government securities settlement and in the triparty repo market. these activities are comparable in their importance to those of the financial market utilities that have been designated as systemically important by the fsoc. thus, bnym will continue to be held to the high standards to which all u. s. bank sifis are held. and it will also be expected to operate in a manner that provides confidence that it is as resilient and robust as a systemically important financial market utility ( fmu ). such fmus are, of course, held to the principles for financial market infrastructures 1 / 2 bis central bankers'speeches ( pfmis ). 2 the pfmis overlap with our banking regulation in many areas ; for example, both emphasize the need for sound risk management and the importance of resilience and recovery. the pfmis also emphasize a strong governance role in support of financial stability and the interests of market functioning, and this has been a focus of our work with bank of new york mellon regarding the transition. although our current task is to establish appropriate expectations for bank of new york mellon as a sole operator, that focus should not be taken as an indication that the federal reserve or other public authorities have pre - judged what the longer - term landscape for government securities settlement should look like. in fact, we do not have a specific market design end state in mind. rather, we recognize the systemic importance of these activities and the need to ensure their continued availability in nearly all states of the world, regardless of the firms that offer them or the specific market structure
| 0.5 |
and the eu in a swift, orderly and consistent manner. we can β t make any assumptions at this stage as to the outcome of the negotiations. what is clear, however, is that there can be no cherrypicking and no free - riding. for the uk to maintain access to the single financial market, all the usual eu rules should be strictly respected. 2 ) building on our strengths to raise investment and growth despite the gradual economic upturn seen in 2015 β 2016, our main european challenge is still how to increase growth. to achieve this, the priority is to boost business investment β in france it is currently forecast at + 3. 4 % for 2016. this depends on economic levers, to be strengthened through structural reforms. but it also depends on financial levers β the core challenge being equity financing, which is key for innovation. in this respect, europe is lagging far behind the us : the equity share of corporate financing in the euro area is 52 % of gdp compared with 121 % in the us. bis central bankers β speeches france and europe do have substantial strengths to meet this investment challenge. let me focus on two of them today : β first, savings are abundant. in france, the household saving rate is high : 14. 1 % of gross disposable income in 2015, second only to germany ( 17. 4 % ) among the main european economies. in the euro area, the current account surplus is substantial : more than 3 % of gdp in april 2016 β meaning that savings exceed investment by nearly eur 330 billion. this gap needs to be closed by fostering investment rather than by reducing savings. β second, our financial system is solid. the regulatory and supervisory frameworks have been considerably strengthened since the crisis, both at the international and european levels. today, the french banking system is one of the soundest in europe and in advanced economies : between 2008 and 2015, the cet1 solvency ratio of france β s major banking groups more than doubled, from 5. 8 % to 12. 6 %, which is eur + 143 billion of core capital. moreover, their liquidity ratio has exceeded 100 %, three years ahead of the basel iii deadline. the french insurance sector too is robust, and has swiftly adapted to solvency ii. new assessments are under way, but using the previous standards, france β s major insurance groups cover their own funds requirement by around 230 %. clearly, financial stability is a priority for us ;
|
euroclear β cmu and innovation β conference 3 october 2024 opening address by denis beau, first deputy governor what will tomorrow β s post - trading industry look like and what forms of cooperation will it deploy? ladies and gentlemen, in a tougher and more fragmented world, an increasing body of analyses and reports are identifying europe's vulnerabilities β especially in the economic and financial sphere β and proposing ways of remedying these by leveraging and consolidating our key competitive advantages. these levers include europe's financial firepower, which is not currently commensurate with its economic heft, even though it has to contend with major investment requirements for two necessary transformations in the digital and climate spheres that hold immense promise for the future. from this perspective, the post - trading industry has a key role to play in harnessing these new digital technologies and processes which are developing before our eyes and transforming our financial system. from my perspective as a central banker, tasked with overseeing the efficiency and security of the post - trading infrastructures that are so crucial to the stability of our financial system, these innovations constitute both opportunities and risks. their deployment therefore raises strategic and operational questions that we need to answer collectively if we are to ensure that tomorrow's post - trading infrastructures safeguard the competitiveness and sovereignty of our financial system, while maintaining the stability that the legislator has tasked us with preserving. this raises the following two questions in particular : what will the post - trading services industry look like in the wake of these transformations? page 1 of 5 what path should we follow to transition to the post - trading environment of tomorrow, without jeopardizing security and efficiency? to help move the debate over the potential solutions forward, i would like to talk to you this evening about how we at the banque de france see both the development of our service offering in terms of assets used to settle transactions and infrastructure that can help to shape the posttrading environment of tomorrow, and the cooperation arrangements and priorities that need to be established to ensure a smooth transition to this new environment. i. the eurosystem's changing service offering to perform its financial stability mandate with regard to post - trading infrastructures, the eurosystem uses three instruments : the provision of services, supervision and boosting market initiatives. within this toolbox, the provision of services has long played a key role. this has meant that infrastructure services t2 and t2s and central bank money take centre
| 0.5 |
as i have already said, we will assess whether these factors become steady against the backdrop of increased inflation expectations. moreover, the influence of demand on prices will also depend on future changes in the epidemiological situation, the pace of recovery processes when vaccines become widely used, and an improvement of consumer sentiment and business expectations. as we could observe in summer and early autumn, when the situation returns to normal, the recovery may be sufficiently quick. at the moment, we consider it too early to adjust our medium - term inflation forecast since it is necessary to also analyse the effect of competing factors on price movements. as regards the near future, our preliminary estimates show that annual inflation will approximate 5 % in 2021 q1. further on, if the influence of one - off factors diminishes rather fast, it will trend down and return to 4 % by mid - 2021. given the accommodative monetary policy pursued, inflation is expected to equal 3. 5 β 4. 0 % by the end of 2021, subsequently stabilising close to 4 %. we will carry out an additional analysis to assess whether there are grounds for adjusting our forecast in february, for the core meeting on the key rate. as regards other risks for medium - term economic development and inflation, their estimate has remained unchanged overall. various geopolitical risks are still relevant β they may provoke fluctuations in financial markets, affect exchange rate expectations and sentiments, and influence trends in the russian and global economies. as always, further changes in budget spending are a critical factor. this has a considerable influence on our monetary policy decisions. there is still uncertainty about the estimate of the pandemic impact on the russian economy β s potential, especially amid the current worsening of the epidemiological situation. given such highly uneven trends in the economy and price movements, we will need to carry out an additional analysis of how the situation will be changing and whether we still have some room for cutting the key rate when making our key rate decisions in the future. it is hard to affirm this now. if the impact of one - off factors wanes quickly and inflation expectations reverse, it is entirely possible that there may be grounds for a further reduction in the key rate, yet this will not necessarily be the case. i would also like to emphasise that it is now crucial to maintain the robustness of the monetary policy to various scenarios. our policy is aimed at keeping inflation close to 4 % under any scenario of
|
an increase in prices for a broader range of goods and services. this in turn explains the readiness to pay more and pushes prices upwards. actually, we are already observing such an environment, which once again proves that households β inflation expectations are currently not anchored yet. when i say that they are not anchored, i do not imply the level of households β inflation expectations, but rather their response to one - off factors. the fact that households β inflation expectations are significantly higher than current inflation is typical not only of russia, but of a whole range of countries ( even where inflation is very low ). in terms of monetary policy, this is the sensitivity of inflation expectations to temporary or local factors which induces risks, rather than the fact that households β inflation expectations exceed inflation measures. this is clear from the analysis of the reasons causing inflation deviation away from our october β s forecast. this deviation is quite notable β + 0. 7 percentage points. according to preliminary estimates, 0. 2 percentage points of this deviation stem from a faster rise in sugar and sunflower 1 / 4 bis central bankers'speeches oil prices and 0. 3 percentage points β from the growth of grain export prices and their passthrough to prices for both bakery products and a broader range of food products. the remaining 0. 2 percentage points are interpreted as additional steady inflationary pressure. it may result from both a faster revival of demand in a number of industries already facing supply - side constraints and secondary effects brought about by increased inflation expectations. this is what may impact a steady level of inflationary pressure in the future as well. therefore, today it is rather important how the situation will be unfolding in the future, including how inflation expectations will be changing and whether secondary effects may become more intense. this may result in a longer - lasting influence of one - off factors on prices. moreover, we should take into account that a rise in inflation expectations may speed up the growth of the demand for consumer lending which has already been expanding materially amid the accommodative monetary policy. monetary conditions are the third factor we discussed when making our decision. monetary conditions remain accommodative. coupled with the government β s support measures, this promotes lending across all segments, including the households, corporates, and small and medium - sized businesses. the annual growth of corporate lending reached its five - year high in october. the offering of corporate bonds has also been expanding. mortgage lending continues to increase significantly. the portion of
| 1 |
agus d w martowardojo : maintaining financial stability amid continued economic growth deceleration keynote speech by mr agus d w martowardojo, governor of bank indonesia, at the discussion and launching of the financial stability review book, jakarta, 10 december 2015. * * * honorable, our predecessors governors of bank indonesia, members of the board of governors of bank indonesia, officials in the ministries and state agencies, banking leaders representatives of industry associations academicians and economic observers attendees and invitees, assalamu β alaikum warahmatullahi wabarakatuh, good afternoon and best wishes to us all, first of all, let us pray our praise and gratitude to allah swt, the god almighty for only upon his grace and blessing, we can all gather here in good health to participate in the discussion and launching of the book on financial stability review ( kajian stabilitas keuangan - ksk ) no. 25, september edition year 2015. the development of this ksk constitutes a part of the transparency and accountability of bank indonesia β s duty implementation in the field of macro - prudential. as one of the routine semester publications, ksk contains the results of assessment and review of bank indonesia toward the condition of the national financial system. such assessment also covers our monitoring to the sources of vulnerability and imbalance of the financial system that can be found in the financial markets ; financial agencies / institutions, namely households and corporates ; banking ; and non - bank financial institutions ( institusi keuangan non - bank - iknb ) ; and also financial infrastructures. due to the deceleration of economic growth experienced by indonesia, it is critical for bank indonesia as the authority in the field of macro - prudential to continue maintaining the stability of financial system. especially, as the dynamics of the global financial system continue to remain under uncertainties. therefore, the edition of ksk this time takes up the theme of β maintaining financial stability amid continued economic growth deceleration β we are convinced that our duty in maintaining the stability of economy will be more challenging. hence, we expect that depth assessment and review on the condition of national financial system will be a valuable reference for us in taking measures in the future. ladies and gentlemen, the condition of indonesia β s financial system in 2015 in general is still overwhelmed by various challenges and fluctuations, both sourced from global and domestic. the still weak global economic recovery, the continued declining price of
|
in the banks β portfolios. for our economy to recover, we had to create a strongly capitalized and well managed banking sector in line with international standards. this is our objective. to reach it we have first to address the current situation ; that is very low capital base and excessive number of institutions which have not been able to institute the necessary reforms and improvements to their financial conditions, management and operational systems. clearly, the banking sector has been one of the most seriously affected segments of the economy during the crisis. the effects were transmitted primarily through the following ways. ( i ) the sharp depreciation of the rupiah suddenly blew up the rupiah value of banks β liabilities denominated in foreign currencies and put the banks with short position in serious problems ; ( ii ) the economic crisis put banks β customers ( debtors ) in problems which depressed the value of banks β assets ; and ( iii ) the tight monetary policy to stabilize inflation and exchange rates, and the concomitant high interest rates, resulted in negative spreads for the banks. all the factors i cited earlier imply depletions of banks β capital base. and the longer the problems remain, the sharper the depletion of banks β capital will be. indeed, the results of the due diligence being run on the banks in 1998 show how deep the impact of the crisis on the banking sector has been. we fully realize that : ( a ) the recapitalization program is likely to be costly ; ( b ) the recovery of the economy relies upon the recovery of the banking system, and thus on the recapitalization program ; and ( c ) the failure of the recapitalization program would amount to the very costly delays to economic recovery ; then the recapitalization program would have to be designed and implemented very carefully to assure its success. it is for this purpose that our bank recapitalization program carries the following characteristics. ( i ) the estimates of recapitalization needs are done very realistically, or even conservatively through the due diligence process conducted by international auditing firms on each and every bank. the conservativeness of the estimate would provide some cushion to the changing environment during the process of recapitalization. ( ii ) the criteria for the banks to be eligible to participate in the government - supported recapitalization program are made very clear and transparent. ( iii ) the process of eligibility evaluation is conducted by four
| 0.5 |
supply shortages, firms will avoid making hasty decisions β such as raising prices of their products β that may result in losing customers, if firms judge the supply shortages to be temporary. on the other hand, if downside risks to the economy materialize, leading to a prolonged economic downturn, prices will be affected accordingly. other risk factors to prices include firms β and households β medium - to long - term inflation expectations, as well as developments in import prices, which are affected by fluctuations in international commodity prices and foreign exchange rates. iv. monetary policy a. the bank β s thinking behind the conduct of monetary policy so far, i have talked about economic activity and prices in japan. i would now like to turn to the bank β s conduct of monetary policy. the bank recognizes that japan β s economy is faced with the extremely important challenge of emerging from deflation and returning to a sustainable growth path with price stability. based on this recognition, the bank has been doing β and is determined to continue to do β its utmost as the central bank, using a threepronged approach consisting of ( 1 ) pursuing powerful monetary easing under the comprehensive monetary easing policy, ( 2 ) ensuring stability in financial markets, and ( 3 ) providing support to strengthen the foundations for economic growth. furthermore, with a view to ensuring stability in financial markets, the bank introduced a number of measures in the wake of the earthquake to address its impact on the economy and associated risks. 1. pursuing powerful monetary easing under the comprehensive monetary easing policy β comprehensive monetary easing β is a policy package that the bank introduced in october 2010, consisting of three measures. first, the bank lowered its policy interest rate, that is, the target for the uncollateralized overnight call rate β the shortest interbank rate β to β at 0 to 0. 1 percent β, thereby indicating that it was pursuing a virtually zero interest rate policy. second, the bank clarified its commitment regarding the time horizon based on the β understanding of medium - to long - term price stability β ( hereafter the β understanding β ). the β understanding β is the level of inflation that each policy board member understands as being consistent with price stability over the medium to long term. the β understanding β at present falls in a positive range of 2 percent or lower, and the midpoints of most policy board members β understanding are around 1 percent. the bank has made clear that it will maintain the virtually zero interest rate policy until it judges, on the basis
