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imf expects a modest rebound in emerging market growth this year. however, it warns that the risks to this outlook are skewed to the downside due to geopolitical uncertainties, china ’ s shifting growth model, and the possibility of escalating financial market volatility. advanced economies continued on a path of recovery last year, albeit at a mixed pace. the us and the uk appear to be leading the recovery, while japan and the euro area find themselves in an earlier phase of their economic upswings. the ongoing improvement in us economic activity and employment prompted the us federal reserve ( fed ) to lift the benchmark us interest rate last december for the first time in nine years. the fed is expected to continue on a gradual path of interest rate normalization over the medium term. as publicand private - sector borrowing costs in many parts of the world are referenced off us interest rates, a rising us policy rate threatens to push up the cost of capital globally. a second symptom of the impending us hiking cycle is that it has seen the dollar strengthen substantially against most other currencies since mid - 2014. this has been driven by a flow of capital into bis central bankers ’ speeches the us and, to some extent, out of emerging markets. meanwhile, in europe and japan, central banks are aggressively easing policy in an attempt to fight off deflation and low growth. global economic growth has persistently disappointed since the financial crisis hit in 2009. this is due, in part, to high levels of indebtedness, excess capacity as well as weak fixed investment growth in many parts of the world. however, these challenges are being exacerbated by longer - term trends such as falling productivity growth, the technological displacement of jobs, and a downshift in global trade. while these trends present both opportunities and challenges, it appears as if emerging market economies are most at risk in the current environment, especially from an employment perspective. in an increasingly globalized world, it is important for south africa to improve its competitiveness so that we can grow our export base and avoid increased import penetration. domestic prospects let us turn now to an examination of the domestic economy. as governor kganyago pointed out in the statement of the monetary policy committee ( mpc ) last month, gdp growth is expected to come in at only 0, 9 per cent this year. if the forecasts of the south african reserve bank ( sarb ) are correct, economic growth | , be short - sighted of the reserve bank to overlook inflation and consider only shortterm economic growth in its decision making. instead, what we try to do is balance the need for stable economic growth and low levels of inflation. we are cognizant that the current interest rate hiking cycle will have a short - term detrimental impact on the economy. however, the cycle thus far has been gradual and shallow by historical standards. this measured approach to monetary policy tightening reflects the difficult balancing act that we currently face. the reserve bank operates within a flexible inflation - targeting framework, which allows us a degree of discretion in responding to inflation target breaches. if we expect a breach to be temporary or to be caused by an external shock, we may opt to look through such an event. an external shock could be a once - off food price increase or a depreciation of the exchange rate. in the case of such a shock, we may look past the first - round impact and act only if we see evidence of second - round effects ( that this, if the shock feeds through more broadly into inflation ). for example, in both 2012 and 2013 inflation briefly breached the 6 per cent level. the breaches were temporary, so we were able to look through them and leave interest rates on hold at that time. the inflation outlook has unfortunately deteriorated since then, which has called for higher interest rates. last month, the mpc opted to lift the repurchase rate, or repo rate, by 50 basis points. this was due to a revised inflation forecast, which sees headline inflation remaining above the 3 – 6 per cent target range throughout the forecast period. our inflation forecast was revised higher in january due to the multiple supply - side shocks that i referred to earlier. while we are able to tolerate a single external shock for a limited period of time, we cannot tolerate multiple simultaneous shocks that are likely to keep inflation elevated for two years. shocks of this nature raise the risk that inflation expectations for the coming years will recalibrate to a significantly higher level. bis central bankers ’ speeches our monetary policy response going forward will depend largely on how surveyed and implied inflation expectations play out over the course of this year. we use the bureau for economic research survey of inflation expectations among trade unions, financial analysts, and business people as a guide. but a crucial indicator of implied inflation expectations is the level of actual wage settlements in the economy. wage settlements that are above inflation and productivity growth threaten to undermine | 1 |
account and given that market forces play a predominant role in determining external value of the rupee, there has not been large volatility in this market barring few mild episodes related to turbulence in global markets. daily exchange rate volatility in rupee had been in the range of 1. 6 to 4. 7 per cent during 2001 to 2006 as compared to 7. 5 in 1993 - 95. it is lower than most of the emerging economies. computed from monthly neer and reer indices, volatility in indian market is one of the lowest in the world. reform measures enhanced depth and liquidity in the market reflected in rising turnover and moderation in bid - ask spread over the years. there has been more than four - fold rise in total annual turnover in foreign exchange market from us $ 1. 3 trillion in 1997 - 98 to us $ 5. 7 trillion in 2006 - 07. capital market like other market segments, there have been far reaching changes in both the primary and secondary market segments of capital market. primary market witnessed a significant movement away from cci regime imposing primary issuance at sub - market rates to free pricing and book - building system along with mandatory disclosures as prescribed by sebi. in the secondary market, corporatisation of exchanges, screen based trading replacing open outcry system, introduction of options and futures replacing erstwhile badla system, rolling settlement replacing 14 - day settlement cycle, dematting of securities with depository system created state - of - the art infrastructure comparable to best international practice. this not only integrated stock markets across the country, capital market became far more efficient as could be observed in terms of various parameters. there has been sharp increase in liquidity as observed from fall in impact or transaction cost by more than 50 per cent and rise in turnover ratio from 20. 3 per cent in 1991 - 92 to a peak level of 409. 3 in 2000 - 01 before moderating to 81. 8 per cent in 2006 - 07. similarly, in terms of market stability, volatility declined from 3. 3 in 1992 to 1. 1 in 2005. credit market prior to reforms, banking operations both on the assets and liabilities side were governed by the guidelines set out by the regulator. with guidelines that ensured banks ’ margin on cost plus basis, competition was virtually absent with no incentive to cut cost, raise efficiency or upgrade credit assessment skills. while, broad approach to reforms in this market has been to bring | in modernising its education system in recent years and its gross enrolment ratio is almost approaching twice that of india. way forward our discussion of process of transformation, its achievements as well as failures do throw up some issues which need to be addressed to ensure that economic progress is sustainable and it is percolating downwards for the benefit of the masses. agricultural investment while structural transformation from agriculture to services led growth is a positive feature, corresponding movement in terms of population dependent on respective sectors has not occurred. the share of agriculture in total income has dropped to 17 per cent ; still more than 60 per cent of population continues to draw its livelihood from this sector. this workforce also accounts for sizeable proportion of poor in the country. there is an urgent need to enhance investment in this sector not only to raise crop productivity, but also to create employment opportunities outside the farming. there is a need to effectively integrate rural sector with urban economy by creating needed infrastructure viz., roads in rural areas ; electricity ; major and minor irrigation projects ; and cold - storage chains to provide farm producers access to urban markets. besides, there is also a requirement felt for bringing legal reforms with regard to tenancy rights that would give a boost to contract farming and higher productivity in farming activity particularly when individual farm size is rapidly dwindling. labour reforms the topic of labour laws reforms in india has always been a matter of debate. the issue here is not to argue whether the indian labour laws are rigid or liberal, but to find out whether the existing laws are helping in bringing market efficiency and productivity. we have to analyse whether the present laws are encouraging and promoting the growth of the entrepreneurs, creating a positive investment environment and opportunities. there is a need to ensure relativity in the rights of management and workers to promote healthy milieu for growth and progress. a liberal exit policy can only coexist with generous unemployment, retraining benefits and severance pay. one may also need to examine and rationalise some extant labour regulations and provisions. for instance, let us see the pension laws where the workers get the right of pension only after having devoted a minimum numbers of years in the job which in fact restrain them from availing the best opportunities in the market. the disparity between the organised and the unorganised sectors in terms of working condition and protection of employees ’ rights also needs to be bridged. there is a need to enhance protection of workers in the unorganised sector with provision of insurance, pension schemes | 1 |
ardian fullani : monitoring of the economy to be conducted not only in the metropolis but in the regions as well article from mr ardian fullani, governor of the bank of albania, published in the ekonomia newspaper, 21 january 2005. * * * our economy has long ago been integrated in a continuous process of quality and quantity development, including an increasingly wider geographical expansion. both communities, bank and business, need to cooperate more closely with each other. in order that this cooperation becomes more efficient, we deem, as bank of albania, to play our active role not only through establishing a safe macroeconomic environment, but also by providing a range of other operations that will encourage lending activity of the banking system from one side and impact a more correct tendency of business toward more reliable projects and investments, on the other side. to this end, we estimate in our short - term and medium - term programs to give our regional branches spread throughout the country a different role from the one they played till now. we deem appropriate it ’ s time now for our branches not to be simply cash storerooms and distributors. also, we shall try to renounce some operations of non - central banking nature, which gradually shall be absorbed by commercial banks. our goal is these branches be changed into an advanced model of the bank of albania presence throughout various regions of the country. they will become genuine stations of information gathering about the economic and financial activity of the region, being preceded by further analyses and studies. this research work will serve not only to a more explicit monetary programming but also to the modernization of transmission elements of this policy from the higher authority to the lower authority and vice versa. i estimate that this initiative of the bank of albania to monitor the economic activity not only in the metropolis but also in other regions of the country would be of particular interest for all the interested groups. further, i would like to add some other comments on the latest developments of the banking system, which i deem have created good premises for a real expansion of this business, an expansion that will positively impact on the performance of business activities. after completion of the real time gross settlement ( rtgs ) system, the bank of albania inaugurated some times ago the initiation of a very important project on the automated electronic clearing house ( aech ). the operation of this new system will considerably increase the payment speed for the customers, knowing that the lack of this element has maintained businesses far from banks. i take this opportunity to make | businesses aware of the advantages of the operation of this system, as both systems together will help reach the international standards of atm and aips ( automatic and electronic payment equipments ), per population number. the challenge to the banking system and businesses, but also to the bank of albania, still remains the public encouragement to use them. so, to put this into practice, i shall stimulate the banking system to become more active, that is banks should provide to the households and businesses clear and ready products, quick and efficient services. given the latest developments in the banking system and the increasing number of the branches as well as the increasing banking services, i advocate the banking system will be more attractive in 2005. i consider the optimistic signals of the previous year will be followed by more vigorous operations of the banking system related to the business of electronic card payments. in this spirit i would say that banking system solutions properly consist in issuing a unified card. evidently, steps to be taken in this direction will be more complex, and naturally some of them imply inter - institutional cooperation. bank of albania is already paving the way toward wider use of cards in albania. credit cards service shall not only contribute to cash reduction in the economy, but also provide a positive impact on the reduction of informal economy. however, i deem as important encouraging and stimulating the banking system in order the service level be uniformly present all over the albanian territory where banks conduct their activity. only in this manner electronic payment advantages and all other facilities will be equal to you and to all the public in general throughout the territory of the republic of albania. i believe, in the spirit of this reasoning, we shall establish real opportunities for a harmonised geographical progress, providing a concrete contribution to the growth of country ’ s welfare. | 1 |
savings rates exceeding 30 % of gross national product for most countries in asia, raises the potential for long - term sustainability of domestic consumption spending. this trend has also supported increased intra - regional trade, investment and tourism that is reinforcing the growth prospects in the region. the evolving trends and encouraging growth prospects in our respective regions present tremendous opportunities for the insurance and reinsurance industry. of significance is that the global insurance industry on the whole has remained resilient throughout the current financial crisis. the overall aggregate financial position of insurers in the crisis affected countries have continued to be strong, and generally not severely affected by liquidity pressures or exposures in the credit derivatives markets. earlier losses by insurers in financial market activities had resulted in a shift to " back - to - basics " models, focusing on core underwriting business instead of heavily relying on investments as the main source of earnings. the industry had also benefited from the subsequent upturn in the pricing cycle which has fortified the capital position of insurers and provided the support to maintaining sound underwriting standards. these conditions have placed the industry on a much stronger position to withstand the challenges emanating from this global financial turmoil. domestic and external conditions are however expected to remain volatile for some time. significant uncertainties will persist in the international financial markets and the broader global economic conditions. these conditions will continue to pose significant challenges to the insurance industry. in this environment, maintaining strong capital buffers and sound risk management is even more imperative to ensuring the continued resilience of the insurance industry. with the adoption of solvency ii in europe and its influence on solvency regimes in other jurisdictions, more countries, including malaysia, have now moved to adopt more riskaligned capital regimes. this needs to be reinforced by substantive improvements in risk management practices, greater alignment between business strategy and risk, and greater appreciation by boards and senior management of insurers on risk issues given the growing complexity and increasing interconnectedness of financial markets and financial sector players. the insurance industry has progressed significantly over the years and is well - positioned to supporting both the recovery process and future growth potential of the economy. as emerging economies rebalance with greater emphasis on private consumption, the social safety net will need to be strengthened, with insurance and pensions now having a greater role. an ageing population will also become an issue in the future. globally, the number of the aged population that is aged 65 and above is expected to grow dramatically by 2050. such | set rediscount rates, regulate money markets, execute the treasury operations and take, jointly with the government, all measures to protect the value of the turkish currency. during and after the second world war, central banking underwent drastic changes in the world in line with the gradual global economic and political transformation. the scope of the central bank ’ s mandate to manage and control the circulation of currency was extended. its responsibility now ranged from issuing banknotes, functioning as a lender of last resort, achieving and maintaining low inflation to being the guardian of financial stability. except the temporary amendment concerning the short - term advances to the government before the second world war, no major amendments were made to the central bank law. 1950s and 60s were relatively easy years. however, the authorities thought that the provisions of the law of the central bank fell short of meeting the necessities of contemporary central banking. therefore, on january 14, 1970 a new law on the central bank of turkey was adopted. the new law brought in changes on the structure of the bank as well as changes in its policy implementations. the most important organizational change was replacing the general director, the highest post in the bank, with the governor. as regards policies, the bank was directly authorized to set monetary policy in line with the development plans and annual programs. the bank was also authorized to conduct open market operations in order to manage money supply and liquidity and was entrusted with medium term discount credit facilities to real sector through the intermediary of commercial banks. in the 70s, there were significant developments in the world economy. in the aftermath of the first oil shock in early seventies, inflation all over the world economies became rampant. accordingly, the main focus was directed towards the fight against inflation. the 1980s and 90s were the years where a number of structural and institutional changes were introduced in the turkish economy. with various measures taken between 1980 and 1989 turkey ’ s both current and capital account transactions were fully liberalized. trade restrictions were eliminated and the turkish currency was made fully convertible. there were also notable changes on the domestic financial market infrastructure. for the monetary policy to be effective what is needed is the existence of well - developed financial markets. for this purpose the central bank played a leading role in the creation of domestic money, foreign exchange and government bond markets. to further strengthen the financial markets infrastructure the central bank established a well - functioning electronic payments and securities settlement system. contrary to these developments, the performance of the turkish economy in terms of inflation | 0 |
identified and to allocate our resources to areas that have the greatest impact in the fight against financial crime. while traditionally the financial sector was seen as the most vulnerable sector to ml / tf risks, in the face of heightened regulatory focus and more advanced aml / cft legislation and procedures governing this sector, money launderers started to resort to the nonfinancial sector to conceal their proceeds of crime. in response, the fatf increased its focus on the designated non - financial businesses and professions ( dnfbps ) that have similar potential to financial institutions to be used for money laundering. casinos, real estate agents, dealers in precious metals and stones, barristers, attorneys, notaries, accountants and trust and company service providers – referred to as the dnfbps in the fatf standards – are, since may 2019, subject to the same aml / cft requirements and preventive measures as financial institutions regulated by the bank of mauritius and the financial services commission. the need to enhance the regulatory and supervisory capabilities of the aml / cft supervisors of dnfbps can, thus, only be underscored. ladies and gentlemen, the scale and complexity of evolving financial products and technologies bring along new risks. to identify, evaluate, mitigate and monitor those risks, operators in the financial and non - financial sectors alike have to put in place robust risk management systems and ensure they are periodically upgraded. obviously regulators and supervisors have to keep pace with the rapid evolution of risk associated with new services, technologies and products. these require new resources and regular upgrading of skills both among supervisors of the financial and non - financial sectors. risk - based supervision is gradually taking precedence in aml / cft supervisors ’ approach around the globe. this approach is evidently much more data - centric and thus more demanding technically. risk - based supervisory frameworks require aml / cft supervisors to continuously identify, understand, assess and monitor the risk profiles of their licensees. these institutions are monitored both for compliance with the rules and how they approach and adopt risk management. ladies and gentlemen, let me now say a few words on what the bank of mauritius has been doing on aml / cft in recent year. the implementation of the risk - based approach was one of the key recommendations of the mutual evaluation report of 2018 to enhance the effectiveness of the aml / cft system. the bank of mauritius has spared no effort to set up an aml / cft | international. innovations and partnerships in the mobile phone money transfer industry, as we are seeing today, have given impetus to access to financial services to kenyans. besides the revolutionary impact on financial systems, mobile phone technology has also provided access to services for the previously unbanked and created thousands of job opportunities. the provision of remittance services is a potentially effective method by which service providers can attract the unbanked for sending or receiving purposes. in this regard, it is an emerging market leadership platform to be consolidated for enhanced financial inclusion. distinguished guests : there has been tremendous growth in international remittances in recent years, a trend that is expected to continue as the world becomes increasingly bis central bankers ’ speeches interlinked. the world bank estimated remittance flows to developing countries in 2013 to have amounted to usd414 billion, and projections to usd540 billion by 2016. in kenya, the annual remittance inflows from kenyans in the diaspora, officially recorded from banks ’ returns, rose from usd338 million in 2004 to usd1. 3 billion in 2013. this is a commendable growth of more than 285 %. these remittances, that are playing a vital role in supporting both consumption and investment needs of the recipients, have also become an important source of foreign exchange inflows to the country. ladies and gentlemen, the kenya government recognizes the role and importance of remittances in boosting economic development. in this regard, cbk has worked closely with stakeholders in the mobile phone money transfer industry in implementing regulatory reforms aimed at guiding the market to prosperity. the national payment system regulations 2014 were formulated and gazetted to guide mobile phone money transfers within the country while the money remittance regulations 2013 have been operationalized to introduce standalone money remittance providers in kenya. previously all international remittances were made through commercial banks platforms. ladies and gentlemen : despite the significant progress made in making remittance services accessible and efficient in kenya, as in the rest of the developing world, there are still some challenges that we need to address. chief among these are the high transaction costs, integrity of the services and need for effective competition. the practice has been to charge a fee for transfer and fix the exchange rate for the amount to be received. however, the question remains “ how do we provide services for international money remittances at competitive costs? ” to address this, cbk has approved partnerships between local financial | 0 |
relative development of our business and financial markets, local internet penetration and international connectivity. the quality of life in barbados is high, attested to by the human development report, published by the united nations development programme ( undp ). in recent reports barbados is credited with high human development, an indication that in terms of what our salaries will buy, as well as educational and health status, barbadians live as well as people do in some advanced countries. we have all but eliminated dilapidation in housing, access to electricity, water and sanitation is universal, and homelessness has been reduced to a level that many rich countries would envy. we have our very wealthy, and our poor people, but on the whole we are a remarkably egalitarian society. our economic performance the barbados economy runs on foreign exchange, as i have often said. we live quite well, by international standards, by selling the goods and services we produce at competitive prices for bis central bankers ’ speeches foreign currency, and using that foreign currency to import everything we need for our modern lifestyles. our main focus is therefore always on the activities that earn us foreign exchange : tourism and related activities, international business and financial services, and rum, chemicals and a few other manufactured goods. there is one sector where we have the potential to increase output without the use of foreign exchange, and it is in the energy sector. every day in barbados we produce far more energy than we could possibly use, but almost all of it is completely wasted, because it is in the form of heat generated on our roofs and other surfaces that absorb and reflect the sun ’ s rays. we currently harvest a small amount to heat water. however, affordable photovoltaic systems now provide an opportunity to businesses and middle class households to generate all their electricity needs. of course, we would need a means of supplying electricity at night. it has been shown that with a combination of solar and wind energy, plus biofuels and storage, barbados could become self - sufficient in electricity generation. it is an opportunity we cannot afford to pass up. barbados ’ tourism is rising to the challenges of the 21st century. the barbados brand is highly regarded, and developments in the sector have largely enhanced the quality and appeal of the barbadian tourism product. the visitor experience has been enhanced by top quality sports, dining, shopping, music, culture and heritage. our visitors are in search of authentic experiences, and we continue to enrich our offerings in ways that are | to a more liquid market where money moves more quickly. in times where liquidity is needed rapidly, thinly securitized markets have their downsides, though they tend to be more safe and less volatile. in such cases the strength of the balance sheet is more important than changes in the market value of deposit institutions. all the balance sheets of financial institutions that i have seen show solvent institutions so though this is not the only relevant factor, we start with an advantage. risk management risk - taking is a necessary element in conducting business, and effective risk management systems, together with good governance strong regulation and supervision all serve to mitigate risk exposure. supervisors instil market discipline by employing strong licensing criteria that ensure the fitness and propriety of directors and executive officers. we should not use the opportunity of these hiccups to remove ourselves from risk - taking. we need to take well considered risk. it is part of the growth process. enforceable guidelines ( e. g. corporate governance, operational risk management and capital adequacy ) and regulations must be supported by effective ongoing monitoring of risk exposures and monitoring for compliance with legal requirements. sometimes legislation is necessary to ensure that supervisors have the needed powers of enforcement to intervene at various stages where infractions may be detected so as to avoid escalation of the problem. both the central bank of barbados and the supervisor of insurance possess legal powers to conduct inspections of their licensees. in some cases the strength of the oversight in the non - bank sector needs to be enhanced as was mentioned in the last financial sector assessment programme report. capital controls in the barbados situation, capital controls have served us well. they serve to control and monitor cross - border financial transactions. further, entities that are licensed under the financial institutions act, cap 324 are additionally subject to credit exposure restrictions relative to capital – that is levels on lending to a single person or group. where these are below acceptable levels, licensees are given specified time periods to have them corrected. this is a key credit risk control and is monitored on a quarterly basis using prudential returns submitted by all central bank licensees. institutions are not always perfect, breaches can be corrected and the earlier the better, but it must be done in an orderly fashion. a disorderly correction is to be avoided. consolidated supervision consolidated supervision of financial groups necessitates collaboration at different levels. memoranda of understanding among all domestic regulatory agencies are key in facilitating information exchange and collaboration. there | 0.5 |
main objectives of this series of conferences is to discuss the main lessons for public policies arising from developments in the international banking and financial sector. the continuation of the market turmoil does not allow me to talk to you with the benefit of detachment and the comfort of an ex - post assessment. however, i should like to take advantage of the occasion to share with you some considerations on the ecb ’ s response to the market turmoil drawing on the experience of the past year. i am very grateful to cornelia holthausen for her valuable contributions. 2. the separation between monetary policy formulation and its implementation central bankers have, naturally, eyed the developments of the past year of financial turmoil – and, particularly, their recent intensification – with great concern, as they have the potential to influence adversely the ability of central banks to steer monetary policy rates, affect the transmission mechanism of monetary policy and, more generally, may pose a threat to financial stability. once the credit concerns that had built up in the sub - prime mortgage market segment started to affect interest rates and traded volumes in the euro area money market, the ecb responded to these highly unusual market events by timely and forcefully adjusting its liquidity policy. i will not deal with the specificities of the ecb ’ s liquidity management over the past year – this will be carried out by the ecb staff in tomorrow ’ s session on “ the experience with crisis management ” – but i would like to stress one fundamental principle underlying our response to the turmoil : “ the separation principle ”. this principle relates to the dichotomy between the ecb ’ s monetary policy and its liquidity policy or, in other words, between the formulation and implementation of monetary policy. during the turmoil, the separation principle proved to be very effective. supported by the flexibility of its operational framework, the ecb was able to react in a flexible and quick manner to a changing market environment, and it allowed the steering of interest rates close to the policy rate by means of temporary quantity adjustments, albeit without increasing the aggregate supply of euro liquidity to the banking sector. the main objective of the ecb ’ s immediate and lasting responses to tensions in the money market was to keep under to control the very short - term interest rates as the first step in the transmission of monetary policy. broadly speaking, the ecb ’ s liquidity policy response consisted of three elements : first, it changed the timing of the liquidity provision within the maintenance period ( the so - | the euro area ”, cambridge university press. kashyap, a. and j. stein ( 2000 ) : “ what do a million observations on banks say about the transmission of monetary policy? ”, american economic review 90 ( 3 ), pp. 407 - 28. european securitisation forum ( 2008 ) : “ esf securitisation data report – q2 : 2008 ”. european central bank ( 2008b ) : “ the role of banks in the monetary transmission mechanism ”, ecb monthly bulletin, august 2008, pp. 85 - 98. see, for instance, altunbas, y., l. gambacorta and d. marquez ( 2007 ) : “ securitisation and the bank lending channel ”, ecb working paper no. 838, and ecb ( 2008a ). see, for instance, gropp, r., c. kok sørensen and j. lichtenberger ( 2007 ) : “ the dynamics of bank spreads and financial structure ”, ecb working paper no. 714. european central bank ( 2008c ) : “ the euro area bank lending survey ”, january 2008. 4. the role of uncertainty one of the most relevant features of the current turmoil has been the high degree of asymmetric information and the enormous increase in general uncertainty in the financial sector. i would like to distinguish between the two in the following way : 9 uncertainty owes mainly to imperfect information in relation to credit valuations. uncertainty generally increased during the summer of 2007, because market participants realised that the current practices used for valuations – often based almost solely on ratings – were no longer valid. with this type of uncertainty, market participants have difficulty in modelling the expected occurrence of defaults. credit spreads can widen, also at the short end. 10 another typical effect is the flight - to - quality phenomenon : as in previous episodes of high uncertainty, during the turmoil savers have shunned equity and credit risk products in favour of government bonds and commodities as well as cash and bank deposits. as a result, bank deposits increased significantly. the term asymmetric information, on the other hand, applies to an adverse selection problem, notably in the interbank market, where market players can no longer distinguish solvent from insolvent borrowers. such a “ lemon ’ s problem ” induces banks to demand high risk premia of their creditors and lead to a general increase in interbank | 1 |
and knowledge through seminars and other training programmes. mas will also continue to collaborate with financial institutions, the tripartite partners, and institutes of higher learning to build a strong local pipeline of specialised talent, particularly in areas such as information technology, computing, data analytics. 25 if we can do well in these two key areas, it will position our fx market and participants to capture growth opportunities and serve the needs of the asian markets. conclusion 26 promoting and embedding the code within the global fx market and in singapore, is a journey that we have committed to. we hope that you can support these efforts, from your firms and in your individual capacity as market participants. 27 we have also co - created our medium term business strategies with market participants like yourselves, and we are committed to making them work, and bringing more innovation into the market place. 28 with this, i hope that you will have a productive and rewarding conference ahead. 5 / 5 bis central bankers'speeches | and macroeconomic policy. the items on regulation can themselves be divided into two subgroups. on the one hand, the g20 decided to tighten or strengthen the regulatory framework applying to entities or activities that had already been regulated before the crisis. examples include : • a more demanding framework for the capital, leverage, and liquidity of banks, prepared by the basel committee on banking supervision ( bcbs ) and known as the basel iii accord since its initial exposition in 2010 ; bis central bankers ’ speeches • special regulatory treatment of systemically important financial institutions ( sifis ), such as additional capital ( or in the basel jargon, “ loss absorbency ” ) requirements ; and • additional disclosure obligations for banks. on the other hand, entities or activities that until 2008 were mostly outside of the scope of regulators were made subject to a comprehensive regulatory framework : • over - the - counter ( otc ) derivatives, • executive compensation, • credit rating agencies, • hedge funds, “ shadow banking ” ( i. e. entities and activities that are not regulated as banks, but present bank - like systemic risk profiles ) and, more recently, • financial benchmarks ( following the detecting of fraud in the setting of libor, the london interbank offered rate, and other similar reference rates ). all those initiatives that were envisaged by the g20 are translated into regulatory changes in us and europe. in the us, dodd – frank wall street reform and consumer protection act ( or known as dodd - frank act ) implements changes that, among other things, affect the oversight and supervision of financial institutions. the dodd - frank act creates the financial stability oversight council to oversee financial institutions. additionally, it provides for a new resolution procedure for large financial companies, a creation of a new agency responsible for implementing and enforcing compliance with consumer financial laws, introduces more rigorous regulatory capital requirements, affects significant changes in the regulation of otc derivatives, includes reform of the regulation of credit rating agencies, implements changes to corporate governance and executive compensation practices, incorporates the volcker rule, requires registration of advisers to certain private funds, and affects significant changes in the securitization market. in the eu, markets in financial instruments directive mifid is an important step in the biggest overhaul of financial markets regulation in the eu for a decade. however, the new regulatory framework consists of directive ( mifid 2 ) and regulation on markets in financial instruments ( mifir ). it is an integral part of the | 0 |
area should reach at least 2. 2 % this year, reflecting a strong economic recovery. however, there are two major risks threatening growth : financial instability and protectionism. regarding financial instability, the continued rise in global public and private debt since the start of the 2000s – from 190 % of global gdp in 2001 to 230 % in 2016 [ slide ] – has become a subject of concern. the 2008 crisis stemmed from this, but this trend has unfortunately not slowed down since ; the private debt in emerging countries ( namely corporate debt ) has risen particularly rapidly. since the g20 summits of london and pittsburgh in 2009, the regulatory page 2 sur 6 effort that has been undertaken is unprecedented, in particular in the banking sector : by increasing both the quantity and quality of banking sector own funds, the basel iii reform has considerably enhanced the robustness of banks ; in addition, it ensures better account is now taken of the diverse risks to which banks are exposed, thanks to the introduction of two new liquidity ratios for bank cash levels. i am confident that we are about to finalise a fair and reasonable agreement at our ghos meeting next thursday. this would be very welcome for our international financial order. but beyond basel iii, we should finalise measures that target non - banks. we must ensure a balance between financing channels. the priority has now shifted from the solvency of banks, which has improved substantially, to the liquidity of the shadow banking sector, particularly funds and asset management companies that are exposed to the risks of sudden panic - driven runs. moreover, we have to make sure that this internationally agreed regulatory framework is implemented everywhere with consistency. unilateral deregulation would be nothing less than a lose - lose scenario with serious consequences for the stability of the global financial system – we would be paving the way for the next financial crisis – as well as the competitive landscape for us, japanese and european banks. the second risk is related to protectionist tendencies, namely in the united states. we, europeans and japanese, shoulder - to - shoulder with canada and others elsewhere, must resolutely defend international economic relations based on commonly respected rules and multilateral institutions : their deterioration would dampen world trade and economic activity. in a recent speech, the governor of the bank of japan, haruhiko kuroda, stressed “ the importance of multilateral cooperation ”. he said : “ economies must overcome their narrowly - defined self - interest so as to cooperate and coordinate from a | 7 % [ slide ], and the disparities across countries have narrowed. besides, better controlled inflation means lower financing costs, because it reduces risk premia [ slide ]. all economic players benefit from lower interest rates : households, when they purchase a property, companies when they invest, but also governments and hence taxpayers. in addition, the euro has helped consolidate the european single market, by eliminating currency fluctuations for corporates, simplifying day - to - day life for citizens and promoting capital market integration. lastly, the economic size of the euro area and the stability of its currency have enabled the euro to play an important international role. today, the euro accounts for 20 % of international reserves, second only to the us dollar. an internationally recognised currency generates economic gains : financial markets are more attractive to domestic and foreign investors, more liquid, and thus more efficient. but it also carries a political weight : when mario draghi speaks at the g7 or g20, the whole world listens to europe attentively, just as when janet yellen speaks for the united states. page 4 sur 6 overall, this list of benefits is impressive, particularly when you think that the euro is only 19 years old. more importantly, we have come this far despite the global financial crisis, which triggered the deepest recession in three generations and despite the euro area sovereign debt crisis a few years later. the robust economic recovery in the euro - area now enables us to pursue a path of gradual normalisation of our monetary policy. on 26 october, the governing council of the ecb, dividing in half the volume of our monthly net asset purchases, took a decisive step towards possibly ending them, while maintaining with all our other instruments an ample degree of monetary accommodation. second, we in europe share a large single market. it removes all internal borders and regulatory obstacles to the free movement of goods, capital, services, and persons in the european union. it is a tremendous asset which belongs to us all – the 27 – and it is no coincidence that access to the single market lies at the heart of the brexit debate. we cannot foresee the outcome of the future negotiations and we don ’ t want to “ punish ” the united kingdom in any measure. but we must respect one consistency principle : access to the single market must continue to go hand - in - hand with strict acceptance of all its rules. there can be no cherry - picking or free - riding. for the financial services industry, | 1 |
well. recent estimates of international institutions point out a prolonged period of recession in developed economies and a sharp slow down in growth rates of developing economies. addressing these challenges, g - 20 summit held in brazil on 8 - 9 november 2008, issued a communique that included the following statement : “ we affirmed our determination to take all necessary steps to foster non - inflationary growth in a stable and sustainable manner according to the needs and available instruments in our respective countries, including through monetary and fiscal policy. ” distinguished guests, as concerns over inflationary pressures have subsided all over the world, maintaining the smooth functioning of financial system and efficiency of credit markets has become the main priority of policy makers. it will be proper to evaluate the recent developments in turkish economy in this perspective. in turkey, the banking system has been relatively prepared for the current crisis in terms of foreign exchange liquidity. its foreign exchange short position is also well contained. foreign exchange position of the public sector is almost negligible. the household sector is net creditor in terms of foreign exchange, while real sector is net debtor. since securitized products are rarely used in the turkish banking sector, the ongoing financial turmoil has not put a marked pressure on local banks through that channel. current account deficit, historically a source of vulnerability for the turkish economy, is likely to experience a sharp drop in the upcoming period due to correction in commodity prices, slow down in economic activity and depreciation in new turkish lira. still, extraordinary fluctuations in global liquidity conditions have adversely affected turkey like other countries, which are sensitive to international financial developments. at this point, i would like to emphasize that we will continue to take the necessary measures to contain the adverse effects of the global financial turmoil on the domestic economy, provided that they do not conflict with the price stability objective. the general framework of the central bank ’ s liquidity management is fairly flexible and wellstructured to fulfill its lender - of - last resort role and meet both new turkish lira and foreign exchange liquidity requirement of the banking system effectively. we will not allow any setback in new turkish lira money markets and will ensure smooth operation of payment system. in this context, judging that inflation will display a more rapid fall than envisaged before, the monetary policy committee has decided to lower the borrowing rates by 50 basis points on november 19, 2008. in addition, the margin between the lending and borrowing rates was reduced by a further 50 basis points | higher level of prosperity. before ending my speech, i would like to reiterate my belief that the turkish competition authority will further contribute to the level of prosperity in turkey in the upcoming years. i would like to thank everyone who had a hand in the organization of this conference and for your attention. | 0.5 |
shop floor / products / services inflation alone, as a key variable, in monetary policy response. for what happened was unprecedented in that with monetary policy focused only on traditional cpi, interest rates were kept low in spite of exploding prices of assets like real estate / property, credit assets, equity and commodities. and this was all made possible because of the huge current account surpluses in china and other emes, and huge private capital inflows into emes in excess of their current account deficit, getting recycled back as official capital flows into government bonds of reserve currency countries, especially the usa, resulting in compression of long term yields which, in turn, translated into lower long term interest rates even for the riskier asset classes mentioned above. this chasing of yield, due to global savings glut, in turn, led to unprecedented underpricing of risk as reflected in the all - time - low risk premia with junk bond spreads becoming indistinguishable from investment grade debt! such a low interest rate environment coupled with luxuriant supply of liquidity, created enabling environment for excessive leverage and risk taking so much so that american household debt exceeded the country's gdp! this, in turn, led to a sort of the so called “ ponzi finance culture ” where, with personal savings rate at close to zero, consumption spending binge was driven through withdrawal of home equity made possible by omni - present home equity loans rather than through incomes! thus, the entire debt binge was spent in consumption and not investment, leading to a veritable partial deindustrialization of america, as it were, with the possible exception of the services sector. all this while, the us growth story stayed non inflationary due primarily to cheap imports from china, asia and emes. in a refreshing and instructive contrast, in an almost identical macroeconomic environment in the usa in the 1980s, the volcker fed resolutely tightened monetary policy to counter the potentially inflationary impact of unsustainably high fiscal and current account deficits of the usa as a result of which, and also the fact that, unlike this time, there was no savings glut, us interest rates rose almost to 18 - 20 %! this fed action saved the day in as much as the risk premia became very high ex ante avoiding, unlike in the recent crisis, underpricing of risk and the financial meltdown although it exacted its toll in the | of business or exit existing ones, all without any need for prior approval from the government. all this meant that greater autonomy to the boards of public sector banks came with bigger responsibility. lastly, a series of structural reforms raised the profile and importance of corporate governance in banks. the “ structural ” reform measures included mandating a higher proportion of independent directors on the boards ; inducting board members with diverse sets of skills and expertise ; and setting up of board committees for key functions like risk management, compensation, investor grievances redressal and nomination of directors. structural reforms were furthered by the implementation of the the ganguly committee recommendations relating to the role and responsibilities of the boards of directors, training facilities for directors, and most importantly, application of “ fit and proper ” norms for directors. some important issues relating to corporate governance of banks in india let me move on to discussing a few issues in corporate governance of banks which should engage our collective attention. i will do so under five headings. bank ownership the first issue concerns ownership. there is typically a divergence between the interests of shareholders and of depositors. shareholders want profits to be maximized by taking on greater risk ; depositors have an overriding preference for the safety of their deposits and hence for lower risk. at the same time, depositors have little say in the governance of banks whereas the shareholders ’ say is very pronounced. within the shareholder group, the extent of control exercised by promoter shareholders too is an important determinant of the effectiveness of corporate governance. as some recent instances demonstrated, such excessive influence of promoters can turn the board into a mouthpiece of the promoter to the detriment of the interests of all other stakeholders. another way to look at the issue of ownership is in terms of public vs. private ownership. if banks are publicly owned, issues of conflict of interest between shareholders and depositors get mitigated. public ownership of banks would also inspire confidence in the financial system. on the other hand, an important question is whether effective and autonomous corporate governance is compatible with public ownership of banks. the question arises bis central bankers ’ speeches because publicly owned banks render accountability to the government and to the democratic institutions. the government judges them on criteria quite different from those used by the market. how can we resolve this dilemma? is it possible to stay with public ownership but still give near total autonomy to the boards? is it, in particular, possible to cede the power to appoint the ceo to | 0.5 |
unemployment debates ” ( no. 173 ), greenwood publishing group. bis central bankers ’ speeches appendix chart 1 : unemployment rate and projections chart 2 : cumulative employee growth by skill level cumulative increase since 2010q1, thousands unemployment rate, % 16 + unemployment rate february 09 ir projection february 14 ir projection 1, 800 highly skilled 1, 600 medium skilled 1, 400 low skilled 1, 200 total 1, 000 - 200 source : ons and bank calculations source : ons and bank calculations chart 3 : percent of 18 – 24 year olds not in employment, education or training chart 4 : nominal and real total pay growth per cent real pay growth total nominal pay growth - 400 per cent yoy - 2 - 4 - 6 2010 q2 2011 source : ons labour force survey bis central bankers ’ speeches - 8 - 10 source : ons and bank calculations chart 5 : percentage of people in employment who would like to work longer hours per cent chart 6 : percentage of people in employment on a zero hours contract per cent source : ons labour force survey notes : responses to the labour force survey can be affected by respondents recognising the term “ zero - hours contract ”. it is not possible to say how much of this increase is due to greater recognition of the term. chart 7 : fall in the labour share since 2009 per cent 60 % 55 % 50 % 2000 2001 2003 2005 2007 2008 2010 2012 2014 45 % bis central bankers ’ speeches - 12 % duration ( years ) depth ( % ) recovery ( % ) total change over seven years ( % ) bis central bankers ’ speeches financial and insurance activities transportation and storage electricity, gas, steam and air conditioning supply other service activities manufacturing agriculture, forestry and fishing information and communication mining and quarrying wholesale and retail trade ; repair of motor vehicles and motorcycles public administration and defence ; compulsory social security real estate activities education administrative and support service activities arts, entertainment and recreation accommodation and food service activities water supply ; sewerage, waste management and remediation activities construction human health and social work activities professional, scientific and technical activities chart 8 : median real pay decline by sector since 2009 per cent 0 % - 2 % - 4 % - 6 % - 8 % - 10 % table 1 : comparison of major earnings crises in uk history - 10 12. 8 1874 – 78 - 1. 7 0. 6 1921 – 23 - 8. 2 4. 5 1976 – 77 - 6. 6 14. 5 2007 – 14 - 7. 9 n / a | as much an economic waste as under - utilised time. at present, there are around 5 million people whose skills are mismatched, or are over - qualified, for the job they are doing. this number has increased by two percentage points since the start of the crisis. • even for those who have found work, levels of job security appear to be lower than in the past. around 6. 4 % of all employees in the uk are on temporary contracts. rates of self - employment have risen from 12 % a decade ago to around 15 % now. for some firms and workers, those trends are a welcome sign of job flexibility. but not for all. around a third of temporary contract workers would prefer a permanent contract. since 2011 the reported incidence of zero - hours contracts has risen rapidly, from 0. 6 % to 2. 4 % of the working population ( chart 6 ). what may be welcome flexibility for a company may be unwelcome insecurity for its workforce. • while participation rates in the uk workforce have increased, in some cases they remain low by international standards. female participation in the uk labour market remains well below our european neighbours, such as germany, the netherlands and sweden. and compared to these same countries, the fraction of neets in the uk is almost twice as high. • finally on wages, real wages have yet to return to their pre - crisis peak. rather, they are still 6 % below that level. since the crisis, we have seen one of the largest and longest squeezes on wages since at least 1850 ( table 1 ). • indeed, since the crisis real wages have fallen faster even than uk productivity, which itself has been extra - ordinarily weak having flat - lined for the past six years. bis central bankers ’ speeches put differently, labour ’ s share of the national income pie has fallen since 2009, from around 58 % to 53 % ( chart 7 ). • that squeeze on real wages has been even more acute for some. declines in median real wages among the young have been roughly twice as large as among the old. and workers in sectors such as construction, health and social work have seen far - larger declines in their take - home pay ( chart 8 ). in short, many workers in the uk have not in fact had that pay rise. • partly in consequence, the number of people earning less than the living wage is currently estimated to be around 5. 8 million. that is 700, | 1 |
