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emmanuel tumusiime - mutebile : uganda β s new credit reference bureau speech by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the launch of the credit reference bureau, bank of uganda, kampala, 3 december 2008. * * * h. e. mr. reinhard buchholz the ambassador of the federal republic of germany, h. e. mr. anders johnson the ambassador of sweden, h. e. mr. thanduyise chilliza the high commissioner of the republic of south african, members of the committee on national economy, parliament of uganda, members of the board of directors, bank of uganda, the chief executive officers of commercial banks, credit institutions and microfinance deposit - taking institutions, managing director compuscan information technologies of south africa, managing director credit reference bureau b ltd., distinguished guests, ladies and gentlemen. it is my pleasure and honor to welcome you all to this auspicious occasion when we are launching the credit reference bureau ( crb ) and the associated financial card system ( fcs ). this is a major initiative by bank of uganda and government of uganda through the ministry of finance planning and economic development towards improvement of credit risk management in the financial sector. the establishment of the crb is an important milestone in the development of uganda β s financial sector. the absence of a crb in uganda has been a major bottleneck to the expansion of the volume of private sector credit. indeed, ugandan firms - large, small and medium enterprises consistently cite limited access to credit as one of the greatest barriers to their operations. up to now, the infrastructure for information sharing and unique borrower identification has been non - existent. the participating institutions ( pis ) ( commercial banks, credit institutions and microfinance deposit - taking institutions ) had no way of checking and sharing information on the credit history of borrowers. therefore, pis have continuously been exposed to high credit risk on account of inadequate information on borrowers β creditworthiness. this has inevitably resulted in increased cost of borrowing, thereby making credit more expensive than it would otherwise have been. as a step in the right direction, the parliament of uganda passed the microfinance deposittaking institutions act 2003 ( mdi act ) and the financial institutions act 2004 ( fia ), which propelled the process of establishing a credit reference bureau in the country. the fia mandates the central bank or its appointed agent or any other person authorized
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products and offer competitive interest rates due to availability of information on customers β credit risk profiles. bou in its mandated responsibility will supervise the operations of the crb and fcs to ensure that the information collected is managed securely and responsively at all times and in accordance with the agreement which we have signed with compuscan. bou has already issued guidelines for the operation of the crb. the guidelines specify the standards that the crb shall implement in order to ensure a reliable mechanism to process data. the bank of uganda conducted education and sensitization campaigns in 21 districts in order to : β’ deepen the understanding of key stakeholders of the crb, the fcs ; and the accruing benefits of the crb. β’ create a favourable public opinion and perception about credit reference services, through the careful and strategic deployment of available media and communication resources. the public awareness campaigns shall continue in order to encourage borrowers register on the fcs and to address the concerns of specific target groups, to allay fears of borrowers regarding the sharing of confidential information and to assure all stakeholders of the integrity and security of the system. i wish to assure the general public that we consider confidentiality and privacy of information paramount. bank of uganda, pis and compuscan crb ltd. will ensure that confidentiality and privacy are adhered to at all times. i wish to thank the german development cooperation, the people of germany and the government and the people of sweden for the financial and technical support accorded to bank of uganda for this project. i also want thank the world bank for the role they have played towards the successful establishment of the crb and the fcs. i thank you very much for joining bank of uganda on this memorable occasion. it is now my honor and pleasure to invite the chief guest, h. e. reinhard buchholz the ambassador of the federal republic of germany to give his remarks.
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commission β s priorities for financial services policy over the next five years. 2 finally, the ecb also seeks to provide economic analysis and research on financial integration, in order to raise the awareness of economic agents and policy - makers about the benefits of financial integration for the euro area economy. the ecb is in a unique position to produce in - depth economic analysis and comprehensive statistics for the euro area as a whole, by drawing on the expertise of its staff, by relying on direct interaction with major financial players and by building on its role as a supranational institution at the helm of the eurosystem. the publication we are presenting today belongs to this fourth type of initiative. in discussions on european financial integration, the relevant arguments are often of a qualitative nature. however, in order to properly monitor and assess the state of financial integration, quantitative information in the form of indicators β as contained in our report β is not only useful, but essential. we wanted to devise a way in which to capture, in quantitative terms, the various dimensions of financial integration and to have a toolbox at our disposal to monitor developments, measure progress and assess the state of integration of the different components of the european financial system, that is, financial markets, financial institutions and financial infrastructures. the indicators that we have compiled focus on markets and cover the main financial market segments of the euro area, ranging from the money market to retail loans and wholesale equity trading. the statistics indicate that the degree of integration varies greatly depending on the market segment. the unsecured money market has been fully integrated since shortly after the introduction of the euro. the repo market is also highly integrated, albeit to a lesser extent. government bond markets have integrated significantly. the indicators for the corporate bond market, which has grown considerably since the introduction of the single currency, also point to a high degree of integration. progress has also been made in the see http : / / www. ecb. int / pub / pdf / other / lamfalussy - reviewen. pdf. see http : / / www. ecb. int / pub / pdf / other / ecgreenpaperfinancialservicespolicy2005en. pdf. 2 / 3 integration of euro area equity markets, in which equity returns are increasingly determined by common factors. however, banking markets are generally much less integrated. these general findings β and i only wanted to refer to them very briefly β already
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the capacity of the economies to absorb shocks. on the other hand, intensified cross - border financial links also harbour the potential that shocks could be transmitted more rapidly through the euro area. a potentially increased risk of financial contagion alters the challenges to financial stability that we are facing. against this background, the monitoring of progress towards more fully integrated markets β as we are seeking to do with this new set of indicators β is useful for our assessment of the outlook for financial stability. finally, and more generally, financial integration can help to promote the development and modernisation of financial markets, institutions and infrastructures, thereby helping, through various channels, to support economic activity and raise the potential for economic growth. deeper and wider markets encourage savings, offer more and better investment opportunities, reduce the cost of capital and intermediation, and facilitate a more efficient allocation of financial resources. in this way, they contribute to higher growth. it is for this reason that the objective of fostering financial integration in the european union is a key aspect of the lisbon agenda. in fact, financial integration has arguably been one of the most 1 / 3 successful components of the lisbon strategy and further progress towards more integrated financial markets is undoubtedly desirable. the ecb has taken a proactive stance towards, and has been involved in several initiatives aimed at fostering, financial integration, given its importance not only for the performance of the basic tasks of the eurosystem but also for the welfare of european citizens. it goes without saying that we are also in close cooperation with the european commission in our efforts to promote financial integration. the pertinent initiatives of both institutions support and complement each other. regarding the specific fields of activity and expertise of the ecb and the eurosystem, we distinguish between four kinds of contribution. first, public authorities can make a contribution by fostering collective action to overcome possible coordination problems in the private sector. right from the start of monetary union, the ecb has sought to play this β catalyst role β. the most recent example in this respect is our support of the initiative for a single euro payments area. second, we provide central banking services that are conducive to financial integration, most prominently by operating europe β s leading large - value cross - border payment system, target. third, we offer advice on the legal and regulatory frameworks for the financial system. for example, the eurosystem recently commented on the review of the lamfalussy process1 and on the european
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barbro wickman - parak : the imf β s role β new thinking in the wake of the financial crisis speech by ms barbro wickman - parak, deputy governor of the sveriges riksbank, at a meeting at global challenge, stockholm, 5 october 2012. * * * i would like to thank ms maria wallin fredholm and ms emelie mannefred, from the riksbank β s financial stability department, for their assistance in the writing of this speech. the 188 member countries of the international monetary fund ( imf ) will gather in tokyo for the fund β s annual meeting next week. when i began working with imf issues at the riksbank in 2007, my impression was that the imf was suffering from an identity crisis. the fund β s lending to countries in crisis appeared to have played out its role and major staff cuts were underway. in short, the mood was rather subdued in the corridors of the imf. the financial crisis led to an abrupt change. the imf was forced to quickly provide action programmes and funding for crisis countries. before the crisis, the imf β s lending amounted to approximately usd 9 billion, the largest part of which went to turkey. today, the imf β s lending amounts to around usd 112 billion, and the absolute largest part of this sum now goes to countries in europe. the media spotlight often falls on the fund when it rides to the rescue with crisis - management measures like this. but the every - day, important and tireless surveillance work of the imf seldom attracts any headlines. the imf continuously monitors all of its member countries, for example through its article iv consultations. these include in - depth analyses of the development of the economy, points out risks and gives advice on areas such as fiscal policy, labour - market policy and monetary policy. the knowledge of individual countries that the imf has built up during years of regular surveillance is a precondition for quickly being able to warn against and counteract risks and to launch tailor - made action programmes when countries need financial support. the imf extended its financial surveillance a number of years ago, but there is still more to be done. in the nordic - baltic imf constituency, 1 of which sweden forms a part, we have been a driving force on several important issues in this area. as a small, open economy with a large financial sector, sweden has every reason to support the imf in its
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certain countries were asked to liberalise capital flows too early. the issue has therefore been very sensitive since then. today, however, most countries agree on the positive effects of free capital flows β that is that they contribute to increased economic growth by enabling resources to be used more efficiently. the issue of free capital flows has now appeared on the imf β s agenda once again. the sudden stop in capital flows during the initial phases of the crisis and the subsequent rapid increase in capital inflows into emerging - market economies have focused attention on the problem of volatile capital flows. massive inflows can lead to overheating and asset - price bubbles and as there are no clear guidelines a number of emerging - market economies have chosen to manage massive inflows by introducing a range of capital controls. the member countries have therefore given the fund the task of drawing up guidelines on how countries should manage such capital flows. this work has been underway for the last 12 months and a proposal for a comprehensive framework will be discussed by the imf β s executive board at the end of october. according to the proposed guidelines, countries should in the first instance review their fiscal and monetary policies in order to manage or counteract major capital flows, and as a complement to this they should use various macroprudential - policy tools. as a final resort they may introduce capital controls. the idea is that the imf should give advice on how these tools should be designed in order to be effective. no organisation has played a clear role in the liberalisation of capital flows. this is a major difference compared to the liberalisation of trade, where the world trade organisation ( wto ) played and still plays a prominent role. i think it is positive that the issue of capital flows is once again on the imf β s agenda as it is an important issue that requires careful analysis as volatile capital can cause serious problems. β¦ as clearly demonstrated by the crisis in our region the need to analyse capital flows became clear in connection with the crisis in our region too. if capital flows had been systematically analysed prior to the crisis, we would have seen that capital flows to the baltic countries were dominated by bank loans from nordic parent banks to their baltic subsidiaries and not, for example, by more sustainable direct investments. perhaps this would have led the alarm bells to ring sooner and louder. in our constituency we have carried out an empirical study of iceland β s and the baltic countries β experience of capital flows and capital controls before
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showed a depreciation more or less equal to the inflation differential between south africa and its major trading partners. the more stable exchange rate also reduced the demand for forward cover in respect of outstanding foreign exchange commitments of south african residents. the net oversold forward book of the reserve bank, about which there is much misunderstanding in financial markets, declined from us $ 22 billion at the end of 1996 to less than $ 15 billion at this stage. the second gratifying development was that south africa succeeded in 1997 to arrest the inflationary pressures created by the 1996 depreciation of the rand. the rate of increase in consumer prices, measured over a twelve months β period, accelerated from 5. 5 per cent in april 1996 to 9. 9 per cent in april 1997. during the rest of last year, however, the rate of increase in consumer prices gradually drifted down to 6. 1 per cent in december 1997. on a seasonally adjusted annualised basis, the rate of inflation declined to 4. 1 per cent in the fourth quarter of 1997. against the background of the relatively successful financial consolidation process of 1997 and the progress made during the course of the year towards reaching overall financial stability, it is understandable why the turmoil in the international currency markets after the east asian crisis only had a limited effect on the south african situation. it hit the south african markets just at a time when the country had more or less completed painful adjustments to restore equilibrium after its own crisis of 1996. apart from the downward adjustment of prices in the equity market, the contagion on south africa from the currency problems in east asia appeared to have been limited. 4. prospects for 1998 at the beginning of 1998, south africa therefore finds itself in a much more comfortable situation than a year ago, at least as far as the overall financial situation is concerned. the improved conditions were already recognised by a gradual easing of monetary policy in recent months. bank rate was reduced from 17 to 16 per cent on 20 october 1997, and the money market shortage allowed to decline from r11. 1 billion at the end of november 1997 to r7. 6 billion at the end of january 1998 ( and r7. 2 billion last friday ). the more flexible interest rates in the money and capital markets drifted downwards. the monthly average yield on long - term government bonds declined from 14. 5 per cent in november 1997 to 13. 6 per cent in january 1998, and to 13. 3 per cent at the end of last week.
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##tralasia and africa have also been part of the global recovery to varying degrees. behind the euphoria, there are a number of factors that have been identified as posing a risk to the sustainability of the turnaround. firstly there are the imbalances in the us economy. the us trade and current account deficits may require an adjustment in us macroeconomic policies, if the required adjustment is not achieved through movements in the dollar exchange rate. some adjustment is inevitable as economic growth in the us accelerates. the challenge for the us will be to reverse its policies in such a way that does not undermine the global recovery and also achieves the desired effects with respect to the imbalances. the lenient macroeconomic policies of the united states in particular were an important element in bringing about the global recovery, and the challenge is to prevent the inevitable reversal of these policies from undermining the recovery. the recent positive employment figures emanating from the us have fuelled expectations that the tightening of the us policy stance will begin sooner rather than later. this will follow the lead of central banks in the uk, australia and new zealand which have already increased interest rates. secondly, a further risk to the global recovery is posed by the recent developments in the international oil market, where oil prices are moving inexorably towards the us $ 40 per barrel mark. this is a result of a combination of low inventory levels in the united states, the reduction in opec production quotas, tensions in the middle east, and political problems in a number of oil - producing countries. as recently as february it appeared that the pressure on prices would be short - lived as the opec basket price moved from around us $ 30 per barrel down to the us $ 28 per barrel level, the upper limit of the opec target range. unfortunately this turned out to be a temporary reprieve. the average price of the opec basket was us $ 32, 05 in april and us $ 35, 23 in the first week of may. although at this point it appears that this threat is more short term in nature, there have been warnings that excessively high prices could undermine the sustainability of the global upswing. despite the upswing in the global economy, there is no widespread expectation of a revival of generalised world inflation. the imf world economic outlook projects a decline in world inflation from 3, 7 per cent in 2003 to 3, 2 per cent in 2005. although a handful of countries are
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on october 30, have inched up since mid - november as banks have held off buying tb and fb in response to a drop in bank stock prices. yields on long - term government bonds declined below 1. 0 percent for the first time since november 1998 as banks and institutional investors increased investment in bonds, and are moving around 1. 0 percent recently. yield spreads between private bonds ( bank bonds and corporate bonds ) and government bonds remain virtually unchanged. meanwhile, stock prices declined and are recently moving around 8, 000 - 8, 500 yen due to rising uncertainty about the economic outlook. in the foreign exchange market, the u. s. dollar is weakening again on the whole reflecting the strained situation in the middle east and the deterioration in the u. s. economic indicators. the yen is currently being traded in the range of 119 - 122 yen to the u. s. dollar. 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 slightly more severe. in the corporate bonds and cp markets, the issuing environment for firms with high credit ratings is accommodative, but the environment for firms with low credit ratings is severe. credit demand in the private sector continues to follow a downtrend mainly because firms β business fixed investment remains sluggish while continuously reducing their debts. amid these developments, private banks β lending continues to decline by about 2 - 3 percent on a yearon - year basis. growth rates of the amount outstanding of corporate bonds and cp issued are on a declining trend and the amount outstanding dropped slightly below the previous year β s level in october. meanwhile, according to business surveys, the financial position of firms, particularly that of small firms, remains severe. the monetary base exhibits a high year - on - year growth rate of around 20 percent. the year - on - year growth rate of the money stock is around 3. 0 - 3. 5 percent. funding costs for firms continue to be at extremely low levels on the whole. against the above background, the financial developments are summarized as follows. money market conditions as a whole continues to be extremely easy partly due to the additional monetary easing by the bank. long - term interest rates are low. the money stock and the monetary base maintain high growth rates relative to that of the economic activity as a whole. however, stock
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greater. on the domestic side, stock prices have fallen to a considerably low level. hence, the progress in the disposal of non - performing loans of financial institutions and its effects on stock prices, corporate finance, and the economy, should be carefully monitored. on the price front, import prices are starting to turn up reflecting the rise in oil prices during the summer and into the fall, and the depreciation of the yen. domestic wholesale prices are virtually level since the rise in import prices and the improvement in the balance of supply and demand in the materials industries have almost been offset by the decline in machinery prices and electricity charges. however, consumer prices remain on a gradual downtrend and corporate services prices continue to decline. this report is based on data and information available at the time of the bank of japan monetary policy meeting held on november 18 and 19, 2002. the bank β s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on november 18 and 19 as the basis for monetary policy decisions. looking at the conditions influencing price developments, import prices are projected to continue firming up for the time being as the effects from the rise in oil prices will remain. however, the overall supply - demand condition is expected to keep exerting downward pressure on prices for a while amid persistently weak domestic demand, although the completion of inventory adjustment and the rise in capacity utilization rates will support prices to some degree. moreover, factors such as the ongoing technological innovations in machinery, deregulation, and the streamlining of distribution channels will continue to restrain prices. under these circumstances, domestic wholesale prices are expected to remain virtually level for a while. consumer prices are expected to stay on a declining trend for the time being at the current gradual pace. while the slower growth in imports of consumer goods is expected to alleviate the downward pressure on prices to some extent, the faster pace of decline in wages may possibly reinforce the ongoing decline in prices, especially for services prices. as for the financial market, the outstanding balance of the current accounts at the bank of japan is recently moving at around 17 - 18 trillion yen, as the bank provides further ample liquidity following the guideline for money market operations decided at the monetary policy meeting held on october 30. under these circumstances, in the short - term money markets, the overnight call rate continues to move at very close to zero percent. meanwhile, tb and fb rates, which declined temporarily after the monetary policy meeting held
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choongsoo kim : new role of central bank and regional financial cooperation after the global crisis opening address by mr choongsoo kim, governor of the bank of korea, the 47th seacen governors β conference, high - level seminar and the 31st meeting of the seacen board of governors, seoul, 13 february 2012. * * * distinguished governors, ladies and gentlemen, i would like to express my gratitude to all my fellow central bank governors for taking part in the 47th seacen governors β conference, high - level seminar and the 31st meeting of the seacen board of governors. my special thanks go to 5 distinguished speakers, mr. pier carlo padoan, deputy secretary - general of oecd, mr. stephen p. groff, vice - president of the adb, professor charles engel from university of wisconsin, mr. hannoun from bis and mr. chia from imf who have come from afar to deliver the keynote addresses. it is a great honor and pleasure for us to be hosting the seacen governors β conference in seoul again after 13 years. though i stand before you today as the representative of the bank of korea, i bid you welcome on behalf of all the korean people. in the wake of the global financial crisis, emerging market countries recovered faster than the advanced countries. however, the increasing uncertainties surrounding the world economy since then still pose a threat to the asian economies. at this juncture, we should learn the lessons of the global financial crisis. this means setting the financial infrastructure right and establishing an effective policy response system in order to ward off further crises by speeding up global economic recovery. i think now is the time to change the policy stance and also strategies. global financial resources may have in recent years been directed toward financing of unsustainable financial deficits and debt - ridden countries, and little toward growth and job creation. i believe that redirecting of financial resources more toward growth, and more specifically toward countries with high productivity could yield substantial benefits to all in the long run. this is why i see a greater role for asia going forward. asia overcame the global financial crisis well, and has remained resilient to negative spillover from ongoing crisis in europe. moreover, many expect asia to develop even more into an engine of global economic growth. if we look at the outbreak and spread of the global financial crisis and the policies adopted in response, we can draw many precepts and pointers as to the role
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still suffered shocks very similar to those at the time of the asian financial crisis of 1997 β 98. basically, the factor behind this was their vulnerability to external shock due to their export - driven growth strategies, rapid economic liberalization and market opening. as several researches by the fed of the us and the asian development bank ( adb ) have pointed out, the financial crisis in advanced countries was transmitted to asian economies through the trade channel even more than through the financial channel. 3 in the initial phase angus maddison, chinese economic performance in the long run, second edition, revised and updated 960 β 2030 ad, the development centre, oecd 2007. β asia accounted for over half of world output for 18 of the past 20 centuries. β the economist, february 27, 2010, p. 72. for example, the welcome address by ben bernanke on β asia and the global financial crisis β at the asia economic policy conference on october 2009 and the adb β s asian development outlook update on september 2009. of the crisis, the foreign exchange and financial markets in every country in asia suffered severe turmoil. however, they began to regain stability comparatively quickly. although this recovery was in part ascribable to the bold and active policy response of countries around the world, and to their close international policy cooperation, as seen for example in the use of bilateral currency swaps, it is also a fact that the asian financial sector was in comparatively strong shape thanks to its structural adjustments following the asian financial crisis, and this is considered to have played a considerable part as well. on the other hand, every country in asia also suffered very large real sector shocks by way of the trade channel. from the beginning of the fourth quarter of 2008, most asian countries shifted into states in which economic activity was extremely subdued, in line with the sharp drops in their exports as import demand in advanced countries shrank sharply due to the rapid slowdown of economic activity. subsequently, however, asian economies staged much faster recoveries than advanced countries and came to serve as the locomotives of the world economic recovery. during 2009, economic growth in major advanced countries, namely g7 countries, averaged a negative 3. 4 %, whereas that of the asian economies reached a positive 3. 6 %. in this year of 2010, growth rates in asia are expected to climb to 7. 5 %, and the forecast is that they will account for 40 % of world economic growth this year. 4 strengths and weaknesses of
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john c williams : healthy workforce, healthy economy remarks ( via videoconference ) by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at combating food insecurity : what β s working β and what β s scalable?, 30 november 2021. * * * as prepared for delivery good morning, and welcome. we are pleased that so many of you have joined us today for this important discussion about food insecurity. it is not lost on me that we are holding this event just five days after thanksgiving, a holiday that is largely centered around food β the turkey, the stuffing, the mashed potatoes, the pumpkin pie. for some of us, the big concern coming out of the weekend was whether we had eaten too much. but for far too many, the much bigger concern is that they and their families did not β and still do not β have enough to eat. that β s what brings us here today. our mission at the new york fed is to make the economy stronger and the financial system more stable for all. but we can β t have a healthy economy without a healthy workforce. and that is why health β along with household financial well - being and climate change β is a focal point for our community development team. before i continue, i must give the standard fed disclaimer that the views i express are my own and do not necessarily reflect those of the federal open market committee or anyone else in the federal reserve system. food insecurity has long been a systemic problem. here in the federal reserve β s second district, many households in both our urban and rural communities are vulnerable financially. and since the onset of the pandemic, access to quality, nutritious food has been greatly impeded. after many businesses were forced to shut down in the spring of 2020, food banks were quickly overwhelmed. in addition to an abrupt increase in need, there was also the challenge of distribution. i β m sure many of you remember the long lines to food pantries that stretched through neighborhoods. and many of our schools shifted from providing free lunches to students to offering grab - and - go meals to entire families. now, we are facing another economic challenge : higher food prices. transportation and labor costs β along with supply - chain disruptions β are driving up the price of many staples, such as beef, poultry, eggs, peanut butter, and produce. food is not only becoming far more expensive for
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families, but also for food banks β which, at the same time, are reporting fewer donations. the result of all of this is that food insecurity is becoming more widespread β and more difficult to resolve. the ripple effects expand across the economy, as food insecurity drives economic inequality, which in turn is a barrier to cultivating a healthy workforce. and a healthy workforce is what we need to keep our economy strong. at the new york fed β and across the federal reserve system β one of our key areas of focus is to better understand the economic drivers and social determinants of health. we have been hosting a series of events that bring together experts on economic inequality and the needs of low - and moderate - income communities in our district. today β s event on food insecurity is part of that larger effort. but we recognize it β s not enough to merely study the issue. the role of our community development team is to champion promising solutions by connecting people, programs, and proposals with funding. up to 40 percent of food produced in the united states goes to waste 1 / 2 bis central bankers'speeches each year, so there is a huge opportunity to distribute that unused food to those who need it. you β ll be hearing more about that later today. but first, we β ll start off with a presentation from professor tashara leak. she β ll frame the discussion by talking about how food insecurity affects the health of children β and how that, in turn, shapes their economic prospects as they grow older. then, we β ll convene a panel of business and government leaders, along with impact investors, who will spotlight some of the innovative work being done to make healthy and affordable food more accessible. thank you all for joining us. and with that, i β ll turn it over to professor leak. 2 / 2 bis central bankers'speeches
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, the fiscal easing relied also on the taxation policy, as a number of taxes were reduced directly or indirectly. budget expenditure surged 13. 3 %, mainly due to public investments during this period. fiscal revenues fell 0. 2 %, mainly due to contraction in the tax component. for the first five months of the year, budget deficit stood at all 38. 3 billion, about 1. 1 times higher than a year earlier, affecting, therefore, the increase in the public debt to gdp ratio, to 62. 4 %. the bank of albania continues to draw the attention on the need for fiscal measures, which would guarantee the long - term stability of the public debt, boost financial markets'confidence in our public finance, and cut long - term costs of debt service. this objective should be the main medium - term priority of public finances. data on the external sector of the economy reveal that the net foreign demand contributed positively to economic growth in the first quarter. the current account deficit narrowed, in annual terms, settling at 9. 8 % of gdp during this period. foreign trade data for april point to further narrowing of the annual trade deficit by about 5. 3 % in annual terms, thanks to the bis central bankers β speeches rising exports. meanwhile, for the first time since september 2012, total imports increased about 3. 6 % in this month. as pointed out earlier, the current account deficit constitutes a structural deficiency of the albanian economy. its adjustment would mitigate one of the potential sources of risks to the albanian economy and financial markets, and broaden the space for implementing stimulating macroeconomic policies in the future. monetary indicators were in line with the real - economy developments and our analysis reveals that the monetary inflation pressures are weak. annual increase of money supply accelerated in april, reversing the deceleration trend that had started in july of last year. the broad money aggregate, m3, picked up 5. 2 % from 4. 6 % in march, mainly reflecting the higher demand for funding by the public sector. by contrast, the private sector's weak demand is reflected in the sluggish credit performance. lending to the economy slowed down further in april, marking only 0. 9 % annual growth. besides the weak demand, lending deteriorated also due to banks β prudence in lending, materialised in relatively tight standards. this phenomenon is regionally dispersed and is dictated, to a large extent, by the developments in the euro area's financial markets. the main feature
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stated, i would like to clarify that the exploration of the potentials that the different regions have to offer and the identification of their level of use is also essential in terms of the banking system β s activity, in particular of the geographic expansion and financial intermediation. another major reason motivating the bank of albania to organize these meetings relates with the establishment of a more effective communication channel between the bank of albania and the public. we believe that the direct contact with various social groups in different geographic regions ( that is to each and every family ), in addition to the traditional means of communication, press conferences, monetary policy or financial stability reports, is a very efficient tool and frequently determinant. i would like to dwell today on some matters of interest to the entire audience. first i would like to make a brief outline of the bank of albania β s latest analysis of the economic and financial situation in albania : in brief, three are the main developments of greatest interest to the audience : with regard to the international developments, the economic and financial situation has been very complex in the last months. inflation has turned into a point of concern in most foreign economies, mainly driven by the high prices of raw materials, oil and food. in addition, economic activity in developed economies has experienced sharp turns. euro area economy is at present in front of many questions, while the us and some asian economies have shown slow rates of economic growth. credit crisis has caused many reputable international institutions to experience large financial losses and its contamination process is still present. recently, the two us mortgage giants, freddie mac and fannie mae, which were on the verge of collapse, were subject to an unprecedented and costly rescue plan designed by the us treasury department. all these issues have triggered uncertainties in the markets, causing the future forecasts to be more challenging and the participants β exasperation to peak. i would consider the immunity shown by our economy in terms of price stability as the most outstanding development. albania β s economic activity is progressing in line with our previous expectations. a few days ago, instat published the inflation figure for august 2008, according to which annual inflation marked 2. 5 %. following a 12 - month period of inflation rates standing at around 4 - 4. 5 %, in line with our forecasts, it is assessed that inflation will fluctuate in the next few months at around 3 %, which is our quantitative objective. worth to note, however, is that the risk for