|
launch a retail cbdc, if necessary. but there does not seem to be a compelling case for it yet, given that todayaβ¬β’s digital payment system is already effective and efficient in transferring money. the regulatory approach that mas has taken towards crypto assets or tokens distinguishes the different types of such tokens. if a crypto token is being offered as a security with an expectation of a return, it is regulated under the securities and futures act. if a digital token is being offered as a payment instrument, it is regulated under the payment services act where the focus is on anti - money laundering and technology risk management, and increasingly, customer protection. mas looks at the underlying activity, and the nature and quality of the crypto asset, to determine the specific risk it poses. we right - size our regulations to focus on those risks. we hold digital payment token licensees to the same high anti - money laundering standards that we hold banks to. but we do not regulate them like banks because they do not conduct other activities that 1 / 2 bis central bankers'speeches banks do. payment service providers have a lighter regulatory regime overall compared to banks. this gives them more latitude and space to innovate, and yet for the risks that they pose, we hold them to the same high standard. 2 / 2 bis central bankers'speeches
| 0 |
bis central bankers β speeches diverse perspectives to bear on the design of best practices, helping to ensure the best practices developed are more effective. central banks β role in supporting best practices central banks have an interest in ensuring well - functioning markets β as market participants and for efficient transmission of monetary policy. we also have a stake in enhancing the strength and stability of the financial system as a whole. moreover, central banks can play an important role in the creation of effective best practices by serving as a convening body for market participants, by signaling the importance of best practice efforts to the market, and by encouraging the inclusion of a diverse set of market segments in the development process. first, particularly where otc markets predominate, a central bank can bring together market participants to discuss and address issues collectively. there is a rich history of collaboration between the official sector, the academic community, and industry participants to analyze existing issues, identify emerging risks, and develop guidance for financial markets. over time, the new york fed has led a number of such efforts. for example, the otc derivatives supervisors group addressed emerging risks of inadequate infrastructure for the growing credit derivatives markets. the new york fed and the board of governors convened the alternative reference rates committee, which is currently working to identify a set of alternate reference interest rates for financial products and contracts that are more firmly based on transactions from a robust underlying market and that comply with international standards. 6, 7 similarly, the u. k. official sector worked with a panel of market participants in developing the recommendations in the fair and effective markets review. the new york fed also sponsors two industry groups that have long - term missions focused on best practices. the tmpg is, as you know, a group of market professionals committed to supporting the integrity and efficiency of the u. s. treasury, agency debt, and agency mbs markets. to that end, the group develops guidance to promote market liquidity and transparency, robust control environments, efficient market clearing, and managing large positions with care. 8 the new york fxc examines similar issues in the fx market. it has a long history β more than three decades β of publishing documentation to facilitate fx transactions and market functioning and to articulate best practices. 9 the new york fed is also involved in the bis fxwg to help establish and promote adherence to an fx global code, a single set of guiding principles for the fx market. these groups have confronted collective action problems where an individual firm may want to raise concerns
|
strive to engage a wide diversity see β the introduction of the tmpg fails charge for u. s. treasury securities β for more information. the new york fed has organized workshops and conferences on reforming culture in the financial services industry. additionally, several executives have spoken publicly on the topic. see here for more detail. the g30, the basel committee, the european systemic risk board, and the fsb have issued papers on culture, governance, and misconduct risk. the bank of england β s fair and effective markets review called for higher conduct standards for the fixed income markets. the central bank of the netherlands β de nederlandsche bank β has developed new approaches for the supervision of corporate culture and decisionmaking. the mpg is working with the bis fxwg to develop market - based adherence mechanisms for the fx global code. bis central bankers β speeches of market participants as we develop best practices. this is to ensure that the practices reflect all relevant segments of the market and to promote buy - in and thus foster their adoption. as i mentioned before, both the tmpg and the fxc are expanding their membership such that a range of market participants feels vested in their missions. in addition, we engage with other sectors of the marketplace, such as trade associations and infrastructure providers, to educate them about best practices that have been developed and facilitate their potential adoption of aspects of them. when central banks operate in the markets ourselves, we expect the best practices to apply. this has two aspects. first, we align our own practices to the best practices, except where it would inhibit our policy functions. as a corollary, we expect those institutions that choose to become our counterparties to comply with the best practices as well, so that when we transact, we do so with the confidence that our counterparties are adhering to these standards of behavior. finally, we keep supervisors, regulators and other official sector bodies, inside and outside our four walls, abreast of the work of our committees. in some cases, they may choose to adopt standards first articulated by our committees as part of their frameworks. 22 conclusion market participants have a responsibility to themselves, their clients, and the financial markets in which they transact to implement best practices within their own institutions and to encourage their clients and other counterparties to do the same. broad adoption of best practices can strengthen each market participant β s existing controls, help reduce market disruptions, and ultimately foster greater confidence in the broader financial system.
| 1 |
around 2. 5 % in the years from 1973 to 1980, inflation accelerated to 10 %. except in germany, where monetary policy was directed with greater determination to controlling inflation, the 1970s were marked by high negative real interest rates. the shift in us monetary policy introduced by paul volcker in 1979 gave priority to controlling the quantities of credit and money ; interest rates rose sharply to well above the inflation rate. the upward movement spread to all the other leading countries. 1. global finance during the 1980s flexibility of the exchange rates between the main economic regions of the world was accompanied by the dismantling of the barriers to capital movements. growth in the industrial countries was no more rapid than in the previous decade ; it slowed in the 1990s. the persistence of budget deficits and large external imbalances, the rapid advances in data processing and telecommunications, financial innovation and the activity of institutions that collect and invest savings on a world scale all contributed to the creation of a single, global market for currencies and finance. the harbinger of this development was the growth of the eurodollar market, which had been boosted in the 1970s by the recycling of the surpluses of the oil - producing countries. the new conditions made it possible for countries to adopt a gradualist approach to correcting budget and, above all, external deficits ; it was no longer necessary for saving to equal investment in any given period. the global market was fuelled by the steady accumulation of external debt by the united states and the build - up of a net credit position by germany and japan. in all the leading industrial countries except the united kingdom public debt continued to rise in relation to gdp. gross financial assets and liabilities continued to grow much more rapidly than economic activity. between 1982 and 1995 the total liabilities of the six largest industrial countries rose from us $ 25 trillion to us $ 110 trillion and from four to six times their gdp. over the same period the degree of financial integration increased ; today, external liabilities are equal to 60 % of gdp. the growth in foreign exchange trading proceeded apace. favourable investment opportunities encouraged huge flows of capital into the emerging economies ; high rates of economic growth were often coupled with large balance - of - payments deficits and stable exchange rates. foreign investment in these markets increased from us $ 50 billion in 1990 to us $ 200 billion in 1995. in the oecd countries the assets managed by institutional investors rose over the same period from us $ 14 trillion to us $
|
the soundness of economic policy, foreign capital inflows have ceased suddenly and given way to outflows, supplemented by substantial exports of italian capital. in late 1992 and again in early 1995 non - residents disposed of very large quantities of italian securities ; at the same time residents β purchases of foreign financial assets increased considerably. these outflows put the lira and securities prices under very heavy pressure. the reaffirmation of monetary policy β s counter - inflationary commitment, the continuation, albeit with pauses, of the efforts to adjust the public finances, and the policy of wage moderation were decisive in easing the pressure and restoring conditions for a stable inflow of capital from abroad. looking ahead to a situation of recovery in economic activity and a reduction in the external current account surplus, the diversification of residents β financial portfolios will not put pressure on the exchange rate if non - residents continue to buy large amounts of italian securities. during the current year, characterised by favourable expectations regarding the italian economy and the prospects for economic and monetary union, non - residents β purchases of government securities, totalling more than 80 trillion lire up to september, have contributed to the sharp contraction in the long - term interest rate differential between italy and the countries with a longer record of price stability and a lower level of public debt. exports of italian capital have also increased, however. one of the reasons for the gradualness with which monetary policy has been eased has been to ensure favourable conditions for foreign investment in italy, taking into account the continual, structural outflow of italian capital. as economic and monetary union draws closer and national monetary policy β s room for manoeuvre gradually narrows to the point of disappearing, the macroeconomic equilibrium of each country will come to depend increasingly on budgetary, incomes and structural policies. in the absence of changes in the relative values of currencies, imbalances will impinge on competitiveness, production and employment. public spending in italy is now equal to more than 50 % of gdp. reducing this ratio will make it possible to ease the burden of taxation and social security contributions. in order to enhance italy β s competitiveness and reduce the cost of labour, it is also necessary to remove the obstacles hindering competition in the markets for goods and arrive at a more flexible use of labour. 4. concluding remarks in addition to benefiting the participating countries, the creation of a stable monetary area in europe will contribute to the stability of the real and financial macro
| 1 |
role as a reserve currency globally. moreover, we have a robust and diverse banking system that provides important services along with a widely available and expanding variety of digital payment options that build on the existing institutional framework with its important safeguards. circumstances where the central bank issues digital currency directly to consumer accounts for general - purpose use would raise profound legal, policy, and operational questions. that said, it is important to study whether we can do more to provide safer, less expensive, faster, or otherwise more efficient payments. some jurisdictions are likely to move in this direction faster than others, based on the particular attributes of their payments and currency systems. at the federal reserve, we look forward to collaborating with other jurisdictions as we continue to analyze the potential benefits and costs of central bank digital currencies. most immediately, the federal reserve is actively working to introduce a faster payment system for the united states, to improve the speed and lower the cost of consumer payments. in many countries, consumers are already able to make real - time payments at low cost. this summer, the federal reserve announced the first new payment service in more than 40 years β the fednow service β to provide a platform for consumers and businesses to send and receive payments immediately and securely 24 hours a day, 365 days a year. - 9as the public and private sectors work to reduce payment frictions, one of the most important use cases is for cross - border payments, such as remittances. current cross - border payments solutions are often slow, cumbersome, and opaque. authorities in many jurisdictions, including the united states, recognize the importance of cooperating across borders with each other and the private sector to address these cross - border frictions. 13 technology will continue driving rapid change in the way we make payments and the concept of β money. β as central bankers, we recognize the power of technology and innovation to transform the financial system and reduce frictions and delays, and the importance of preserving consumer protections, data privacy and security, financial stability, and monetary policy transmission and guarding against illicit activity and cyber risks. given the stakes, any global payments network should be expected to meet a high threshold of legal and regulatory safeguards before launching operations. the work ahead is not easy β the policy issues are complex, the coordination challenges are significant, and there are likely to be few simple fixes. because the road ahead is complicated and challenging, i am especially pleased that benoit will continue to help us navigate these issues as the new
|
the future rate of sustainable economic growth. in summary, the objective of economic policy - - monetary policy included - - is to keep the economy on the highest sustainable growth path. no one knows exactly what that rate is right now, or what it can be in the future, but a combination of policies, intelligently pursued, can raise it as far as possible. these policies include : wise monetary policy that helps the economy expand, and keeps labor markets tight, without incurring excessive risk of accelerating inflation ; investment in skills by individuals, firms and the public and non - profit sectors ; increased saving ( public and private ) invested in research, technology and infrastructure. the federal reserve will do its part, in the face of huge uncertainties, to steer an appropriate monetary policy. fiscal and other policies, both public and private, are needed to take full advantage of the opportunity we have today to keep the american economy operating at a high level in the future.
| 0.5 |
furthermore, we must avail of the efficiency provided by the technology, in sharing our information. a joint web - site can be established, where we can find important information, interpretations, or share its experience regarding supervisory issues or financial stability issues. when mentioning this ways of cooperation, i am not trying to neglect what is already happening and i am mindful of the fact that there is a trade - off between the advantages of such cooperation and its costs. we should also point out that memoranda of understanding β s can not act as a substitution for cooperation in practice. it is important we maintain close contacts with our counterparts, on exchanging regular information on general trends and issues of respective banking systems in normal times, as it serves to establish confidence for future cooperation, particularly during distress times. otherwise, such official cooperation agreements will do little in making a real difference. let me conclude by saying that the objective of reaching and maintaining the financial stability is not an easy task but we could contribute a lot in its achievements by enhancing our efforts to make sure that financial market institutions are performing soundly in a stable macroeconomic environment. our contribution can be much more effective if it is properly coordinated regionally. such cooperation will ease our efforts in improving supervision capacities, avoid cross - border regulatory arbitrage and will serve our efforts to meet our objective of integration in european financial markets. we can enrich the modalities of such cooperation, keeping in mind that the basis of good cooperation is established in normal times, through regular contacts. thank you.