in advanced economies. a deep understanding of tax and benefit systems is therefore crucial to anticipate aggregate demand and inflation dynamics and to assess the appropriate stance of monetary policy and, more generally, of the overall policy mix. from the standpoint of banco de espana, the foregoing arguments in favour of a wide view on our research activities are even more compelling since our responsibilities include providing advice to the spanish government on economic policies. in so doing, we have not remained indifferent to the transformations referred to above and the avenues of research inspired by them. consistent with this broad perspective on central bank research, our economists engage in an extensive variety of topics, some of which go beyond the more traditional focus of central banks. for example, we have recently placed emphasis on the study of the aggregate effects of structural reforms in product and labour markets, the distributional consequences of tax policies, the evolution of income inequality and the assessment of the financial competences of the population, to name but a few. more generally, we believe that high - quality theoretical and empirical analyses are necessary to fulfil one of our core mandates : understanding and monitoring developments in the euro area and spanish economies. we see high - quality research as an indispensable tool to adopt sound policymaking decisions. in this regard, in recent years banco de espana has aimed to further improve the standard of its research activity and to strengthen collaboration with other institutions. overall, these endeavours reaffirm our commitment to research, as the fundamental basis for good policy decisions, and i hope they will enhance our research output in the future. i would not like to miss this opportunity to underline the importance of relying on accurate and available statistics for economic analysis and research. it is my view that allowing independent researchers to access high - quality data is a necessary step to advance in the knowledge of the issues referred to above. in this regard, over the years more and more countries are easing the requirements to work with the micro and administrative data produced by the public sector. i believe that spain should not lag behind in this endeavour. in keeping with this assessment, banco de espana provides researchers with the micro data of some of the surveys it conducts, such as the survey of household finances and the survey of financial competences. but more needs to be done. in this regard, we are committed to extending the availability of micro data to other products, such as the balance sheet data of non - financial corporations and some banking data. in this respect, banco | about 7 times. that is quite a striking result. it is at least as large, for example, as the relative increase in assets of american households, which occurred in the stock market boom there in the late 1990s. the difference is that, in australia, much of this increase in asset values, particularly over the past few years, has been a result of rising house prices. with financial liberalisation allowing more access to debt, and with the decline in interest rates making debt more affordable to the average household, this asset accumulation has been accompanied by a rise in debt, though the ratio of debt to assets has risen only moderately, from around 14 - 15 per cent in the late 1980s, to about 17 - 18 per cent now. the structural decline in inflation and interest rates explains much of the rise in borrowing and buying by owner - occupiers. the effects of the gains in wealth on their behaviour are still working their way through the economy. but at present, our focus is on the role of investors in rental dwellings, which has become much more prominent in the past couple of years. these are people who presumably have been attracted by perceptions of capital gains and tax advantages of leverage, and who recently may have been disappointed with returns in the share market. nearly 50 cents of every loan dollar approved for housing purposes is now going to investors, which is unprecedented. the rba has examined all this in detail in other places and i will not repeat that analysis today. it does raise the question, however, of whether housing values can continue to increase like this. ultimately, there has to be an income stream which anchors asset values. in the case of investor housing, that stream is, of course, the rent on the property. rental yields have fallen noticeably in recent years, and there is widespread talk of rentals being under continued downward pressure at present, as the supply of dwellings for rent outstrips demand, something which appears likely to continue, and perhaps intensify, for a while at least. it is getting harder and harder to believe that the prospective returns from that outlook are high enough either to sustain valuations which are so high relative to historical experience, or to warrant the $ 4 - 5 billion which is being loaned to investors each month. hence we are keen to see the pace of both price gains and the run - up in debt abate. this is not motivated by a puritan disdain for debt, or a desire to target some “ correct ” level of house | 0 |
of the single financial market. laws and regulations alone cannot extend the boundaries of marketplaces or define new products. on the contrary, market forces should ultimately drive the integration progress. collective action by market participants, perhaps with the support of public authorities, has therefore to be organised at the eu level to overcome possible co - ordination problems in this process. the integration of money markets is a clear example of how actions by market players themselves may underpin integration. the eonia, the reference rate for overnight unsecured interbank deposits, was developed by market participants with the facilitating role of the ecb. this example also illustrates how public authorities may also play the role of catalysts of collective action. and third, european financial integration is a process which calls for a very attentive monitoring as regards its impact in terms of financial stability. a large number of complex processes are at stake : better allocation of capital resources all over a vast continental economy of 450 million inhabitants ; better assessment of risks through enhanced quality of management of financial institutions ; enhanced market discipline ; concentration of investments in a fewer number of institutions ; globalisation of the european financial institutions ; introduction of new non european institutions as major european players ; regional regroupings, etc, etc … together with the flexibilisation of the financial system fostered by the combination of market innovation, technological improvements and globalisation, the previously listed forces should, by and large, foster the resilience of the financial sector and its capacity to weather shocks. that being said, it is not, in any respect, time for complacency. the exceptional chances and opportunities of the present times have their necessary counterparts in potential risks that have to be identified, analysed and appropriately weathered if materialising. i consider that improving tirelessly the resilience of the european financial system and paving the conditions for enhanced financial stability in an ever changing environment is a fundamental responsibility of the ecb and the eurosystem. i thank you for your attention. | jean - claude trichet : a rich variety of cultures at the heart of europe interview with mr jean - claude trichet, president of the european central bank, in the frankfurter allgemeine zeitung special supplement of the ecb cultural days, published on 4 october 2009. * * * 1. the ecb cultural days have been held seven times since their launch. on three occasions, they have featured countries from eastern europe. what does eastern europe bring to europe and to frankfurt, in particular? it is very important for the ecb – with our staff coming from all 27 eu member states – to discover or rediscover the wealth of european culture in the international environment of frankfurt and its surrounding area. as you say, it has always been our aim to embrace the whole of europe, both the old and new members of the european union. it is no accident that we have welcomed three central and eastern european and three western european countries. last year, on the occasion of the tenth anniversary of the ecb, the events involved all 27 eu member states in order to underline the diversity of european culture. this year, the 20th anniversary of the fall of the iron curtain, the event takes place against the unique backdrop of the reunification of europe. 2. you made a speech on european culture in frankfurt this spring, which explored the link between the concepts of roots, diversity and identity. did you have the ecb cultural days in mind? of course. i was very keen to deliver this speech upon the invitation of my friend, professor otmar issing. i profoundly believe that culture is at the heart of the european project. the cultural unity of europe is based on the recognition of, and an openness to, its cultural diversity. europe benefits greatly from the mix of cultures. this is the core concept of the ecb cultural days. 3. in times of crisis, culture can be seen as a luxury, a remedy or a refuge. the past two years must have been very difficult for you, presenting you with many challenges and a very heavy workload. what works of art helped you to unwind during this period? particularly in very demanding and challenging crises, it is important to remain composed, to be able to stand back from immediate events and to develop as sound and as lucid a judgement as possible. i think that, in times like these, it helps more than ever to read a good ismail kadare book or a beautiful heine poem, | 0.5 |
a reliable global financial safety net before the next crisis and co - ordinate its different layers. this should include an “ imf standing liquidity facility ”. the global financial safety net is the best insurance we can get against the risks created by economic divergence and it comes at a limited cost. * * let me conclude by quoting voltaire, who wrote in 1770 : “ doubt is an uncomfortable condition, but certainty is a ridiculous one. ” 4 in these times of doubt, we as central bankers should be predictable without being pre - committed – or, as voltaire would say, we should give clarity without pretending to certainty. this is precisely the objective of governing council of the ecb : we are committed to give as much clarity as possible ; clarity, not certainty, which is neither possible nor desirable. thank you for your attention. 1 brainard, w. ( 1967 ), « uncertainty and the effectiveness of policy » the american economic review, vol. 57, no. 2, papers and proceedings of the seventy - ninth annual meeting of the american economic association, may, pp. 411 – 425. 2 blinder, a. ( 1999 ), central banking in theory and practice, the lionel robbins lectures, mit press, cambridge massachusetts. 3 rey, h. ( 2013 ) “ dilemma not trilemma : the global financial cycle and monetary policy independence ”, jackson hole conference proceedings, kansas city fed. 3 / 4 bis central bankers'speeches 4 letter to frederick william, prince of prussia ( 28 november 1770 ). 4 / 4 bis central bankers'speeches | a high level of inflation in recent years, the bank should pay attention to the risk that possible changes in the inflation expectations of households and firms'price - setting behavior may generate second - round effects. as i have explained, the current situation requires the bank to carefully monitor both downside risks to economic growth and upside risks to inflation. furthermore, if the downside risks to the economy turn out to decrease, there is a risk that prolonging the period of accommodative financial conditions will lead to swings in economic activity and prices. the bank continues 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 a flexible manner. moreover, since global financial markets are expected to remain unstable and there are various uncertainties in the outlook for economic activity and prices, it is essential for the bank to ensure the stability of the japanese financial markets. closing remarks as i have so far explained, the current state of japan's economy and the world economy pose an extremely difficult situation for the conduct of monetary policy. while monetary policy is expected to contribute to sustainable economic growth by creating a stable financial and economic environment, it cannot by itself increase the potential growth rate of the economy. a prerequisite for the economy to boost its growth potential is a rise in productivity, facilitated by innovation and a continual review of resource allocation. the kansai region is famous for its long history of pioneering entrepreneurship, as demonstrated by the fact that the world's first futures trading was carried out at the dojima rice exchange in osaka during the edo period ( 1603 - 1867 ). in the current environment, i look forward to seeing the region's originality and inventiveness add to the vigor of japan's economy. for our part, we will continue to support your efforts through our conduct of monetary policy. i would like to close my speech by mentioning an early episode in the relationship between the business community of the kansai region and the bank of japan. the bank was established in 1882 with capital of 10 million yen – equivalent to approximately 30 billion yen today. of the contribution to the bank's capital from the private sector, which accounted for half of the total, about 60 percent of the shareholders and 48 percent of the amount came from the kansai region. in other words, the business community of the kansai region contributed significantly to the establishment of japan's | 0 |
amando m tetangco, jr : ensuring efficient & eco - friendly asean mints speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the 14th technical meeting of mints in asean ( teman ), manila, 23 november 2009. * * * distinguished members and participants to the 14th technical meeting of mints in the asean, special guests, good morning! on behalf of the bangko sentral ng pilipinas and our security plant complex, it is with pleasure that i welcome all of you to the philippines for the 14 teman conference. as you may have noticed, the conference theme we adopted is spcwhich stands for “ strengthening partnership and cooperation. ” i understand that in indonesia, the abbreviated word teman means friends. what better way to move forward with friends therefore than to strengthen partnership and cooperation. the organizing committee envisions the conference to be a catalyst for new and dynamic ideas, for critical thinking, and for open discussions on issues affecting the minting industry. among others, we want to create more value for our products, to facilitate advancements and enhancements in our systems, and to contribute ultimately in the broader and lofty task of building up our respective nations. indeed, teman plays a vital role in empowering its member mints to provide quality products and services to their people. given the global financial crisis that had triggered a global economic slowdown, teman must take appropriate steps to work out a common agenda that will promote process and cost efficiencies, while addressing urgent issues such as the need to adopt more environment - friendly processes. ladies and gentlemen. the world has realized that there is no progress to speak of if this is made at the expense of the environment ; because in the end, it is a step backward not forward if the environment suffers as a result of our operations. we have seen how industrialization made for the benefit of human beings has been generating toxins and pollutants which now threaten the very same human beings. the challenge for teman therefore is to align itself with the goals of the association of southeast asian nations which is committed to continue sustainable development or the pursuit of a green and eco - friendly economy. afterall, the 10 teman members have one thing in common : we are all members of asean. that goes for brunei darussalam, cambodia, indonesia, lao pdr | , malaysia, union of myanmar, singapore, thailand, socialist republic of vietnam, and the philippines. i hope therefore that clean and green topics will be very much a part of your discussions. in words and in deeds, let us help take on the case for a cleaner and better environment in our respective mints, in our homes, and in our communities. our own security plant complex has already taken meaningful steps in this direction. i hope that this teman conference will give it more new ideas to implement as an eco - friendly mint. i am counting on it. finally, i wish to congratulate the members of the 14th teman organizing committee – my colleagues at the bangko sentral ng pilipinas – for all their efforts in ensuring the success of this conference. please stand up so we can acknowledge you with a round of applause! to our foreign guests, i advise you to find time to explore and know more about our country, our culture, and our people. you will find that this is a great place which is worth coming back for. once again, i wish you all a successful and fruitful conference! thank you all and mabuhay! | 1 |
this good. but the case for further regulation has not as yet been compelling. first and foremost, we should consider the contents of possible improvements. i would pinpoint three areas, among others, for consideration : first, greater transparency of rating methods and the overall role of rating agencies in the securitisation process. second, a marked difference in the metric used for rating bonds and structured products, which would restore confidence in ratings. this could be done in two ways, which could also be combined : either by adopting another rating scale for structured products ( with another symbol for example ) ; or by including an additional measure in the credit rating, in particular on its volatility in times of market or liquidity stress. third, a specific rating for liquidity risk. i am aware that rating agencies are considering this, despite the difficulties of such an exercise. we must hope that the discussions currently underway in international fora, such as the fsf and groups of central bankers in which the banque de france is actively involved, will restore the integrity of the ratings system, given its prominent role in the development of modern financial markets. ladies and gentlemen, thank you very much for your attention. | ultimately the cost of living for all south africans. 11 encouragingly, we are beginning to see some traction on reforms, particularly in the energy sector. while some strides have been made in removing structural barriers to entry for independent energy producers, the full benefits of these interventions will mostly materialise in the medium to long term. the sarb sees both potential growth 9 the budget deficit rose to 10 % of gdp in 2020 / 21 ‒ one of the highest in emerging markets. the sarb lowered the repo rate to 3. 50 % during the pandemic ‒ its lowest level in over 50 years. 10 the cumulative electricity shed from the grid in the first six months of 2023 amounted to just over 15 000 gwh, which is significantly higher than the 11 770 gwh shed in the whole of 2022. load - shedding is estimated to have contributed 0. 5 percentage points to domestic inflation this year. and output growth slightly higher over the medium term. 12 meanwhile, private sector investment in alternative energy is providing a welcome boost to fixed capital formation and is supporting domestic economic activity, particularly in the construction industry. investments in back - up energy solutions have cushioned business operations from the impacts of load - shedding and partly explain the resilience we see in the economy. despite high inflation eroding real incomes, household spending has grown over the past year, although its contribution to overall economic growth has been declining. high inflation and rising interest rates, alongside slower employment recovery and declining real disposable income, continue to weigh on consumer confidence, raising the prospect of further slowdowns in household consumption growth. 13, 14 slower domestic growth ultimately reflects in weaker fiscal numbers, especially so given the reversal in revenue windfalls. the current trajectory of the fiscus is characterised by elevated budget deficits and rising public debt levels. this has contributed to a higher risk premium, driving up the cost of borrowing, and depreciating the rand exchange rate, thereby raising exchange rate pass - through inflation. fiscal consolidation can significantly lower fiscal risk, and this should support macroeconomic stability and ultimately economic growth. conclusion finally, let me conclude by recommitting the sarb to the challenge posed by our constitution. our job is to contain inflation in the interests of balanced and sustainable growth. the sarb will continue to exercise its mandate to guide inflation and inflation expectations closer to the midpoint of the target band which, in turn, keeps demand and supply in the economy | 0 |
alan greenspan : central bank panel discussion remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, to the international monetary conference, peoplea€™s republic of china, beijing, ( via satellite ), 6 june 2005. * * * the pronounced decline in u. s. treasury long - term interest rates over the past year despite a 200 - basis - point increase in our federal funds rate is clearly without recent precedent. the yield on ten - year treasury notes currently is at about 4 percent, 80 basis points less than its level of a year ago. moreover, despite the recent backup in credit risk spreads, yields for both investment - grade and less - than - investment - grade corporate bonds have declined even more than treasuries over the same period. the unusual behavior of long - term rates first became apparent almost a year ago. in may and june of last year, market participants were behaving as expected. with a firming of monetary policy by the federal reserve widely expected, they built large short positions in long - term debt instruments in anticipation of the increase in bond yields that has been historically associated with a rising federal funds rate. but by summer, pressures emerged in the marketplace that drove long - term rates back down. in march of this year, market participants once again bid up long - term rates, but as occurred last year, forces came into play to make those increases short lived. but what are those forces? clearly, they are not operating solely in the united states. long - term rates have moved lower virtually everywhere. except in japan, rates among the other foreign group of seven countries have declined notably more than have rates in the united states. even in emerging economies, whose history has been too often marked by inflationary imbalances and unstable exchange rates, access to longer - term finance has improved. for many years, emerging - market long - term debt denominated in domestic currencies had generally been unsalable. but in 2003, mexico, for example, was able to issue a twenty - year maturity, peso - denominated bond, the first such instrument ever. in recent months, colombia issued domestic - currency - denominated global bonds. as rates came down worldwide, dollar - denominated embi + spreads over u. s. treasuries receded to historically low levels, before widening modestly of late. * * * a number of hypotheses | driving investors to reach for higher returns, thereby lowering the compensation for bearing credit risk and many other financial risks over recent years. the search for yield is particularly manifest in the massive inflows of funds to private equity firms and hedge funds. these entities have been able to raise significant resources from investors who are apparently seeking above - average risk - adjusted rates of return, which, of course, can be achieved by only a minority of investors. to meet this demand, hedge fund managers are devising increasingly more complex trading strategies to exploit perceived arbitrage opportunities, which are judged - in many cases erroneously - to offer excess rates of return. this effort is particularly evident in the pronounced growth and increasing complexity of collateralized debt obligations. although collateralized debt obligations are a powerful tool for enhancing risk management by separating idiosyncratic risks from systematic risks, the models used to price and hedge these instruments are just beginning to be tested. i have no doubt that many of the new hedge fund entrepreneurs are embracing a strategy of pinpointing temporary market inefficiencies, the exploitation of which is expected to yield aboveaverage rates of return. for the time being, most of the low - hanging fruit of readily available profits has already been picked by the managers of the massive influx of hedge fund capital, leaving as a byproduct much - more - efficient markets and normal returns. but continuing efforts to seek above - average returns could create risks for which compensation is inadequate. significant numbers of trading strategies are already destined to prove disappointing, a point that recent data on the distribution of hedge fund returns seem to be confirming. consequently, after its recent very rapid advance, the hedge fund industry could temporarily shrink, and many wealthy fund managers and investors could become less wealthy. but so long as banks and other lenders to these ventures are managing their credit risks effectively, this necessary adjustment should not pose a threat to financial stability. i trust such an episode would not induce us to lose sight of the very important contributions hedge funds and new financial products have made to financial stability by increasing market liquidity and spreading financial risk, and thereby enhancing economic flexibility and resilience. * * * the economic and financial world is changing in ways that we still do not fully comprehend. policymakers accordingly cannot always count on an ability to anticipate potentially adverse developments sufficiently in advance to effectively address them. thus our economies require, in my judgment, as high a degree of flexibility and resilience to unantici | 1 |
##ntial policy. this is the new buzzword in central banking circles. it has not been much referred to in singapore, but we have been applying macroprudential policies for some time now. i will describe now the workings of macroprudential policies in singapore, explaining why they are necessary in our context, and how they have been applied. why macroprudential policy the conventional thinking pre - crisis was based on two assumptions : • first, asset prices did not matter much. central banks therefore focused on consumer prices and placed less emphasis on asset prices. • second, if risks in individual financial institutions were well controlled, the financial system as a whole would generally be safe. regulators therefore focused on the safety and soundness of individual institutions and paid less heed to systemic risk. the collapse of the real estate markets in america and europe, the breakout of the global financial crisis, and the contagion of risk to seemingly sound financial institutions – against a backdrop of relative macroeconomic stability – showed both assumptions to be wrong. thus was born macroprudential policy – which focused on the health of the financial system as a whole and its interactions with the macroeconomy, particularly developments in liquidity, leverage, and asset markets. in many emerging market economies, macroprudential policy has become an important complement to monetary policy to help secure economic and financial stability. in singapore, the focus of macroprudential policy has been to promote sustainable asset prices. asset prices matter for four reasons. first, volatile asset prices pose a risk to financial stability, especially when a run - up in asset prices is financed by easy credit and accompanied by a build - up in leverage in the economy. when asset prices correct, financial institutions ’ vulnerability to default and loss increases. second, asset price inflation is as distortionary as consumer price inflation. both create uncertainty, misallocate resources, discourage productive investment, and ultimately drag down economic growth. third, asset prices have important feedback loops with consumer prices. rapidly rising asset prices raise general inflation expectations and also directly affect rentals and accommodations costs that go into the consumer price index. fourth, asset purchases financed by excessive borrowing on the expectation of future capital gains undermine financial prudence. if households or corporates build up leverage during periods of low interest rates, they will be vulnerable when interest rates normalise. what can central banks or governments do about asset bubbles or the leverage cycle? an oft - cited reason for not doing anything is | that we cannot reliably determine whether asset prices have overshot fundamentals or whether leverage has reached unsustainable levels. but the issue is not whether we can establish if there is an asset bubble or not. the issue is whether the rise in asset prices is creating negative spillover effects on the economy or whether a future sharp reduction in asset prices will lead to instability or serious dislocations. if the assessment is that it would, we have to act proactively to moderate prices now. and bis central bankers ’ speeches this has indeed been the approach taken by mas and the government with respect to property prices. how macroprudential policies have been applied singapore applied macroprudential tools as early as 1996, to help cool an overheated property market. but it is only since 2009 that macroprudential policies have been applied in a more concerted and calibrated fashion – again to help moderate price increases in the residential property market. following the global financial crisis, the confluence of low interest rates, firm domestic demand underpinned by sustained income growth, and supply shortages in the residential property markets caused home prices to rise rapidly. this had implications for both price stability and financial stability. as rentals increased on the back of rising property prices, imputed rentals on owneroccupied accommodation accounted for about a third of overall inflation during 2011 – 2012. cpi - all items inflation averaged 4. 9 % per annum during this period. mas was concerned that this would unhinge general inflation expectations and spill - over into more rapid wage growth across the economy. at the same time, the stock of mortgages surged by about 70 % from end - 2009 to end - 2012, posing risks for financial stability. to be sure, there was little imminent danger. households ’ net asset positions were still strong, with the aggregate household debt - to - asset ratio stable at around 16 %. the non - performing loan ratios for mortgages remained low at 0. 25 %, and the amount of housing loans in negative equity was negligible. but if domestic income growth faltered or if the global interest rate cycle turned abruptly, mortgage financing burdens could escalate. households ’ balance sheets could deteriorate if home prices fell, as much of the increase in household wealth had been driven by a rise in the value of property assets. the government was thus concerned that households were over - extending themselves in the low - interest rate environment. if a sufficiently large | 1 |
”, imk working paper 156. roberts, j. m. ( 2006 ), “ monetary policy and inflation dynamics ”, international journal of central banking 2 : 193 - 230. runstler, g. and m. vlekke ( 2018 ), “ business, housing and credit cycles ”, journal of applied econometrics, 33 ( 2 ) : 212 - 226. schmidt, s. ( 2011 ), “ the cost channel, indeterminacy, and price - level versus inflation stabilization ”, the b. e. journal of macroeconomics, 11 ( 1 ). schuler, y., p. hiebert and i. jaccard ( 2017 ), “ contrasting financial and business cycles : stylized facts and candidate explanations ”, mimeo bundesbank and ecb. staiger, d., j. h. stock, and m. w. watson ( 1997 ), “ the nairu, unemployment and monetary policy ” journal of economic perspectives 11 : 33 - 49. stark, j., “ the irresponsible ecb ”. stein, j. ( 2013 ), “ overheating in credit markets : origins, measurement, and policy responses ”, speech at the " restoring household financial stability after the great recession : why household balance sheets matter " research symposium sponsored by the federal reserve bank of st. louis. svensson, l. e. o. ( 1999 ), “ price - level targeting versus inflation targeting : a free lunch? ”, journal of money, credit and banking, 31 ( 3 ) : 277 - 295. bis central bankers ’ speeches svensson, l. e. o. ( 2008 ), “ inflation targeting ”, in the new palgrave dictionary of economics, second edition, 2008. svensson, l. e. o., ( 2010 ), " inflation targeting, " in : benjamin m. friedman and michael woodford ( ed. ), handbook of monetary economics, edition 1, volume 3, chapter 22, pp 12371302. svensson, l. e. o. ( 2017c ), “ leaning against the wind : costs and benefits, effects on debt, leaning in dsge models, and a framework for comparison of results, ” international journal of central banking 13 : 385 - 408. svensson, l. e. o. ( 2017 ), “ cost - benefit analysis of leaning against the wind ”, journal | . to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed that an ample degree of monetary accommodation is still necessary for the continued sustained convergence of inflation to levels that are below, but close to, 2 % over the medium term. 2 / 3 bis central bankers'speeches in order to reap the full benefits from our monetary policy measures, other policy areas must contribute more decisively to raising the longer - term growth potential and reducing vulnerabilities. the implementation of structural reforms in euro area countries needs to be substantially stepped up to increase resilience, reduce structural unemployment and boost euro area productivity and growth potential. this is particularly important in view of the overall limited implementation of the 2018 country - specific recommendations, as recently communicated by the european commission. regarding fiscal policies, the mildly expansionary euro area fiscal stance and the operation of automatic stabilisers are providing support to economic activity. at the same time, countries where government debt is high need to continue rebuilding fiscal buffers. all countries should continue to increase efforts to achieve a more growth - friendly composition of public finances. likewise, the transparent and consistent implementation of the european union ’ s fiscal and economic governance framework over time and across countries remains essential to bolster the resilience of the euro area economy. improving the functioning of economic and monetary union remains a priority. the governing council welcomes the ongoing work and urges further specific and decisive steps to complete the banking union and the capital markets union. we are now at your disposal for questions. 3 / 3 bis central bankers'speeches | 0 |
with $ 10 billion or less in assets from reporting requirements, which the federal reserve supported, due to the lack of 2 / 5 bis central bankers'speeches trading activity that community banks engage in. this overtook efforts by the fed and other regulatory agencies to refine the volcker rule, but the bottom line is that this broad exemption is law and in the process of being implemented. another change in the new legislation raises the asset threshold for bank holding companies eligible for the small bank holding company policy statement from $ 1 billion to $ 3 billion. the law also exempts bank holding companies with $ 50 billion to $ 100 billion in assets from enhanced prudential standards and exempts banks with less than $ 100 billion in assets from future stress testing. the lifting of this threshold importantly allows the federal reserve to tailor its rules for these firms moving forward while retaining the ability to protect the safety and soundness of the system. i mentioned steps related to call report streamlining, and the legislation addresses this topic also, allowing reduced call report requirements for certain banks with less than $ 5 billion in assets. for banks that are well managed and well - capitalized, the asset threshold was raised for a longer, 18 - month examination cycle from $ 1 billion to $ 3 billion. the legislation would also exempt from an appraisal requirement rural properties for loans of less than $ 400, 000, under certain circumstances. a common theme in the legislation and the fed ’ s steps to improve our regulation and supervision is tailoring. as the fed continues to evaluate the effectiveness and efficiency of regulations, i expect tailoring will be a guiding principle. let me now address international efforts to promote financial stability, specifically those centered in the financial stability board. in the run - up to the crisis, as i ’ m sure you all know, decades of relative stability in the united states had left both the financial industry and government agencies complacent about potential threats. and even though financial crises had occurred during that time in some advanced economies, it is fair to say that the united states and other nations did not place a high probability on a crisis that could be global in nature. as a result, international coordination and collaboration on financial stability was limited, and there was a shortage of detailed and standardized information about financial conditions and vulnerabilities in different countries. as the crisis descended and the global nature of the problems became clear, the united states and other major economies, working through the group of twenty nations, created the financial | system creates disincentives to work in the formal sector, and suggests that tax reform could produce a growth dividend as well as a more reliable source of revenue. on top of the low labor force participation is the well known and deeply concerning high level of out - migration. in addition to the lack of labor demand, it seems likely that quality - of - life concerns such as high crime rates are playing a role in these decisions. this underscores the importance of basic public service delivery and is another example of the interplay between fiscal and economic outcomes. another important dimension of labor supply involves the skills that workers bring to the market. many of these skills are acquired while in school. our research indicates that test scores for school - age children on the island are low, suggesting that there is an opportunity for improvement in the quality of public education. one clear lesson from recent research in urban and regional economics is that the collective skills of the people living in an area are a critical ingredient for its growth prospects. improving the education available to residents can pay large dividends over time. i know that this list seems long, and none of issues i have raised are easy to address. nonetheless, i am confident that puerto rico has started on the road to recovery. in the current environment, it ’ s hard to see beyond the immediate crisis to a brighter future for puerto rico, but that has been said of other places that have come back stronger than ever. getting the fiscal situation in order is an important first step. the factors leading up to the crisis took many years to develop, and history shows that a successful recovery from a crisis also takes time. it is important to recognize that fact and to stay the course. before i conclude, let me briefly discuss our new survey. earlier this month, the new york fed released the puerto rico small business survey, which focuses on the business performance, financing needs and borrowing experiences of firms across the island. the survey is intended to fill important knowledge gaps and flag potential economic growth opportunities for the commonwealth. it was designed with input from partners here in puerto rico, and we are very grateful for their cooperation. key findings reveal that firms are persevering through puerto rico ’ s economic crisis, though a majority reported declining revenues. managing cash flow is a top concern, ranking above concerns about rising business costs. there is significant demand for credit, with the most common reason being the need to meet operating expenses. for about half of all small firms, credit | 0 |
but also spread over to major southern european countries, including spain and italy. in those countries, due to a rise in government bond yields, namely, a decline in government bond prices, financial institutions ’ assets have deteriorated, which has led to a rise in funding costs and instability of financial positions. as a result, financial conditions surrounding firms and households have worsened, posing pressure to suppress economic activity. such deterioration in the real economy and concern over the financial systems have been fed back to the fiscal problem through a decline in revenue and an increase in support for financial institutions. in such a way, in europe, a vicious cycle of public finance, the financial system, and the real economy has been at work, mainly in peripheral countries. therefore, the stagnation in the european economy has been protracted, and that has recently been spread to core countries, including germany, mainly in terms of business sentiment. the growth rate of the euro area economy has been negative for three consecutive quarters. in the meantime, the european authorities have been taking various policy measures. in july, a financial support measure to inject public funds into spanish financial institutions was compiled, and in the beginning of september, the european central bank ( ecb ) introduced a new program to purchase government bonds with a maturity of between one and three years, with no ex ante quantitative limits on the size of purchases. however, in starting purchases of government bonds, the ecb is going to make some conditions. for example, the issuer countries of bonds to be purchased will have to accept monitoring by the eu and the imf on the progress of fiscal consolidation. thanks to those various policy responses, stability has been maintained in interbank funding markets, and investors ’ risk aversion has abated somewhat in international financial and capital markets as a whole. the policy responses by the ecb and other policy authorities are indispensable for containing the vicious cycle of public finance, the financial system, and the real economy. however, in order to resolve the european debt problem fundamentally, it is necessary for countries whose fiscal sustainability has been a cause for concern to make some progress in meeting the challenges such as fiscal consolidation, strengthening medium - to long - term growth potential, and reinforcing the stability of the financial system. in addition, for europe as a whole, integrating fiscal policy and banking supervision of the nations is an unavoidable challenge. none of these challenges is easy to meet and thus it is likely that high uncertainty | bank of japan ’ s may report of recent economic and financial developments1 bank of japan, may 21, 2001. * the bank ’ s view * * adjustments in economic activities have been under way, as production is declining reflecting a fall in exports. with regard to final demand, the recovery in private consumption continues to be weak as a whole, but there are somewhat positive signs in some indicators. housing investment is declining slightly. public investment is increasing. on the other hand, net exports ( real exports minus real imports ) continue to decrease reflecting a slowdown in overseas economies such as those of the u. s. and east asia. business fixed investment seems to be leveling off while the exporting conditions continue to deteriorate. industrial production is declining sharply, reflecting such developments in final demand and as excessive inventories of electronic parts and some materials are building up. the environment surrounding corporate profits is becoming more severe in line with the decline in exports and production, and business sentiment of firms is worsening particularly in manufacturing. income conditions of households have not yet deteriorated, but the decline in production is starting to affect the household sector mainly through the decrease in hours worked. as for the outlook, public investment is expected to continue increasing for the time being. net exports, however, are likely to continue decreasing for a while, reflecting the ongoing adjustments in overseas economies. business fixed investment is projected to peak out and then to start a downturn, as the effects from the implementation of a backlog of orders sustaining investment dissipates. in addition, inventory adjustments in goods such as electronic parts and materials will continue for the time being. industrial production, therefore, is expected to follow a declining trend. in these circumstances, corporate profits are likely to start decreasing and thus household income is expected to weaken gradually. overall, the adjustments are likely to continue for some time, mainly in production. meanwhile, it is generally thought that overseas economies, particularly the u. s., will follow a gradual recovery trend from the latter half of 2001. in this case, exports, helped also by the depreciation of the yen, are expected to underpin the economy once again. however, attention should still be paid to the possibility of a prolonged deceleration of overseas economies and the risk of a negative impact on the economy induced by developments in foreign and domestic capital markets via corporate and household confidence. with regard to prices, import prices are rising, mainly reflecting the depreciation of the yen. domestic | 0.5 |
the banks would have both a direct adverse impact on customers and an indirect effect that would result from its negative impact on economic growth. 4. the importance of the reform in bank fees i am in favor of this important reform, because it is likely to increase competition in the banking industry, to the benefit of its customers. the reform was the outcome of the intense efforts by the knesset, mainly by member of knesset ( mk ) moshe kahlon, mk gilad ardan, the entire economic affairs committee, and the supervisor of banks. here i would like to compliment the staff of the banking supervision department on the efforts they invested in this area, which resulted in a necessary and wellplanned reform. i would also like to mention the ministry of finance, the director - general of the anti - trust authority, expert advisers and consumer organizations, all of whom cooperated on this issue and supported the reform. the aim of this reform, which will affect us all, is to lower the costs paid by banks ’ customers. there are two ways of achieving this : one is by imposing wide - ranging supervision on bank fees, and the other is by increasing competition in the banking system, and lowering prices via market forces. the first method gives immediate results, but brings in its wake much damage, which i will describe later. the second approach is the right one, which will yield long - term gains to consumers and to the economy as a whole. the reform has increased the level of transparency with regard to fees, and transparency is essential to the development of competition. thus, the reform reduced the oversized list of bank fees, gave them uniform names, and created the current situation in which, for the first time, customers know the prices they are asked to pay for banking services. as a result of these changes, consumers can compare prices and make informed decisions – just as we all do when we go shopping. this has revolutionized the pricing of banking services, and customers can see what they would be charged for various services in each of the banks, and they can then make rational decisions. to help customers, the bank shows on its website the fee tariffs of the banks, tables and calculators enabling customers to compare the costs of managing their current accounts, and other detailed relevant information. all these have created a new situation in israel : for the first time customers are well aware of the full implications of the bank fees and have become more actively involved in this issue. the reform also abolished fees | be inadvisable to opt at this stage for simpler, “ instant ” solutions, such as imposing wide - ranging supervision over bank fees, or forbidding banks to charge fees at all. we must give the new system time to operate properly, and to allow the banking supervision department to deal with flaws that may come to light. supervision must be the last step, not the first, and even then only if there is absolutely no alternative. sweeping supervision is not advisable, is unacceptable around the world, will take us back to somewhere we do not want to be, and is likely to have an adverse effect on competition which we all favor so highly, and thus, in the final analysis, on consumers. this would probably occur because supervision is likely to result in the banks setting uniform fees, at the exact level determined, and the quality of service to customers would be impaired. moreover, and certainly no less important, it would probably deter potential competitors, particularly foreign banks, from entering the field of banking in israel, meaning that competition would remain at its low level. clearly we must give the reform a chance ; it has been in effect just two weeks. it is also important that we all support the supervisor of banks in advancing the reform, and he, on his part, will do what is necessary to correct any flaws and to speed up the whole process. | 1 |
masaaki shirakawa : japan ’ s economy and monetary policy speech by mr masaaki shirakawa, governor of the bank of japan, at the kisaragi - kai meeting, tokyo, 25 july 2011. * * * introduction i am privileged to have this opportunity to speak before such a large audience today. four and a half months have passed since the great east japan earthquake, an unprecedented tragic event. immediately after the earthquake, production plunged mainly due to the destruction of capital equipment, supply - chain disruptions, and electric power shortages. after passing through the worst period, however, production activity has been recovering at a faster - than - expected pace with a gradual easing of various supply - side constraints. at the same time, there is also the harsh reality that many still bear hardships that cause them restless days. the conduct of monetary policy is by nature mainly based on a macroeconomic analysis. however, we recognize that the damage from the earthquake disaster varies by area and industry. i myself visited the disaster areas and now have a greater recognition that macroeconomic perspectives are not enough to fully describe the true state of our economy. even from a macroeconomic perspective, although downside risk has been receding with respect to the supply - side constraints that emerged immediately after the earthquake, japan ’ s economy is starting to confront another new problem of uncertainty regarding electric power supply in the long run. even before the earthquake, our economy had faced various pressing structural problems, including the rapid aging of the population. so, this brings us to the end of a somewhat lengthy introduction. today i will first describe the current state of japan ’ s economy and its outlook. after illustrating the challenges confronting our economy, i will explain the bank of japan ’ s conduct of monetary policy. in my remarks, i would like to pay due attention to the time horizon by clearly delineating short - term and medium - to long - term periods. i. developments in overseas economies i will begin with developments in overseas economies, which form the basis for analyzing those in japan ’ s economy. the impact of the recent earthquake has been enormous, and recent economic debate tends to focus on the effects of the disaster. needless to say, the global economy and financial markets keep changing while we deal with the aftermath of the disaster. after all, when the supply - side constraints are resolved, developments in overseas economies will be the most significant driver of japan ’ s economic activity in the short run. the u. | for this reason, the relative value of the currencies greatly affects the competitiveness of each country ’ s exports. on the other hand, looking at the trade relationship between japan and china, the two countries play much more complementary roles in the international supply chain, meaning that exchange rate effects differ. these issues are also highlighted in the reports from the bank ’ s branches across japan and the bank, taking them into account, in detail examines foreign exchange rate developments and their effects with great interest. it should also be noted that, the appreciation of the yen, from a longer - term perspective, has the positive effect of bringing about an improvement of the terms of trade through a decline in import prices, that is, it leads to an increase in japan ’ s overall real income. the bank also pays attention to how developments in the foreign exchange market affect japan ’ s economy from such a long - term perspective and how firms respond. iii. developments in japan ’ s economy let me now turn to developments in economic conditions in japan. what i mean by economic conditions here are short - term developments in economic activity measured by indicators such as those related to gdp, corporate profits, and employment. on the other hand, i assume that business leaders such as yourselves probably associate with the term economic conditions developments that reflect more structural or longer - term factors in your region or industry. keeping this subtle difference in mind, let me first talk about economic conditions in terms of short - term developments in economic activity. japan ’ s economy has been improving on the back of the increase in exports and production brought about by the recovery in overseas economies and due to the effects of policy measures targeting durable consumer goods, but it seems that the recovery has been pausing since early autumn. exports have recently been more or less flat mainly due to inventory adjustments in it - related goods and the slowdown in overseas economies. as for private consumption, demand for cars has suffered a reverse following the last - minute increase in demand for energy - efficient cars ahead of the expiration of subsidies. in these circumstances, the increase in production has come to a pause. as for the outlook, it is projected that the pace of economic improvement will continue to be slow for the time being, mainly due to the slowdown in overseas economies and the waning effects of various policy measures, as well as the effects of the earlier appreciation of the yen. however, once we enter fiscal 2011, japan ’ s economy is expected to return to a moderate recovery path, | 0.5 |
##ing, mobility and transportation, and importantly, develop a safe and secure data marketplace. 7 likewise, mas seeks to create a smart financial centre, where technology is used pervasively in the financial industry to increase efficiency, create opportunities, allow for better management of risks, and improve lives. to that end, the mas will pursue a holistic developmental path that is underpinned by smart regulatory and developmental policies that are conducive to innovation. a balanced regulatory approach must encourage financial institutions to thrive on innovation, yet keep risks in check, to maintain the safety and stability of our financial system. our development strategy will entail close partnership between mas and industry, to promote a culture of innovation in our financial sector. we have embarked on a number of key initiatives to develop new capabilities, infrastructure and talent in technology and innovation. financial services will feature strongly in our national skillsfuture effort, and mas will work with industry, the institute of banking and finance, as well as educational institutes to build capabilities in financial technology and innovation. mas also recently launched the financial sector technology & innovation ( fsti ) scheme, to support the creation of a vibrant innovation ecosystem in singapore. the opening of lumenlab today bears testimony to metlife ’ s confidence in singapore ’ s proposition as a leading insurance market and our vision to be an innovation hub for new and emerging insurance risks. lumenlab is an enlightened response to asia ’ s healthcare and retirement needs in the next decade, and is well aligned with mas ’ strategy to have innovation - led growth drive our next phase of development as a global insurance market. conclusion congratulations to metlife and lumenlab. i look forward to continued partnership with you in singapore. thank you. transcript of speech by prime minister lee hsien loong at founders forum smart nation singapore reception, prime minister ’ s office singapore ( 2015 ). bis central bankers ’ speeches | singapore. | 0.5 |