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the us and the euro area. they expected a tightening of monetary policy in the us. meanwhile, the european central bank indicated that further extensive monetary policy easing measures would be necessary towards the end of 2014. 5 the diverging monetary policy outlook influenced exchange rates : the euro depreciated significantly against the us dollar. this in turn caused the swiss franc to weaken against the us dollar. broad - based euro weakness prevailed. the swiss franc neared the minimum exchange rate of chf 1. 20 per euro ( slide 5 ). we had to intervene to keep the snb β s commitment. in this context, the minimum exchange rate was no longer sustainable. defending it further would have entailed high costs in a number of respects : even bigger interventions, losing control of our balance sheet and losing credibility. for this reason, we decided to discontinue the minimum exchange rate on 15 january 2015. at the same time, we cut our policy rate to β0. 75 %. 6 the initial nominal appreciation in january 2015 was considerable. inflation in switzerland turned negative, before gradually rising again in the second half of 2015. negative interest and foreign currency purchases cushioned the appreciation and deflation to some extent in the following months. the appreciation was less pronounced in real terms over the course of 2015. the snb introduced the minimum exchange rate on 6 september 2011. the ecb in fact announced a large - scale quantitative easing programme on 22 january 2015. negative interest was introduced in december 2014 at a rate of β 0. 25 %. page 4 / 8 the β swiss franc shock β was a major challenge for many companies. the sudden appreciation affected export - oriented firms in particular. in geneva, people queued to get euros to go shopping in france. retailers here had to lower their prices to keep customers. looking back, the swiss economy as a whole thankfully proved once again to be quite adaptable and innovative. 7 many businesses managed to absorb the shock by squeezing their profit margins further. they had to cut costs to remain competitive. gdp fell in the first quarter, but recovered over the course of the year. the increase in unemployment was only moderate. after the discontinuation of the minimum exchange rate, we remained active in the foreign exchange market. we no longer focused solely on a single currency β the euro β but on the overall currency situation. 8 foreign currency sales to counteract high inflation let us move forward to 2021. towards the end of the corona
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second concentrates on the implementation of foreign exchange interventions : continuous development. and the third assesses whether foreign exchange interventions have contributed to fulfilling our mandate : ensuring price stability. the side effect : the large balance sheet first : what is the side effect? to fulfil its mandate, the snb significantly increased its foreign currency reserves and hence its balance sheet ( slide 8 ). it is important to note that the size of the balance sheet is the result of our monetary policy. in 2022, our balance sheet reached a record value of one trillion β i. e. one thousand billion β swiss francs. that is almost one and a half times switzerland β s gdp. the larger foreign currency reserves have a consequence : absolute profits and losses fluctuate strongly. these fluctuations mainly depend on developments on international financial markets. and from the fact that we cannot hedge our foreign currency risks. 10 in particular, the development of exchange rates, stock prices and interest rates influence our annual results. until 2021, we recorded high profits in most years ( slide 9 ). in 2020 and 2021, we were even able to significantly increase the profit distribution to the confederation and cantons, up to a maximum of chf 6 billion. that represented about 3 % of the federal government β s and the cantons β revenues. however, financial markets performed poorly in 2022. the swiss franc has also appreciated by 5 % in trade weighted terms. the snb recorded a loss of chf 132. 5 billion. we were unable to distribute any profits to the confederation and cantons. the side effect of foreign exchange interventions includes stronger fluctuations in the snb β s annual result. this is due to the size of the balance sheet and higher foreign currency risks. who bore this foreign currency risk previously? with the snb β s foreign currency purchases, the risks have shifted from the private sector to the snb. swiss companies and investors are also exposed to foreign exchange risks. they generate profits abroad or hold assets in other currencies. since 2009, swiss corporates and investors have increasingly repatriated their profits from abroad and hedged their currency risks. 11 this has increased the appreciation pressure on the swiss franc. the snb took on part of these risks to maintain price stability. currency risk is not hedged against the swiss franc as this would influence demand for swiss francs. switzerland holds substantial wealth abroad, on which dividends and interest payments are earned. also, the swiss economy earns
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the reserve bank therefore welcome the fact that the household debt ratio has flattened out in recent years and, as glenn stevens remarked last week, there would be benefits in that stability continuing. foreign debt let me now turn to the question of australia β s foreign debt. following the floating of the exchange rate and the removal of capital controls in the early 1980s, both foreign investment in australia and australian investment abroad increased sharply as the australian economy became more integrated into the global financial system ( graph 7 ). in net terms, capital inflows increased from around 2 per cent of gdp to around 4 per cent, and, in the latest decade, to an average of almost 5 per cent of gdp. the current account deficit widened correspondingly, since with a floating exchange rate the current account and capital account balances must be equal and offsetting, both being determined simultaneously through the interaction of a wide range of economic and financial forces. the pick - up in net capital inflow meant that the ratio of net foreign liabilities to gdp rose. from around 20 per cent in 1980, it rose to around 50 per cent by 1995. it then flattened out for a decade, but in recent years the further increase in net capital inflow has seen the foreign debt ratio rise again ( graph 8 ). expressing foreign liabilities relative to gdp is, perhaps, the most common way in which people analyse them. for emerging markets, this measure has been shown to have some association with vulnerability to balance of payments crises. this is because emerging market economies often have a fixed or managed exchange rate and their foreign liabilities tend to be denominated in foreign currency, rather than domestic currency. in such instances a rise in the ratio of foreign liabilities to gdp does indicate increased vulnerability as it signals an increase in the country β s foreign exchange risk and liquidity risk. for a developed economy that can borrow overseas in its own currency, and which has a floating exchange rate, the significance of a rise in the ratio of foreign liabilities to gdp is less clear. it also needs to be kept in mind that, as economies develop, most financial variables rise relative to gdp. this seems to be a consequence of financial deepening. expressing net foreign liabilities as a percentage of the total financing in the economy is, perhaps, more relevant, since it gives some indication of the proportion of the economy β s funding that is coming from offshore. in australia, this ratio has remained relatively steady since the late 1980s, at a
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β 65 year olds with debt increased significantly through to 2008, as households have been more inclined to trade up to bigger or better located houses, and to buy investment properties. households under 35 years of age ( i. e. the group that would typically encompass first - home owners ), in contrast, have seen a fall in the proportion with debt ( graph 5 ). another factor that has contributed to the resilience of household finances is that, by and large, the debt has not been used to increase consumption. apart from some brief periods, household consumption has not been unusually elevated during this period of rising debt. rather, the debt has mainly been used to acquire assets. perhaps the best, and most direct, indicator of households β capacity to support the increase in debt is the arrears rates on loans. this remains very low in australia. the current arrears rate is around 0. 7 per cent. this is one of the lowest rates among developed economies ( graph 6 ). other data also suggest that households β aggregate debt - servicing capacity is quite strong : in recent years more than half of owner - occupiers have been ahead of schedule on the repayments on the loan they took out to buy their property. within this relatively benign aggregate figure, pockets of stress have emerged from time to time. we saw this clearly in the south - western suburbs of sydney following the sharp run - up in sydney house prices over 2002 and 2003. more recently there are some signs of increased housing stress in south - east queensland and western australia, again following sharp rises in house prices in these areas. another segment of the market that will bear close watching is first - home owners. they have accounted for an unusually high proportion of housing purchases over the past couple of years β around 40 per cent. this has reflected the incentives created by various first - home owner concessions. most of these purchases have been funded by floating rate mortgages, and the average loan to valuation ratio is relatively high, at around 90 per cent. clearly, this group will be very sensitive to changes in interest rates. in summary, if we look at the way the increase in household debt has been distributed, what households have done with the money, and the arrears rates on loans, it is reasonable to conclude that the household sector has the capacity to support the current level of debt. having said that, the higher the level of debt the more vulnerable households are to shocks that might affect the economy. we at
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effective controls. i look forward to that time as we move to the next level. 3. developing the methodology to assess effectiveness i mentioned earlier one of the promising new tools to assess the effectiveness of ethics and compliance programs, and that is the pei, the program effectiveness index. the excellent report by the ethics resource center, the federal sentencing guidelines for organizations at twenty years, has drawn attention to standards for assessing program effectiveness. the report states : β altogether, the lack of assessment standards and guidance on how the quality of a compliance / ethics program should influence the outcome of a matter create the impression, validated by the [ ethics resource center ] and conference board studies... that too many judgments are being made inside a black box. β 2 while we seem to be on the cusp of a number of promising indicators, like the pei, the truth is that we are not there yet. we simply do not have a tool that will give us an accurate and reliable measure of program effectiveness. instead, we have a situation where enforcers ( including those agencies with civil enforcement authority, such as the banking agencies ) tend to be result oriented. when we see that a particular organization has experienced a major compliance failure, we tend to view the failure as evidence of the ineffectiveness of the ethics resource center, the federal sentencing guidelines for organizations at twenty years at 51 ( 2012 ). bis central bankers β speeches ethics and compliance program. we reason backward, β if the program were effective, this would not have happened. β i think this is natural and understandable for the enforcement community, but it is not necessarily good policy. to borrow an observation from senator ted kennedy concerning the federal sentencing guidelines, this creates β a risk that companies without substantial compliance programs will get a free ride, and those with strong programs will not receive the credit that they deserve. β 3 alternatively, if there were a reliable and acceptable measure of program effectiveness, this kind of backward reasoning would be replaced by reliance on the effective measure. institutions could use the measure when making arguments for leniency, again assuming that the measure demonstrated that their programs were effective. it might, of course, show just the opposite. and there are other, perhaps even more important, benefits. if an industry and its regulators came to have great confidence in a particular effectiveness measure, this might provide a foundation for building a program that could be used to on - board risk. put differently, a particular organization could have confidence that its ethics and compliance program
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the image of a suone symbolises the treatment and distribution of water β a major component of switzerland β s humanitarian and development aid effort. the key motif also plays an important role on the security strip, which features a network of waterways over the map of switzerland, together with a list of the country β s longest rivers. the remaining security features, such as the transparent swiss cross or the shimmering globe, are the same as those on all denominations of the new series β you will already be familiar with these. as with the other denominations, we are once again providing information in print and online, and we have of course updated our β swiss banknotes β app. the new 100 - franc note will be issued starting next thursday, 12 september 2019, at our counters in berne and zurich and at the snb β s agencies. for logistical reasons, it will take a few days before the new notes are available country - wide. and now, having unveiled the new 100 - franc note, i β d like to show you the entire set. here it is : the complete ninth series, inspired by β the many facets of switzerland β. the vibrant colours and the aesthetically pleasing and intricate design of the series are particularly striking. switzerland β s many facets are showcased using core design elements such as the hand, the globe, a swiss location and an object, which are easily recognisable and recur throughout the banknote series. the theme of each note is illustrated via a hand gesture. on the 50 - franc note, the hand is holding a dandelion, whose seeds are carried away on the wind. on the 10 - franc note, a conductor β s hand sets the tempo for the orchestra. the shimmering globe reflects how switzerland sees itself as part of an interconnected world. in the sequence of notes from 1000 francs to 10 francs, the earth rotates once on its axis and passes through one full day. the places depicted on the back of the notes are emblematic of various locations in switzerland. together, the six notes illustrate the diversity of our country. the object depicted is linked to each note β s key motif. on the 20 - franc note, the object is a butterfly, and on the 200 - franc, a particle collision. the key motifs of the six notes are time, light, wind, water, matter and language. as i mentioned earlier, the security features are the same for all denominations. i hope
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doors to entirely new forms of use. with this in mind, the eurosystem is currently looking into the introduction of central bank digital currency, as part of its digital euro project. besides the other benefits offered by digital payments at the point of sale or when shopping online, customers can rest safe in the knowledge that their data is protected when paying with the digital euro. this is because the eurosystem has no commercial interest in the use of transaction data. the digital euro could be an option for digital person - to - person payments, too. in addition, the development of a new infrastructure opens up further opportunities. over the past few years, we have seen mounting demand for stablecoins and other crypto - assets. one reason for this could be that decentralised financial systems offer additional functions compared with normal bank accounts. smart contracts are one such example. these allow payments to be executed automatically as soon as predefined conditions are met. when it comes to developing a new payment infrastructure, thought and planning should go into such opportunities from the outset. we anticipate that any potential new platform that is developed will serve as a springboard for innovation. interoperability for cross - border payments between currency areas should also be a goal from the very start. in particular, the fact that many central banks around the world are currently considering the introduction of central bank digital currency opens up the prospect of tangible progress in this area. as you can see, the eurosystem has embarked on quite the undertaking with its digital euro project and we're investing a huge amount of time and energy into it. at the same 4 / 6 bis - central bankers'speeches time, however, central banks depend on cooperation with you β the payments experts. after all, central banks are not the kind of banks that provide accounts for everyone. according to the current legislation, the bundesbank wouldn't even be permitted to do so. and that is why the eurosystem is reliant on the tried - and - tested cooperation within the two - tier banking system. in this system, central banks, commercial banks and payment service providers each bring their own respective strengths to the table, to the benefit of all the parties involved. the central bank's role lies purely in providing an efficient, stable and secure payment infrastructure. commercial banks and payment service providers have direct contact with customers β they are the user interface. i know some voices have expressed fears that the central bank's footprint
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companies in germany have also seen 3 / 5 bis central bankers'speeches sharp devaluations. these cases are exemplary of the transition risks i am talking about. and they prove that markets can respond well before the fact. what is important to recognise is that transition risks are not confined to companies operating in the production of fossil fuels or in the energy sector. other sectors, such as transportation, logistics, automotive, chemicals and heavy industry, which currently rely on fossil fuels or are energy - intensive, could be hit by transformation costs as well. but these second - and third - round effects are extremely complex and can currently only be quantified using equally complex assumptions. the exposure of the financial sector becomes apparent when, besides the direct investments in the industries in question, we take into account the tendency of insurers, pension funds and other investors to align their portfolios with capital market indices which often contain large portions of the industries that might be affected by the transition. and much like what we discussed in the case of physical risks, lenders are exposed due to reduced collateral values or the risk that their borrowers β once - profitable business models are not profitable anymore. to be fair, we also have to factor in the possibility that some green business models might not deliver the benefits and financial returns investors expect. transition risks will be less severe the sooner the transition begins and the more predictable it is. it β s a simple matter of fact that the longer governments wait, the more they will have to act later on to meet their targets. 5. the way forward we have identified two risk categories : physical risks that relate directly to climate change, and transition risks that relate to society β s response to it. at the beginning of my talk, i asked : are we currently underestimating these risks? i think we do. there is a difference between identifying risks, monitoring risks and managing risks. we may have identified the risks, but we don β t know how material they are. this needs to change, and in the remainder of my talk today i want to discuss how that can be done. for many reasons, understanding the risks i have talked about is inherently challenging. first, the developments we are facing stretch over the long term, and their outcome is uncertain ; second, historical data are of little use to predict them ; and, third, the whole process will be heavily influenced by policy decisions, which involves further uncertainty. another problem is that, typically, analysts don β t look
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heng swee keat : monetary authority of singapore β s initiative to develop singapore dollar sovereign - rated sukuks speech by mr heng swee keat, managing director of the monetary authority of singapore, at the 5th annual islamic financial services board summit, amman, jordan, 13 may 2008. * * * introduction it is my honour this afternoon to join my ifsb colleagues in discussion of this very current topic. i am very glad that we are addressing this issue of regional integration of islamic financial services at this point. this is very timely and relevant to both the soundness and vibrancy of islamic finance. let me explain. the global islamic finance industry has grown rapidly β it is estimated that total assets are now over us $ 750 billion. this is impressive. still, this is a small proportion of conventional finance. the potential for growth is hence very large. while each country is taking measures to promote islamic finance, we can grow much faster as well as increase the scope and depth of the industry if we work towards integration at an early stage. integration increases market size, efficiency and liquidity. this in turn provides for more competitive cost of capital, spurring further growth. second, having service providers from different regions allow risks to be distributed across a wider group of players, and can improve the overall stability of the financial system. regional integration between middle east and asia, which may have different business cycles, provides a cushion for financial institutions and investors from country specific shocks. third, integration promotes greater interaction and knowledge sharing, and can help lift the standards of the islamic finance industry. in short, the 3 facets β development, integration and stability of markets β are closely intertwined. proper attention to all these 3 facets will enhance the soundness and vibrancy of islamic financial services. we are in fact seeing greater integration already with more cross borders flows, both within the middle east and asia, and between the two regions. banking and capital markets are opening up to foreign investors, more shariah products are listed on stock exchanges and islamic financial service providers are expanding their operations overseas. this is a promising trend. three tasks we should build on this positive momentum. allow me to share my views on three broad categories of essential tasks in promoting greater integration in the coming years. 1st task : promoting more economic integration first, financial integration and economic integration are deeply linked, and mutually reinforcing. hence, to promote financial integration, we also need to focus on economic integration
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own workforce, to develop them and give them the best opportunity to stay relevant, the transformation of our workforce will be that much 2 / 3 bis central bankers'speeches smoother. let us mobilise and inspire our staff to inculcate a growth mindset to stay competitive and step up to take action. to help do that, ibf is pleased to launch of the # futuremenow movement. this is a call to action, for industry professionals and leaders to take ownership and contribute to enabling our workforce for the future. individuals can pledge to learn something, talk to someone about their career plans or be a mentor. ibf will work with the pledgees to realise their pledges. there are about 500 of us gathered here today. i invite you as industry leaders here tonight to be the first to be active multipliers. transforming our financial industry workforce for the future requires a collaborative partnership among all of us here : where leaders provide the example and set the tone ; where financial institutions provide the opportunity to upskill and reskill ; and where people take ownership of their own professional development. thank you for taking time to be here this evening. i wish you every success as you build up your businesses and your people, and together we build up singapore as a global financial centre offering good jobs and meaningful careers for our workforce. 3 / 3 bis central bankers'speeches
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september ecb staff projections foresee average annual hicp inflation at between 3. 4 % and 3. 6 % in 2008, and between 2. 3 % and 2. 9 % in 2009. the higher inflation projections for 2008 and 2009 mainly reflect higher energy prices and, to a lesser extent, higher food and services prices than assumed previously. in this context, it is important to recall the conditional nature of the ecb staff projections. they are based on a number of assumptions that are of a purely technical nature and unrelated to policy intentions. in particular, the technical assumptions for short - term interest rates reflect market expectations as at mid - august. moreover, it should be noted that the projections are based on the assumption that oil and non - oil commodity prices, while remaining at elevated levels, will exhibit greater stability over the projection horizon than has been the case in recent months, in line with prevailing futures prices. it is the governing council β s view that, at the policy - relevant medium - term horizon, there are upside risks to the outlook for price developments. these risks include the possibility of renewed increases in commodity prices and of previous rises having further and stronger indirect effects on consumer prices. there is particularly a very strong concern that the emergence of broad - based second - round effects in price and wage - setting behaviour could add significantly to inflationary pressures. moreover, the upside risks to price stability could be aggravated by unexpected rises in indirect taxes and administered prices. against this background, it is imperative to ensure that medium to longer - term inflation expectations remain firmly anchored at levels in line with price stability. broad - based secondround effects stemming from the impact of higher energy and food prices on price and wagesetting behaviour must be avoided. the governing council is monitoring price - setting behaviour and wage negotiations in the euro area with particular attention. all parties concerned β in both the private and the public sectors β must meet their responsibilities in this regard. the governing council has repeatedly expressed its concern about the existence of schemes in which nominal wages are indexed to consumer prices. such schemes involve the risk of upward shocks in inflation leading to a wage - price spiral, which would be detrimental to employment and competitiveness in the countries concerned. the governing council calls for these schemes to be abolished. the monetary analysis confirms the prevailing upside risks to price stability at medium to longer - term horizons. in line with our monetary policy strategy, we take the view that the sustained underlying strength of monetary and credit expansion in the euro
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european central bank : press conference β introductory statement introductory statement by mr jean - claude trichet, president of the european central bank and mr lucas papademos, vice - president of the european central bank, frankfurt am main, 4 september 2008. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. we will now report on the outcome of today β s meeting of the governing council, which was also attended by commissioner almunia. on the basis of our regular economic and monetary analyses, at today β s meeting we decided to leave the key ecb interest rates unchanged. the information that has become available since the last meeting has confirmed that annual inflation rates are likely to remain well above levels consistent with price stability for a protracted period of time and that upside risks to price stability over the medium term prevail. while the growth of broad money and credit aggregates is now showing some signs of moderation, the still strong underlying pace of monetary expansion points to continued upside risks to price stability over the medium term. the latest economic data also confirm the weakening of real gdp growth in mid - 2008. this reflects partly an expected technical reaction to the strong growth seen in the first quarter as well as dampening effects from global and domestic factors, including direct and indirect effects from high commodity prices. in this environment, it remains imperative to avoid broad - based second - round effects in price and wage - setting. in full accordance with our mandate, we emphasise that maintaining price stability in the medium term is our primary objective and that we are resolute in our determination to keep medium and long - term inflation expectations firmly anchored in line with price stability. this will preserve purchasing power in the medium term and support sustainable growth and employment. on the basis of our assessment, the current monetary policy stance will contribute to achieving our objective. we will continue to monitor very closely all developments over the period ahead. allow me to explain our assessment in greater detail, starting with the economic analysis. according to eurostat β s first estimate, following strong quarterly growth of 0. 7 % in the first quarter, euro area real gdp contracted by 0. 2 % in the second quarter of 2008. in terms of quarter - on - quarter growth, private consumption declined by 0. 2 % and there was a perceptible weakness in investment, which fell by 1. 2 %. growth in both euro area imports and exports declined by 0. 4
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regulator of one of the largest fund hubs globally has meant for us that it is important that we contribute constructively to the international debate and take direct action where required. 2 / 8 bis - central bankers'speeches in doing so, we have sought to bring our practical experience of regulating such a large funds hub, while also being an integrated regulator β with responsibilities covering both investor protection and financial stability β which means we are active in a range of european and international discussions on this important topic. last july's discussion paper represented views of both a financial stability authority but also a securities regulator. it was the culmination of significant internal debate and serves as one of the ways in which we are trying to facilitate the ongoing international discussion in this area. systemic risk and investment funds : a matter of perspective for us, it is an absolute truth that cohorts of the investment fund sector can represent a systemic risk. this is not an abstract risk, as we have witnessed episodes of stress involving parts of the funds sector. let me be clear about this : in the face of financial vulnerabilities, cohorts of funds can amplify shocks to other parts of the financial system and the real economy. this amplification follows decisions taken by individual fund managers in response to shocks. these decisions are often rational at an individual level but, when aggregated across entire cohorts of funds, can generate negative spillover effects. those decisions come from certain vulnerabilities, namely liquidity mismatch and leverage. in the case of liquidity mismatch, in response to a shock, fund managers may need to sell assets in a falling market in order to meet heightened investor redemptions. such asset disposals can amplify downward asset price movements, resulting in a spiral effect. for leverage, a shock may trigger margin calls on derivatives positions, forcing fund managers to dispose of assets to raise cash to meet margin requirements. again, these asset disposals can amplify asset price movements. as i said, these are not abstract risks. we saw these concerns play - out in parts of the funds sector during the global financial crisis, the covid - induced market shock of march 2020, and recent ldi fund issues following the uk gilt market shock. and i stress in parts because β as i'll set out later β this is a very diverse sector, and we should not be making general statements. but neither is this chain of events the result of poor
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gabriel makhlouf : be an ex ante person - perspectives on macroprudential policy for investment funds opening remarks by mr gabriel makhlouf, governor of the central bank of ireland, at the central bank of ireland's macroprudential policy for investment funds conference, dublin, 20 may 2024. * * * good morning. whether in the room virtually or physically, i am delighted to welcome you to our conference on macroprudential policy for investment funds. the conference is designed to bring together different perspectives from a range of stakeholders, and i know there are different views on this topic! this is why we have put together panels with diverse views β including policymakers from central banks, securities regulators, public decision - making bodies as well as industry representatives β to discuss key issues on developing and operationalising a macroprudential framework for such funds. for us at the central bank of ireland, today's conference is another opportunity to continue our discussions on this important topic and to debate with a range of our stakeholders. it follows the publication of our discussion paper last july. today we will hear from a number of panels covering a range of themes including systemic risks in the funds sector and considerations for developing a macroprudential framework for the sector, not least the need to strike a balance between ensuring investor protection and maintaining financial stability. i am sure we are all looking forward to hear the different perspectives and views from our excellent group of speakers. in particular, i am delighted that β klaas knot β as chair of the financial stability board ( fsb ) will address the conference this afternoon while verena ross, chair of the european securities and markets authority ( esma ), will also deliver a keynote address this morning. to set the scene for these discussions, i wanted to outline our views on macroprudential policy for investment funds, why we believe it is needed, the key objectives and guiding principles we consider when developing such a framework, as well as some of our key areas of focus. the burning question : is there systemic risk in the funds sector? before getting into the detail, it might help to start at the very beginning : why are we discussing this topic today? one of the most striking features of the evolution of the financial system since the global financial crisis has been the substantial increase in the size of the non - bank sector. the increase has been driven by the rapid expansion in assets under management of the investment fund sector. 1
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forces and competition from abroad and a monetary regime bent on securing a low rate of inflation was chosen. iceland is, as mentioned, not a member of the european union and membership is not on the agenda of the present government. iceland operates its own small currency on the margins of the us dollar and the euro. these facts place firm requirements on economic policy while at the same time offering iceland to reap important benefits from globalisation. this is indeed born out by developments over the last few years that were years of rapid growth of gdp and years which tested the ability of economic policy makers to steer the economy in an environment of liberalised markets and capital movements. more generally, the lesson to be drawn from our experience is that countries only stand to gain from full participation in the global economy. aside from subjecting the domestic economy to competition from abroad, it disciplines economic policymaking. the market is a strict master and serves painful punishment for mistakes or ill - thought initiatives.
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mar guΓ°mundsson : capital flows and systemic risk in iceland panel comments by mr mar guΓ°mundsson, governor of the central bank of iceland, in norges bank's ( central bank of norway ) 200th anniversary symposium, oslo, 16 june 2016. * * * in my short introductory remarks, i would like to discuss what i consider to be one of the key factors behind the financial crisis in iceland : the interaction between capital flows and systemic risk. i will focus in particular on those aspects that have more general relevance and herald unsolved problems for economic management and financial stability in small, open, and financially integrated economies ( sofies ), such as iceland was before the crisis and now strives to be again, at least up to a degree. the saga of iceland β s experience during the great financial crisis had two separate but interrelated sub - stories. the first story was related to iceland β s boom - bust cycle and problems with macroeconomic management in small, open, and financially integrated economies. this is a story that has played out many times around the globe, and many of its elements have been seen before in iceland. it might have been somewhat more extreme this time around, but it wasn β t fundamentally different. strong capital inflows that met with an insufficient policy response and contributed to huge imbalances in the domestic economy were a key part of the story. i will come back to this later. the second story was the rise and fall of three cross - border banks operating on the basis of eu legislation ( the european β passport β ). this story was much more unique, as it was part of the first banking crisis in europe since the eu single market was formed in the early 1990s. taking advantage of this framework and the prevailing international conditions of ample and cheap credit, these banks grew phenomenally, in less than five years, to almost ten times iceland β s gdp, with most of the expansion being crossborder β or maybe more aptly put, off - border, as the bulk of both financing and investment took place abroad. the result was very big fx - denominated balance sheets with the usual maturity transformation that banks, as we know them, are all about. however, the safety net that we have in national settings to back them up, including lolr facilities, was not there. it was an accident waiting to happen, and so it did. i will be very brief on how the failure of these cross -
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, including possible deleterious effects on the innovation process. while i have discussed some examples of incentive - compatible regulation that appear to be working, we have a very long way to go. for example, banking regulators have yet to reach a consensus on some of the most basic questions associated with prudential supervision - questions such as what is an appropriate conceptual basis for assessing a financial institution β s overall risk exposure, how should such risk exposures be measured, and if we use internal management models for such measurements, how can these models be validated? the revolution in risk measurement techniques makes the answers to these questions approachable but not without significant effort on the part of the regulators and the financial industry itself. i am confident that all parties are both willing and able to solve the challenges that confront us. it is clearly in our mutual self - interest to do so. our success will preserve not only the benefits of the most competitive and innovative financial markets in the world, but also the benefits of financial stability that are critical to our economy.