|
##ve customers over the years and measures were required to be taken by the banks to protect the customers. while it is good to know that banks have played their roles in investing in robust security systems, they must also ensure that customers play their part in protecting their own assets and savings. the reminder and greater awareness from the banks through this campaign is timely. it will not only reinforce the need for constant vigilance from all parties, but also help create an environment where everyone is risk conscious and responsible in protecting the interests of each other. these initiatives would not achieve the desired outcomes without effective bis central bankers β speeches communication, and the media has a critical role to play in conveying the message from the banks. we have always acknowledged the importance of the media and i would like to record bank negara malaysia β s appreciation for the assistance rendered by the media in creating awareness of this issue in the past. we hope that with the support of the media on this occasion too, this campaign will be a success, and the public will have heightened levels of understanding and vigilance over this issue. on behalf of bank negara malaysia, i would like to thank all the banks for taking this initiative to undertake this joint e - banking awareness campaign. our thanks also to cyber security and the police force for your ongoing efforts to collaborate with the banking industry. i wish all of you the best and assure you that bank negara malaysia will continuously support you in this noble effort. bis central bankers β speeches
| 0 |
continue to play an important role in the u. s. economy by extending credit, providing banking and payment services, and participating in u. s. securities and derivatives markets. context matters, and when we discuss changes to the bank regulatory framework - including through changes to capital requirements - we need to understand the direct and indirect consequences that may result. potential consequences of capital reform one of the key questions i ask when considering regulatory proposals is whether the benefit of the change outweighs the costs of implementation, both for the financial institutions subject to the proposal and for the broader economy. on a simplistic level, higher capital levels make the banking system safer. but this must be the beginning of the analysis, not the definitive end. increased safety comes at a cost, and the business of banking is built upon risk. the complete elimination of risk would transform a bank into a public utility. assuming this is not the desired end state of the banking system, we must evaluate a proposal's merit by thoroughly understanding the balance between these benefits and the resulting costs. as i noted earlier, the u. s. banking system continues to be much better capitalized than before the 2008 financial crisis. that capital cushion has broadly enhanced the resiliency of the banking system through business, economic, and interest rate cycles, enabling the banking system to continue supporting the u. s. economy, even throughout the pandemic and the related economic stress. while the full extent of " costs " under the proposal are not entirely clear, in the aggregate, those costs - including the direct costs experienced by banks, and the indirect costs experienced by bank customers and the u. s. economy - would be substantial. capital increases of this magnitude are likely to have a detrimental impact on u. s. market liquidity and lending, and firms without sufficient scale are likely to exit certain markets. increased capital requirements for certain types of loans may also lead to reduced credit availability or increased cost of credit, which could disproportionately harm underserved markets, businesses, and communities. ultimately, bank customers will bear the cost of these increases. the path forward for capital reform what does the path forward entail? the agencies have received substantial initial public feedback, and in response, have extended the comment period into mid - january 2024. the agencies have also engaged in a parallel effort to gather more information about the potential impact of the proposal's approach and calibrations. these actions reflect an important recognition of the
|
that sharp movements in asset prices will have serious negative consequences for the economy. instead of trying to preemptively deal with the bubble - which i have argued is almost impossible to do - a central bank can minimize financial instability by being ready to react quickly to an asset price collapse if it occurs. one way a central bank can prepare itself to react quickly is to explore different scenarios to assess how it should respond to an asset price collapse. this is something that we do at the federal reserve. indeed, examinations of different scenarios can be thought of as stress tests similar to the ones that commercial financial institutions and banking supervisors conduct all the time. they see how financial institutions will be affected by particular scenarios and then propose plans to ensure that the banks can withstand the negative effects. by conducting similar exercises, in this case for monetary policy, a central bank can minimize the damage from a collapse of an asset price bubble without having to judge that a bubble is in progress or predict that it will burst in the near future. another way that a central bank with bank supervisory authority can respond to possible bubbles is through prudential supervision of the financial system. if elevated asset prices might be leading to excessive risk - taking on the part of financial institutions, the central bank, as in the case of the united states, can ask financial institutions if they have the appropriate practices to ensure that they are not taking on too much risk. working through supervisory channels has the advantage not only of helping make financial institutions better able to cope with possible asset price declines but possibly also of indirectly restraining extreme asset prices if they have been stimulated by excessive bank financing. also, reminding institutions to maintain risk - management practices appropriate to the economic and financial environment could potentially help lessen a buildup of excessive asset prices in the first place. even if the central bank is not involved in the prudential supervision directly, it can still play a role through public communication, particularly if it has a vehicle like the financial stability reports that some central banks publish. in these reports, central banks can evaluate whether rises in asset prices might be leading to excessive risk - taking on the part of financial institutions or whether distortions from inappropriate tax or regulatory policy may be stimulating excessive valuations of assets. if this appears to be happening, the central bank's discussion might encourage policy adjustment to remove the distortions or encourage prudential regulators and supervisors to more closely monitor the financial institutions they supervise. large run - ups in prices of assets such as houses present serious
| 0.5 |
, intergenerational report 2010, commonwealth of australia, canberra. for a further discussion of demographic trends in australia, see productivity commission ( 2013 ), an ageing australia : preparing for the future, commission research paper, canberra. some of this slower growth in hours is cyclical in nature. bis central bankers β speeches if this pattern were to continue, as seems likely, the australian economy faces a substantial challenge. over the next decade or so, if we are to achieve anything like the type of growth in real per capita income that we have become used to, then a substantial increase in productivity growth will be required. we can no longer depend on a rising terms of trade and favourable demographics to make us richer. if this lift in productivity growth does not take place, then we will need to adjust to some combination of slower growth in real wages, slower growth in profits, smaller gains in asset prices and slower growth in government revenues and services β in short, slower growth in our average living standard. so the debate about productivity should not be seen as an esoteric one just for economists. productivity growth matters and it matters a lot to our future living standards. on the positive side, we have seen some signs that productivity growth has picked up a bit recently. many firms that we talk with β particularly those affected by the high exchange rate β report that they have made serious efforts over recent years to make their operations more efficient. and, as the resources investment boom transitions to the resources exports boom, stronger growth in productivity is expected, as the production phase is often less labour intensive than the investment phase. there is thus some basis for optimism. even so, the task of generating a sustained and widespread pick - up in productivity needs to be high on our national agenda. it is a task where monetary policy can make a contribution by keeping inflation low and stable so that people can make decisions without having to worry about the distorting effects of high and variable inflation. our medium - term inflation targeting framework β which has been in place for two decades now β has achieved this and we are committed to making sure that we continue to deliver. but realistically, the additional contribution of monetary policy to improving productivity growth is only modest. the solutions clearly lie elsewhere, in the hands of both the private and the public sector. improving productivity is not simply a matter of the β government fixing the problem β. the private sector has a central role to play too, as it is the private sector that is the main
|
. 36. for an earlier discussion, see schnabel, i., ( 2020 ), β monetary policy in changing conditions β, speech at the second ebi policy conference on β europe and the covid - 19 crisis β looking back and looking forward β, frankfurt, 4 november. 37. ahmed, r. et al. ( 2024 ), β losing traction? the real effects of monetary policy when interest rates are low β, journal of international money and finance, vol. 141, march ; and van den end, j. w. et al. ( 2020 ), β macroeconomic reversal rate : evidence from a nonlinear is - curve β, dnb working paper series, no 684, de nederlandsche bank, may. 38. related, there could be a β reversal interest rate β at which accommodative monetary policy becomes contractionary. see brunnermeier, m. k. and koby, y. ( 2018 ), β the reversal interest rate β, nber working paper series, no 25406, national bureau of economic research, december. 39. berger, d. et al. ( 2021 ), β mortgage prepayment and path - dependent effects of monetary policy β, american economic review, vol. 111, no 9, september, pp. 2829 - 2878 ; and eichenbaum, m., rebelo, s. and wong, a. ( 2018 ), β state dependent effects of monetary policy : the refinancing channel β, nber working paper series, no 25152, national bureau of economic research, october. 40. bundick, b., hotz, l. and lee smith, a. ( 2023 ), β how optimal was u. s. monetary policy at the zero lower bound? β, research working paper series, no 23 - 14, federal reserve bank of kansas city, december. 41. gorodnichenko, y. and sergeyev, d. ( 2021 ), β zero lower bound on inflation expectations β, nber working paper no 29496. similarly, there is evidence that the effect of persistent deviations of inflation from target on long - term inflation expectations is not stronger at the effective lower bound. see moessner, r. and takats, e. ( 2020 ), β how well - anchored are long - term inflation expectations? β, bis working papers no 869.
| 0 |
duvvuri subbarao : mint road milestones talking points by dr duvvuri subbarao, governor of the reserve bank of india, at the inauguration of newsibition, kolkata, 8 december 2010. * * * i am delighted to inaugurate this newsibition of the reserve bank in this city of joy. last year, the reserve bank celebrated our platinum jubilee. as part of the celebrations, we documented the 75 years of the reserve bank β s history in the form of a book β mint road milestones. milestones is rich treasure trove of archival material including, photographs, news clippings, documents along with a commentary which weaves them all together in an interesting narrative. in fact, the material that we collected was so interesting and rare that we thought it would be a great public service to put it up all in the form of an exhibition and make it accessible to a much wider audience. but why are we setting up the exhibition in kolkata? because, kolkata is where it all began. the reserve bank β s first central office was located here in this very building. it is thus appropriate that any effort to document the banks past and project its future be located here. this exhibition is a part of the bank β s outreach efforts to demystify the central bank. it seeks to introduce the viewer to the broad canvas, considerations and changing facets of thought that lay behind the bank β s policy efforts over the years. the display is divided into nine sections representing different phases in the bank β s evolution. these take the viewer down 75 years of central banking history covering critical events and policies. the reserve bank took birth here in kolkata on april 1, 1935 as a private shareholders institution. it shifted to mumbai shortly thereafter and was nationalized in 1949. soon after independence, the bank repositioned itself to meet the aspirations of an infant democracy and dovetailed its functions to the demands of a poor country with ambitious development goals. the 60s were a period of institution building where the reserve bank helped formalize systems for agricultural and industrial credit ; catalyzed institutions such as the state finance corporations and helped set up the deposit insurance corporation, the unit trust of india as the first mutual fund, the idbi as an apex development bank, etc. the 70s saw the nationalization of banks which heralded a new era when banking was taken from the classes to the masses. this was also the period when banks performed a critical role in
|
country today, the msme sector stands as a beacon of hope. realizing the potential that the sector holds, both government of india and reserve bank of india have been laying substantial emphasis on means to energize the sector. among the goi initiatives that have a bearing on the sector are provision for udyog aadhaar, start - up india, make in india and steps for improving β ease of doing business β in the country. likewise, reserve bank of india has also been very conscious of the needs of the msmes and has hence, initiated a plethora of steps to support them through their lifecycle. i will delve upon some of these measures in the course of my address today. strengthening the banking system for lending to msmes 4. with a view to strengthen the reach and scope of credit delivery mechanism for small entrepreneurs and businesses, rbi has recently issued in - principle approvals for setting up of 10 small finance banks ( sfbs ). the sfbs are mandated to extend 75 per cent of their adjusted net bank credit ( anbc ) to the sectors eligible for classification as priority sector lending ( psl ) by rbi. further, these banks are also mandated to ensure that at least 50 per cent of their loan portfolio should constitute of loans and advances of up to annual report ministry of micro, small and medium enterprises 2014 β 15. bis central bankers β speeches rs. 25 lakh. this is intended to ensure that these sfbs have a diversified loan book with exposures to small entrepreneurs. we believe that together with the existing players, these banks would be able to meet the credit needs of small businesses in a holistic and timely manner, which is so central to the financing needs of the msmes. 5. the recent revision to the priority sector lending guidelines has also sought to facilitate flow of credit to the sector. while on the one hand, the target for banks β lending to micro enterprises has been progressively increased to 7 percent by march 2016 and 7. 5 percent by march 2017, medium enterprises have been brought within the ambit of priority sector, whereby all loans to medium enterprises in the manufacturing sector and those up to rs. 10 crore in the service sector now qualify for priority sector classification. 6. an extremely important, but relatively much less appreciated aspect of credit delivery system is the availability of trained human capital within the banks. bankers ought to have a sound understanding of the businesses that they finance. in respect of established businesses with predictable cash flows,
| 0.5 |
process of credit risk management and liquidity at banks. banks played an important role in the process of spreading the crisis. as investors and providers of liquidity to companies β intermediaries in the sale of assets and companies investing in those assets, as well as by organizing the securitization of those assets. the role of good supervisory policies cannot be underestimated 6. first, the negative impact of a bubble burst will be less severe both for the economy as well as for financial institutions as such, provided that a banking system is well supervised, the level of exposure on this market is low, the system has quality assets and the capital stock is adequate to absorb the effects of the shock. second, if the bubble expansion reflects the expectations of extraordinary gains, the supervisory policy may substantially diminish the economic benefits from and the scale of speculation, e. g. by way of reducing the ltv ratio, restricting the loan term or introducing the requirement to provide own contribution for housing loans. third, the supervisory activities β as an instrument preventing asset bubble formation β have the advantage of affecting directly one selected group of entities which may play an important role in bubble formation. compared to interest rates, those measures have an effect of a conventional intelligent bomb, which is both selective and precise. supervisory activities pursued in order to prevent the creation of an asset bubble may be especially effective if bubbles occur, among others, as a result of the legislation the sector is regulated by. in poland, this principle is illustrated by regulations which restrict the investment policy of open pension funds and the impact of those regulations on the stock crockett a., marrying the micro - and macro - prudential dimensions of financial stability, bis speeches, september 2000. borio c., towards a macro - prudential framework for financial supervision and regulation?, cesifo economic studies, vol. 49, no. 2 / 2003, summer 2003. tsatsaronis k., systemic financial risk and macroprudential supervision, article presented at bocconi university centennial conference on risk and stability of financial system : what roles for regulators, management and market discipline, 2003. rybinski k., globalizacja w trzech odsΕonach, difin, warszawa 2007. market. the currently effective legislation may contribute both to aggravating the supplydemand imbalance which supports the divergence of stock prices from the fundamentally reasonable levels and also towards the growth in the
|