##down in the global economy. virtually all economies – both industrialised as well as emerging – have been moving in the same direction since the end of 2008, which has contributed to the magnitude of the overall current downswing. in conclusion, i would like to draw your attention to three points, which i consider as important : first of all, the full - scale test to which the global financial system is subject reveals an excessive fragility that the prevailing mathematical models had not anticipated. this fragility is unacceptable. the global market economy, in all its elements, including and especially in its financial component, must considerably strengthen its resistance to shocks, i. e. its resilience. this calls for a set of ambitious reforms aiming to introduce, re - introduce and reinforce if need be counter - cyclical mechanisms and the shock - absorbers in the financial system. financial and economic fluctuations are inevitable and necessary in a market economy. it is up to us to ensure that we don ’ t amplify those shocks by our own making and our own rules, as is the case at the moment. shocks, sometimes abrupt, are inevitable : they may come from technology and innovation, from structural transformations that characterise globalisation, from geostrategic risks and many other angles. it is up to us to deal with them as smoothly as possible, not only at the level of the economies concerned but also at global level. the corresponding reforms must be systematic without giving the least privilege to any entity and without focusing attention either on a few scapegoats. as a matter of fact, everything can and must be substantially improved. in second place, we should note the rapid reaction of the public authorities, central banks and governments in particular, in these exceptional circumstances. of course, i am not referring to the decisions taken since the start of the turbulence on 9 august 2007 : you may remember that the ecb ’ s executive board decided to lend overnight at our refinancing rate €95 billion to the commercial banks in the euro area. what i want to talk about are the decisions of the european central bank and the other central banks after the crisis worsened in september concerning the organisation of what i would call a line of defence against a systemic threat of illiquidity : those decisions have led us to expand the collateral framework and to commit to ourselves to refinancing without limit a fixed interest rate, at one week, one month, three months and six months. the governments | themselves have set up a second line of defence against the systemic solvency threat. they have done so by organising, whenever necessary, support to ailing institutions and by systematically supporting the banking sector by means of guarantees and recapitalisation. the difficulties are still there, and in these circumstances there is no room for whatever form of complacency. we have to remain permanently ready to act. my third point concerns confidence. confidence is the most precious ingredient today. it is also the ingredient that is lacking most in the real and financial sphere of the economy at present. having underestimated considerably the true underlying risks that were lying ahead in 2008 and 2009, it would be an error of equal magnitude for the actors of the private sector to now overestimate the risks that are lying ahead over the medium term, for 2010 and beyond. the year 2009 will be very difficult, as i mentioned last thursday. the ecb ’ s governing council considers that economic growth in the global economy and in europe will be substantially lower than projected in early december. however, i see at least four reasons to have confidence in a recovery of the global economy and the industrialised economies over the medium term, after the trying year of 2009 : • the responsiveness of public authorities, central banks and governments, in a difficult situation makes out of the current episode a unique period in economic and financial history. i do not consider that the scope of the actions by public authorities has been sufficiently taken into account by the private actors. • the growth potential of the large and emerging economies is considerable : the deceleration of their growth patterns currently observed will be temporary ; for several of them the potential growth of domestic demand, which today is suppressed, is enormous. • technological progress is remarkable and even accelerating in the current period : it will be the source of an important part of tomorrow ’ s economic growth. • an important factor in the current slowdown has been the spike in oil and commodity prices. this spike was both inflationary and contractionary. the current sharp decline is, by consequence, both dis - inflationary and expansionary. for all these reasons, which are not exhaustive, after an exceptionally difficult 2009, it seems to be a good working hypothesis to me to see 2010 as the year of rebound. the european central bank and the eurosystem will for their part continue to provide a solid anchor of stability and confidence over the medium and long term, in the service of our 329 million citizens. | 1 |
true market is and their responsibility to act in a way that is consistent with maintaining true markets. in terms of a perception of a lack of client focus, i took away two gaps that were raised. the first is a financing gap, which i felt came out during the first panel, and which some economic historians in the room compared to the ‘ macmillan gap ’ – the distance between finance and industry being too great. people talk today about an excess of savings not finding a home. in this country, it is felt most in terms of sme and mid - cap finance. many were struck by the potential ability of financial technology – fintech – to help bridge this financing gap, but i would emphasise that there was also bit of a caution, as i believe reverend giles fraser noted in the last panel. we should not get too far ahead of ourselves, but look to further evidence that it can bridge the gap. i think the chancellor is absolutely right that fintech has potential both in terms of expertise in finance and capability in technology. if these can be married effectively, we have an opportunity. there were a few specific examples that were mentioned that i would just like to reinforce. first, and as alex brummer very rightly emphasised, the opportunities that come from big data and a greater open architecture that is already there. as our chief operating officer charlotte hogg would note, the bank of england is one of the biggest repositories of big data. there is always a question about to what extent that can be leveraged more broadly into the system, and though it is still early days, the bank may want to consider taking this on as a challenge. jon cunliffe raised a separate and important issue with receivables finance, where fintech could make a real difference. following the crisis, payment terms for companies increased to 120 days and have not come back. we know there are effective fintech solutions to this which leverage off the credit of the payer. in such circumstances, and more broadly where fintech moves further into more traditional banking areas such as peer to peer and other lending, the bank recognises that we need to think about and take forward a proportionate, activity - based regulatory response. let me turn to the second gap in relation to a lack of client focus : an engagement gap, if i can put it that way. this manifests itself in a number of ways, as noted during the many insightful interventions during our panel | coming to completion this year – it did not currently see a case for recommending changes to the uk regulatory framework. i am afraid, for financial stability, that is as good as it gets. the financial sector evolves at a phenomenal speed. risks can change and build very quickly. so the fpc will have to repeat its assessment of risks from the non - bank financial sector at least annually. in this area, as in the banking sector, it has to keep risk under close and regular review. and it has to be prepared to act. but that, of course, is the nature of preserving financial stability and preventing a reoccurrence of the illusions i described earlier. bis central bankers ’ speeches | 0 |
appropriately managed. i am sure that the mpc will play a useful role in helping the industry meet this challenge, by providing training for new practitioners and continuing its work on product development. the recent study on the feasibility and desirability of introducing overnight index swaps in hong kong is one good example of this work. 7. i should perhaps stop here to avoid encroaching further on the valuable time set aside for our guest speaker today. donald mathieson of the imf is no stranger to hong kong. many of you will be familiar with the authoritative reports and analysis of financial markets that he and his colleagues produce. we are fortunate in having been able to grab him for a couple of hours today while he is briefly passing through hong kong. it is my pleasure to welcome him and to join with you all in the launch of this seminar, which will, i hope, be the first of many organised by the mpc over the coming months and years. 8. finally, let me record my gratitude and congratulations to all the committee members of the mpc for the excellent work they have put into the reconstruction of the committee, and my thanks to everyone here for supporting this event today. | purchasers who meet the eligibility requirements will be able to apply for mortgage loans of up to 90 % ltv ratio under the mortgage insurance arrangements. according to figures provided by the hong kong mortgage corporation limited, the value of properties involving mortgage loans with a 90 % ltv ratio averages at around hk $ 3. 2 million. therefore, i believe that the measures of the hkma will have minimal impact on first - time homebuyers. 10. changes in the property market cycle are affected by a host of internal and external factors, including land supply, interest rate movements, changes in household income as well as economic and financial market developments in europe and the us. in view of the highly uncertain internal and external environments, the hkma will continue to monitor the market situation closely and introduce appropriate measures in response to changes in the property market cycle to safeguard banking stability. bis central bankers ’ speeches | 0.5 |
yield spreads between private bonds ( bank bonds and corporate bonds ) and government bonds are contracting slightly. however, spreads between bonds with low credit ratings and government bonds still remain wide. stock prices are level on the whole and are basically moving in the range of 11, 000 - 12, 000 yen. in the foreign exchange market, the yen appreciated reflecting the overall downtrend in u. s. dollars due mainly to weak u. s. stock prices. with regard to corporate finance, private banks are becoming more cautious in extending loans to firms with high credit risks while they continue to be more active in extending loans to blue - chip companies. the lending attitudes of financial institutions as perceived by firms are becoming more severe. in corporate bonds and cp markets, the issuing environment for firms with low credit ratings continues to be severe on the whole, but the environment for firms with high credit ratings is improving recently. credit demand in the private sector continues to follow a downtrend mainly because firms are decreasing their business fixed investment while continuously reducing their debts. amid these developments, private banks ’ lending continues to decline by about 2 - 3 percent on a yearon - year basis. the year - on - year growth rate of the amount outstanding of corporate bonds issued is decreasing somewhat. the year - on - year growth rate of the amount outstanding of cp issued continues to decline, although the amount is still well above the previous year ’ s level. the year - on - year growth rate of the monetary base in april increased further due partly to the continued high liquidity demand even after entering the new fiscal year, reflecting a system failure of a major bank group. the year - on - year growth rate of the money stock ( m2 + cds ) remained around 3. 5 - 4. 0 percent. funding costs for firms continue to be at extremely low levels on the whole. overall, the recent financial environment remains extremely easy on the whole in terms of money market conditions. the deterioration in the financial position of firms is coming to a halt. however, the stance of investors toward firms with high credit risks remains severe and the lending attitudes of private banks are becoming more cautious. hence, the developments in the behavior of financial institutions and corporate financing continue to require close monitoring. | average inflation rate after cy 95 ( discontinued at the introduction of qqe for japan ). 4. gray bands indicate recession periods ( peaks and bottoms of business cycle are those determined by the national bureau of economic research for the united states and cabinet office for japan ). sources : cabinet office ; ministry of internal affairs and communications ; federal reserve bank of st. louis ; national bureau of economic research. chart 10 consumption before and after consumption tax hike real disposable income and real consumption expenditures cy 2015 = 100 average consumption propensity fy 2000 = 100 system of national accounts family income and expenditure survey real consumption expenditure consumption tax hike before most recent consumption tax hike ( jan. 2000 - mar. 2014 ) after most recent consumption tax hike ( apr. 2014 - dec. 2017 ) fy 2000 real disposable income cy 2015 = 100 note : data are for workers ’ households with two or more members. source : ministry of internal affairs and communications, ” family income and expenditure survey. “ 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 notes : 1. average consumption propensity = household consumption expenditure / household disposable income. 2. disposable income for national accounts includes that of private unincorporated enterprises. 3. figures for the family income and expenditure survey are those for the average of each fiscal year ( average of april to december for 2017 ). sources : cabinet office, “ system of national accounts ” ; ministry of internal affairs and communications, ” family income and expenditure survey. “ | 0.5 |
close to the target number, we would not only need scaling up of efforts by institutions like aif, but also the involvement of many more such governmental and non - governmental organizations. our experience with the financial inclusion programs has highlighted that unless the intermediaries involved develop sustainable delivery models and are able to run these activities as a viable business proposition, success would remain elusive. therefore, apart from a sense of commitment, what we really need for these drives to succeed is a sustainable delivery model, which other institutions could imbibe from aif and emulate. it is, indeed, very heartening to note that the aif has chosen to focus on the subject of financial inclusion of urban poor for its annual seminar and i compliment the foundation for this. as you all know, financial inclusion has been a key area of focus for the reserve bank of india and i firmly believe that forums such as this provide us an opportunity to put our minds together to introspect on what more needs to be done to meet the ambitious goals we have set for ourselves. i, therefore, thank the organizers for inviting me and providing me the opportunity to present my views on the topic. though the indian economy has witnessed tremendous growth lately, vast sections of our society have remained excluded from the india growth story due to various socio - economic factors. it is ironic that despite our cities seeing widespread affluence, large pockets of financial exclusion should exist right at the very heart of these cities. every year, a large number of people migrate from villages to cities in search of a better life for themselves and their families. they take up non - contractual and non - permanent jobs of vendors, porters, hawkers, construction workers, domestic workers, rickshaw pullers, etc. these people need fast, low cost, convenient and safe avenues of savings, credit and remittances to meet their needs. however, in view of the non - permanent nature of their occupations, they frequently bis central bankers ’ speeches shift base within city or even across cities. bankers are generally found to be shy in providing them banking services, for obvious reasons. what do we mean by financial inclusion? before i turn to the specifics of financial inclusion of urban poor, let us spend a minute in understanding the meaning of the term itself. we have defined financial inclusion as “ the process of ensuring access to appropriate financial products and services needed by all sections of the society in general and vulnerable groups such as weaker sections and low income groups | zeti akhtar aziz : the transformation of labuan as an international business and financial centre speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the launch of labuan international business and financial centre, kuala lumpur, 28 january 2008. * * * distinguished guests, ladies and gentlemen, it is with great pleasure that i welcome you to the launch of labuan international business and financial centre. this decade has seen the labuan offshore financial centre demonstrate its ability to adjust and reinvent itself in a rapidly changing international and regional environment. this decade has also witnessed the robustness and resilience of the labuan offshore financial centre as evidenced by its ability to continue to expand and mature even during the most challenging of periods. the global and regional market place however, continues to transform, bringing with it new opportunities and challenges. to have the flexibility to benefit from the new opportunities and to have the capacity to rise to the new emerging demands and challenges, continued reassessments need to take place to rediscover new directions, build new strengths, new comparative advantages and to define our new role in this ever changing and more competitive market place. today we are defining a new beginning for the labuan offshore financial centre as it positions itself for a much larger role. your presence here today to share in this auspicious occasion is indeed appreciated. in providing the full range of financial services, labuan offers a total financial solution both in both conventional and islamic finance. labuan also has the top - ranked financial institutions that originate from more than 80 countries, including islamic financial institutions that also originate from different parts of the world. the labuan offshore financial centre has seen steady expansion both in terms of the number of players, the diverse financial product offering and the volume of activity. labuan today has also become a thriving regional business centre. it is making its mark as a regional base for the oil and gas industry and as an entreport for the regional triangle of brunei - sabah - philippines. its convenient location and excellent deep harbour are natural advantages. its modern airport which has been enhanced has also promoted increased tourism. being a duty free zone and a free port status has supported these activities. growth in these peripheral commercial and economic activity in labuan has provided the potential for labuan to succeed as an international business and financial centre. labuan benefits from being centrally located in the asia pacific region, a region that has been one of the fastest growing regions in | 0 |
in the fit framework is expected to be decided jointly by the government and the central bank. hence, the fit framework requires these two institutions to work together, as there should be no misalignment between fiscal and monetary policy. the central bank will continue to resort to active omos to manage liquidity in the money market, thereby guiding the short - term market interest rate, which is the key operating target to navigate inflation in the targeted range. i wish to emphasise the fact that omos are a strategy to manage market liquidity to align short term market interest rates with the policy stance and not a mechanism to print new money by purchasing or holding treasury bills by the central bank as wrongly interpreted by some analysts. a clear distinction must be made between such omos, widely practiced by central banks, and monetising the fiscal deficit through the central bank purchasing treasury bills issued on behalf of the government. further, we have implemented several measures to provide more information to market participants thereby facilitating an efficient price discovery process in the financial markets. the central integrated market monitor ( cimm ) system was introduced, in january 2018. the system captures vital market information from the call money, the government securities and the foreign exchange markets. daily liquidity estimation was further improved with the implementation of the liquidity reporting system through the cimm. further, a policy intervention by way of restricting non - bank primary dealers from participating in omo auctions was made in the money market with a view to strengthening the signaling effect of omo auctions. non - bank primary dealers continued to enjoy access to standing facilities and the intra - day liquidity facility. meanwhile, at the most recent policy rate adjustment, we narrowed down the policy rate corridor to 100 basis points with a view to reducing the volatility in overnight interest rates. looking ahead, we are in the process of exploring the feasibility of a single policy rate instead of the current corridor system to give clearer signals on the interest rates, reduce volatility in the call money rate and increase the transparency in the monetary implementation process. also, the hair cut policy relating to the pricing of securities will be reviewed in line with international best practices to ensure smooth operations in the money market. we will be looking into expanding money market activities in a comprehensive manner by introducing new instruments such as interest rate swaps ( irs ) and nondeliverable forwards ( ndf ). in order to improve the competitiveness of the banking sector, the central bank is also planning to | deficit, subpar economic growth, deceleration in monetary aggregates and credit, moderate levels of inflation as well as continuing deficit liquidity conditions in the money market. the tight monetary policy stance pursued by the central bank, since end 2015, by way of raising the statutory reserve ratio ( srr ) and policy interest rates yielded the desired outcomes, especially on demand driven inflation and trends in money and credit aggregates compared to 2016 and 2017. such developments, in particular, the favourable developments in inflation, inflation outlook and the trends in the monetary sector, in an environment of lackluster growth performance, induced the central bank to signal the end of the tightening cycle in early april 2018, by way of reducing the standing lending facility rate ( slfr ) by 25 basis points. nevertheless, global economic conditions and the pressure on the exchange rate has compelled the central bank to maintain a neutral monetary policy stance since april 2018. in the conduct of monetary policy, market based policy tools, particularly policy rates and open market operations ( omos ) were widely used, while the srr was also used as a tool of injecting liquidity to the market on a permanent basis. in view of the large and persistent shortage in rupee liquidity, the monetary board decided to reduce srr applicable on all rupee deposit liabilities of commercial banks to 6. 00 per cent from 7. 50 per cent in november 2018. the reduction in srr released a substantial amount of rupee liquidity to the banking system, which could have led to a reduction in interest rates and excess aggregate demand. therefore, in order to neutralise the impact of the srr reduction and maintain its neutral monetary policy stance, the central bank raised policy interest rates simultaneously. since the announcement of the transition towards fit, we have broadly maintained low levels of inflation in spite of some occasional upticks and downturns due to various demand and supply shocks stemming from the external and domestic fronts. benefiting from prudent and proactive monetary policy measures that were also supported by several macroprudential measures, monetary expansion was contained at desired levels, thereby supporting the maintenance of low levels of inflation during 2018. as you all know, the central bank has an unblemished track record of maintaining single digit inflation continuously for a decade. this also shows the central bank ’ s strong commitment to price stability, which it considers to be of utmost importance to create an enabling environment for the economy to achieve an accelerated trajectory of economic | 1 |
and capacity to act in cases of market turbulence. but i duly recognize there are other proposals on the table as well. one is to change the name of the esm to european monetary fund, emf. would this be justified? to my mind the nameplate is less important than the substantive improvements in the functioning of the esm. besides, the esm has become a positive, solid brand, based on the high integrity and professional quality of the institution and its staff, under the competent leadership of its managing director, klaus regling. another reform proposal relates to the institutional dimension. to increase accountability, the european commission has proposed to transfer the esm into the eu treaty and put it under parliamentary control of the european parliament, in a rather similar way as the ecb is – mostly focusing on the full right of demanding and receiving information. on the other hand, the commission proposal would maintain the key policy decisions and executive functions in the hands of the board of governors. this includes the decisions to approve of conditional financial programmes and the appointment of the managing director. hence the commission proposal is actually less of a great federalist leap forward than some fear and others wish. in principle, there are two alternative ways of making progress in european cooperation, either by the well - tested community method or by the intergovernmental method, which some years ago was described as the union method. for the eu to continue making legitimate progress in integration, in my view it is necessary to take good care of the community method, since it is able both to provide the effective capacity to act and the legitimacy to take decisions. it is based on the commission ’ s right of initiative, its independence and professionalism, the qualified majority rule in the council and co - determination by the european parliament. it enables the union to take decisions and keeps all member states – including the small states – on board. revisions of fiscal rules : the expenditure rule let me turn to my third and final subject : the revision of fiscal rules, in particular by introducing the expenditure rule into the eu fiscal rules. in the future, the economic and monetary union can work smoothly only if the public finances of all member countries are credibly on a sustainable footing. a combination of fiscal policy rules and market discipline related to government borrowing is necessary to ensure this. fiscal rules should be sufficiently simple to ensure that, in normal circumstances, we can be certain in advance that they will be adhered to when budgets are prepared. the expenditure rule can | shamshad akhtar : global transaction banking keynote address by dr shamshad akhtar, governor of the state bank of pakistan, at the annual global transaction banking seminar, organised by deutsche bank, karachi, 3 may 2006. * * * let me first welcome the deutsche bank global team to pakistan. deutsche bank has been an age - old partner in the development of pakistan ’ s banking industry and we look forward to the advice of their global team, and their contribution to supporting the enhancement of global transactions in pakistan ’ s banking industry. today, pakistan offers a promising ground for financial experimentation and innovation. pakistan ’ s banking industry has seen brisk growth in banking assets which today stand at over $ 60 billion. bank ’ s profitability is at an all time high and unprecedented, reaching close to rs 95 billion by end 2005. aside from higher efficiency gains in the industry attributable to benefits arising from significant banking sector restructuring and reforms, high profitability of banks has been achieved because of high interest margins. in the period ahead, the financial industry however has to be positioned for a more competitive environment and has to cater for more diverse and complex requirements of pakistan ’ s consumers and infrastructure. pakistan, like the rest of asia, is growing fast and the rise in per capita income, emergence of the middle income group and relative wealth increases altogether bring with them new demands for the retail banking industry. among others, both investors and industry are seeking better investments and financing alternatives and solutions, with demand for private debt, asset based and mortgage based securities, credit derivatives and hedge products etc. now emerging from different segments of the economy and population. beside these real sector developments and requirements, financial industry of pakistan has to catch up fast with the global developments and achieve better financial diversification and strengthen its risk management systems. in pakistan ’ s context, it has to be recognized that while large banks will continue to thrive on volumes of business which they have traditionally captured given their reach across the country, it is the foreign banks with their competitive edge in global transaction banking that can offer unique and new financial solutions and lead the way for the rest of the banking industry to provide to customers an integrated solution that caters for emerging consumer and industry requirements. global changes in the financial industry compulsions to go this route are mounting. world - wide, the financial landscape has changed driven by : • changing macroeconomic factors such as economic growth and demography and institutional development as capital markets have matured and population demands for | 0 |
i said, we went really deep into the analysis of the labour market and tried to really understand the forces behind inflation to better fight it. it was a very, very broad consensus. by the way, i just want to remind that it was a twofold decision. it was, number one, the 25 basis points but it was also the decision, or the confirmation, that we would stop any reinvestment under the app. what does the ecb know about lag effects? what takes longer to transmit into the economy? what are you looking at more closely? the second question, about your targets. according to projections you do not expect to reach the inflation target in the next three years. some economists suggest that this target 6 / 10 bis - central bankers'speeches is no longer valid, that 3 % will be the new 2 %. what do you have to say about that? we have a target. we have agreed on the target. we are in the middle of that fight against inflation and this is what we know. we're going to get to that 2 % and we're going to reduce it to 2 %. what happens next is another story, but we want to be at target and we want to be confident that it remains at target. so, the two elements are going to really drive our monetary policy going forward. on the lag time : we know that there is lag time, that the decisions that we have made in the last soon - to - be - a - year – which are monumental, by all accounts, both in terms of speed, in terms of height, volume of hikes, if you will, and we are seeing some effects. we are seeing it in market rates. we are seeing it in banking, financing. we are seeing it in credit, both in volumes and in rates. there is some lag time – not that much by textbook standards, which will typically say that it's anywhere between 18 and 24 months, maybe a bit more. but because it is so unprecedented and such an exceptional situation, we really have to monitor that very carefully. whether it is going to be faster, whether it is going to be a bit more slow because there has been variation in the terms of loans, for instance, to both corporates and mortgages and therefore the transmission is not operating as smoothly as it would if everything was at floating rates. all of that we are looking at extremely carefully to measure the transmission | objective that we have is very clear. the destination we know. the journey to get there is not over and we have ground to cover. so, we will be as restrictive as long as needed in order to make sure that we reach that destination. under the current parameters, 2. 2 % in 2025 is not satisfactory and it's not timely – which is why we are making the decisions that we are making today, and later on. at the end of june banks will reimburse €477 billion that they had borrowed under tltro, which was this very special facility that we had put in place to help the financing of the economy at the time of the pandemic. those loans were granted for periods of three years and there were various operations in the course of the pandemic. the repayment which is coming due now, is known and has been known for a long time. actually it was so well - known that it should have been a lot higher than that but we took measures in order to avoid that we had this sort of cliff effect of a massive reimbursement which would have exceeded €1 trillion. but banks know about it, they have known about it. they have done their funding plans in order to respond to the situation. in any event, we have the normal facilities available, whether it's mro or ltro if that was ever needed, just in case. the app reinvestment will be completed at the end of june, and we will let run - off take place as of july. we have experienced that partial reinvestment now for a few months because it was decided back in march. it has been well - absorbed by markets. we have not observed any disruption. given the amounts that we are talking about, we have reasons to believe that it should be absorbed also in a smooth manner. but, of course, we will be very attentive. we will look at this process. we will, as i said, always have the means to take action and to use all the tools that we have available if it was needed. you've touched on the problem of the wage increases. at your speech at the european parliament, you touched on the problem of corporate profits. if you take these both together, how confident are you that the relevant parties actually start to be more moderate on this, in particular as both of them start to criticise that interest rates are already too high? the second question | 1 |
##t has already established a corpus fund with a seed amount of rs. 50 lakh to promote higher education and research in banking technology and management as a core area. banks and other financial institutions are expected to contribute significantly to the growth of this fund. it is customary to devote a memorial lecture to a theme, which has fundamental significance and contextual relevance. after consulting with the organisers and keeping in view the interests of the rbi, the subject chosen for this occasion is : ” reviving confidence in the indian economy ”. it is necessary to recognise that india remains one of the best performing economies in the world, in spite of the current indications provoking a debate on the need for revival of the economy. it can be gathered from the analysis that it is important to revive confidence in the economy in any attempt to improve the performance. an approach in this regard can be discerned from the latest annual report of the rbi. in the true spirit of philosophical explorations and interpretations propounded by dr. sarvepalli radhakrishnan, the concluding part of the lecture will be devoted to select structural issues critical to restoration of confidence in the indian economy. performance of indian economy india today is rated as the fifth largest economy in the world, measured in purchasing power parity terms. only the u. s., chinese, japanese, and german economies are larger than ours. in terms of gross domestic product ( gdp ) growth rates, india was one of the ten fastest growing economies in the world during the ‘ eighties, and moved up to the eighth fastest during the period 1980 to 1998. in regard to growth of gdp in per capita terms also, india's performance during the period is among the top ten. furthermore, on the basis of data on income or consumption distribution ( world development report 1998 - 99 ) for about 80 countries, and using both the ‘ gini ’ coefficient and the share of the poorest 20 per cent as a measure of distribution, there are only 15 countries in the world, which have a better consumption / income distribution than india. while growth is considered to be a key measure of macroeconomic performance, economic stability is indicated by inflation. in the ‘ eighties, india ’ s average inflation rate was close to asian developing countries, above developed ones and lower than the average for all developing countries. in the ‘ nineties, inflation has been relatively low in the second half of the decade. in the external sector, india, along with china, has been described as | be of interest especially to our foreign delegates. nepal ’ s modern financial system has evolved through 80 years. up until 1983, the financial sector was highly controlled. in the mid - 1980s, the country embarked on a financial liberalization drive with a view to developing a diversified and competitive financial sector. a major structural change in financial sector policies, regulations and institutional developments was witnessed. the government emphasized the role of the private sector for the investment in the financial sector. subsequently, the door was opened for foreign banks to open joint venture banks in nepal. due to the adoption of financial liberalization policy, a proliferation in number of banks and financial institutions ( bfis ) was observed in nepal in the earlier decades. however, the growth has moderated as nrb imposed moratorium on licensing of bfis. for the last two years, banking system of nepal is experiencing an encouraging restructuring and consolidation, particularly through the merger and acquisition. nrb has taken consolidation in the financial sector as an important reform measure for building strong and competitive financial environment. as of mid - january 2017, the number of commercial banks stood at 28 while the number of development banks aggregated 57. similarly, there were 36 finance companies and 48 microfinance institutions. moreover, there were 15 cooperatives permitted by nrb to conduct limited banking activities as well as 25 financial ngos also licensed by nrb to undertake micro finance activities in nepal. ladies and gentlemen, nepal rastra bank and the government of nepal have been according due priority to values - based banking as demonstrated by their focus on microfinance which gained momentum in the 1990s as an instrumental tool for social mobilization and poverty reduction. consequently, some policy models were introduced including the grameen bank model, the wholesale micro finance model, the directed lending model, project - based micro credit model, and the fingos and the saccos model. i would now like to take your few minutes to highlight a couple of recent policy provisions which show that both the government and nrb have given a clear message to banks and financial institutions of the country to focus more on the well - being of the people, especially those residing in the rural areas, and not just on profit. first of all, acknowledging the significance of financial inclusion for nepal, the government through the budget for 2016 / 17 provided some policy directions. these included expansion of banking and financial services in the rural areas, promotion of mobile banking and branchless banking, continuation of government led programs such as rural self reliance fund ( rsrf | 0 |
of which i have mentioned earlier, inflation has been much lower in sweden than in other countries. compared with the united states and the euro area, the difference is between 0. 5 and 1 percentage point on average for the past three years, depending on which inflation measure is used. in 2004, the difference was as much as 2 percentage points. when one looks ahead, which is important in this context, according to consensus forecast, forecasters are expecting higher inflation in the euro area and the united states than in sweden, ” continued mr heikensten. ” it is clear that the krona has developed more weakly since the spring than the riksbank expected. as you know, we do not have a target for the exchange rate. however, it is an important factor when we assess future inflation. in this context it is not the present exchange rate that is decisive, but how we see it developing in a slightly longer - term perspective. there is no reason to depart from the basic assessment we made earlier ; there are still strong reasons in favour of a stronger krona. it is not merely that swedish macro data in general has developed well over a number of years compared with, for instance, the euro area ; most forecasts indicate that this development will continue. sweden is also one of the countries that has had the highest trade surplus as a percentage of gdp over a number of years, which is one indication among many that the value of the krona has been relatively low. however, even if we should not – as i see it – change our basic assessment that the krona will strengthen, its value at present is rather different. there is therefore reason to take into consideration a risk scenario for inflation linked to a weaker exchange rate. just as the riksbank emphasised during 2003 and 2004 that the strong krona was one reason behind the low inflation rate, there is reason to point out that the weakening of the krona this year, particularly if it persists, could result in higher inflation, ” said mr heikensten. ” all in all, i do not at present see any reason to change my view of inflation now to any great extent, compared with the october assessment. however, in my opinion, the changes that have occurred would appear to indicate slightly stronger economic growth and perhaps also the risk of a slightly more rapid rate of price increase, mainly connected with international inflation and a weak krona. given the information we have now, the financial markets ’ expectations | of expectations, almost all of the unemployment effect svensson has calculated disappears ( floden, 2012 ). and soderstrom and vredin ( 2013 ) point to problems with interpreting causal relationships behind svensson ’ s estimated phillips curve. the claim that unemployment would have been lower if a more expansionary monetary policy had been conducted since 2010 appears more plausible, however. but one can find objections to this conclusion. first, the reasoning presumes that a more expansionary monetary policy would not have caused the crisis scenario that a majority of executive board members have expressed as a risk that justifies a higher repo rate ( see the article in monetary policy report february 2014 ). second, higher unemployment now can be counterbalanced by lower unemployment in the future, as monetary policy can become more expansionary in the future when inflation and inflation expectations today are low. the question is thus whether the low inflation affects the average level of unemployment or merely the volatility of unemployment over the business cycle. examples are the us federal reserve, the bank of england and the european central bank ( ecb ). the two first - named banks have supplemented low policy rates with quantitative easing to try to make monetary policy more expansionary. see smets ( 2013 ) for a review of various points of view on this question. bis central bankers ’ speeches short time before other macroprudential policy measures are in place. but studies show that typical credit cycles are much more protracted than normal business cycles. 15 the status of the inflation target would probably be questioned if monetary policy “ leans against the wind ” – that is, results in an inflation rate below the target – for many years to dampen an expanding credit cycle. this reasoning becomes increasingly important the lower the inflation and policy rates are. if inflation expectations fall, increasingly expansionary monetary policy will be required to bring inflation back up to the target. 16 and as the policy rate has a lower bound, it may be difficult to make monetary policy sufficiently expansionary once this bound has been reached. one conclusion from these insights may be that monetary policy should react asymmetrically when inflation is low. monetary policy should then counteract falling inflation particularly strongly if there is a risk that the policy rate will otherwise reach its lower bound. 17 but the danger of deflation should not be exaggerated the low inflation in sweden and the euro area has recently led to much discussion on the risks of deflation, that is, a general fall in price levels. 18 | 0.5 |
working life, up to at least age 55 to supplement their retirement income. this is a great opportunity and challenge for the trust industry to design product choices that conform faithfully to the laudable objective of this new law. further, the improving economic prospects also set the stage for progressive liberalization of our foreign exchange regime to allow for greater flexibility in overseas investing. this should provide professional fund managers the necessary room to maneuver the diversification of their portfolios and to access a richer variety of qualified assets …. for the benefit of their customers. ladies and gentlemen. the reform agenda must be pursued vigorously …. if we are to secure the opportunities. at the financial market level, the bsp is closely collaborating with key market players through their respective industry associations, as well as with our fellow regulators particularly the sec ….. to achieve more transparent and investor - friendly markets. it is in this context, that we welcome the recent launch of the new government securities benchmark system that can promote fair price discovery, more effectively. we expect the trust industry to work within this new system so we can achieve full transparency and comparability of performance. the new benchmark should also assist in properly valuing debt securities and other financial products like derivatives, repos, as well as securities borrowing and lending arrangements … and thus promote their acceptability to the market. as the galaxy of available domestic capital market assets expands and the market deepens …. it is the trust industry that will be a clear winner. we are also working hard to constantly improve the payments and securities settlement systems. it is basic that we aspire to fully achieve efficient dvp settlement in all securities transactions …. in line with global standards in the area. this is critical to both investor protection and market stability. we also need to work closely to reform the trust industry itself. in that spirit, we are devoting dedicated resources at the bangko sentral … through our newly formed trust supervision group … to work closely with toap. their priorities include ( 1 ) basic trust department operating standards ; ( 2 ) risk management guidelines ; ( 3 ) trust department rating system ; ( 4 ) specialized examination procedures ; and ( 5 ) improvements to uitf regulations. at a more fundamental level, we are also reviewing the basic governance arrangements of the trust department …. as an entity within the bigger banking organization …. to minimize potential conflicts of interest, while preserving natural business synergies. this includes a closer look at the composition of the trust | christian noyer : monetary policy and banks, and the rise of global protectionism introduction by mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, at the gic ( global interdependence center ) central banking series “ monetary policy and banks, and the rise of global protectionism ”, paris, 10 march 2014. * * * these are challenging times for economic policy making. as was apparent at the g20 meeting in sydney, the performance of the world economy is contrasted and uncertain. a central question is whether monetary policy has a role to play to improve the situation. to me, the answer is unambiguously “ yes ”. monetary policy should remain active because persistently low inflation threatens the achievement of price stability as commonly defined by all major central banks today. not all central banks are the same and there is some diversity in their objectives, mandates and, of course, the situations they are facing. remarkably, however, all advanced economies have converged – in recent years – towards the same definition of price stability, first adopted by the eurosystem in 2003 : an inflation rate “ close to 2 % ” ( and in our case : below but close to 2 % ). i will focus my introductory remarks on two issues related to this challenging objective : the low inflation level and the forward guidance strategies. i ’ ll start with low inflation. inflation has been falling recently in all advanced ( although not emerging ) economies. its behavior has been atypical compared to previous episodes following a recession. this fall was especially marked in the euro area, from 2. 7 % in 2011 to 0. 8 % in december 2013. recently, developments in the euro area have started to diverge downward from some other advanced economies such as united states and canada. the sources and reasons for such a low inflation are complex and multiple. there are many uncertainties. temporary and global factors may be at play in the euro area with import prices going down. i also think there are more permanent and deep forces pushing inflation down both at the euro area and global level. besides there is still an important unused capacity – commonly labeled as “ slack ” - in most advanced economies, as demand has not yet caught up with its pre - recession levels and firms, as a consequence, have not recovered their pricing power. commodity price inflation has been trending down recently. this is true both for energy and food prices. commodity prices have | 0 |
. while this outcome may be inevitable, we do need to think carefully about the possible consequences. first, given that we have to have a simple alternative to the internal ratings approach, it is important that the new accord provides the right degree of capital incentive for banks to progress over time to using internal ratings. it is the committee's firm intention to ensure that the final accord provides modest incentives for banks to adopt the internal ratings approach. there is a conservative bias in the standard approach ; and internal ratings in measuring risks more accurately should, for lower risk business, result on balance in lower capital requirements. the objective of ensuring some capital incentive for banks to progress to risk sensitive measurement does, of course, have to be balanced against the objective of roughly maintaining the overall amount of capital in the financial system. it would be dangerous to financial stability if we gave so large a capital carrot to banks to use the internal ratings based approach that many of the world's most important financial institutions, which account for the vast bulk of global and g10 domestic banking activity, saw a significant reduction of their regulatory capital requirement. it is the need to balance incentives with the maintenance of overall capital levels which makes this issue a difficult one. this, along with a large number of other questions about the impact of the proposals, will be further examined by the committee in the course of a quantitative impact study to be carried out before finalising the proposals. the bank of england has been asked to co - ordinate this work calibrating the impact of the new accord on individual institutions and on the system as a whole. i recognise that the time allowed for this exercise is short, but i hope very much that we can count on the contribution and co - operation of the banking community. turning to the second possible consequence of maintaining a risk insensitive alternative approach, we may find that the combination of having some banks on the irb approach and some on the standard approach will, perversely, introduce a financial stability risk that is not present with all banks on the standard approach. this is that the more sophisticated institutions would have to hold more regulatory capital against weak loans than banks that remain on the standard approach. over time, therefore, we could find that the worst - quality credits could gravitate to those banks which are the least able to assess, price or monitor them. however, i do not wish to suggest such a scenario without also highlighting how we may guard against it. first, of course, the | charles bean : the economic outlook speech by mr charles bean, deputy governor for monetary policy of the bank of england, to the council of mortgage lenders, mortgage industry conference & exhibition, london, 3 november 2011. * * * good morning and thank you for that kind introduction! in the very early part of this year, with the recovery from the 2008 – 9 recession seemingly becoming more solidly based and inflation running at double our 2 % inflation target, the bank ’ s monetary policy committee, of which i am a member, was edging towards starting to withdraw some of the considerable monetary stimulus we had injected during the downturn. indeed, as recently as our may meeting, a third of the committee were voting to raise bank rate from its emergency level of 0. 5 per cent. although i did not join them in voting to raise bank rate, i did view the arguments for and against a tightening as being finely balanced. now, just a few months later, the committee has unanimously voted to re - start its programme of asset purchases financed by the issuance of additional central bank reserves, also known as quantitative easing. in my address this morning, i thought i would say a few words about why the committee ’ s view of the outlook has shifted so dramatically and what we can expect additional purchases to achieve. as i said, earlier this year the recovery seemed broadly on track. but, as time has passed, so it has seemed less secure. that is not so obvious in the figures for quarterly gdp growth ( see left - hand panel of chart 1 ), which have been buffeted by a variety of special factors, such as : the bad weather late last year ; the impact of the tohoku disaster on global supply chains ; and the extra bank holiday for the royal wedding. these last two, in particular, provided a temporary boost to the third - quarter growth rate of 0. 5 per cent released on tuesday. but business surveys and other indicators suggest that the underlying rate of expansion has probably eased ( see right - hand panel of chart 1 ). those same surveys point to only very moderate growth at best in the final quarter of this year. this slowing in growth is not confined to the united kingdom. growth has eased in the euro area and the business surveys are consistent with contraction in the second half of this year ( see chart 2 ). though output growth has picked up in the united states according to the latest official data, the business surveys suggest this may prove ephemeral | 0.5 |
mario draghi : generation €uro students'award 2018 event introductory remarks by mr mario draghi, president of the european central bank, frankfurt, 11 april 2018 introduction ladies and gentlemen, and especially dear students, first of all, let me express congratulations to all the students here for reaching this stage of the generation €uro students ’ award competition. it ’ s an incredible achievement and you should all be proud of yourselves. bravo! this gathering is an important opportunity for us to continue our dialogue with you. you are the winners of our euro area - wide competition on monetary policy, which is now in its seventh year. the ecb also organises other initiatives to engage with young people. we have the ecb youth dialogues and competitions such as the euro video challenge and the young economists ’ session at the sintra conference. sintra is a conference that we do annually on a variety of themes around monetary policy and macroeconomics. so far, my impression is that it has been a success, but of course i am biased. i am also aware that my colleagues from the national banks organise events and dialogues with students and schools at national level. all this basically tells you one thing : you are very important because you are our future. you are europe ’ s future and that ’ s why the ecb and the national central banks really give you a lot of attention and get a lot from you. i trust that in taking part in the competition you have been able to find out more about what we do at the ecb, why we do it, and how our monetary policy works. it seems obvious that you should know what we do at the ecb or what people do in their national central banks. but as a matter of fact, if you do polls, you would be surprised by the amount of confusion that people have. for example, lots of people, about one - third, think that central banks are like other banks, that they are by and large not very different from what other banks do. now, you will be the selected category that will know that the ecb is a central bank and that central banks are different from banks. and even more importantly, through this exercise, you actually got to have, at a very young age, a european perspective. you understood what is still really missing from lots of people, who still think in terms of national borders. it is very important, of course, but it is not the only reality that we are living through. in | are not aware of how much good they do to their children. it just comes with being a father or a mother. so again, let me congratulate you and congratulate everyone who has been involved in your success. let ’ s now open our discussion. thank you. 2 / 2 bis central bankers'speeches | 1 |