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donald l kohn : condition of the us banking system testimony of mr donald l kohn, vice chairman of the board of governors of the us federal reserve system, before the committee on banking, housing, and urban affairs, us senate, washington dc, 4 march 2008. * * * chairman dodd, ranking member shelby and members of the committee, it is my pleasure to appear today to discuss the condition of the u. s. banking system. in my remarks, i will summarize briefly the role of the federal reserve in banking supervision, provide an overall view of the health of the u. s. banking system, and then discuss some key areas of supervisory focus. the u. s. banking system is facing some challenges, but remains in sound overall condition, having entered the period of recent financial turmoil with solid capital and strong earnings. the problems in the mortgage and housing markets have been highly unusual and clearly some banking organizations have failed to manage their exposures well and have suffered losses as a result. but in general these losses should not threaten their viability. we, along with the other banking agencies, have been working with banking organizations to identify and rectify those shortcomings in risk management and to ensure that the banking system continues to be safe and sound. role of the federal reserve in banking supervision the federal reserve has supervisory and regulatory authority over a wide range of financial institutions and activities. it works with other federal and state supervisory authorities to ensure the safety and soundness of the banking industry, the stability of the financial system, and fair and equitable treatment of consumers in their financial transactions. while the federal reserve is not the primary federal supervisor for the majority of commercial bank assets, it plays an important role as the " umbrella supervisor " of bank holding companies. the bank holding companies supervised by the federal reserve number approximately 5, 000 and have consolidated assets of about $ 14. 2 trillion. the federal reserve conducts inspections of all large, regional, and complex bank holding companies and maintains inspection teams on - site at the largest bank holding companies. for smaller less complex organizations, supervision is conducted through a combination of off - site monitoring and on - site inspections. these inspections, which are conducted using established procedures, manuals, and techniques, allow the federal reserve to review the organization's systems for identifying and managing risk across the organization and its various legal entities and to evaluate the overall financial strength of the organization. the primary purpose of these inspections is to ensure that the holding company
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tedious affair and a source of much inefficiency. merchants in particular should leverage on e - payments as a means to rationalize their business processes to be more efficient, so that more resources can be directed towards growing their business. merchants should also leverage on the latest payments technology such as the mobile point - of - sale ( mpos ) which allows them to leverage on smart devices to accept payment cards on - the - go. consumers on the other hand, should also embrace e - payments to be more efficient and safe by taking advantage of the various incentives provided by the banking industry. opportunities and key priorities for 2016 we have now reached a critical juncture in our migration to e - payments. with the enabling environment in place and the encouraging progress recorded for the past five years, emphasis should now be devoted towards implementation and facilitating behavioural change among individuals and businesses. we must use as beacon the targets set out in the financial sector blueprint. the achievement of such targets would put us on par with other advanced countries and become as competitive as we transition into a high value added and high income economy. the support from all relevant stakeholders is needed to ensure that such objective becomes a reality. as the catalyst for e - payment growth, the banking and payments industry should explore the possibility of forming strategic alliances with non - traditional partners. the recent partnerships between banks and telcos in the roll - out of mpos are a good example of such new partnership. let me outline the key priorities for the banking and payments industry in the upcoming year of 2016. i would like to raise 6 points. i. first, as a group, we need to ensure there is no delay in the key payment card infrastructure projects such as migration to cardholder verification by pin and the migration to contactless debit cards under the chip and pin and the mccs initiatives. coordinated constant and effective communication strategies must be undertaken to ensure an effective and seamless migration ; ii. second, the payments industry must collaborate towards the achievement of an additional 50, 000 payment card terminals and 137 million debit card transactions under the payment card reform framework. in this regard, the industry should devise creative measures to facilitate behavioural change. this may include offering incentives and educating merchants and cashiers to motivate customers to use debit cards instead of cash ; iii. third, myclear together with the banking industry should expand the biller base for jompay, a payment system launched in april 2015, to further enhance
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spearheading the sustainability agenda. digitalisation can further this cause, helping islamic finance unleash its full potential in striving towards fully embracing and adopting vbi to contribute meaningfully towards an inclusive, sustainable and impactful growth. there are two main outcomes for which digitalisation can be deployed to create winning strategies for islamic finance. firstly, technological advances can reduce operational costs therefore allowing islamic financial service providers to reach the underserved and the unbanked with more affordable digital financial services. high mobile penetration and internet usage, the shift towards e - commerce and increased usage of e - payments are all important trends that hold great promise to bring financial inclusion in malaysia to the next level. coupled with new technological advances such as cloud computing, artificial intelligence ( ai ) and data analytics, financial services providers are now able to better assess creditworthiness using real time and alternative data, thereby overcoming the traditional obstacle of making sound credit decisions for customers who lack collateral and credit history. in the same vein, the deployment of telematics, internet of things ( iot ), affordable usage - based insurance ( ubi ) and other value added services open up scope for the takaful industry to create efficiencies whilst addressing customer demand, further closing the protection gap of the malaysian population. a well - designed digital takaful solution that not only offers affordability but also seamless customer experience can go a long way towards elevating consumer trust and changing perceptions about the value of takaful protection, particularly among low income groups. secondly, technological advances present opportunities for islamic financial services providers to further automate their business to bring about greater efficiency and transparency as well as manage risk effectively in delivering value - driven and impact - focused products and services that can realise the aspiration of maqasid shariah. this is particularly important for products and services with multiple applications of shariah contracts as well as those instruments such as risk sharing, waqaf and sadaqah, which demand not only a high degree of transparency and disclosure but also positive customer service and engagement to engender trust and confidence. there is scope for the industry to explore the potential of new technologies that can transform risk management and compliance, remove information asymmetry and integrate the value chain of financial intermediation seamlessly with the real economy, particularly in trade and the halal industry. ultimately, realising the full benefits of digitalisation to deliver the intrinsic values of islamic finance successfully, relies on
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mr greenspan focuses on the revolution in information technology and its implications for key government policies speech by mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the boston college conference on the new economy, boston, on 6 march 2000. * * * in the last few years it has become increasingly clear that this business cycle differs in a very profound way from the many other cycles that have characterized post - world war ii america. not only has the expansion achieved record length, but it has done so with economic growth far stronger than expected. most remarkably, inflation has remained largely subdued in the face of labor markets tighter than any we have experienced in a generation. a key factor behind this extremely favorable performance has been the resurgence in productivity growth. since 1995, output per hour in the nonfinancial corporate sector has increased at an average annual rate of 3Β½ %, nearly double the average pace over the preceding quarter - century. indeed, the rate of growth appears to have been rising throughout the period. my remarks today will focus both on what is evidently the source of this spectacular performance - the revolution in information technology - and on its implications for key government policies. when historians look back at the latter half of the 1990s a decade or two hence, i suspect that they will conclude we are now living through a pivotal period in american economic history. new technologies that evolved from the cumulative innovations of the past half - century have now begun to bring about dramatic changes in the way goods and services are produced and in the way they are distributed to final users. those innovations, exemplified most recently by the multiplying uses of the internet, have brought on a flood of startup firms, many of which claim to offer the chance to revolutionize and dominate large shares of the nation β s production and distribution system. and participants in capital markets, not comfortable dealing with discontinuous shifts in economic structure, are groping for the appropriate valuations of these companies. the exceptional stock price volatility of these newer firms and, in the view of some, their outsized valuations indicate the difficulty of divining the particular technologies and business models that will prevail in the decades ahead. how did we arrive at such a fascinating and, to some, unsettling point in history? while the process of innovation, of course, is never - ending, the development of the transistor after world war ii appears in retrospect to have initiated a special wave
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strengthening the cra : a conversation with representatives of native communities remarks by lael brainard vice chair board of governors of the federal reserve system at national native coalition virtual series on the community reinvestment act notice of proposed rulemaking ( via webcast ) july 19, 2022 good afternoon. 1 i am happy to join you today for the national native coalition listening session to discuss the community reinvestment act ( cra ). i want to thank the national congress of american indians and its many tribal partners, as well as casey lozar and his team at the center for indian country development at the federal reserve bank of minneapolis. i am pleased to be joined by acting comptroller of the currency michael hsu of the office of the comptroller of the currency ( occ ) and acting chairman martin gruenberg of the federal deposit insurance corporation ( fdic ). in may, the federal reserve, the occ, and the fdic issued a unified proposal to modernize the cra regulations. this is a once - in - a - generation opportunity to strengthen the cra to bring greater credit, investment, and banking services to the communities that have faced the greatest challenges. for the first time, the cra will provide powerful incentives for banks to make investments in communities that do not have access to branches, such as in native lands. as representatives of native communities, you know all too well the challenges faced by native communities in getting access to financial services β challenges that were made worse by the pandemic. i have visited with native communities in south dakota and oklahoma and seen firsthand the resiliency and innovation of these communities in the face of numerous challenges. 2 even with the implementation of the cra and other complementary laws, tribal economic inclusion is hindered by a lack of banking and credit access. as of the most recent 2019 data, over 16 percent of native i am grateful to amanda roberts and matthew lambert of the federal reserve board for their assistance in preparing this text. the views expressed here are my own and do not necessarily reflect those of the federal reserve board or the federal open market committee. see lael brainard, β financial inclusion and economic challenges in the shadow of the pandemic : a conversation with tribal leaders β ( speech at fed listens : roundtable with oklahoma tribal leaders, oklahoma city, oklahoma, october 13, 2021 ), https : / / www. federalreserve. gov / newsevents / speech / brain
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fabio panetta : central clearing and the changing landscape welcome address by mr fabio panetta, member of the executive board of the european central bank, at the third annual joint conference of the deutsche bundesbank, european central bank and federal reserve bank of chicago on ccp risk management, frankfurt am main, 3 march 2021. * * * introduction1 it is with great pleasure that i welcome you to the third conference on central counterparty ( ccp ) risk management, organised by the ecb together with the deutsche bundesbank and the federal reserve bank of chicago. this event has become an increasingly relevant international forum to discuss key challenges surrounding central clearing. in my remarks today, i will reflect on key developments since we met a year ago. the coronavirus ( covid - 19 ) pandemic is naturally foremost in my mind β the turmoil that hit financial markets last spring has underlined the need for robust and resilient market infrastructures such as ccps. the end of the transition period following the united kingdom β s departure from the european union is of course another crucial change, and i will discuss its implications for financial stability in the eu in relation to central clearing. i will then argue that these developments show the urgent need for the eu to develop a deep and integrated single capital market. the need for robust and resilient ccps since the g20 agreed to make central clearing mandatory for over - the - counter ( otc ) derivatives at the 2009 pittsburgh summit, ccps have become central pieces of the global financial infrastructure. some ccps are systemically relevant for multiple jurisdictions in view of the direct and indirect clients they serve worldwide and their interconnectedness with systemically important global banks. we have seen progress in making global ccps safer and more resilient, starting with the safeguards introduced to address the shortcomings that the global financial crisis revealed. today, clearing risks are much lower than they were ten years ago. and the robustness that ccps have displayed since the outbreak of the pandemic shows that regulatory efforts are paying off. we should, however, continue to strengthen the resilience of ccps. last march we saw spikes in volatility and trading activity, coupled with a surge in liquidity and credit risk at the global level. such situations call for closer cross - border regulatory, supervisory and oversight cooperation between ccps, banks and public authorities. to prevent market fragmentation and preserve financial stability, both domestically and internationally, in the
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the latter having equivalence arrangements with both the eu and the united 2 / 4 bis central bankers'speeches kingdom. towards a well - functioning capital markets union in the eu the events of the past year β the pandemic and brexit β have put renewed emphasis on the need for the eu to have a well - functioning capital markets union. in fact, eu leaders have agreed to finance the recovery from the pandemic by borrowing collectively through financial markets. the issuance of high - quality euro - denominated sovereign bonds under the next generation eu ( ngeu ) recovery fund is a step towards achieving deeper, more complete and liquid capital markets and establishing a european safe asset. as the commission intends to raise 30 % of the β¬750 billion recovery fund by issuing green bonds, ngeu is also expected to contribute to further developing sustainable and green finance. in parallel, the commission has set out 16 specific actions to boost the eu β s capital markets union, which are aligned with many of the ecb β s own priorities. 4 these actions aim to deepen and further integrate european capital markets, in order to allow investors, savers, firms and market infrastructures alike to access a full range of services and products, regardless of where they are in the eu. a deep, single capital market will also strengthen the international role of the euro, 5 as further developed euro - denominated markets, derivatives and benchmarks will reduce transaction costs, curb spreads and mitigate rollover risks. this will in turn attract foreign investors and widen the possibilities of using the euro in international transactions. conclusion let me conclude. assessing potential vulnerabilities in the light of current challenges is key to making financial markets and infrastructures more resilient. authorities and market participants are reflecting on the lessons to be learned from the pandemic and this will be a key topic of today β s discussions. our panellists will provide insights on ccp margin practices and the related funding and operational complexities that emerged last spring and which we need to address. this conference will also provide an opportunity to discuss the direct and indirect implications of climate change for central clearing. cash and derivatives markets have already developed products to facilitate sustainable investments and help hedge against climate risks. our panellists will also consider the changing clearing landscape, including some of the regulatory and supervisory cooperation issues i have mentioned and the global dimension of this debate. given the challenges currently faced by economies and financial markets, finding the right mix of internal capacity
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bank uses five criteria, which can be summarized as follows : 1. achievement of the inflation target the interest rate should be set with a view to stabilising inflation close to the target in the medium term. the horizon will depend on disturbances to which the economy is exposed and the effects on the prospects for the path for inflation and the real economy. 2. reasonable balance between the inflation gap and the output gap norges bank conducts flexible inflation targeting, which implies that stabilising inflation around the target should be weighted against stability in the real economy. the chosen interest rate path should therefore imply a reasonable balance between the objectives if there is a conflict in the short term between stabilizing inflation around the target and stabilizing the real economy. what is meant by a β reasonable β balance is obviously a matter of judgment and is an important element in board discussions. for example, the swedish riksbank communicates the criteria behind the forecasts as follows : β the riksbank β s forecasts are based on the assumption that the repo rate will develop in such a way that monetary policy can be regarded as well - balanced. in the normal case, a well - balanced monetary policy means that inflation is close to the inflation target two years ahead without there being excessive fluctuations in inflation and the real economy. β ( see p. 2 in the riksbank β s monetary policy report ). in the assessment, potential effects of asset prices, such as property prices, equity prices and the krone exchange rate on the prospects for output, employment and inflation are also taken into account. assuming the criteria above have been satisfied, the following additional criteria are useful : 3. robustness interest rate developments should result in acceptable developments in inflation and output also under alternative, albeit not unrealistic, assumptions concerning the economic situation and the functioning of the economy. 4. gradualism and consistency interest rate adjustments should normally be gradual and consistent with the bank β s previous response pattern. 5. cross - checking it is important to cross - check the board β s judgments concerning the interest rate path against other information. one natural cross - check is market expectations about the future interest rate, as represented by implied forward interest rates ( adjusted for risk and term premia ). in addition, simple interest rate rules like the taylor rule and other variants suggested in the literature provide potentially useful cross - checks. experiences what are our experiences of our communication approach? the ultimate objective of our communication is to achieve better outcomes in
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terms of improved stability in inflation and the real economy. however, with less than three years of being fully transparent about our future policy intentions, it is too early to draw a conclusion regarding macroeconomic stability. an intermediate objective of communication is to provide a better understanding of the bank β s reaction pattern. one test of this to consider the volatility of market interest rates on the day norges bank decides the interest rate. if the new communication approach has been successful, one should expect that the interest rate decisions are more predictable. chart 5 shows the magnitude of market rate changes on the day the interest rate is decided. we see that volatility in market interest rates has on average been smaller after we started publishing our interest rate forecasts. although one cannot exclude the possibility that the reduction in volatility is caused by other factors than policy communication, it seems that our reaction pattern has become somewhat better understood. one internal effect of publishing interest rate forecasts is that it provides discipline in the internal decision process and good incentives for the staff. i have observed how transparency has changed the motivation and discipline of the economists within norges bank. by publishing our own interest rate forecast, each sector expert will see how his or her judgment might affect policy. moreover, by following the principle that what is communicated externally should reflect the internal decision process, we need to think extra hard about what we do internally. transparency makes the public better capable of evaluating the central bank β s analyses and policy assessments. if these are not of sufficient quality, we will be criticised. public scrutiny disciplines the internal process and, i believe, results in better monetary policy. measuring transparency even if i have focused on certain dimensions of transparency, such as openness about our intentions for future interest rate decisions, transparency has many other dimensions. petra geraats 4 distinguishes between five dimensions of transparency : 1. political transparency refers to openness about policy objectives 2. economic transparency focuses on the economic information that is used for monetary policy 3. procedural transparency is about the way monetary policy decisions are taken 4. policy transparency refers to the announcement and explanation of policy decisions 5. operational transparency concerns the implementation of the central bank β s policy actions due to the many dimensions of transparency, it is not possible to talk about transparency as if it were a one - dimensional concept. one could claim that some central banks are more transparent than others in some particular dimensions, but it is difficult β if not impossible β to measure overall transparency by a single metric in
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than that of the rest of the population. spain is the country with the lowest proportion of students who receive some basic financial education at school. with the aim of promoting financial education in schools, the national securities market commission and the banco de espana signed a collaboration agreement with the ministry of education in september 2009 to implement the financial education plan. since then, high quality educational materials have been provided free of charge under this programme, to enable teachers to include the basic principles of budgeting, means of payment, saving and borrowing in compulsory secondary education. in the 2014 - 2015 academic year an initiative was launched to evaluate the extent to which the financial education plan is achieving its objectives. this was based on the valuable collaboration of the teaching staff, administrators and students of 77 schools in 12 regions, which taught the content of the programme to their students in steps, as established by the banco de espana. the results indicate that the programme has increased students β financial knowledge, in particular with regard to the use of means of payment provided by banks, and also β which is no mean feat β their readiness to save. activities relating to adults can the results for young people be extrapolated to the adult population? unfortunately, we know little about the level of financial knowledge of the adult spanish population. it is generally thought that spanish people are not well informed, but much of the evidence for this is based on unrepresentative information. accordingly, as part of a highly ambitious project, the banco de espana and the national securities market commission are preparing one of the most extensive surveys undertaken at international level : the financial competence survey, which forms part of the national statistical plan. this study, which we expect to be completed by the end of 2017, will include various original aspects to address the special characteristics of the spanish case. first, educational skills are decentralised. given the nature of financial competence, which varies significantly according to the level of education of the individual concerned, the project will use representative samples of the different levels in the various regions. second, the financial knowledge of each individual may not reflect that of the persons who actually take household decisions. for example, in spain, important financial decisions regarding house purchase and mortgage borrowing are taken at different ages than they are in other european countries, as a high proportion of young people live with their parents. as a result, information is sometimes needed on the financial competence of those members of the household who take saving and borrowing decisions affecting the whole household. 4 / 5 apart
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from its financial knowledge, we have little evidence regarding the general economic knowledge of the spanish population. given this situation, questions have been included in the financial competence survey that aim to measure, inter - alia, knowledge of certain key concepts, such as inflation and money. in 2018 we will have the results of the survey, which will enable us to analyse on a sound basis the financial knowledge of the adult population in spain and to identify those areas on which the financial education plan needs to focus. future activities will be based on this information. to conclude, i should like to join the chairman of the national securities market commission in expressing my sincere and deep gratitude for the work and effort over the past eight years of all those persons and institutions who have collaborated directly or indirectly on the financial education plan. thank you very much your attention and i hope you will enjoy this event. 5 / 5
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fluctuations in the economy that are due to changes in demand for goods and services. at the same time, the budgetary guidelines state that β... [ in fiscal policy ] considerable emphasis must be placed on stabilising fluctuations in the economy with a view to ensuring appropriate capacity utilisation and low unemployment. β we can see here that there is an overlap between the tasks monetary policy and fiscal policy are intended to perform. this naturally raises the issue of whether there is after all a need to coordinate fiscal and monetary policy decisions. is there, for example, a risk of a situation arising where norges bank tightens monetary policy to achieve the inflation target, while at the same time the central government authorities increase the use of petroleum revenues ( more than implied in the fiscal policy guideline ) in order to increase employment and reduce unemployment? report 29 ( 2000 - 2001 ) to the storting : guidelines for economic policy. there are various factors that can prevent the interplay between monetary and fiscal policy from functioning. interplay functions well when the decision - making bodies are conscious of how one body β s decisions influence the decisions of the other. unless this fact is recognised, a decision will not produce the result that was planned. the economy may move in a very undesirable direction, with high interest rates, sluggish economic growth and deterioration in the state β s financial position. however, even without continuous coordination, a fairly good result may be achieved if fiscal policy acts as β leader β and monetary policy as β follower β, to use expressions taken from game theory. the authorities determine fiscal policy knowing how monetary policy will react. today β s flexible inflation targeting establishes a firm framework for monetary policy and provides clear guidelines on how monetary policy is to respond in different situations. the fiscal policy authorities can internalise the monetary policy response pattern. this is only natural, since the mandate for monetary policy was laid down by the government and the storting. in other words, the conditions exist for delegating the interest rate decision, but the central bank β s response pattern must be known, so that the fiscal authorities can take this into account. when the response pattern in monetary policy is known and remains unchanged over time, the social partners can also take any monetary policy response into account when wages are being determined. the β leader β in this interplay - the social partners - can take the β follower β s β - norges bank β s - response into account. this view
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italy and france, has been associated with episodes of consolidation in the banking industry. financial performance indicators have been very good. in the last three years mainly, the banking sector has also introduced modern payment infrastructure and products, to allow for increasing usage of electronic payment cards and internet banking. undoubtedly, the banking sector has been a very important contributor in the economic growth, while preserving solid business development and financial soundness indicators. despite the solid performance in the last years, the bank of albania, in its role of the monetary authority and the exclusive supervisor of the banking sector, was vigilant to point out areas of the banking activity that required increasing attention from the industry. we have continuously expressed our concern regarding the rapid increase in lending, which at some time reached up to 8 - 9 percentage points in terms of annual growth to gdp. we were aware of the risk it would bring to the credit quality, even though this was not expected to be relevant. the composition of the loan portfolio, which is dominated by the eurodenominated loans, has always been a point of concern. despite the fact that this position is supported by a strong presence of retail foreign currency denominated liabilities in banks balance sheets, a generally supportive environment of exchange rates and interest rates over time and very close economic links to euro - area countries like italy and greece, bank of albania has been consistent in its approach to introduce gradually regulatory measures that would discourage rapid increase in lending, encourage banks to lend more in domestic currency and increase transparency toward clients on banks products and services. impact of the crisis in our economy and in the financial sector, has been increasing and β¦ in the last quarter of 2008, the financial sector in albania started to feel the impact of the international financial crisis. the main development was an increasing sensitivity of the public for their savings in the banking sector. people started to withdraw their deposits regardless of the currency of denomination. at the beginning, there was no pressure on the exchange rate but it started to mount at the beginning of this year, when it was noticed a contraction in the inflow of foreign currency, due to a decline in exports and remittances. the quality of the loan portfolio started to deteriorate, and the nonperforming loans reached 8 percent of the entire outstanding loan portfolio at the end of april 2009. we expect this figure to edge higher, as data from the economy and surveys of business expectations and a marked slowdown in the credit availability, suggest that the economic growth
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and soundness of regulated firms and to contribute to the securing of an appropriate degree of protection for policyholders. but importantly, the mandates for the fpc and pra ensure that other factors such as long - term productivity and economic growth are taken into account when setting policy. the fpc must pursue its financial stability objective without causing serious harm to the wider economy in the medium or i would like to thank matthew willison, hugh burns, nicolo fraccaroli and david swallow for their assistance in preparing these remarks long term. in other words, the fpc must avoid the β stability of the graveyard β. 6 and, the fpc also has a secondary objective, subject to its pursuit of its primary objective : that of supporting the economic policy of the government. the pra also has an important secondary objective to facilitate effective competition, and must have regard to a set of regulatory principles, including the desirability of sustainable economic growth. furthermore, the chancellor writes regular letters to both the fpc and the prudential regulation committee, setting out the government β s economic policy and making recommendations on how they should discharge their functions. importantly, the pra takes into account the fpc β s views on financial stability when setting microprudential policy. to give an example of how this works in practice β in 2015 the fpc set out the optimal overall level of uk capital requirements, balancing financial stability against economic growth. the prc then took into account this judgement when setting individual bank capital requirements. and at the end of last year, the financial policy committee ( fpc ) raised the structural level of the uk countercyclical capital buffer ( ccyb ) rate - that is the rate it expects to set in a standard risk environment - from in the region of 1 % to in the region of 2 %. then, last month, the pra consulted on proposals to reduce variable microprudential minimum requirements ( so - called variable pillar 2a capital requirements ) to take account of the additional resilience associated with higher macroprudential buffers in a standard risk environment. 7 in addition to setting out a clear mandate in primary legislation, there are also a number of accountability mechanisms in place for parliament to scrutinise the work of the fpc and pra against that mandate. for example, pra senior representatives are expected to appear before the treasury select committee ( and other parliamentary committees ), when requested. and the pra annual report is laid before
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capital requirements regulation and capital requirements directive. this means that many of the technical details that make up prudential regulation are included in legislation. this would include, for instance, the mathematical formulae used to calculate risk weights. i would like to thank matthew willison, hugh burns, nicolo fraccaroli and david swallow for their assistance in preparing these remarks this model provides legitimacy because the legislation in which the prudential regulation is set out has been passed by a parliament. it is also time consistent, because a deviation from regulatory standards would require a change to legislation. but it is unlikely to be very dynamic because the only way prudential regulation could be adjusted in response to an unintended consequence or new risk that has arisen is a change to the primary legislation, which takes time to happen. it typically takes nine months to issue a new pra rule β with that time including policy development, cost benefit analysis, process for public consultation, and approval by the prudential regulation committee. in contrast, the process for making changes to primary legislation in the uk β which includes debates in committees and both houses of parliament β requires finding parliamentary time for legislation, and then after parliamentary time has been secured, takes longer than a year to complete. finding parliamentary time is not an easy task, especially if the purpose of legislation is carrying out technical amendments to financial services rules. public officials need to compete for attention with all the other important public - policy issues that parliament and government must deal with and if they do not find a parliamentary slot or parliament is dissolved for elections, the legislation gets delayed for the next queen β s speech. for example, over the past six months, such events have delayed the passage of a bill that is necessary to implement the final elements of basel 3 ( so - called basel 3. 1 ). by contrast, the financial regulator β s task is solely focussed on delivering and maintaining rules that are fit for purpose for their regulated sector only β there is no competition for other initiatives and the process and timetable provides certainty to industry. in a second model, prudential regulatory - setting powers could lie with government ministers. this model would be dynamic because the government would be able to adjust prudential regulation. it would be legitimate since the government is directly accountable to the parliament and ultimately the electorate. but it may not be time consistent because it creates the possibility that prudential regulation will be influenced unduly by the electoral cycle, as was deemed to
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jorgovanka tabakovic : annual financial stability report for 2015 speech given by dr jorgovanka tabakovic, governor of the national bank of serbia at the presentation of the annual financial stability report for 2015, belgrade, 27 july 2016. * * * ladies and gentlemen, esteemed members of the press and fellow economists, welcome to the presentation of the annual financial stability report for 2015. if we call last year β s presentation of this report history or our firstborn, then today β s press conference can be regarded as the start of tradition and continuation of good international practice. macroprudential policy or the policy of safeguarding financial stability has been the focus of almost all economic discussions since the outbreak of the global financial crisis. the national bank of serbia does not lag behind other central banks in this respect. quite to the contrary, we are keeping up with them. the depth of our analyses and the expert approach place us among the most efficient central banks in terms of achieving the financial stability mandate. we have been witnesses to turbulences in the international environment for quite some time already. the ripple effects of these turbulences did not by - pass serbia as an open and small economy. however, we did not stand by and wring our hands, waiting to be hit by the waves of uncertainty from different continents. in coordination with the government of the republic of serbia, we responded with timely action, carefully assessing the intensity of all influences. through synchronisation of monetary easing and consistent fiscal consolidation, we have maintained price stability, reduced external and internal imbalances significantly and improved further the conditions for sustainable economic growth. as a result, the key policy rate is at its historical low since the introduction of the inflation targeting regime and the fiscal deficit is at its lowest level since 2008. i will take the liberty of saying that the monetary policy easing of the national bank of serbia has paved the way for a sharp drop in interest rates on dinar loans in the last three years. to put this into numbers β from may 2013 until today, the key policy rate was cut 17 times by a total of 7. 75 pp to 4 %. that the interest rate channel is working in the dinar segment of the market is confirmed by the concurrent decline in interest rates on dinar loans to households and corporates by almost 10 pp to the lowest levels on record. interest rates on government dinar securities also declined. since november 2014 we have also reduced the fx required reserve ratios
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- standing challenge for statisticians. there is the challenge of appropriately capturing changes in quality and there is also the challenge of ensuring that the weights used to aggregate the prices of the various goods and services appropriately reflect households'expenditure patterns. for example, it may take some time for new goods and services to be included in the cpi basket. more generally, there is the issue of ensuring that the cpi appropriately takes account of changing expenditure patterns in response to movements in relative prices. the abs has recently begun updating its cpi weights to reflect changing household expenditure patterns on a more frequent basis, which should reduce the size of this β substitution bias β in the future. http : / / www. rba. gov. au / speeches / 2018 / sp - dg - 2018 - 08 - 22. html 10 / 23 22 / 08 / 2018 low inflation | speeches | rba housing the cost of housing services has a large weight in the cpi, with the weight about equally split between the cost of building a new home and the cost of renting ( graph 8 ). there have been quite divergent dynamics in each of these two components in recent years. graph 8 new dwelling costs new dwelling cost inflation, which has an 8 per cent weight in the cpi basket, has tended to move closely with the residential building cycle over time ( graph 9 ). [ 6 ] however, despite the historically high level of activity in housing construction over recent years, new dwelling cost inflation has been running at a bit below its long - run average. during the late 2000s, new dwelling cost inflation was higher than it is currently because the residential construction sector was competing for materials and labour with the resources sector in the midst of its investment boom. this competition for inputs has clearly abated. wages growth in housing construction has been generally contained except for some particular skills such as bricklayers, in part because workers have been moving from the resources sector as projects there finished and also reflecting the general slow pace of wages growth in the economy. reports from liaison suggest that competition for inputs between public infrastructure projects and high - rise residential developments has put some upward pressure on new http : / / www. rba. gov. au / speeches / 2018 / sp - dg - 2018 - 08 - 22. html 11 / 23 22 / 08 / 2018 low inflation | speeches | rba dwelling cost inflation in sydney and melbourne. this includes competition for labour such as engineers and project managers, as well as competition for materials such as
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mugur isarescu : gaps and economic crises in south - east europe β present and past opening speech by mr mugur isarescu, governor of the national bank of romania, at the conference " gaps and economic crises in south - east europe : present and past ", bucharest, 28 october 2016. * * * distinguished guests, ladies and gentlemen, allow me to warmly welcome you to the national bank of romania. the board of the national bank of romania and i are glad to host, for the second time, the annual conference of the south - east european monetary history network. five years ago, in march 2011, when nbr hosted this event for the first time, we expressed our interest and support. we firmly believe that a good understanding of history, of how our forerunners addressed issues linked to monetary and economic developments, sets the foundation for finding solutions to present day challenges. this conference brings together central bank representatives from albania, austria, bulgaria, greece, serbia and romania, as well as prominent members of academic and scientific european circles. i welcome you to romania and hope you will have opportunity to enjoy your brief stay. this year, the meeting is focused on economic cycles and economic crises in south - east europe, both past and present. this is a generous and challenging research topic. all the more so, there has always been a permanent concern in the past 150 years for the policy makers in the region to reduce the economic gaps between the countries in south - east europe and the developed ones. in spite of this preoccupation, the real life was, in almost all the cases, different. this kind of historical research, stretched over a longer period of time, could reveal to which extent the solutions adopted in time were the appropriate ones. given the interest shown by both economic and political decision - makers, we find it useful to highlight the role that central banks have played in the catching - up process. i have to confess that i am personally interested in this topic and i look forward to seeing the outcome of your debate. i do wish you success. allow me to say a few words about the south - east european monetary history network. after a decade since it has been launched in sofia, the network achieved notable results in its aim to collect and extract value from statistical and historical data. the most important one was the release, in 2014, of a book titled β south - eastern european monetary and macroeconomic statistics from the nineteenth century to world war ii β. it
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national bank of romania, as they capture appropriately the opinions of the real sector on some key issues, such as : ( i ) the most pressing problems that firms are facing in their activity ; ( ii ) the investment needs and priorities ; ( iii ) challenges raised by climate change and energy efficiency. the survey shows that firms in romania have become less optimistic regarding investment conditions for the year ahead. while this is a worrying trend, we are rather positive that romania will be able to overcome the main problem identified, the energy costs, in the near future. i would add here that the government has implemented several measures in this respect, such as electricity and natural gas price capping schemes, the compensation of the price of motor fuel / liter and caps on the firewood price. also, we are aware that the war in ukraine and the related sanctions will continue to generate considerable uncertainties and risks to the outlook for economic activity, through possibly stronger effects on consumer purchasing power and confidence, as well as on firms'activity, profits and investment plans, with an unfavorable impact on financing costs. in this current juncture, the balanced macroeconomic policy mix and the implementation of structural reforms, including the use of eu funds to foster the growth potential over the long term, are essential in preserving a stable macroeconomic framework and strengthening the capacity of the romanian economy to withstand adverse developments. with respect to the national bank of romania's responsibilities, we aim to anchor inflation expectations over the medium term, to bring the annual inflation rate back towards the target, in a manner conducive to achieving sustainable economic growth. the annual cpi inflation rate is projected to follow a gradual downward path, but to remain slightly above the variation band of the target also next year. the prudential and financial position of the romanian banking sector - the main source of finance to the economy - is adequate. however, the risks are rising both locally and internationally. the total capital ratio remained adequate, above the eu average, but the capital reserve shrank once with the marking to market, because of the fast - paced interest rate rise. asset quality continued to improve, with the non - performing loan ratio falling to european levels and the npl coverage by provisions staying at significantly higher levels than the european average ; profitability increased. yet, romania's banking sector faces a number of vulnerabilities : ( i ) expectations on a higher risk of default on private sector loans amid worsening macroeconomic conditions, the uncertainty
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other regulated or unregulated entities managing the platform. examples include marketplaces ( e. g. deposit marketplaces ) or even e - commerce portals distributing financial services, which are ancillary to their core business ; big techs play a significant role in this space. many authorities and stakeholders are addressing this issue, striving to increase their knowledge of this important phenomenon, raising interest from different perspectives. today i want to focus on one perspective : the microprudential one. the eba published a first report4 in september 2021, providing an initial taxonomy of the main business models observed. a crucial finding of this analysis is that regulators and supervisors do not yet have sufficient information on platforms and on their relationships with banks. thus, properly and systematically mapping the use of digital platforms by supervised entities and, more generally, the platformization of the financial ecosystem, are indeed essential. in a business model perspective, platforms can help financial intermediaries, specifically the traditional ones, in providing new products and services to their clients and / or increasing their customer experience, thus representing a way to support the viability and sustainability of business models. 5 in the meantime, the reliance on digital this paradigm is usually associated with the use of the open api, which allows an application to have access to the data of financial intermediaries and which therefore allows the exchange of information between different operators ( financial intermediaries, technical suppliers, other non - financial parties ) the functioning of the ecosystem is even more complex due to the presence of tpps with the freedom to provide services without establishment, located in other jurisdictions than the european union, and of big tech companies that are currently acting as purely technical service providers, but that might decide to have a bigger role in the financial ecosystem. https : / / www. eba. europa. eu / sites / default / documents / files / document _ library / publications / reports / 2021 / 1019865 / eba % 20digital % 20platforms % 20report % 20 - % 20210921. pdf for example, digital platforms facilitate access to financial services, the matching of customer preference ( e. g. in terms of β search for convenience β ), support economies of scale, and leverage on network effects, reducing the need for physical premises. digital platforms also allow innovative business models to be developed that should be monitored and understood by the supervisors. platforms to promote and distribute services introduces strong interdependencies
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as we try to weigh the risk of an unduly sharp downturn, against the threat to inflation posed by a sharp surge in global energy prices. much will depend on developments in the rest of the world ; on whether the slump in the us housing market causes a sharp slowing in the wider us economy : and on how far this acts as a brake on demand β and inflationary pressures β in the rest of the world, especially asia and the euro area. the projections we published in last week β s inflation report were centred around a relatively mild slowdown, by historical standards β on the same scale as we experienced in 2005 β based on the assumption of a gradual and modest easing in interest rates over the next two years. but those projections are subject to a very wide margin of error β in both directions. the mpc β s monthly decisions are always grounded in a careful analysis of all the evidence. given the uncertainties we face, now is a time to pay extra attention to the emerging data. we can, and should, respond quickly and flexibly to early signs of the changing economic weather. according to most recent official economic statistics, the weather is still set fair. but we know fouler weather is brewing off shore. what is still far from clear is whether we are in for a force 6 strong breeze, or a full force 8 gale. we will need to deploy all our meteorological skills. in the inflation report we highlighted a number of early warning indicators on both output and inflation, which will help us judge the strength of the wind. these include the reports from our own agents around the country, drawing businesses such as your own. if you are one of our regular contacts, let me take this opportunity to thank you warmly on behalf of the mpc for your help. we may be making additional demands on you over the coming months. i hope my remarks tonight have helped to explain why your co operation is so necessary β and so valuable.