workers who would like more hours. there are also structural factors at work, arising from technology and competition that we have discussed at previous hearings. the fourth and related issue is the outlook for inflation. the cpi inflation rate β at 2. 1 per cent β is higher than it was a couple of years ago, but still below the medium - term average. strong competition in retailing from new entrants is holding down the prices of many goods and low wage increases are holding down the prices of many services. rent inflation is also at a very low level. working in the other direction over the past year has been higher prices for electricity, fuel and tobacco. we are expecting inflation to move gradually higher over the next couple of years as the economy strengthens. we remain committed to achieving an average rate of inflation over time of between 2 and 3 per cent. in the short term, though, we are expecting the headline rate of inflation to dip a little in the september quarter. utility prices have declined recently in some cities and policy changes are likely to reduce the measured price of child care. there have also been some policy changes at the state government level that will reduce other measured prices. collectively, these changes will help with cost - of - living pressures and free up income to spend on other things. from this perspective, these changes are good news. so these are some of the main issues we have been working our way through. as you are aware, the reserve bank board has held the cash rate steady at 1Β½ per cent since august 2016. this setting of monetary policy is helping support economic growth, allowing for further progress to be made in reducing the unemployment rate and returning inflation towards the midpoint of the target range. we have not sought to fine - tune outcomes, but rather to be a source of stability and confidence as the economy moves along this path. for most of this year, i have emphasised three points in communication about monetary policy. the first is that things are moving in the right direction. we are making progress towards full employment and having inflation return to around the midpoint of the target range, and further progress is expected. the second point is that if we continue to make progress, you could expect the next move in interest rates to be up. with the central scenario being for the economy to continue on its recent track, it is more likely that the next move in interest rates will be an increase, not a decrease. the last increase in the cash rate was back in
| 0 |
ben s bernanke : euro at five - ready for a global role? remarks by mr ben s bernanke, member of the board of governors of the us federal reserve system, at the institute for international economics conference, washington, dc, 26 february 2004. the references for the speech can be found on the board of governors of the federal reserve system β s website. * * * β what is the appropriate domain of a currency area? it might seem at first that the question is purely academic since it hardly appears within the realm of political feasibility that national currencies would ever be abandoned in favor of any other arrangement. β robert a. mundell ( 1961, p. 657 ) it is an honor for me to address such a distinguished group on the occasion of the euro β s fifth anniversary. i congratulate the institute of international economics for putting together such an excellent program. the successful introduction, five years ago, of an entirely new currency over a wide range of polities and economies was, at a minimum, a remarkable technical achievement. as a card - carrying member of the club of monetary economists, i like to think that our collective expertise was helpful in making that achievement possible. as both a policymaker and an economist, i welcome this opportunity to look back on the first five years of the euro to see what we can learn from the experience and to consider what this grand experiment implies for the future. i should say at the outset that, as usual, my remarks this evening reflect my own views and not necessarily those of my colleagues in the federal reserve system. 1 the economic analysis of optimal currency areas began, of course, with robert mundell β s seminal 1961 paper, from which i have quoted above. 2 as you know, mundell argued that, ideally, economic similarity, not political boundaries, should define the geographic area spanned by a common currency. he was the first to state the classic tradeoff implied by the decision to adopt a common currency. according to mundell, the principal advantage of a common currency is the reduction in transaction costs implied by the use of a common medium of exchange across a broad area. the disadvantage of a common currency is the loss of the shock - absorber properties of flexible exchange rates and independent monetary policies. flexible exchange rates and independent monetary policies will be useful shock absorbers to the extent that macroeconomic shocks are imperfectly correlated across regions, wages and prices are sticky, and other macroeconomic adjustment
|
β one. this approach has benefits. crises clearly differ in form and severity, which calls for flexibility in the official sector β s approach to dealing with them. but discretion also carries some costs. for private creditors, it adds to uncertainty when framing their lending plans. the imf β s latest capital markets report states that the private sector is β highly uncertain, if not outright confused about the official community β s approach to achieving its goals β. discretion also has costs for the official community. it risks β gaming β by the private sector, with the official sector providing more money ex - post than would have been optimal ex - ante. by altering official and private sector behaviour in this way, a discretionary approach to crisis management potentially increases both the cost and the incidence of crisis. are there feasible, rules - based alternatives? one simple means of establishing an official β line - in - the - sand β would be to place an explicit cap on imf lending. no rule is of course inviolable. but publicly - stated constraints are likely to have greater credibility. this would reduce uncertainty among private creditors. and it would drive home the point that β bail in β by private creditors would need to be greater, the larger a country β s financing needs, which provides the right set of incentives from a moral hazard perspective. payments standstills as a crisis management tool this limited pool of imf lending would need to be complemented with other crisis management tools. voluntary rollover agreements with creditors - the like of which were put in place in korea and brazil recently - would be an important part of that crisis management toolkit. so too would voluntary bond restructurings, as have recently been undertaken in pakistan, ukraine and ecuador. an ongoing dialogue between country debtors and their private creditors - what the institute for international finance call β country clubs β - would facilitate both of these voluntary tools for crisis resolution. involuntary payments suspensions also deserve consideration as part of the official sector β s toolkit, however. as a crisis management tool, they may be beneficial in certain situations. where a country is vulnerable to short - term capital movements, standstills could serve as a potentially important circuit - breaker. they might be an efficient means of forestalling β runs β on a country because they prevent pessimistic creditor expectations becoming self - fulfilling. more generally, whether capital is short - term or not, they could serve as an important incentive device. having standstills as a
| 0 |
, financial markets process new information efficiently : if some unexpected news arrives, markets adjust, sometimes even sharply, and they should. these types of movements are healthy, even necessary. they serve to quickly bring prices in line with underlying fundamentals. and markets that move quickly and adroitly do not necessarily produce unstable financial conditions. nor should those who take up the cause of ensuring financial stability protect individual investors or financial institutions from substantial losses or insolvency. to the contrary, a healthy and well - functioning financial system will tend to reward well - managed risk - taking and punish imprudence. i am inclined to interpret the federal reserve's interest in promoting financial stability as a desire to foster conditions that favor sustainable growth and stable prices. in this sense, financial stability concerns may rightly shape policymakers'views about the modal outlook for the federal reserve is by no means the only institution in the united states that is concerned with the stability and functioning of the financial system. indeed, the federal reserve works closely with a number of other u. s. government agencies on both a bilateral basis and jointly through the president's working group on financial markets to enhance the integrity, efficiency, orderliness, and competitiveness of financial markets and to maintain investor confidence. in addition, the federal reserve participates in a number of important international groups, such as the financial stability forum, the basel committee on banking supervision, the committee on the global financial system, and the committee on payments and settlement systems, to name just a few. indeed, in today's tightly integrated international financial markets, fostering financial stability requires a global perspective. the first bank of the united states was created in 1791 and lasted until 1811. the second bank of the united states operated from 1816 to 1836. originally, the preamble to the federal reserve act of 1913 stated that the federal reserve system was created " [ t ] o furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the united states, and for other purposes. " macroeconomic objectives were explicitly introduced later, with the 1977 amendment of the federal reserve act, which stated, " the board of governors of the federal reserve system and the federal open market committee shall maintain long - run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and
|
many state governments are taking actions to make long - term structural reductions in spending. federal fiscal policy is widely acknowledged to be on an unsustainable path for the long term and must be addressed ( chart 33 ). for example, the expiration of the bush - era income tax cuts and legislated cuts in medicaid, if they went into effect, would stabilize the debt to gdp ratio at around 80 percent ; if, however, their effective date continued to be deferred, the debt to gdp ratio could move toward 100 percent fairly rapidly. the proposed budget delivered by the u. s. administration on february 14 begins the process of adjusting the fiscal trajectory. fifth, the challenge for monetary policy has been to provide stimulus and support in the wake of the combined financial crisis and recession. as noted at the outset, economic history suggests that such a combined financial and economic shock can drive the economy down very deeply. strong, forceful policy β both monetary and fiscal β is necessary to stem the contractionary forces in the economy. the federal reserve responded by lowering interest rates to near zero, to provide substantial liquidity support to the economy and to conduct the first large - scale asset purchase program, more than doubling the federal reserve β s balance sheet. history also suggests that the recovery from a combined financial and economic shock can be fragile. the federal reserve responded to the slowing of the recovery in midyear 2010 by beginning a second round of large - scale asset purchase programs. those purchases are resulting in a rough tripling of the federal reserve β s balance sheet ( chart 42 ). u. s. economic conditions are currently quite far away from levels consistent with the federal reserve β s dual mandate of the pursuit of the highest level of employment consistent with price stability. i β ve discussed the high unemployment and unused productive capacity in the united states. let β s turn to inflation. while trend inflation is quite low at the moment, we see it likely to be near the low point of this cycle. the rate of inflation for nonenergy services is beginning to increase, led by faster increases in apartment rents ( chart 36 ). a firming of demand along with a decline of the exchange value of the dollar should begin to put upward pressure on nonfood, nonenergy goods prices. however, underlying inflation fundamentals suggest relatively low trend inflation for some time : a substantial amount of slack in the economy, reflected in the sharp deceleration of core services prices β and the united states
| 0 |
tolerance is highest for low impact firms while, for obvious reasons, we have a very low tolerance to failure in the highest impact firms. we are prepared β no β more than that β we expect some low impact firms to fail each year. i will return to the subject of the supervision of low impact firms in more detail later. for the moment i want to stress that we require all low impact firms to comply with the appropriate prudential and consumer regulations just as much as we require our higher impact firms to comply with such regulations β but we accept that, in any market economy, firms will be created and they will fail for a whole variety of reasons. when they fail, we will work to ensure that the rights of customers are appropriately protected according to the law, supported by the extensive retail consumer protection framework in ireland. we will also work to ensure appropriate cancellation of permissions and winding up in accordance with insolvency regulation. as you would expect our risk appetite for such failure in our highest impact firms is markedly less. we do not expect these firms to fail regularly and, when it appears that it is possible they are at risk or may fail, you will find us working pro - actively to mitigate the risks. we will work to ensure that, if there is to be failure, that it is not disorderly and that there is no requirement for taxpayer support to preserve financial stability. bis central bankers β speeches how we will implement our risk appetite? the first stage in implementing our risk appetite is through investigating and challenging the firms we regulate. we are deploying a set of engagement tasks which are designed to help us understand the firms better and to put us in a place where we can effectively unearth and discuss the key issues with a firms β leadership team, with a view to achieving swift and effective mitigation where necessary. to make this approach plausible, we have been investing in practical training for supervisors to help them conduct high quality qualitative and quantitative evaluations of firms. we have also recruited a considerable number of staff with deep industry knowledge and we will continue to invest in training all our supervisory teams. as supervisors provide us with feedback on different aspects of different prism engagement tasks we will be able to commission further training to enhance specific skills β thereby further improving performance. this year, for example, we have commissioned focused business model training for some supervisors, to ensure they have the requisite skills to evaluate, working with our specialist business model analytics team, the strengths and weaknesses
|
achieved by market forces. i hope that, looking at the matter from a european perspective, you agree with me. the fact of the matter is that diversity or fragmentation leads to individual vulnerability, and interdependence is synonymous with contagion, particularly financial contagion. this is notwithstanding the low degree of financial integration and varying degrees of financial openness. the ingenuity of the financial community can be relied upon to establish financial linkages, where there is none officially allowed, through which what appears to be unmanageable financial risks can be managed and, consequently, financial contagion can be readily transmitted. the emerging markets of asia provide fertile ground for financial innovation. for example, we hear often that the hong kong financial markets provide a perfect hedge, or more modestly, a proxy hedge, for risks in the mainland of china or the region. there is an element of truth in this. after all, this is one of the roles of an international financial centre. but it does mean that, in asia, the dynamics of financial contagion can be quite complex. for example, financial crises do not necessarily erupt and manifest themselves at source - somebody sneezes and others get pneumonia. so, it is only prudent that asian monetary co - operation should be on the agenda of discussions on asian finance, and i have been urging for greater co - operation for some time. i am therefore glad that there has been increasing attention given to the subject in recent years. but, in terms of actual co - operative initiatives, progress has been slow and the scope rather narrow. to be fair, there is consensus on the need for diversification of financial intermediation channels, for enhancing efficiency and financial stability, and this consensus has been manifested in co - operative efforts to develop the bond markets in asia. there are three clusters of initiatives : " what is driving asian exports? ", hkma, august 2003. β’ the first is the apec initiative on the development of securitisation and credit guarantee markets, which is spearheaded by three apec member economies, namely, hong kong, thailand and korea, and sponsored by the world bank ; β’ the second is the asian bond market initiative ( abmi ) of the asean + 3 forum ; and β’ the third is the asian bond fund initiative of emeap, comprising eleven central banks in the region, which has successfully launched abf1, denominated in us dollars and has been working
| 0 |
preliminary flash estimate. it is set to remain weak in the near term. surveys indicate that manufacturing 1 / 4 bis - central bankers'speeches continues to contract while services activity is expanding. consumer confidence is fragile, and households have not yet drawn sufficient encouragement from rising real incomes to significantly increase their spending. nevertheless, the conditions for a recovery remain in place. while the labour market has softened over recent months it continues to be robust, with the unemployment rate staying low, at 6. 3 per cent in december. a solid job market and higher incomes should strengthen consumer confidence and allow spending to rise. more affordable credit should also boost consumption and investment over time. provided trade tensions do not escalate, exports should support the recovery as global demand rises. fiscal and structural policies should make the economy more productive, competitive and resilient. we welcome the european commission's competitiveness compass, which provides a concrete roadmap for action. it is crucial to follow up, with further concrete and ambitious structural policies, on mario draghi's proposals for enhancing european competitiveness and on enrico letta's proposals for empowering the single market. governments should implement their commitments under the eu's economic governance framework fully and without delay. this will help bring down budget deficits and debt ratios on a sustained basis, while prioritising growth - enhancing reforms and investment. inflation annual inflation increased to 2. 4 per cent in december, up from 2. 2 per cent in november. as in the previous two months, the increase was expected and primarily reflected past sharp drops in energy prices falling out of the calculation. along with a month - on - month increase in december, this led energy prices slightly higher on an annual basis, after four consecutive declines. food price inflation edged down to 2. 6 per cent and goods inflation to 0. 5 per cent. services inflation edged up to 4. 0 per cent. most underlying inflation indicators have been developing in line with a sustained return of inflation to our medium - term target. domestic inflation, which closely tracks services inflation, has remained high, as wages and some services prices are still adjusting to the past inflation surge with a substantial delay. at the same time, recent signals point to continued moderation in wage pressures and to the buffering role of profits. we expect inflation to fluctuate around its current level in the near term. it should then settle sustainably at around the two per cent medium - term target. easing labour cost pressures and
|
with an annual growth rate of 1. 1 per cent. credit standards for business loans tightened again in the fourth quarter of 2024, having broadly stabilised over the previous four quarters, as reported in our latest bank lending survey. the renewed tightening mainly reflected banks becoming more concerned about the risks faced by their customers and less willing to take on risks themselves. demand for loans by firms increased slightly in the fourth quarter but remained weak overall. credit standards for mortgages were broadly unchanged, after three quarters of easing, while the demand for mortgages again increased strongly, mainly because of more attractive interest rates. conclusion the governing council today decided to lower the three key ecb interest rates by 25 basis points. in particular, the decision to lower the deposit facility rate β the rate through which we steer the monetary policy stance β is based on our updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission. we are determined to ensure that inflation stabilises sustainably at our two per cent medium - term target. we will follow a datadependent and meeting - by - meeting approach to determining the appropriate monetary 3 / 4 bis - central bankers'speeches policy stance. in particular, our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. we are not pre - committing to a particular rate path. in any case, we stand ready to adjust all of our instruments within our mandate to ensure that inflation stabilises sustainably at our medium - term target and to preserve the smooth functioning of monetary policy transmission. we are now ready to take your questions. 4 / 4 bis - central bankers'speeches