the organizations that consider adopting them. but regulators also should seek to analyze the implications of technology developments through constructive and timely engagement. we should be attentive to the potential social benefits of these new technologies, prepared to make the necessary regulatory adjustments if their safety and integrity are proven and their potential benefits found to be in the public interest, and vigilant to ensure risks are well understood and managed. 1 these remarks represent my own views, which do not necessarily represent those of the federal reserve board. 2 for a review of the potential of distributed ledger technologies to change payment, settlement, and clearance processes, see the forthcoming federal reserve board finance and economics discussion series paper titled “ distributed ledger technology in payments, clearing and settlement. " 3 board of governors of the federal 2016 ( pdf ) ( washington : board of governors ). reserve, consumers and mobile financial services 4 the federal reserve board ’ s survey of household economics and decisionmaking finds that 46 percent of households report that they would need to borrow money or sell something in order to pay an unexpected expense of $ 400. the report of survey findings is available on the board ’ s website at www. federalreserve. gov / communitydev / shed. htm. 5 / 6 bis central bankers'speeches 5 robo - advisors are making investing and retirement planning cheaper and more accessible, filling a particular need as the coverage of employer - provided retirement plans has declined. according to insider newsletter published by willis towers watson ( vol. 26, no. 2, february 2016 ), only 20 percent of fortune 500 companies offered a defined - benefit plan to salaried new hires in 2015, down from 59 percent among the same employers in 1998. 6 for more information on fintech and small business lending, see karen gordon mills and brayden mccarthy, “ the state of small business lending : innovation and technology and the implications for regulation ( pdf ), ” harvard business school working paper ( 2016 ). 7 most recently, regions bank announced a partnership with fundation, an online lender, and trufund, a cdfi, to provide small - dollar loans to underserved small businesses ( for more information, see ir. regions. com / releasedetail. cfm? releaseid = 989068 ). in 2015, lending club and the opportunity fund, a california - based cdfi, announced a partnership intended to provide $ 10 million in loans over a period of five months to 400 small businesses in underserved | years, and their balance sheets are strong. the reports on first - quarter earnings have been quite positive, and available measures of credit quality, such as credit ratings and loan defaults, show few signs of stress. financing costs have moved up since last fall, but the federal reserve ’ s most recent survey of bank lending practices, which was conducted in april, indicates that domestic banks are noticing increases in requests for business loans. they also indicated an increased willingness to supply business loans in an environment of brisk competition from other lenders, a liquid secondary market for business loans, and an increased tolerance for risk. in that regard, research conducted by federal reserve economists notes that more banks are offering loans to businesses in markets where the banks do not have branch offices ; the research suggests that new technology has spurred competition for some types of small business lending in recent years. more broadly, businesses currently have access to plentiful debt and equity financing from a variety of sources in addition to banks. the challenge that community development practitioners face in working with businesses looking for new investment opportunities is to demonstrate through careful analysis that promising inner - city neighborhoods can be good investments. that the current overall conditions for business investment are positive is thus good news for the work of social compact and its partners. the importance of data to investment decisions community development has come a long way since i first began following it as a young congressional staffer thirty - five years ago. whereas government programs once funded the bulk of inner - city development, public - private partnerships now dominate. in many places, community - based organizations have been able to " jump start " markets by facilitating private investment. the focus of neighborhood revitalization has shifted increasingly toward market - based approaches. in that regard, organizations that seek to promote neighborhood revitalization must focus on what makes their projects competitive. social compact is perhaps best known for its focus on one important input into the investment process - - information. timely and accurate information is what project planners need to bring entrepreneurs, investors, and lenders together to objectively assess the proposed undertaking. having been a banker, i know very well how much more efficient the process can be when decisionmakers are presented with a clear assessment of the projected returns and a balanced analysis of risk. another related feature of market - based investment decisions is the importance of built - in measures of accountability. hard data on results are important in establishing the credibility of projects. with data, and results, such investments can also serve as catalysts for additional private | 0.5 |
/ transfer system, but after taking into account the operation of pension system. the central difference between personal factor income and pre - tax income is the treatment of pensions, which are counted on a contribution basis by factor income and on a distribution basis by pre - tax income. the population is comprised of individuals over age 20. the base unit is the tax unit defined by national fiscal administrations to measure personal income taxes. the first observation is 1970 for japan and the united states, and 1980 for the european union. latest observation : 2017 for european union, 2014 for united states and 2010 for japan. diverging trends in the return on capital and on safe financial assets a further complication relates to shifts in the relation between the return on so - called safe assets ( such as highly - rated sovereign bonds ) and wider measures of rates of return, including equity returns and returns on higher - risk debt instruments. in related fashion, there has also been a shift in the relation between the returns on short - term instruments and those on longer - term instruments, with term premia that are much smaller now than in earlier periods ( or even negative ). on the one side, we have observed that corporate bond spreads have held up and estimates of the equity risk premium have increased, in both the united states and the euro area ( chart 14 ). on the other, the demand for short - term money - like instruments has surged, and the yield on those instruments has dropped to unprecedented negative values. chart 14 corporate bond spreads and equity risk premium ( percentages ) sources : for corporate bond spreads – merrill lynch, ecb staff calculations and gilchrist, s. and zakrajsek, e. ( 2012 ), “ credit spreads and business cycle fluctuations ”, american economic review, vol. 102, no 4, pp. 1692 - 1720 ; for equity risk premium – thomson reuters, consensus and ecb staff calculations. notes : corporate bond spreads for the united states before 2010 are based on gilchrist, s. and e. zakrajsek ( 2012 ), ibid. owing to historical data constraints, the equity risk premium is approximated by subtracting the real risk - free rate from the earnings yield. latest observation : october 2019. a vibrant field of research seeks to reconcile the observed divergence in rates of return across asset categories with reference to shifts in mark - ups and risk premia. this literature also highlights the increasing value attached to safe assets that offer protection against downside risks. | ability to deal with cases that might warrant corporate restructuring and change of management. · second, to introduce a scheme of credit guarantees which would provide a facility of risksharing between corporate borrowers, the government, and banks based on market mechanism. · third, to work with the management of the state banks and commercial banks to facilitate their resumption of lending without compromising the banks ’ own risk management and the bank of thailand ’ s own supervisory standards. on our part, the bank of thailand has improved the credit information system through fostering the establishment of credit bureaus, which provide the much - needed infrastructure for the resumption of new credit. meanwhile, we will continue to adhere to the best practices in prudential standards, and look to further improving the standards. let me now turn to the third challenge : rebuilding our financial architecture. this is an area that the bank of thailand takes leadership role to strengthen the soundness and efficiency of the financial institutions. our leadership must lead to outcome which makes practical sense, measures up to international best practices, and must be market - oriented and suitable to thailand. so far, we have laid down necessary groundwork to tackle short - term difficulties, such as the persisting non - performing loan problems, the lack of credit growth, or the restoration of financial sector soundness. long - term prosperity however requires more. it requires a new financial architecture and corresponding market infrastructures to foster competition and efficiency while ensuring a nonrecurrence of past problems. specifically, in the world where financial innovations, economic integration, and technological advancements bring nations and markets closer and define a new paradigm for competition for financial service industries, the rebuilding of our financial architecture becomes vital for our long - term successes, if not survival. given such a challenge, which direction are we heading? · going forward, we must improve our financial architecture to raise efficiency and ensure nationwide access to financial services. · in term of market competition, the opening up of our banking system has accelerated the transfer of technical knowledge and ensured competition for our domestic financial institutions. · in term of market structure, the new financial institutions bill – currently at the senate and is expected to be passed in the course of this year – will provide a legal and formal framework that accommodates the establishment of financial conglomerates. financial institutions will be allowed to offer varieties of financial services such as insurance or securities through their subsidiaries. though this is still a step away from universal banking model where all financial services will | 0 |
“ social value of public information – testing the limits to transparency ”, european central bank working paper 821. holmsen, amund, jan f. qvigstad, øistein røisland and kristin solberg - johansen ( 2008 ) : “ communicating monetary policy intentions : the case of norges bank ”, norges bank working paper 2008 / 20. solberg johansen, kristin ( 2008 ) : “ publishing interest rate forecasts – how does the market react? ”, mimeo stockholm school of economics. woodford, michael ( 2005 ) : “ central - bank communication and policy effectiveness ”, nber working paper series 11898. | be recommended when the turnaround occurs. different indicators of underlying inflation were close to 3 per cent in 2008, while the rise in total consumer prices was 3. 8 per cent. economic agents can be myopic. it is short - sighted to base assessments of sustainable levels of debt on today ’ s variable interest rates. long - term, fixed interest rates provide a far better guideline in this context. homebuyers, and the banks providing their mortgages, must take into account that variable rates over time will be around 6 per cent, sometimes higher. there are also other sources of fluctuations in credit and property prices. banking is procyclical. in upturns, loan losses are low, increasing banks ’ profits. access to equity capital is ample, providing the basis for strong lending growth. losses increase in downturns, and the supply of equity capital can dry up, compelling banks to restrict their lending. the impact is stronger since the value of property used as collateral fluctuates in step with cyclical developments. at the same time, counterparties and rating agencies may require higher capital levels. when credit is rationed by banks with large market shares, in regional or national terms, sound investment projects are also postponed. this results in an adverse feedback loop, with banks incurring higher loan losses and weaker earnings – as economic activity stalls. banks operate with very low levels of equity capital. a manufacturing enterprise or a firm in the service sector should preferably have an equity ratio of between 30 and 70 per cent, depending on the level of risk involved. banks can operate with a far lower level of equity capital because they are supposed to diversify risk, have sound management systems and be well regulated and under supervision. in norway, banks ’ equity capital makes up six per cent of their assets. before the second world war, the ratio was over 10 per cent, falling to five per cent in the postwar period. government capital injections resulted in a rise in equity capital at the beginning of the 1990s, but the ratio has fallen again in recent years. figures for banks ’ equity capital before 1918 are based on : jan tore klovland ( 2007 ) : “ a reconstruction of the balance sheets of savings banks in norway 1822 - 1875 ” and “ a reconstruction of the balance sheets of commercial banks in norway 1848 - 1900 ” in øyvind eitrheim, jan tore klovland and jan f. qvigstad ( ed. | 0.5 |
intrabank vis - a - vis inter - bank since the latter is regulated by the central bank. such happenings defy all logic and needs to be debated in forums like the iba. the banks often counter this concern raised by the central bank by arguing that such charges should be best left to the market. as a person who has seen both sides, i am of the view that while the central bank need not intervene in the pricing of various payment products, it should not hesitate to step in if it finds a large section of the customers that cannot afford or are shying away from such products on account of arbitrary fixing of charges linked to the value of the transactions in a technology - driven scenario. rationalisation of service charges for paper and electronic bis central bankers ’ speeches products by the reserve bank was an attempt in this direction. acquiring space in the payment systems arena is a huge opportunity for bank and non - bank entities if adopted with a level playing attitude where the increasing number of customers coming into its fold is the game changer for pricing strategy. but above all, no attempt would be considered fruitful without the benefits percolating to the aam aadmi. 19. having stated the above, i must admit that one reason for costing of electronic products at a higher band in comparison with the traditional products has been the banks ’ attempt to part - recover the cost of deployment of technology. the process of introducing innovative products in india has been costly for the banks due to the unsystematic developments during the initial stage of technology deployment by the banking industry. in a country of our size, co - operative efforts and sharing of infrastructure while deploying technology is a lost opportunity story. customer service – dispute resolution and frauds dispute resolution 20. the customer dispute resolution has to be given a greater attention in the promotion of electronic payment products. appropriate processes have to be implemented for speedy resolution of such complaints. the time taken for resolution of such disputes should be reasonable. in an electronic payment scenario, a time period of 45 to 50 days for dispute resolution cannot be accepted as normal. our intervention in the resolution of disputes related to failed atm transactions was necessitated by this unreasonable time period. outlier issues cannot be the bottlenecks or benchmarks for dispute resolution process. by this logic, we feel that banks can bring down the 12 day period currently prescribed by rbi for failed atm transactions by implementing systems for automatic reversals. the outlier issues like part cash disbursal have to | distinctly in favour of india since 2013. in 2013, inflation in advanced economies ( aes ) was at 1. 4 per cent, as against 10. 1 per cent in india. the inflation differential of india vis - a - vis aes is now negative, a rare development with several aes experiencing double digit inflation. india's growth differential with the global economy has improved from 3 per cent in 2013 to 3. 8 per cent in 2022. the corporate sector balance sheets are strong ; the banking system is well capitalised ; credit growth is in double digits ; and the growth momentum is steadily improving. 35. the terminal interest rate that the us fed is targeting is anybody's guess, but it cannot be the case that it will tighten monetary policy endlessly. when the tightening is over, the tide will surely turn. capital flows to india will resume and external financing conditions will ease. in this complex world in which both push and pull factors are at play, the inr, which is market - determined, should be allowed to find its level and that is what we have been striving to ensure. as i have just explained, the inr has seen a very orderly movement since the onset of the current geopolitical crisis. we must deal with the global hurricane with confidence, endurance and the courage of our conviction that we will weather this turmoil. conclusion 36. the current global economy is sailing in extremely turbulent waters. despite humungous challenges, the indian economy has progressed relatively well. i would like to impress upon the banks and businesses to remain focussed on reinforcing their resilience while continuing to grow and meet market demand. they should continuously assess the risk buildup, if any, sharpen governance and strive to maintain healthy levels of capital and other buffers. so far as the rbi is concerned, we remain committed to support and preserve macroeconomic and financial stability. once again, it is a moment of'whatever it takes '. 1 besides strengthening the operating framework of monetary policy, the sdf also acts as a financial stability tool. by removing the binding collateral constraint, the sdf empowers the rbi to mop up any amount of funds without driving interbank interest rates to ultra - low levels. 2 based on bis real effective exchange rates. 7 / 7 bis - central bankers'speeches | 0.5 |
driven corrections in the housing market. at the international level, the risk factors that i discussed earlier may generate higher mortgage funding costs and / or a downward revision in the prospects for income and employment growth in ireland. at the domestic level, a desirable expansion in the supply of housing would put downward pressure both on rents and house prices. as the national macroprudential authority, we are committed to ensuring that the domestic financial system remains resilient in the event of a reversal in house prices. the ceilings we have placed on loan - to - income ( lti ) and loan - to - value ( ltv ) ratios on mortgage loans are essential in limiting systemic financial risk emanating from the mortgage market. by guarding against excessive mortgage debt at the household level, these measures also serve a vital consumer protection function while also limiting the risk that a house price reversal is amplified at the macroeconomic level through deleveraging pressures on over - extended households. in relation to the financial health of the banking system, the mortgage measures are reinforced by the higher risk weights associated with mortgage lending in ireland under our capital requirements, together with the capital buffers we impose on systemically - important institutions. in discussing the risks associated with the housing market, it is essential also to maintain our focus on the legacy issues from the crisis. i next turn to discussing the management of npls, before turning to the financial conduct concerns that have been brought into sharp relief by the mis - handling of tracker mortgages across the irish banking system. non - performing loans the central bank ’ s work on mortgage arrears and npls spans its financial stability, prudential supervision and consumer protection mandates. within the remit of the central bank ’ s responsibilities, the approach to mortgage arrears resolution is focused on ensuring the fair treatment of borrowers through a strong consumer protection framework, while ensuring that banks are sufficiently capitalised, hold sufficiently conservative provisions, and have the appropriate strategies and operational capacities to resolve arrears. while there has been progress in recent years in reducing the stock of npls in ireland and across the euro area, significant challenges remain. in the absence of pro - active management, the remaining npl stocks may adversely affect the medium - term supply of bank credit and pose financial stability risks through elevated uncertainty regarding the true health of the banking 4 / 7 bis central bankers'speeches system. importantly, these risks render banks especially vulnerable in the event of a future downturn in the economy, such | philip r lane : opening of ireland's central bank dockland campus exhibitions speech by mr philip r lane, governor of the central bank of ireland, at the opening of ireland's central bank dockland campus exhibitions, dublin, 27 april 2017. * * * i am delighted that you could join us this evening to celebrate the opening of our visitor centre with two exciting and complementary exhibitions : the euro exhibition and pounds, shillings and independence. i am particularly delighted that stephanie van delft of the communications directorate at the european central bank is here with us this evening. stephanie, along with director general communications, christine graeff, deputy director communications, thierry bracke and director banknotes, ton roos was instrumental in sharing the euro exhibition with us. but why a visitor space in a central bank, you may ask? there is a simple answer to that question : we want people to understand what we do and why we do it, in order to facilitate greater transparency and understanding of our public service role. central banks across the world moved to the front pages of the newspapers in 2008 and have largely stayed there ever since. in that time, there has been extensive debate about monetary policy, financial stability policy and many other aspects of central banking that were previously considered arcane knowledge. but while the effects of ecb or federal reserve or national central bank decisions are widely reported upon and communicated, there is less focus on the motivation for those decisions. the central bank of ireland ’ s mandate is very clear : safeguarding stability, protecting consumers. every decision we take is in the public interest – albeit some of those actions may not be universally popular! explaining the rationale for those evidence - based decisions is important to us. while central bank independence is enshrined in the institutional and legislative framework of the european union, as well as domestic law, the flipside of that independence is accountability. and as a public institution, we take our obligations to be fully accountable for our actions very seriously. communications and accountability are therefore key components of our strategic plan 2016 – 2018. we demonstrate that accountability in several ways : our annual report and annual performance statement will be published next week ; we engage with oireachtas committees ; we publish minutes of our commission meetings ; we disclose operational information on our website ; and we explain our policies through a series of public speaking events and topical publications. the visitor space is another important element of that accountability. we share this vision with dublin city council, which requires that landmark | 0.5 |
##appling with persistently high inflation. south africa has experienced a sustained inflation target breach, with headline inflation having remained above the midpoint of the target range for 27 consecutive months since may 2021. high inflation erodes the purchasing power of the rand and thus makes south africans poorer. over the past 18 months, south africans, alongside their global counterparts, have endured a rise in the cost of living. this came at a time when south africans had become accustomed to low and stable inflation. after hovering in the upper half of the target range for a year, south africa ’ s inflation breached the upper limit of the sarb ’ s 3 ‒ 6 % inflation target range in may 2022, and reaching a high of 7. 8 % in july 2022 before beginning its retreat. the trajectory of domestic headline inflation has been shaped primarily by fuel, food and electricity 5 this presents risks of wage - price spirals, particularly given demand resilience. prices. the first two have largely reflected global developments, beginning with the sharp rebound in the demand for goods amid supply bottlenecks, and later exacerbated by the russia ‒ ukraine war, which further strained global energy and food markets. sharply rising food and fuel prices raise fundamental concerns from a distributional standpoint. to provide some perspective, fuel inflation in south africa soared to 56. 2 % in july 2022, and pushed pump prices well above r25 per litre, with immediate knockon effects on transport and production costs for goods and services. 6 meanwhile, high electricity tariffs have further raised the cost of living for many south africans. food and transport inflation impact the poor the most, as their consumption baskets are weighted heavily by these items. recent inflation data by statistics south africa shows inflation for the lowest income deciles ( deciles 1 and 2 ) averaging 9. 0 % in july 2023, while that for income deciles 9 and 10 averaged at 4. 3 %. 7 low - income earners and the poor more generally are less able to protect their incomes from being eroded by inflation, and this contributes to rising inequality in our society. the authors of our constitution understood the need to protect those who cannot protect themselves. the constitution tasks the sarb with protecting the purchasing power of the rand, and we are committed to executing on this mandate. in light of the deteriorating domestic inflation environment, the sarb ’ s monetary policy committee ( mpc ) raised the repurchase ( repo ) rate by a | in balance. by so doing, we play our part in creating an environment conducive to inclusive and sustainable economic growth for the benefit of our people. it is important, however, to realise that economic growth and development really is a team sport, and as such, needs all the players to pull together potential ( real gdp ) growth has been raised from - 0. 1 % in 2023 to - 0. 8 % and 1. 0 % in 2024 and 2025 respectively. 13 consumer confidence declined sharply to - 25 points in 2023q2 from - 8 points in 2023q1. 14 according to the 2023q2 quarterly labour force survey, an additional 784 000 ( 5. 0 % ) people were employed during the quarter, when compared with the same period in 2022. this brings employment back to 2019 levels. meanwhile, the official unemployment rate has declined from 33. 9 % in 2022q2 to 32. 6 % in 2023q2. the limpopo province is also facing the challenge of job creation, with unemployment in the province currently at 31. 6 %, slightly below the national average. and do their jobs well. so, while we work hard to lower inflation and interest rates to support a healthy balance of saving and investment, it is critical that the broader public sector identifies constraints to growth and job creation and focuses on relieving them. thank you. | 1 |
duvvuri subbarao : lessons from the financial crisis for monetary policy in emerging markets welcome remarks by dr duvvuri subbarao, governor of the reserve bank of india, for the l k jha memorial lecture given by prof john b taylor, mumbai, 24 february 2010. * * * on behalf of the reserve bank of india, i have great pleasure in welcoming prof. john brian taylor who will shortly be delivering the l. k. jha memorial lecture. we are very happy to welcome also ms. raye allyn taylor who has accompanied prof. taylor. i also want to acknowledge the family members of late dr. l. k. jha – smt. dipika maharaj singh, smt. and shri. aditya maharaj singh, trisha maharaj singh. many thanks to all of you for rejoining the rbi family. and of course, a hearty welcome to all our invitees who have made the time to come for this lecture. this year ’ s l. k. jha memorial lecture has special significance as it forms part of the platinum jubilee celebrations of the reserve bank. 2. dr. lakshmi kant jha was an outstanding economist and a distinguished civil servant. a member of the ics, he was governor of the reserve bank from july 1967 to may 1970. prior to his appointment as governor, dr. jha served as secretary to the prime minister. he headed the reserve bank during one of the most challenging phases of the indian economy. the country was shaken by food security concerns, and initiatives to redress this eventually resulted in the much celebrated “ green revolution ”. the reserve bank, under dr. jha, was an influential force in shaping these initiatives. the overall scarcity situation renewed the urgency for focusing public policy towards poverty reduction. this led to several path breaking policies, including the nationalization of fourteen major commercial banks in 1969 on dr. jha ’ s watch. subsequently, he served as india ’ s ambassador to the united states and as governor of jammu and kashmir. dr. jha was also member of the brandt commission. in recognition of dr. jha ’ s extraordinary services to the reserve bank and to the nation, the reserve bank of india instituted this lecture series in 1990. so far, there have been 10 lectures, and the lecture by professor taylor this evening will be the 11th in the series. 3. it is perhaps presumptuous to introduce prof. taylor, | the risks, develop a system to relate risk to the bank's capital levels and establish a method for monitoring compliance with internal policies. national discretion : basel ii norms set out a number of areas where national supervisor will need to determine the specific definitions, approaches or thresholds that they wish to adopt in implementing the proposals. the criteria used by supervisors in making these determinations should draw upon domestic market practice and experience and be consistent with the objectives of basel ii norms. disclosure regime : pillar 3 purports to enforce market discipline through stricter disclosure requirement. while admitting that such disclosure may be useful for supervisory authorities and rating agencies, the expertise and ability of the general public to comprehend and interpret disclosed information is open to question. moreover, too much disclosure may cause information overload and may even damage financial position of bank. disadvantage for smaller banks : the new framework is very complex and difficult to understand. it calls for revamping the entire management information system and allocation of substantial resources. therefore, it may be out of reach for many smaller banks. as moody's investors services puts it, " it is unlikely that these banks will have the financial resources, intellectual capital, skills and large scale commitment that larger competitors have to build sophisticated systems to allocate regulatory capital optimally for both credit and operational risks. " discriminatory against developing countries : developing countries have high concentration of lower rated borrowers. the calibration of irb has lesser incentives to lend to such borrowers. this, along with withdrawal of uniform risk weight of 0 % on sovereign claims may result in overall reduction in lending by internationally active banks in developing countries and increase their cost of borrowing. external and internal auditors : the working group set up by the basel committee to look into implementational issues observed that supervisors may wish to involve third parties, such a external auditors, internal auditors and consultants to assist them in carrying out some of the duties under basel ii. the precondition is that there should be a suitably developed national accounting and auditing standards and framework, which are in line with the best international practices. a minimum qualifying criteria for firms should be those that have a dedicated financial services or banking division that is properly researched and have proven ability to respond to training and upgrades required of its own staff to complete the tasks adequately. with the implementation of the new framework, internal auditors may become increasingly involved in various processes, including validation and of the accuracy of the data inputs, review of activities | 0.5 |
exchange - rate - driven price fluctuations ; don ’ t pay too much for land ( especially relevant to farmer exporters ) ; develop brands that are less price sensitive. as i ’ ve said before, a good canterbury farmer knows that droughts are inevitable from time to time, and plans accordingly. likewise a good exporter knows that fluctuations in the real exchange rate are inevitable, and plans accordingly. you should be doing this now. * * * | alan bollard : new zealand ’ s potential growth rate address by dr alan bollard, governor of the reserve bank of new zealand, to the new zealand canterbury employers ’ chamber of commerce, christchurch, 28 january 2005. * 1. * * new zealand ’ s growth performance has improved what a difference a decade makes. if we look at new zealand ’ s economic growth over the last decade, and compare it with the previous decade, we see that there has been a large lift in the country ’ s growth rate. average growth over the earlier decade, 1984 - 1994, was 1. 5 % per annum, while over the last decade it has averaged 3. 4 %. clearly, there were difficulties in the 1980s as firms struggled to come to grips with the new economic environment : exports subsidies were gone, government trading entities were corporatised and some privatised, there was a move towards user pays for government services, and various markets were deregulated. then there were the other factors. these included the sharemarket crash of 1987, which was to have large flow on effects, especially for some local property sector firms. another factor was the international recession of the early 1990s. neither has the last decade been all plain sailing. we had the asian crisis of 1997 - 98, but fortunately this did not last long. the economy was also affected around this time by droughts. then in late 2000 and early 2001 we saw the onset of a major slowdown in the us following a sharp fall in the value of high tech shares. nevertheless, the new zealand economy did more than simply survive these difficulties ; over the decade it had a much improved growth performance. two broad factors appear to have been influencing growth over the last ten years : • the economic reforms of the 1980s and early 1990s have resulted in a more competitive environment for the private sector. also, since the early 1990s we have had a more decentralised approach to wage setting in the private sector, which has given firms more flexibility in how they operate. • reforms in the government sector have resulted in more stable macroeconomic policies. the reserve bank act was passed in 1989 ; price stability was achieved by 1992, and has been maintained since then. we have also seen fiscal stability since the early 1990s, reinforced by the passing of the fiscal responsibility act. we have seen a more medium term approach to planning and undertaking government expenditure, without the volatility associated with attempts to “ pump prime ” the economy. our growth | 0.5 |
the reserve bank to reconsider the existing accommodation arrangements between the bank and private banking institutions. at this stage, the bank would like to give notice of the proposed introduction of a new, more flexible accommodation facility, to be created in the form of regular repurchase transactions between the reserve bank and its banking sector clients. the private banks will be offered the opportunity to tender on a regular basis for central bank funds through the repurchase facility, and accordingly be given more scope to manage their own liquidity positions better. furthermore, the purpose of the minimum cash reserve accounts that banks must maintain with the reserve bank will be extended to serve also as operational accounts for the regular settlement of clearing account balances. an averaging principle will be introduced, in terms of which each bank will have to ensure that the average daily balance in its account over a monthly period will comply with the prescribed minimum cash reserve requirements. this should enable the banks, during the course of the month, to use their minimum reserve balances for settlement purposes. the present discount window facility will still be retained to provide banks with a further source of funds for the management of their liquidity positions. it is envisaged, however, that the bank rate for such loans will be at a substantial premium to the fluctuating effective interest rate as established in the regular repurchase transactions. the department of finance is planning to implement new arrangements for the primary issue of, and the secondary market - making in, government bonds through appointed private market securities dealers. the transfer of these functions from the reserve bank to securities dealers will strengthen the reserve bank ’ s ability to pursue open - market operations more vigorously for monetary policy purposes. the bank is now in the process of preparing a discussion document on the proposed new accommodation procedures. this document will be distributed to the banking community and to other interested parties before the end of october for comments and participation in the preparation of the new system. - 11 - it must not be expected, however, that the introduction of the new system will lead to a permanently lower level of interest rates. the reserve bank may well in future use interest rates more frequently and extensively to pursue its overriding objective of protecting the value of the currency. the bank will nevertheless have to ensure that interest rates will be maintained at a level that will be consistent with all the other objectives of monetary policy, and with developments in other economic aggregates. internal administration of the bank with the appointment of mr. james cross as deputy governor from 1 | services and promoted market development. to amcm, last year was a year of consolidating the financial sector through continued enhancement of financial risk supervision. in the aftermath of the financial crisis, amcm followed up - to - date development of international financial supervision, continued to strengthen financial supervisory work in line with the fresh standards and requirements imposed by the basel committee on banking supervision. at the same time, amcm rolled out specific guidelines on risk mitigation, which reinforced the legal aspect of financial risk management to assist our practitioners in their risk - aversion endeavour. through the collective endeavour of our financiers, the macao banking sector, in the midst of overall economic recovery, scored results with flying colours again, which laid down solid foundation in the realization of our long term sustainable development. as per the end of 2010, total assets of the banking sector amounted to mop540 billion, a year - on - year growth of 26. 5 % ; aggregate deposits totalled mop341. 5 billion, a year - on - year growth of 11. 3 %, while loan portfolio stood at mop245. 7 billion, a year - on - year growth of 31. 7 %, making a loan deposit ratio of 71. 9 % ; initial overall profit for the banking sector amounted to mop3. 54 billion. the whole banking sector had a high capital adequacy ratio of 15. 3 %, bis central bankers ’ speeches which far exceeded international standard ; non - performing loan ratio was a meagre 0. 4 %, which reflected fine asset quality. as for rmb business, as per end of 2010, rmb deposits amounted to rmb 13. 3 billion, a year - on - year expansion of 5. 9 times ; in february 2011, it went up to rmb23. 2 billion, an increase of 74. 4 % compared to 2010 end. at the same time, banks settled rmb business valued at rmb6 billion for the period starting october 2009, when cross border rmb trade settlement business started, to end of 2010. moreover, to widen the spectrum for investment and fund management for macao residents and institutions, with the green light given by the people ’ s bank of china, the settlement channel for macao entities in the purchase of rmb bonds issued in hong kong was opened. in the realm of insurance supervision, apart from perfecting offsite surveillance measures, the inspection and app | 0 |
disturbing. indeed, once the immediacy of the crisis is behind us, it will not be surprising if we head for another round of destabilizing global imbalances. how do we manage global imbalances? it is argued that if the us fed had refused to supply the incipient demand for liquidity in the late 1990s and early 2000s, higher interest rates could have prevented the borrowing boom and the follow on widespread deterioration of financial standards and the subsequent melt down. but this also would have meant lower growth in the us and the rest of the world. the short point is that even as macroeconomic imbalances should not be allowed to proliferate, it is necessary to balance the need for global economic growth against the disruptions which follow the unwinding of such imbalances. resolving the problem of global imbalances does not mean eliminating them. as long as there is world trade, certain countries will have surpluses and certain others will run deficits. global imbalances have been, are, and will continue to be inevitable. so, to ask how we can eliminate global imbalances is clearly the wrong question. the right question is this : given that global imbalances are inevitable, how do we ensure that they do not build up to destabilizing levels? monetary & fiscal policy the second issue on questioning the questions relates to monetary and fiscal policy. unnerved by the scale and sweep of the crisis, governments and central banks around the world responded with an unprecedented show of policy force. the size and pace of monetary and fiscal expansion raised a paradoxical situation – even as governments and central banks coordinated and cooperated, many of their familiar conflicts got played out once again. central banks reduced policy rates ferociously, and in many advanced countries the rates are at or near zero. this is the standard tool of monetary policy whereby central banks expect to influence interest rates at the long end, and steer financial conditions and hence the entire economy by adjusting the short term rates. even in normal times, monetary policy transmission is lagged. in the crisis situation, because of the fear and uncertainty in the financial markets, it almost totally lost traction. central banks responded to this alarming impasse through a slew of measures variously described as quantitative and credit easing. it soon became clear that even as monetary policy became the first line of defence and central banks turned lenders of first resort, credit markets were in no mood to revive soon. so | which were marked by the financial crisis. he has gained significant experience during this time. we are glad that he is now returning to our central office as a staff member in the financial stability department. mr thierfelder will be responsible for setting up new market contacts and intensifying our existing ones. with the creation of this new post we hope to be better positioned to identify key risks to financial stability early on. it also testifies to the importance we attach to exchanging views with market participants. feline von heimburg has also been monitoring the development of the financial crisis when working in the financial stability departments of both the deutsche bundesbank and the european central bank. she will now be able to employ the experience she gained in europe in the more hands - on environment of the representative office. let me now thank felix thierfelder for his work over the past three years and welcome feline von heimburg as his successor. i wish both all the best for the future. thank you very much for your attention. bis central bankers ’ speeches | 0 |
loi m bakani : economic overview and future developments in papua new guinea statement by mr loi m bakani, governor of the bank of papua new guinea, at the 2010 annual meetings of the international monetary fund and the world bank group, washington dc, 8 october 2010. * * * mr. chairman, colleague governors, president of the world bank group, managing director of the international monetary fund, ladies and gentlemen, it is my pleasure to address this 2010 annual board of governors meeting. on behalf of the government of papua new guinea i would like to extend our appreciation to the bank and the fund for the ongoing effort and initiatives to improve our living standards and global financial systems. we look forward to a fruitful round of discussions here in washington dc. governors and colleagues, the prospects for global growth continue to be impacted by the aftermath of the financial crisis. i reiterate the international monetary fund ’ s ( imf ) outlook on the world economy with an anticipated growth of 4½ per cent in 2010. whilst the growth is heading in the right direction we must acknowledge that growth remains sluggish by past standards. at the same time downside risks remain, due to rising concern over sovereign debt and fiscal imbalances that could trigger a repeat of the financial and economic crisis. the downside risks underscore the need for ongoing cooperation and commitments from mutual partners to develop policies and governance mechanisms to address the challenges and secure global prosperity. at the global level, we should support policies that address structural imbalances over the medium term including supportive monetary conditions, accelerating financial sector reform, and rebalancing global demand. papua new guinea, as a small open economy, was able to navigate the negative impact of the global financial crisis and grew by 5½ percent in 2009. in 2010, growth prospects remain positive as the economy enters its fourth year of economic expansion. the combination of a stable exchange rate and moderate interest rates is encouraging businesses expansion. employment is strong, foreign exchange reserve level is high and government debt is at a sustainable level. the solid performance of the papua new guinea economy reflects increased investor and consumer confidence following a period of macroeconomic and political stability. the country has also benefited from a number of important economic and structural reforms the government has undertaken in recent years to complement its macroeconomic policies and management. at the same time, competition has improved the delivery of telecommunication services throughout the country. this is one of our success stories of the past few years. services | fund and our development partners in terms of technical assistance, funding and advice. working together, we can ensure our efforts complement each other and are directed in the most effective way for the benefit of our people. to end, i would like to express my country ’ s sincere gratitude to the management and staff of the world bank and the fund for their continuous support in papua new guinea. | 1 |
, and remarkably constructive, throughout the crisis. when the removal of accommodation begins in earnest, we should be alert to see if this trend continues. this standard represents a prudent framework from which responsibility is delegated to the central bank. the grant of authority from the congress is standards - based with clear limits and bounds. it might serve as a useful model worthy of broader application in the ongoing debate about regulatory reform. | high, in part, because the policy accommodation that requires timely removal as the economy rebounds is substantial. and our policy judgments will ultimately prove worthy of the accolades, and tender the ultimate rejoinder to their critics, if we rise to meet this heightened responsibility. i am confident we will. the views expressed herein are my own and do not necessarily reflect the views of other members of the board of governors of the federal reserve system or of the federal open market committee. i am grateful for the valuable assistance of daniel covitz, eric engstrom, nellie liang, and david reifschneider of the board staff who contributed to these remarks. see kevin warsh ( 2009 ), " the panic of 2008, " speech delivered at the council of institutional investors 2009 spring meeting, washington, april 6, 2009. see ben s. bernanke ( 2009 ), " semiannual monetary policy report to the congress, " statement before the committee on financial services, u. s. house of representatives, july 21, 2009 ; and ben s. bernanke ( 2009 ), " the fed's exit strategy, " wall street journal, july 21, 2009. the final recounting of economic history, i submit, will judge that winning the battle against the panic of 2008 was a necessary but insufficient condition to win the peace and ensure a strong foundation for economic prosperity. that outcome will require that policymakers have equal parts capability, clairvoyance and courage, perhaps the most important of which is courage. for those of us at the federal reserve, the task ahead involves longer days, but in all likelihood, fewer weekends. while the undertaking is as challenging as any we faced in the preceding period, it is exceptionally well suited to the federal reserve's comparative advantages of deliberation, dispassion, and a determination to make judgments based on the long - term interests of the u. s. economy. the task ahead economic histories in the united states and elsewhere are packed with examples in which the monetary authorities, with the overwhelming benefit of hindsight, may have misjudged the communication, timing or force of their exit strategies. in some cases, policymakers may have waited too long to remove easy - money policies. in other cases, policymakers may have acted too abruptly, normalizing policy before the economy was capable of self - sustaining growth. errors of each sort are neither uncommon nor unexpected in the normal conduct of monetary policy. during normal turns | 1 |
what we might consider “ maximum employment. ” trying to offset these changes in the economy with monetary policy can lead to a dangerous drift in inflationary expectations and ultimately in inflation itself. monetary policy since the great recession as i discussed earlier, the federal reserve is mandated to set policies that promote price stability. with that in mind, how has the federal reserve done in terms of its price stability mandate since the great recession began in december 2007? the answer is : remarkably well. the personal consumption expenditure ( pce ) inflation rate has averaged 1. 8 percent per year from the fourth quarter of 2007 through the second quarter of 2011. i would say that this outcome is essentially consistent with price stability. this admirable performance is not due to luck. since mid - 2006, residential land prices have fallen by over 50 percent. 5 falling land prices were at the heart of the financial crisis from 2007 to 2009 and have generated a persistent fall in wealth and borrowing capacity for households. the associated declines in demand for consumption goods and investment goods pushed downward on prices and inflation. confronted with this enormous shock to the economy, the federal reserve has followed an unprecedentedly and imaginatively accommodative policy. it has kept interest rates near zero. it has provided “ forward guidance ” by explicitly expressing its expectation that interest rates would stay extraordinarily low for an extended period. it has bought over 2 trillion dollars of longer - term government securities. through these actions, the fed has provided an extraordinary amount of monetary stimulus – and so has been able to meet its price stability mandate. but what about the future? there are a number of ways to measure inflationary expectations, which all – unfortunately – come with caveats. last december, a cleveland fed study analyzed several such measures. 6 it concluded that the survey of professional forecasters ’ ( spf ’ s ) projections7 tend to forecast relatively well. the most recent spf survey ( conducted before the august fomc meeting ) predicted that pce inflation would average 2. 1 percent per year for the next five years. thus, in the face of challenging circumstances, the federal reserve has met its price stability mandate and is expected to continue to do so. unemployment does remain disturbingly high. yet, i am sure it would be even higher without the enormous amount of the discussion in this paragraph is largely consistent with the following quote from chairman bernanke ’ s response to a reporter ’ s question in april about the fed ’ s ability to lower | open market committee. fomc objectives let me turn first to a discussion of fomc objectives. congress has mandated that the federal reserve set monetary policy so as to promote price stability and maximum employment. in my view, the heart of implementing the price stability mandate is to formulate and communicate an objective for inflation. the central bank then fulfills its price stability mandate by making choices over time so as to keep inflation close to that objective. of course, the central bank ’ s job is complicated by economic shocks that may lower or raise inflationary pressures. the central bank provides additional monetary accommodation – like lower interest rates – in response to the shocks that push down on inflation. it reduces accommodation in response to the shocks that push up on inflation. by doing so, it works to ensure that inflation stays close to its objective. as i said, though, it is not enough to have an objective – the federal reserve must also communicate that objective clearly. that communication serves to anchor medium - and longterm inflationary expectations. put another way, without clear communication of objectives, the public can only guess at the intentions of the fomc. inflationary expectations and inflation itself will inevitably end up fluctuating – and possibly by a lot. as i ’ ll discuss later, it is possible to undo these shifts in expectations, but only at significant economic cost. the federal reserve communicates its objective for inflation in a number of ways. for example, at quarterly intervals, fomc meeting participants publicly reveal their forecasts for inflation five years hence, assuming that monetary policy is optimal. those forecasts usually range between 1. 5 percent and 2 percent per year. they are often collectively referred to by saying that the federal reserve views inflation as being “ mandate - consistent ” if it is running at “ 2 percent or a bit under. ” but the fed has also communicated its intentions more directly and more broadly. last december, for example, on the television program “ 60 minutes, ” chairman bernanke explained the dangers of letting inflation fall too low relative to this 2 - percent - or - a - bit - under range. in the same interview, he also emphasized that the fomc is unwilling to allow inflation to rise above this range. 2 3 as i ’ ll describe in more detail later in my speech, the economy was hit in the past three and a half years by shocks that had the potential to drive inflation significantly downward. i believe in particular, when asked if keeping | 1 |
the development throughout malaysia. the emergence of new growth areas in malaysia such as renewable energy ( e. g. solar ) and semiconductors in fast - growing segments such as automotive, medical devices and telecommunications, has enabled malaysia to be plugged into the global supply chain. investment in the manufacturing sector has moved towards higher value - added activities, shifting from basic production and assembly to producing goods which have advance applications such as in the automotive and healthcare sectors. as a country which is strategically located within close radius of two of the most populous economies in the world, china and india, malaysia is centrally located in asia, more broadly, and in asean, in particular. with the conception of the asean economic community ( aec ), companies would benefit from the stronger economic inter linkages through greater cross bis central bankers ’ speeches border liberalisation and increased intra - asean trade. firms in this region will gain greater market access to 630 million people that are generating economic region that is worth usd2. 4 trillion. the increasing importance of asia in the global economy has raised international interest to better understand asia – the economies, businesses and the people that comprise the region. on that note, i would like to mention that bank negara malaysia has entered into a collaboration agreement with the massachusetts institute of technology sloan school of management ( mit sloan ) to establish the asia school of business ( asb ) in kuala lumpur. asb is envisioned to be a premier business school that develops transformative and principled leaders that will contribute to a better future and the advancement of the emerging world. conclusion let me conclude my remarks. we are now experiencing a phase of modest growth in the global economy, in an environment that is characterised by heightened uncertainty and volatile financial markets. the malaysian economy has withstood these challenging times, supported by our strong initial conditions and early and comprehensive policy responses. the intrinsic strength of the economy, reinforced with policies to encourage greater investments that would serve to ensure greater economic sustainability for the future. finally, active regionalisation is an important strategy for asia to enhance regional economic prosperity. malaysia actively participates in the efforts to strengthen linkages within the asean community and to creating opportunities to foster greater economic integration. these efforts will place asean on a path to realising its economic potential and enable the region to collectively prosper. bis central bankers ’ speeches | prices. 6 however, relative to balance sheet policies, the influence of the short - term rate is far better understood and extensively tested : there have been several decades and many business cycles over which to measure and analyze how the federal funds rate affects financial markets and real activity. in contrast, experience using the balance sheet as an active tool has been very limited and largely confined to a highly unusual period around the global financial crisis, when short - term interest rates were constrained by the zero lower bound. predictability, parsimony, precision, and clarity of communications all would seem to argue in favor of focusing policy on a single active tool that is most familiar. in short, it makes sense to focus policy on the tool whose effects are better understood by both policymakers and the public in circumstances where the tools are largely substitutes for one another. 4 / 6 bis central bankers'speeches even with this subordination strategy, however, there may be limited circumstances in which the balance sheet might be employed in a manner that is supportive of the short - term rate. most obviously, during the period when the balance sheet is running down, if the economy encounters adverse shocks, it may be appropriate to commence the reinvestment of principal payments again in order to preserve conventional policy space if the federal funds rate were to drop below some threshold level, perhaps similar to the “ well under way ” threshold. more broadly, although the two tools can achieve roughly similar effects, they are different, and we cannot rule out that there may be special circumstances in which these differences may be particularly valuable. in particular, these differences may be an important consideration in circumstances when the transmission of changes in the short - term rate to long - term rates and other financial market variables and the real economy is impeded. in addition to directly affecting longer - term interest rates, changes to the balance sheet could serve to reinforce policy communication associated with the short - term rate. some observers believe that such signaling was an important contributor to the effect of the balance sheet on the economy during and after the global financial crisis. 7 thus, the subordination strategy will likely be appropriate in most circumstances, but we cannot completely rule out special circumstances in which the complementary use of both tools may prove compelling. assuming that a subordination strategy is adopted, and the balance sheet is set to shrink passively and predictably once reinvestment ceases or is phased out, there is some uncertainty around the size of the balance sheet when it returns to normal, | 0 |