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, middleincome countries benefited from the introduction of the more favourable houston terms in 1990. when it became clear that even the more concessional debt rescheduling and reduction mechanisms were still not sufficient to attain sustainable external debt levels, particularly in a number of african low - income countries, another key policy initiative was launched in 1996 by the imf and the world bank : the heavily indebted poor countries initiative ( hipc ). under this initiative, the entire international community, including some multilateral institutions, decided to take coordinated action to reduce the debt burdens of eligible countries to sustainable levels. in this context, paris club creditors agreed to increase the reduction in the net present value of eligible debt up to 80 % under the lyon terms and, in 2000, up to 90 % or even more under the cologne terms. the financial implications of these decisions were substantial : around 36 % of the initiative β s total cost, amounting to usd 38 billion thus far, has been borne by paris club creditors. finally, the hipc initiative has been supplemented in 2005 by the multilateral debt relief initiative, which allows for 100 % debt relief by multilateral institutions for countries completing the hipc process. this marked a major break with the principle of preferred creditor status of international financial institutions. looking at the most recent past of the paris club, another development worth noting is that the number of countries rescheduling with paris club creditors has been declining significantly. besides the more general macroeconomic developments i recalled at the beginning of this talk, this desirable trend is also due to two more specific developments : first, the more comprehensive debt stock treatment of low income countries ; and second, a graduation from rescheduling of most middle - income countries as a result of the implementation of economic reforms that have increased their access to market financing and thus private creditors. indeed, while official flows to emerging markets were dominant in the 1980s, reaching on average over 60 % of total flows, the 1990s saw a dramatic increase in private flows, which on average accounted for around 85 % in the period from 1990 until 2003. accordingly, the paris club has been paying increasing attention to coordination with private sector creditors. in particular, early discussions can be scheduled when the proportion of private external debt is deemed significant and when comparability of treatment is an issue. also, interaction between paris club creditors and private sector representatives can be initiated if private creditors indicate their willingness to help restore debt sustainability in good faith and if a
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benoit cΕure : addressing europe's economic and political challenges introductory remarks by mr benoit cΕure, member of the executive board of the european central bank, at tum speakers series / hec debats organised by the technical university of munich, munich, 21 november 2016. * * * recent political developments in the united states and the united kingdom have been interpreted as reflecting widespread concerns about globalisation as well as scepticism about international cooperation1. many europeans also regard the responses to cross - border challenges such as economic fragilities, migration and terrorism as unsatisfactory. a broad debate is under way about the european union β s raison d β etre and its future. this debate resonates particularly strongly as we approach the 60th anniversary of the treaty of rome and the 25th anniversary of the treaty of maastricht. for europe to thrive, europeans, young and old alike, need to be confident that working together is still the best way forward. participation in the european project has rested on three successive promises. for the post - war generation, it was a guarantee of lasting peace and democracy. for europeans who witnessed in their youth the fall of the berlin wall, it held out the promise of freedom of movement and better life chances. for european workers hit by technological change and global competition, it promised economic security and protection. the first two promises have been fulfilled and generated strong support for the european project. but many now consider that the third promise has not been kept. europe has suffered from the worst economic crisis since the 1930s. it partly originated abroad but it was partly also of its own making. next summer it will be ten years since the crisis erupted in europe. many people of your age have felt its effects to a disproportionate degree. with high levels of youth unemployment in several member states2, large numbers of young people feel economically and socially marginalised. 3 for them, the national and european responses have not been sufficient. the emergence of a β lost generation β is morally unacceptable β and it would affect europe β s prosperity in a persistent way4. in my remarks tonight, i will tell you why i believe that europe β s raison d β etre remains strong and could be made stronger. as a european central banker, i will focus on the economic dimension. i will only touch on the political dimension insofar as it influences economic outcomes5. the benefits of european integration as president obama said during his
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su ning : spreading financial knowledge to the chinese people speech by mr su ning, deputy governor of the peopleaβ¬β’s bank of china, at the financial knowledge booklet release and donation ceremony, beijing, 18 january 2007. * * * deputy administrator wu shulin, deputy secretary general yang xinli, ladies and gentlemen, good morning. on behalf of the people's bank of china, i warmly welcome all of you to financial knowledge booklet release and donation ceremony. we would like to congratulate everyone who has been directly or indirectly involved in the writing and publishing of the book, and appreciate those who have contributed to the book's writing. leaders of the state council have always attached importance to education of the general public. premier wen jiabao has on many occasions expressed the hope that financial education should be enhanced and popularized, especially through publication of financial knowledge books for the general readership. the financial knowledge booklet, written by the central bank, is dedicated to spreading financial knowledge to the average people, to promoting their ability in managing financial affairs, and to contributing to a harmonious socialist society. finance is at the core of any modern economy. with the improvement of a socialist market economic system and deepening of open - up in china, financial activities have permeated social and economic activities. finance has become increasingly important in adjusting economic activities and in promoting social and economic development, and more closely connected with people's daily life. the public has gradually become consumers of financial products and services and thus become an extensive base for financial security and development. sound performance and healthy growth of the financial sector has a bearing on a country's economic security and social stability, and on the interests of average people. the public's financial knowledge and confidence in financial system is a decisive factor in sound performance and healthy growth of the sector. therefore, financial education to the public, spreading financial knowledge to them, and increasing people's ability in managing their own financials, is of great importance to promoting sound performance and development of financial sector, to safeguarding people's interests, and to building a harmonious socialist society. since reform and open - up, china's financial sector has made substantial progress, and subsequently the chinese people have come to know more about financial products and services. however, as financial education for the average people is still underdeveloped, their financial knowledge and ability to use financial services has lagged behind compared with the sector's development.
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average people's daily life as well as social and economic activities. in terms of style, this booklet uses concise and simple language and illustrations, as well as household stories and cases, to explain financial terminologies and concepts, complex economic and financial phenomena, and issues of everyone's interest. we have noticed that in recent years relevant agencies and peoples have made much contribution to popularizing financial knowledge, and achieved significant results. yet, so far, there is no publication in our country dedicated to spreading financial knowledge to the average people. by compiling this booklet, we hope to help the readers gain finance knowledge, understand how the finance industry works, and how to use financial knowledge in their daily life, study and work. to make this booklet available to more people, the pbc decides to donate free copies to the national project of 10, 000 libraries in 10, 000 counties, colleges and universities, and public libraries for the convenience of farmers, students and general public. it is a systematic social project to popularize financial knowledge and enhance people's capability in managing financial affairs. the pbc will spare no effort to work this front. also, we hope other parties in the society will pay greater attention to and participate actively in this cause. let's join hands to contribute to the enhancement of people's capability in financial knowledge utilization and a bright future of the financial industry. thank you.
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see keynes [ 1936 ] keynes, john maynard, the general theory of employment, interest and money, 1936. 4. see friedman tl ( 1999 ) the lexus and the olive tree : understanding globalization and ferguson n ( 2008 ) the ascent of money : a financial history of the world. penguin, new york in ippoliti, e. introduction : philosophy for finance. topoi 40, 707 β 713 5. see de bruin, boudewijn, lisa herzog, martin o β neill, and joakim sandberg, " philosophy of money and finance ", the stanford encyclopedia of philosophy ( winter 2020 edition ), edward n. zalta ( ed. ) 6. see part ii of the central bank act 1942 and also article 45 of the constitution of ireland 7. see brunnermeier, m., crockett, a., goodhart, c. a., persaud, a. and shin, h. s., 2009. the fundamental principles of financial regulation ( vol. 11 ). geneva : icmb, internat. center for monetary and banking studies. 8. see douglas w. diamond and philip h. dybvig, β bank runs, deposit insurance, and liquidity β journal of political economy, 1983, vol. 91, no. 3 9. see krugman, paul β the simple economics of panic : the 2022 nobel prize in perspective β, voxeu column 10. see β taking our second chance to make mmfs more resilient - speech by andrew bailey, at the isda 35th annual general meeting, 12 may 11. see bank of england discussion paper, β the role of macroprudential policy β, november 2009 12. ibid 13. see https : / / ec. europa. eu / economy _ finance / publications / pages / publication14527 _ en. pdf 14. see eurostat and updated statistics 15. see https : / / finance. ec. europa. eu / regulation - and - supervision / regulatory - process - financial - services _ en 16. based on data from 2018 17. braithwaite 2017 β responsive excellence 18. see van der heijden 2019 - regulatory philosophy, theory and practice 19. see https : / / www. ft. com / content 20. on liberty Β©2022 central bank of ireland
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authorisations process for firms β in particular more transparency and clearer expectations. we have recently closed our innovation consultation, including proposals for a sandbox, and the team are working through the response received. we expect to publish our feedback statement in may. we have improved our f & p system, delivering benefits and efficiencies for both industry and the bank β reducing the processing time for individual questionnaires ( iqs ) from 36 to 24 calendar days, in part through facilitating improved applications ( with a 50 % reduction in those returning incomplete ). we also plan to publish an authorisation and gatekeeping report in 2 / 3 bis - central bankers'speeches the coming months setting out publically our priorities and expectations and how we are evolving our approach. we are taking a more integrated view of risks and priorities, with the external version of that work the regulatory and supervisory outlook we published last month. in addition to these, as i said we are involved in a transformative piece of work around enhancing our supervisory framework β such that it becomes more data - driven, agile and scalable. this involves improving the tools and technologies supervisors have, and it involves delivering a more integrated approach to supervision β both of which we expect to deliver real progress on this year. with a busy agenda ahead, i will leave it at that. i look forward to today's discussion and will hand over to peter to introduce the first topic. 3 / 3 bis - central bankers'speeches
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crisis has strengthened the common currency along a number of dimensions. first, the european stability mechanism stabilises sovereign debt markets by providing an official funding reserve option ( subject to conditionality ). second, the ecb β s outright monetary transactions ( omt ) programme has clarified the commitment of the ecb to rule out redenomination risk for countries that demonstrate commitment to fiscal solvency. third, the development of a common supervisory approach to financial regulation β which is hardwired in banking through the single supervisory mechanism β serves to reduce the risk of national policy errors in the oversight of the financial system. fourth, the introduction of improved recovery and resolution frameworks ( including the operation of the single resolution mechanism ) helps to reduce the risk that individual bank failures trigger a system - wide crisis. fifth, the activation of national macroprudential policy frameworks ( typically absent or weak before the crisis ) is necessary to mitigate cyclical financial risks. sixth, the strengthening of the european fiscal framework is a necessary precondition for greater cross - border integration, in view of the close relationship between fiscal stability and financial stability. looking to the future, the completion of banking union and capital markets union can further help to mitigate national macroeconomic shocks. first, banking union and capital markets union may facilitate more diversified international ownership of bank equity and contingent debt instruments, such that the costs of distressed banks are not solely concentrated in the domestic economy. second, banking union may lead to more geographically - diversified financial institutions, such that local shocks do not undermine the viability of banking operations. indeed, the us experience is that the liberalisation of cross - state banking has dampened the amplification of regional shocks. accordingly, my perspective on the implications of globalisation for macro - financial stability is that europe has addressed the triple trilemmas by recognising that the internationalisation of policymaking can go a long way in reconciling integration with monetary stability and financial stability. in line with the political economy trilemma, this has required the parallel development of eu - level and inter - governmental institutions that can ensure that policymakers are democratically accountable. as is well understood, it follows that the future evolution of the euro area and the european financial system turns just as much on european political dynamics as on the technocratic debate about the relative merits of further economic and financial integration. conclusions in this lecture, i have tackled two dimensions of the implications of globalisation for macrofinancial
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and mcquade 2014 ). such a metric would have raised a red flag about irish external debt by the first quarter of 2004 and peaked at 44 percent in the third quarter of 2008. the irish retail banks held net external debt assets of around 16 percent at the end of 2017, such that current international balance sheet risk is low. in similar fashion, galstyan ( 2018 ) strips out the foreign assets and foreign liabilities of externally - orientated and externally - owned entities from the irish international investment position data. the outcome of this exercise is a far smaller international balance sheet, this is a transformation of the threshold for net external debt liabilities estimated by catao and milesi - ferretti ( 2014 ). which more accurately represents the external exposures of irish households and irishdomiciled entities. in line with the recommendations of the economic statistics review group ( esrg ) that was formed to address the impact of globalisation on the measured national accounts, the cso now produces supplementary national accounts estimates in the forms of adjusted gross national income ( gni * ) and an adjusted current account balance ( ca * ). the two main forces driving these adjustments are the mobility of ip assets and the ability of firms to redomicile ( that is, change headquarters ) across countries. the underlying principle is that activity taking place elsewhere should only have minimal impact on the measurement of the irish national accounts. in the case of mobile ip assets, a decision by a firm to transfer these assets from a legal entity in some other location to a legal entity resident in ireland should only matter for irish activity data if it is associated with a change in production patterns. in contrast, if these ip assets are primarily deployed elsewhere ( with the irish legal entity charging royalties to the overseas production facility ), it would be highly misleading to include the depreciation charge on the ip assets in the irish national accounts. 3 in relation to a firm that re - domiciles into ireland, this should have no impact on the allocation of the profits earned by this firm if there is no associated change in the shareholder register. however, due to a quirk in the differences in the treatment of corporate income across the direct investment and portfolio equity components of the balance of payments, re - domiciles are not neutral in the standard accounts, such that the correction introduced by the cso is required. taken together, these corrections make a big difference. the 2017 data show that gdp is 62 percent ahead of gni *
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it could be motivational or spiritual. be there for them in good and in difficult times. you must be their biggest cheerleader. and you must show them they can achieve what may seem impossible, and encourage them to persevere and stay the course. parents, you have a tremendous role to play if your children are to be the best they can be. they are counting on you. the byac is counting on you. i am counting on you. and finally, to you students, this nti / byac programme is like the mustard seed. it's small but could mushroom into something huge by unearthing or creating the many vocational and technical skills this country needs to build new industries or expand existing ones to propel barbados'economic growth and development. so, students, this programme is not only contributing to your personal development but is also supporting national development seize the opportunity and in doing so i urge you to set your goals, have a vision, work hard, give back, and lean into the challenges ; see them as opportunities. i believe in every single one of you. i know you have what it takes to achieve great things. so, embrace these principles, visualise your success, and most importantly, believe in yourself. the future is yours - go out and make it amazing and be the best you! as you hear the nti say, just press forward. 5 / 5 bis - central bankers'speeches
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generous person will prosper ; whoever refreshes others will be refreshed ". lean into a brighter future as you stand at the threshold of a new chapter in your life, i know it can feel overwhelming. there are so many challenges out there - peer pressure, crime, and even self - doubt. but here's the good news : you have the power to rise above it all. see all of these challenges as opportunities. you've been given a second chance to improve your education. you can lean into a brighter future by embracing this opportunity with enthusiasm and determination, like i did so many moons ago at the alleyne school, at hc, and at university level. you can start by setting specific, achievable goals that align with your passions and interests, ensuring you have a clear vision of what you want to accomplish. investing time in your studies, seeking help when needed, and actively participating in class can help you make the most of your days at the bcc, sjpi or bimap. beyond the classroom, you should explore extracurricular activities and vocational training that align with your interests, which can provide valuable skills and experiences. building positive relationships with teachers, mentors, and peers can offer support and guidance, making the journey more manageable and rewarding. by maintaining a positive mindset, staying focused, and being resilient in the face of challenges, you can transform this second chance into a solid foundation for a successful and fulfilling future. it won't always be easy, but with resilience and determination, you can achieve greatness. 4 / 5 bis - central bankers'speeches conclusion thank you for letting me share my journey with you to show we are all capable of being better. a special thanks to the nti for working with byac to conceptualise and execute this programme that gives our young people a second chance at life in an era when they face such uncertainties, difficulties and negativities. as i said at the beginning of my remarks, i got a second chance as a teenager and have proven through my success that people deserve another opportunity to be able to press forward. to the parents in the room, i urge you to fortify your support for your children as they begin a new chapter. they are taking advantage of this second opportunity to improve their fortunes. they will need all the help they can get to stay on track and not falter. that support could be financial. or
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as possible, which would help the economy recover as quickly as possible. that is why in the days following the attacks, we took the extraordinary step of lowering interest rates outside our fixed announcement dates. it then became clear that the economy would continue to operate below its capacity throughout 2002, with resulting downward pressure on inflation. so we sped up the pace of interest rate reduction at the next two fixed announcement dates. we wanted to support economic growth, which would help keep inflation within our target range of 1 to 3 per cent. the terrorist attacks created all sorts of uncertainties β economic, political, and military. so it was extraordinarily difficult last fall to be very certain about the future track of the economy. now however, a clearer picture is beginning to emerge. the current economic situation and outlook one way for us to get that clearer picture is to actually get out across the country to see what is going on in canada's regions. these opportunities to get away from the frenetic world of financial markets, and to see what is happening in the real economy, are extremely important to me, and to the bank. let me focus on this province for a moment. here in saskatchewan, the impact of a slowing world economy was felt mainly through a weakening in commodity prices. this hurt not just the agricultural sector, but the important mining sector as well. after posting very modest growth in 2001, saskatchewan's economy is expected to show an improvement this year. a pickup in the global economy should boost commodity prices, which would be a big help to the province. saskatchewan's agricultural sector would also be helped by a return to more normal weather patterns. there is an old farming saying that you can't lose a crop in january. but there is a clear critical need for more moisture in the soil and we all hope it comes soon. of course my predecessor, gordon thiessen, has strong roots in this province and he understood well the difficulties faced by farmers year in and year out. but i want you to know that i too can relate to the trials of farming. i have a small cow - calf operation outside ottawa, and i know how difficult this business can be. we can try to do something about the economy at the bank of canada, but sadly, we can't do anything about the weather. one clear positive for saskatchewan has been the fiscal record of the provincial government, which is currently projected to post an eighth consecutive surplus. this strong fiscal record can only
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david dodge : bank of canada β s outlook for the canadian economy remarks by mr david dodge, governor of the bank of canada, for a meeting with canadian banks and the investment community, new york, 31 january 2002. * * * i am pleased to be here today and to have this opportunity to talk about the bank of canada's outlook for the canadian economy and to update you on our monetary policy actions. this has been a very difficult year for all of us in north america, but especially for you here in new york city. the tremendous loss of human lives as a result of the 11 september terrorist attacks has been tragic. among those who died there were family members, friends, and colleagues. and there were other innocent citizens of many nationalities caught in this tragedy, including canadians. all of us at the bank of canada share a deep sorrow and extend our heartfelt sympathy. the immediate impact and the fallout from last september's events introduced new layers of uncertainty into the economic picture, compounding the effects of a deepening global economic slowdown that had become more evident during the summer. the bank of canada quickly responded to this extreme uncertainty by aggressively lowering interest rates in order to minimize the economic impact of the attacks and limit the loss of confidence. since september, we have lowered our key policy interest rate by 200 basis points, bringing the total reduction since the beginning of 2001 to 375 basis points. this substantial monetary easing, together with measures taken by canadian governments to reduce taxes and to strengthen national security, should support growth in domestic spending. on this basis, and with the improvement we have seen since the fall in the geopolitical climate and in consumer confidence, it is now clearer that the canadian economy will gather momentum as the year unfolds. the timing and strength of the recovery will partly depend on how quickly business confidence and business investment, which remain weak in many countries, bounce back. here, it is important to note that in canada we did not have the same degree of overinvestment in fixed capital in the manufacturing sector during 1998 - 2000 as in the united states. so, the need for retrenchment and for adjustment of excess capacity in canada would be less. the bank of canada's current view is that economic growth in canada will be relatively modest in the first half of 2002 β between 1 and 2 per cent, on an annualized basis β but that it will accelerate in the second half β to a range of 3 to 4 per cent β
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most vulnerable segments. as the new governor of the central bank of chile, i want to confirm to this commission our commitment to carry on the work done to this date, always ensuring high technical rigor in the analyses and decisions, as well as making every effort to take our institution to the highest possible standards. our responsibility is twofold. on one hand, keeping inflation low and stable, favoring sustainable growth. on the other, using our powers to identify and address the risks that could jeopardize the normal functioning of our financial system. this, of course, seeking to preserve the conditions that will foster economic growth and the welfare of the population. thank you. bis central bankers β speeches figure 1 banks'average cds ( basis points ) liquidity conditions ( basis points ) 500 100 u. s. jul. 11 jul. ene. 10jul. 10ene. 11jul. 11 europe u. s. japan eurozone ( 1 ) simple average of 5 - year cds premiums. dotted line marks statistical cutoff date of previous report. ( 2 ) u. s. includes citigroup, goldman sachs, merrill lynch, jp morgan chase and bank of america. ( 3 ) europe includes societe generale, deutsche bank, ubs ag, santander, bbva and unicredit. ( 4 ) difference between the libo rate and the overnight indexed swap ( ois ), both at three months. for the eurozone, difference between euribo rate and respective ois. source : bloomberg. figure 2 manufacturing output ( * ) ( annual change, percent ) manufacturing pmi ( index, based = 50 ) - 10 - 10 - 20 - 20 india brazil china brazil china ( * ) for china, data up to november 2011 ; for the rest, up to october. source : bloomberg. bis central bankers β speeches figure 3 interest rates in us dollars and pesos in local market ( porcentaje ) - 2 interest rates on private sector bonds ( 1 ) ( porcentaje ) - 2 libor + 90 - day on - shore spread ( us $ ) libor + 180 - day on - shore spread ( us $ ) aaa 90 - day deposits trated on stock exchange ( $ ) 180 - day deposits trated on stock exchange ( $ ) aa a ( 1 ) vertical dotted line marks statistical cutoff date of september's report. ( 2 ) considers long - term interest rates on corporate and bank
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ipsa has increased about 17 % this year and more than 30 % since december 2015. although these numbers might ring some bells, the performance of the chilean index does not differ significantly from other regional stock markets and its recent behavior might just be a catch up from very low levels. measured in real terms, its current value does not seem to be an outlier either ( figure 7 ). figure 7 msci : latin america real ipsa ( fixed - base index : january 2013 = 100 ) ( fixed - base index : january 2001 = 100 ) mexico latin chile america colombia peru brazil 01 03 05 07 09 11 13 15 17 sources : central bank of chile and bloomberg. 12. the prolonged strike at the escondida, the open - pit copper mine with the world β s largest production, will have a very important effect on our first quarter gdp figures. it already did in the imacec of february, which showed a yoy contraction of 1. 3 %, with a fall of 17. 1 % of its mining component. since the strike ended in late march and resuming normal production levels is not instantaneously, the figures of that month will also be affected. if you add the continued weakness in construction, the economy could experience an expansion close to 0 % in the first quarter of the year. however, one should not forget that the strike at escondida, while very relevant to explain the first quarter figure, is a oneoff event that is not expected to generate significant spillovers on activity elsewhere in the economy, nor on inflation. 13. for these reasons we reduced our growth forecast for 2017, and we are now projecting gdp will be in the 1 - 2 % range ( 1. 5 - 2. 5 % in december ). at the same time, for 2018 we are expecting the economy to grow between 2. 25 and 3. 25 % ( table 1 ). the growth recovery is based on the fact that the economy does not appear to have any relevant imbalances, the mining - related investment adjustment is expected to end, and as i mentioned at the beginning of my presentation, the global outlook appears more favorable. fiscal policy is assumed to follow the fiscal consolidation path announced by the government. table 1 domestic scenario ( annual change, percent ) gdp domestic demand domestic demand ( w / o inventory change ) gross fixed capital formation total consumption goods and services exports goods and services imports current account ( % of gdp ) gross national saving ( % of
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be given priority in allocation of expenditures. poor access to water supply and sanitation are often associated with poor health outcomes. at present only 63 percent of the country β s population has access to safe drinking water, whereas proper sanitation facilities are available to only 39 percent of the total population. the government is planning to increase water supply facilities and sanitation facilities to reach 100 percent of population as part of millennium development goal. construction of drinking water supply and sanitation facilities is already receiving prime importance under the khushal pakistan program. social safety nets as part of social safety net programme, the government has launched direct cash - transfer programmes for poor families through medical assistance, and educational stipends from the bait - ul - maal ( a public welfare programme ). the food support programme covers 1. 2 million of the poorest households with monthly incomes of up to rs. 2, 000 per family ( us $ 35 ). a system of needstesting has been adopted for the identification of beneficiaries by linking the programme with the zakat system. the zakat programme that targets widows, orphans and the disabled has been strengthened. about two million beneficiaries received assistance from the zakat fund, of which 0. 5 million receive assistance on a regular basis. it is envisaged that an additional 1. 5 million will be added to the list of zakat recipients through rehabilitation schemes, which will provide micro loans of rs. 10, 000 ( us $ 160 ) to rs. 50, 000 ( us $ 800 ) each for starting up small businesses. an allocation of rs. 5 billion ( us $ 80 million ) has been made for these schemes in addition to the normal stipends to mustahqeen ( the needy ) out of the zakat fund. it is estimated that zakat contributes 10 - 15 percent to the government β s poverty reduction programme. the school feeding programme for female students ( tawana pakistan programme ), which was successfully piloted in a few districts will be replicated throughout the country. this programme will help address malnutrition in female students as this has resulted in low enrolment, high absenteeism / dropout rate and low cognitive achievement. it is estimated that community mobilization will strengthen ownership of this programme and lead to a 30 percent decrease in the dropout rate. the employees old - age benefits institutions ( eobi ) and provincial social security institutions provide pension and medical care benefits to private sector employees. sindh and punjab provide medical care
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in awareness building through conferences and regular interaction with the banking professionals, including partnership with the pakistan institute of corporate governance, which was established with sbp as a founding member. the efforts of sbp and banking industry have yielded results in bringing about a positive change in the corporate governance practices of banks. banks are now managed and run by better cadre of professionals and stakeholders now play an active role and take a keen interest in the affairs of banks. the boards meet regularly and participate in both setting strategic direction for their institutions and providing desired oversight. managements at majority of banks are equipped with professional competence and high degree of integrity. the increasingly intense competition among banks has resulted in improved and swift decision - making processes. the outside pressures have been marginalized. financial reporting standards mirror international best practices, resulting in enhanced disclosure and transparency. in compliance with the elaborate corporate governance framework of the regulators, banks have displayed high level of eagerness to up - grade their systems. a quick glance at the corporate governance practices adopted by banks brings to fore the following major areas where banks have shown increased, albeit slow, compliance with the existing codes and standards : β’ β’ β’ β’ β’ β’ β’ β’ β’ β’ β’ β’ banks seek prior clearance from sbp for the appointment of directors and ceos ; banks follow the fit & proper test criteria for the appointment of key executives who should not be holding an office in another financial institution ; the scope of the board β s policies has been enhanced to cover a broad range of areas such as internal audit and control, risk management, human resources, credit, investments, etc. ; boards now include experienced non - executive directors ; boards meet more frequently ; banks record detailed minutes of the board meetings ; boards constitute specialized committees with well - defined objectives, authorities and tenure, comprising of non - executive directors to review different critical functions ; banks ensure that executive directors are not more than 25 % of the total directors on the board ; banks ensure that their cross shareholding in other financial institutions does not exceed more than 5 % ; directors of the same family do not get representation of more than 25 % of the total directors on the board ; auditors are appointed from the sbp β s approved panel and they are rotated at an appropriate interval ; and banks publish and circulate on quarterly basis unaudited financial statements of the banks along with the directors β review. improvement in corporate governance has helped impart a high degree of financial stability. the balance sheet of the banking system has expanded at a
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3 % per cent of their total assets, including off - balance sheet assets such as trade finance commitments. in addition, because trade finance involves the importer β s bank and the exporter β s bank through a letter of credit, the changing risk weight on loans between financial firms is likely to adversely affect trade finance. finally, the liquidity rules, which require banks to match long - term obligations with long - term funding could also penalise trade finance. i thank you for your attention and wish you the best. 4 / 4 bis central bankers'speeches
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ever greater size should be reduced. systemic risk buffers and higher capital requirements for systemically important institutions are instruments which counter this incentive. their introduction is therefore welcome. in other words, there should be at least three, not just two, taxis waiting at the taxi ranks of large stations, to return to the image i used earlier. however, capital buffers are only a first line of defence to help banks weather adversity better. this is particularly important for banks that would be especially difficult to wind up. further measures are necessary to ensure that it is, in extremis, possible for large and very interconnected banks, too, to fail. 6. banking union 6. 1 single resolution mechanism a vital building block in the process of making the banking system more stable is creating the regulatory framework for the orderly resolution of failed banks. to achieve this aim, procedures need to be put in place which allow the principle of liability to be implemented effectively. the eu has made crucial progress recently, with the adoption of a harmonised bank resolution regime ( the bank recovery and resolution directive ) and the decision to create a single resolution mechanism ( srm ). essentially, the new rules are designed to ensure that banks that run into difficulties in future can be wound up, with their owners and creditors being first in line to foot the bill. the srm provides expressly for a bank - financed resolution fund only being second in line, while public funds would only be used as a last resort. despite a number of exceptions in the bis central bankers β speeches fine print, which are part and parcel of the process of compromise, the resolution mechanism agreed upon allows a fundamental principle of market economics to be enforced. the bundesbank welcomes this agreement as an important complement to common european supervision. but we still believe that a treaty change will be needed, all the more so as the decision - making processes seem to be as complex as ever. the aim must be to set up a european resolution agency equipped with clear decision - making structures. a matter which has yet to be decided conclusively, but one that will be of particular interest to you, is the question of which banks will need to pay into the single resolution fund, and how much. an appropriate approach would be to have different contributions depending on an institution β s size and its specific risk profile. banks will be asked to bring the fund up to its target volume of 55 billion euro over a period of eight years, beginning in the year
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juyeol lee : new year speech new year's address by mr juyeol lee, governor of the bank of korea, at the bank of korea, seoul, 3 january 2022. * * * this is an unofficial translation prepared by the bank β s staff based on original speech released on december 31, 2021 dear fellow members of the bank of korea! today we start our first working day of 2022. i would like to begin by expressing my heartfelt gratitude to all of you for so faithfully carrying out your duties throughout the past year under the difficult working conditions during the pandemic. our economy recovered more rapidly than expected last year amid the ongoing impacts of covid - 19. exports and facilities investment maintained buoyancy, boosted by increased global demand. the slump in consumption gradually eased despite continuing effects from the spread of the disease. consumer price inflation picked up rapidly, as international commodity prices soared and demand pressures increased in the process of economic recovery. meanwhile, concerns about worsening financial imbalances grew further, with funds concentrating into asset markets and household debt building up. in consideration of these changes, the bank of korea is gradually normalizing the monetary policy stance, which had been highly accommodative since the outbreak of the pandemic. we raised the base rate twice, and phased out temporary financial support measures deemed to have achieved their intended purposes. nevertheless, we strengthened lending programs for vulnerable groups, such as small businesses, that continue to suffer from the pandemic. the domestic economy is expected to continue steady growth this year as well, on the back of favorable exports and investment. however, uncertainties remain heightened at home and abroad. with the emergence of the new virus variant, it is still hard to predict when the pandemic will come to an end. there is also a growing concern that the elevated inflation, due to global supply chain disruptions and responses to climate change for instance, will last longer than initially expected. around the world, monetary policy normalization is proceeding at a faster pace accordingly. in addition, as competition and conflict among major economies have deepened, global value chains have changed considerably. expanded contact - free practices since the pandemic have prompted transition to digitalization in all sectors of our society. it is increasingly forecast that the chinese economy, which has strong trade links with korea, will slow as it undergoes structural change. looking at our domestic economy, there are growing concerns that the face - to - face service
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selfemployed for the time being. at the same time, we should enhance the efficiency of the lending facilities and will prepare a medium - to long - term plan to improve the facilities for the postcovid - 19 era. efforts must be made in particular to maintain stability in the financial and foreign exchange markets. in response to heightened inflation, major central banks, including the us federal reserve, have either started raising interest rates or are signaling their intention to do so. as each country normalizes its monetary policy, we could see a spike in volatility of the price variables of international financial markets and of capital flows. we should closely monitor instability factors, and implement market stabilization measures in due course if needed. in addition, there is also a possibility of potential insolvencies in the household and corporate sectors materializing as various financial supports are unwound. we must constantly keep a close eye on risk factors concerning the financial system, such as borrowers β debt service capacity, and cooperate with the government to come up with appropriate response measures. we need to deal proactively with changes in the payment and settlement environment. in response to rapid progress toward the digital economy, we should further strengthen research on the technological and institutional aspects of adopting central bank digital currency ( cbdc ). in addition, we should set up a system to effectively monitor companies including big tech firms offering new payment services in order to ensure safety of the payment and settlement system. we must also work to promote financial inclusion to ensure that socially vulnerable groups β access to cash is not constrained in the course of payment and settlement innovation. we should examine the current monetary policy framework to identify any aspects requiring improvement. in this process, we should look at the possibility that inflation dynamics have undergone structural changes since the pandemic outbreak, while studying how financial stability can be considered in a more systemic manner within the current framework. in addition, efforts to review the role of the bank of korea should continue in consideration of changes in the policy 2 / 3 bis central bankers'speeches environment. we should put more thought into how important social and economic issues the central bank too cannot disregard, such as demographic changes, increased inequality and climate change, can be reflected in the operation of monetary policy. since climate change, in particular, is now an immediate challenge and no longer just a potential risk, we should seek realistic alternatives that allow the use of the bank β s policy instruments for the sake of smooth transition to a low - carbon
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muhammad bin ibrahim : future responsibility and response - ability proofing compliance - keynote address by mr muhammad bin ibrahim, governor of the central bank of malaysia ( bank negara malaysia ), at the 9th international conference on financial crime and terrorism financing ( ifctf ) " future proofing compliance : responsibility and response - ability ", kuala lumpur, 4 october 2017. * * * " compliance, past and future " this is an important and serious gathering. i am encouraged to see many leaders and key compliance officers of the financial industry here at the international conference on financial crimes and terrorism financing, signifying the industry β s commitment to a safer and more secured financial system. it is worth repeating that public trust and confidence in the financial system cannot be compromised. the cost of financial crimes and terrorism financing are staggering. based on the united nations office on drugs and crime ( unodc ), money laundering transactions are estimated to cost economies between 2 % to 5 % of global gdp. this equals to usd1 to 2 trillion annually. it is a humongous amount. beyond monetary terms, these activities have destructive consequences for the lives of many, especially the poor and underprivileged. we must do better on this if we really want to β future - proof β our financial system. three points are worth mentioning on compliance : first, it is not the end, it is a means to an end ; second, it should be viewed within a broader context of a financial institution β s responsibilities to society ; and third, it should be approached in partnership with other key participants in the financial system. compliance as a means to an end the past decade has been a turning point for compliance. arising from major systemic failures of governance, regulators have since elevated the importance of compliance. for good reason, this has led to tighter regulations, greater scrutiny and stronger enforcement. the industry has in turn, invested heavily in their compliance function. it is estimated that some firms could spend up to 10 % of their revenues on compliance within the next few years. this is by no means an insignificant amount. yet, as we have seen over the recent years, this has not put a stop to money laundering and terrorism financing. a case in point is a major bank in the asia pacific region which is being investigated for more than 50, 000 violations of money laundering and terrorism financing. perhaps we need to take a step back and question if the industry has the right understanding of compliance. if the motivation for the increased compliance is merely
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may 17, 2019 bank of japan outlook for economic activity and prices and monetary policy speech at a meeting held by the naigai josei chosa kai ( research institute of japan ) in tokyo haruhiko kuroda governor of the bank of japan ( english translation based on the japanese original ) introduction it is my pleasure to have the opportunity to address you today at the naigai josei chosa kai. at the monetary policy meeting ( mpm ) held at the end of last month, the bank updated its projections for japan's economic activity and prices through fiscal 2021 and released them in the april 2019 outlook for economic activity and prices ( outlook report ). in addition, with a view to making clearer its policy stance to persistently continue with powerful monetary easing, the bank decided to take some additional monetary policy measures. today, i would like to talk about the bank's outlook for japan's economic activity and prices based on the outlook report, as well as its current thinking behind the conduct of monetary policy, including the decision at the recent mpm. i. economic developments developments in overseas economies let me start by talking about developments in overseas economies. overseas economies have been growing moderately on the whole, but slowdowns have been observed recently ( chart 1 ). unlike the synchronous growth of the global economy seen through the first half of last year, differences in growth rates among regions and industries have become evident. while the u. s. economy has continued to expand firmly, relatively weak developments increasingly have been observed in the chinese economy because economic activity has been hampered by the trade friction between the united states and china as well as adjustments in the it sector, in addition to the impact of authorities'measures to push forward with deleveraging. as for europe, production has declined since the second half of last year, mainly in germany, reflecting the tightening of gas emission regulations on automobiles within the european union ( eu ), and weaker exports to turkey and china also have been exerting downward pressure on the european economy recently. under these circumstances, in the latest forecasts released by the international monetary fund ( imf ) last month, the global economic growth rate for 2019 is projected to be 3. 3 percent, which was further revised somewhat downward from the previous forecasts released in january. thus, the growth rate for this year is likely to fall slightly below the long - term average since 1980 of 3. 5 percent. current situation of japan's economic
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of 1992 to 2 percent at the end of 1995. with no monetary accommodation from the central bank, unsustainable government deficits and debt caused real interest rates in canada to climb. while canadian inflation was below that of the united states throughout this period, canadians paid a substantial risk premium over u. s. rates to borrow. moreover, the canadian dollar came under persistent pressure. overall economic performance suffered, with gdp growing very sluggishly in the recovery from the 1990 β 91 recession and unemployment climbing as high as 12 percent. these economic conditions contributed to the election of a new government, which made a credible commitment to balance the budget. in the following years, the federal budget deficit fell dramatically. revenue increased, and government expenditures were cut sharply. by 1996, canadian interest rates had fallen below comparable u. s. rates. inflation remained subdued, real gdp growth picked up, and unemployment fell. equitable fiscal discipline. the canadian experience in the second half of the 1990s is suggestive of the third β and the only responsible β way to resolve our growing fiscal imbalance : by addressing its source in an environment of price stability. all seem to agree this is the way we would prefer to go, but of course the devil is in the details. at the outset, it requires an institutional framework committed to having an independent central bank. this discourages the fiscal authority from turning to its central bank and should it do so, strengthens the bank β s ability to say β no. β in the united states, the federal reserve β s policies in the early 1980s provide a vivid example of the benefits that arise from the exercise of central bank independence. during this time, high interest rate policies designed to lower inflation were deeply unpopular both among elected leaders and the broad public. but the federal reserve was able to exercise its independence and pursue long - term goals which systematically reduced inflation and changed the psychology of the nation regarding its expectation about inflation β s path. as a result, the united states has had nearly three decades of low inflation. knowing inflation is not an acceptable alternative to strong fiscal management, a government faced with rising debt levels must provide a credible long - term plan to reestablish fiscal balance. the plan must be clear, have the force of law and its progress measureable so as to reassure markets and the public that the country has the will and ability to repay its debts in a stable currency. to be broadly accepted, the plan must be seen as fair, in which there
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other forms of backstops, like the imf β s flexible credit line, is highly advisable. also, the public and private sectors should pursue proactive debt management strategies, avoiding bunching of maturities, lengthening durations, and keeping an eye on foreign exchange rate mismatches. third pillar. promote economic growth by making the economy more competitive, increasing total factor productivity and thus potential gdp growth. this takes us down the road of structural reforms, which have huge potential in emes. this is the hard way to achieve sustainable gdp growth, but is the only reliable one that is left. so, in summary, the first and second pillars are meant to guarantee financial stability, not necessarily inhibiting economic growth. the real lever for promoting growth lies in the third pillar. as the saying goes : plan for the worst, hope for the best. let me conclude by saying that i am an optimist, even though my remarks might not project that. as you know, we central bankers, by design, are overly cautious, and we are β worriers β. all things considered, emes have sailed through the global financial crisis relatively well, notwithstanding the bumpiness in the ride. required policy responses have been implemented on a timely basis in most cases, and the underlying fundamentals are still strong. bis central bankers β speeches with regard to my own country, mexico, i can say that we have in place a plan that fully complies with the three pillar approach i just presented to you. macrofundamentals are in good shape, we have a strong external position, even under stress scenarios, and unprecedented structural reforms are under way. all this, hopefully with stronger economic growth in the united states β our main trading partner β should allow us to preserve financial stability even under turbulent times, and increase gradually potential gdp growth to reach a level close to 5 percent at the end of president pena nietoΒ΄s administration. thank you very much for your attention. bis central bankers β speeches
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items may be offset with possible adjustments to others. the draft state budget for 2013 sets an overall general government deficit target, in national accounts terms, of 4. 5 % of gdp, in line with european commitments. that is down from 6. 3 % envisaged for 2012, excluding from that figure the impact of the measures to support banks which must be recorded this year ( amounting to around 1 pp of gdp ). the budget envisages that the public debt ratio will increase from 85 % of gdp in 2012 bis central bankers β speeches ( including β¬30 billion of frob debt due to the drawdown in december of the credit line agreed with the european authorities ) to 91 % of gdp in 2013. the fiscal effort these targets entail is highly ambitious ( around 2 pp in terms of the cyclically adjusted primary deficit ), in a setting which will remain difficult. the macroeconomic scenario accompanying the budget envisages that gdp in real terms will contract 0. 5 %, as a result of the 2. 8 % fall in national demand which would be partly offset by a 2. 3 pp contribution by the external sector. the main difference between this macroeconomic setting and that of the imf or the european commission is the lower decline in gross capital formation projected in the budget. achievement of the targets set for 2013 may be jeopardised if tax receipts are affected by lower economic activity. expenditure in the state and social security budget is dominated by the interest on government debt, spending on contributory pensions and unemployment benefits. the sharp rise in these items reflects the increase in debt and the higher cost of new issues, demographic trends and the unfavourable performance of the labour market. to offset this expansionary trajectory, the budget adopts an austere stance on other expenditure items, in particular the remuneration of public employees and real investment. lastly, i must mention that the budget for 2013 saw the culmination of one of the most important agreements of the toledo pact, namely the separation of the social security system β s funding sources : on one hand, contributory pensions, funded solely by social contributions and, on the other, non - contributory supplements and non - contributory pensions, funded by taxes. this separation, which began to be applied in 2002, will finally be completed in 2013. the bank restructuring process finally, i would like to comment on the bank restructuring process under way further to the agreement entered into with the european authorities last july.