| 1 |
no other sea outlet, but thessaloniki also is closer to sofia than the bulgarian ports in the black sea, and the same applies for large regions in south - east romania, south serbia etc. companies established in these regions will find it more convenient to use thessaloniki as a trading port than other sea outlets. especially, if one takes into account the queuing time needed to cross the bosphorus, the economic advantage of the greek ports is more than evident. this will be even more so when the eu co - financed trans - european transport networks, opening up the aegean ports to our northern neighbours and beyond, will reach a maturity phase towards the end of this decade. can thessaloniki become the rotterdam of the balkans? keeping all proportions i would reply yes, and its expansion in recent years and especially after 2007 when the road linking turkey to the west ( the egnatia highway ) will have been finished is a guarantee that thessaloniki along with northern greece will be restored to its past trading and economic glory, to say nothing about the fact that it is a very pleasant, in many respects more than athens, city to live in. greece is in a special position in that its exports of services far exceed its exports of goods. in fact, our non - oil good exports are now somewhat less than tourism receipts and even less than those from shipping, while our total receipts from services cover more than four - fifths of our total non - energy good imports. many foreign observers indicate, as a source of concern, greece β s trade imbalance but they forget that - in the world we live in - services are growing faster. we should build on our success in these areas. it is well known that greece is a major world power in shipping and by far the most important shipping nation in the european union and, on the basis of new orders, it may increase even more its world market share over the medium term. for both economic and geopolitical reasons, europe needs a strong merchant fleet, and here lies greece β s important contribution to the union. greece, with a shipping tradition of more than three thousand years, should maintain its comparative strength in this area both for its own benefits and the european union β s as a whole. shipping is a sector subject to practically unhindered international competition ; it is, therefore, necessary not to impose on it measures and regulations that could impair its competitiveness, apart from those required for environmental reasons. we should also look at ways to enhance the role
|
top of the agenda of central banks. we have fully endorsed this new focus. after an upgrading of our banking supervisory framework which allowed us to implement basel ii as from march 2008, the bank is now envisaging to implement basel iii. a consultative paper outlining the proposals of the bank will be issued for consultation by the end of october 2012. our banks have remained strong during the global financial crisis. the higher capital requirements of the basel iii framework will further enhance their ability to function under conditions of stress and help protect depositors. β’ the deposit insurance scheme is currently in its final stages after a lengthy process which involved intensive consultation with the banking industry and study visits by our officers to other jurisdictions. this additional safety - net will reinforce the stability of our financial system. bis central bankers β speeches β’ another issue that requires our attention is that of domestic systemically important banks, the so - called d - sibs. i had drawn attention on several occasions to the fact that at least two of our banks have developed into big complex institutions, with the potential of posing a threat to the financial system in case of failure. we are currently working on a framework for the monitoring of such institutions which will be required to simplify their structures and maintain additional capital, and possibly write living wills. i am very pleased to note that already two banks, as well as one financial conglomerate, have taken the cue and are restructuring their operations so that they end up with leaner structures. β’ i am pleased to announce that the net profits of the bank rose from rs258. 4 million for the financial year ended 30 june 2011 to rs395. 3 million for the current financial year. the sustained improvement in the performance of the bank was attributable mainly to a combination of operational efficiency and a prudent diversification strategy with respect to reserve management. in 2011, there was a noteworthy change in the bank of mauritius act 2004 with significant impact on the accounts of the bank. this provision allows the bank to credit to the special reserve fund all unrealized gains, arising from the valuation of investments held by the bank, instead of treating them as distributable income, which forced the bank to liquidate portfolio assets, which it would have been more prudent to keep, to distribute as profits. words of appreciation i am deeply indebted to all those who have supported me during my two tenures of office. i thank dr the honourable navinchandra ramgoola
| 0 |
talked a lot about past achievements and future challenges. and i have talked about the need to work together as a team. but, of course, all good teams need good leaders. and speaking of good leaders brings me to aurel schubert. as aurel is due to retire soon, i would like to take the opportunity tonight to say a few words about what he has done for this institution. for eight years now, he has steered the ecb statistics ship with great competence. aurel has made invaluable contributions to some of our most ambitious projects : the granular securities holdings statistics, the mmsr and anacredit. thanks to his leadership, supervisory statistics were available from the start of european banking supervision. he helped amend our statistical legal framework to align it with international standards. but, of course, his career started long before he became director general of statistics. he has worked in the field since 1997. over these past 21 years, he has participated in 90 meetings of the statistics committee and chaired 34 of them. he has also been a vice - chair of the irving fisher committee, a co - chair of the european statistical forum, and chair of the esrb contact group on data. all these achievements are facts, of course. and they show that aurel knows his subject, thinks strategically and masters the politics. these are all important aspects of being a good leader. but they are not the only things that are important. a leader cannot act alone ; they rely on other people. and aurel is an outstanding people manager. i think he can teach us all a thing or two when it comes to forming a team, keeping people motivated, managing change and, most important of all, creating an atmosphere of trust and mutual respect. in that sense, i see him as a role model. aurel, i thank you very much. conclusion ladies and gentlemen, in my speech tonight, i have reminded you of some of your many achievements, both recent and past. but what matters most is not the next big project or the latest database. what matters most are the high professional standards which you have all maintained in your work. and, if we want to keep fighting alternative facts with real facts and fake news with real news, you must continue on this path with the same conviction as you started out with in 1998. and now let me conclude with a fact of life that is all too true : dinner speeches are always too long. there is no way to spin this any
|
facts. one of the key questions is how we can engage with those who doubt us. in my view, there are two things we need to do. the first is to admit that real - world statistics have their limits, and to be transparent about how and when we use judgement. the second is to ensure that we, as institutions and as individual experts, earn people β s trust. statistics is a discipline that is certainly aware of its own limits : it not only acknowledges uncertainty, it quantifies it! but we must also admit that there is not just scope, but also a need, to apply judgement when producing good data and statistics. and trust plays a key role here. people can trust the ecb and the national central banks to apply expert judgement when it is needed. in my speech today, i will focus on key ingredients that have been crucial in building up the ecb β s good reputation over the past 20 years. the first is to have good data and to use them well when taking decisions. the second is to ensure good cooperation. the third is to keep pace with changing times. good data for good decisions 1 / 4 bis central bankers'speeches i am aware that the need for good data may seem self - explanatory, especially for an audience of statisticians. but that doesn β t make it less important, particularly in the case of the ecb. the stakes are extremely high : whether for monetary policy or banking supervision, our decisions impact the lives of over 340 million people. this gives the data we use, and the analysis we carry out, enormous importance. our data need to be reliable and our statistics sound. only then will they be able to form the basis for good decisions. but not all data are created equal. even well - collected data may fall short of answering the burning questions of our experts. with the 2008 crisis, for example, we learned the hard way why better and more granular data are necessary. aggregate data provided us with the big picture of the euro area economy and its financial markets. but the big picture was too blurry. and, at times, it was downright misleading. money markets were a good example. after all, money markets are where the transmission of monetary policy starts. prior to the crisis, the ecb collected microdata on these markets through the euro money market survey, the emms for short. this survey shed light on what was happening in the money markets during the crisis.
| 1 |
muhammad al - jasser : saudi arabia β s economic developments in 2010 / 11 speech by his excellency dr muhammad al - jasser, governor of the saudi arabian monetary agency ( sama ), to the custodian of the two holy mosques, on the occasion of presenting the forty - seventh annual report of the saudi arabian monetary agency, riyadh, 12 december 2011. * * * custodian of the two holy mosques, it is of great pleasure that the meeting with you is renewed while you enjoy, thanks to allah, good health. our country is continuing, under your wise leadership, the march of development and prosperity in an extraordinary solidarity between leadership and citizens. i am pleased to submit the forty - seventh annual report of the saudi arabian monetary agency, which deals with economic developments in 2010 and the first quarter of 2011. custodian of the two holy mosques, the global economy is still suffering from the weakness caused by the global financial crisis and the resulting problems of sovereign debts of a number of states in the industrialized world. however, our domestic economy, thanks to allah, has avoided the pitfalls of public and private debt which had strained the economies of many industrialized countries. therefore, our national economy in 2010 continued its growth for the eleventh year in a row, growing by 4. 1 percent, and the non - oil sector by 4. 9 percent. the kingdom achieved a surplus in its budget amounting to 5. 2 percent of gdp, and recorded a surplus in the balance of payments for the twelfth year in a row which stood at rls 250. 3 billion. the inflation rate rose slightly from 5. 1 percent in 2009 to 5. 3 percent in 2010, and stood at 5. 2 percent in october 2011. it is noteworthy that the inflation in recent years resulted from a rise in food prices and rents. the pace of growth in the national economy is expected to accelerate during the current year. several factors contributed to such growth in gdp, including increased government spending to unprecedented levels, a large part of which was devoted to various development projects, and an increase in domestic banks β finance to both the public and private sectors. custodian of the two holy mosques, in continuation of your care to fulfill the needs of the citizens and provide the requirements of a decent life, you issued a number of royal decrees, which will, allah willing, contribute to enhancement of the citizens β standard of living. you ordered the establishment of the ministry of housing
|
and approved the building of 500, 000 housing units in all regions of the kingdom over the coming five years with allocations of rls 250 billion. the limit of housing loans extended by the real estate development fund was increased from rls 300, 000 to rls 500, 000 which will hopefully provide more houses for citizens and constrain the inflationary pressures stemming from the increase in house rents. you also ordered setting a minimum wage of rls 3, 000 for all saudi government employees, allocated a monthly amount of rls 2, 000 for job seekers, and raised capital of the saudi credit and saving bank by rls 30 billion. the number of family members covered by the social security was increased from 8 to 15 with an allocation of rls one billion for that purpose. the government subsidies for charity associations rose by 50 percent to rls 450 million annually, and needy families β sons and daughters were supported to join bis central bankers β speeches universities through allotting them a portion of seats, facilitating their admission requirements, and exempting them from some tuition fees. this package of honorable royal decrees will enhance the standard of living of the least - income segment of population and promote its ability of saving and, thereby, raise its future productivity and income, and reduce poverty, to which you always attach considerable attention. in the health care arena, you ordered supporting the ministry of health with rls 16 billion in order to carry out the expansion of a number of hospitals and health centers. you increased the maximum limit of the ministry of finance β s financing program of private hospitals from rls 50 million to rls 200 million. this would hopefully enhance health care services in the kingdom. under your wise leadership and continuous guidance, the supreme economic council continued to accomplish a number of development steps aimed at restructuring and reorganizing the economy and streamlining regulations and legislation in order to promote the rise of the level and competitiveness of the economy, achieve the optimum operation of the production factors and provide an attractive environment for domestic and foreign investment. as a result, the investment environment has improved. according to the β doing business report 2012 β issued by the world bank, the kingdom ranked twelfth among 183 world countries in terms of ease of business performance. the executive board of the international monetary fund noted that the kingdom was well posed to encounter the global financial crisis. however, the sound supervisory and regulatory frameworks significantly contributed to strengthening the capacity of the financial sector to withstand the crisis. the board stressed that
| 1 |
in the world economy today, investor perceptions about chinese prospects have implications for global markets. thus, it is becoming evident that chinese economic policy is no longer about china but the global economy. this was evident during the third week of april 2007 when global markets came under renewed pressure, albeit briefly, following the fourth increase in china β s banking sector cash reserve requirement this year. the people β s bank of china increased the cash reserves requirement from 10, 5 per cent to 11, 0 per cent, in addition to three interest rates increases effected over the past year. of course, global imbalances remain a key challenge. the april 2007 world economic outlook published by the imf projects that imbalances are unlikely to fall much over the short term, and therefore continued large cross - border net capital flows will be needed to finance the current account imbalances at their present levels. a disorderly adjustment of these imbalances could result in a sharp depreciation in the us dollar, thereby impacting negatively on global economic growth. it is not clear whether under these circumstances the rand would find itself moving with the dollar, or in the opposite direction. much will depend on how world growth and risk perceptions are affected in such a scenario. however, at this stage a disorderly unwinding of these imbalances appears unlikely. 7. conclusion currently the world economy is characterised by generally strong growth and low inflation. this favourable scenario has also benefited emerging markets, which are now starting to play a larger and more crucial role in the global economy. nonetheless, as we have seen on a number of occasions, markets are susceptible to changes in sentiment. thus far, negative developments stemming from changes in sentiment has generally been brief. however, sustained market moves could lead to a deterioration of growth prospects. global imbalances and the unwinding of these remain a key concern. the resilience of markets to these imbalances has continued to confound many analysts, with participants still debating how and when these imbalances will correct and the impact thereof on financial markets and the global economy. from a south african perspective, the sustainability of our current positive growth experience is dependent in part on this positive international environment. sound macroeconomic policies are essential in ensuring the continued attractiveness of south africa as an investment destination, and monetary policy will continue to play its role in this respect. while exogenous factors are outside the direct influence of domestic monetary policy, their impact through second round effects cannot
|
. a global economy that is expected to turn the corner in 20179 the latest imf world economic outlook ( weo ) 10 projects a pickup in economic activity over the next two years, driven by emdes which are growing at well above the world average. global growth for 2016 has been estimated at 3, 1 per cent and is projected to increase to 3, 4 per cent and 3, 6 per cent in 2017 and 2018 respectively. it is expected that advanced economies will experience a lift in activity from an estimated 1, 6 per cent in 2016 to 2, 0 per cent in 2018. the us in particular is projected to grow by 2, 3 per cent in 2017 and 2, 5 per cent in 2018, from an estimated 1, 6 per cent in 2016. much of this pickup in growth is premised on expectations of fiscal stimulus, tax reforms as well as cuts in both personal and corporate marginal tax rates. incentives to repatriate corporate profits held abroad are also likely. however, the timing as well as the actual size and mechanics of the fiscal stimulus are highly uncertain at this stage and implementation may take time. it is largely expected that the net stimulus will only take effect by 2018. on the other hand, trade policies and immigration reforms could offset these effects while there could also be a potential drag from a stronger dollar and higher longer - term interest rates. euro area growth is set to remain steady at 1, 6 per cent in both 2017 and 2018. the european central bank will be slowing its purchases of bonds from april, and while monetary policy is set to remain accommodative, the decision to slow quantitative easing has already seen the trend towards increasing negative yielding debt reverse, such that more recent numbers point to a deceleration from around us $ 13 trillion in unless indicated otherwise, all the forecasts in this section are taken from the international monetary fund world economic outlook update of january 2017. international monetary fund, a shifting global economic landscape, january 2017 2016 to us $ 9 trillion more recently. fiscal authorities appear to be increasingly open to providing fiscal support and implementing structural reforms. however, the potential banking problems in italy and the rising political risks associated with a number of upcoming elections, including in germany and france, will likely weigh in. in the uk, the economy has so far proved relatively resilient against brexit risks, but this is unlikely to be the case going forward ; indeed growth is projected to slow from 2, 0 per cent in 2016