that the previous mitigants and supporting measures taken by central banks, including the central bank of kuwait, are were to survive coronavirus induced health / economic crisis, and had been unwound once they were no longer needed. the challenges and risks seen today differ from those we experienced during the past two years, and require attention, monitoring of their impacts on our economy and banking and financial sectors, and applying the appropriate measures and policies to face them. among such risks is deceleration of the global economic growth. imf forecasts in july indicated a decline in growth to 3. 2 % in 2022 and 2. 9 % in 2023, driven by several shocks, most notably is deceleration of the american and chinese economies, russian - ukrainian conflict, the geopolitical risks in southeast asia, the elevating tensions between china and taiwan, continued supply and demand imbalance as a result of disruption of supply page 3 of 4 chains of many basic commodities ( mainly food and energy ), risks of the continuous rise in global commodity prices and decade - old high inflation rates, especially in usa and major european economies. to contain the prolonged and far - reaching rise in inflation rates, many central banks tightened their monetary policies, by withdrawing the stimulus packages they had taken to withstand the negative impacts of the pandemic, reduced asset purchase programs, and increased interest rates. such actions are expected to result in inevitable economic costs and we, however, hope that these would not adversely affect our economic sectors, banking and finance in particular. in conclusion, despite the upward global economic challenges at various indicators, especially the forecasts for growth of the global economy to slow, and the factors that still affect the performance of many global economies, the recent data of the arab banking sector for 2021 revealed positive results in terms of capitals, liquidity and profitability inducing to adopt a countercyclical policy by rebuilding capital and liquidity margins for the sector units to face any future challenges. ladies and gentlemen, once again, i would like to express my heartfelt gratitude and appreciation to your excellencies, and hope that the outcomes of this meeting help achieve the desired goals in supporting financial and monetary stability and plans of development and prosperity for our countries. thank you 18 / 9 / 2022 page 4 of 4 | many times over the cost of the handset as monthly voice and data subscription charges. they may also pay substantial sums for downloaded content such as music and video. as a result, many firms are now slowly adapting their business models. one option is to become “ platform businesses, ” making their physical products platforms for various services. the aim is to capture as much of what the users are prepared to pay over the life of the product. meanwhile, another option is to become the provider of one - of - a - kind inputs ( especially materials ), which cannot be easily replicated by other firms. successful firms in japan and elsewhere are now pursuing these strategies, which i noted in a book published several years ago. 8 one footnote here is the impact of recent breakthroughs in the energy sector regarding shale gas and tight oil production. while the impact is now most visible in the united states, there are many promising geological formations in the world where new exploitable gas and oil deposits might be discovered, including turkey. while they may or may not become game - changers as some commentators suggest, once discovered and developed, these new sources of energy could affect the global economy in two respects. they will definitely change the energy endowment of economies. however, more uncertain is the effect on energy prices and their impact on the increasing mismatches and polarization we have witnessed in the past decade. 3. 3. challenges for the aged society finally, what will be the effect of the two forces – demographics and ict – working together? i explained earlier that if the ubiquitous presence of ict becomes the new normal, there will be relentless pressure on corporate profits because prices of products will tend to fall and even approach zero, reflecting the very low marginal cost of production for ict - enabled products. at the same time, the replacement of moderately skilled workers by ict will lead to a polarization of the workforce, with heavy losses of relatively well - paid jobs in the labor market. that said, the impact of ict differs between aging societies and those with young and growing populations. nishimura, k. g. ( 2004 ), the japanese economy : inconspicuous structural transformation, tokyo : nihon keizai shinbun, pp. 24 – 34. bis central bankers ’ speeches in the case of ageing societies, ict may create some new business opportunities, because ict can help firms adapt to the demands of ageing consumers, who tend to be more heterogeneous than younger consumers. ict | 0 |
øystein olsen : how central banks influence interest rates speech by mr øystein olsen, governor of norges bank ( central bank of norway ), at the centre for monetary economics ( cme ) / bi norwegian business school, oslo, 1 october 2015. * * * please note that the text below may differ from the actual presentation. accompanying charts can be found on the norges bank ’ s website. introduction a number of items appear on my calendar every year. today ’ s speech is one of them. three years ago, the speech was entitled “ monetary policy in turbulent times ”. the theme was how central banks worldwide were adopting new approaches to the conduct of monetary policy. chart : international yield curves three years later, this theme has not lost its relevance. the list of countries that have adopted quantitative easing has grown longer. policy rates in some countries have fallen below the zero lower bound, and we have seen examples of negative yields on bonds. this has challenged a long - held belief – that the lower bound for nominal rates is zero. the measures have a common goal, which is to bring down market interest rates and keep them there until a firm economic recovery is achieved. by influencing interest rates on financial contracts of varying duration and risk, monetary policy seeks to stabilise inflation and stimulate output and employment. in this speech, i will take a closer look at how policy rates affect money and financial markets and the impact of the unconventional measures implemented. even though interest rates have been low for a long time, activity in advanced economies has been slow to recover, reflecting global developments and economic shocks in the wake of the financial crisis. low policy rates and quantitative easing in other countries have also influenced the norwegian bond market. yields on norwegian long - term government bonds have fallen to a very low level, primarily driven by policy rate setting in other countries and global financial markets rather than economic conditions in norway. and even though the recent cuts in norges bank ’ s key policy rate have followed in the wake of the fall in oil prices, the current low level is a result of low interest rates abroad. the policy rate is the central bank ’ s most important monetary policy instrument. before we turn to global developments, i will therefore briefly describe how the policy rate influences the shortest end of the curve, with a particular focus on the norwegian context. from policy rates to short - term market rates banks ’ deposits with the central bank are often referred to as reserves and are banks ’ most liquid assets. | things stand now, the rise in prices will be notably higher than wage growth this year. indebted households will face both higher interest expenses and higher electricity and food prices. many households will be facing a tighter financial situation, and i am fully aware that some of them will also be facing a financial struggle. most households will be able to cope with higher interest rates on their loans. unemployment is very low. many will be able to cut down on other expenses or draw on their savings. chart : monetary policy meeting on 17 august we could have decided to raise the policy rate more gradually. but then we would have run the risk of inflation becoming entrenched at a high level. that would have made it more difficult to bring inflation down and could have required a sharper tightening of monetary policy somewhat further out, increasing the risk of an economic downturn. inflation has surprised to the upside in recent months. this is why the policy rate has been raised somewhat more rapidly than signalled earlier. and the economy might evolve differently from what we have envisaged. the level of uncertainty is high. limited spare capacity in the norwegian economy and persistent external inflationary pressures may lead to inflation accelerating further. on the other hand, the rise in interest rates and high inflation may cool down the housing market and curb household consumption faster than currently envisaged. there is also a risk of a sharper slowdown in global growth. the future path of the policy rate will depend on how the economy evolves. we cannot make any promises about the policy rate. the promise we can make is that we will continue our efforts to fulfil the mandate of keeping inflation low and stable and to promote economic stability. 1 a new set of forecasts was not prepared for the monetary policy meeting on 17 august. updated forecasts will be presented when monetary policy report 3 / 22 is published on 22 september. 3 / 3 bis central bankers'speeches | 0.5 |
years before entry into the euro. to support this process, it is urgent to improve euro area growth rates, which are projected to remain low for a number of years. this can be done by unlocking the many rigidities that still exist in euro area product and labour markets. this process of debt stabilisation is already well underway. the imf projects that the euro area will be almost in primary balance this year, with an average debt level just over 90 % of gdp. in terms of fiscal consolidation, this puts the euro area significantly ahead of some other advanced economies. bis central bankers ’ speeches how to deal with intra - euro area competitiveness imbalances? ensuring debt sustainability is to a large degree linked to the second question of today ’ s panel : how to deal with intra - euro area competitiveness imbalances? to some extent, this question is already answered. rebalancing is happening. large competitiveness adjustments are taking place in the so - called periphery. the countries under full eu - imf programmes have seen unit labour costs improve by around 10 % since 2008, relative to the euro area average. current account deficits are on average 8 percentage points of gdp lower than they were then. but to ensure that this competitiveness improvement is structural rather than cyclical, three further elements are crucial. first, continued and determined reform. and this ultimately has to go beyond economic policies and into fundamental issues of governance, like public administration, judiciary and education. second, the completion of europe ’ s single market. it does not serve citizens to protect local monopolies that lead to high prices and low quality. europe has some of the world ’ s most sophisticated and innovative companies, and they should be operating on a european scale. third, stronger economic governance. we have already made some progress here with a new procedure to monitor and correct euro - area imbalances. but we also need to find better ways to incentivise continued structural reform, including through the use of common funds. all these measures are of course relevant for the country most in the media spotlight, greece. a lot has been done by the greek authorities in last two years. the primary deficit has been reduced by more than 8 pp from end - 2009 to end - 2011. labour market reforms are beginning to show positive results. but a lot still remains to be done. the greek authorities have to demonstrate that they can continue to stick to their commitments. we are seeing encouraging signs that the | long time lastly, the experience over the past two years suggests that portfolio rebalancing effects might be highly persistent. despite the sharp rise in interest rates, stock market valuations remain high, especially in the united states. [ 51 ] and house prices have corrected somewhat in some countries but not in others. in germany, for example, despite residential real estate prices declining by nearly 13 % since mid - 2022, prices in metropolitan areas remained some 15 % to 20 % higher than the values implied by economic fundamentals in 2023. several factors, including supply constraints and strong demand in housing markets as well as declining volatility in financial markets, may have contributed to the broad resilience of asset prices. however, another factor may be the pace with which central banks unwind the stock of purchased assets. central banks typically take a cautious and gradual approach when reducing the size of their balance sheets, as too fast a decline in bond holdings could cause congestion effects in financial markets and as banks need time to adjust to the fall in excess liquidity. this gradualism is probably one reason why quantitative tightening ( qt ) announcements are often found to have smaller effects on bond prices than qe announcements. [ 55 ] that is, the stock effect matters also when monetary policy portfolios are reduced. since bonds held by the central bank mature only gradually, investors may heavily discount redemptions that are due far out in the future. this is consistent with three pieces of evidence. first, using micro data on the interest rate and balance sheet expectations of market participants, ecb staff estimate that the unitary effect of qt on term premia is not significantly different from qe ( slide 12, left - hand side ). second, today, despite the start of qt and the significant increase in public debt in the aftermath of the pandemic, the bond free float in the euro area is not expected to reach the pre - app level anytime soon ( slide 12, right - hand side ). third, new empirical evidence suggests that the effects of changes in the expected path of government debt on interest rates are materially lower – possibly by as much as half of the estimated impact under perfect foresight – when investors have limited foresight for changes that may occur in the distant future. as a result, risk premia may remain compressed in many market segments, making financial conditions more accommodative than they otherwise would be. this may have weakened the transmission of monetary policy during the recent | 0.5 |
to start worrying about an accountant spending it on my behalf! we have just witnessed the awarding of certificates to those who have passed their “ final qualifying exams ” ( or fqes ). and, later on this evening, we will also witness the induction of new members into the samoa institute of accountants. on behalf of everyone here tonight, i wish to congratulate all of you on the achievement of these important milestones in your education and career lives. you have continued to make your families both proud and happy. but, i caution you, this is only the first step in your careers as accountants. remember, “ it is not what you learned, but how you use what you learned, that counts ”. i came across a definition of an accountant the other day. it said, “ an accountant is someone who solves a problem that you did not know you had, in a way that you don ’ t understand ”! i hope that tonight ’ s graduates do not end up being one of these accountants, who creates a problem first and then pretends to solve it. and, worse still, they end up charging the client for something that was not there in the first place! it ’ s almost like being a lawyer! the recent global financial crisis started from a liquidity shortfall in the united states. this liquidity shortfall resulted from many loans ( especially for housing ) going into default, and there were insufficient assets to cover these loans. as a result, many large banks and financial institutions went bankrupt. and, if it were not for the quick and substantial intervention by some major governments and central banks, the global economy would have collapsed. among others, the accountants have been blamed for the “ financial crisis ”, as a result of their “ creative accounting ” techniques, which contributed to inflating the values of the assets which were used as collateral for the many risky loans that were issued. as well, the ability of many accountants to hide a substantial volume of very large transactions “ off the balance sheet ”, contributed to the demise of many of these large financial institutions. i mention this to highlight the critical roles that accountants can play in maintaining financial stability in national economies and thereby the global economy as a whole. the stable economic environment that samoa has enjoyed over the past many years is also partly due to the responsible way that the members of the samoa institute of accountants have carried out their duties. and, i commend and thank you all for that. let me | leasi papali ’ i tommy scanlan : samoa ’ s economy, interest rates and the expanded mandate of its central bank address by mr leasi papali ’ i tommy scanlan, governor of the central bank of samoa, on the induction of new graduates to the samoa institute of accountants, apia, 25 march 2010. * * * distinguished guests ladies and gentlemen 1. introduction at the outset, i want to thank the president and her committee for inviting me to address you on this special occasion. it is indeed both a privilege and an honour for me to be here this evening. in 1970, when the minister of finance ( hon. niko lee hang ) and i attended form 4 at saint joseph ’ s college, we were told that a number of students in our class will need to take “ physics ” as an option, while the rest will take “ accounting ” or “ bookkeeping ”, as it was called in those days. physics was a relatively new subject at that time, and they needed some guinea pigs to continue their experiment with. and, that was where we came in. we were never given the chance to decide which subject to take. so, from 1970 to 1972, nine of us studied physics while the rest of our colleagues studied accounting. i can never forget what one of the best accounting teachers in the country in those days used to say to us. he said, “ you can study physics all your life, but none of you will ever go to the moon ”. and, this teacher continued, “ in the unlikely event that you physicists become rich, you will not only need accountants to look after your money but the accountants could also end up spending your money for you! ” the teacher ’ s name was brother conrad, and i have no doubt that many of the senior accountants here tonight will remember this very learned marist brother. anyway, in 1973, seven of us from the “ sjc class of 1972 ” won scholarships to study in new zealand to become a doctor, engineers, a teacher, a lawyer, an air traffic controller and a master mariner. no scholarships were offered for accountants or physicists! the end result was, the minister ( niko lee hang ) and most of our other class mates eventually became accountants, whilst one became an economist and another an engineer. i suppose because of br. conrad ’ s warning, there was no physicist from our group. and, fortunately for me, i don ’ t have any money | 1 |
anyway, for political reasons. this is often done in an unpredictable and sometimes unfair manner favouring certain segments of the population. the cost of such implicit deposit protection is often higher than that of explicit guarantees. a guarantee system makes it easier for the authorities to close problem banks. where such a system is lacking, the authorities tend to delay the unpleasant decision of closing a bank since they are afraid of the negative repercussions on depositors and other counterparties. but such supervisory forbearance only leads to growing problems and costs. it will always be difficult to close banks, but with a deposit guarantee at least the issue of the depositors is partly solved. what i just described fits in with the development in sweden. when the bank crisis came, we had no deposit guarantee system but the government found it necessary instead to issue a general guarantee, sometimes referred to as a blanket guarantee protecting all depositors but also other counterparts to swedish banks, with the exception of the shareholders. this guarantee was in fact much broader, and potentially more expensive, than a limited deposit guarantee. after the crisis, sweden has introduced legislation on a system of explicit limited deposit protection. all current deposits up to a certain amount, approximately 35 000 us dollars, are covered. for this, the banks pay a yearly premium, currently 0. 10 percent on average of the total amount of deposits. other parts of the financial sector in my presentation i have focussed on the banks, but an efficient financial sector must also contain a broad range of institutions and markets. they can specialize in certain activities and instruments and improve competition and diversity. they may also reduce the risk concentration on the banking system which implies that the overall economy will be less gravely hit if there ever is a systemic banking crisis. compare for example thailand in 1997, where the banks played a dominant role and russia in the same year where banks played a minor role. both countries were hit by financial problems but the overall effects on the economy were much worse in thailand. in sweden many different types of institutions and markets perform specialized roles alongside with the banks. there are also rapid developments in these in the form of volume growth but also in new or improved activities and instruments. the insurance sector which was as restricted in its activities as the banks during the regulation years has grown strongly in sweden after deregulation, both for non - life and life insurance products. the demography of sweden is such that we have an ageing population. thus savings for retirement, for instance | the credit information bureau. the group is also considering the suggestion given by bankers that information regarding the defaults of state governments be collected and widely circulated and published. yet another area critical for financial stability relates to several international initiatives were undertaken over the last couple of years with the goal of maintaining financial stability by strengthening the financial infrastructure. the rbi and sebi were members of one such task force on securities settlement systems constituted by bank for international settlements. the report has since been finalised and released by bis. an expert group is being set up by the rbi to examine the adherence to the recommendations in regard to government securities market in important areas such as legal risk, pre - settlement risk and settlement risk. efficient payment system is also very critical to meet the new challenges. the rbi has been engaged in the design and development of the payment system in india as part of the financial sector reforms. the broad objective of this process is to ensure the setting up of a robust, efficient, secure and integrated payment and settlement system for the country. the ultimate aim to be achieved in this regard is to ensure quick settlement of financial transactions, especially in an electronic environment based on a sound legal foundation. the rbi is addressing the task of drafting the indian payment system legislation considering among others issues, finality of payment / settlement in an electronic environment, issues of failure from bankruptcy and the formulation of the framework for the payment system act, the netting act and other related issues. to bestow focused attention, a payments systems department is being contemplated within the rbi by appropriate restructuring and retraining of the existing officers and staff. the functions of this department will include among other things, formulation of payment system policies, regulation of payment system, implementation of core principles of the bis relating to payment system, etc. finally, with regard to the financial sector, banks have always been concerned at the regulatory burden on them due to the crr requirement. rbi desires to move to a 3 per cent crr regime, but at the current stage, early movement can be considered only if it is a package and one of them relates to the present way of maintenance of cash balances by banks with the rbi. apart from this, as mentioned in an address yesterday, the time has come to take a hard look at the access of banks to call money. the call money window should be used to iron out temporary mismatches in liquidity and not on a sustained basis as a source of funding their normal requirements. an option to be discussed is | 0 |
current expectations of a sustained adjustment path. looking ahead, monetary policy will be firmly guided by the outlook for price stability and our stance will evolve in a data - dependent and time - consistent manner. our monetary policy will remain patient, persistent and prudent. the benign market reaction following the announcement of our decision supports the appropriateness of our current assessment. let me turn to today ’ s bond market contact group meeting. the topics on your agenda are as relevant to the ecb as ever, in particular given the updated guidance from the ecb governing council. i would like to present a few considerations that you may want to touch upon in your discussions. under your first agenda item, the bond market outlook, you will be holding an in - depth discussion on bond market developments and the outlook for the months ahead. euro area bond market developments in the past weeks were notably volatile. i hope your discussion will shed some additional light on the underlying drivers of this market turbulence. yes, political factors played an important role. however, were there other perspectives? has the market structure changed so much that it exacerbated the market reaction to the political events? could something be done from a structural perspective to prevent such a gapping in the market? how do you see the bond market outlook for the second half of 2018? what are the key factors that will drive markets during the rest of the year? the second item on your agenda, the global quantitative easing unwind and the implications for financial markets, is of particular importance. from my perspective, the reduction at the start of this year of the average net purchase volume under the expanded asset purchase programme from €60 billion to €30 billion had been well anticipated. similarly, the announcement that we will reduce the monthly pace of the net asset purchases to €15 billion until the end of december 2018 and then end net purchases, was also followed by a benign market reaction. nevertheless, i would be interested in your views on the implications for fixed income markets given that net asset purchases are likely to be coming to an end on a global scale – perhaps with the exception 2 / 3 bis central bankers'speeches of japan. looking at central bank communication, what is of particular importance to market participants as central banks wind down their net asset purchases? what were the main lessons from the us federal reserve ’ s experience? are there certain structural developments that could hinder a smooth end to net purchases? how do you foresee the reaction in fixed income segments that have benefited | olaf ) judgment [ 6 ], the european court of justice made it clear that, in principle, the ecb is bound by all regulations which bind the union. there is no distinction to be made between the different institutions, bodies, offices and agencies. all are equal under the law, so to say. however, the word “ relevant ” is ambiguous. does it refer to any institution, where relevant? that would mean that every eu institution should comply with the climate law, whenever it develops policy or takes action relevant to the objective of the law. or does it refer only to those institutions with competence to create policy relevant to achieving the objective of the climate law? the ecb would be directly bound by the law under the first interpretation but not under the second. the climate law is not crystal clear on this point. it does not define “ relevant institution ”. but there are a number of strong indications that the ecb is not a relevant institution under the climate law. let me explain why. the climate law does not contain many specific obligations. the law sets out a destination : climate neutrality. it does not tell us how to get there. how we do so will depend on environmental and economic policymaking. this is a union competence the ecb does not have. there are further arguments that support this interpretation. if the ecb is deemed to be a relevant institution, then it would have to submit its policies to the commission for assessment and the commission would monitor progress. that would be a fundamental change to the ecb ’ s accountability framework. under current law, the ecb is only directly accountable to the european parliament and the european court of auditors. a final reason for this view is institutional. if the ecb were deemed to be a relevant institution within the meaning of the climate law, this would be an implicit acceptance that the council of the eu and the parliament could set additional objectives for the ecb through the ordinary legislative procedure. however, the ecb ’ s objectives are laid down in the treaty on the functioning of the european union ( tfeu ) [ 8 ], and their scope cannot be changed by secondary legislation. that would be a violation of the treaty. changing the ecb ’ s objectives requires a special procedure. the ecb is – it seems – not directly bound by the climate law. so, can we ignore it? not at all. to do so would be a violation of the treaties. article 11 of the tfeu provides that | 0.5 |
level of skill, and the result is an apparent excess of supply relative to a declining demand. these changing balances are most evident in the failure of real wages at the lower end of our income distribution to rise during the past quarter - century. the hypothesis that we should be able to improve upon the knowledge that our students acquire as they move from kindergarten to twelfth grade gains some support from international comparisons. a study conducted in 1995 revealed that, although our fourth - grade students were above average in both math and science, by the time they reached their last year of high school they had fallen well below the international average. 1 accordingly, we apparently have quite a distance to go before we catch up. early last century, technological advance required workers with a higher level of cognitive skills - for instance the ability to read manuals, to interpret blueprints, or to understand formulas. youth were pulled from rural areas, where opportunities were limited, into more - productive occupations in business and an advancing manufacturing sector. our educational system responded : in the 1920s and 1930s, high - school enrollment in this country expanded rapidly. it became the job of these institutions to prepare students for work life. in the context of the demands of the economy at that time, the third international math and science study is a project of the international study center, lynch school of education, boston college. a complete set of timss publications is available on the center ’ s web site, http : / / timss. bc. edu / timss1995i / timsspublications. html. a high - school diploma represented the training needed to be successful in most aspects of american enterprise. the economic returns for having a high - school diploma rose and, as a result, high - school enrollment rates climbed. by the time that the united states entered world war ii, the median level of education for a seventeen - year - old was a high - school diploma - an accomplishment that set us apart from other countries. i cannot dismiss the notion that we can learn something from that period and perhaps from other countries. still, i realize that the world was different from today in many ways. societal changes have been numerous and profound, and our schools are being asked to do a great deal more than they have in the past. we need to be forward - looking in order to adapt our educational system to the evolving needs of the economy and the realities of our changing society. one area in which educational investments appear to have | paid off is our community colleges. these two - year institutions are playing a similar role in preparing our students for work life as did our early twentieth - century high schools in that less technically oriented era. but to an even greater extent, our population today is adjusting to an ever - faster turnover of jobs. we are also growing more aware that in the current intensely competitive economy, the pace of job creation and destruction implies that the average work life will span many jobs and even more than one profession. the desire of workers to learn skills that build on their previous work experiences or to acquire new skills is apparent. currently almost one in three of the enrollees in community colleges and almost one of two part - time enrollees at four - year undergraduate schools are aged thirty or older, statistics that suggest that these individuals have had previous job experience. the increase in these enrollments over the past thirty years attests to the success of these institutions in imparting both general and practical job - related training. a rising proportion of the population is also taking advantage of workrelated instruction. more broadly, our system of higher education bears an important responsibility for ensuring that our workforce is prepared for the demands of economic change. america ’ s reputation as the world ’ s leader in higher education is grounded in the ability of these versatile institutions to serve the practical needs of the economy by teaching and training and, more significantly, by unleashing the creative thinking that moves our economy forward. * * * i do not doubt that the vast majority of us would prefer to work in a less stressful, less competitive environment. yet, in our roles as consumers, we seem to relentlessly seek the low product prices and high quality that are prominent features of our current frenetically competitive economic structure. retailers who do not choose their suppliers, foreign or domestic, with price and quality uppermost in mind, risk losing their customers to retailers who do. retailers are afforded little leeway in product sourcing. if consumers are stern taskmasters of their marketplace, business purchasers of capital equipment and production materials inputs have taken the competitive paradigm a step further and applied it on a global scale. those who have lost jobs as a consequence of this process, i know, are not readily consoled by the fact that job insecurity concerns are not new. but keeping the current period in context is instructive. jobs in the united states were perceived as migrating to low - wage japan in the 1950s and 1960s, to low | 1 |
the dollar. the amount outstanding of funds in the call money market has remained generally stable since the middle of june. to date, this has not led to any difficulty in funds settlement, but close attention should be paid to future market developments. with regard to corporate finance, private banks have basically retained their cautious lending attitude. however, constraint that had been caused by severe fund - raising conditions and insufficient capital base has eased considerably. under these circumstances, major banks have gradually become more active than before in extending loans, while carefully evaluating the credit risks involved. however, credit demand for economic activities such as business fixed investment remains weak. in addition, some firms have been trying to reduce debts using their on hand liquidity. as a result, credit demand in the private sector has continued to be weak, and thus private banks ’ lending has remained sluggish. meanwhile, issuance of corporate bonds and cp has recently been steady. the year - to - year growth rate of money stock ( m2 + cds ) has declined to around 3. 5 percent mainly due to the weakness in credit demand in the private sector. in this financial environment, credit conditions have eased somewhat. the following continue to warrant careful monitoring : how actively investors will take risks ; how far private banks will ease their lending stance ; and how these changes will affect economic activities. | i have no doubts that the success of european integration in the past will continue into the future. as mentioned before, the oesterreichische nationalbank ( oenb ) very closely tracks and analyzes the process of european integration of central and eastern european countries. to keep the interested public informed about economic topics pertaining to this region, we hosted the “ east - west conference ” year after year and published a “ focus on transition ” twice a year. since the process of european integration has permanently closed the divide that used to run across europeand since the new central and eastern european eu member states have successfully completed most transition steps - and therefore can no longer be labelled transition economies - we had good reasons to update the names of two of our most important products. our conference and our publication are complimentary products. therefore we decided to choose a common name. this year ’ s conference is the first to take place under the new name : “ conference on european economic integration ( ceei ) ”, a name which reflects the growing - together of europe. in parallel, we relaunched the “ focus on transition ” as ” focus on european economic integration ”. the first issue was published recently. hand in hand with the renaming we also have renewed the structure and content of our products, an effort that was greatly aided by the results of a reader survey conducted this year. we will continue to investigate economic topics relevant to the new central and eastern european eu countries, such as the adoption of the euro. furthermore, we used the opportunity to extend our geographical focus to the region of south east europe. this year ’ s “ conference on european economic integration ” entitled “ south eastern european challenges and prospects ” is dedicated especially to this part of europe ; which comprises, as we understand it, the countries albania, bosnia and herzegovina, bulgaria, croatia, macedonia, romania, serbia and montenegro. since the eight central and eastern european countries joined the eu, the eu integration process has clearly shifted south east. apart from romania, bulgaria and croatia, which are next candidates for accession, all other south eastern european countries now have an accession perspective, as recently stated by the european commission. the stability pact for south eastern europe has been assisting the difficult catching - up process of this region. we will hear more on this pact later today. for completeness, let me shortly mention the case of turkey. last month, the european commission recommended to start accession negotiations with turkey. based on the report and recommendation from the european commission, | 0 |
covered bonds. how asset purchases contribute to the ecb ’ s objective with our monetary policy decisions in june and in particular in september, we have transitioned from a monetary policy framework based predominantly on passive provision of liquidity to a more active and controlled management of our balance sheet. bis central bankers ’ speeches this means that it is now changes in the size and composition of our balance sheet that determine our monetary policy stance – or to be more specific, the markets in which we intervene, and the magnitude and pace of our purchases. we expect such interventions to affect output and inflation through two main channels. direct pass - through effects the first is by addressing impairments in financial markets that have a direct pass - through effect to the real economy. and this effect will naturally be stronger in those markets that are more important for the transmission of monetary policy. with this in mind, we began our shift to actively deploying our balance sheet by focusing on the abs market, as this was a market that was both impaired and that had a tight link with bank lending, which is the main transmission mechanism of monetary policy in the euro area. this reinforced our overall aim to ensure there are no barriers to credit supply as credit demand progressively picks up. purchases of abs will push down market spreads on senior tranches, reduce volumes available for investors in those markets and thereby encourage banks to relieve this scarcity by originating more abs. as they can only do this by creating more loans in the first place, this ought to increase the supply of credit and reduce the price at which it is granted. the impact of these purchases will be bolstered by the scaling - up in parallel of the tltros. as banks receive cheap long - term funding on the condition that they expand loans to households and firms, the tltro will increase credit supply, which in turn should lead the price of credit to fall in a competitive environment. and both these measures will arrive in the context of the successful completion of the comprehensive assessment, which puts banks in a much stronger position to transmit our new monetary policy impulse. indeed, there is already evidence that in expectation of the roll - out of these measures, banks are lowering lending rates and increasing loan volumes. our latest bank lending survey reported a net easing of credit standards on loans to non - financial corporations and, more generally, suggests we have passed a turning point in credit growth. portfolio balance effects the second channel through which we expect asset purchases to work in the euro area is the broad portfolio | ##b have taken several steps to address fragmentation, and the financial situation in the euro area has improved dramatically. spreads on government bonds have fallen on average by 3 percentage points. interest rates on corporate and bank bonds have also converged substantially. and the fragmentation of financial flows across borders has receded, although it is still higher in some markets than it was before the crisis. bis central bankers ’ speeches the process of cleaning up the banking sector has also advanced considerably. in particular, our comprehensive assessment has encouraged banks to frontload their balance sheet repair and recapitalisation efforts, as well as identifying €25bn in capital shortfalls and imposing important prudential requirements. all this increases confidence in the sector and puts euro area banks in a better position to restart lending to the real economy. nevertheless, these positive developments in the financial sphere have not transferred fully into the economic sphere. the economic situation in the euro area remains difficult. the euro area exited recession in the second quarter of 2013, but underlying growth momentum remains weak. unemployment is only falling very slowly. and confidence in our overall economic prospects is fragile and easily disrupted, feeding into low investment. indeed, the latest flash euro area purchasing managers index released yesterday suggests a stronger recovery is unlikely in the coming months, with new orders falling for the first time since july 2013. in this context, the inflation situation in the euro area has also become increasingly challenging. headline inflation has fallen significantly over the last year. last november, it still stood at 0. 9 %. this was low, but it was generally expected to rise safely above 1 % by now. instead, the latest reading for headline inflation is 0. 4 %. this downward movement of inflation was primarily driven by declines in energy and food price inflation, which are two components that tend to be volatile and whose effects are typically temporary. so to some extent the ecb could “ look through ” them. indeed, in our current environment low energy and food prices give valuable support to economic activity by raising real disposable incomes. but we also see that core inflation is low – the inflation rate that strips out these volatile and temporary components. the annual rate of change in core inflation has been consistently below 1 % over the past year, with the latest reading for october at 0. 7 %. a low reading for core inflation for such a period of time indicates that it is not only temporary factors that are operative : underlying demand weakness is also playing a role. indeed, we have clear | 1 |
luis m linde : introduction to christian noyer speech by mr luis m linde, governor of the bank of spain, introducing christian noyer at the foro de la nueva, madrid, 28 june 2013. * * * ladies and gentlemen, it is an honour and pleasure for me to introduce to you today, here at the foro de la nueva economia, my colleague and friend christian noyer, the governor of the banque de france. with the presence of governor noyer, the foro de la nueva economia continues its tradition of inviting distinguished international personalities from the world of administration, business and politics, to promote the exchange of ideas on matters of particular interest to society. i will begin my brief description of the career of governor noyer by emphasising something in his curriculum vitae : christian noyer is a good friend of our country. the spanish government has recognised this, by awarding him the gran cruz de la orden del merito civil. with a legal training – he studied law at rennes and paris – governor noyer subsequently graduated from the institut d ’ etudes politiques and the ecole nationale d ’ administration, the school for senior civil servants and top corporate executives. his professional career began in 1976, when he joined the treasury in the french ministry of the economy and finance, where he held various positions relating to debt management, regulation of the financial industry and the management of public corporations. in the 1990s he was head of the treasury and chief of staff for the ministers of finance edmond alphandery and jean arthuis. during those years he built up considerable european and international experience. he was a member of the european monetary committee and held the office of alternate for the minister of finance at the oecd, the g7 and the g10. as head of the treasury, he also chaired the paris club. in 1998 he was appointed vice - president of the newly established european central bank. in 2003 he succeeded jean - claude trichet as governor of the banque de france, a post that he still holds following his reappointment in october 2009. he is a member of the governing council of the european central bank and chairman, since 2010, of the baselbased bank for international settlements. he is also head of the prudential control authority, one of the two most important regulation and supervision bodies in france. today, christian noyer is one of the most respected and long - serving central bankers. he has | 03. 11. 2023 stylised facts about the post - pandemic performance of the spanish labour market and future challenges * closing address at the “ canary islands, investment hub ” forum during the canary islands money week / universidad de las palmas de gran canaria las palmas de gran canaria pablo hernandez de cos go verno r * english translatio n o f the spanish o riginal dignitaries, ladies and gentlemen, good morning. i would like to thank the distinguished chancellor of the universidad de las palmas de gran canaria, mr lluis serra, and the dean of the faculty of economics, business and tourism, mr juan manuel benitez del rosario, for their kind invitation to deliver the closing address of the canary islands money week, organised by this university. of all the building blocks of an economy, the labour market is one of the most fundamental. a country ’ s macroeconomic performance and the efficiency of its economic and social policies largely depend on the functioning of this market. in recent years the global economy has experienced an unprecedented series of shocks, whose impact on production, aggregate demand, employment and, ultimately, producer and consumer incomes crucially depends on how the labour market copes with them. these shocks have occurred against a background of secular trends ( such as population ageing and technological change ) with the capacity to transform the functioning of the labour market and economic activity. in spain, moreover, the labour market has traditionally been characterised by serious dysfunctionalities, which have resulted in very high unemployment rates, affecting the different population groups very unevenly ( with a higher incidence among women, young people and low - skilled workers ), and an excessive prevalence of long - term unemployment. this market also suffers from an excessive duality between workers on permanent and temporary contracts that is economically inefficient, socially unfair and not conducive to productivity growth, and which also leads to adjustments in the event of adverse economic shocks through job losses to a much greater extent than through wages and makes the market prone to mismatches between labour supply and demand even in periods of particularly buoyant economic activity. the long succession of labour reforms over the past four decades aimed at correcting this dysfunctional behaviour – the last of which was passed in 2021 – should therefore come as no surprise. in this setting, i would like to share some thoughts about the spanish labour market and its outlook. to this end, i will highlight some stylised facts | 0.5 |
has been in the last three years in keeping portuguese bonds interest rates relatively low? one of the main factors why portuguese rates went down was that the country completed the programme. so you don ’ t feel that the country is dependent on the ecb ’ s low interest rates and its promise of support in case of need? we have seen that interest rates in portugal have recently gone higher. this shows that market discipline is present, in spite of the fact that the ecb is buying sovereign bonds. portugal should not forget this message : market discipline is still there. and then there are the ratings. in the asset purchases, we look at the assessment of rating agencies. there is one with the minimum, and it is bbb - … if portugal loses that rating, what would the ecb do? it ’ s very clear, we only buy investment - grade assets. we can have a rating waiver, but this is subject to a programme. so there is no ambiguity there. don ’ t you think it ’ s strange that the ecb ’ s action regarding portugal is dependent on a single rating agency? the ecb relies on four recognised rating agencies and has an economics department looking at the vulnerability of countries. probably better than the ones at dbrs, i assume? the rating agencies have to fulfil a set of criteria. you can say : why don ’ t you do your own ratings? we certainly can and do make an analysis to cross - check the conclusions and bis central bankers ’ speeches assessments of the rating agencies. but it is good practice to have this cross - checking going in both directions : our assessment also needs some double - checking by outsiders. the imf calculates that, at the present rate, the ecb will reach the limit of portuguese bonds that it can buy at the end of the year. will portugal have a problem here? i don ’ t want to comment on this. you talked about market reactions to the latest developments in portugal. and you, are you worried? the markets are somewhat worried, but not excessively. so there ’ s still the benefit of the doubt. the fiscal direction has been confirmed but a number of things are not clear for the budget of 2016. and the number for nominal gdp growth looks on the high side. there is a political declaration of continuity and of following the rules in europe, that ’ s positive, but there are some doubts about the details and the macro assumptions. so it is something we are following | ##metric shocks, there was no compensation by other countries. it is a problem that is quite difficult to solve, but it is a fact that emu hasn ’ t functioned very well in this respect. one worry is that the fundamental reflection about how to make emu work better is not advancing sufficiently. not all is negative, of course. we have managed to set up better mechanisms to deal with sovereign debt crises, but you are still in an unclear position when dealing with issues of sovereign debt. and we have banking union, we are especially advanced in terms of supervision, but we have not finished it. the fact that banking union is not finished, doesn ’ t that lead to small banks in small countries being bought by big banks from big countries? i know this is a big discussion here in portugal. i always have problems in understanding why that would be a problem. i experienced the crisis in belgium with fortis, and that bank represented a huge risk for that country. now, it is part of bnp and this has been absolutely instrumental in avoiding a catastrophe. for europe, this is an important question. you see the banking systems are in general more national than they were. not in portugal, but in many countries. the banks, even when they have subsidiaries, are tending to manage by way of separate entities more and more. banks today are exposed to country risk because most of the assets are related to the country. this means that, if you have a shock in the country, the banking system is not diversified enough. of course, the fact that we are in a monetary union limits the room for manoeuvre : you don ’ t have the exchange rate instrument, you have a single monetary policy. so it is absolutely vital to evolve towards pan - european banks, banks that are geographically diversified and also that would be backstopped by emu as a whole. so what you are saying is that, in a monetary union, if small countries want to have safe banks, they have to forget the ownership question? i think what matters in banks is good governance, not national ownership. you can always have local banks, that ’ s not the problem, but having the whole banking system exposed to the local economy in a monetary union like ours is a dangerous combination. we have two problems in the euro area : a fragmented banking market and the lack of common backstop. it cannot be done in one day, but you have to spell out how you make the transition to it | 1 |