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that the banking union is incomplete. we have not yet finished the work we began ten years ago. although the single supervisory and resolution mechanisms are fully operational, the european deposit insurance scheme ( edis ) is still pending. in the absence of political consensus, work is currently under way on an intermediate solution, namely the bank crisis management and deposit insurance framework ( cmdi ). last june5 the council of the eu agreed on a joint position with the european parliament, which has to be ratified. without going into detail, i firmly advocate aiming for the creation of this common framework, in order for the banking union to have true substance. in conclusion, the uncertain and changing environments in which banks operate today require that supervisory processes also be adapted so as to quickly and flexibly capture all elements related to their risk profile and be able to establish timely corrective and mitigating measures. supervision needs to be more efficient, targeted and transparent, both now and in the future. as with the world around us, supervision also has to evolve, if it is to fulfil its purpose : ensure a robust and stable financial system that provides the real economy with the resources it needs for its activity. banks β ability to react to unexpected shocks, and the existence of operational frameworks that strengthen their resilience in vulnerable digital environments with unforeseen or deliberate failures, will be key elements of tomorrow β s supervisory agenda. nor must the other aspects i have mentioned be neglected, such as governance, climate risk management and liquidity. if it is to be efficient, supervision needs to evolve in step with changes that impact the financial system. lhttps : / / www. consilium. europa. eu / en / press / press - releases / 2024 / 06 / 19 / bank - crisis - management - and - depositinsurance - framework - council - agrees - on - its - position /.
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orderly but resolute fashion, especially by smaller banks, whose npl ratios are higher and coverage ratios lower than those of the significant banking groups. the improvement in the quality of banks β assets was facilitated by the development of the market for npls : in the three years 2016 - 18, npl disposals amounted to more than β¬120 billion, gross of provisions ; so far this year they came to around β¬20 billion. this was due not just to the fact that banks can access the state guarantee scheme ( gacs ) for securitized bad loans, which was renewed in march of this year, but was also spurred by the early results of the reforms undertaken to reduce the length of credit recovery proceedings, which deters investors and affects disposal prices. the expected time needed to sell foreclosed property decreased from more than three years to around two years. the expected length of time needed to complete all preparatory procedures also declined, albeit by only three months, to just over two years. there is still room for further reductions, which can be accomplished in part by following the best organizational practices promoted by the high council for the judiciary, whose effects can already be seen in some areas of the country. progress can also be achieved by turning more frequently to corporate restructuring and turnaround specialists ( e. g. turnaround funds ). this could lead to some β unlikely - to - pay β loans returning to performing status, benefiting both banks β balance sheets and the economy. the credit recovery sector has grown significantly in recent years. this development has contributed to the reduction in npls in banks β balance sheets, but it is not free of problems. inefficient recovery performance can erode value, reintroduce risks to banks β balance sheets and, in extreme cases, have repercussions on the guarantee provided by the state through the gacs. the bank of italy remains highly vigilant in supervising the intermediaries for which it is responsible. banks β profitability was helped by low funding costs and the drop in loan loss provisions ; excluding extraordinary items, in the first six months of 2019 the return on equity was about 7 per cent on an annual basis. net interest income remains under pressure, also due to increased competition in the market for loans to high - quality customers. banks, especially small ones, must continue to diversify their sources of revenue and to contain their costs ; less significant banks have reduced their operating expenses by just under 1 per cent
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in the first half of this year, compared with a drop of almost 4 per cent for the significant banking groups. better profitability is critical for banks, and not just italian ones, to enable them to meet the challenges posed by competitive pressures, by prudential regulation, by the new european crisis management framework, and by technological innovation in the financial sector. this is essential for small and medium - sized banks which are still suffering from the effects of the deep and protracted economic recession, especially in the south of italy. among other things, these banks face greater difficulties in accessing the market for debt and equity capital. the heterogeneity of financial intermediaries in terms of firm size, business models and corporate form can play an important role in the proper functioning of the system. however, it must be compatible with the safety and soundness of banks, which is essential for them to remain in the market. from this standpoint, achieving various forms of integration could help significantly by unlocking the benefits associated with a larger operating scale, a wider range of products, and the adoption of innovative technologies. with the launch this year of two new cooperative banking groups ( iccrea and cassa centrale banca ), this sector can continue to support local economies from a much sounder position. as a result of the reform, the structure of the italian banking system has undergone extensive change, moving towards less fragmentation. as of last june, the 12 significant groups ( which include both cooperative banking groups ) held almost 80 per cent of the system β s total assets. many of the about 90 less significant banks, with the exception of the raiffeisen banks for which an institutional protection scheme is to be established, operate on a very small scale, which also impacts their ability to adapt their business models to technological change : more than half of them report assets of less than β¬1. 5 billion and over one third of less than β¬1 billion. effective integration must be pursued in this sector as well, especially among the smaller popolari banks, which suffer from the typical governance problems that stem from the cooperative banking model. for these popolari banks, the measures and projects we have been suggesting for some time for their strengthening need to be implemented quickly. * * * to make the fullest possible use of the expansionary potential of the monetary policy measures adopted by the ecb governing council, the other policies also have to move in the same direction. fiscal policies that support economic activity
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power standards. cesee - 10 figures are gdp - weighted averages. bis central bankers β speeches turning to gdp per capita, we see a different picture. while the cesee - 10 cover a comparatively small area, in 2010 their gdp per capita in purchasing power standards was on average almost three times higher than that of china. as you can see, the income level in russia was close to the gdp - weighted average in the cesee - 10. but does this mean that cesee ( and russia ) can lean back? no, on the contrary : china β s impressive growth path over the past 15 years constitutes a challenge to all other economies, including cesee and russia. data on gdp growth show that china stands out with a remarkable real gdp growth of 309 % over the period from 1995 to 2010. china had chosen a highly controlled opening - up strategy. the chinese growth model relies upon a large pool of domestic savings and investment ( which, to a large extent, comes from abroad ), lower labor costs and thus labor - intensive exports. by contrast, in cesee and russia, central planning was overthrown in the late 1980s and early 1990s, when a major shift in economic, political, cultural and sociological paradigms occurred in these countries. russia β s growth model has, to a large extent, rested on industrial production and, increasingly, on energy exports. in the cesee - 10, by contrast, capital inflows β mainly from western europe β together with institutional reforms and eu accession have spurred export - led growth. even if cesee and russia started out from higher gdp per capita levels than china, their growth performance has still been remarkable. the financial crisis, however, has challenged the current growth models not only in these regions. chart 3 : real gdp growth source : oenb calculations based on imf data. note : 1995 = 100. while china has weathered the financial crisis quite well, 1 cesee and russia were directly hit. 2 despite these differences, all three markets face common challenges both in the real economy and on the financial market, such as rising external imbalances and decelerating despite a decline in real gdp growth against precrisis levels, china nevertheless recorded positive annual growth rates of between 9 % and 10. 5 % over the period from 2009 to 2010 ( imf ). most recently, however, real gdp growth slowed down again from 9. 5 % in the second quarter to 9. 1 % in the third quarter of
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properly communicated to our constituency, the filipino public, through such documents as the inflation report and regular press statements. we welcome your comments on the contents of the report and hope that you will continue to actively participate in the public dialogue on the monetary policy process. thank you and good morning.
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amando m tetangco, jr : a responsive capital market β a step on the road beyond investment grade speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the philippines investment forum, organised by euromoney, manila, 18 february 2014. * * * i am pleased to join you for this philippines investment forum. events such as this organized by euromoney bring together the main stakeholders of our economy. through the various panel sessions, we are able to hear and exchange views, giving us a good sense of where the market pulse lies. it was certainly a privilege for all of us to have listened to no less than the president deliver the official keynote address. this shows you how serious the country β s policy makers are in reaching out to you who are among our economy β s main stakeholders. your work is central in enabling the public sector to effect true, broad - based and lasting change that supports the country β s continued development. the president β s address and the session before this one laid the groundwork for us to set our sights β beyond investment grade β. investment grade β how did we get here? indeed, we have seen that the road to investment grade was not easy... it was long and marked by reforms. reforms which include, first, a critical diversification of our growth sources and drivers to exploit and take advantage of our favourable demographics... second, a purposeful shoring up of our external position and strengthening of our banking system β¦ knowing that a robust external position and strong bank balance sheets would allow us to ride out the turbulence from external financial shocks... and third, a resolute management of our fiscal house by steadily reducing our external debt, maintaining a healthy government debt profile, and firmly committing to reforms that would allow us to meet our intergenerational needs. investment grade β the near - term challenges our current operating environment continues to be very sensitive to global developments. of late, we have witnessed what some analysts called the β rout β in emerging markets, following uncertainty in the next steps of the fed. since the beginning of the year, investors have indiscriminately sold em debt, and the philippines was not spared. we saw the peso decline, the stock market index drop and government securities yields rise in the secondary market. alongside the fear of contagion from em sell -
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offs, some analysts are also beginning to wonder if the philippines isn β t already overheating. let me address the overheating concern first. looking behind the numbers, current trends in liquidity and credit growth do not appear to be worrisome. the strong growth in domestic liquidity has been due mainly to the operational adjustments in the bsp β s special deposit account ( sda ) facility which were completed in november 2013. this rapid growth is therefore seen as only temporary and is not expected to translate into significant inflationary pressures or asset price misalignments. the growth in bank credit, on the other hand, continues to be channelled to the productive sectors of the economy. the higher bank lending growth rates are reflective of the economy β s higher growth trajectory and increased financial deepening. in addition, there is fundamental support for the growth in the real estate sector with real demand from end - users including from the growing young professionals and bis central bankers β speeches the bpo sector. finally, data from colliers international philippines research ( colliers ) as of q4 2013 show that property prices are not significantly out of line with their long - term trends. as for the rout in the financial markets, i would say, some calm has returned with the market β s better appreciation of the forward guidance from the fed. our view has always been that after the initial nervousness, markets would regain their bearing and distinguish between economies with good fundamentals ( such as the philippines ) and those with more structural concerns. in the case of the philippines, we have actually observed some funds returning to our financial markets. at the beginning of each new calendar year or each chinese new year, i am often asked for my β fearless β economic forecasts. there are those who ask me with such earnestness that i sometimes feel they think i have an infallible crystal ball! friends, i don β t have one. and neither am i one to pursue luck. although before this forum, someone told me that in the year of the chinese wooden horse, the numbers 2, 3 and 7 are considered lucky β¦ interestingly, today is the 2nd day of the 3rd week of the year of the horse and 7th full week of the year 2014! what a coincidence, right? thankfully, we don β t have to leave things to coincidences. we can instead have the confidence to weather hiccups in market sentiment by planning judiciously and working earnestly. more specifically, the
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) complementary, merchant banking, or section 4 ( o ) grandfather authority are typically subject to continuous supervision by the federal reserve. that supervisory oversight, for example, includes review of internal management reports, periodic meetings with the personnel responsible for managing and controlling the risks of the firm β s commodities activities, and targeted examinations of those activities. the primary goals of our supervision of commodities activities are to monitor the management of risks of those activities to the financial holding companies and assess the adequacy of the firms β control environments relating to physical commodities activities. the federal reserve expanded the scope of its examination and review of the firms engaged in physical commodities activities as the events of 2008 and 2009 alluded to earlier brought more firms engaged in commodities activities under the supervisory purview of the federal reserve. in 2009, the federal reserve formed an examination team to conduct horizontal examinations of firms across the liscc portfolio that are engaged in commodities activities. among the supervisory activities taken were additional reviews by examination staff specializing in commodities risk - management practices. during these reviews, the teams examined the ways firms managed risks from commodities activities. in addition, the teams reviewed the firms β processes for assessing capital needs associated with these activities. on an ongoing basis, supervisory experts monitored the firms β exposures and assessed the strength of the corresponding risk - management and control processes. this work led us to explore possible additional actions in our anpr. the board requires financial holding companies that engage in commodities activities to hold regulatory capital to absorb potential losses from those activities. financial holding companies have long been required to hold capital against the counterparty credit risk from commodity derivatives ( and other types of over - the - counter derivatives ) and against the market risk of all commodity positions. following the financial crisis, the board has strengthened its capital requirements for the credit risk and market risk of these transactions. still, physical commodities activities can pose unique risks to the safety and soundness of financial holding companies. while firms engaged in physical commodities activities employ measures to limit liability β including using a variety of legal structures that attempt to limit liability for catastrophic and environmental events, purchasing insurance, and allocating capital aimed at mitigating operational risk β there are considerable difficulties in estimating bis central bankers β speeches the possible damages related to environmental or catastrophic incidents, as evidenced by some well - publicized events in recent years. moreover, just the uncertainty that can come about after a catastrophic event as observers wait to see the ultimate damages could put extraordinary pressure on a financial institution engaged in these
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anselmo l s teng : corporate governance in the financial sector welcome speech by mr anselmo l s teng, chairman of the monetary authority of macao, at the fsi - seanza regional seminar on corporate governance for banks, macao, 22 april 2008. * * * distinguished guests, dear delegates, ladies and gentlemen, good morning, i would like to extend my warmest welcome to all of you, on behalf of the monetary authority of macao, for attending the fsi - seanza regional seminar in the next three days. it is our honour that fsi and seanza hold this prestigious seminar in macao, a fascinating city of a unique mix of eastern and western heritage and recreation, featured by various historical and nostalgic constructions as well as gigantic entertainment complexes. i am very pleased to have the privilege to make an opening remark in this occasion and to share with you some of my views on corporate governance in the financial sector. undoubtedly, this is a prominent topic drawing extensive discussion amongst regulators and entrepreneurs in developed and developing countries at all times. to put the discussion in a nutshell, i would like to start with a study of the idea enshrined in the term β corporate governance β which is a legacy of our ancient wisdom. the word β corporate β comes from latin, meaning the formation of a body, and the word β governance β originates from greek, implying to steer a vessel across the sea. these concepts of ancient wisdom is still relevant nowadays, since the protection of shareholders β or stakeholders β interests as well as the board β s role to lead an institution to sail through uncertainties and challenges is the essence of modern corporate governance. in the context of the financial sector, effective corporate governance practices are indispensable to maintaining trust and security and critical to the proper functioning of economic and social system as a whole. poor corporate governance may lead to loss of public confidence in the ability of a financial institution to manage its assets and liabilities in a prudent manner, trigger more serious impacts on the financial sector through contagion effects and may even end in systemic crises. different from other sectors, financial institutions, particularly credit institutions, have β duties of care β not only to their shareholders but also their stakeholders, namely, depositors and customers. as the sole regulator of the financial sector of the macao special administrative region, the monetary authority of macao has exerted a lot of efforts to strengthen corporate governance in order to
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thirachai phuvanat naranubala : the role of non - bank financial institutions in relation to monetary policy speech by mr thirachai phuvanat naranubala, deputy governor of the bank of thailand, at the regional seminar on non - bank financial institutions in east asia region, bangkok, 4 september 2002. * * * i wish to congratulate the securities and exchange commission of thailand and the world bank for organizing such an interesting seminar in bangkok, and to thank them for inviting me to share my thoughts with you today. i can see that the topics in the seminar will cover many important aspects of non - bank financial institutions β operations - - ranging from the regulatory and supervisory framework to capital market development as well as the issue of governance. but i am the only person touching on monetary policy aspect. monetary policy does affect an important part of your business, which is the bond market. because the one factor reflected in the bond market yield curve is inflation expectation. therefore, if the framework and the conduct of monetary policy result in low and predictable inflation, it will help curb volatility of the yield curve and support development of the bond markets. change in monetary policy stance also directly affect interest rate and hence the bond market. thus, it pays for you to understand monetary policy. monetary policy in thailand in order for you to do that, i have to start by telling you about how the monetary policy framework has evolved here in thailand. since the end of the second world war, thailand employed the regime of fixed exchange rate one way or another. at the beginning our currency was fixed to the british pound, and later to the us dollar - first directly, then later via a basket with a very heavy us dollar content. the regime had served us very well. it provided certainty for international trade, and it helped to attract foreign investment. we were able to maintain the parity with the us dollar for more than 18 years until 1981 when we had our first devaluation. the pressure on our parity in the early days was slight. thailand β s exports at that time were rice, rubber, tin and teak. our production costs for those items were among the lowest in the world. however, beginning from the 1980 β s, we began to industrialize. our industrial exports which was only 33 % of the total exports at the end of the 1970 β s quickly rose to 76 % in 1990 and even further to 86 % today. with industrialization, we
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##aid, re - priced, and refinanced at higher rates. while financial market interventions are highlighted in this report, the continuing value of sustaining our economic momentum is also emphasized. in the 2017 fsr, there are discussions on the asean integration and on the advent of financial technology applications. the fscc sees a strong upside in these initiatives. discussion of these topics contextualizes our shared goal to accrue benefits derived from them while at the same time, remaining vigilant and prepared to intervene should systemic risks develop. finally, the fsr also explores data gaps and other areas of policy interest. better data is essential as empirical basis for our actions is required. however, data gathering and analysis are recurring challenges in the field of financial stability. thus, a strong emphasis is placed on this work to support and address other policy issues along the way. our technical team put considerable effort in completing the 2017 fsr. we expect that future issues will be released in the first trimester of every year. we also expect more engagement 1 / 2 bis central bankers'speeches from the public, market players and the media, not just to highlight future content but to raise appreciation for financial stability issues through a concerted communication plan. we have much to look forward to. thank you again for joining us today and good afternoon. 2 / 2 bis central bankers'speeches
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, over the period. with these rapid increases in productivity, business costs were well contained and the rate of price inflation was stable, despite a fall in the unemployment rate to below 4 percent. of course, over the past year, productivity growth has slowed, increasing 1 - 1 / 4 percent at an annual rate over the first three quarters of 2001. this, in itself, is remarkable, given the historical tendency of productivity growth to turn negative when the economy enters recession. i believe that the reason for the good performance at this stage of the cycle is that the improvements in productivity growth that we have witnessed since the mid - 1990s have been largely structural and will persist for a time. the fundamental factor leading me to be cautiously optimistic that much of the improvement is likely to be sustained is my outlook for the state of technological advancement in the united states. as fed economists dan sichel and steve oliner have shown, one major source of the gains in output per hour were the high and rising levels of business investment, which raised the amount of capital per worker, thereby boosting productivity. booming investment in the 1990s owed importantly to steep declines in prices of high - tech equipment, which largely reflected rapid technical progress. about half a percentage point of the increase in productivity growth in the 1995 - 99 period can be attributed to this so - called capital deepening. i believe that technological progress will continue to drive down information technology costs in the coming years. moreover, businesses have reaffirmed their intentions to improve productivity by substituting cost - saving high - tech capital for labor. while there are certainly risks to the view that improvements in productivity growth will persist, i do not believe the terrorism of last fall is going to permanently harm increases in output per hour ( and thus the health of the economy ). most assuredly, in the aftermath of these attacks, many businesses have been forced to redirect resources from efficiency - enhancing investment to meet greater demands for security. businesses may also have been compelled to increase redundancy to cope with the greater potential for supply disruption. however, these effects will be mainly a one - time hit to the level of productivity. they are not likely to change the trend growth rate of output per hour. moreover, their effects will be ameliorated as businesses use new technologies and find creative ways to hold down the cost of enhancing security and providing for contingencies. conclusion obviously, 2001 was a challenging year. but the american people once again proved to be up to the
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roger w ferguson, jr : developments in the u. s. economy - review and outlook speech by mr roger w ferguson, jr, vice - chairman of the board of governors of the us federal reserve system, before the economic club of colorado, denver, 16 january 2002. * * * i am pleased to address the economic club of colorado today. as always, the views i will be expressing are my own and are not necessarily shared by other members of the board of governors or of the federal open market committee. review of 2001 a confluence of factors shaped economic developments last year, and i would first like to review these factors, to provide a backdrop for assessing our economic prospects in the coming year. a year ago, signs of the recession that eventually unfolded were just beginning to materialize. after several years of booming growth, economic indicators started sending mixed signals. although consumer sentiment had dropped around the end of 2000, consumers were still spending at a healthy clip. while consumption growth had decelerated somewhat over the previous year, the modest slowing was consistent with the deceleration of aggregate demand necessary to better align supply and demand. businesses, however, appeared to be struggling. as data for the end of 2000 became available, it became clear that businesses - - amid disappointing sales and earnings - - had abruptly curtailed the record - setting expansion of investment spending. of course, some reduction of investment usually accompanies the recognition of a downshift in the economy, as firms bring their capital stocks in line with a revised outlook. but the severity of the adjustment last year appeared to reflect more than the usual reaction. businesses seemed to be reassessing the profitability of additional fixed capital in a more fundamental way. new capital, especially capital that embodies new technologies, continues to promise efficiency gains, but expectations seemed to have gotten ahead of even the more favorable reality, resulting in an unsustainable buildup of capital and run - up of equity market values. capital expenditures on high - tech equipment were especially hard hit. moreover, the sudden drop - off in business demand, coupled with some slowing in the consumer sector, apparently caught producers off guard. and despite rapid cuts in production, inventories piled up on shelves and at warehouses. early last year, manufacturers took steps to address the unwanted buildup and began liquidating inventories in earnest by slashing production of all types of goods. against this backdrop, the federal open market committee reduced the target for the federal funds rate sharply
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paris europlace international financial forum β paris, 9 july 2019 new frontiers in finance speech by francois villeroy de galhau, governor of the banque de france press contact : mark deen ( mark. deen @ banque - france. fr ; + 33 6 88 56 54 03 ). page 1 sur 5 ladies and gentlemen, it is a pleasure to be with you today : this paris - europlace international financial forum is more and more β the place to be β, as france and paris are increasingly stimulating first - movers in europe. the theme of this forum β β new frontiers in finance β β prompts us to look towards new territories that we have to explore and conquer. regarding finance, i will focus on two of them : digitalisation and green finance. but before looking at the future, let me stress two prerequisites for the present. * * i. two prerequisites for the present my first message is to welcome the new european team, nominated in brussels last week, starting with christine lagarde and ursula von der leyen. once again, albeit at the last minute, albeit under the threat of a crisis, europe has proved itself to be decisive and innovative. now, it is time to begin the fundamental work on a true financial eurosystem. let us look beyond brexit, and beyond the somewhat disappointing debates on the euro area budget. the top priority on the european agenda should be a financing union for investment and innovation, which will channel our abundant private savings through a combined banking union and capital markets union. firms need this in order to raise equity and find european venture capital ; keeping a european capacity in investment banking is a strategic imperative. financial players need this in order to conduct cross - border mergers : european banking consolidation is overdue, and it is indispensable, not to reduce competition β quite the opposite β but to reach the critical mass necessary to make digital investments and allow savings to circulate. and, lastly, the euro area needs it in order to finally have an effective economic stabilisation tool to weather the shocks affecting some countries : β private risk sharing β is effective between states in the united states. if one doesn β t want a fiscal union β duly noted β, one must make even more resolute progress on the capital markets union. we have talked enough about this, and it is now time to take concrete page 2 sur 5 measures : this must be the ambition
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, but took on an historical and symbolic dimension. on 1 january 2002, we will have the honour of witnessing the largest currency changeover that the world has ever experienced. this will be the crowning achievement of a long economic and political process which led to the creation of monetary union on 1 january 1999. this unique event in european history will help to ensure lasting prosperity, which is not only in europe β s interest but that of the rest of the world as well. lastly, speaking in front of bankers, financial institutions, business executives and journalists, i would like to make the following remarks as regards the present situation : - first, the main message in the present exceptional circumstances, is that the first quality of all institutions, all economic leaders, all enterprises as well as households is to keep one β s nerves. the best gift we could give the terrorists would be to change our plans, to cancel endeavours, to delay decisions, to reduce investment or consumption. we, institutions, enterprises, individuals had and have projects : let us realize them, in time, and unchanged. - second, let us beware of fashion. it was still fashionable, a year ago, to embark on vibrant eloge of the new economy, to predict the end of the business cycle and to forecast for ever very high level of productivity progress and buoyant economic growth. to - day some kind of herd behaviour drives a lot of observers and actors in the opposite direction : overwhelming pessimism as regards the present situation and the economic future. both attitudes are equally totally inappropriate. it is up to the central banks to remain moderate in their judgments, pragmatic and lucid in the various circumstances and to offer an anchor not only for monetary and financial stability but also for stability of judgment. - third, fostering confidence is a major contribution of the eurosystem to the prosperity of the european economy. confidence is a very precious ingredient in the present european conjuncture, as recently emphasized by the european council in ghent : confidence in the euro, in price stability, in its ability to be a highly reliable instrument for savings, in its medium and long term solidity. confidence of the consumers in price stability underpins growth through dynamic household consumption β which is today a major motor of economic growth. confidence of the savers underpins growth through a favourable financial environment. thank you very much for your attention.