| 0.5 |
flow of credit through the banking system remains a central objective of the federal reserve. to achieve this outcome, we have been taking measures to ensure that our supervisory actions do not inadvertently impede sound lending. businesses need access to credit to maintain or expand their payrolls and make productive investments. and banks need to make sound loans to preserve their earnings stream, absorb credit losses, and support capital growth, as necessary. for this reason, we have joined with the other federal banking agencies to issue a series of policy statements to examiners : on the importance of bank lending to creditworthy borrowers, on small business lending, and on commercial real estate loan restructuring. 2 we see board of governors of the federal reserve system, federal deposit insurance corporation, office of the comptroller of the currency, and office of thrift supervision ( 2008 ), β interagency statement on meeting the needs of creditworthy borrowers β, joint press release, november 12 ; board of governors of the federal reserve system, federal deposit insurance corporation, national credit union administration, office of the comptroller of the currency, office of thrift supervision, and conference of state bank supervisors ( 2010 ), β regulators issue statement on lending to creditworthy small businesses β, joint press release, february 5 ; have followed up this formal guidance with training for examiners and outreach to the banking industry. our message is a simple one : institutions should strive to meet the needs of creditworthy borrowers, and the supervisory agencies should do all they can to help, not hinder, those efforts. we also are supporting sensible efforts to work with troubled borrowers to bring them back into good standing. in an effort such as this, feedback is critical. to help us better understand what is going on in the banks we supervise and in the communities they serve, we continue to seek many views. for example, reserve banks across the country are meeting with small business owners, community bankers and others to talk about opportunities for β and barriers to β small business lending. we are also developing a number of sources of information to help us evaluate whether banks are achieving the right balance between sound lending and necessary prudence. for example, examiners are collecting information on banks β workout practices and loan restructurings, which will act as a baseline for assessing the effectiveness of supervisory guidance. in addition, we have asked banks for more frequent and detailed information on smaller business loans, and we have added questions to our own senior loan officer opinion survey on bank lending
|
oversee their enterprise - wide compliance - risk management program, and the federal reserve views this trend very favorably. in these cases, the central function has been staffed with experienced compliance officers who are able to provide substantive guidance to business line managers and to keep senior management and boards of directors informed on how well the program is functioning, including by alerting them promptly about any material compliance breaches. overall, such a central function can contribute a great deal toward ensuring that the key elements of a sound and effective compliance - risk management program are present and functioning as intended. corporate standards - - tailored within the business lines how does a board - mandated " compliance culture " permeate a banking organization? among other ways, the culture and expectations are communicated through enterprise - wide compliance - risk management standards or objectives - - established by senior management within a corporate - level compliance function - - that reflect the expectations of the board. regardless of the compliance - risk management framework employed, the business line managers continue to " own " the compliance risk. that is, they are responsible for achieving compliance in their business lines and suffer the consequences in the event of compliance failures or missteps. business line managers convert the corporate compliance risk standards or objectives into policies and procedures tailored to the specific type and level of compliance risk inherent in their activities and to the specific laws of the jurisdictions in which they operate. to create appropriate compliance risk controls, organizations seek first to understand compliance risk across the entire entity. managers assess and evaluate the risks and controls within their scope of authority at least annually. however, an enterprise - wide compliance - risk management program is dynamic and proactive, meaning that risks are assessed whenever new business lines or activities are added or existing activities and processes are altered. once a particular business line has identified and assessed its compliance risks, it can design policies, detailed day - to - day procedures and processes, and associated risk - mitigating internal controls. the corporate compliance function plays an important role in advising business line managers as they assess risk. such counsel adds to consistency in approach and helps control for mis - estimated risk. the corporate compliance function's involvement also increases the organization's ability to aggregate and better understand risks across the organization. understanding of risk helps both the business lines and the compliance function develop internal controls that are reasonably designed to mitigate the risk. while the industry trend toward more - consolidated compliance risk management is a favorable development, it is critical that business line management remain engaged. as i noted, senior
| 0.5 |
background of increases in redevelopment projects and steady demand for office space. these developments may also cause activity of both firms and financial institutions to accelerate. if greater assertiveness should be based on optimistic assumptions regarding future sales and profits, financing costs, foreign exchange rates, and asset prices, the result could well be a misallocation of resources in the long run as agents become over - extended in financial markets or pour funds and other resources into inefficient economic activities. such developments may push up economic growth in the short run, but lead to later downward adjustments and hamper the sustainability of economic growth. iv. sensitivity of prices to changes in the output gap these upside and downside risks to the outlook for economic activity may affect prices should they materialize, but there are also upside and downside risks unique to price developments that could cause prices to deviate from the projection. the sensitivity of prices to changes in the output gap has been declining in recent years. this tendency has been taken into account in our projection for prices mentioned earlier, but the degree of decline is uncertain and the sensitivity of prices may turn out to be lower than assumed in the projection. if factors strongly restraining wage growth remain despite prolonged economic expansion, downward pressure on prices from labor costs would persist. moreover, if the positive influence of the strength in the corporate sector feeds through into the household sector more slowly than expected due to sluggish wage growth, supply and demand conditions for consumer goods and services may not improve as much as the output gap suggests. in such a situation, prices may not be responsive to the improvement in the economic situation. on the other hand, if the economy continues to grow at a pace exceeding its potential through fiscal 2008, it is likely that the utilization of resources such as labor and production capacity will rise further and the output gap will show further tightening of supply and demand conditions. inflation expectations, which have been low and stable, may rise with higher resource utilization, particularly in labor, along with increased prices of crude oil and other international commodities. moreover, although firms are likely to continue to restrain labor costs, they may change their attitude with the aim of hiring or retaining skilled workers. these potential changes would exert upward pressure on prices. v. conduct of monetary policy next, i would like to elaborate on the future conduct of monetary policy, keeping in mind the projection for economic activity and prices and the possibility that they may deviate from the projection. the bank assesses the economic and price situation
|
has been that ( 1 ) given the extremely accommodative financial conditions, the level of interest rates is to be raised if japan's economy is to follow a path of sustainable growth under price stability, and ( 2 ) the pace of increase in interest rates should be determined in accordance with improvements in the economic and price situation without any predetermined view. so far, weak inflationary pressures have given the bank latitude in conducting monetary policy. the actual interest rate adjustments have therefore been slow based on a thorough assessment of the future path of the economy and prices and its likelihood, as well as both upside and downside risks. the bank's basic thinking in this regard will remain the same in the conduct of future monetary policy. that is, while confirming that the japanese economy remains likely to follow a path of sustainable growth under price stability and assessing relevant upside and downside risk factors, the bank will adjust the level of interest rates gradually in accordance with improvements in the economic and price situation. we believe that, from the long - term perspective, the conduct of monetary policy in such a manner will prevent the risk of larger swings in economic activity and prices from materializing and will help to realize sustainable growth under price stability. conclusion japan's economy is expanding moderately. corporate activity has been increasing due partly to strong exports, as can be seen here in the kansai region, and the positive influence is clearly spreading throughout the wider economy as evident in the declining unemployment rate. in order for japan's economy to continue sustainable growth in the face of various challenges including the declining population, it is crucial for all regions and industries to persist with their efforts to innovate. since, along with the kanto and tokai regions, the kansai region is pulling japan's economy forward, i fully anticipate that your originality and inventiveness will continue to play a leading role. as for the bank, we will continue to support your efforts through our conduct of monetary policy.
| 1 |
entity called a financial holding company. the new law also provides a mechanism for determining prospectively which products or services fit the definition of " financial in nature " or " incidental to financial activity " and therefore qualify as appropriate for a financial holding company. the federal reserve has been accorded a major role in deciding these issues and has also been assigned the role of umbrella supervisor of financial holding companies. as such, the federal reserve will rely as much as possible on the functional regulators of a company's subsidiary banks, securities firms, and insurance entities, but will oversee the financial soundness of the consolidated organization, including the activities that are otherwise unregulated. our focus is the potential risk these nonbank activities can present to banks. in addition, the fed, in conjunction with the treasury department, will respond to requests for determination as to whether new products and services meet the test for " financial in nature " or " incidental to financial activity " to be approved for financial holding companies. this change has made our laws more consistent with changes that occurred in the marketplace and has provided a mechanism for allowing new products as the marketplace evolves. conclusion the past decade has been a time of dynamic change in the financial services industry, and there are no signs that the pace of change will abate. an important component of this change is the growing global reach of many of our financial entities. financial regulators throughout the world will need to continue responding to these marketplace changes and providing oversight consistent with our safety and soundness responsibilities. for that reason, i look forward to today's discussion of financial markets regulation.
|
- border spillover effects 25. the potential spillover of nationally implemented macroprudential policies largely depend on the degree of financial cycle synchronisation, especially within the highly integrated ( economically and financially ) states, as in the case of the european union, or even more so within the currency union members with a single monetary policy. several aspects of the potential spillover should be considered when formulating the policy stance in a highly integrated environment that challenges us in pursuing financial stability. outward cross - border spillovers of systemic risk create a need for countervailing macroprudential measures, clearly emphasising the need for policy coordination and measure reciprocation. in contrast, inward spillover effect is a direct consequence of the regulatory arbitrage that motivates internationally operating financial institutions to seek organisational restructuring that minimizes regulatory costs. the issue of converting subsidiaries into branches has recently attracted a lot of attention, as some member states are actively trying to reduce this risk, 26 alongside international efforts directed towards formulating a framework for voluntary cross - border reciprocity 27. some countries, for example, try to internalize the costs of registering subsidiaries as branches by increasing depositor and retail consumer legal protection through an option for retail clients to cancel praet, p. ( 2015 ) : structural reforms and long - run growth in the euro area, intervention on the panel β long - run growth, monetary policy and financing of the economy β at 43rd economics conference of oesterreichische nationalbank, vienna, 15 june 2015. european central bank ( 2015 ) : a framework for analysing and assessing cross - border spillovers from macroprudential policies, financial stability review, special features, may 2015. czech national bank ( 2014 ) : box 7 : fragmentation, ring - fencing of local activities and foreign bank branches, financial stability report, 2013 / 2014. recommendation esrb / 2015 / 2 on the assessment of cross - border effects of and voluntary reciprocity for macro - prudential policy measures. bis central bankers β speeches liability / claim without penalty, extraordinary contributions to deposit guarantee systems, etc. the potential for intra - banking - group arbitrage could also be diminished if a macroprudential measure is applied at the appropriate level of consolidation and / or exposure location, making reciprocity arrangements a necessary condition for mitigating these effects. since it may be difficult to simultaneously hit macroprudential and monetary objectives due to the general low degree
| 0 |
industry, full of administrative experience and proficient in operation of financial enterprises. strengthening and improving training arrangement and rules of procedure for members of the board of directors, shall be the focus of the next stage of reform and the gist of the principle of separation of the functions of enterprises from those of government. we shall grant the managerial power to investors and their representatives in the real sense. only by doing so can we have the micro basis for operation of the market economy. when china is running short of financial talents, we could as well hire talents abroad or from all walks of life, thus accelerating growth of china β s financial talents. ( iii ) we shall improve the system of labor safety and set up the personnel system in which one can be transferred to other jobs or be given a higher or a lower position as required. handling well the relationship between the board and top management and between the board and employees, represents one very important component of corporate governance structure of financial enterprises. the above calls for establishment of the adequate system of safeguarding labor rights and interests. concretely speaking, it entails the employment system and social safety net. in terms of the reform of china β s state - owned enterprises and banks, the success is hinged on instituting the personnel system in which one can be transferred to other jobs or be given a higher or a lower position as required. the sense of security, ownership and enthusiasm of employees of financial enterprises come from the adequate law of labor safety and social security net. guanzi once said, he who has immovable property will have immovable perseverance. when enterprises have clearly established ownership and when employees have the sense of physical safety, the reform shall proceed smoothly. the labor law prescribes that establishment of employment calls for employment contracts. the contract is the fundamental basis for safeguarding legal interests of employees during employment. employment contracts shall be entered into in conformity with the principle of equality, voluntary participation, consultation and consensus, which represents complete contractual freedom enjoyed by employees. employees of financial enterprises may participate in the management of the enterprise in a democratic manner and discuss on equal footing with the employer about protection of legal interests of labor through the general meeting of employees, trade unions or other means. career development program, training program, compensation scheme and employee stock ownership plan ( esop ) can create the sense of honor and ownership among employees, arouse their definite expectation about the future and thus can mobilize their working enthusiasm. the survey conducted by mercer
|
##rrencies of all major economies, and the gdp may also be included as a weight. the allocation of the sdr can be shifted from a purely calculation - based system to a system backed by real assets, such as a reserve pool, to further boost market confidence in its value. iv. entrusting part of the member countries β reserve to the centralized management of the imf will not only enhance the international community β s ability to address the crisis and maintain the stability of the international monetary and financial system, but also significantly strengthen the role of the sdr. 1. compared with separate management of reserves by individual countries, the centralized management of part of the global reserve by a trustworthy international institution with a reasonable return to encourage participation will be more effective in deterring speculation and stabilizing financial markets. the participating countries can also save some reserve for domestic development and economic growth. with its universal membership, its unique mandate of maintaining monetary and financial stability, and as an international β supervisor β on the macroeconomic policies of its member countries, the imf, equipped with its expertise, is endowed with a natural advantage to act as the manager of its member countries β reserves. 2. the centralized management of its member countries β reserves by the fund will be an effective measure to promote a greater role of the sdr as a reserve currency. to achieve this, the imf can set up an open - ended sdr - denominated fund based on the market practice, allowing subscription and redemption in the existing reserve currencies by various investors as desired. this arrangement will not only promote the development of sdr - denominated assets, but will also partially allow management of the liquidity in the form of the existing reserve currencies. it can even lay a foundation for increasing sdr allocation to gradually replace existing reserve currencies with the sdr.