restraining structural changes that occur when households increase their debt over several years to invest in housing and other property and assets. an interest rate that would effectively restrain these structural adjustments would also have an adverse impact on economic activity. but households are more vulnerable when debt levels are high. long periods of a sharp rise in asset prices and debt may give rise to instability in output and employment at a later stage. debt developments also affect banks ’ behaviour. a particular responsibility for monitoring developments in financial institutions has been assigned to kredittilsynet ( financial supervisory authority of norway ), and we are happy to have a well - equipped supervisory authority in this field. in its forecasting of economic variables, norges bank uses a broad approach. current statistics and impressions from norges bank regional network are important in assessing the current economic situation. in its forecasting, the bank uses several macroeconomic models : one core model and a number of smaller models. there is, however, no mechanical relationship between the models the bank uses and its forecasts. the bank ’ s forecasts are based on a broad and varied range of information sources and include a substantial element of judgment. important components in the assessment of what constitutes a good interest rate path – and which stress the element of judgment in this assessment – are expressed in a set of criteria that should be met. the criteria are included in the inflation report. criteria have been set for robustness and financial stability. it is also appropriate to assess interest - rate setting against cross - checks such as simple monetary policy rules. the central balance is nevertheless between the inflation outlook and the outlook for capacity utilisation in the economy, expressed in the chart as the output gap. the projections are from inflation report 3 / 05. if monetary policy is to anchor inflation at the target, the interest rate must be set so that inflation moves towards the target. inflation should be stabilised close to the target within a reasonable time horizon, normally 1 - 3 years. provided inflation expectations are on target, the inflation gap and the output gap should be in reasonable proportion to each other until they close. looking ahead, the inflation gap and the output gap should normally not be positive or negative at the same time. several of the recommendations from norges bank watch can be translated into how we should weigh the outlook for these two variables against each other. according to the report, norges bank ’ s inflation projections through 2005 were fairly accurate. inflation has risen somewhat but is still very low, even | , many international enterprises now have a poorer credit rating than earlier this has also affected borrowing in norwegian companies, which now have to place greater emphasis on their customers ’ ability to honour commitments. international financial and capital markets are characterised by uncertainty and unrest. this unrest is not found among economic agents in norway. as long as oil prices are high, the norwegian economy is fairly sheltered. many central banks are now reducing their key rates. as our economy is affected to a lesser extent, the differential between short rates in norway and abroad may widen. monetary policy the long - term objective of monetary policy is to provide the norwegian economy with a nominal anchor – domestic price stability, and thereby the basis for a stable krone. nominal stability is the best contribution monetary policy can make to economic growth and prosperity. a nominal anchor is also a necessary precondition for stable financial markets and property markets. high inflation and wide swings in the exchange rate impair the function of prices as an information vehicle. this leads to booms followed by busts and an arbitrary redistribution of income and wealth. inflation therefore poisons the economy. by linking movements in the krone to the euro, we have chosen to follow the same standard for nominal stability in the economy as set by the euro area countries. inflation 1990 - 2001 per cent norway euro area since 1997, inflation has been higher in norway than in the euro area. the difference partly reflects a period of strong growth in norway, while the level of activity in europe has been low. the higher level of inflation in norway cannot be sustained, however, as this would undermine the basis for stability in the krone exchange rate and confidence in monetary policy. short - term capital inflows and outflows are probably the most important factor determining movements in the krone exchange rate from day to day, from week to week and from one quarter to the next. they are governed by expectations concerning future returns. changes in expectations concerning the future value of the krone can trigger extensive capital movements. as a rule, norges bank does not intervene in foreign exchange markets with a view to influencing the krone exchange rate. the krone is floating, and the value of the krone fluctuates in periods by the same magnitude as exchange rates in other open economies. nevertheless, the prevailing stability of the krone is largely a reflection of confidence that inflation in norway will be kept at a low level. our experience is that changes in the norwegian interest rate level only have a predictable | 0.5 |
##ness and provides valuable information for economic analysis and public policy decisions by increasing the frequency and opportunity with which we can measure regional economic conditions, which until recently was available only annually. this initiative has been applauded by local and regional stakeholders, as it will be providing a regular and up to date assessment of the business - cycle, helping adjust and draw economic initiatives by both the public and private sectors that can be more precisely tailored to changing local realities. this initiative was possible because of the maturing relationship through the protocolization of anonymized information exchange between the central bank and the chilean internal tax service. the use of existing administrative records, allowing the identification of the location of economic transactions, has been much more efficient than the traditional recourse to large surveys, both in the timeliness of access as well as the possibility to backward estimate up to a decade of information. following that, in july, by the joint effort of several institutions, we broadened data availability by gender and regions. additionally, we managed to facilitate access and data analysis by combining data from different sources in one location using our public statistics database platform. we have now begun to publish an “ experimental statistics ” section that brings together indicators in various areas of interest. the indicators include mobility indexes, based on the number of electronic invoicing issued by a sample of gas stations ; a daily retail sales index, which anticipates the activity of the retail trade sector ; and the internet job ads index, first published in 2019, based on the ads posted at the leading web employment portals in chile. to ease and empower the user in manipulating and utilizing these new data we launched a new visualization tool developed in power - bi. the lesson learned is also that to keep up with the changes and react promptly, we must continue encouraging the digital transformation of our organizations, incorporating advanced analytical techniques, and providing more timely and granular information that considers heterogeneity to complement conventional statistics. as the access to new large - volume databases and the use of granular data almost always poses the challenge of confidentiality, the central bank of chile has sought to implement best practices and safeguards to exploit such information. with this objective, we established a data governance agenda, led by a strategic committee that reports directly to the board and whose executive management is located in the statistics division. likewise, we are working on our big data strategic project, which contemplates a centralized data repository that all user areas can access | by the superintendence of securities and insurance ( svs ), and pension funds, which are large players in our financial system, are regulated by the superintendence of pensions ( sp ). in this setting, the preservation of financial stability crucially relies on the capacity and ability of all players involved, including us, to share our views and coordinate our actions. this is currently done through routine interaction between us, and more formally through periodic meetings in the financial stability council, an entity created precisely to guarantee such coordination. 2. financial stability tools let me now turn to the discussion of what are the most appropriate tools to pursue financial stability. of course, this discussion draws from the previous one on whether the central bank should be in charge of it. but let ’ s forget about that for a second to tackle one of the main aspects of this debate, which is whether a central bank that cares about financial stability should use the policy rate as a tool. there are different views on this regard, both in academic and policy circles that you probably know well. i am among the ones who think that the interest rate is often too blunt a tool to deal with financial stability issues, especially when they have clear sources that can be addressed more directly, since the policy rate affects every sector of the economy. furthermore, under some circumstances the required movement in the policy rate for financial stability purposes may be in conflict with the price stability mandate. assuming that such tradeoff is absent, that reasonable movements in the policy rate are expected to be useful to deal with financial stability concerns, and that there are no better tools at hand, it may be reasonable to rely on it as a tool for financial stability. however, in many situations at least one of these conditions would not hold and other options would prove more efficient. for instance, more often than not financial stability concerns are related to specific segments of financial intermediation. concerns about rapid growth in credit to the housing sector can be tamed by changes in loan - to - value or debt - toincome ratios, for example. dynamic provisions related to general or specific forms of credit may also help banks maintain a solid position through the financial cycle, and discretional changes to reserve requirements may also help rein in rapid bank credit expansion. of course, all these measures are not cost free and their use must properly consider these costs against specific financial stability concerns. for instance, increases in reserve requirements affect only the banking sector, which may lead to disin | 0.5 |
. as a result, eu accession should contribute to faster economic growth, leading to an acceleration of the process of real convergence and to a steady improvement in living standards. eu membership also entails a commitment to participate in emu. before accession, malta will, therefore, have to adopt key elements of the acquis communautaire related to emu. this process is well underway. for example, legislation currently before parliament will explicitly make price stability the primary objective of monetary policy, strengthen the legal and operational independence of the central bank of malta and formally prohibit central bank financing of public sector deficits. in practice, the central bank has been formulating monetary policy independently since 1994, using market - based instruments, including open market operations and reserve requirements, which are similar to the ones currently used by the eurosystem. the adoption of the euro would be the final step in a process linking the maltese economy and the euro area. compared to the current regime it offers a number of additional advantages, which are highlighted in the literature on optimum currency areas. specifically, it should reduce transaction costs ; result in lower interest rates in malta ; ease access to the growing european financial market ; and lead to more transparent pricing of goods and services. it should also act as a spur to the integration process with the eu since countries with the same currency tend to trade more with each other. from an institutional point of view, it should allow malta to be represented in the decision - making processes of the european system of central banks ( escb ) that affect it even today. here i would like to support the view put forward recently, among others by governor wellink of de nederlandsche bank, about the need for adequate representation of national central bank governors in the decisionmaking bodies of the escb. their participation confers a degree of legitimacy on the decisions of supra - national bodies such as the governing council, and can improve the quality of the policy debate as well as communications with the public in the various member states. from our perspective, the adoption of the euro should not involve any major regime shift. in fact, since the collapse of the bretton woods system three decades ago, the maltese lira has been pegged to a basket of major currencies. although the composition of the basket has been changed on a number of occasions, mainly in response to shifting trade patterns, the exchange rate was only devalued once, in the wake of the erm crisis in | the autumn of 1992. the fact that malta has successfully maintained a peg for so long suggests that this is a viable exchange rate arrangement. the choice of a fixed exchange rate as the intermediate target of monetary policy was dictated by key characteristics of the economy. first, malta ’ s size implies that it is a price taker on international markets and cannot hope to influence its terms of trade through nominal exchange rate movements. in addition, because of the economy ’ s openness, the conduct of monetary policy has to take the exchange rate into account, whatever the overall policy strategy adopted. in fact, our experience after the 1992 devaluation showed the ineffectiveness of the exchange rate as a policy instrument, given the rapid pass - through from import prices to the general price level, and the consequent loss of competitiveness in export markets. second, the economy is already highly integrated with that of the eu. this is borne out by trade flows, as well as by a comparison of malta ’ s economic structure in terms of the sectoral distribution of value added and employment with that of the union. in addition, differences in productivity levels between malta and the eu in the traded goods sector have been found to be small, which suggests that the balassa - samuelson effect is unlikely to be strong. moreover, economic integration will deepen as barriers to the movement of goods, services and factors of production are removed as part of the accession process. these factors, which attest to a significant degree of real convergence, support an exchange rate regime based on a peg to the euro. empirical evidence indeed shows that the exchange rate peg has been a valuable nominal anchor, restraining price and wage increases. in fact, inflation has averaged just 2. 6 % in the past five years, indicating a considerable measure of nominal convergence with our major trading partners, and with the euro area in particular. by reducing the costs associated with international trade and investment, the peg has also contributed to malta ’ s orientation as an open economy. price stability and openness have been key factors contributing to the country ’ s economic growth record, which averaged 3. 3 % in real terms during the same period. between now and the adoption of the euro, therefore, malta intends to maintain a fixed exchange rate regime based on a currency basket centred on the euro. the central bank is aware that it will have to maintain the peg and manage a smooth transition to membership of the erm and the single currency area in a rapidly changing economic environment. | 1 |
than a decade ago. given our comparative advantages, this phenomenon offers us many opportunities, ones we cannot afford to waste. thank you for your attention and i would be pleased to answer any questions. | funds in the most liquid components included in m1, which continued to grow at a robust annual rate of more than 12 % in december. the zero annual growth rate of bank loans to the private sector reflects a further increase in the growth in loans to households, while the annual growth in loans to non - financial corporations moved further into negative territory. such divergence remains in line with business cycle regularities. the ongoing contraction in the outstanding amounts of loans to non - financial corporations continues to be accounted for entirely by a strong net redemption of loans with a short maturity. for the sector as a whole, the overall contraction may be due partly to substitution with market - based financing. given the typical lags between turning points in economic activity and those in the demand for bank loans, growth in loans can be expected to remain weak over the months to come. in the meantime, the real cost of external financing for non - financial enterprises has declined further, while the net tightening of credit standards applied by banks has continued to diminish, as indicated by the bank lending survey for the last quarter of 2009. at the same time, banks have continued to reduce the size of their overall balance sheets over the past few months. in this respect, the challenge remains for banks to adjust the size and structure of their balance sheets while ensuring the availability of credit to the non - financial sector. to address this challenge, banks should use the improved funding conditions to strengthen their capital bases further and, where necessary, take full advantage of government support measures for recapitalisation. this is important to facilitate access to finance, especially for those enterprises that do not have recourse to market - based financing. to sum up, the current key ecb interest rates remain appropriate. taking into account all the information and analyses that have become available since our meeting on 14 january 2010, price developments are expected to remain subdued over the policy - relevant horizon. the latest information has also confirmed that euro area economic activity continued to expand around the turn of the year. looking ahead, the governing council expects the euro area economy to grow at a moderate pace in 2010. the recovery process is likely to be uneven and the outlook remains subject to uncertainty. a cross - check of the outcome of the economic analysis with that of the monetary analysis confirms the assessment of low inflationary pressure over the medium term. all in all, we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. medium to longer | 0 |
let government build infrastructure and help the poor and private sector trade and invest to economically develop the nation. the recent trend is that, central banks are now given the sole task of keeping price stability, and is given the independence to do that since if they have no independence, government will, at time ask it to do things that are in conflict to that sole function. thus the modern central bank is really akin to keeping peace in the nation through enhancing stability and it ’ s other people ’ s jobs to create wealth or turmoil as the case may be, the turmoil being a necessary instrument in coming to the right policies or at time the wrong ones or in an ever worse ending turmoil without apparent purpose as is so often the case in emerging markets. but it certainly is not now deemed the function of the central bank to be doing this sort of thing. so central bankers can now claim that they are basically trying to create peace and hopefully in a peaceful economy, there will be better prosperity than a wildly gyrating one. in a peaceful economy, growing stably at a high but sustainable rate, one cannot expect that there will be no criminals hidden deep down somewhere inside the society. a new instrument has therefore been added to the arsenal of monetary policy and financial supervision in the anti - money laundering legislations. the first anti - money laundering legislation was issued in 1970 by the us government. the mechanism is generally that cash deposit of more than the minimum stipulated amount would be examined. in the case of thailand, this legislation was issued in april and became effective in august 1999. the central bank participated fully in the draft and cooperates with its implementation. we have taken the option though that central banks should be trying to put up a good system for people to operate in rather than having another prime function of catching thieves and criminals, and in this legislation therefore a new independent government office has been put up dedicated solely to the pursuit of the articles of the legislation. we sit on the committee under the legislation as i have just said, and cooperate wherever we can to make sure its execution is effected and effective. this is another occasion where central banks contribute directly to peace in that criminal activities which by nature are not peaceful is kept to a minimum. speaking of criminal activities, vote buying in an election is also a criminal activity and although legislation makes it difficult for us to tackle this problem, we cooperate with the neutral national election commission in tracking down movement of funds and we have assigned an assistant governor to directly coordinate with this | before international liquidity standards were first discussed in basel. it has helped to shelter the italian banking system from the financial storm ; it continues to be necessary in the face of persistent market instability. convergence towards the basel liquidity standards, the details of which are not yet fully defined, will take place gradually, according to plan. in the first quarter of 2011, the profitability of the five largest banking groups improved somewhat with respect to a year earlier. the annualized rate of return on equity rose from 3. 0 to 3. 4 per cent. losses on loans decreased by 12 per cent, but they still absorb almost half of the banks ’ operating profit. the improvement is encouraging ; it should continue in the coming months when the recovery in lending reflects positively on banks ’ earnings. however, for the banks to return to satisfactory profitability it is essential that they persist with their efforts to reduce costs. some groups are taking steps to rationalize their networks ; these must be pursued with determination. a difficult round of labour negotiations awaits the banks, during which they must reconcile the need to reward the professionalism and productivity of employees with the impelling need to ensure that the evolution of costs is in line with the sector ’ s economic prospects. * * * there are favourable factors we can rely on to carry forward the consolidation of the public finances, overcome the emergency now overshadowing the economic outlook, and set italy on a path towards stable growth. we have the advantage that private sector debt and the country ’ s overall net foreign debt are both limited. our banks are sound ; they have emerged unscathed from the financial crisis that shook large foreign institutions. we possess fundamental resources that have always characterized the italians : individual initiative, ability to innovate, willingness to work. we must believe in our economy ’ s capacity for growth. we must find a common goal, above and beyond individual and factional interests. we must rediscover how to act for the good of all. bis central bankers ’ speeches | 0 |
as collateral – both in private lending and in central bank refinancing operations. central banks should be flexible enough to adapt their instruments to changes to the financial environment. but they have to remain inflexible in their overall strategy. in a changing financial environment the only way to maintain credibility is to safeguard the ultimate objective, which is price stability. thank you for your attention. | tout court. in fact, by 2007 the size of the official and shadow banking systems, measured by the total amount of assets, had become essentially the same. 3 but there is also an issue of quality – or, if you prefer, of composition – of finance. due to the increased risk aversion resulting from the financial crisis, collateralised lending is bound to increase in the future, even in markets where traditionally unsecured lending was the most important source of finance ( e. g., the euro area interbank market ). as a consequence, the demand for securitised assets – of the type that shadow banks have learned to create in the past – is set to increase further in the future, as institutions demand such types of debt to use as collateral. to put it in a nutshell, we will continue to need the functions, the financial products and the expertise that the shadow banks have been offering. but, we need to make sure that these activities are performed in a non - disruptive way. the new financial landscape can also reinforce the effectiveness of monetary policy. i already mentioned that most of the funding of financial institutions – whether banks, brokerdealers, hedge funds or shadow banks – is short - term. in other words, a key function of the financial system is maturity transformation. when a central bank takes decisions on the policy rates, it directly affects the marginal price of leverage for these financial institutions. 4 as a result, the behaviour of financial intermediaries – which, by their nature, have high levels of leverage – can be strongly influenced by even small changes in short - term rates. 5 in see figure 3. 1 of t. adrian and h. s. shin ( 2009 ), “ financial intermediaries and monetary economics, ” handbook of monetary economics, forthcoming. see : t. adrian and h. s. shin ( 2009 ), “ financial intermediaries and monetary economics, ” handbook of monetary economics, forthcoming. see : r. g. rajan ( 2005 ), “ has financial development made the world riskier? ” proceedings of the frb kansas city jackson hole symposium “ the greenspan years : lessons for the future ” ; and f. allen and d. gale ( 2007 ), understanding financial crises, oxford university press. other words, short - term interest rates are important in and of themselves, not only because they influence longer - term rates and other asset prices via expectations of future short - term | 1 |
benjamin e diokno : sustainability in investing speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the year - end market forum for maybank philippines'25th anniversary launch, 23 november 2021. * * * to finance secretary carlos p. dominguez national economic and development authority undersecretary rosemarie edillon ; ms. puan fauziah hisam, chairperson of maybank philippines incorporated ; ms. abigail del rosario, president and ceo of maybank philippines incorporated ; chua hak bin of maybank kim eng singapore ; guests, ladies and gentlemen, good afternoon. i am honored to be here at the year - end market forum for maybank philippines ’ 25th anniversary launch. since maybank opened its doors in the country in november 1997, the bank ’ s network has grown to over 60 branches nationwide. through your corporate social responsibility initiatives and various community and sustainability programs, you were able to demonstrate maybank ’ s brand of humanizing financial services. bsp commends maybank ’ s sustainability initiatives. we recognize the maybank group ’ s long - term commitments launched in july 2021, including the mobilization of 50 billion malaysian ringgit in sustainable finance by 2025, carbon neutral position by 2030, and net - zero position by 2050. we also commend the bank ’ s governance reforms reflecting its desire to integrate sustainability principles in its corporate structure. as banks take on the “ green and sustainable ” path, bsp provides the enabling regulatory environment to drive sustainable finance in the country. bsp is also leading by example. we endeavor to embed sustainability principles in everything we do as an institution, as guided by bsp ’ s sustainable central banking program. this program underscores the essential roles of the bsp as an enabler, mobilizer, and doer. as an enabler, bsp provides policies and structures that will support and facilitate sustainable finance. in this respect, we have issued the sustainable finance and environmental and social risk management frameworks. released in april 2020, the sustainable finance framework highlights the overarching principles of integrating sustainability and esg considerations in banks ’ corporate and risk governance frameworks, business strategies and operations. this framework also underscores the responsibilities of the board of directors in institutionalizing sustainability principles within the organization. supplementary to this is the environmental and social risk management framework. this framework gives | register a surplus. our international reserves as of end 2016 stood at us $ 81 billion, adequate to cover over 9 months ’ of imports of goods and payment of services, as well as to cushion us from unexpected external shocks. the philippine banking industry played a significant role in helping sustain the pace of growth of our economy. bank lending continued to expand by double - digit rates and went mostly to productive sectors. as of november 2016, consolidated bank loans reached p7. 4 trillion, almost 19 % ( 18. 5 % ) higher than the year - ago level. indeed, the banking sector kept pace with the growth of our economy. total assets of the banking industry reached p13. 2 trillion, over 12 % ( 12. 4 % ) growth from the november 2015 level, while deposits increased by more than 13 % ( 13. 5 % ) to p10. 1 trillion, an all - time high. significantly, asset quality improved further with non - performing loans at 2. 0 % while capitalization 1 / 3 bis central bankers'speeches remained comfortably above the minimum required under national and international standards. and the banks continued to report profits. in other words, ladies and gentlemen, the philippine banking sector not only survived 2016, it continued to thrive. and more than these, our stress tests indicated that our banks can withstand extreme shocks in both credit and market risks. third party analysts also have positive reviews concerning our banking industry. for instance, the philippines is the only banking industry within asia pacific that was given positive outlook by fitch ratings in 2016. meanwhile, moody ’ s recognized our banking industry as the only one within asean that has a stable outlook on all rating factors — operating environment, asset quality and capital, profitability, funding and liquidity. indeed, our banking sector is sound, stable, and continues to be a source of strength for our economy. the philippine economy has recorded 71 quarters of uninterrupted growth. our banks helped nurture this virtuous cycle for our economy. let us therefore congratulate the leaders of our banking industry for making this happen. let us also thank other institutions that support our banking system. of course you and i know that it was not easy getting here. together, the bangko sentral ng pilipinas and the banking sector worked together to continue to strengthen our banking system, raise risk management standards, and align governance standards with international best practices. the process of collaboration has been challenging but our performance does speak for itself. | 0.5 |
sharia - compliant institutions to have a real asset to back their financial assets. nonetheless, these exposures also have a downside, as the experience of the past few years has reminded us. like conventional financial institutions, some islamic financial institutions have suffered losses resulting from their exposure to real estate markets around the world. moreover, because they are frequently the direct owners and developers of real estate projects, islamic financial institutions have been exposed to wider range of risks than conventional ones. as the ifsb argued in a recent paper, the events of the past few years should have given the industry a clear signal that it must reduce its reliance on real estate as an asset class. the requirement for a real asset to back financial assets can be met in many other ways than by financing the construction of office buildings, shopping malls or luxury apartments. the industry should look instead at the scope for increasing the finance it provides for productive assets such as factories, ports, mines, and oil processing facilities. financing these activities may appear less profitable in the short - term, but may be a better proposition on a riskadjusted basis. diversification is also needed of product offerings that will allow islamic financial institutions to serve their customers better and to generate more stable revenues. surveys of the islamic financial industry tend to show that firms have a comparatively narrow range of financial products to offer their clients. developing a greater product range will not only benefit consumers. it will also create new sources of revenue that tend to be more stable than those generated by cyclical industries such as real estate. as i said at the beginning of my remarks, it is in the interests of all involved in the industry – regulators, standard setters and above all practitioners – to ensure that it rests on secure foundations. in other words, the industry must be prepared constantly to subject itself to the sort of intellectually rigorous analysis that has been the hallmark of the work of professor simon archer whose contribution to the industry we celebrate this evening. throughout his long and distinguished involvement with the islamic financial industry professor archer has assessed its prospects both sympathetically and honestly. while aiming to encourage the growth and development of the industry, he has also recognised that its long - term potential can only be realized if it rests on strong foundations. the long - run objective of a sound and stable industry should not be sacrificed to short - term gain. these sound principles are exemplified by the work that professor archer has done over the years, both with aaoifi and with the ifsb. he has | rasheed mohammed al maraj : business models in islamic finance – challenges and opportunities keynote address by he rasheed mohammed al maraj, governor of the central bank of bahrain, at the ifsb seminar on business models in islamic finance, manama, 3 october 2010. * * * your excellencies, ladies and gentlemen : it gives me great pleasure to be here this evening and to have the opportunity to contribute a few thoughts to the important and timely seminar on business models in islamic finance. i am sure that the morning session provoked many lively debates as the issues considered are of fundamental importance to the future of the islamic financial industry. as a major centre of islamic finance, bahrain wishes to see the industry move from strength to strength. however, this means on occasion being willing to pose some challenging questions for the industry to answer. we are all aware of the great potential that exists in the islamic finance field. following the global financial crisis there has been a resurgence of interest in the islamic finance model. some consultants are predicting that the size of the industry, currently estimated at around one trillion us dollars, could double within a decade. these are exciting predictions, but like all predictions they need to be treated with a degree of caution. as the health warnings on investment products constantly remind us, past performance is not necessarily a guide for the future. as a result, projections of spectacular future growth of the industry which rely on extrapolating the growth trends of the last five or ten years may not be the best guide to the future. the industry will only realise the predicted growth trends if it can properly address some fundamental issues, central to which are the business models of islamic financial institutions. the rapid growth in the industry in the last decade has meant that few sharia - compliant financial institutions have been able to achieve significant economies of scale. many remain comparatively small and focused on niche markets. the result is that we have an industry that comprises many small scale firms engaged in very similar activities and with comparatively high concentrations of risk. as i have said several times in the past, for the long - term health of the industry it is important to generate greater scale and diversity. diversification of the industry needs to occur over several different dimensions. in the first place, diversification is needed of the industry ’ s exposure to particular economic and industry sectors, such as real estate. many islamic financial institutions have built up a comparatively high exposure to the real estate sector. in part, this is the consequence of the requirement for | 1 |
andrew bailey : the outlook for financial regulation in the uk speech by mr andrew bailey, executive director for banking services and chief cashier of the bank of england, on a regional visit to edinburgh, edinburgh, 10 january 2011. * * * andrew bailey will become the deputy chief executive of the prudential regulation authority ( pra ) on its creation. thank you to linda urquart for inviting me to speak today and morton fraser for allowing us to use your venue. i would also like to thank will dowson, the bank ’ s agent for scotland for the assistance that he has given me, and for the work that he does to ensure that the bank is well connected to the uk ’ s most important financial centre after london. will worked for me when he first joined the bank as a graduate entrant, and i can assure you, drawing on that experience, will is an excellent person to ensure that the bank and you as our contacts in scotland are well informed and understand the relevant developments that affect each of us, and of course that we in the bank understand the state of the economy in scotland and the financial sector here. it is quite right that first and foremost our agents support the needs of monetary policy and the mpc. the information that they gather from you, their contacts, makes a real difference to the monetary policy process. there is a parallel in our responsibilities for ensuring financial stability. in an important financial centre like edinburgh, we need to be well connected, and to understand your assessment of the threats to financial stability and we need to explain what we are doing to tackle these threats. our market intelligence function under my colleague paul fisher plays an important role here, and is in frequent contact with the scottish financial community. this contact will be even more important under the new arrangements in which the bank will be responsible for macroprudential policy and its focus on the stability of the financial system, with a new policy making body, the financial policy committee, or fpc. alongside and feeding into the bank ’ s macroprudential role will be our new responsibility for microprudential supervision of deposit takers, insurers and major securities dealers, also in a new body, the prudential regulation authority, or pra. it is therefore a period of major change at the bank, and we are taking very seriously our role in building a system of regulation in the uk that must meet the very reasonable expectations of the public for a safer and sounder financial | system. the overarching objective for the bank is to put the stability of the financial system at the heart of the mission of financial regulation. we are now in the fourth year since the financial crisis started in the middle of 2007. the scottish banking system took a pounding during the earlier stages of the crisis. that was not just deeply regrettable for the institutions concerned, but also it damaged a proud and long tradition of sound banking in scotland. it pained me, in my role as the person responsible for resolving a number of these problems, to see the lack of regard for the basics of a well run bank, the foundations which must be there to be sound and successful. i have spent the last seven years also responsible for the bank of england ’ s banking operations, and i know from this experience that unless you really understand your balance sheet and its risks, the systems and control environment that supports the balance sheet, and you have the basics needed well covered – the reconciliations work, the right management information available promptly – you aren ’ t doing your job. it isn ’ t sexy or headline grabbing, but it is surely what the good scottish bankers of the past taught us to do, and what i hope is back with the current generation. the financial crisis has moved on since those earlier days. over the last twelve months, concerns with both sovereign states and their banking systems have intensified in other parts of europe. recently, the imf and european authorities have moved to put in place a substantial package of support for ireland. this intensification of concerns has raised the bis central bankers ’ speeches threat of contagion from these countries, and the consequent financial market developments that have affected several other european countries have added to the risk of a spill - over to the largest european banking systems, including our own. so far, the threat has been limited. an important reason for this is that banks have done the right things over the last two years, namely to focus on their resilience by refinancing debt at longer maturities and raising their buffers of capital. it is hard work in an environment that is still affected by the crisis, but there is no doubting that it is the right thing to have done and continue to do. sound banking is about having a strong capital base and a funding profile in terms of maturity that can withstand the sorts of shocks in the world that will happen from time to time. it is not about expanding your bank rapidly and funding the growth | 1 |
road ahead is challenging, and decisionmakers will need enough resolve to face down opposition to such reforms and get them implemented. 4. how can monetary policy help? yet this must not entice politicians to go for what some view as the “ easy way out ”. as you ’ ve probably already realised, i ’ m talking about the role of monetary policy. the ecb governing council agrees unanimously that monetary policy cannot solve the crisis. at best, it can buy time – but that is not its job. monetary policy has already helped substantially in preventing an escalation of the crisis. however, this has taken it a long way into uncharted – and dangerous – territory. it ’ s no secret that i am critical of the ecb ’ s government bond purchase programmes in particular. if eurosystem central banks buy government bonds issued by countries with poor credit ratings, this will distribute the risks of unsound fiscal policy among all the euro - area states. this weakens the no bail - out principle and entails redistribution, which is really the prerogative of fiscal policymakers. alongside the government bond purchase programmes, the sustained period of low interest rates is also controversial. incidentally, that is true of many countries outside the euro area, too. bis central bankers ’ speeches many savers find the low interest rates and negative real interest rates unfair. some enterprises, prospective homeowners and governments, on the other hand, probably see them as a blessing. they help them to service their debt and to fund investments cheaply, thus boosting economic activity. given the subdued medium - term inflation outlook, which is due to the weak macroeconomic backdrop and muted credit growth, the low interest rates are justified from a monetary policy perspective. yet low interest rates are not without their side - effects. while they are currently justified from a monetary policy perspective, we must not blind ourselves to reality : they tempt decisionmakers to delay reforms and necessary structural changes. risks to financial stability may build up, and these side - effects will increase the longer the phase of low interest rates continues. all this means that the interest rate environment also poses a challenge for cooperative banks ; a sustained period of low interest rates squeezes profit margins and means cost structures have to be adjusted. given the subdued medium - term outlook for inflation, the ecb governing council stated last week that it expected the key ecb interest rates to remain “ at present or lower levels for an extended period of time ” | regain responsibility for its own public finances. the government, parliament and electorate of each euro - area country must be bis central bankers ’ speeches responsible for ensuring that their economy is competitive and performs well, that the country generates growth and employment under its own steam, that its government finances are sustainable in the long term, and that excessive public deficits and debt are eliminated so that the country can absorb cyclical shocks without external assistance. far - reaching reforms are needed to achieve this level of stability. all this is challenging, but shouldn ’ t it really be a matter of course? after all, these are the prerequisites for a stable monetary union. to achieve these aims, to set the right incentives for sound policymaking, we need to lend more weight to the no bail - out principle again. the collective action clauses on recently issued government bonds are a step in the right direction, enabling a bail - in of bond creditors in the event of serious solvency problems. only then will the market have a disciplining effect on government budgets. but as the crisis has shown, the success of this approach of national responsibility hinges on one condition : ensuring that public finance problems do not derail the whole financial system. two things can at least help to ensure that this condition is fulfilled : in the medium term, banks should be obliged to set aside sufficient capital to back government bonds, and they should also be subject to limits on large exposures to governments. such limits have been applied as standard to corporate loans for a long time now. this would make banks more resilient to public finance problems, encouraging them to adjust their demand for government bonds more closely to the level of risk involved. any government with an unsound fiscal policy would face rising interest rates on its bonds. kenneth rogoff, former chief economist at the imf, even views adequate capital backing for government bonds as a far more effective debt brake than the rules of the fiscal compact. incidentally, putting an end to preferential treatment of government debt over corporate loans would also make lending to enterprises more attractive again. and you could all benefit from that, even though there are currently no signs of constraints on lending to enterprises in germany. quite the opposite : credit standards for corporate loans were actually loosened slightly in the first quarter of 2013. however, bank balance sheets don ’ t just reflect government finances but also developments in the real economy. the reforms i ’ ve described will therefore also make the banking system more stable. the | 1 |
governing council today, and i will not comment immediately on our decisions that christine lagarde has just presented. in mid - march, when the economy was threatened by a breakdown in financing, the governing council of the ecb put in place an immediate and virtually unlimited liquidity shield. on 12 march, we acted first of all for businesses and smes that obtain financing from banks, by allocating them an exceptional refinancing envelope at a very attractive rate : the tltro iii, which as of their first take up in june represented an amount of nearly eur 1, 350 billion. then, on 18 march, for large companies and governments that fund themselves through the financial markets, we created the pandemic emergency purchase programme ( pepp ), initially totalling eur 750 billion, which was increased to eur 1, 350 billion on 4 june. this massive and rapid action was welcomed but raised questions, particularly in germany : is the ecb not going beyond its mandate, endangering price stability? and even more " fundamentally ", where do these thousands of billions created all of a sudden come from? i will start with the second question : the specific feature of a central bank is its ability to create money virtually and without limits. however, it must be borne in mind that the money created by central banks is never simply “ given away ” permanently : it is loaned for a limited period ; and it is channelled into the economy and eventually comes back to the central bank. the central bank can buy time through its monetary creation, and this is important. but it cannot sustainably increase wealth ; only our work and economic growth can. i will now return to the first question, on whether or not we are fulfilling our mandate. in its founding treaties, and under the legitimacy afforded to it by economic actors and public opinion, the ecb ’ s measures are bound by two interlinked anchors : its price stability mandate and its independence. they are inherited from the bundesbank and in my view vital. independence : the ecb is subject to neither national governments, nor to the pressures of the financial markets nor of passing trends. the ecb ’ s monetary policy must continue to support economic activity, for the sake of its own mandate of price stability. in the short and medium term, the crisis will have desinflationary effects that are already noticeable, with inflation temporarily falling in august by 0. 2 % in the euro area, and by | is why we think we need to adapt our central bank money services if we are to address the settlement needs of an increasingly digital financial system. as such, the banque de france was one of the first central banks to launch an ambitious experimental programme on wholesale cbdc. the mas and the banque de france have been travelling companions on this journey for some years now, and our partnership has proved very fruitful. we have been, and continue to be, close partners working on bis innovation hub projects involving crossborder payment processes. let me just highlight a few of those projects here. in the wake of project mariana, where we tested the cross - border exchange of cbdc, we are currently working together on project rialto to improve the fx layer of instant crossborder payments. we are also exploring on - chain compliance checks for cross - border transactions with project mandala, and are collaborating, with a group of financial institutions, on the les gardiennes project, to implement a cross - border and crosscurrency repo on - chain solution for tokenised financial assets issued in public permissioned blockchain infrastructure. within the euro area, as it is likely that traditional infrastructures will coexist with new dlt systems for quite some time, i believe that the availability of central bank money, irrespective of the infrastructure used, and the interoperability within and between those infrastructures, will be crucial to preventing market fragmentation and ensuring a safe settlement process. this is why, since may 2024, the banque de france has been deeply involved in the eurosystem's ongoing exploratory work to test different interoperability solutions for the settlement of tokenised financial assets in central bank money. looking further ahead, the bis's vision of a unified ledger is promising and could start with the development of regional unified ledgers, such as a european shared ledger. building on a public - private partnership, we could thereby establish a more integrated, efficient, and resilient wholesale payment infrastructure, which could host wholesale cbdcs and private settlement assets as well as tokenised deposits in commercial bank money. this perspective lead the banque de france, as a representative of the eurosystem, to take part in bis innovation hub's project agora, in order to explore the possibilities of this type of programmable platform. 2. retail digital payments in the retail space, the digitalisation of payments offers numerous benefits for consumers | 0.5 |
secondly, we want to be served efficiently and courteously with minimum waiting time. have you heard the story of a patient named tom that was being examined by a doctor? every few minutes the doctor had to stop talking with tom to answer calls from other patients, listen to their symptoms and advise them what to do. this went on for a while. when the doctor next answered the phone, he heard, “ doctor, this is tom calling! ” thirdly, we all want to get what we paid for. standards are important. have you heard about the customer who fronted up to the hamburger counter and asked for a burger that had stale vegetables, raw eggs that were dripping off the sides and beef that was still red with blood? the attendant was totally aghast and proclaimed that they do not serve such a burger and will definitely not serve such a thing to the customer. the customer calmly replied “ well you did so yesterday! ” my experience is that good customer service is about attitude and the culture of the business. it boils down to a personal touch and going the extra mile. concluding remarks finally, i would again like to thank ms. roshika deo for inviting me here this morning. i would also like to thank the distinguished speakers who are contributing to the program – they are all professionals in their own fields and have a lot of experience and knowledge to share with you today. to you participants, i wish you well in your deliberations. official opening i now have much pleasure in declaring this business seminar – increasing productivity and improving customer service open. thank you. | and internet banking. i believe that fiji is at par to what is offered internationally. it is critical that we in the financial sector are ahead of the wider economic reforms. it is inadequate for us to be following behind these reforms. in fact, we should be driving them. the complexities in the financial intermediation are increasing with the development of modern products to better suit the evolving demands of customers. inevitably, it is the central bank that takes a lead role in the modernization of the payments system because of its importance to the economy and the entire financial system. at the same time, such a system facilitates our work as custodian of financial stability. today, payments systems are the top agenda for most central banks. payment modes are wide ranging. cash is the common mode of payment. however, the inconvenience of carrying cash and increasing security threats has encouraged the move towards other payment media. but paper based instruments like cheques and drafts are not so convenient. in modern times, cards and electronic payments are regarded as the most convenient and safer instruments, although they too are subject to certain risks. some experts use the analogy of the “ plumbing design ” to describe payment system where nobody cares if everything is in running condition. however, if one of the pipes burst or the plumbing malfunctions, we will find ourselves in a wet and nasty mess ”. the manual payments system that we have used up to now has served us adequately. but it has its shortcomings. the major one is that it takes too long to clear cheques and this has implications on cash flows and financial performances. second, as i have said, carrying cash has its risks. thirdly, the cost of paper based instruments like cheques is relatively high in fiji adding to the cost of doing business. as i have said before, the smooth functioning of the payment and settlement system contributes to financial stability. with the introduction of fijiclear, where settlement of individual inter - bank fund transfers is on real time all throughout the day, a major source of systemic risk in the financial system has been reduced substantially. financial innovation fijiclear is now another instrument available in fiji to customers through which they can make payments to one another. the global trend is toward electronic real time payment system. world wide the financial landscape has changed driven by a number of factors including growth in financial markets, cross border flows, technological advancement in communication and information technology, changing macroeconomic factors, and globalization of markets and business | 0.5 |