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. where do we stand now, nine months into the program? with respect to the economic fundamentals, both the current state of the labor market, as well as the outlook, have improved since september 2012. back then, the unemployment rate was 8. 1percent and nonfarm payrolls were reported to have increased at a monthly rate of 97, 000 over the prior six months ; today, those figures are 7. 6 percent and 194, 000, respectively. back then, fomc participants were forecasting unemployment rates around 7 β 3 / 4 percent and 7 percent for year - end 2013 and 2014, respectively, in our summary of economic projections ; as of the june 2013 round, these forecasts have been revised down roughly Β½ percentage point each. while it is difficult to determine precisely, i believe that our asset purchases since september have supported this improvement. for example, some of the brightest spots in recent months have been sectors that traditionally respond to monetary accommodation, such as housing and autos. although asset purchases also bring with them various costs and risks β and i have been particularly concerned about risks relating to financial stability β thus far i would judge that they have passed the cost - benefit test. however, this very progress has brought communications challenges to the fore, since the further down the road we get, the more information the market demands about the conditions that would lead us to reduce and eventually end our purchases. this imperative for clarity provides the backdrop against which our current messaging should be interpreted. in particular, i view chairman bernanke β s remarks at his press conference β in which he suggested that if the economy progresses generally as we anticipate then the asset bis central bankers β speeches purchase program might be expected to wrap up when unemployment falls to the 7 percent range β as an effort to put more specificity around the heretofore less well - defined notion of β substantial progress. β it is important to stress that this added clarity is not a statement of unconditional optimism, nor does it represent a departure from the basic data - dependent philosophy of the asset purchase program. rather, it involves a subtler change in how data - dependence is implemented β a greater willingness to spell out what the committee is looking for, as opposed to a β we β ll know it when we see it β approach. as time passes and we make progress toward our objectives, the balance of the tradeoff between flexibility and specificity in articulating these objectives shifts. it would
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have been difficult for the committee to put forward a 7 percent unemployment goal when the current program started and unemployment was 8. 1 percent ; this would have involved a lot of uncertainty about the magnitude of asset purchases required to reach this goal. however, as we get closer to our goals, the balance sheet uncertainty becomes more manageable β at the same time that the market β s demand for specificity goes up. in addition to guidance about the ultimate completion of the program, market participants are also eager to know about the conditions that will govern interim adjustments to the pace of purchases. here too, it makes sense for decisions to be data - dependent. however, a key point is that as we approach an fomc meeting where an adjustment decision looms, it is appropriate to give relatively heavy weight to the accumulated stock of progress toward our labor market objective and to not be excessively sensitive to the sort of near - term momentum captured by, for example, the last payroll number that comes in just before the meeting. in part, this principle just reflects sound statistical inference β one doesn β t want to put too much weight on one or two noisy observations. but there is more to it than that. not only do fomc actions shape market expectations, but the converse is true as well : market expectations influence fomc actions. it is difficult for the committee to take an action at any meeting that is wholly unanticipated because we don β t want to create undue market volatility. however, when there is a two - way feedback between financial conditions and fomc actions, an initial perception that noisy recent data play a central role in the policy process can become somewhat self - fulfilling and can itself be the cause of extraneous volatility in asset prices. thus both in an effort to make reliable judgments about the state of the economy, as well as to reduce the possibility of an undesirable feedback loop, the best approach is for the committee to be clear that in making a decision in, say, september, it will give primary weight to the large stock of news that has accumulated since the inception of the program and will not be unduly influenced by whatever data releases arrive in the few weeks before the meeting β as salient as these releases may appear to be to market participants. i should emphasize that this would not mean abandoning the premise that the program as a whole should be both data - dependent and forward looking. even if a data release
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##ous shocks. financial conditions then affect policy rates only to the extent that they have an impact on the forecast of inflation and resource utilization. 4 now, is there any reason to modify this view of monetary policy given the experience of the financial crisis so far? let me approach this question by first asking what the causes of the financial crisis were, whether monetary policy contributed to the crisis, and whether a different monetary policy was warranted and could have prevented or reduced the size of the crisis. the financial crisis was not caused by monetary policy many have claimed that excessively easy monetary policy by the federal reserve after 2001 helped cause a bubble in house prices in the u. s., a bubble whose inevitable bursting proved to be a major source of the financial crisis. 5 however, as i see it, the crisis was mainly caused by factors that had very little to do with monetary policy and were mostly due to background macro conditions, distorted incentives in financial markets, regulatory and supervisory failures ( also when central banks have been responsible for regulation and supervision ), information problems and some specific circumstances, including the u. s. housing policy to support home ownership for low - income households. 6 the macro conditions preceding the crisis included low world real interest rates associated with global imbalances, as well as the great moderation, with a long period of very stable growth and stable low inflation, which led to a systematic underestimation of risk and very low risk premia in financial markets. there were distorted incentives for commercial and investment banks to increase leverage that were made possible by lax regulation and supervision and the lack of an appropriate bank resolution regime. there were also distorted the idea that inflation targeting implies that the inflation forecast can be seen as an intermediate target was introduced in king ( 1994 ). the term β inflation - forecast targeting β was introduced in svensson ( 1997 ), and the term β forecast targeting β in svensson ( 2005 ). see woodford ( 2007a, b ) for more discussion and analysis of forecast targeting. several central banks that do not call themselves inflation targeters effectively do conduct flexible inflation targeting, although they may not be quite as transparent about their inflation target, the role of stability of the real economy, etc. see, for instance, taylor ( 2007 ). see bean ( 2009 ) for an extensive and excellent discussion of the crisis, including the credit expansion and housing boom, the macroeconomic antecedents, the distorted incentives, the information problems, the amplification and propagation
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nbu is pursuing the policy of steering inflation to a point target of 5 % within an extended policy horizon of up to three years. inflation targeting reduces uncertainty, while flexibility allows us to take current economic conditions into account β including structural shocks caused by the war. flexible inflation targeting has its own distinct features. 2 / 4 bis - central bankers'speeches first, we focus on long - term goals. even in crisis conditions, we adhere to inflation benchmarks, paving the way for a gradual return to full - fledged inflation targeting. second, our monetary policy reacts to the conditions of the day : we have a broader monetary policy horizon under the transitional regime, which allows us to quickly adapt and respond to new shocks, such as energy crises or supply chain disruptions. third, flexible inflation targeting involves the use of a combination of instruments. apart from interest rate policy, we maintain an active presence in the fx market and impose caps on capital movements. as favorable prerequisites emerge, however, we continue our movement towards more market - based mechanisms. we will give special attention today to this third feature, as the use of a combination of policy instruments is not unique to ukraine and is increasingly seen in other small open economies. in fact, the main task of this workshop is to find an effective balance between the instruments used β in particular those based on advanced macroeconomic analysis. the fourth important feature of a flexible monetary regime is a high level of interaction between the fiscal and monetary authorities. the nbu cooperates closely with the government in raising external financing and implementing reforms in ukraine. at the same time, this cooperation implies that authorities must respect each other's mandates. which brings us to the fifth feature : the nbu strives for transparent, active communications with every target audience. we freely explain our decisions to avoid misleading market participants, experts, government officials, investors, and the public. we do this to maintain their trust β the primary anchor for an effective policy. through this approach, ukraine has been able to retain macrofinancial stability while setting the stage for economic recovery, despite continuing to face massive challenges. in addition to internal transformation, an important component of resilience is close cooperation with international partners. for ukraine, cooperation is now an integral element of macrofinancial stability. and at this point i'd like to reiterate our gratitude to our partners for the expert, financial, military, and humanitarian assistance they have provided. today we are one thousand and fifteen
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mr. george discusses monetary policy, unemployment and economic growth in the united kingdom speech by the governor of the bank of england, mr. e. a. j. george, at the tuc congress in blackpool on 15 / 9 / 98. thank you, chairman. i β m actually very pleased to be here, and to have this opportunity to respond directly to some of the serious concerns that have been expressed recently by trade union leaders - among others - about monetary policy. let me start with what is perhaps your biggest concern. you think that the monetary policy committee, which i chair and which sets interest rates, is only interested in controlling inflation and takes little or no account of the effects of its decisions on real economic activity and jobs. some of you evidently think that β s because we β re a crowd of β pointy - heads β or β inflation nutters β, or even β manufacturing hooligans β - and i β m not sure these descriptions are intended as terms of endearment. more seriously some of you think that the problem lies with our remit from the government which is first, to maintain price stability - defined as an underlying inflation rate of 2Β½ %, and, subject to that, to support the economic policy of the government, including its objectives for growth and employment. whatever the reason, your concern is that we place too much emphasis on holding prices down and not enough on keeping growth and employment up. the implication is that you see a trade - off between inflation and the rate of economic growth, so that if only we β d let up a bit on controlling inflation then this country could enjoy higher activity and lower unemployment, which are the really good things in life - or at least we could avoid some of the worst damage that is currently being inflicted upon the whole of the agriculture, large parts of manufacturing industry and even some services sectors. and that might even be true for a time. the trouble is that, in anything other than the short term, it would be likely to mean more rather than less economic damage, and lower rather than higher growth and employment. often in the past in this country we behaved as if we thought that promoting higher growth and employment - which of course is what we all want to see - was largely a matter of pumping up demand. we paid too little attention to the structural, supply - side, constraints. all too often we tried to buy faster growth and higher employment even at the expense of a bit more inflation. in
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management perspective β, bis quarterly review, september. benefit of contributing to the development and a more generalized adoption of standards and best practices in this market. naturally, it is also important to consider that investment in green bonds by these institutions is not free of constraints such as, for instance, those related to accessibility and liquidity. lastly, and rounding all this up, it is important to raise awareness and help develop the sense of commonality required to achieve greater adherence to a collective strategy. to this end, sustained collaboration among all relevant parties geared towards capacity building and knowledge sharing is essential, while the establishment of frameworks conducive to the wider diffusion and disclosure of the issues and actions undertaken, including to the general public, further adds to these objectives.
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the country. i β ll give the example of 2007 β the economy declined by 6. 6per cent and the banks made huge profits. i have all the information with me β what each bank makes, what is their spread, for how long and how they quickly adjust their rates to maintain their profitability. so, it β s the rest of the population which bears the brunt of adjustment while the banks maintain their profitability. to me that is unacceptable. i want to give a very clear signal to the banks that i β m not interested in controlling the interest rates but i want to see banks behaving responsibly in our economy. they must support the growth of our economy. they operate here. if we all do well, we all benefit, if we go down, let β s all go down together. i do not like some sections to take advantage of the situation. that is my sole reason to introduce the policy, which is very unprecedented. question 7 : how will the devaluation affect the sugar industry and agricultural sector? answer : very positive β they will get 20 per cent more revenue immediately and they β ll be encouraged to grow more food, those who are exporting eggplants, chilies and all sort of things, i would encourage them to grow more food β not only for exports, but grow more food for local consumption as well. and this devaluation is going to give that nudge which was required. question 8 : going back to banks β very soon banks will be advised to open up micro finance units, what is the purpose of micro - finance and how will it affect the economic growth? answer : that is another area that we have been having long conversations for a number of years, as far as 20 years back. i β ve been personally talking to banks. please, can you do something, change your banking practices, and don β t just concentrate on big businesses. you β re operating in fiji. we are a developing country. we are spread along the islands. see how we can grow the rural sector. that β s where the future of the country is. it β s the rural sector we need to grow. without the right kind of financing structure our rural sector can not grow. they have all the resources β fiji doesn β t lack resources. it β s got all the resources it needs. we need somehow to get the capital to work with the resources. and the banking system can facilitate that. this
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risk than the traditional banks and their cost of funds has also been higher. they have to work hard to keep their customers over the longer term as many tend to graduate to the banks as they become more successful. indeed competition across the whole banking system has noticeably stepped up in the last five years and customer bis central bankers β speeches allegiance is almost a thing of the past. no doubt each bank and credit institution is now being judged by its level of service. despite the intense competition, i think it is fair to say that our credit institutions have persevered in their niche areas and continue to perform well, backed by strong capital positions and satisfactory earnings performances. the combined balance sheet of the credit institutions recorded an annual growth of 33 percent over 2015, to reach $ 335million, with merchant finance limited contributing almost half. at the end of last year, combined credit institutions β net profit before tax stood at $ 18 million with capital and reserves growing 13 percent to $ 72 million. merchant finance limited please allow me to share a brief history of merchant finance limited. officially established in 1986 as the merchant bank of fiji, this institution initially operated as a finance company and since it did not take deposits from the public it did not come under the supervision of the reserve bank. this all changed in 1992 when we granted the company a licence to operate as a credit institution, enabling it to access public deposits. in 2002 the merchant bank of fiji changed its name to merchant finance & investment limited. further approval was granted in late 2014 to make another name change. this is the name we are actually launching tonight β merchant finance limited. so this year merchant finance limited actually enters its 24th year of serving the people of fiji as a licensed credit institution. the company has grown significantly, with an asset book of $ 21 million in 1992 to a publically reported $ 134 million in june 2015. the profitability of the institution has also increased over the years noting an β all time high β of just over $ 8 million in its last financial year. ladies and gentlemen, as the supervisor of the banking industry, the reserve bank closely observes the relationships of our licensed financial institutions with the other sectors of the economy. as i alluded to earlier, credit institutions like merchant finance limited play the unique yet important role of servicing customers and sectors which the banks may consider as high - risk. it is pleasing to see that merchant finance limited β s reach as a lender has extended to many key sectors in the economy, such as transport
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however, in practice, one should also take into account the idiosyncratic features of central banks when compared with private financial institutions, such as the fact that their ability to issue legal tender also contributes to their resilience by guaranteeing a future stream of income. furthermore, however a central bank β s risk budget is set, in specific institutional set - ups the range of measures adopted by a central bank in a financial crisis could β provided that the independence of the central bank is preserved β be further extended if a government guaranteed those operations that led to risks exceeding that budget. these two points mean that a line must be drawn in terms of the financial risk taken by a central bank. this line is not merely quantitative in nature. it is also determined by the goals to be achieved by the specific measures adopted by a central bank. while it could be argued that the government could take the necessary risks associated with the provision of support in terms of financial stability, the central bank remains responsible for the risks incurred by measures associated with monetary policy geared towards ensuring price stability. these two goals may sometimes converge β for example when the impairment of the transmission mechanism for monetary policy needs to be addressed using measures which will, at the same time, improve the resilience of the financial system. when intervening to provide liquidity, a central bank must avoid favouring certain sectors over others in terms of liquidity support. it must avoid distorting competition or otherwise hindering the efficient allocation of resources. while the central bank should therefore be very careful in its market interventions, this is not an argument in favour of inactivity. on the contrary, when asymmetric information β owing, for example, to a lack of market transparency or the opacity of certain financial instruments β threatens the functioning of a particular market segment, there may be grounds for the central bank to intervene. in such cases, intervention may be what is needed to restore market efficiency. β fx reserve management : trends and challenges β, bis papers, no 40, may 2008. 3. what central banks can do to help contain a financial crisis it follows logically from the points i have just made that the central bank, as the only player that has no liquidity constraints, can and should help to overcome a liquidity crisis by injecting additional cash into the system. in doing so, it should use all available instruments, but should not take on excessive credit risk. its objective of providing the financial system with adequate amounts of
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the importance of risk management considerations β in line with the theme of this conference β in determining central bank policies in the area of crisis management. we can add this to the long list of reasons why advances in the field of risk management, pursued in conferences such as this, will be essential in preventing and β should it prove necessary β managing financial crises in the future. thank you very much for your attention.
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, where the degree of resource utilisation is more than satisfactory, demand should stabilise. for 2010 as a whole, the snb expects real gdp growth of between 0. 5 % and 1 %, following a decline of around 1. 5 % in 2009. changes in monetary and financial conditions overall, monetary conditions are a reflection of our expansionary policy, especially with respect to interest rates and the monetary aggregates. the libor is currently at the level targeted since march this year, i. e. 25 basis points, a level which can be regarded as a floor. the fact that it was impossible to bring the rate down any lower than this led us, in march, to introduce other instruments in order to make our monetary policy as expansionary as the circumstances demanded. monetary conditions have become more expansionary via the interest rate channel in particular. indeed, credit premia on the capital markets have declined steadily since the beginning of the year. as yields on confederation bonds have remained low, other long - term yields have also trended downwards. it has thus become cheaper for companies to raise funds by borrowing on the capital market. in addition, our figures show that financing in the form of bank loans has also become more attractive following the decline in the libor. in real terms β i. e. after factoring in expected inflation β interest rates are even lower. the swiss franc has appreciated slightly in trade - weighted terms, as a result of the recent weakening of the dollar. however, it has remained stable against the euro, which shows that the monetary policy followed since march has been effective. an appreciation of the swiss franc against the euro would run counter to the relaxation in monetary conditions brought about through the interest rate channel. this is why the snb will continue to act decisively to prevent any excessive appreciation of the swiss franc against the euro. an assessment of monetary conditions can be misleading if it is based on prices, which, like currently the libor, have reached a bound. for this reason, an assessment based on quantities β money and credit β is particularly important in the current circumstances. the monetary base has increased substantially since october 2008, when the financial crisis entered a new phase following the collapse of lehman brothers. we supplied the interbank market with sufficient liquidity to meet burgeoning demand in a climate of uncertainty, in order to prevent any increase in money market rates. since then, precautionary base money demand has declined and we have
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news conference berne, 16 june 2022 thomas jordan introductory remarks by thomas jordan ladies and gentlemen it is my pleasure to welcome you to the swiss national bank β s news conference. in my remarks, i will begin by explaining our monetary policy decision and our assessment of the economic situation. after that, fritz zurbrugg will present the key messages from this year β s financial stability report. andrea maechler will then comment on the situation on the financial markets and the implementation of monetary policy. we will β as ever β be pleased to take your questions afterwards. monetary policy decision i will begin with our monetary policy decision. we have decided to tighten our monetary policy and to raise the snb policy rate and the interest rate on sight deposits at the snb by half a percentage point to β0. 25 %. in doing so, we are seeking to counter increased inflationary pressure. the tighter monetary policy is aimed at preventing inflation from spreading more broadly to goods and services in switzerland. it cannot be ruled out that further increases in the snb policy rate will be necessary in the foreseeable future to stabilise inflation in the range consistent with price stability over the medium term. to ensure appropriate monetary conditions, we are also willing to be active in the foreign exchange market as necessary. the snb policy rate change applies from tomorrow, 17 june 2022. with effect from 1 july 2022, we are also adjusting the threshold factor used to calculate the level of banks β sight deposits at the snb exempt from negative interest. the factor will be lowered from 30 to 28. this will ensure that the secured short - term swiss franc money market rates are close to the snb policy rate. page 1 / 5 berne, 16 june 2022 thomas jordan news conference inflation forecast inflation reached 2. 9 % in may and is likely to remain at an elevated level for the time being. the main reason for the higher inflation is the increase in the prices of oil products, food and goods affected by the global supply bottlenecks. however, there has also been a rise in inflation for some other goods and services. the snb β s new conditional inflation forecast is based on the assumption that the snb policy rate is β0. 25 % over the entire forecast horizon. the new forecast for the next three years is above that of march ( cf. chart 1 ), and stands at 2. 8 % for 2022, 1. 9 % for 2023, and
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information gaps by expanding workers β networks, providing legitimate information, and identifying new job opportunities. but finally, the pressure that community - based organizations exert on financial regulators must continue. access to credit is an enduring challenge, and the obstacles and problems β all the β broken windows β you see on the block β must be reported and explained. they must be understood by the federal policymakers who are responsible for enforcing our country β s laws and regulations in the realm of access to credit ; by the federal policymakers who engage in the conduct of monetary policy ; and by the federal policymakers whose actions contribute to the shaping of the landscape for financial services in this country. your voices β whether you are reporting, documenting, monitoring, analyzing, proposing, or even protesting β must be heard. your voices are crucial to alerting policymakers to the significant developments and emerging trends in the nation β s communities that must be confronted β and confronted in a swift and decisive way β if we are to make prosperity a national agenda that touches every american. thank you. bis central bankers β speeches
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society for training and development indicated that employers committed $ 172 billion in 2011 to employee training. see american society for training and development ( 2011 ), β 2011 state of the industry report shows increased spending, commitment for l & d, β december 20. this investment, however, traditionally funds the highest - educated and highest - paid employees. the hitachi foundation has suggested that considering a reallocation of even a small portion of these funds toward frontline workers would offer benefits to both employers and employees. as an example of these employer practices, right here in our backyard, the community foundation for the national capital region piloted the β career navigators β program with three hospitals in maryland β s montgomery county and one in the district of columbia to help employees navigate a pathway to better jobs with their current employer. these hospitals concluded that investing in training and education for top - performing, entry - level staffers in positions such as housekeeping, food service, and patient transport could provide a pipeline for the skilled employees that the hospitals would rely upon in the future. employees receive support with literacy and college - readiness training, career coaching, and scholarships. the program also helps hospitals document internal career pathways and train the human resource staff to serve as career coaches. throughout these efforts, the participating hospitals have reported enhanced employee engagement, reduced errors, and improved performance. see ted howard ( 2012 ), β owning your own job is beautiful thing : community wealth building in cleveland, ohio ( pdf ), β in nancy o. andrews and david j. erickson, eds., investing in what works for america β s communities ( san francisco : federal reserve bank of san francisco and low income investment fund ). see also gar alperovitz ( forthcoming april 2013, chelsea green ), what then must we do? the success of the β cleveland model β has spurred new efforts in places as diverse as amarillo, texas ; atlanta ; pittsburgh ; richmond, california ; and washington, d. c. see ted howard ( 2012 ). bis central bankers β speeches policymakers. you are the ideal audience for this message because you know how to link federal policymaking with economic empowerment. ncrc has grown to an association of more than 600 community - based organizations that promote access to basic banking services to create and sustain affordable housing, jobs, and vibrant communities for america β s working families. community - based organizations like many of those represented in this room will need to consider how to work with low - wage workers to bridge
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rumours carry with them a destabilising effect and in some cases have the potential to degenerate into self - perpetuating or self - fulfilling events. the rumour effect can result into unintended losses or gains and people may suspect that there are some vested interests behind such rumours. needless to say, the media β s role will, on the whole, tend to be negative in this channel. the third type is the survey effect. it is common for the media to carry out opinion polls. these polls or surveys could have methodological and other problems in terms of reflecting the true picture. these surveys have a tendency of influencing the perception of markets and at times, the general public. in such a case, the contribution of the media would depend on the scientific methodology adopted, transparency of assumptions and objectivity in the presentation of results. adequate care is a pre - condition to ensure a positive effect through this channel. lastly, there is the interpretation effect. here the media tries to interpret the stand taken by policy makers or markets. the interpretation effect may be positive or negative depending on professional skills as well as commitment to objectives. responsibility and accountability would be key to ensure positive effect through this channel. it is my conviction that the media β s responsibility is not confined only to their shareholders or to their subscribers, but extends to a larger section of the public. it is therefore apparent that the challenges before the media are not less than those before the central bank. it is also fair to recognize that the media faces several dilemmas. there are always pressures to be the first to report β a race to be the number one and they also have several stakeholders to cater for. let me end with a quote from the late dr. i. g. patel, former governor of the reserve bank of india : β communication is not just about transparency. it is also about education, guidance and steering this in the right direction. in this, the central bank can be an honest broker between government and the public and even the parliament β. i thank you.
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emmanuel tumusiime - mutebile : bankers β code of conduct remarks by prof emmanuel tumusiime - mutebile, governor of the bank of uganda, at the launch of the uganda bankers association code of conduct, kampala, 2 december 2010. * * * the chairman, uganda bankers association executives of commercial banks the executive director, uganda bankers association management and staff of the association distinguished guests in your respective capacities ladies and gentlemen it is a great honor and pleasure to be with you tonight, to witness the launch of the code of conduct for the uganda bankers association. i congratulate the uganda bankers β association on this important milestone and for the commendable job of fostering good governance and international best practices in the banking industry. the code of conduct will greatly contribute to the enhancement of public confidence in the banking sector. the code of conduct will undoubtedly contribute to overall integrity and security of the banking sector and help to further nurture the already conducive working relationships between the various banks and their customers. as you are aware, the code of conduct is drawn up to guide all member banks of the uba in their relationship with their customers with regards to the services they offer. through adherence by member banks to the requirements and principles of the code of conduct, immense benefits will go to customers through better and standardized services. ladies and gentlemen, the code of conduct also aims at promoting and maintaining high standards of professional and moral behavior within the banking sector. it is imperative, therefore, that on a continuous basis, you encourage your staff to familiarise themselves with the code of conduct and to ensure that they adhere to its principles in all aspects of their work. for purposes of promoting transparency, i urge you to ensure that customers are kept abreast with the terms and conditions governing your respective banking services as they change from time to time. this will ensure that customers are adequately equipped to make informed decisions on which services to subscribe to at any given time. on the part of the central bank, we are in the process of issuing consumer protection guidelines, which we have shared with banks. it is my sincere hope that the code of conduct and the consumer protection guidelines complement each other in promoting best practices in satisfying customer demands. the issue of safeguarding customers β confidentiality cannot be over - emphasized. in this respect therefore, i urge you to observe your duty of strict confidentiality with regards to customer information. furthermore, i encourage you to continue to review periodically the code of
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jean - claude trichet : interview with aachener zeitung on the occasion of the awarding of the 2011 international charlemagne prize of aachen interview with mr jean - claude trichet, president of the european central bank, on the occasion of the awarding of the 2011 international charlemagne prize of aachen, conducted by ms birgit marschall, mr bernd mathieu and mr peter pappert of the aachener zeitung, and published on 27 may 2011. * * * question : mr president, people in europe are worried about the debt crisis in the euro area. what is your take on the current situation? trichet : we are experiencing a dramatic global financial crisis, which is also impacting on the euro area. this is the deepest recession since the second world war. all the advanced economies β the united states, japan and europe β must draw lessons from it. the outlook for the monetary union is favourable : the euro and prices are stable. the average inflation rate in the euro countries over the last 12 years has been just under 2 %, and in germany it has been as low as 1. 5 % ; this is a better result than was achieved during the 50 years of the deutsche mark. question : so where does the problem lie? trichet : the real problem in the euro area is that the economic union β the β e β in emu β between the euro countries has not been properly implemented. there is a need for much improvement on that score. the most important lesson from the crisis is that the euro countries must coordinate their economic and financial policies better β and do so urgently. question : we are a long way from there, look at greece. trichet : in recent years the eu governments have ignored the rules of the stability and growth pact. unfortunately the large countries β i. e. france, germany and italy β tried to weaken the stability and growth pact or even rescind it in 2004 and 2005, when they themselves were not complying with it. i expressed grave concerns at the time, because the letter of the pact was weakened and the spirit of the stability pact was being violated. the weakening of the pact had devastating consequences. we urgently require effective and reliable governance that conforms to common economic goals. question : the heads of state or government recently agreed on tougher rules for the stability pact. is this enough? trichet : no. we are asking the heads of government, the european commission and the european parliament to go further and to be
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when ngeu funding is considered. the share allocated to economic, social and territorial cohesion and to the common agriculture policy has decreased to 30. 5 %, and 30. 9 % respectively. the latter policies have themselves been modernised, taking into account the objective of the green and digital transition. see european commission ( 2021 ), β the eu β s 2021 - 2027 long - term budget and next generation eu : facts and figures β and β multiannual financial framework 2021 - 2027 β.