| 0.5 |
in mauritius. as regulators and supervisors we need to exercise discretion failing which the very purpose of the rules, guidelines and laws could be defeated. let me share with you a brief paragraph from sammuel brittan β s economics and ethics : β most real - world situations are more complicated that the simple prisoner β s dilemma, and the possibility of choosing an inappropriate strategy is a real one. this possibility arises because the way in which strategies are normally determined is via the application of widely accepted rules - whether these are obviously moral, such as β do not kill β ; conventional, such as β drive on the left β ; or habitual, such as β do not scatter litter β. but many widely supported moral practices and rules are double - edged. frank cites a hypothetical jones who sacrifices a day β s earnings of $ 300 to prosecute smith for stealing a $ 200 briefcase. the motive here can only be described as vengeance. frank is inclined to regard jones as a social benefactor because his action discourages theft. may be. but encouraging vengeance as a general practice is playing with fire. β regulators and supervisors or any other authorities should make productive use of the rules, guidelines and laws in the best interest of our financial sector. misuse of the rules, guidelines and laws by anyone of us could only jeopardize the achievement the authorities β objectives. the goal should be the promotion of the growth of our financial market without excessive constraint. let me wish all the participants in the seminar a pleasant working day. thank you.
|
much appreciated. i seize this opportunity to commend the fsap team, in particular mr abdessatar ouanes and mrs ann rennie, for having given a well - balanced assessment of our financial sector. the report does not merely refer to the weaknesses and vulnerabilities of our financial sector. it does also underline the strength of our financial sector and the progress that has been made in recent years with regard to our supervisory framework. i am particularly pleased to note, among the findings of the fsap mission, the following : 1. overall, the mauritian financial sector is currently in good health, and the short - term stability risks are modest. 2. mauritius has a relatively large and well - developed domestic financial system and a growing offshore sector. 3. the authorities have embarked on an ambitious program to transform the economy, and the government, in partnership with the private sector, is taking decisive measures to build a knowledge economy based on higher value - added services, notably in information and communication technologies. 4. the assessment of standards and codes found a high level of compliance with internationally accepted norms and best practices. 5. mauritius β strong economic performance has spurred the development of a large, profitable and sound banking sector. 6. the banking system of mauritius is profitable, well capitalised and generally sound. 7. the quality of banking supervision in mauritius has improved significantly over the past few years and is of a generally higher standard than in most african countries. 8. the bank of mauritius guidelines on corporate governance, internal control and credit are all of a commendable standard reflecting international best practices and the capacity of the bank of mauritius to enforce the guidelines has improved with the development of knowledge and skills within the supervision department. we expect that, on the basis of the fsap report, the financial stability forum will issue another press release announcing the removal of mauritius from the third category. our commitment to proceed with the various recommendations is already evidenced by the actions that have already been taken by the authorities in mauritius. we are thankful to the imf and the world bank for the prompt response given to our request for technical assistance to beef up our supervisory and legal framework. a few laws have, under the whip of the honourable minister for financial services, been enacted : the anti - money laundering ( miscellaneous provisions ) act to further strengthen our institutional and regulatory framework with respect to money laundering ; the convention for the suppression of the financing of terrorism act which lays the basis for
| 1 |
##iliency service ( mirs ) β that will act as virtual third site for the bank on an independent it platform. moreover, because swift would operate mirs from one of its european operating centres, it would not be affected by it failure affecting both of our locations, increasing the degree of latency that mirs will offer compared to a traditional model for a third site. mirs will be available from january 2014, and we are the first central bank to take advantage of it. the bank β s costs in relation to this project have been funded by the chaps member banks, who will benefit from the additional resilience mirs will provide. bis central bankers β speeches turning to the lesson that β liquidity matters β, we introduced a liquidity saving mechanism ( lsm ) in april this year. there are some technical similarities to the canadian β jumbo algorithm β, which periodically looks to offset high - value ( β jumbo β ) payments in bilateral queues, speeding up their settlement and reducing collateral requirements. the lsm in our rtgs system is an offsetting mechanism that seeks to match groups of payments, regardless of size, via bilateral and multilateral algorithms that run in short cycles around 275 times each day. all the payments matched by the algorithms will settle individually and simultaneously at the conclusion of the matching cycle. since the implementation of our lsm, participants β average peak intraday usage in chaps has fallen by around 20 %, so this innovation has provided a technical means of saving liquidity, reducing incentives to otherwise adopt receipt - reactive behaviour. on - going and future priorities if the post - crisis initiatives i have discussed so far have been, or are, close to completion, one area of work where we have further to go is in ensuring continuity of access to payment services for banks that are in recovery or resolution. in the uk β s case, a new resolution regime was introduced in the banking act of 2009 which gave the uk authorities tools to address the risks of discontinuity. nevertheless there is a good case that the effective statutory framework could be usefully supported by private sector initiatives ( whether contractual or otherwise ) to enhance further the ability of central banks, supervisors and resolution authorities to maintain continuity in payment, clearing and settlement services in recovery and resolution. for banks in recovery, that would involve avoiding β cliff - edges β in contracts that automatically exclude banks from payment schemes in the event of ( say ) a ratings downgrade. for banks entering resolution,
|
transformed demand and supply conditions across the globe : the integration of china, india and other emerging market economies into the world trading system. the first signpost shows that prices of labour - intensive manufactured goods have fallen. china, india and the former soviet union between them have massively increased the supply of labour available to industry around the world. as labour - intensive goods have become more abundant, they have also become cheaper. the signpost points us in a familiar direction : the need to change what we produce. were we still producing the same labour - intensive goods as before, with output concentrated in industries like agriculture ( including hops ), textiles, coal - mining and ship - building, we too would have seen the price of our own output fall, just as it did for hop growers a century ago. instead we allowed output and employment to expand in those industries where we could exploit a comparative advantage. in kent, the expanding sectors include financial services, transport ( with 18 million tons of freight passing through the channel tunnel each year ) the exploitation of life sciences, and higher education ( with five universities in the county ). as consumers, we have benefited from falling prices of goods made in china and elsewhere in asia. between 1995 and 2005, the prices of imported manufactured goods fell by a sixth and, relative to the price of domestically produced output, by no less than a third. so over the past decade we have been able to increase consumption by more than the increase in production. openness to the world economy has resulted in a higher standard of living. the second signpost marks the rise in oil and other commodity prices. rapid growth of production in china, india and other newly integrated economies has led to a substantial rise in the demand for oil and other raw materials. between 1995 and 2004, net imports of oil to china rose by a factor of seven. unlike earlier episodes of high oil prices, which were driven largely by temporary supply constraints, the recent increase in the demand for oil has been reflected in higher prices for future delivery as well as higher spot prices. similar rises are apparent in the market for gas. the signpost marked higher energy prices points us towards ways of using less energy, to alternative energy sources and to new sources of oil production such as the canadian tar sands. the first two signposts point us in the right direction. but the path has not been easy to follow. we have seen movements - in both directions - in inflation, consumer spending and output growth. interest
| 0.5 |
do remember, two years ago, on december, 5th, when aspen institute romania celebrated five years of operations, i was presented with the β values - based leadership β award on behalf of aspen network of international partners. i cherish that memory and what this award stands for. i would like to thank each and every one of you for joining us. bis central bankers β speeches
|
mugur isarescu : the transatlantic renaissance β romania as a faithful partner and ambitious player opening speech by mr mugur isarescu, governor of the national bank of romania, at the conference β the transatlantic renaissance : romania as a faithful partner and ambitious player β, bucharest, 9 december 2013. * * * prime minister ponta, mr. kennedy, your excellences, ladies and gentlemen, it is a great pleasure for the national bank of romania, and an honor for me and the board members, to welcome such a distinguished audience. i salute the presence of victor ponta, prime minister of romania, who will be the keynote speaker today and that of craig kennedy, the president of german marshall fund of the united states. allow me to greet their excellences, members of the diplomatic corps, as well as the other notable guests who represent an important array of successful domains of activity. a special welcome to mircea geoana, president of aspen institute romania and his team of young, talented and hardworking professionals. today β s gathering has a challenging topic : β the transatlantic renaissance : romania as a faithful partner and ambitious player β. here, at the national bank of romania, we take pride in having always been a forum for debating, in an open and profound manner, the themes and trends defining our age. thus, it is the perfect venue to host such a conference as this one, which encourages individuals to reflect on ideals and ideas that define good society through leadership, dialogue, entrepreneurship and regional stability. i have read two papers prepared by aspen institute and the german marshall fund : the report β dialogues on the national interest. recommendations of public policies β and the program β east - west gateway β. they generate the object of the forthcoming debates. allow me to make some remarks regarding the national interest and the transformations within the financial sector that are currently taking place in europe. the national interest goes beyond its economic dimension, although it is also true that the smooth functioning of the economy is not only an objective per se, but also a means to achieve the other objectives subordinated to the national interest. as any other european central bank we are focused on price and financial stability. obviously, monetary and financial stability is an essential ingredient of economic performance. this is all the more relevant for a catching - up economy, such as romania. on the one hand, progress towards convergence is impossible to imagine without capital accumulation from local and external sources alike, and it cannot be achieved in the absence of a
| 1 |
rate guidance. this is particularly important because, as the chairman stressed in september, the committee views rate policy as its stronger and more reliable tool. to wrap up, let me emphasize that what matters is the overall stance of policy, not the pace of asset purchases. in all likelihood, policy will remain highly accommodative for quite a while longer β as long as needed to support an economy that still struggles to shake off the lingering effects of the financial crisis. thank you. bis central bankers β speeches
|
jerome h powell : communications challenges and quantitative easing speech by mr jerome h powell, member of the board of governors of the federal reserve system, at the 2013 institute of international finance annual membership meeting, washington dc, 11 october 2013. * * * it is an honor to be here today with such distinguished panelists to discuss the communications challenges associated with quantitative easing. i should say at the outset that the views i express here today are my own and may not reflect those of other federal open market committee ( fomc ) members. i'll start with the fomc's commitment, when the current asset purchase program was launched in september 2012, to continue purchases until the committee sees a substantial improvement in the outlook for the labor market, a term the committee left undefined. 1 this commitment was powerful precisely because it was open ended. but β open ended β does not mean unending. as time passed and labor market conditions improved, it would be important for the committee to clarify the meaning of the term substantial improvement. and given the lack of precedent, it was likely that this transition to more - specific guidance would involve some short - run volatility. economic conditions have improved since the program was launched. consumer and business confidence moved higher, and sectors such as housing and autos have performed well. despite strong, ongoing headwinds from fiscal policy, there has been significant progress in the labor market. from september 2012 through august of this year, the private sector created 2. 3 million new jobs. the unemployment rate declined from 8. 1 percent to 7. 3 percent. it β s unclear how much of this improvement was due to the program, but i think there is evidence that it played a role, lowering long - term interest rates and raising equity prices and home prices, effects that have supported household and business spending. in march 2013, the committee began noting in its postmeeting statement that it would consider β the extent of progress toward its economic objectives β in judging β the size, pace, and composition of its asset purchases. β 2 in late may, the chairman stated, in response to a question during a congressional hearing, that the committee might begin to reduce the pace of asset purchases β over the next few meetings. β 3 a few weeks later, at his press conference after the june 2013 fomc meeting, the chairman noted that the substantial improvement test might well be met over the coming year, and he therefore set forth a framework designed to clarify the
| 1 |
obligations from immovable property ownership. the regulatory framework applied to financial institutions aims to determine the minimum requirements and standards that must be applied by every licensed financial institution. appraisal of immovable property in relation to transactions in which immovable property is used as collateral for any credit instrument issued by financial institutions, as well as determining which immovable property transactions require the services of a licensed appraisers is of primary importance. property appraisal potentially affects capital allocation through risk - weighted assets, for loans that are collateralized by immovable property. once we have managed to have this process finalized, we will also look at the possibility of considering commercial immovable property collateral to be weighted with a smaller weight in risk weighted assets. currently these collaterals are weighted with a risk of 100 percent according to our regulation, so that when the appraisal is more accurate / fair, they will be able to be weighted with a lower weight. this would also enable the release of capital and therefore the possibility for more lending. the cbk cooperates closely with the supervisory council on licensing of immovable property assessors, established by the ministry of finance, labour and transfers, in which it also participates with its representative. in addition to the licensing by this council of a number of immovable property appraisers who carry out appraisal for the needs of the financial sector, the cbk has also licensed a number of its personnel engaged in the examination of financial institutions, who assess reports prepared by appraisers engaged for financial institutions. the cbk is committed to further advancing the regulatory and supervisory framework related to the appraisal of immovable property. we expect that through this usaidsupported project, we will be able to advance the existing legal and regulatory framework of the appraisal of immovable property, including establishing the necessary mechanisms for quality control of appraisal and adequate monitoring of appraisers. in this regard, the central bank of the republic of kosovo, through its involvement in the inter - institutional working group, within the framework of the international monetary fund program, has been involved in the preparation of the residential property price indices, a project which is being led by the kosovo agency of statistics. we expect that these changes will directly affect banks and other financial institutions to correctly implement the applicable regulatory requirements, as well as to advance their policies and procedures related to the appraisal of immovable property, in accordance with international best practices and european union standards,