ecb has had to identify the most effective policy tools for repairing these disruptions, while remaining within its mandate. financial integration is clearly in the interests of the market and it is strongly supported by the post - trade harmonisation initiatives that are taking place within the eu at the legislative, operational and business levels. these initiatives all aim to remove national barriers and thus reduce the fragmentation of the european post - trade landscape. the integration of market infrastructure, the harmonisation agenda triggered by t2s and the regulatory framework are the key elements of a coordinated harmonisation effort that complements and supports financial integration. bis central bankers ’ speeches it is through this lens that the topic of today ’ s conference should be analysed. key questions include : how can we contribute to improving post - trade harmonisation? what will this process change? and what actions can we take to benefit from it? the speakers will give us their answers and explore the various harmonisation initiatives, linking them with changes in the regulatory framework and in market infrastructure. last may, i participated, along with some of you, in the signing of the contractual agreements between the eurosystem and those csds that had decided to participate in t2s. i stressed that the fundamental objective of t2s is to contribute to making europe a better place to invest. let me say that this objective is not unique to t2s. it is the objective of all the harmonisation efforts that are being undertaken in the post - trade field, by all parties. it is definitely a joint effort, and what i see is not just the commitment of public authorities at the european or national level, but also the commitment of market participants, csds and ccps. i am sure that we all share the same goal, namely making europe stronger and more attractive for both domestic and foreign investment, thus stimulating and sustaining growth. through the coordinated action of so many stakeholders, financial markets will become safer, more transparent and, therefore, more efficient and integrated. dismantling legal and operational barriers, which is the aim of current eu legislative proposals and new infrastructure such as t2s, will benefit those who adapt their business models to a more competitive landscape. it is important to highlight that the benefits of t2s will be fully achieved if the current harmonisation efforts are successfully implemented at the european level and especially at the national level. let me be specific here by giving you a few examples. in terms of infrastructure, t2s is the necessary | mario draghi : post - trade harmonisation and financial market integration in europe opening remarks by mr mario draghi, president of the european central bank, at the conference “ post - trade harmonisation and the integration of financial markets : a joint effort ”, organised by the european central bank and the european commission, frankfurt am main, 19 march 2013. * * * ladies and gentlemen, i am very pleased to welcome you to frankfurt today and to open this important conference on post - trade harmonisation and financial market integration in europe. this conference is the result of a joint effort between the european central bank and the european commission, and i would like to thank the organisers for putting together such an excellent programme. i am very pleased to see that so many distinguished speakers from both the public and private sectors have agreed to share their views on how post - trade harmonisation will contribute to financial integration in europe. in times of severe economic challenges, it is particularly important that our commitment to achieving a truly single european market is reaffirmed. as we all understand, a wellfunctioning internal market generates many benefits, including lower prices, more freedom of choice for individuals and better opportunities for firms. what europe has achieved so far is indisputable – and it is often taken for granted. people sometimes focus on perceived difficulties caused by the single market from an individual or national perspective. but it is important to acknowledge the huge benefits of european integration for our daily lives and day - to - day business. greater financial integration is a key part of building the single market – and something that improves the functioning of national financial systems. financial integration leads to better risk - sharing and diversification, it makes markets deeper and more liquid, and it encourages competition, which in turn reduces the costs of intermediation. in addition, financial integration fosters more efficient allocation of capital, higher productivity, and stronger and more sustainable non - inflationary economic growth. financial integration is essential to making europe stronger, so it is very important to the ecb ’ s governing council. we are fully committed to making it happen, especially at a time when the fragmentation of the single financial market has led to fragmentation of the single monetary policy. as you will be aware, the disruptive effects of severe fragmentation in the single financial market have tangible consequences, such as diverging funding costs for banks. this has resulted in the uneven transmission of our interest rate reductions to firms and households across the euro area. for this reason, the | 1 |
guarantees made available by the state are making it possible to meet firms ’ demand for emergency funding. in the two months march and april, lending to non - financial corporations increased by €22 billion, after decreasing by €9 billion in the previous 10 months ; annualized growth was equal to almost 17 per cent ( figure 6 ). while indispensable, support measures for firms that focus on bank lending could destabilize their financial structure, increasing their indebtedness to an excessive degree. the government has enacted measures to facilitate the governor ’ s concluding remarks annual report 2019 banca d ’ italia the capital strengthening of firms. tax incentives have been introduced for medium - sized enterprises to help both firms making capital increases by the end of 2020 and those subscribing them. the largest firms will benefit from direct forms of public support via the cassa depositi e prestiti. the timing and strength of the recovery that will follow the emergency phase depend on factors that are hard to predict. in mid - may, we presented a scenario analysis for the italian economy based on alternative hypotheses on the duration and extent of the epidemic, its impact on the global economy and its financial repercussions. the estimates will be updated as part of the eurosystem staff macroeconomic projection exercise and will be published on 5 june. in the baseline scenario, the fall in production in 2020 would be equal to 9 per cent, greater than that suffered at two different times between 2008 and 2013 ; the drop would be concentrated in the first two quarters of the year, with a partial recovery starting in the summer ( figure 7 ). without the support for demand provided by the fiscal policies set out so far, the contraction in economic activity would exceed 11 per cent. debt moratoriums and public guarantees on new loans to firms drastically reduce the risk of further amplificatory effects due to a widespread liquidity crisis. in 2021, gdp would recoup about half of the fall. these estimates assume that the containment of contagion at national and global level will continue. a second scenario based on more pessimistic, though not extreme, assumptions regarding the evolution of the epidemic, the magnitude of the drop in world trade and the intensity of the deterioration in financial conditions, would see gdp fall by 13 per cent this year, and a much slower recovery in 2021. in both scenarios, about half of the fall in gdp would be due to the restrictions connected with the | . note : total assets, not including gold, as a percentage of gdp in 2019. data at 22 may 2020. banca d ’ italia the governor ’ s concluding remarks annual report 2019 figure 3 inflation expectations in the euro area ( per cent ) 1. 5 10 - year 1. 5 0. 5 0. 5 - 0. 5 - 0. 5 1 - year - 1 - 1 source : bloomberg. note : inflation swap rates. data at 26 may 2020. figure 4 sovereign spreads ( basis points ) portugal italy spain france source : based on bloomberg data. note : yield spreads between the ten - year government bonds and the corresponding german bund. data at 26 may 2020. the governor ’ s concluding remarks annual report 2019 banca d ’ italia figure 5 discretionary budgetary measures in response to the epidemic ( per cent of gdp ) germany france italy netherlands spain euro area sources : the european commission for the euro area and the netherlands ; national stability programmes for germany, france, italy and spain ( april 2020 ). note : increase in general government net borrowing in 2020 following the measures adopted in response to the epidemic. figure 6 growth in bank lending to firms in italy ( 12 - month percentage change ) - 2 - 2 - 4 - 4 - 6 - 6 source : supervisory reports. note : updated to april 2020. banca d ’ italia the governor ’ s concluding remarks annual report 2019 figure 7 level of gdp in italy : scenario analysis ( 2006 = 100 ) baseline scenario adverse scenario sources : based on istat data. for the scenarios for 2020 - 21, banca d ’ italia, note covid - 19, 15 may 2020. figure 8 public and private debt ( per cent of gdp ) private public it fr de nl es euro area it fr de nl es euro area sources : based on data from banca d ’ italia, ecb, european commission, eurostat and istat. note : end - 2019 data. private debt : households ’ and firms ’ financial debt. the governor ’ s concluding remarks annual report 2019 banca d ’ italia figure 9 long - term scenario for gdp and labour productivity in italy ( 1980 = 100 ) gdp labour productivity source : based on istat data. note : assessment horizon of the long - term scenario : 2020 - 35. figure 10 long - term scenario for investment in italy ( 1980 = 100 ) % investment investment - to - gdp ratio ( right - hand scale ) source : based on istat data. note : | 1 |
risks. our successful and solid anchoring of inflation expectations has protected us, i trust, very well against the materialisation of inflation risks – but also against the materialisation of deflation risks. financial times : and what about deflation in the united states, is that different? jean - claude trichet : i fully rely upon the analysis of the federal reserve. financial times : but how serious do you think is the present weakness of the american economy? jean - claude trichet : i would say, again, that i rely very much upon the fed ’ s analysis, which i have to say over the crisis has been wise and pertinent. there was a level of hype at certain moments, when we were getting out of the crisis, which perhaps did not fully reflect the situation of the real economy. and now there is a mood which seems to me too negative. that ’ s my own personal feeling. financial times : let ’ s talk about the pace of financial reform, regulation. why were the reforms as proposed under basel iii watered down? jean - claude trichet : i do not want to prejudge in any respect the upcoming meeting we have on this issue. i will only say that we need the same rules at the global level, a level playing field globally. and now at the global level we have the full participation of the emerging world, which, by the way, is one of the major structural transformations of global governance over the last three years. the g20 has substituted for the g7 as the premier forum for international economic cooperation. we have also profoundly transformed the global governance of central bank cooperation with full ownership by the central banks from emerging economies. that is something which i would call a “ silent revolution ” in global governance. one thing is certain – and i ’ m sure that all my colleagues share this view : we cannot again in the next years be put in a situation where the financial sector is about to collapse in the advanced economies and at the global level, or a situation in which it is necessary on both sides of the atlantic, for taxpayers to put approximately 27 per cent of gdp on the table to stabilise the system and avoid a major global depression. we cannot do that twice. the people in our democracies would not accept that. this is not, of course, to say that the 27 per cent of gdp was spent or lost, but that was the level of additional taxpayer risk that had to be put on the table | ##ing has increased. the rise in overnight deposits is in part a mechanical effect of asset purchases, which increase deposit holdings of those selling bonds to the eurosystem. it also reflects the long period of very low interest rates that sharply reduced the opportunity costs of holding “ money - like ” claims. both of these effects can be expected to reverse as we remove monetary policy accommodation. when we last increased interest rates, from 2005 until mid - 2008, overnight deposits as a share of total deposits fell by about seven percentage points as firms and households shifted savings into less fungible term deposits that earn a higher rate of remuneration, a development that started only recently in the current hiking cycle ( slide 11, right - hand side ). however, even if funding became more stable again over time, banks would be likely to want to hold larger liquidity buffers to meet potential outflows. [ 16 ] and they would want to hold such buffers, at least in part, in central bank reserves as these do not need to be liquidated and, unlike marketable safe and liquid assets, are not subject to valuation changes. the current environment vividly demonstrates that such valuation changes can be a source of instability for banks and markets. steering interest rates when the demand for reserves is uncertain these developments do not necessarily suggest that a return to the pre - 2008 corridor framework is undesirable or infeasible. after all, reserve demand may become more predictable over time and balance sheet run - down will increase the availability of marketable hqla which banks can use to comply with their regulatory requirements. but they do suggest that it may have become more difficult for central banks to correctly anticipate the demand for reserves and hence to steer interest rates in a wide corridor, and that such steering would entail a higher operational burden, both for the central bank and the banking system at large, with the need for more frequent fine - tuning operations. what, then, might be the alternatives to the pre - 2008 corridor framework? the recent experience of other major central banks suggests that policymakers have two broad options : one is to formally adopt the current floor system by maintaining a sufficiently large bond portfolio on the asset side ; the other is to offer, either in a floor or a narrow - corridor framework, regular collateralised lending operations that ensure that banks are able to maintain their desired level of reserve holdings as balance sheet reduction proceeds. while both options can be expected to have a similar capacity to maintain control | 0 |
addition, money supply remains ample. even at double - digit growth rates, we do not see overheating in credit conditions, as credit continues to be channelled to key production sectors. more importantly, the intermediation of these funds is expected to remain safe and efficient, owing to our sound and stable banking system. key indicators continue to reflect solid asset growth and improving quality of loans. capitalization also remains strong and above prescribed domestic and international standards. on the external front, the country ’ s current account has been in surplus for 14 consecutive years, 4 due to the sustained increase in overseas filipinos ( ofs ) remittances, as well as business process outsourcing ( bpo ) revenues and tourism receipts. we saw a narrowing of the current account surplus in recent months. this trend may continue, as imports of capital goods are seen to further pick up. such importation, we note, is necessary to support the expansion of the economy in the medium term. steady foreign exchange ( fx ) inflows from of remittances and bpos, however, will continue to allow us to maintain adequate fx reserves. we expect our gross international reserves to continue to be more than sufficient to meet the country ’ s fx liquidity requirements. reaping dividends from growth to reiterate, our macroeconomic fundamentals remain strong. on the one hand, these give us enough buffers to ward off the challenges posed by a difficult external environment. on the other hand, how secure are we against homegrown challenges? political noise here as well as overseas is a manifestation that the benefits of growth may not have trickled down fairly to all sectors of society. the rise in populist sentiment globally suggests that inequality in society also poses a threat to prosperity. in essence, what we ’ re saying is that it is not enough for growth to be just fast and sustained. for growth to be truly meaningful, it must also be inclusive. we can take heart in knowing that the philippines has made noteworthy progress and intends to see more headway moving forward. for one, labor and employment conditions have shown marked improvements. the unemployment rate has declined steadily from 7. 4 percent in 2010 to 5. 5 percent in 2016. the government aims to reduce it further to between 3 and 5 percent by 2022 through its various social programs and sustained economic growth. poverty incidence and income inequality among filipinos have also been on an appreciable downtrend, | nestor a espenilla, jr : mindfulness and vigilance keynote speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the money market association of the philippines, inc. ( mart ) mart first general assembly, makati city, 22 march 2018. * * * good evening everyone. i thank the officers and members of the money market association of the philippines, inc. ( mart ) led by mr. christopher salazar for the invitation to speak today about the current operating environment, the bsp ’ s monetary policy actions... our direction... and our mindful approach in the implementation of monetary, prudential and financial reforms. mindfulness. the concept of “ mindfulness ” has gained so much popularity. it is a buzz word that frequently crops up in online articles, magazines, newspapers, tv programs, podcasts and conversations. but what does it mean? does “ mindfulness ” have application in central banking and monetary policy formulation? i believe so. “ mindfulness ” is not a new idea. the concept is core to buddhism, traced as far back as the fifth century bc. a widely used definition is by dr. jon kabat - zinn of the university of massachusetts medical school. he defines mindfulness as “ paying attention in a particular way : on purpose, in the present moment and non - judgmentally. ” what is monetary policy ’ s “ present moment ”? monetary policy stance just this afternoon, in our latest monetary policy assessment, the bsp maintained its key policy rate steady at 3. 0 percent for the overnight borrowing or reverse repurchase ( rrp ) facility. corresponding rates on overnight and deposit facilities were also kept unchanged. our decision is based on our assessment that while recent inflation outturns show elevated path in 2018, latest baseline forecasts continue to show inflation remaining within the target in 2018 and moderating further in 2019. we also considered that prospects for domestic activity continue to be firm on the back of robust domestic demand, strong growth in credit and liquidity, and sustained recovery in global economic growth. as such, monetary policy action is not warranted at this time, at this present moment. vigilance tsong - kha - pa, a famous teacher of tibetan - buddhism, wrote in his great treatise on the stages of path to enlightenment, that mindfulness is a non - distracted focal | 0.5 |
also declined somewhat in the recent period, albeit still remaining high. for further information about this issue, you can refer to the relevant box in our report. 6 / 12 bis - central bankers'speeches we envisage that our decisions will facilitate an improvement in inflation expectations, and the gap between market expectations and our interim targets will be closed. monetary policy distinguished participants, in this part of my speech, i would like to talk about our monetary policy strategy. as you know, we initiated a strong monetary tightening process in june 2023 to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behavior. accordingly, we have raised the policy rate from 8. 5 percent to 50 percent. as a technical adjustment, we widened the interest rate corridor in march. in addition, against the divergence in expectations of economic units and possible volatilities, we continue to implement macroprudential policies to enhance the effectiveness of monetary transmission. accordingly, in order to support the rebalancing process in domestic demand, we lowered turkish lira commercial loan and general - purpose loan growth limits to 2 percent, we introduced reserve requirements and terminated securities maintenance practice. moreover, we raised the maximum interest rate on credit cards. in order to reinforce the monetary transmission mechanism and increase the share of turkish lira deposits, we started remunerating turkish lira required reserves according to targets and revised targets for growth of turkish lira deposit share. as of today, we completely terminated the securities maintenance practice in order to enhance the functionality of market mechanisms and strengthen macro - financial stability. thus, we were able to enhance the functionality of the bond market, normalize the yield curve and strengthen the monetary transmission mechanism. we have sterilized the excess liquidity stemming from the exchange rate difference payments of fx - protected accounts and the increase in the cbrt's swap transactions with domestic banks in the final quarter of 2023. more than 1 trillion turkish liras were sterilized from the market via the increases in required reserves. in december, we started holding turkish lira deposit buying auctions to sterilize access liquidity. we are sterilizing the temporary excess liquidity via deposit buying auctions. 7 / 12 bis - central bankers'speeches we will monitor liquidity conditions closely and we will effectively use necessary sterilization tools when necessary. our monetary tightening steps have immediate and strong effects on financial markets. in this part | deterioration brought about by the mis - management of risk affects the economy as a whole. dear guests, when the course of the value of turkish currency versus foreign currency from 2002 up to now is taken into account, it is observed that as long as tight monetary and fiscal policies are maintained ; structural reforms are implemented, political stability is maintained and the decisiveness for macroeconomic stability is sustained ; the basic tendency will be in favor of the appreciation of the turkish currency. this is a process in which the turkish currency is increasingly preferred for investment as in every robust economy although it is subject to occasional interruptions. therefore, the value of the turkish currency emerges as a clear consequence. determination of the foreign exchange rates under the market conditions as a requisite of the floating exchange rate regime does not imply that the bank shall not undertake any transactions in the foreign exchange markets. as it was also explained in detail in our announcement called “ monetary and exchange rate policy for 2007 ”, the central bank undertakes transactions in the foreign exchange markets for two objectives. the first one of these transactions is the daily foreign exchange purchasing auctions that are implemented transparently and under methods in accordance with certain rules to serve the bank ’ s purpose of reserve accumulation. the central bank purchases foreign exchange from the market via these auctions when the supply of foreign exchange is abundant under a moderate reserve - increasing strategy. the second situation in which the bank undertakes transactions is the direct interventions in order to prevent existing or possible excessive volatilities in the foreign exchange rates. these interventions are neither mechanic nor symmetric. the bank evaluates all the changes occurring in the foreign exchange rates with regard to its own conditions and takes the decision for intervention accordingly. as a result of the foreign exchange purchasing auctions and the direct interventions implemented within the scope of the foreign exchange policy, net purchase of 44. 8 billion usd from the market has been made in a period of five years as of 9 january 2007. following the foreign exchange purchases embarked on as of april 2002, reserves of the bank increased by 199 percent and reached 60. 8 billion usd on 29 december 2006. dear guests, now i would like to mention the growth performance of the turkish economy and the things to be done in this respect. the turkish economy has been growing consecutively for the last 19 quarters. gross national product grew by 8. 8 percent in real terms in the second quarter of 2006 ; and the growth rate decreased to 3 percent in the third quarter due to the monetary tightening and | 0.5 |
. 3 per cent at end march 2006, while the net non - performing assets have declined from 4. 0 per cent to 1. 2 per cent during the same period. financial markets development of financial markets received a strong impetus from financial sector reforms since the early 1990s. the reserve bank has been engaged in developing, widening and deepening of money, government securities and foreign exchange markets combined with a robust payments and settlement system. a wide range of regulatory and institutional reforms were introduced in a planned manner over a period to improve the efficiency of these financial markets. these included development of market micro structure, removal of structural bottlenecks, introduction / diversification of new players / instruments, free pricing of financial assets, relaxation of quantitative restrictions, better regulatory systems, introduction of new technology, improvement in trading infrastructure, clearing and settlement practices and greater transparency. prudential norms were introduced early in the reform phase, followed by interest rate deregulation. these policies were supplemented by strengthening of institutions, encouraging good market practices, rationalised tax structures and enabling legislative and accounting framework. ii. a review of monetary policy challenges the conduct of monetary policy has become more challenging in recent years for a variety of reasons. many of the challenges the central banks are facing are almost similar which could be summarized as follows : challenges with globalisation first, globalisation has brought in its train considerable fuzziness in reading underlying macroeconomic and financial developments, obscuring signals from financial prices and clouding the monetary authority ’ s gauge of the performance of the real economy. the growing importance of assets and asset prices in a globally integrated economy complicates the conduct of monetary policy when it is focused on and equipped to address price stability issues. second, with the growing integration of financial markets domestically and internationally, there is greater activism in liquidity management with a special focus on the short - end of the market spectrum. there is also a greater sophistication in the conduct of monetary policy and central banks are consistently engaged in refining their technical and managerial skills to deal with the complexities of financial markets. as liquidity management acquires overriding importance, the evolving solvency conditions of financial intermediaries may, on occasions, get obscured in the short run. no doubt, with increasing globalization, there is greater coordination between central banks, fiscal authorities and regulatory bodies governing financial markets. third, there is considerable difficulty faced by monetary authorities across the world in detecting and measuring inflation, especially inflation expectations. recent experience in regard to | , this remains relevant even today, in fact more today, post crisis. too much of leverage, too much of liquidity, too much of complexity and too much of greed – they all have led to the crisis. it is now being argued that too much of finance is also not conducive to growth. recent studies 8 suggest that while at low levels a larger financial system leads to higher productivity, beyond a point, more banking and more credit result in lower growth. further, it is also argued that fast growing financial sector can be detrimental to the aggregate productivity growth. moderation in approach, therefore, is an important lesson. takeaway 2 : models are not absolute in the run up to the crisis, there was an excessive reliance and almost a blind faith that models convey absolute truths. entire risk management systems were built around this belief. post crisis, participants have woken up to the harsh reality that models do not fully reflect the realities of life and excessive reliance on quantitative models is fraught with risk. exact sciences such as physics are governed by nature ’ s laws that are immutable and lead to definite and predictable results. finance on the other hand, is governed by capricious human behavior and biases which cannot be easily modeled. to an argument that models with all their limitations are better than not having any, nassim taleb has said “ you are worse of relying on misleading information than on not having any information at all. if you give a pilot an altimeter that is sometimes defective he will crash the plane. give him nothing and he will look out the window ” knowing the shortcomings of the models is, therefore, extremely important for their judicious usage. takeaway 3 : finance should serve the real sector and not the converse while it is agreed that financial system furthers the economic development by enabling efficient allocation of capital and risk, the ultimate objective of finance, which is the furthering of economic development should not be lost sight of. in the period prior to crisis, the financial activity grew so much that the umbilical cord between financial and real sectors was severed and the finance started to exist for its own sake. the dangers of such a scenario have been quite emphatically conveyed by the crisis. with these thoughts, i conclude my address. i thank you all for your patient hearing and wish you all the best in your future endeavors. references : acharya, shankar ( 2012 ) “ india - after the global crisis ” cecc | 0.5 |
global investment and higher living standards. we can ’ t be sure though : time will tell. but a clear lesson from history is that advances in technology form the backbone upon which higher living standards are built. an obvious question is how to create and seize these opportunities that technology offers. there will be those in the audience better informed than me on how to do this. i do, though, find it hard to escape the conclusion that the starting point must be heavy investment in human capital and the creation of a culture that promotes innovation. a related challenge is dealing with the distributional effects of technological progress. the sheer scale of global markets means that the potential gains to innovators who can tap into these markets can be huge. at the same time, new technologies and globalisation create some losers. at the moment, our societies are struggling in dealing with this tension. we have a strong interest in working out how to manage this better. if we don ’ t do this, 1 / 2 bis central bankers'speeches technological progress and globalisation could come to be seen as bad things, not the good things they are. that would surely harm prospects for long - run global growth. 3. in australia, it is likely that growth over the next couple of years will be a bit stronger than it has been recently. the pick - up in the global economy is helping us. the return of mining investment to more normal levels is almost complete. monetary policy continues to provide support and surveybased measures of business conditions have improved noticeably. employment growth has also strengthened over recent months. these are all positive developments. we do, though, continue to face some headwinds. households are gradually coming to grips with slower growth in their real incomes. growth in wages is unusually low, average hours worked have declined and the nature of employment is changing. so there is a recalibration of expectations going on. many households are also coming to grips with higher debt levels and, in our largest cities, high housing prices. we need to watch these issues carefully. 4. australia ’ s longer - term prospects remain positive, but we need to keep working to keep them that way. over the past couple of weeks there has been much discussion of australia ’ s record run of 26 years without a technical recession. this is a significant achievement. we have done better than most countries over a long period. but just in case we are inclined to celebrate too much, we should remember that over those 26 years we have | manuel sanchez : monetary policy in time of crisis remarks by mr manuel sanchez, deputy governor of the bank of mexico, at the universidad autonoma de nuevo leon, monterrey, nl, mexico, 26 august 2011. this is a free translation of the original remarks in spanish. * * * it is an honor for me to close the banco de mexico lecture series hosted by the school of economics of the universidad autonoma de nuevo leon. i have a great appreciation for this institution where, during the eighties, i was a professor of many students who today are excellent economists. the purpose of this series of lectures is to explain to students how our central bank fulfills its responsibilities mandated by law in order to improve mexicans ’ well - being. the lectures which today conclude highlighted the implications of our central bank ’ s main goal set by the constitution, which is to pursue the stability of the domestic currency ’ s purchasing power, and of its other complementary goals of promoting both the sound development of the financial system and the adequate functioning of the payment systems. this morning i would like to review the role of monetary policy in an international context and, based on this, frame some lessons for mexico. the central focus of my presentation is that while during the global financial crisis of 2007 – 2008 monetary policy was effective in re - establishing liquidity in the main advanced economies, current economic conditions in those countries reveal problems whose solutions are far beyond the scope of monetary policy. the best option for all countries, including mexico, is to identify the underlying factors that might be hindering long - term growth and tackle them without delay. my comments are entirely my own and do not represent those of banco de mexico. the unusual rebound of the world economy after experiencing a significant contraction, the world economy has been growing since mid2009. nevertheless, as compared with other business cycles, it has been recovering at a weaker pace due to the lower dynamism of advanced economies that were severely affected by the global financial meltdown. it comes as a surprise that the united states, the epicenter of the crisis, has not been improving enough to offset the fall in output observed during the past recession and resume its long - term growth path. indeed, for more than a century, us gdp has followed a trend of annual growth of approximately three percent, which accounts for nearly two percent in per capita terms. however, since 2009, output has remained around nine percent below the level that would have otherwise prevailed due to its trend, representing | 0 |
” 6 but are these a risk to the wider economy? it ’ s reassuring that easy conditions in markets have not led the corporate sector to take on an unusually high level of leverage. as a multiple of earnings, corporate debt in this country is around its long term average level. nevertheless, developments in corporate debt bear close scrutiny, because we cannot take for granted that it will stay this way. the united states, where corporate debt levels have been testing previous highs, shows this to be more than a hypothetical possibility. the uk ’ s largest companies – those with access to capital markets – report that credit has become easily available. 7 corporate debt in the uk has been growing at a not insignificant annual rate of 6. 2 %. and notably, riskier forms of debt – those most sensitive to a change in market conditions – have recently been growing most rapidly. issuance of leveraged loans and high yield bonds reached a record level last year. 8 paragraph 5 of ‘ record of the financial policy committee meeting on 12 march 2018 ’, available here. see chart 11 in deloitte ( 2018 ), ‘ the deloitte cfo survey q1 2018 ’, available here. leveraged loans are loans to companies that typically display some of the following characteristics : high levels of indebtedness, a non - investment grade credit rating or ownership by a private equity sponsor. the latter is defined as bonds rated below investment grade. all speeches are available online at www. bankofengland. co. uk / speeches last year more than half of the issuance was used to refinance existing debts more cheaply. in the early stages of this year, however, there are signs of that changing. issuance has been higher than in the same period last year and less is being used to refinance. 9 ( slide 9 ) these forms of debt accounted for around only 10 % of bond and bank loans issued to uk companies last year. but if the pattern of the first 3 months of the year were to continue, they would still – alone – add 3 % to the overall stock of corporate debt this year. so recent developments demand careful scrutiny. if they continue, we ’ ll need to assess, in particular, whether they increase the risks faced by banks. banks have demonstrated in recent stress tests their resilience to a sharp adjustment in credit market, and markets, rather than banks, have been the driving force behind recent growth. 10 but recent imf work shows how | to the concerns of the public and to carefully evaluate whether and how they may be able, within their mandate, to respond to these concerns. accountability is the quid pro quo of independence. the ecb is doing this diligently as part of its ongoing monetary policy strategy review. we are analysing the effects and side effects of our unconventional monetary policy instruments in depth. and we are exploring if and how, within our mandate, we can contribute to the broader objectives of the union, including by taking measures that will help accelerate the transition towards a more sustainable economy, while firmly adhering to our primary objective of price stability. thank you for your attention. 1. see, for example, the deloitte global millennial survey 2020. 2. various listening events, both with experts and with the general public, were held by the ecb and the eurosystem ’ s national central banks between october 2020 and february 2021. an overview of the ncb ’ s listening events is provided on the ecb website. 3. see, for example, calomiris et al. ( 2016 ), " political foundations of the lender of last resort : a global historical narrative, " journal of financial intermediation, vol. 28 ( c ), pp. 48 - 65. 4. see also goodfriend, m. ( 2007 ), “ how the world achieved consensus on monetary policy ”, journal of economic perspectives, 21 ( 4 ) : pp. 47 - 68 5. treaster, j. ( 2005 ), “ paul volcker : the making of a financial legend ”, john wiley & sons. 6. see haldane, a. ( 2018 ), “ climbing the public engagement ladder ”, speech at the royal society for the encouragement of arts, manufactures and commerce ( rsa ), 6 march. 7. see also schnabel, i. ( 2020 ), “ narratives about the ecb ’ s monetary policy – reality or fiction? ”, speech at the juristische studiengesellschaft, karlsruhe, 11 february. 8. see, for example, christelis, d., georgarakos, d., jappelli, t. and van rooij, m. ( 2020 ), “ trust in the central bank and inflation expectation ”, working paper series, no 2375, european central bank ; mellina, s. and schmidt, t. ( 2018 ), “ the role of | 0 |
be remedied under national responsibility. with regard to resolution financing, national fiscal backstops and – as an ultima ratio – the european stability mechanism ( esm ) are of central importance. in the case of legacy risks, it should also be taken into account that direct recapitalisation of banks by the esm breaches the liability principle. after all, the legacy risks arose on the watch of national supervisors. practical application could reveal that subsequent improvements to the current institutional structures might be needed in two areas to ensure that the new resolution mechanisms are effective. first, the decision - making structures of the srm – much like those of the single supervisory mechanism – are extremely complex. the short deadline of one weekend will hardly be sufficient for a restructuring or resolution to be initiated at a large bank in a way that does not place an excessive strain on the system as a whole. for this reason, a check should be carried out on the extent to which the legal framework needs to be altered in order to arrive at more efficient decision - making structures in the resolution mechanism. the second problematic point is the authorities ’ relatively broad scope for discretion, which allows them to exclude private creditors from loss - sharing. this assessment is not an easy one to make. l laeven and f valencia ( 2012 ), systemic banking crises database : an update, imf working paper 12 / 163. bis central bankers ’ speeches the higher the losses assumed by private creditors, the greater the potential negative effects for the stability of the financial system. the lower the private loss absorption, however, the higher the costs for government budgets – and the lower the disciplining effect for investors as well. the resolution authority therefore faces a conflict of interests : if it aims to deflect risks to financial stability, it must trust that ultimately a fiscal backstop will be available. the american model of systemic risk exception is of interest for implementing the liability principle and permitting as few exceptions from the bail - in of creditors as possible. the principle of bailing in creditors can only be deviated from in systemic crises. each deviation must be approved by a clear majority of the relevant decision - making bodies – in this case, the deposit guarantee scheme and the central bank. the finance minister must sign off a deviation in consultation with the president. this is intended to secure the financing of bank restructurings. this is a sensible approach to strengthening the credibility of resolution regimes and being capable of acting during systemic crises at the same time. | over the last few months and that will continue in the coming period is in fact both a modest and a difficult one. it is to ensure that accounting conventions fully reflect the reality of financial activities and are not overambitious. this undoubtedly means reviewing the role of fair value in the accounting treatment of financial instruments. thank you for your attention. | 0 |
are identifying weaknesses in banks'risk management practices, including underwriting practices, appraisal processes, stress testing, and market analysis. based on these results, we are updating our supervisory plans and examination schedules to focus our resources most effectively on those institutions presenting the greatest risk and needing the most improvement. finally, we just concluded a federal reserve examiner training effort on cre topics, including appraisal practices, loan loss allowances, stress testing, and board and management oversight. the training focused on the importance of ensuring prudent risk management practices, without unduly curtailing credit availability. counterparty credit risk concerns in financial markets about the creditworthiness of some financial intermediaries have eased somewhat since the first half of march, but those concerns remain relatively high. more fundamentally, the proper management of counterparty credit risk – which is the risk of loss from a counterparty's failure to perform its financial obligations – is a prerequisite for protecting the entire system from contagion when any one institution fails. consistent with the recommendations of recent reports, we are looking at how firms are addressing weaknesses in counterparty credit risk management practices highlighted by recent events, including the measurement and aggregation of exposures stemming from a wide range of transactions with both unregulated and regulated entities. for instance, we are emphasizing that firms should use a variety of techniques to measure potential exposure on over - the - counter ( otc ) derivatives, repurchase agreements, and other contracts, and that they should aggregate all exposures to each counterparty. in this context, we have been closely monitoring counterparty exposures arising from transactions with monoline financial guarantors and have been discussing with banks the measurement and management of these positions. in addition, we are working to strengthen the market infrastructure for financial transactions to make it more robust and more resilient. in particular, the federal reserve bank of new york continues to work with domestic and international prudential supervisors of otc derivatives dealers to strengthen the infrastructure for those large and rapidly growing markets. the supervisors are emphasizing to the major dealers and to other active market participants the importance of setting standards for the accuracy and timeliness of trade data submission and for the timeliness of resolutions of errors in trade matching for otc derivatives contracts. furthermore, consistent with the recommendations made in recent reports on turbulence in financial markets, supervisors are encouraging the development by the industry of a longer - term plan for an integrated operational infrastructure supporting otc derivatives | . fourthly, is the uncertainty related to the implementation of the structural reforms to address the structural rigidities and deficiencies that surfaced during the global financial crisis. fifth and finally, are also considerable geopolitical uncertainties prevailing in the world today. cumulatively, these developments have compounded the uncertainties surrounding the global economy. in this environment of great uncertainty, a more moderate recovery of the global economy has been projected for 2015. the most pressing challenge, therefore for the global economy, is to generate an economic recovery that is balanced and sustainable. although the growth momentum has improved in a number of major economies, the growth has thus far been modest. in addition, weaknesses in several major economies continue to point to a global economy that remains vulnerable to downside risks. while the growth performance in most emerging economies is projected to moderate, collectively emerging market economies remain an important driver of growth of the world economy. a less robust external sector, bis central bankers ’ speeches slower domestic demand and specific domestic factors are amongst the reasons for this growth performance. in asia, the growth for 2015 is projected to be sustained at 6. 4 %, while growth in the asean - 5 is projected to be in the region of 5 %. a further phenomenon affecting the global economic performance is the significant decline in global oil prices. while this has partially offset the weaker - than - expected growth momentum in some of the advanced countries, it has, in different degrees, adversely affected the oil exporting economies resulting in divergent growth performance across and within regions. overall, however, the global economy is expected to benefit from the lower oil prices. a further recent development is the consequences of the unprecedented and divergent monetary policies being pursued in the major economies which have now resulted in significant policy spillovers to other parts of the world. against this backdrop, the financial markets are therefore expected to remain in a state of heightened volatility during this year. given the degree of openness of the malaysian economy and the financial system, we are of course affected by these global developments. these effects, however, need to be seen from the perspective of our underlying conditions. malaysia is affected by these external developments through trade and capital flows. the diversified structure of our economy and of our exports has reduced the impact of the effects of the plummeting oil prices on the economy. while the current account of the balance of payments is expected to narrow, it is projected to remain in surplus. the global shifts in liquidity have caused size | 0 |
in agrarian societies, people worked for livelihood. times changed and came the industrial age. livelihood was not the only reason of working. as henry ford famously said “ why is it every time i ask for a pair of hands, they come with a brain attached? ” the people then understood that apart from livelihood, there is something else required. this something else was termed “ job satisfaction ”. we have moved on further and are now in the “ knowledge age ” and in this age, in my opinion, people work for “ empowerment ” more than anything else. i will touch upon other requirements of managing in knowledge age a bit later. the best development of people is through empowerment. people at all levels in the organization must feel empowered. for this, we need to cut layers of bureaucracy that we bis central bankers ’ speeches have created over the years and adopt an effective way to delegate. we have made some beginning in this direction in the rbi. performance management : this is the most important area of human resource management, the foundation of which is discrimination. unfortunately, current systems are unable to discriminate and differentiate between performers and non - performers. in fact, it is impossible to identify who are the performers and who are the non - performers. i don ’ t know if any one of you has even attempted to identify who are, say, the bottom 25 % people in your organization. in any organization typically there would be some 10 – 15 % of people who would be the high performers. hr managers often focus on this segment and try to cater to their needs first. instead, i feel that focus should be on the remaining 85 % as any improvement in their performance would have a significant impact on the organization ’ s performance. with all the efforts a student who always scores above 90 % marks in his class, will benefit by only a few percentage. the one who scores only 45 %, however, has the potential of doubling his marks. the results of not having a proper performance management system are disastrous. we are all having to deal with the problem of people who are “ promotable ” but not “ postable ” and people who are “ postable ” but not getting promoted. this is because we have failed to discriminate between performers and non - performers. hr systems may have failed to appreciate performers. in fact, we have not even tried to define what performance is in a given job. despite this, what is the kind of time we are spending on performance management? what is | what is expected of a leader? a leader is expected to do three things : ( i ) plan ( the tasks ) ( ii ) inspire ( people ) inspire for aspiring inspire for perspiring and ; ( iii ) deliver ( on results ). a leader is no leader if he / she cannot deliver. systems / processes : the hallmark of any effective hr system / process is that it should be objective and transparent. these traits are essential for the manpower to repose trust in the organization ’ s systems / processes. no hr function can be effective if it does not enjoy the trust and confidence of its constituents. two key stakeholders in the hr management process are board / senior management and unions. how much time do board members spend on hr related issues? perhaps, not enough. structurally, it is important that board / senior management is actively involved in hr matters involving all its manifestations. organized employee unions are an important part of the democratic process and form an effective channel for communicating with employees down the line. it is important to involve them in the hr process without allowing them to have an overbearing influence. communication : communication with employees is a vital part of the hr process as it helps enhance transparency in hr practices, thereby imparting credibility to them. when dealing with human beings, it is important to be objective, transparent and non - discriminatory and this must be effectively communicated. the employee must say that the management has all the above qualities. the board must spend time on devising ways and means for this communication – lay down appropriate structures for the purpose. all forms of modern communication channels including intranet, corporate e mails, etc. can be adopted to reach out to employees. however, despite these developments, the traditional channel of communicating through unions continues to be relevant as employees attribute greater credibility and reliability to messages received through their unions. the banks have a clear cut advantage in this respect – they already have a participative process. representatives of the employees sit on the board itself and hence, it requires better practice of participative management in the real sense of the term. ( d ) managing people separation / exit : except maybe a last few years, so far most of the people leaving us were due to retirements. things will change, unless we are doing all the other things that i spoke out earlier, properly, people will also leave us for other opportunities – and believe me, there are going to be plenty of them – not only from competitor | 1 |
delisle worrell : the barbados ibfs sector and the efficiency of international commerce lecture by dr delisle worrell, governor of the central bank of barbados, at the carleton university, ottawa, 17 september 2015. * * * small international business and financial services ( ibfs ) centres like liechtenstein, guernsey, the caymans and barbados – to take a random selection – have an enduring place in international commerce, because they serve to make the international system more efficient. through the services that international companies locate in these centres, companies are able to offer products and services to the global market more cost effectively than they would otherwise be able to do. it is because of this economic reason that the foremost centres have proven so resilient, in the face of repeated waves of misrepresentation. the truth, as i will show in this presentation, is that international firms that use subsidiaries in ibfs centres to locate appropriate aspects of their global operations, are more competitive than those that do not. the sources of ibfs competitiveness vary by country, and include the expertise available in the centre, its global interconnectedness, the local penetration of information and communications technology ( ict ), the quality of life available in the centre, the quality of infrastructure, and many others. importantly, most centres will offer local expertise that is on par with london, new york and singapore, at significantly lower costs than would be the case for the large global financial centres. in this essay we cite evidence of barbados ’ competitive standing in international financial markets. how ibfs centres contribute to global efficiency the main factors which make international firms that use well regulated, well networked ibfs centres more efficient than the competition include : • such centres may reduce market frictions and information costs to the international firms whose subsidiaries they host ; • they are able to offer internationally comparable skills at lower wages and other costs ; and • they offer a corporate tax regime which provides for lower taxes on value added in the export of goods and services. because of these factors the ibfs centre is able to offer benefits to producers and consumers of ibfs goods and services, while at the same time providing an economic benefit to the host country. the investing company is able to produce the services located in the ibfs centre for sale in third countries at significantly lower cost, with no sacrifice in quality. the third country receiving the finance, product and / or service is able to access the output at a more attractive price. the benefit to the ibfs | delisle worrell : general financial sector issues and policies opening remarks by dr delisle worrell, governor of the central bank of barbados, at the financial institutions conference “ general financial sector issues and policies ”, bridgetown, 3 november 2011. * * * this is our second annual conference for all financial institutions. we have a full day of discussion, which allows us to study current issues of the financial sector in depth. with the participation of all financial institutions, and with the collaboration of the financial services commission, we are able to take a comprehensive view of the financial system, including banks, finance companies, insurance, pensions, mutual funds, credit unions and securities. this conference deals with financial institutions that do domestic business ; in march this year we held a conference for financial institutions in our international financial centre, and that is also intended to be an annual event. since last year we have taken important steps to further strengthen financial oversight, and to increase the efficiency of the delivery of financial services. the most important of these was the establishment of the fsc, with responsibility for the supervision of non deposit takers. the fsc is in the process of recruiting staff and setting up systems, and central bank is lending its expertise wherever we can be helpful. this morning you will hear more about its activities from the fsc themselves. we have also been strengthening cooperation with banks which have domestic retail operations, through regular quarterly meetings, as well as ad hoc meetings when we need to make policy changes, such as the change in our foreign exchange margins. we are constantly strengthening cooperation with canadian and other overseas regulators, with the bank of canada and with the head offices of banks operating in barbados. we do consolidated supervision of all the operations of multinational banks, together with the regulators of all the countries in which these banks operate, through a variety of channels and mechanisms, including collective overview by the regulators and discussion with the banks in meetings which have come to be known as “ colleges ”. regulators also arrange conference calls and have informal contact, as well as more formal arrangements such as information - sharing memoranda of understanding. two weeks ago i led a team of my colleagues on a most successful visit to toronto and ottawa, where we had discussions with the major canadian banks, including those active in our international financial centre, with the office of supervisor of financial institutions ( osfi ), the bank of canada and the financial institutions supervisory committee, which also includes their deposit insurance corporation, their consumer protection agency and | 0.5 |