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bank ad skopje. dear guests, the fact that the leaders of this fund offered to present their financial services in the republic of macedonia, the central bank certainly encouraged and supported this initiative, shows that these important partners consider the republic of macedonia a friendly environment for launching various mutually beneficial business initiatives and projects. yet, we do not forget though, that some of these institutions had no doubts whatsoever about the republic of macedonia even in the most difficult periods for us after gaining the independence, since when nobody else was coming, they were here. we certainly appreciate that. regardless of all above, we still have many reasons that urge us to notice and convince others why is it good to invest in the republic of macedonia and to develop partnership with our economic agents and, of course, to inform on the activities that all of us in our country perform, directed towards increasing the attractiveness of the republic of macedonia as investment destination. hence, we definitely need such financial offers. the economic growth could be accelerated by more investments, competitive offer of financial instruments and products, which are likely to eventually bring about lower costs for borrowing capital. the potential investors should be aware that the macedonian financial sector is booming, but that the room for investments is yet to be opened. the gross national savings is low, not more than 12 - 17 % of gdp, over the recent several years. the gross domestic savings have been even lower over the last five years, swinging around 2. 5 % of gdp, on average. since 1995, the gross investments have virtually never exceeded 20 % of gdp. the foreign investments, except in the years of large privatizations by foreign companies, are also low, barely 2 % of gdp, on average, in the last 4 years. the total bank assets, even though registering a fast growth over the last years, making up roughly 50 % of gdp, still shows low level of financial intermediation in the country. the above figures were target of a deep impact of the external shocks the country suffered, besides, of course, the inexcusable delay of many essential reforms of the vital sectors of the country. but, eventually, the potential investors and creditors have to believe that : - the political and security shocks in the region and inside the country are behind us, - the economy accelerates its growth, which over the recent years is not below 4 % real gdp growth, - we preserve high macro - economic stability that implies exceptionally disciplined monetary and fiscal policies, which in turn result in low
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liquidity requirements in the u. s. and globally have made banks more resilient and robust. the major u. s. banking organizations today have much more capital, much higher - quality capital, and much larger liquidity buffers than prior to the crisis. on the capital side, we have taken a belt - and - suspenders approach. the basel iii risk - weighted capital standards framework has been significantly strengthened β a stronger belt β and a supplemental leverage ratio requirement has also been imposed on large banks and bank holding companies to restrain overall leverage β the suspenders. in addition, and perhaps most importantly, the capital requirements have now become much more forward - looking. each year a bank β s capital dividend and share - repurchase plan is assessed against the amount of capital the bank would potentially have under an extremely stressed economic and market environment given its portfolio of assets. the annual comprehensive capital and analysis review ( ccar ) process has pushed u. s. banks to improve their capital planning processes and forced them, when needed, to retain more earnings and to build up their capital. as a result, these banks are much less risky now than they were prior to the financial crisis, when their vulnerability was masked by a high, but unsustainable, level of profitability. 1 / 3 bis central bankers'speeches on the liquidity side, there has also been significant improvement. the liquidity coverage ratio and the net stable funding ratio requirements have forced banks to hold more high - quality liquid assets and have reduced the scope for maturity transformation. the ability and willingness of banks to finance illiquid, hard - to - value assets with short - term funding was an important element that contributed to the financial crisis. in addition, i believe that supervisory oversight has improved. there is more attention on horizontal evaluations across the systemically important firms and a greater emphasis on bank governance, risk management, cyber security, and bank data and technology capabilities than in the past. but the progress has not just been in terms of enhancing the strength of individual institutions. the system as a whole is also stronger because of a number of important initiatives. due to time constraints, i cannot be exhaustive today. but, there are four important structural changes to the financial system that are worth highlighting. first, the tri - party repo system β which matches institutional investors with bank dealers that need to fund their securities portfolios β has been made much safer. before the crisis, each morning the two large
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our work is not yet finished. high unemployment and financial fragmentation both remain a chief concern. the unemployment rate, currently at around 12 %, remains unacceptably high. market sentiment also remains fragile. to use an analogy, the needle of market sentiment has shifted from fear to caution. now we need to move the needle from caution to confidence. and the way to do that is by avoiding any relapse in the progress made so far, and by moving forward towards a genuine emu. bringing our banking system back to health is an essential precondition for restoring growth. it is against this background that in my remarks today, i would like to focus on a key pillar of a genuine emu, that is the banking union. i will try to answer three questions. what are the necessary components of a banking union? what does a banking union mean for countries inside the euro area and those outside, like sweden and the home country of today β s host, denmark? and is a banking union sufficient to kick - start bank lending and consolidate the recovery? bis central bankers β speeches elements of a banking union let me start with my first question. what are the necessary components of a banking union? to our mind, a banking union requires a single supervisory mechanism ( ssm ) and a single resolution mechanism ( srm ). the single supervisory mechanism a lot of progress has been made on the ssm. last month, the eu legislature gave the final green light to the regulation. the entry into force of the regulation has allowed us, the ecb, to speed up our internal preparations. we recently communicated on the comprehensive assessment that we will undertake in the run - up to the actual assumption of supervisory tasks, twelve months from now. in a way, this comprehensive assessment is the β founding act β of the ssm. and we are very much aware of the conventional wisdom that β there is no second chance to make a good first impression β. so we are adamant that this comprehensive assessment needs to be thorough, credible, and transparent. we are intent to not only shed light on the potential weaknesses in banks β balance sheets, but we will also prescribe the necessary corrective actions that need to be undertaken. after all, there is no point in making the right diagnosis, if you don β t apply the remedy and cure the disease. if you read some press reports, one could get the impression that the euro area banking sector is terminally ill. this is not the case
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are blended with a heloc component. helocs have been a very convenient tool for many households. they give borrowers flexibility to finance renovation projects or handle emergencies β such as when your furnace dies on a cold february night. their popularity shows how useful these lending arrangements are. however, there are some potential risks that borrowers need to manage. helocs usually allow the borrower to pay only the interest on the loan each month, leaving the principal amount unchanged. indeed, about 40 per cent of heloc borrowers are not regularly paying down their principal, which means that debt loads may persist longer than in the past. furthermore, some may be using their heloc to speculate β for example, to fund a down payment on a second house with the intention of flipping it. given the potential for volatility in house prices and for higher interest rates, such activity may be adding to the overall vulnerability of the system. we have seen several rounds of macroprudential measures to tighten mortgage finance rules. these include measures last year that were aimed at high - ratio mortgages β those where the down payment is less than 20 per cent of the value of the home. since then, there has been a sharp drop in the number of highly indebted canadians obtaining these mortgages β and by highly - indebted we have in mind people with a ratio of debt to income that is more than 450 per cent. but we have also seen an increase in low - ratio mortgages with risky characteristics, such as extended amortization periods. new lending guidelines for low - ratio mortgages, which will come into effect next year, should work to limit the number of low - ratio mortgages going to highly indebted households. these mortgage rule changes will help build up the resilience of the financial system over time, as each new mortgage will be stress - tested to ensure that the borrower can manage a higher interest rate at renewal time. it is important to remember that the purpose of these rule changes is not to control house prices. ultimately, the laws of supply and demand will determine the direction of house prices. at the same time, there is little doubt that these rule changes will mean less growth in our housing sector. in the wake of the global financial crisis, ultra - low interest rates have helped our economies weather the storm, but an important by - product has been exceptional growth in housing. for some time now we have been expecting a rotation
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spiral into a broader financial setback. financial security in retirement a key component of middle - class financial security is the cushion of savings to cover retirement. here, the dfas suggest some progress. one of the innovations of the dfas is that they include defined benefit plans from the financial accounts in addition to defined contribution plans, whereas measures of household pension wealth in the scf are confined to the latter. the balances in defined contribution plans, such as 401 ( k ) s, in which retirement savings accumulate in an account, are typically simpler to measure. by this statistic and the rest in this subsection are from the 2018 shed and are only for middle - income adults. the shed collects ranges of family income, not a dollar amount. middle income is defined as the ranges of family income from $ 40, 000 to $ 99, 000, which is roughly the 40th to 70th percentiles. - 7contrast, the value of defined benefit plans requires estimating how much the future fixed payments each year in retirement are worth today. these future payments are a sizable asset for households, currently estimated at about $ 15 trillion, or about 70 percent of total pension assets. 11 the dfas indicate that the average pension wealth for middle - income households β including both types of plans β has increased 2. 5 percent per year over the past three decades ( figure 6 ). pension assets are now the largest asset held by middleincome households, representing 40 percent of their wealth, substantially exceeding the 22 percent share of home equity in their wealth. in part, the growth in pension balances reflects the sustained decrease in longterm interest rates over this period, which has boosted the value of the future fixed payments associated with defined benefit pensions. it reflects the aging of the population, since households near or in retirement age have the largest accumulated levels of pension savings and are also likely hold a relatively greater share of defined benefit plans ( figure 7 ). how do we square the growth in pension assets with survey evidence indicating that many households in the middle of the income distribution are concerned that they will not have enough to live on in retirement? only 35 percent of middle - income adults, who are not retired, say that their retirement saving is on track, and 16 percent of middle - see board of governors of the federal reserve system, statistical release z. 1, β financial accounts of the united states, β table l. 117, https : / / www. federalres
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blur the lines between banks and nonbanks. for example, we can expect mutual funds to refine their offerings to compete with bank checking and savings accounts, albeit without deposit insurance. banks will undoubtedly make further inroads in mutual fund management and investment banking through internal growth and through acquisitions of securities firms. investment banks may also supplement their services by making commercial loans and participating in loan syndications. with such things happening, why do we need a legislative solution? the answer is that a well thought out proposal addressing the appropriate structure for the industry would allow for a more rapid and efficient integration of financial services. moreover, by clearly defining the boundaries and structure of financial conglomerates, a well - considered supervisory program could adequately protect banks without undue intrusion to other parts of the conglomerate. because financial conglomerates generally operate as integrated entities and manage risks on a global basis across business lines, their true operating structure superimposes a risk management and internal control process that extends across legal - entity - based corporate structures. in this light, supervision by legal entity can create important supervisory gaps that may expose the insured depository institution to unnecessary risk. that is to say, someone should look at the risk management of the organization as an organic whole, rather than as separate pieces that are simply added together. in fact, comprehensive, consolidated supervision by the home country supervisor is a legal requirement for foreign banks operating in the u. s. some foreign supervisors are now beginning to question the consolidated supervision of u. s. firms operating in their countries. now, i suspect some nonbank firms may feel apprehension at having an umbrella supervisor evaluate their operations. but let me emphasize that such oversight need not be overly onerous or intrusive. in fact, regulators are probably better prepared than ever before to implement an umbrella supervisory approach as a result of the supervisory techniques and approaches i just discussed. by applying risk - focused supervision, and promoting sound practices, and improved market disclosures, an umbrella supervisor should be able to implement an effective, unintrusive oversight process for conglomerates. moreover, an umbrella supervisor may be able to provide assurances and information to other regulators and individual supervisors which may minimize their need to extend their reviews beyond the legal supervised entity and into the conglomerate β s other operations, creating duplication and burden. i believe that the umbrella supervisor, whether it is the central bank or another agency, should not attempt to duplicate efforts of other regulators. rather, the umbrella supervisor should evaluate the financial
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markets. since the london summit, a great deal has been accomplished. and the financial system is much safer as a result. but there are still some important elements that remain to be completed, and we need to get these across the finish line. today, i want to quickly review the highlights of what has been achieved and then turn to four areas that need further work : leverage limits ; bail - inable securities ; core funding markets ; and finally, risk disclosure, governance and culture. bis central bankers β speeches in a nutshell, my message is that while the roots of this crisis were in complex instruments and interactions, the foundational elements for a more resilient financial system are not complex : bigger capital and liquidity buffers combined with a leverage backstop, rigorous and proactive supervision, and robust financial system plumbing. but risk is complex. completing the reforms and then ensuring ongoing healthy vigilance requires investments in risk management by both the private sector and the public sector. risk management is hard work. it can't be replaced by simplistic rules. there are no shortcuts. and risk does not take holidays β it only hides. the completion of the ambitious reforms laid out five years ago is within reach. this is essential to a return to sustainable, natural growth in the global economy. let's get it done. what β s been achieved to make banks safer, reform started by strengthening the bank capital regime. under the new basel iii rules, the minimum capital requirement is being raised, the capital requirements for riskier activities are being increased and the definition of capital is being strengthened. all in, the largest banks will have to hold at least seven times as much high - quality capital as they did before the crisis. while basel iii calls for these changes to be implemented over the next six years, banks are not waiting to rebuild confidence in their creditworthiness. since the end of 2007, major banks in the united states and europe have increased their common equity capital by $ 615 billion and their common equity capital ratios by almost 30 per cent. national legislation has now been adopted to implement the basel iii capital framework in virtually all g - 20 jurisdictions. canada was one of the first jurisdictions to implement it. by the beginning of this year, all major canadian banks had met the stringent basel iii requirements β six years ahead of the generous deadline of january 1st, 2019. to end the problem of β too big to fail, β a three - pronged approach
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tiff macklem : management and financial reform remarks by mr tiff macklem, senior deputy governor of the bank of canada, presented to autorite des marches financiers, montreal, quebec, 18 november 2013. * * * introduction good morning and thank you for the invitation. it is a pleasure to be here in montreal, where i was born and raised. sound risk management in canada by both the private and the public sectors played a definitive role in steering us through the financial crisis. as you well know, none of our banks failed and none had to be rescued. and importantly, our financial system continued to function. so when the bank of canada injected exceptional liquidity and monetary stimulus, and the federal and provincial governments undertook extraordinary fiscal stimulus, credit flowed to households and businesses and they responded. as a result, we had the shortest recession and the fastest recovery in the g - 7. but i am not here to boast. lest we forget, we had our own risk - management failures here in canada. i am sure i don β t need to remind you that our non - bank asset - backed commercial paper market froze in the summer of 2007, at the onset of the crisis. and the crisis reminded us that keeping our own house in order is not enough. even if our financial system proved resilient, our exports plummeted 21 per cent in the wake of the global recession. and still today, our exports remain below their pre - recession level. the global financial crisis continues to cast a long shadow. this underscores the importance of completing the global financial reforms that were launched exactly five years ago this week at the first g - 20 leaders summit. convened by president george w. bush following the lehman failure, it was held in washington on the 14th and 15th of november in 2008. at the summit, the leaders agreed on a set of common principles for the reform of the global financial system. and five months later, at the london summit in april 2009, the leaders elaborated on those principles by committing to a sweeping and comprehensive reform agenda. their fundamental objective was to build a resilient global financial system that would serve households and businesses in good times and in bad. to do this, the leaders created the financial stability board ( fsb ), and gave it four core tasks : β’ make banks safer ; β’ end β too big to fail β ; β’ mitigate bank - like risks in the shadow banking sector ; and β’ ensure continuously functioning core financial
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equally important to avoid an inflation rate that is too low, as it is to avoid an inflation rate that is too high. the interest rate is the most important monetary policy instrument. it affects price inflation through two channels : demand for domestic goods and services and the krone exchange rate. changes in labour costs influence the rise in prices for domestically produced goods and services. the tighter the labour market is, the higher wage growth will be. demand for goods and services determines to a great extent how tight the labour market will be. high levels of private and public consumption, investment and exports will sustain the demand for labour. when the supply of labour is limited, the competition for labour pushes up wages. a tight monetary policy stance with a high real interest rate will curb domestic demand. in many countries, low and stable consumer price inflation is the goal of monetary policy. consequently, we can assume that imported price inflation will remain subdued. however, price inflation will nonetheless vary in pace with global economic developments. the krone exchange rate also plays an important role in determining import prices. a strong krone exchange rate will curb prices for imported goods, while a weak krone exchange rate will result in higher prices. when there is a rise in the interest rate in norway and a widening differential between domestic and foreign interest rates, investments in nok will increase, and the krone exchange rate will rise. price inflation may vary considerably from month to month. this variation may be due to random or temporary conditions, such as fluctuations in electricity prices or petrol prices, or the effects of changes in real taxes. when we assess the interest rate, we disregard these effects. statistics norway has constructed an indicator for adjusted price inflation - cpi - ate - which is the measure we use to examine the results of monetary policy performance. a sharp rise in labour costs is currently fuelling brisk growth in the prices of goods and services produced in norway. inflation is being kept at bay because the rise in prices for imported goods is close to zero. a stronger krone exchange rate, increased trade with china and eastern european countries, a reduction in tariffs and the global downturn have kept import prices low. if the krone exchange rate remains at today β s level, imported price inflation will remain subdued. wage growth has remained at between five and seven per cent every year since 1998. it appears that this year β s wage settlement will result in a similar outcome. strong wage growth is the result of a tight labour market. the interest rate
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annual real rate of return of 1Β½ - 2 per cent. by way of comparison, the authorities have based their use of petroleum revenues over the central government budget on the assumption that the petroleum fund can generate a long - term real return of 4 per cent. it is unlikely that this rate of return will be achieved if we only invest in bonds. buying a bond means lending money to others. buying equities is the same as investing in real assets. buying equities gives us direct ownership of the means of production in global business and industry. on the one hand, these ownership rights provide high returns when companies are flourishing. on the other, shareholders are the first to sustain losses when companies fail. consequently, the return on shares fluctuates far more than the return on bonds, reflecting the higher level of risk. over the past 75 years, equity returns in the us market have been negative almost every third year. an investor will only invest in high - risk vehicles if it is reasonable to expect compensation for the risk. the compensation for high risk in the stock market is a far higher average return for equities compared with bonds. since 1926, the annual return on us equities has on average been 4. 8 percentage points higher than the return on bonds. also in most ten - year periods, investing in us equities has been profitable, with the exception of the depression in the 1930s and the last half of the 1970s. equity returns have been negative after ten years only in the years between 1928 and 1938, in other words on equity investments made the year before the 1929 stock market crash. it may also be worth noting that equities purchased during recessions - such as in the mid - 1930s and mid - 1970s - brought solid returns ten years later. the picture is the same for most other countries. since short - term fluctuations in equity prices are difficult to predict, it may be a sound strategy to keep the share of equities constant over time. this means buying a relatively large volume of equities when prices are low, and buying a smaller volume - or selling - when prices are high. this is the strategy applied by the petroleum fund. let us now revert to the norwegian economy and norwegian economic policy. the revision of economic policy in march 2001 can to some extent be said to be a consequence of our oil economy. the new guidelines have also changed the interaction between the different components of economic policy. fiscal policy will now have an
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to be licensed as a bank in botswana, hence the approval, in principle, of the acquisition of 78. 15 percent of abch shares in bancabc, in march 2021. promoting financial sector development and inclusion turning to the promotion of financial sector development and inclusion, the bank of botswana recognises, distinguished guests, that in the first instance, the licensing requirements and ongoing prudential supervision are meant to allow those that meet the criteria and operate prudently to pursue their business and profit / return interests and aspirations freely, albeit within a regulated environment that safeguards safety of deposits and integrity and stability of the broader financial system. however, at the same time, the activities and operations of banks play an important role in promoting and fostering economic development, financial discipline and innovation. in this regard, going back to economic history, a preeminent father of the economics profession, adam smith in his classic / seminal works, β an enquiry into the nature and causes of wealth of nations β, alluded to β the invisible hand β, a concept that describes unseen market forces of supply and demand, leading to the unintended greater social benefits and public good as a result of individuals acting in their selfinterest. hence, the need, as promoted by the bank of botswana, to accentuate the developmental role of banks in the interest of economic prospects and welfare improvements for society. therefore, where opportune and prudent, the bank will continue to implore banks, including access bank, into active participation and contribution to the national development and transformation agenda. distinguished guests, i have, therefore, in my engagement with the leadership of the incoming bank highlighted the pertinent and immediate developmental issues for botswana, where i observed a positive response by access bank, supported by a demonstrable track record in markets in which it currently operates. the overriding issue for botswana is financial inclusion generally, where it is expected that access bank plc will add to vibrancy of market competition and broader coverage in attracting customers, diversity of products and services, quality of service provision and related cost rationalisation, for the benefit of both its investors and customers. beyond this generalisation, there are specific areas of need where the bank of botswana has observed what i would call β cherry - picking β of easier to deal with customers and sectors and eschewing of some areas of greater need where the developmental impact can be larger and more pervasive. here i am referring to support for
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β s presentation will include an overview of structural features of the botswana economy, including the related challenges of slow progress on economic diversification, evidenced by continuing over - reliance on a single commodity for exports, government revenues and growth. notwithstanding the current environment of extreme volatility and uncertainty in global economy and markets, the presentation will also cover economic outlook for 2020 and prospects for recovery in 2021. it suffices for me to indicate that the locomotives of the botswana β s economic growth performance, namely, the diamond revenues and catalytical role of the government activities, would be severely constrained by macroeconomic the covid - 19 pandemic amidst shock which, according to a many commentators, is estimated to likely lead the global, regional and domestic economy into a recession of uncertain magnitude and duration ; most likely not experienced since the great depression of the 1930s. the third presentation will be a summary of the theme topic for the 2019 annual report, on β central bank governance and functions in pursuit of price and financial stability β by deputy director in the research and financial stability department, mr innocent molalapata. this theme topic is intended to explain the role of central banks in the economic management of any country, evolving institutional structures, mandates and objectives. among others, mr molalapata will highlight the importance and linkages of the triad of central bank operational autonomy, transparency and accountability in facilitating effective discharge of the central bank mandates and maintenance of macroeconomic stability, attainment of inclusive and sustainable economic growth. he will also reinforce the need for central bank adaptability in an environment of fast and disruptive developments in financial technology, aligned to the nation β s aspirations for digital transformation and knowledge - based economy. distinguished members of the media, in tying together the various strands out of the presentations to be delivered by my colleagues this morning, some key messages become apparent, clearly suggesting that the current growth model for botswana will, going forward, be difficult to sustain. first, that a key driver of economic and welfare prospects for botswana, namely, the export potential has, over the last few years, faltered and shrunk as a proportion of gdp ; therefore there is an urgent need for rejuvenation by redesigning the country β s industrial policies to promote exports and, given the size of the domestic market, to grow the private sector through a better integration into regional and global value chains. second and related thereto is that, despite the large public investment in infrastructure and related social spending by government, as
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intensive, have propelled prices of distant futures to levels well above their ranges of recent years. meanwhile, despite the paucity of new discoveries of major oil fields, improving technology has significantly increased the ultimate recovery of oil from already existing fields. during the past decade, despite more than 250 billion barrels of oil extracted worldwide, net proved reserves rose well in excess of 100 billion barrels. that is, gross additions to reserves have significantly exceeded the extraction of oil the reserves replaced. indeed, in fields where, two decades ago, roughly one - third of the oil in place ultimately could be extracted, almost half appears to be recoverable today. gains in proved reserves have been concentrated among opec members, though proved reserves in the united states, essentially offshore, rose 3 - 1 / 2 percent during the past five years. the uptrend in proved reserves is likely to continue at least for awhile. oil service firms continue to report significant involvement in reservoir extension and enhancement. nevertheless, future balances between supply and demand will remain precarious, and incentives for oil consumers in developed economies to decrease the oil intensity of their economies will doubtless continue. presumably similar developments will emerge in the large oil - consuming developing economies. * * * the remainder of my remarks will address the federal budget, for which the incoming data suggest that the unified deficit has recently leveled out. with the economy continuing to improve, the deficit is more likely to decline than to increase in the year ahead. nonetheless, the prospects for the federal budget over the longer term remain troubling. as yet, concerns about the budget do not appear to have left a noticeable imprint on the financial markets. in recent years, even as fiscal discipline has eroded, implied one - year forward treasury rates at long horizons, which history suggests are sensitive to changes in the fiscal outlook, have held fairly steady. various measures of long - term real interest rates have also remained at moderate levels over this period. these developments, however, do not warrant complacency about the fiscal outlook. with the baby boomers starting to retire in a few years and health spending continuing to soar, our budget position will almost surely deteriorate substantially in coming years if current policies remain in place. the enormous improvement of the federal budget balance in the second half of the 1990s and early in the current decade was due importantly to the rapid growth in labor productivity during that period, which led, both directly and indirectly, to a vast but, in retrospect, temporary
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increase in revenues. the budget enforcement act ( bea ) of 1990, and the later modifications and extensions of the act, almost surely contributed to the better budget outcomes as well, before the brief emergence of surpluses eroded the will to adhere to its deficit - containment rules. the key provisions of the bea expired in 2002, and no replacement has been adopted. reinstatement of a structure like the bea would signal a renewed commitment to fiscal restraint and would help restore discipline to the annual budgeting process. but it would be only a part of any meaningful endeavor to establish a framework for fiscal policy choices. the bea was designed to constrain legislative actions on new initiatives. it contained no provisions for dealing with unanticipated budgetary outcomes over time. it was also not designed to be the centerpiece for longer - run budget policy ; importantly, the bea did not set a clear objective toward which fiscal policy should aim. budget outcomes over the next decade will deviate, as they always have from projections - perhaps, significantly. accordingly, it would be quite helpful to have mechanisms in place that assist the congress in making mid - course corrections as needed. four or five decades ago, such mechanisms were unnecessary, in part because much of the budget was determined on an annual basis. indeed, in the 1960s, discretionary spending, which is subject to the annual appropriations process and thus comes under regular review by the congress, accounted for about two - thirds of total outlays. that share dropped markedly in the 1970s and 1980s as spending on retirement, medical, and other entitlement programs rose sharply. in the early 1990s, it fell below 40 percent, where it has remained over the past decade. the rise in the share of expenditures that is not subject to annual review complicates the task of making fiscal policy by effectively necessitating an extension of the budget planning horizon. in the 1960s and early 1970s, the president β s budgets provided information mainly for the upcoming fiscal year. the 1974 legislation that established a new budget process and created the congressional budget office required that cbo provide five - year budget projections. by the mid - 1990s, cbo β s projection horizon had been pushed out to ten years. given the changing composition of outlays, these longer planning horizons and the associated budget projections were essential steps toward allowing the congress to balance budget priorities sensibly. among other things, this change has made the budget process more reliant on forecasting. to be
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on the bank. depending on the size of the open position vis - a - vis the hli, this might threaten the bank's solvency in an extreme case. the effective risk emanating from hlis depends primarily on the margin and collateral requirements set by the banks. these requirements help not only to constrain losses but also to determine the amount of leverage hlis are allowed to use. moreover, banks can partially hedge their risk and diversify their exposures. in general, we do not see a substantial difference between banks β exposures to hlis and other risky exposures, such as, for instance, derivatives. both make high demands on banks β risk management and their value may react sharply to market movements because of leverage. investments in hlis are thus comparable to other risky investments. let us now have a look at the collapse of ltcm β by far the largest hedge fund to date β in order to obtain some idea of the potential disruptive capacity of hlis. almost all of the fund's capital was destroyed in the collapse. losses amounted to usd 4. 4 billion, of which usd 1. 9 billion were incurred by the manager of the hedge fund, usd 0. 7 billion by ubs and usd 1. 8 billion by other investors. moreover, if the federal reserve bank of new york had not intervened to organise a bailout, the hedge fund's counterparties would have incurred estimated losses of about usd 5 billion. 7 although these amounts seem high, they are in fact modest in relation to the involved banks'capital and to the size of the financial markets. second transmission channel : banks as price takers on financial markets hlis act as buyers and sellers on the financial markets. their actions have an impact on prices, liquidity and volatility in just the same way as any other market participant's action. however, there are two reasons why the impact of hli trading could be stronger. first, in certain market segments they have an above - average share in trading volume. second, margin calls can force hlis with a high leverage and a focus on derivatives to liquidate large positions in a very short period of time. in stressful market conditions, both of these phenomena could further depress market prices, reduce market liquidity and increase volatility. this is the second transmission channel through which hlis may amplify shocks and spread negative effects in the banking sector. see also hildebrand, 2007.