|
ahmet ismaili : welcoming remarks - world savings day welcoming remarks by mr ahmet ismaili, governor of the central bank of the republic of kosovo, at the world savings day, pristina, 31 october 2023. * * * dear mr. jaha, director of " xhevdet doda " gymnasium in prishtina dear mrs. shatri, professor dear students, i address you today on world savings day, which aims to promote educational habits by promoting the culture of savings in the world, especially in the republic of kosovo. world savings day was established as an event to promote savings on 31 october 1924 at the first international savings bank congress held in milan, italy. this day is marked with informative and educational activities with the aim of informing and raising the awareness of citizens about the importance and financial responsibility of savings and their impact in the future. the central bank of the republic of kosovo marks this day for the 8th year in a row through awareness, educational and informative activities with the aim of encouraging students and young people to be informed and understand the ability of proper money management. the european commission has declared 2024 the year of skills, and of course financial education skills are included, as one of the main social skills, personal finance management, so that the decisions of citizens are then appropriate decisions for the future. the cbk will also focus on access to finance education and inclusion, where, during 2024, it will work in this direction. for this purpose, we will also coordinate with the bank of albania, to cooperate and harmonize financial education materials and propose it to be part of the school curriculum, as far as possible. the world is changing fast and we must keep up with it, and advanced changes in information technology, environmental and social changes, and geopolitical changes have become part of our daily life, and we must prepare to face them. today, more than ever, it is important to cultivate a genuine culture of managing and protection of personal finances and the protection of the environment, so that in the social and environmental aspect, as an individual, as a family or as a society, we have stability and sustainability. you are still young, but it is the right time to think about your financial future, and it is important to create the knowledge and skills of proper management of personal finances, create the habit of savings, and awareness of economic and financial issues. 1 / 2 bis - central bankers'speeches young people should set clear
| 0.5 |
innovate and grow, and individuals to plan for the future. for the system to work, policyholders need to have confidence that the promises made to them by insurers are going to be met. and we in the pra have been clear that having left the eu, our approach to policy making will continue to have robust prudential standards at its heart, to safeguard uk financial services and policyholders. some types of cover, such as employer β s liability, might only be called upon years after the original policy was written. having cover is essential to allow certain businesses to operate and such cover has, in the past, provided vital compensation to beneficiaries who have been affected by asbestos and other harms that may take decades to fully become known. it is so important, for everyone involved, that insurers will still be there, standing ready to pay these claims when they arise. 1 / 6 bis central bankers'speeches annuities represent another kind of very long term and important promise. policyholders may entrust the results of a lifetime of work and careful saving to an annuity provider ; there are currently more than ten million such annuity policies in the uk2. these policyholders do this knowing that there are no refunds, and no chance to switch provider once they are committed. they are placing a huge amount of trust in their insurer β s promise to make payments to them for years into the future. for many customers, these payments may form a substantial portion of their retirement income. this enormous trust that policyholders place in their insurers has several significant benefits to the wider economy. i already mentioned how risk transfer allows innovation and growth, and smooths consumption. but the pooling of savings within life insurance companies and the willingness of policyholders to commit their savings for the long term also allows those savings to be channelled into new types of investment β ones that would be difficult or impossible for individuals to access directly, but which will play an essential part in the recovery and in meeting the challenges of the 21st century. and our data show that insurers are investing in ever more diverse and novel asset types, which often represent very long - term commitments. a willingness to innovate is to be welcomed. there is nevertheless a flipside to this novelty β the lack of a long history to guide the selection and risk - management of these assets, or to show how they may perform under various possible stress scenarios. so there are new
|
singapore taiwan south korea thailand hong kong malaysia indonesia philippines 86 88 94 96 9886 88 94 96 it may be useful to recall, also, the old distinction between risk and uncertainty β it was the latter ( whose characteristic is unpredictability ) rather than the former that was relevant, and perhaps we should not be surprised that uncertainty premia can shift dramatically. ( d ) a disequilibrium process these capital - receiving emerging countries were being transformed at such a pace that it is not sensible or realistic to see the process in terms of the usual textbook notions of returns equilibrated at the margin and smooth allocation of resources, particularly capital. systems were in flux, and production functions were changing continuously. this general notion manifested itself in various ways, but three examples will illustrate the issue. the first example of apparent disequilibrium in capital flows was identified nearly two decades ago β the feldstein / horioka paradox ( 1980 ) β there seemed to be too much correlation between domestic saving and investment rates in individual countries, with the implication that capital flows between countries were smaller than would occur in a well integrated world. so here, perhaps, is another clue to the puzzle. it is not so much that capital flows rose suddenly to achieve abnormally high levels, but that they were β for some reason β less than optimal earlier, and so the big increase was a move towards a more normal or equilibrium situation. 18 these are asset or stock equilibria. when these ill - defined and easily changeable temporary equilibria are displaced by a shift of confidence, the flow requirements to shift from the old to the new stock equilibrium may be very large ( and very disruptive ). second, profits ( or even expected profits ) were not equilibrated across countries. for a sustained period ( through the 1980s ), excess profits had been earned, illustrated by equity returns and high domestic real interest rates in indonesia, korea and thailand. indeed, the constant revisiting of the feldstein / horioka result has found less correlation between domestic saving and investment rates over time, implying increasing international capital integration ( fujiki and kitamura 1995 ; ghosh 1995 ). - 12 - graph 7 asian share markets december 1987 = 100 index index indonesia thailand malaysia philippines south korea 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 source : datastream. table 4 : average real interest rates * south korea thailand indonesia # malaysia philippines 1980 β 89 1990 β
| 0 |
loan to were calibrated with a 2013 would have not transparency exercise ) reduce uk mortgage β observed in other value ( based on eba flat correlation factor of indexed loan to value european countries for benchmarking exercise 20 % and not 15 % ( i. e. if house price had their national in 2018 ) mortgages in that year stayed constant since 2013 ) source : eba transparency exercise 2016, eba benchmarking exercise 2018 ( article 78 of the crd ), and bank of england β s calcula tions. chart 8 : capital held against a recent margin loan exposure shows wide dispersion across firms source : bank of england note : box and whisker plot of margin loan rwa data. whiskers denote 0 % ( the minimum ) and 100 % ( maximum ) value. edges of box d enote 25th percentile ( rwas 11 % of exposure ) and 75th percentile ( rwas 91 % of exposure ). horizontal line denotes 50th percentile ( rwas 26 % of exposure ) all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx chart 9 : leverage ratios in 2018 could be lower if we measured activity such as collateral swaps differently impact of measuring activity differently on aggregate leverage ratio of sample banks 6 % 5 % 5. 34 % 0. 53 % 0. 68 % 0. 11 % 4 % 4. 02 % 3 % 2 % 1 % 0 % current leverage ratio ( reported ) collateral swaps netted repo synthetic pb leverage ratio ( incl. all potential'missing'leverage ) impact using worst case assumptions source : bank of england note : banks in sample include large uk banks and large overseas investment firms all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx
|
scanning the horizon speech given by sam woods, deputy governor for prudential regulation and chief executive officer, prudential regulation authority at the building societies association, london friday 24 may 2019 i am very grateful to heena samani and the horizon - scanning team for their help in preparing this speech. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches it β s a real pleasure to be invited to join you at what i know is a very important birthday for the building societies association ( bsa ). the bank of england is even more ancient but i think it β s very impressive for a trade association to make it to its 150th year. i can think of various ways to celebrate this. perhaps, given recent developments in longevity, we could ask robin to keep serving until his 150th year? or you could write to new - born trade associations such as uk finance and offer them some mentoring, which i β m sure stephen jones would be delighted to accept. or i could give you a really valuable gift by cutting my speech in half and releasing you early for some extra caffeine! at any rate, given the significance of the occasion i am not surprised to see such a full room this morning. in fact it reminds me of another meeting i recently took part in at the pra, in a room we call the β auditorium β at 20 moorgate. the room was absolutely jam - packed with staff from the pra and the wider bank β standing room only, in fact if one more person had entered it would have been a clear health and safety breach. my colleague vicky saporta was in the chair, and this was a tough job : arguments raged, data was questioned, competing views were offered and challenged. why so much excitement at the pra? after all, boring is good in our line of work. were we perhaps having our own private brexit debate, with vicky in the role of speaker? were we changing our pension scheme, which is in my experience the only topic that gets people hotter under the collar than brexit? or were we picking next year β s charity of the year? none of the above. this was a meeting on what we call β horizon - scanning β, which we have made a strategic priority for the pra as we come out of the post - crisis reform period. what is this activity? why have we made it a priority? and why does it
| 1 |
capital requirements need longer time series. less than one year after the introduction of basel ii in germany, the database is still very narrow. it is not yet possible to make a detailed assessment of whether the minimum capital requirements are becoming binding and therefore acting in a procyclical manner. knee - jerk responses, such as the general introduction of additional general capital buffers by means of pillar 2 are therefore, as we see it, not appropriate. what is, in fact, called for is a close monitoring of developments and a careful analysis of the incoming data. it is important, first of all, to gain a deeper understanding of the complex mechanisms of banks β capital management and of basel ii β s impact over an adequate period of time. the banking supervisors are working very hard on this. their findings, as well as others, can then be used to assess any systemic effects of the prudential requirements. if procyclical effects exist on a significant scale, they should then be taken into account in a system - oriented supervisory approach. now, i have already indicated that the fundamental issues concerning procyclicality also have to do with accounting. fair value accounting leads to valuations fluctuating along with market prices. this evidently heightened the financial market turbulence. with a mark - tomarket valuation of the paper, losses result in falling asset values, making the reduction of risk positions seem advisable, thus triggering a further wave of selling. computer - controlled procedures for automatically limiting losses can give further impetus to this procyclicality. conversely, rising asset values in an upswing make additional investment possible, which can drive market prices up even further. nevertheless, by means of β prudential filters β the banking supervisors have ensured that these fluctuations in the balance sheet items do not impact fully on the regulatory capital. this means that the nexus of falling market prices for assets, declining own funds and restricted ability to lend in a downswing is dampened. in an upswing the reverse applies. this prudential correction mechanism therefore limits only part of the effects of fair - valuebased accounting, namely its impact on the potential supply of credit. iv conclusion ladies and gentlemen in conclusion, let me return once more to the beginning. after well over a year of financial market turbulence and following the experience of the past few days, i firmly believe that stabilising the financial system cannot consist solely in working through β to do β lists with their recommendations for action, however
|
this statutory deposit protection at the minimum european level, there exist additional, private protection schemes operated by the various categories of banks. not least in the wake of the bank run on northern rock last summer, the european commission is considering a revision of the deposit protection directive. it is aiming for a greater degree of harmonisation. in particular, this concerns a higher level of minimum protection and the abolition of the co - insurance. as the discussion in the eu now stands, this would mean that the principle of subsidiarity would be basically retained. we at the bundesbank attach great importance to this. deposit protection has to be consistent with the specific features of the national banking systems. ii fundamental institutional questions with the distribution of powers among the sovereign regulatory levels, i am now very close to the second set of fundamental issues. i would now like to talk about a number of fundamental institutional questions about the stabilisation of the financial system. i am doing this because, during the financial crisis, it has become clearer to me than ever before how much institutions matter. i am therefore concerned with the institutional framework for the monetary, supervisory and regulatory infrastructure. in the usa, the shortcomings of governance in the financial system have been revealed for all to see in the crisis, at the same time posing two major challenges. the first challenge arises from the fragmented structure of financial supervision. in some cases, however, quite new institutional arrangements β that is, institutions β have to be put in place. with its β blueprint β, the us ministry of finance has now presented an ambitious but cogent overall strategy for a longer - term reform of financial supervision. it envisages a radically overhauled institutional structure with a complete change of design in its tasks. i see one particularly important aspect of this blueprint in that fact that the fed in the role of a β market stability regulator β would, for the first time, institutionalise a primarily macro - oriented perspective on the financial system. i await with keen interest how this debate will proceed. with regard to the second institutional challenge in the usa, namely the review of the monetary policy instruments, a lot has already happened. to begin with, the fed was not so well equipped with instruments for the liquidity policy action necessitated by the subprime crisis. the fed was very quick to create efficiently functioning instruments in the crisis, however. when i now look at the institutional structure for financial stability in germany and in the eurosystem, i would like
| 1 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.