accounts volume measures will be compiled using chained moving bases, instead of the traditional fixed base measures. thus, these statistics are set in a level that can be compared with that of other oecd member countries. as i stated recently, various indicators point out that activity and domestic demand will decelerate in the coming months. nevertheless, we believe that it will do so at a slower pace than we expected a few months ago. in our december monetary policy report we projected a baseline scenario where growth ranged between 3. 75 and 4. 75 %. some of the risk factors that in december we envisaged could reduce growth during this year – accounting for the downward bias that we announced then – have had a better evolution than forecast at the time. examples are the recent evolution of demand, which coupled with the signs of a tight labor market suggest that output gaps are fairly limited. another example are the terms of trade, which take place in an environment where the likelihood of more catastrophic external bis central bankers ’ speeches scenarios seems to have diminished. in march, private expectations point to a growth in gdp close to 4. 5 % this year, having been in the range of 4 % at the end of 2011. at the same time that some risks have diminished, others appear. an important matter for us is the widening of the current account deficit, explained by the dynamics of spending. in spite of the high level of our terms of trade, and following current account surpluses in 2009 and 2010, we estimate that in 2011 we had a small current account deficit and in 2012 it could expand further. this matter needs to be analyzed in depth. on the other hand, a lower deceleration of domestic demand, in the context of narrow output gaps, could give rise to inflation pressures. during the last months core inflation measures converged towards 3 % at a speed higher than forecast. although this evolution may well be a lagged adjustment of core inflation, after it remained persistently at low levels during several months, its path must be carefully monitored, more so in the light of a narrowing of capacity gaps and a tightening of the labor market. overall, in recent weeks, market expectations have raised the projections of short - term inflation. in addition, in the short term, inflation is affected by supply shocks that can have significant effects. developments in the international oil market do not help the outlook for domestic inflation. recent geopolitical tensions in the middle east, which, among other consequences, led to an | and are well aware of its devastating effects on our more vulnerable population. the objective is bis central bankers ’ speeches clear, but the difficulties we face are in its implementation, with the caution demanded by the complex macroeconomic environment. thank you. bis central bankers ’ speeches | 1 |
by them are disaggregated and percolate down to the branch level so as to ensure the involvement of all the stakeholders in fi efforts and also to ensure uniformity in the reporting structure under fips. the focus under the new plan is now more on the volume of transactions in the large number of accounts opened. a brief of the performance of banks under fip up to march 31, 2014 is : i ) the number of banking outlets has gone up to nearly 3, 84, 000. out of these, 1, 15, 350 banking outlets were opened during 2013 – 14. ii ) nearly 5, 300 rural branches were opened during 2013 – 14. out of these, nearly 4, 600 branches were opened in unbanked rural centres ( tier v and tier vi centres ). iii ) nearly 33, 500 bc outlets were opened in urban locations during 2013 – 14 taking the total number of bc outlets in urban locations to 60, 730 as at the end of march 2014. iv ) more than 60 million basic savings bank deposit accounts ( bsbdas ) were added during the 2013 – 14 taking the total number of bsbdas to 243 million. v ) with the addition of 6. 2 million small farm sector credits during 2013 – 14, there are 40 million such accounts as on march 31, 2014. vi ) with the addition of 3. 8 million small non - farm sector credits during 2013 – 14, there are 7. 4 million such accounts as on march 31, 2014. vii ) nearly 328 million transactions were carried out in bc - ict accounts during 2013 – 14 as compared to 250 million transactions during 2012 – 13. 8. as you all know, greater impetus to the financial inclusion plans has since been received through the prime minister ’ s jan dhan yojana. under this programme, in a short span of seven and a half months, a world record breaking achievement in the form of opening jdy accounts for 14. 71 crore persons as at end march 2015 has been accomplished. need for more banks & differentiated banks 9. while thus the financial inclusion efforts through the existing set of banks have been continued, the reserve bank is conscious of the position that these may not be adequate to speed up the process and achieve the goals early. a govt of india ’ s high level committee on financial sector reforms headed by dr raghuram rajan submitted in 2008 its report titled “ a hundred small steps ”. among its various recommendations, the committee recommended that there is | welfare measures of the government. implementing such obligations would become difficult through differentiated banks. therefore, to ensure participation of these banks in the developmental bis central bankers ’ speeches needs of the economy, appropriate modifications may have to be set keeping in view the nature of the business model. 43. accordingly, for small finance banks we prescribed a higher level of priority sector lending requirement at 75 %, as the very purpose is financial inclusion. for payments banks, as they will not have lending activities, we have ensured their participation in development by prescribing 75 % investment in government securities. elimination of regulatory arbitrage 44. as universal banks are permitted to do all or any of the activities mentioned in section 6 of banking regulation act, 1949, regulating the universal banks is easier for the regulator as the regulations could be principle based and common to these banks. however, once the differentiated banks are licenced, there would be a need for having a different regulatory and supervisory approach specific for such banks depending on the specialization. it also needs to be ensured that there is no scope for regulatory arbitrage across different types of banks. multiple regulations and complexity in regulations 45. also, there may be a need for more types of regulations for differentiated banks because of the different products lines, service offerings, clientele, areas and modus operandi of doing business. multiple regulations need to work in tandem to ensure effective regulation. further, there would be increase in complexity due to various types of banks and the different regulations applicable to each type of specialized category of banks. the regulatory and supervisory resources would have to be reoriented to ensure that effective regulatory and supervisory oversight is put in place. resolution regime for banks 46. more number of banks may mean more number of failures. it is a big risk in licensing of differentiated banks. however, as noted by the hlcfsr, failure of a few small banks may not have systemic consequence. further, the resolution regime is being strengthened. conclusion 47. there is enormous unmet potential demand lying in the rural areas and other unbanked centres which needs to be tapped. to tap this unmet demand for financial services, it is felt that it is worth experimenting on new types of institutions for financial inclusion. however, in a country like india where there exists differentiated markets and consumer groups, the concept may have to be contextualized according to the needs of the customers. as regards the health of the differentiated banks, there is a need for creating a balance between long | 1 |
standards. all of this together contributes to the preservation of financial stability. with this i would conclude my opening remarks and give the floor to my colleagues who will present the key messages of the november inflation report and our perception of macroeconomic trends in the coming period. you will hear from them that our projections of inflation movements indicate that we will accomplish our main statutory objective by ensuring low inflation within the target tolerance band in the future period as well. chart 6 inflation projection ( y - o - y rates, in % ) - 1 - 2 source : nbs. | mortgage banks should generally stay well within the statutory limits – also after this bill has been passed. * * * during the last 18 months, the danish productivity commission has analysed the reasons for many years ’ low productivity growth in denmark. some sectors are more severely affected than others. the commission has also presented a long list of proposals for improving productivity in various parts of the economy. the financial sector plays an important role in danish society as a provider of capital to households and firms, and it also offers products such as pension saving schemes and hedging of various types of risk. in addition, the sector ensures that domestic and cross - border payments can be transacted efficiently. so from society ’ s point of view it is important that this sector is as efficient as possible – which means that its production costs should be as low as possible. a rough indicator of developments in labour productivity in the financial sector can be obtained by looking at domestic lending – or alternatively financial assets – relative to employment in the sector. calculated in this way, labour productivity was more or less constant in the decades before the liberalisation of the financial markets, which really took off in the early 1980s. liberalisation of capital flows across borders and deregulation of the financial sector in denmark have provided considerable welfare gains. these gains are the result of lower prices and a larger product range, coupled with better opportunities for planning individual savings, consumption and investment. at the same time, financial sector productivity has increased substantially. in fact, since 1980 productivity has grown by an average of 4 – 5 per cent annually in the financial sector. but in recent years lending by banks and mortgage banks relative to employment has been stagnant or shown a weak trend compared with previously. domestic lending by banks relative to employment has even fallen. compared with the rest of the eu, denmark is among the member states with the largest balance - sheet sum or domestic lending per employee. but in terms of cost - to - earnings ratio, denmark is in the middle of the table. this could indicate that, at least on average, there is scope for further efficiency improvements in danish credit institutions in the coming years. however, there are large differences within the sector. comparisons of individual danish and foreign banking groups show that some danish banks are fully able to match the most bis central bankers ’ speeches efficient foreign banks. but at the same time a number of danish banks are less efficient than the top danish and foreign banks. for these banks, the scope for improvement | 0 |
to deal with acute bank problems, such as closing a problem bank. when a bank needs to be closed, a difficult balance arises, between the owners'interests and the savers'interest, which are both safeguarded in law. one very current example of this dilemma in sweden is the case of custodia. both the country administrative court and finansinspektionen ( the swedish financial supervisory authority ) have made their assessments on the basis of what they should take into account, that is to say the customers'interests and the company and owners'interests respectively. however, i feel that it is very unsatisfactory that we in sweden do not have a clear legal framework that can manage this type of situation and i assume that these difficulties will quickly be repaired. crisis prevention also includes creating sufficiently strong public authorities. unfortunately, one can see that the authorities in many countries have insufficient resources, independence and competence to match the often financially strong and rich in expertise financial institutions, whose owners can moreover all too easily gain the support of politicians against the supervisory authority ’ s demands for measures. this is of course a more serious weakness in a problem situation where a lack of measures, insufficient measures or delayed measures can aggravate the crisis. another problem, although fortunately one we do not have in the nordic countries, is harassment of the management and personnel within the public authorities for the purpose of reducing their ability and willingness to take supervisory measures against wrongdoing banks. in addition, it is important to establish clear roles and areas of responsibility between public authorities within the same country, between authorities in different countries and also between the authorities and the financial institutions. i have seen that in some countries it is unclear which authority makes the decisions, or which authority has the power to decide on a particular issue, because the law is unclear or because it is not followed in practice. this lack of clarity is accentuated in a crisis situation and hampers crisis management. this can be expressed in different ways, such as poor coordination between the authorities with regard to public statements and decisions or territorial conflicts arising and special interests being favoured over general solutions. if one wishes to detect problems in good time, before they develop into a crisis, it is important that the public authorities within a country and those in different countries can coordinate and exchange information. there have been large inadequacies in this field in previous crises. this can to some extent be blamed on confidentiality regulations, and the relevance of these may be questioned | bank to reduce risks in foreign exchange trading. the banks and public authorities currently have a much better grasp of the risks in the financial sector and how these can be managed and reduced – this is probably part of the explanation why we have seen a clear decline in the number of bank crises in recent years. at the same time, the developments i have outlined above, including the creation of large financial groups and payment centres, lead to new types of risk that need to be managed. the consolidation on the part of the market must therefore be met with increased coordination on the part of regulations and public authorities. we do not need more regulation and supervision ; the challenge is that regulation and supervision must always be adapted to development and, as now, aimed at detecting and remedying the most critical vulnerabilities in the financial system. this sounds obvious, but it is not so easy to achieve in practice. commercial developments are rapid, while it always takes a little longer to adapt laws and public authorities, particularly if regulation and supervision are at the same time to be harmonised across national borders. from my work in various international forums, i know that the danish authorities in general share my views on the importance of the issues i have mentioned today and i look forward to continued cooperation with you in various ways to prevent financial crises and thus avoid having to manage them together. | 1 |
brothers, investment levels in the eu - 28 are about 18 % below their peak ; in some euro area economies under stress, investment was cut by about one - half. taking into account some necessary correction of previous overinvestment in the construction sector, a prolonged period of below - trend business investment will certainly weigh on future productivity growth. the investment gap can be partly explained by financial constraints, in particular for smes, start - ups and infrastructure. another factor is demand uncertainty, triggered by private and public deleveraging – typical for balance sheet recessions. having said that, one should not forget that because the level of economic activity differs widely between the euro area average and the cesee region, the latter has the best longterm growth prospects in europe – even if convergence will, most likely, proceed more slowly than in the past ( with the annual growth differential dropping from up to 4 to below 2 percentage points ). thanks to its proximity and its traditional ties to the cesee region, austria is in an excellent position to take advantage of this growth process. cesee ’ s share in austria ’ s total goods exports rose to 22 % ( 2013 ) – with the euro area countries still accounting for half of all austrian exports. conversely, austrian banks ’ high international exposure is concentrated with their cesee subsidiaries despite a slight decline in the respective exposures due to reduced activities in countries like hungary and ukraine. while a tendency toward greater diversity is desirable, banks ought to promote a sustainable growth model in countries with adequate economic and legal conditions – in the spirit of the vienna initiative. how to maintain the hope for convergence as enshrined in article 3 of the treaty, which states that the european union “ shall promote economic, social and territorial cohesion ”? i think that the new european commission is setting the right priorities by proposing an investment package combined with regulatory reforms targeted toward fostering smart infrastructure, education, research and energy. not only should this package provide shortterm stimulus but also improve the potential for long - term growth in europe. at the same time, a reform of industrial policy focusing on new companies in the manufacturing sector of vulnerable member states could help create export capacities. at the same time, the process toward a governance structure worth of a “ genuine emu ” as outlined by the presidents of the european central bank, the european commission, the european council and the eurogroup in 2012 contributes to confidence building. while the successful creation of the banking union marked a major step | and a much higher level of freedom. the cesee region in particular saw a period of accelerated growth rates in the years prior to the global financial crisis. this was a win - win situation not just for the acceding countries but also for the eu, in general, and for austria with its strong trade and investment links to the cesee region, in particular. the episode following the introduction of the euro in 1999 and up to the beginning of the financial crisis was beneficial to the euro area. but those countries who apparently profited the most had to find out that they had built their performance on the untenable foundation of private debt backed by overvalued assets. the crisis has revealed that the previously remarkable catching - up process is neither automatic nor irreversible. the new central european member states fared relatively well in terms of trade performance even after the financial crisis. by contrast, a dramatic stop of private financing flows required the economies under stress in the euro area, the baltics and the balkans to quickly adjust their external imbalances. even though they improved their competitiveness, external rebalancing resulted in internal imbalances such as high unemployment and overcapacities, while the development of new export capacities was hampered by financial constraints and weak european and foreign demand. hence, a lot of the adjustment had to take place via diminished import demand caused by painful cuts in bis central bankers ’ speeches income and employment. whether this import reduction is sustainable depends on the structural nature of the related economic slump – something we will only know with a sufficient degree of certainty at the beginning of a new cycle. a very interesting aspect of external imbalances is their relation to the patterns of sectoral specialization in a given economy. the countries featuring the best export performance prior to and after the financial crisis are exactly those that have a large manufacturing sector. the four countries that form the visegrad group have been fortunate in terms of foreign direct investment, which enabled their re - industrialization. via cross - border production networks, these economies are involved in a “ new industrial core ” of europe together with germany and austria. those countries, however, that have not been able to establish sufficient tradable industries and have neither abundant natural resources nor tourist attractions have difficulties to escape the dilemma of either chronic disequilibria or contractive deleveraging. even worse, investment, which is crucial for future growth, has been cut over proportionally. six years after the collapse of lehman | 1 |
developments globally regarding features and functionalities. therefore it was decided to replace the application to a higher level by using the latest technology and redefined business requirements. report of the working group on information security, electronic banking, technology risk management and cyber frauds the above report examined various issues arising out of the use of information technology in banks and made its recommendations in nine broad areas i. e. it governance, information security, is audit, it operations, it services outsourcing, cyber fraud, business continuity planning, customer awareness programmes and legal aspects. the objective of this report is to serve as a common minimum standard for all banks to adopt as well as lay down the best practices for banks for a safer and sounder banking environment. the final guidelines in the respective areas as mentioned above have been issued to banks for implementation. keeping the customer ’ s perspective in mind, banks would need to ensure that they implement solutions that exploit the latest available technology to build their applications / solutions to ensure customer ’ s delight as also proliferation of banking services ; albeit the cost of providing adequate security. having said this, i would caution the banks that unless they keep them simple, they run a risk of losing their customer base to their competitors. it is also imperative that redundancy or alternate service delivery channels are available to the customer. we need to give a thought about this and provide workable systems at the earliest if we have to retain the customer within the fold of the banking system. developments in it have also brought along a whole set of challenges to deal with. these include rapid changes in technology, complexities, high costs, security and data privacy issues, new laws and regulations and inadequate trained manpower. there is a need to enhance the governance of it and institute robust information security measures in the banking sector based on extant international standards and best practices. given the instances of cyber fraud in banks recently, it is necessary to improve controls and examine bis central bankers ’ speeches the need for pro - active fraud risk assessments and management processes in commercial banks. banks must also work towards ensuring dissemination of the it security policy and procedures and related parameters amongst all operative functionaries of banks. summary how can banks achieve enhanced customer profitability? a bank can take the first step, which is to consolidate and streamline customer segment data. with accurate, segmented, easy - to - access data, analysis tools can be used to develop strategies and models, determine appropriate sales channels, calculate value measures, and set targets to advance the | feedback loops between the global and the domestic economy, on the one hand, and between the financial and real sectors, on the other, have bis central bankers ’ speeches become more complex. in this context, it has become difficult to make reasonable impact assessment of macro - policies. moreover, the capability of standard models in the armoury of central banks in predicting growth and inflation is being questioned. primary assumptions of basic dsge models have come under attack both from policymakers and academia. there is, therefore, a need to revisit the modelling strategy in the light of the increased uncertainty, leverage and global linkages. it is important to harness appropriate statistical tools to capture the underlying dynamics of economic - financial framework. ladies and gentlemen, we are fortunate to have amidst us luminaries who are not only accomplished statisticians but some of them are at the helm of statistical administration. i am confident that the deliberations today will not only guide us in setting our statistical agenda in the reserve bank but also will go a long way in strengthening the indian statistical system, for which prof. mahalonobis worked tirelessly. i once again extend a hearty welcome to all our speakers and all our invitees, and look forward to the intellectual fare ahead. thank you. bis central bankers ’ speeches | 0 |
, membership of a monetary union and the absence of an independent monetary and exchange rate policy means that member state ’ s domestic economic policies have to be appropriate. in particular, as i have mentioned earlier, in the absence of an independent monetary policy, it is essential in present circumstances that a strong focus is placed on policies to restore competitiveness. contributing to financial stability while monetary policy and liquidity provision have always been the key functions of central banks, in recent years there has been an increasing emphasis on their contribution to financial stability. through the publication of financial stability assessments, central banks in the major industrial countries draw attention to risks to the financial system. this information and analysis is provided to the wider public, financial market participants and directly to the banks so that they are informed about the economic and financial environment, thus allowing them to adjust their behaviour consistent with those risks. it is precisely this role that the central bank here has played over the past four to five years pointing out the domestic and international risks to the economy at a time when house prices and credit growth were increasing at very high rates. these risks, based on our ongoing analysis and research, were highlighted not only in our annual financial stability reports, but also in our quarterly bulletins and in statements made by me regularly. in the context of an unprecedented period of expansion and wealth creation, this proved a difficult message to get across. it is evident there was not a sufficient or timely change in behaviour in response to these warnings. other central banks around the world faced similar headwinds in changing behaviour consistent with the risks identified in their own financial stability assessments. an international debate has now begun on how authorities might directly change the behaviour of financial market participants to mitigate the risks identified in financial stability reports. this debate, in part, is focusing on whether central banks need specific powers to intervene directly in this regard. for example, one proposal is that central banks might have an explicit role in setting capital ratios in response to emerging risks identified in their financial stability assessments. a further area for discussion is how monetary policy might better respond to asset price developments. for example, should policy “ lean against the wind ” by tackling asset price inflation more directly. recent developments in late - september, following the lehman ’ s bankruptcy and when the global interbank markets froze and funding was unavailable even at the shortest maturities, the central bank formed the view that the risks to financial stability were becoming unacceptably high with knock - on effects for the wider economy. | the global economy, volatile commodity prices, and the continuing financial turmoil, conventional wisdom says that it will be. nevertheless, i believe that together we have the capacity to ride out the challenges before us. the key is to manage the factors that are within our control, to maintain a positive mindset, and to capitalize on our time - tested resiliency and ability to innovate amidst challenging times. and don ’ t forget, our economic fundamentals continue to be a source for optimism. this includes sustained economic growth, slowing inflation, declining interest rates, record high international reserves, balance of payments surplus, a competitive peso and a stable banking system. in the end, the challenge in 2009 for the banking sector is to quickly act on the painful lessons of the global financial crisis. it is simply far too convenient to point at the complexities of structured products, the over - leveraging, or the fundamental dilemma with market greed. all these were necessary inputs but together they are not sufficient to explain where the world is today. more importantly, debating the whys and wherefores will have its place, but at this juncture we need to act decisively with conviction, in unison, and move forward. ladies and gentlemen, while the global prognosis for 2009 is daunting, the bangko sentral continues to believe that the philippines remains in a position of relative strength as we navigate through these difficult times. what we do to consolidate our gains rests squarely on us. in the case of the philippine banking community, i am confident it will prevail and remain sound and stable. on behalf of the members of the monetary board, i thank all the sectors represented here tonight for their continuing support : the banking community ; the legislative, executive and judicial branches of government ; the private sector, the diplomatic corps, the academe, the media, our special guests, and our partners in bilateral and multilateral agencies. together, let us offer a toast to our continuing partnership in sustaining economic growth in our country and improving the quality of life of filipinos. cheers! finally, before it becomes totally unfashionable, let me take this opportunity to wish all of you blessings of good health, success, and prosperity this new year. mabuhay! thank you all and enjoy the rest of the evening. | 1 |
of its two components, capital and labor. it appears that capital, that is, plant and equipment, can adapt and expand more expeditiously than in the past to meet demands. hence, capital capacity is now a considerably less rigid constraint than it once was. in recent years, technology has engendered a significant compression of lead times between order and delivery for production facilities. this has enabled output to respond increasingly faster to an upsurge in demand, thereby decreasing the incidence of strains on capital capacity and shortages so evident in earlier business expansions. reflecting progressively shorter lead times for capital equipment, unfilled orders to shipment ratios for non - defense capital goods have declined by 30 percent in the last six years. not only do producers have quicker access to equipment that embodies the most recent advances, but they have been able to adjust their overall capital stock more rapidly to increases in demand. the current lack of material shortages and bottlenecks, despite the high level and recent robust expansion of demand, is striking. the effective capacity of production facilities has increased substantially in recent years in response to strong final demands and the influence of cost reductions possible with the newer technologies. increased flexibility is particularly evident in the computer, telecommunications, and related industries, a segment of our economy that seems far less subject to physical capacity constraints than many older - line establishments, and one that is assuming greater importance in our overall output. but the shortening of lags has been pervasive even in more mature industries, owing in part to the application of advanced technologies to production methods. at the extreme, if all capital goods could be produced at constant cost and on demand, the size of our nation ’ s capital stock would never pose a restraint on production. we are obviously very far from that nirvana, but it is important to note that we are also far from the situation a half - century ago when our production processes were dominated by equipment such as open hearth steel furnaces, which had very exacting limits on how much they could produce in a fixed time frame and which required huge lead times to expand their capacity. even so, today ’ s economy as a whole still can face capacity constraints from its facilities. indeed, just three years ago, bottlenecks in industrial production - - though less extensive than in years past at high levels of measured capacity utilization - - were nonetheless putting significant upward pressures on prices at earlier stages of production. more recently vendor performance has deteriorated somewhat, indicating that flexibility to meet demands | ben s bernanke : brief overview of the 4th conference of the international research forum on monetary policy ( welcoming remarks ) welcoming remarks by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the fourth conference of the international research forum on monetary policy, washington dc, 1 december 2006. * * * vice president papademos, ladies and gentlemen, i would like to welcome you to the fourth conference of the international research forum for monetary policy. the forum is one outgrowth of the increased interaction between central banks and academic institutions that, in my opinion, benefits both groups. it is a true joint effort involving the european central bank, the federal reserve board, the bmw institute for german and european studies at georgetown university, and the centre for financial studies at goethe university in frankfurt. you have a very full agenda for the next two days. the topics represent a good mix of theoretical work as well as empirical work based on both calibration and econometric estimation. you are beginning with two papers that emphasize the importance of inflation expectations. other papers examine such topics as the application of search theory, the functioning of mortgage markets, the theoretical analysis of optimal monetary policy, and empirical research on price - setting. there is a lot of intellectual food on the table. bon appetit! | 0.5 |
are segmented, requiring different and more specialized actors in some segments. dtms can be community based or nationwide with different core capital requirements of ksh. 30 million and ksh. 60 million, respectively. ii. agency banking effective 2nd january 2012, dtms were allowed to appoint third parties ( agents ) to offer specified dtm services on their behalf. this followed the successful rollout of agent banking by banks effective may 2010. so far eleven ( 11 ) banks have been granted approval to roll out their agency networks. eight ( 8 ) of these banks have appointed 11, 176 agents, which bis central bankers ’ speeches had executed over 18. 6 million transactions valued at over ksh. 93. 1 billion over the two year period to may 2012. iii. mobile phone financial services there has been tremendous growth in mobile phone financial services in the country. consequently, a number of institutions have initiated various innovations and new products to conveniently serve their customers and reduce the long queues that were previously experienced in banking halls. mobile phone money transfer services have been a phenomenal success and have put the country at the global centre stage of financial inclusion and innovation. in a country like ours with remote corners not served by financial institutions, mobile financial services has provided the answer. more importantly, our banks have easily integrated into their financial services with these technological platforms. the up - scaled level is now to use mobile phones to send money to savings accounts and credit provision through the same channels. this is already taking place with m - kesho type of products in the market. iv. credit information sharing the credit information sharing ( cis ) mechanism for banking institutions has successfully taken root with mandatory sharing of negative information on a monthly basis. all the 43 licensed commercial banks in kenya and institutions under the deposit protection fund board have been submitting negative credit information to the licensed credit reference bureaus ( crbs ) within the required timeframes. the banking act and the central bank of kenya act have now been amended to allow institutions licensed under both the banking act and the microfinance act to share both positive and negative credit information of their customers. this will go a long way in enriching the crbs database for the benefit of the entire banking sector and create objectivity in reporting. credit information sharing allows the market to build information capital for the financial sector in kenya. this will help build credit histories of borrowers and support a change of collateral technology in use currently. development of information capital will remove information as | njuguna ndung ’ u : essential groundwork for competing effectively in the islamic banking environment remarks by prof njuguna ndung ’ u, governor of the central bank of kenya, at the launch of the regional certificate in participatory / islamic banking, kenya school of monetary studies, nairobi, 25 february 2014. * * * distinguished guests ; ladies and gentlemen : 1. it gives me great pleasure to be here today to officially welcome all of you to the launch of the regional certificate in participatory / islamic banking programme conducted by the kenya school of monetary studies in collaboration with the international center for education in islamic finance ( inceif ). inceif is the only educational institution in the world devoted to islamic finance. on behalf of the central bank of kenya, let me extend a very warm welcome to all the organizations represented here today. 2. the school has established a collaborative partnership with inceif to offer the exclusive certificate targeting members of staff at executive level in bank and non bank financial institutions offering lending services. in this collaborative arrangement, ksms is leveraging the expertise inceif has developed over the years in delivering a globally recognized certificate in islamic banking. further, it is important to note that the launch of the inceif program we are having here today is a culmination of concerted efforts by kenya school of monetary studies in developing solutions to problems faced by the region that are practical and relevant. 3. ladies and gentlemen : this program is designed to develop human capital in participatory / islamic banking in the comesa region. it is structured to provide an introduction of basic islamic principles governing financial transactions in order to establish a good foundation for the understanding of key operations in participatory / islamic banking. the program will change the islamic finance training landscape and enhance financial inclusion since the focus is definitely now on africa and particularly sub - saharan africa where consumer awareness of non interest banking or participatory / islamic banking is growing and the demand for this across bank customers. 4. as kenya and the region at large becomes an increasingly attractive destination for investments, the onus is on you, the financial industry players and financial institutions to tap into this tremendous potential in the area of islamic banking. as you know, with growth comes opportunities ; with opportunities, demand for engaging qualified personnel and developing training capacity for the drivers of the industry in technical and operational areas of handling and managing participatory / islamic banking based products for | 0.5 |
william c dudley : transcript of fireside chat at york college in queens transcript of a discussion between mr william c dudley, president and chief executive officer of the federal reserve bank of new york, and dr olajide oladipo, professor and chair of the business and economics department, during the fireside chat at york college in queens, new york city, 24 march 2017. * * * dr. olajide oladipo : president dudley, can you please share with us the purpose of your trip here today to queens? president dudley : so, there are 12 federal reserve banks around the united states, and one of them is the federal reserve bank in new york that sits downtown in manhattan, and near wall street. our second district consists of new york, northern new jersey, fairfield county, connecticut, puerto rico, and the virgin islands. haven ’ t gotten to the virgin islands yet. as part of our mission, we want to represent the communities in our district, and so four times a year, i get on the road, and i go out to visit people, to find out what ’ s really happening on the ground. it ’ s meeting with businesses, meeting with people from educational institutions, going to visit manufacturing facilities, community development organizations. it ’ s really designed to do two things. one, explain sort of a little bit of what we do – like for example there, in the introduction, talking about this bis. what the heck is the bis? well, bis is a bank for central banks that sits in basel, switzerland. in fact, what did i do last weekend? well, i was in basel, switzerland, at the bis. this is where central bankers get together from across the world, exchange information with one another. so, the first thing is to explain ourselves to people in the community. because the federal reserve is pretty mysterious in terms of – when i went to grad school even, i wasn ’ t really sure again what the federal reserve was. had to be explained to me. the second thing we do in the community, and this is the more important piece, is to really learn what ’ s going on, on the ground, in the community. what ’ s happening in terms of businesses – are they successful? if they ’ re having trouble, what are the reasons for the trouble? do they have access to the credit? can they find people with the job skills they need to support their businesses? what are the challenges | ##ized to refinance when mortgage rates decline below the rate on their current loan. in contrast, most market participants expect longer - term interest rates, including primary mortgage rates, to rise over policy normalization, and that therefore mortgage refinancing activity will be modest. as a result, most expect mortgage principal repayments to run below the level of the redemption cap set by the fomc. projections for these repayments, drawn from the july 2017 update to our annual report that i discussed earlier, are shown in lefthand side of panel 3. 6 / 15 bis central bankers'speeches the benefit of the cap, even though it is unlikely to bind, is that it limits the amount of variation in the pace at which securities, and particularly mortgages, will flow back into private hands. recall that the left - hand figure in panel 3 is based on rising interest rates over an ongoing economic expansion. for comparison, the right - hand figure in panel 3 shows the projected mbs principal repayments for a scenario in which interest rates come in two percentage points below market participants ’ expectations. in this scenario, the cap operates to constrain the flow of securities into the market. while such a lower - rate outcome is not a central expectation, it is certainly possible. by providing market participants some certainty that the pace of balance sheet decline will be gradual across economic scenarios, this plan should help mitigate the risk of unexpectedly sharp shifts in asset prices, liquidity, or market functioning should markets begin to put greater weight on lower interest rate scenarios. indeed, by promoting greater confidence in the stability and liquidity of the treasury and agency mbs markets across economic outcomes, the fomc ’ s plan should result in lower risk and liquidity premia on these assets relative to normalization plans that do not promote such confidence. the importance of predictability is underscored when one considers that in recent years, adverse economic shocks have generally been associated with sharp falls in longer - term interest rates. such declines would tend to bring about faster mbs repayments and, if the outflow from the federal reserve ’ s portfolio were not constrained by a cap, an unforeseen tightening effect on financial conditions, amplifying the adverse shock. prepared for the unexpected while i am confident that the fomc ’ s plan will work well, there ’ s always the risk that events unfold differently than expected. in my view, we best prepare for the unexpected in two ways : | 0.5 |
strong foundations and basic institutional framework, relates to the pace of further deregulation and liberalisation, consistent with the progress of reform in the real and fiscal sectors. the reserve bank and the commercial banks have been preparing to implement basel ii. in practice, within the given legal framework, priorities have to be appropriately set ensuring implementation of intended reforms in banking sector in tune with the evolving domestic and external developments. ( ii ) financial markets – efficient and developing development of financial markets received a strong impetus from financial sector reforms since the early 1990s. reforms in financial markets were carefully sequenced ensuring that they were in sync with the real sector. the reforms were also important for developing the environment for effective monetary policy making and monetary transmission mechanisms. as in other areas of reform, a gradual approach was followed in respect of development of financial markets. this has served india well since it helps in continuous rebalancing of the various elements depending on global and domestic developments and thus maximises benefits while minimising costs associated with the process of financial integration. in this approach, the pace and sequencing of financial liberalisation could be tempered keeping in view the degree of comfort in moving forward in a credible way. gradualism also enables harmonisation with reforms in other sectors of the economy. a wide range of regulatory and institutional reforms were introduced in a planned manner over a period to improve the efficiency of financial markets. these included development of market micro structure, removal of structural bottlenecks, introduction / diversification of new players / instruments, free pricing of financial assets, relaxation of quantitative restrictions, better regulatory systems, introduction of new technology, improvement in trading infrastructure, clearing and settlement practices and greater transparency. prudential norms were introduced early in the reform phase, followed by interest rate deregulation and gradual lowering of statutory pre - emptions. these policies were supplemented by strengthening of institutions, encouraging good market practices, rationalised tax structures and enabling legislative and accounting framework. going forward, a judicious mix of appropriate policy, strong macro economy and sound and resilient financial system would be necessary as the indian economy moves up in the ladder from an emerging market economy towards a more mature economy. as development of financial markets is an ongoing process, initiatives to further deepen and widen the various segments of financial markets would have to be continuously pursued. as the economy ascends a higher growth path, with greater opening up and financial integration with the rest of the world, the financial sector development in all its aspects will | promoting global coordination to minimize spillover and to contain debt. governor tombini emphasized that fiscal legacy has generated multiple equilibria for central banks and emphasized the importance of fiscal consolidation for overall macroeconomic stability. governor subbarao underscored that the new trilemma is not only an economic issue but also an issue of institutional architecture. he emphasized on the need for explicit, though not exclusive, mandate for financial stability for rbi. governor anwar indicated that the old trilemma continues for edes because of the spillover effects and emphasized the importance of communication among the central banks in the region. managing director mr. menon emphasized that central banks should try to be independent within the government rather than of the government and also highlighted the role of financial markets in addressing the trilemma. governor najeeb underscored the independence of central banks, particularly in edes, to enhance policy credibility. martin wolf emphasised that the global economy has changed with a series of shocks over the past 5 to 6 years, questioning the self - sustaining nature of financial markets. this underscores the increased role of public policy in the financial sector, greater responsibility for the central banks in the economy and enhanced global co - ordination. at the end, let me list out some of the major takeaways from this conference. first, the new trilemma is a reality, and fiscal discipline is critically important for financial stability and price stability. second, interaction between sovereign debt and monetary policy is an important determinant of market confidence. a comprehensive fiscal exit strategy should explicitly recognize the objective of a sustainable public debt ratio and policies that should underpin a fiscal adjustment path. third, right balance between growth in the financial sector and real sector is important to prevent imbalances. warning signals always flash before the crisis. often imbalances are ignored, even if identified earlier. leaning against imbalances could be less costly than cleaning up later. fourth, macro prudential measures are useful, but their effectiveness in preventing crisis is yet to be tested. these tools need to be fine - tuned. thank you for your kind attention. bis central bankers ’ speeches | 0 |
out in order to understand how vulnerable the system is to a specific shock and the extent to which the shock will be contagious. the input of research has been invaluable in guiding central banks and the output of the macroprudential research network ( or mars as it was known ) was surely vital in helping central banks get macroprudential regulation up and running. at the same time as research has been progressing, the institutional structure of regulation and supervision has also undergone considerable reform. the european systemic risk board was created in the wake of the global financial crisis following the recommendations of the high level group chaired by jacques de larosiere. the de larosiere report focused on the need to move beyond microprudential supervision and give due attention to ensuring the stability of the financial system as a whole. as part of the process of implementing its recommendations, macroprudential regulation became a central bank core task. the research conducted in fora such as this one provides valuable inputs to this work. we have also seen major changes in the area of microprudential supervision with agreement on 1 / 2 bis central bankers'speeches the goal of european banking union and the creation of the single supervisory mechanism and the single resolution mechanism. the single supervisory mechanism seeks to provide a consistent method of supervising 120 significant european banks. once again research input is crucial to building up that method. to reap the full benefits of these institutional changes, it is important that the banking union be completed by creating a common deposit insurance scheme and setting up a credible common fiscal backstop to the single resolution fund that underlies the single resolution mechanism. perhaps strengthening the financial resources of the esm could provide a way forward in this respect. research clusters were only recently set up by the heads of research in order to encourage interaction and collaboration between escb researchers working on fields of common interest. it is planned that each research cluster will have an annual workshop where papers, selected on the basis of academic quality, will be presented and discussed. the workshops will provide an opportunity for researchers from national central banks and the ecb to get together and discuss advances in their respective fields – something that will have particular benefits for researchers who work in smaller central banks. i trust that you will find the atmosphere at the first workshop of this cluster conducive to encouraging such cooperation in order that policy in this area can move forward. if the global financial crisis has taught us anything it is surely that we, as central bankers, | crisis driven mainly by sizeable fiscal deficits and the domestic currency depreciations vis - a - vis the us. 3. 2 brexit as far as brexit is concerned, with the deadline approaching, financial services firms have no choice, but to continue preparing for the worst outcome ( " no deal " ), hoping for the best. the closer we get to 29 march without a deal, the more business from the city of london will be transferred and staff either hired locally or relocated. many companies have already confirmed they are moving or adding staff and / or operations elsewhere. it has been projected that up to 7, 000 jobs may relocate from the city to dublin and paris, and more firms will relocate to new york, so why not also to singapore? following the heavy defeat of pm may ’ s eu withdrawal agreement at the house of commons on tuesday 15 / 1, there are now four possible brexit scenarios : 1. a delayed brexit 2. no - deal brexit 3. a second referendum and 4. a general election. i am probably not the ideal person to project on the final outcome, although i have lived in the uk for more than a decade. the british are probably the most sophisticated electorate in europe, but for me as a pro - european, all i can say is that even great nations sometimes make mistakes. having said that, i have confidence in british diplomacy and uk institutions, so no matter what, the uk will face economic hardship in the short - term, but in the medium - term the country, including the city of london as a major financial center, will not only sail through, but also thrive. 3. 3 european elections 2019 is a year of multiple elections in the eu, the most significant of which is the vote for the new european parliament, without the uk. there are three risks arising, first of all, from the electoral uncertainty and what kind of a parliamentary formation will come out of the european elections, from migration, a risk which is also linked with the general situation in terms of geopolitics in our continent and beyond and, last but not least, populism. next may ’ s elections for the new european parliament are going to be the litmus test of populist strength. if the ruling class and mainstream political parties do not show evidence that they have truly heard the message from ordinary people on the street ( who are worried about migrants and jobs ), the electorate will want to | 0.5 |
in the market. it is worth noting the code is principles - based rather than rules - based. this is to encourage market participants to think about their practices and how their activities comply with the principles, rather than working narrowly to a set of rules. the code ’ s application is also designed to be proportional to the fx business that a participant is involved in. clearly, there are some principles that aren ’ t directly relevant to the buy - side. most obvious are those principles that deal with handling client orders or client mark ups. ultimately, the code ’ s principles are there to give market participants confidence in how the market is operating. there are numerous ways the code can promote confidence. it can help to improve price competition as liquidity providers ’ pricing practices become more transparent to clients. market participants can also be more confident that good practices around information handling will result in a more level playing field for all. 1 / 2 bis central bankers'speeches so i encourage those of you who have yet to familiarise yourselves with the code to do so. and then consider adopting it. it is a useful tool in many ways, not just to enhance your own practices but, for those on the buy side to gauge what you should expect from your brokers in terms of their execution, the type of market colour they provide and their market practices more generally. finally, i should mention the work of the australian foreign exchange committee ( afxc ). this committee contributes to maintaining the code and promoting it within the local market. our membership comprises a diverse range of market participants, including those from both the sell - side and buy - side, and also those that provide infrastructure to the market, such as the platforms. so if you are interested to know more about the code, you could contact any one of the members and ask about their own experiences with the code. 2 / 2 bis central bankers'speeches | christopher kent : opening panel remarks - fx week australia opening panel remarks by mr christopher kent, assistant governor ( financial markets ) of the reserve bank of australia, at the fx week australia, sydney, 27 march 2019. * * * thanks to fx week for the invitation to discuss the fx global code. when the fx global code was launched in 2017, the aim was that it would promote a robust, fair, liquid and transparent wholesale market. to do that, the code sets out principles of good practice. as awareness of the code builds and more market participants commit to adhering to its principles, standards will no doubt improve across the market. the code has already gained significant traction in the marketplace. a recent survey of market participants by the global foreign exchange committee ( gfxc ) confirmed that awareness of the code within the industry was now very high. almost all of those surveyed had read part or all of the code. furthermore, the vast majority of respondents indicated that they expected or required their counterparties to adhere to the code. globally, there are now more than 800 firms that have signed statements of commitment to the code and lodged them on public registers. so what do we need to do from here? globally, it is clear that the sell - side have embraced the code. what appears to be missing is comparable take - up from the buy side. this is as apparent in australia as it is in other jurisdictions. to some extent, this could be just a lag as buy - side participants take longer to complete the process of reviewing the code and aligning their practices to it. encouragingly, the gfxc ’ s survey showed that while current take - up from the buy - side was low, many of the buy - side respondents indicated that they did intend to adhere and some of those had already begun the process. more broadly, though, the gfxc is conscious that greater take - up from the buy - side will be needed and the gfxc is actively looking at ways to achieve that end. for those in the audience from the buy - side the question i would put to you is : can you justify to your stakeholders — whether they are your investors ( if you are a fund manager ) or shareholders ( if you are a business ) — why you have not adopted a set of principles which represent industry best practice when you are managing their money? the widespread adoption of the code will benefit everyone involved in the fx industry, regardless of where you sit | 1 |
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