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market risk and thus to achieve absolute returns in different market conditions. nowadays, they no longer just β hedge β since they apply a wide range of investment strategies. they make intensive use of short selling and of complex financial instruments such as derivatives. the term β highly leveraged institution β is also of limited value in terms of defining the entity it designates. 2 at a rough estimate, hlis have an average leverage of 1. 4. 3 this is indeed a much higher leverage than traditional investment funds have, for which there are strict restrictions on indebtedness. in switzerland, for instance, traditional investment funds are only allowed to have a leverage of up to 0. 1, and this only on a temporary basis. however, a leverage of 1. 4 is low compared to large international banks which have a leverage of ten to fifty. in terms of market share, the role of hlis is less important than is generally believed although, in the last few years, their activity has grown tremendously. since 1999, hli assets under management have increased by a factor of five. an important driving factor has been the increased inflows from institutional investors. currently there are some 9, 000 hlis with assets under management of about usd 1, 600 billion. 4 despite these impressive figures, the hli industry remains modest in relative terms. hlis have a market share which is smaller than the trading books of the five largest international banks and they represent only a fragment of the total debt securities ( usd 65, 000 billion ) and credit default swaps outstanding ( usd 25, 000 billion ). however, more important is the activity of hlis in some market segments, especially in the more complex ones. in the markets for credit default swaps, distressed debt and emerging market bonds, for instance, roughly half of the trading volume can be attributed to hlis. in the more traditional markets for interest rate derivatives and mortgagebacked securities, their share drops to only 10 % again. 5 2. the benefits of hlis hlis have undoubtedly been a source of innovation in the global asset management industry, especially with regard to traded credit products. moreover, through their flexible and largely unconstrained investment approaches as well as through their extensive use of innovative financial instruments, they have contributed to improving the efficiency of price discovery in financial markets. by buying assets that are perceived to be undervalued and by selling assets that are perceived to be overvalued, hlis help to
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faster and smoother transmission of monetary policy to the economy. but digitalization also raises new risks. a major one is to jeopardize the central role, as anchor and stabilizer, of the national central bank currency of a country β s financial and monetary system. this risk stems from the possible development of alternative systems whose settlement asset is not solidly linked to the national central bank money. for instance, tokenized financial assets are booming with the risk that transactions involving them settle with other settlement assets than central bank money, including crypto - assets. in the retail payment space, new players such as bigtechs with huge financial resources and benefitting from worldwide network effects, are making inroads into the payments industry and may provide dominant payment solutions with settlement coins with loose links, if any to central bank money. 2. let me now turn to the consequences from a more macroeconomic perspective that are relevant for the conduct of monetary policy digitalization affects the measurement of the price index. it exacerbates measurement issues well - known to price indices, such as dealing with frequent product replacements and 1 / 4 bis central bankers'speeches adjusting for product quality, or dealing with changes in the structure of the economy and hence the weight of new technologies in the economy. digitalization also influences inflation dynamics via firms β pricing behavior, market power and concentration, as well as firms β productivity and marginal costs. on the one hand, it reduces search costs and increases price transparency β think of how e - commerce renders price comparison easy - thereby reducing mark - ups. on the other hand, it increases the degree of market power and mark - ups by increasing entry costs for competitors of β superstar β firms especially due to a strong network and platform effect. the overall impact is therefore ambiguous. hence, digitalization should not only influence price level, but also its dynamics and its relation to real activities. b. policy responses and the role of a cbdc the macro financial and macroeconomic possible positive and negative impacts of the spread of digital technologies create challenges to central banks β roles and missions. three of them are of particular relevance in the case of europe : i ) a risk to european sovereignty in payments with the emergence of digital solutions offered by non - european - players, being private or public ; ii ) a threat to monetary and financial stability, notably through the risk of a disanchoring of the role of central bank money both in the retail and wholesale space ; and iii ) a threat
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being particularly useful nor necessary. in any case the usual requirements related to counterparty eligibility criteria, including financial soundness assessment and supervision, would need to be taken into account. to conclude these introductory remarks, let me stress three points : - digitalization is a major supply / technology shock, whose implications are multifaceted, and which have been intensified and accelerated by the covid crisis - as central banks, in the context of our monetary and financial stability mandate, we have a role to play to make sure that digitalization becomes a blessing and not a curse. the readiness to issue a cbdc can prove an important lever to that end. - in such a context, even if the jury is still out whether we will have to use it, it is essential that we show openness to change and to investigate ant test practical solutions, among central banks and with the private sector. 4 / 4 bis central bankers'speeches
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, maybe it is no coincidence that they and romania have folk songs called doina and daina, respectively, included in the intangible unesco heritage. romania is a mostly greek - orthodox christian country, the same as greece, cyprus and bulgaria. by the way, let me congratulate our bulgarian friends on the 140th anniversary of the establishment of their central bank! the legal and political systems of modern romania were inspired by the french ( i limit myself to just mentioning the napoleonic code ). this is also the case with modern romanian culture : prominent romanian artists such as constantin brancusi and george enescu achieved international recognition in paris. coming back to the legal system, the first constitution of modern romania in 1866 took after the belgian one. in addition, the nbr was founded based on the constitutive principles of the belgian central bank. the report to parliament underlying the establishment of the national bank of romania in 1880 saw belgium as β and i quote β β a small but happy country β, which developed rapidly with the assistance of its national bank, rendering it a suitable model for the institutional set - up of romania. as regards the neighbouring netherlands, the name of romania β s domestic currency β the leu ( meaning lion ) β comes from a dutch silver coin very popular in this part of europe in the 17th and 18th centuries : the lion - thaler. crossing the channel, our most beloved queen marie was the granddaughter of queen victoria of the united kingdom. it was her son, king charles ii, who reconstructed this royal palace. moving west again, let us not forget that the irish writer bram stoker took vlad the impaler as an inspiration for his famous novel dracula, creating a myth that romania is frequently associated with. returning to romania β s monarchs, under whose reign the country saw a remarkable modernisation, they belonged to the german house of hohenzollern - sigmaringen. as for the economic ties with germany, i would mention the fact that the name of the street where the old palace of the national bank of romania is located, i. e. lipscani, derives from leipzig ( lipsca in romanian ), the place where long ago local merchants used to bring their goods from. going further back in time, the saxons ( originating also in the luxembourg area ) settled in transylvania, which they called siebenburgen ( seven fortified towns ). one of these towns is sibiu or hermannstadt, where romania β s
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factors, which were likely to dissipate. we did not see much demand side pressures and the chance of seeing a wage - price spiral was low. we genuinely felt that inflation was largely transitory. given the eventual outturns on growth and inflation, we feel that that reading was the right one and the'gradual and measured'policy response was the right call. where we are today? we are now at a more advanced stage of normalization. as a result, our policy objective has changed β from trying to ensure a smooth takeoff, now the focus is on getting the landing right. those of you who paid attention to our latest mpc statement would have noticed a couple of changes. we removed the'gradual and measured'language that we had been using in previous mpc statements to indicate that we are at an inflection point β that things are different from before β and that we are approaching the landing. in terms of getting closer to that landing point, we are guided by several considerations. first, we now need to focus on medium - term objectives - trying to make sure that ( i ) economic growth returns to its long - term potential ( 3 - 4 % range in thailand given our structural features ), ( ii ) inflation remains sustainably within our target range of 1 - 3 %, and ( iii ) the policy rate does not lead to financial imbalances via excessive financial leverage and risk - taking activities. one manifestation of that is the high build - up of household debt in thailand. second, we tend to be outlook dependent rather than data dependent because the data outturns are noisy. they are affected by short - term considerations, short - term noise, base effects, temporary measures. trying to base 2 / 4 bis - central bankers'speeches policy decisions on the latest data outturn creates more noise rather than add stability to the market, which is the last thing policymakers want to do. third, we would like the landing point to be a roughly neutral policy stance, given that our economic trajectory is one where the economy is converging towards the potential level, inflation residing within the target range, and no build - up of imbalances. the context in thailand differs from many other countries. most countries are trying to overshoot the neutral rate ( that mythical r * ) to slow down the economy and bring inflation down to target. our situation is different. we do not need the policy rate to exceed a neutral policy rate, but we are
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of global gdp in 2018 to be over 3 % below what the imf expected at the time of the brisbane summit. we need to live up to china β s g20 priorities. structural reforms with a long - term focus but a short - term implementation horizon. determined reform of the global architecture for sustainable capital flows. the development of our essential macroprudential frameworks and the implementation of our financial reform commitments to address new vulnerabilities. these will allow monetary policies to fully bridge to a better future. conclusion that future needs the arms of macro policy to operate in close concert, domestically and internationally. demand stimulus alone will not sustainably reflate the global economy. moreover, sustained low rates could strain the capacities of macroprudential policies. at their roots, fiscal, monetary, financial and structural policies are deeply complementary, operating through many of the same channels. a stronger financial system can better channel savings to investment, building demand in the short run and productivity in the long run. monetary stimulus is more effective if, in a deflationary environment, other policies can also give households and firms the confidence that global reflation is in prospect. and structural reforms can boost long - run wealth allowing monetary policy to bring forward spending from future incomes that are real and not ephemeral. all must recognise the imperative of avoiding the global liquidity trap. not to beggar - thyself via beggar - thy - neighbour. not to obsess over process at the expense of productivity. but by building resilient domestic demand and sustainable cross border capital flows, we in the g20 can redeem an unforgiving world. bis central bankers β speeches annex chart a1 secular drivers of lower real rates β quantification source : taken from rachel and smith ( ibid. ). bis central bankers β speeches
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in post - tax return on equity, 2006 - h1 2015 ( a ) - 11 due to reduction in leverage - 4 due to fall in return on assets - 7 of which : net interest income - 4 trading income and fees - 6 misconduct costs - 3 other income and expenses - 4 impairments operating expenses increases due to sources : published accounts, bank data submissions and bank calculations. ( a ) uk banks are barclays, cooperative bank, hsbc, lloyds banking group, nationwide, rbs and santander uk. more fundamentally, banks are out of favour because of a new - found exasperation with their returns rather than due to old concerns about their resilience. uk banks, for example, have seen a sharp decline in profitability since the crisis, with average group - level post - tax returns on equity falling from 17 % in 2006 to 6 % in the first half of 2015 ( chart 6 ). of course, with hindsight, a substantial proportion of the pre - crisis return bis central bankers β speeches was ephemeral, reliant on short - term funding, capital - light balance sheets and massive synthetic leverage. banks are facing continuing pressures on their business models from a number of sources, including : β’ the consequences of a low growth, low rates environment with ongoing private deleveraging ; β’ the impact of a new regulatory framework designed to fix the fault lines that caused the crisis ; and β’ the effect of determined progress on removing the implicit public subsidy of toobig - to - fail. finally, some residual concerns about regulatory uncertainty, particularly in the euro area, may have been secondary reinforcements to the macroeconomic drivers of recent market turbulence. financial reform and the state of the financial system however, this is not 2008. the largest cross - border banks are considerably stronger than during prior episodes of market stress. common equity requirements are seven times the pre - crisis standard for most banks. for global systemically important banks ( g - sibs ), they are more than ten times higher. global standards require banks to hold much higher liquid asset buffers, to strengthen their trading books, and to reduce and simplify the formerly complex web of interbank exposures. in response, banks have built higher and better quality capital buffers ( chart 7 ), largely through retained earnings, and have reduced leverage. between 2008 and 2015, advanced economy g - sibs raised close to $ 800bn of equity, while almost $ 200bn was raised by major uk
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gent sejko : convergence process challenges facing south - east europe and albania speech by mr gent sejko, governor of the bank of albania, at the 7th ecb conference on central, eastern and south - eastern europen ( cesee ) countries on " institutional quality and sustainable economic convergence ", frankfurt am main, 5 october 2017. * * * accompanying slides honourable participants, it is a pleasure for me to participate in this conference, and discuss about the role of our institutions in the eu economic convergence process, such a relevant topic nowadays. i believe sharing our knowledge and experience in this area is extremely beneficial to all of us. my thoughts will be organized along three main dimensions. to begin with, i will highlight some of the challenges that the see convergence process is facing, from bank of albania β point of view. next, i will briefly describe how albania is positioned across these dimensions. lastly, i will try to emphasise how the convergence process itself can be enhanced to anchor our policymaking. 1. see convergence process challenges the long - term political future and economic prosperity of the see region is firmly linked to eu convergence and integration processes. while individual countries have differences, a common specific they all share is the economic and political benefits from the process. the convergence process is difficult and full of challenges, most importantly, the risk of falling into a β middle income trap β, a feature that is especially relevant given the slowdown in the speed of convergence that the region experienced in the aftermath of the crisis. the main reasons that can entrap an economy in a middle - income level are a low level of innovation, poor quality of institutions and unfavourable demographics. from a certain point of view, the ability of any country to move up the development ladder depends on the upgrade of its internal economic system, from an efficiency - driven into an innovation - driven economy. obviously, upgrading the whole economic systems and adopting best practices is easier said than done. diminishing marginal returns on labour and capital, as well as a reduced scope for total factor productivity growth, coming mainly from imported technologies, decelerate growth and increase the risks of getting stuck in a β middle income trap β. therefore, progression to the next development stage requires improvement of the human capital stock, facilitation and innovation in production processes, advancement of domestically generated technology and expansion of high value added exports. in a nutshell, the see countries need to transform themselves into innovation - driven economies
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zeti akhtar aziz : emerging trends in asia and their implications for malaysia keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the the asian banker summit 2003, β post - asian financial crisis : securing financial stability β, kuala lumpur, 16 september 2003. * * * ladies and gentlemen as we advance into the 21st century, sustainable performance demands resilience to the economic cycle, resilience to unstable market conditions and overall resilience in an environment of rapid change. to prosper in this new environment, we need to have the capacity to withstand the entire business cycle, to survive the increased volatility in the financial markets and to have the capacity and agility to adjust to the changes taking place. sustainable performance is key in achieving long - term relevance and success. to achieve this, it is important to look beyond the short - term perspective and build the capacity and the resilience to meet the new challenges that are emerging in this new environment. it is my honour and pleasure to be invited to this asian banker β s summit 2003. let me join the organisers in welcoming you to kuala lumpur. it was exactly five years since the countries in east asia have emerged from the financial crisis, when stability in the financial markets was restored and the economic recovery resumed. asia has now emerged as the fastest growing region. despite a more difficult external environment, the asian region has demonstrated resilience. the new trends emerging in asia point to significant transformation taking place in the economies in asia. these trends have contributed toward increasing the growth prospects for the region. today, my remarks will focus on these fundamental trends that have emerged in asia and the promise that they hold for the prospects for this region. i would also like to take this opportunity to share with you the implications of these trends for malaysia and the strategies and responses that we have adopted in addressing the challenges that we are faced with in this more difficult environment. emerging trends in asia : economic transformation in asia asia β s resilience can be traced to several important trends which have contributed to the economic and financial transformation of the region. the dynamic transformations taking place in our region are significant and varied. the region accounts for more than half the world β s population and 23 % of the world economy. the growth for the region as a whole is forecast to be one and half times higher than the global average. of significance, is the trend towards greater integration in the region on several fronts
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increasingly relevant in our assessment of price stability. the risk of deflation, which would make deleveraging harder, is quite limited. but the longer inflation remains low, the higher the probability of such risks emerging. that is why the ecb has been preparing additional non - standard monetary policy measures to guard against such a contingency and why it stands ready to take further decisive action if needed, mr draghi said. * * * ladies and gentlemen, let me start by expressing how grateful i am, but also how humbled i feel, to speak before you today as the recipient of the schumpeter preis. it would be tempting to see the honour that you are bestowing upon me today as a reward for a job well done. i prefer, however, to regard it as encouragement and inspiration to continue to pursue our task with the determination and single - mindedness that we have shown over the past few years. bis central bankers β speeches after five years of crisis and uncertainty, 2012 and 2013 have been years of stabilisation for the euro area. they have seen a return of confidence in the prospects of our union. 2014 and 2015 will be a period of recovery. but that recovery remains conditional. it remains conditional on our pursuing the very policies that have brought about the return of confidence : growth - friendly fiscal consolidation ; structural reforms aimed at enhancing investment and productivity ; a committed monetary policy guarding against all threats to the integrity of our money β in particular, the risk of both too high and, currently more relevant, too low inflation. but the recovery is also conditional on another set of policies, to which it is appropriate that i devote my remarks tonight, because those policies draw significantly on the teachings and ideas of joseph schumpeter. i refer here to the actions being undertaken to β reboot β the financial system, in particular the so - called comprehensive assessment, the current health check of the euro area banking system, which precedes the start of the single supervisory mechanism ( ssm ) in november this year. the rationale for what we are doing actually connects two of schumpeter β s most important and better known insights. first, it acknowledges the importance of a well - functioning financial sector for the efficient allocation of capital and credit. and second, it contributes to the schumpeterian notion of β creative destruction β which drives innovation and productivity growth. in short, by β cleaning up β and repairing bank balance sheets, we are creating the
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, while restraining leverage capabilities of the unregulated / lightly regulated entities. in our case, it proved to be an effective combination since banks β exposure to such entities could be regulated through absolute exposure norms or even tweaking the risk weights applicable to such exposures. i realize the problem would be much more involved in predominantly market based financial systems where direct bank linkages are not very obvious. but even in such regimes, as has been clearly demonstrated, the indirect linkages of banks were enmeshed in the maze. that is why it would be important to ensure that the markets too should not provide leverage capabilities to such entities beyond a limit. contingency liquidity provision the recent crisis has again brought to the fore the role of a lender of last resort ( lolr ), the extent of central bank intervention and the entities to which such intervention can be extended. the question as to under what circumstances and to what extent should safety nets be extended to non - deposit taking institutions has been widely debated. the basic underpinning of the lolr philosophy internationally has been that any institution whose failure is conclusively decided to cause broader systemic instability needs to be supported in the interregnum. as long as banks were the only institutions fulfilling this criterion, the case was straightforward. however, with the development of global financial markets and growth on non - banks as alternate media of financial intermediation, the decisions were not so simple as the recent experience has clearly shown. in india, while there is no provision for the reserve bank of india to lend directly to any nonbank entities, except a few specified ones, there have been specific instances of workable arrangements being devised in the interest of broader stability to provide liquidity support to some institutions / sectors indirectly. in respect of non - banking finance companies, in the postlehman fallout there was severe systemic liquidity crunch and even the non - banking finance sector were stressed. it was apprehended that in a scenario of asymmetrical information and general risk aversion of banks, the strains in non - banking finance sector could eventually pose a systemic risk. it was then decided to provide liquidity to those systemically important nbfcs facing temporary liquidity mismatches through an spv. the key part was that the liquidity was provided to the spv by the rbi through purchase of fully government guaranteed bonds. further, this facility was only meant to tide over temporary liquidity mismatches and not
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##ies that the rbi gives out stingily after much public pleading. instead, what is important is sustained low inflation, something the prime minister emphasized in his independence day speech, and rate cuts are a natural consequence that the rbi has no hesitancy in delivering. stressed assets and speedy resolution let me turn to stressed assets. in dealing with stressed bank assets, rbi has been focused on getting the underlying real project back on track. there are a number of impediments here. the stigma as well as the provisioning ( and the associated fall in profitability ) attached to a loan being labelled β non - performing β makes banks eager to avoid the label. in some cases, they ignore the reality that existing loans will have to be written down significantly because of the changed circumstances since they were sanctioned ( which includes extensive delays, cost overruns, and over optimistic demand projections ). the debt recovery tribunal system has not been speedy, which also emboldens uncooperative promoters and keeps them from accepting their share of the losses. regulatory forbearance, where rbi makes it easy for banks to β extend and pretend β, is not a solution. since no other stake - holder β such as the promoter, tariff authorities, tax authorities, etc. β contributes to resolution, the real project limps along becoming increasingly unviable. bis central bankers β speeches meanwhile, analysts grow increasingly suspicious of bank balance sheets and the growing volume of β restructured β assets. also, some large promoters take advantage of banker fears about assets turning non - performing to extract unwarranted concessions, without any sacrifice in the value of their stake. regulatory forbearance therefore ensures that problems grow until the size of the provisioning required to deal with the problem properly becomes alarmingly large β which then prompts calls for yet more forbearance. forbearance is also a disservice to the bank β s owners ( which may include the government ) who, instead of being faced with a small problem early and being given the opportunity to apply corrective action, are faced with large problems suddenly when they cannot be pushed into the future any more. one example of the difficulties stemming from forbearance is the plight of state power distribution companies ( discoms ). in 2012, a number of states signed up to a financial restructuring plan ( frp ) with banks and the central government, based on which the rbi permitted restructured loans to discoms to be treated as standard
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to do what is necessary at a time when global conditions are propitious β commodity prices look like they will stay low for a time, helping the fight against inflation, and there is plenty of money around the world and at home, looking for investments, including in distressed assets, that can help us clean bank and corporate balance sheets. as india strives to regain its place in the ranks of prosperous nations, we must remember that what sets poor nations apart from the rich is not people or resources or even luck but good governance, which comes from strong frameworks and strong institutions. a summary explanation of the economic problems of the recent past is that they arose because india outgrew its institutions. a summary of the government and the reserve bank β s measures to restore sustainable growth is that we are building the necessary institutions. thank you. bis central bankers β speeches
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who point to the ecb variant of pragmatism, as well as by those who think the interest rate should be lower and who see the fed's pragmatism as their ideal. this is a debate which in essence is based on misunderstandings. the constraints within which the riksbank works, allow a monetary policy which is both flexible and pragmatic. we can certainly extend our target horizon, monitor risks of problems in the financial sector or act early in order to avoid major subsidence in the economy further ahead. but this places requirements on us to motivate our actions clearly and substantially. it is, therefore, in this context β by setting very high standards as regards clarity and openness β that we beg to differ. in essence, i think that demands made on us that we should be more pragmatic in some general way β and not keep to our way of reasoning with a target, with guidelines, etc. β are meaningless. less clear principles for policy in combination with reduced transparency regarding, for example, the reasons for making decisions, will hardly lead to a policy which will be more successful in the future. many years'experience in the vicinity of economic policymakers suggests to me that the opposite is more probable. among the most important things one can do in this type of work is to try to build up clear processes which contribute to decision data, based on good economic analyses, being produced in a systematic way. and that this decision data is subjected to as wide an examination as possible. i am convinced that our ambition to be as clear and open as possible has served us well. starting with a numerical, symmetric objective and a guiding rule, in the way that we have done, we have been forced to think through every question with which we have been confronted in a more precise manner. this has resulted in our gradually increasing our understanding in a way which i think would hardly have been possible otherwise. certainly it is not yet over, and in this context, future developments will place new demands on us and impose further intensification and exactitudes. there is also a connection between transparency in relation to the outside world on the one hand, and internal work on the other. in getting rid of secrecy we were able to introduce a more realistic debate on monetary policy. this has allowed sharper and more specific criticism from outside, something on which we thrive. in addition, i think that decision making should be made in a way which contributes to
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encourage regulatory arbitrage and thus tend to heighten systemic vulnerability. therefore, the bundesbank is very much involved in the work of the fsb. i would like to restrict myself to highlighting just two aspects which enjoy a very broad consensus in the international debate. first, there is consensus on one of the points mentioned earlier, namely the need to strengthen financial institutions β resilience ; the capital and liquidity buffers for weathering crises have to be increased. more robust capital and liquidity requirements as well as an improved measurement of exposures to risks are also necessary so that risks arising from excessive leverage can be better controlled in the future. due account should be taken when devising and implementing rules of the particularities and peculiarities of national financial systems. this is especially important with regard to the aspired improvement in the quality of banks β capital base. here it is essential to focus on the targeted function β the ability to absorb losses β rather than on legal form. in view of the ongoing difficult economic environment, it is also evident that appropriate transition periods have to be granted. overhasty implementation would pave the way for a likely capital - induced credit supply failure. second, we must ensure that the incentive structures of participants in the financial system are aligned with the objective of fostering a sustainable development. this will be facilitated by enhanced transparency, which strengthens market discipline, even though it is obviously not sufficient on its own. this applies especially to the securitisation process. significantly improved standards of quality and integrity are a key precondition for reviving the securitisation market. originators should have a direct interest in ensuring that all risks ( including those of correlated defaults ) are captured adequately β for instance by retaining a vertical slice of securitisations. provided the instruments are designed in a way which makes microeconomic risk - taking compatible with sound macroeconomic outcomes, they can play an effective role as a source of funding for the banking sector. they will thereby also contribute to reliable and properly priced lending to enterprises β which is the most important aspect from an economic perspective. in a nutshell, the internationally coordinated reforms should substantially increase the stability of the financial system. on balance, they will probably imply more moderate earnings prospects in the financial sector. however, earnings are also likely to be less volatile and therefore more robust. given the considerable negative externalities that may arise if financial institutions run into distress, that seems a price worth paying to safeguard financial stability
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certainly, recent experience in south africa suggests that the recovery in the rand over the past year has been an important factor in containing inflation. in part this recovery has reflected the general weakening in the dollar, and factors such as higher commodity prices have also been an influence. but the currency's recovery has also been an important channel by which monetary tightening worked its way through to the economy. if the relationship between interest rates and exchange rate movements were predictable, the effectiveness of the exchange rate transmission channel would be helpful to monetary policy. but in practice this relationship remains rather inscrutable. moreover, the fact that emerging market currencies are subject to volatility resulting from shifts unconnected with the country itself, such as the recent substantial adjustments by the dollar and the euro, means that movements in the exchange rate can have impacts on domestic monetary conditions that can be both large in their effects and impossible to anticipate. of course, it can always be argued that in these circumstances the central bank should try to moderate movements in the exchange rate in greater or less degree. but the instruments available, for example through capital controls or official intervention, if maintained for any period, do not have at all an encouraging track record and may have counter - productive side - effects by impeding desirable structural adjustment or actually increasing exchange rate volatility. the appropriate remedy is to stick to the fundamentals, focusing monetary action determinedly on low inflation while taking into account impacts from the exchange rate as one amongst a range of relevant influences. but it needs to be recognised that these impacts may be particularly significant for emerging market economies. a further distinctive feature is more straightforward, but can easily be overlooked - that policy - makers in emerging market economies tend to have less information available to them about developments in the economy. this is essentially a form of resource constraint. it applies to statistics, where relevant series may be available less frequently, or in less comprehensive or disaggregated form, or simply less reliable. in south africa, what was in origin a relatively minor distortion in the compilation of the cpi produced a downward revision, when it was discovered, of nearly 2 percentage points in the 12 - month rate of inflation. this at least had the merit of being a rare example of a good news shock. such events are not unique to emerging market economies : the uk and others have experienced problems with important statistical series from time to time. but diverting scarce resources to statistical compilation is inevitably a problem in an economy where the
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contacts with market participants and receives valuable information almost automatically by virtue of its market presence ; similar to a seismograph, it may record tremors in the financial system at an early stage and react accordingly. moreover, in many cases the central bank is in a good position to strive for market - enhancing and prudentially justifiable deregulation and technical innovations. however, during liquidity crises, central banks should not assume an official, predetermined function of β lender of last resort β because of the associated problem of moral hazard. instead, liquidity crises should be solved by private or semi - private agencies before they reach the central bank. in germany the liquidity consortium bank serves as an example for such strategy in case of liquidity problems.
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possibility of excessive risk taking in the banking sector should not be neglected. faced with eroding margins in " old businesses ", banks may develop their activities in heretofore unexplored fields, by geographical expansion or by product development. in such circumstances, some banks may misjudge the risks inherent in the new activities, as a result of a lack of information, knowledge or skill. in such a situation, the prudential supervision of banks can help by assessing whether the capital buffers of banks remain sufficient for the banking sector as a whole. in financial markets, the issues are broadly similar. it is widely recognised that financial markets have been significantly transformed by the emergence of on - line brokers and electronic trading systems over recent years. in general, these developments have the potential to improve the functioning of financial markets. for example, on - line brokers often provide clients with detailed information regarding market conditions and the execution of orders. greater transparency on the part of brokers reduces the information asymmetry between brokers and customers. as a result, customers may be able to obtain better execution prices, not least because they can more easily see the prices quoted by various brokers. although the electronification of financial markets can bring benefits to customers, some risks are also associated with it. the first type of risk is by nature operational. advances in information and telecommunications technologies have made it easier than ever before to set up exchanges for financial products, for example on the internet. in the early stages of their development, the new trading systems need to be thoroughly tested so as to ensure maximum security. in particular, it is important for them to be able to withstand turbulent market conditions, including periods of exceptionally high trading activity and market volatility. the second kind of risk arises from the possibility of a disorderly segmentation of financial markets. as new trading systems are developed, the possibility exists that trading activity becomes spread over a number of exchanges. competition between exchanges is generally beneficial. however, customers may, at least over a transitory period, be faced with some difficulties in accessing the new exchanges. until the changeover is complete, customers may thus be unable to always obtain the best execution prices. in order to deal with this problem, it is important that the new exchanges establish clear rules regarding participation and price quotation as soon as possible in the process of starting their operations. finally, i would like to say a few words about electronic money. e - money is still
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vitor constancio : the role of europe in global rebalancing speech by mr vitor constancio, vice - president of the european central bank, at the expert seminar β asia β s role in the global economy forum β, organised by the official monetary and financial institutions forum ( omfif ), singapore, 12 july 2013. * * * ladies and gentlemen, i want to thank omfif, particularly david marsh, as well as all the organisers of this conference for inviting me to address you today. in discussions on global economic imbalances, the euro area often played a secondary role. academic debates about global imbalances prior to the crisis typically involved the united states and asia, with the euro area largely excluded as its aggregate current account was broadly in balance. and looking ahead, on the face of it, the same story is largely true. the policy debate is focused on how the global situation will develop in the presence of two counter - veiling forces : the united states likely moving away from its traditional role as the global β spender of last resort β ; and external surplus economies, notably in asia, still largely relying on an export - based growth model. the euro area, running a non - significant current account surplus, is seen as a largely neutral force. but this does not mean that what happens in the euro area is irrelevant for other regions. naturally, the euro area banking and sovereign debt crises have been a cause of concern for the world economy from the perspective of growth prospects and as a possible source of financial turbulence. and the international cooperation that is so vital for the health of the world economy implies that the three regions should achieve their internal balance with growth and low unemployment, maintaining at the same time a long term situation close to external balance. in the present globalized economy this cannot be achieved without cooperation on their macroeconomic policies. any set of policies implemented by the us, europe and asia that does not consistently corrects global macroeconomic imbalances is not sustainable and could lead to new crises. what i would like to do in my remarks today is to emphasise two specific channels where developments in the euro area could have an important impact on the global economy. channel one : rebalancing towards sustainable growth the first channel is related to the structural adjustment taking place within euro area economies which could, in time, correct the imbalances internal to the euro area thus overcoming a major european vulnerability allowing europe to make a contribution to
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the principles of outcomes - based education. to stimulate research in the bank, a research fellows programme has been introduced in terms of which senior researchers from other central banks and academia are invited to spend time at the bank and engage in collaborative research. three research fellows, two of whom are from abroad, have already spent time at the bank in 2007, and a fourth is expected later in the year. applications have been invited for the 2008 programme. to contribute further to the economic research effort in the country, a conference on macroeconomic policy challenges for south africa was organised by the college in 2006. it included papers presented by leading academics from local and international universities, as well as other local economists. conclusion from a monetary policy perspective this past year has been particularly challenging for the bank. the international environment has been uncertain, and the recent turmoil in international markets means that further challenges and uncertainties lie ahead. nevertheless, the bank will continue to focus on achieving its mandate and will strive to bring inflation to within the target range. low and stable inflation remains the best contribution the bank can make to economic growth and development in south africa. the bank will continue to make a contribution to financial stability in the country. apart from oversight and regulation of the national payment system, future challenges are likely to come from the introduction of basel ii at the beginning of next year, the possible implications of the national credit act, and the impact of higher interest rates on a highly indebted population. we will not lose sight of the need to give attention to the internal management of the bank. the bank remains committed to the training and development of staff in the broader context of its employment equity plan. acknowledgements i want to thank the presidency, the government and parliament for their continued support. through the system of bilateral committees, the bank has maintained a good working relationship with the national treasury. i wish to thank the minister and deputy minister of finance, and the director - general of the national treasury and his staff for their ongoing support and co - operation. i also wish to express my thanks to the members of the board for their commitment to the bank. their efforts are important in ensuring effective corporate governance and strategic direction for the bank. last but by no means least, i wish to thank the deputy governors, management and staff of the bank for their support and contributions to the successful running of the bank. an organisation such as ours is only as good as the quality and commitment of its personnel. we are indeed fortunate to be able to
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daniel mminele : south african national payment system framework and strategy document β vision 2015 opening remarks by mr daniel mminele, deputy governor of the south african reserve bank, on the occasion of the launch of the south african national payment system framework and strategy document β vision 2015, pretoria, 12 september 2011. * * * good day ladies and gentlemen. thank you for accepting our invitation to the launch of the south african national payment system framework and strategy document β vision 2015. the mandate of the south african reserve bank β s national payment system department ( npsd ) to oversee the payment system, emanates from the enabling legislation which is the south african reserve bank act, 1989 ( act no. 90 of 1989 β sarb act ). section 10 ( 1 ) ( c ) of the sarb act makes provision for the bank to perform such functions, implement such rules and procedures and, in general, take such steps as may be necessary to establish, conduct, monitor, regulate and supervise payment, clearing or settlement systems. during 1995 the bank published its first south african national payment system framework and strategy document β vision 2005. the vision 2005 document spanned a 10 - year period and contained strategies to modernise the south african national payment system ( nps ) and to align the domestic nps developments with international best practice. with the achievement of the major milestones and objectives envisaged in this document, a process was embarked upon to re - evaluate the nps vision, which process culminated in the strategy document published in april 2006, referred to as vision 2010. the vision 2010 focused, inter alia, on access for bank and non - bank participants, oversight of the nps, enhanced security and operational resilience in the nps, regional and international participation in payment system development, as well as increasing awareness of the features nps. the key strategic objectives outlined in the vision 2010 document have similarly been implemented and achieved. in late 2009 and early 2010, the npsd embarked on an extensive consultation and factfinding process to determine any new challenges facing the nps, and to establish if refinements to the strategic direction of the nps were required. payment systems are by nature dynamic and fast changing, and various challenges emerged nationally and internationally. it was decided that due to the demands and challenges facing the nps, a refinement of the strategic direction was required. the purpose of this framework is to provide a high - level updated strategic direction for the payment system up
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course, the highly sensitive issue of migration. it is also, to an important extent, a cultural phenomenon. nevertheless, the economic aspect of globalisation remains the most pressing aspect in the public opinion. in my speech today i will try to look more deeply into that perspective. i should also say from the outset that these reflections will certainly not lead me to call for a stop to globalisation. none of us wants to see a repetition of the 1930s. the challenge however remains to minimising the costs so as to increase acceptance by our societies. i will not try to offer definite prescriptions ; many people in this audience are much better qualified than me to do just that. instead, i will try to raise some issues that i see as problematic or still unresolved, and hope to stimulate the debate at tomorrow β s conference. i β d like to touch upon three issues ; first, public perceptions of globalisation ; second, the evidence on costs and benefits of globalisation, with particular reference to the euro area ; the views expressed reflect only those of the author. i thank r. anderton and l. stracca for input and comments as well as a. mehl and r. straub for providing background analysis. see leamer ( 2007 ). third, the opportunities and challenges raised by financial globalisation. in my conclusions, i will also elaborate on the role of europe in this process. 2. perceptions of globalisation how does the public perceive globalisation? i would like to underline 4 β stylised facts β that can be drawn from existing analyses. 3 first, europeans are more inclined to view globalisation with concern. taking the eu as a whole, public opinion is evenly split between supporters and opponents of globalisation. the situation varies considerably across countries. anxiety about globalisation is very noticeable in france ( but is also high in greece ), in particular in relation to its impact on jobs. by contrast, support is high in scandinavian countries, such as denmark and sweden. support for globalisation overall seems stronger in the rest of the world. for example, in the united states a majority of the population considers globalisation as inherently good. second, cultural competence, i. e. the ability to interact effectively with people of different cultures and education, are inversely related to the degree of concern about globalisation. indeed, support is strongest among high - skilled workers in mature economies, while political orientation of both skilled and unskilled workers does
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##gilance and awareness of trends of serious crimes in the country and emerging threats impacting the system. it also calls for effective responses in the form of more robust, agile controls to address these identified trends and threat in a timely manner. from the national risk assessment 2020 undertaken by members of the national coordination committee to counter money laundering and to assess and facilitate the understanding of ml / tf risk exposures, it was found that the top five high - risks crimes that pose substantial ml / tf threats to the country are corruption, fraud, smuggling, illicit drug trafficking and organised crimes. corruption remains a systemic issue, and is particularly insidious, since it facilitates and sometimes enables others significant crimes such as fraud, drugs, human trafficking and environmental crimes. the assessment also indicated that the banking sector is exposed to high level of ml / tf risks. with banks as the nexus between all financial and non - financial sectors, the banking platform has become an ideal channel to be abused for criminal activities including corruption. 2 / 4 bis - central bankers'speeches in this regard, it is crucial that banks understand these key risk drivers to accurately assess whether their current systems are sufficiently adequate in the face of such risks and deploy their resources more strategically to focus on addressing specific, high - risk areas. some best practices for control measures include improving the ability to deter illegal fund flows within the system, conducting swift identifications of illegal transactions and prompt submissions of suspicious transaction reports ( str ). banks are also highly encouraged to make good use of technological advancements to develop more holistic monitoring and risks detection systems, allowing for more prompt alerts and sophisticated red flag systems and stronger compliance to anti - money laundering & counter financing of terrorism ( aml / cft ) requirements. it goes without saying that savvy systems alone are not the one - stop solution. this must be complemented by continuously maintaining and upgrading relevant competencies of aml / cft personnel through investments in training. ladies and gentlemen, i would like to take a moment here to commend the industry on the strides it has made in the aml / cft space over time. in particular, strs received from the banking sector has steadily improved in quality over the years. there is no doubt that these strs and the overall cooperation of banks with the relevant authorities have been useful in supporting enforcement activities by law enforcement agencies. this includes supporting macc's investigations through timely responses to orders, provisions of documents and witnesses.
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scope for an effective response. fiscal policy was seen as the main policy tool, but very quickly the debt to gdp ratio rose to alarmingly high levels at about 135 per cent, the highest in the oecd. this of course puts a brake on further fiscal stimuli, although tax reform measures have been mooted for later this year. at the same time the new reform programme committed the government to a reduced deficit at a time when unemployment had reached the highest levels in 34 years. furthermore, discretionary fiscal actions could well be offset by higher household saving, due to increased concerns about long - term fiscal sustainability. japan is not only in trouble due to problems with its banking sector, it also has suffered from the bursting of the it bubble. exports have declined significantly over the past year and continued weakness in the electronics market is expected. most indicators remain negative, particularly in the manufacturing sector which is characterised by excess capacity, declining employment and falling inventories. japan will be helped to some extent by an upswing in the us and asia. what is clear however is that japan will not be one of the locomotives of that upswing. despite the rhetoric to the contrary, there does not seem to be the political will deal with the problem of the non - performing bank loans. this will have macroeconomic costs in the short - run, but the reform of the banking system and corporate restructuring is essential for the overall recovery of japan. 6. emerging markets not surprisingly the downturn in the industrial countries resulted in widespread declines in economic activity in developing countries and a less favourable environment for international trade and financial flows. weak global growth hits those economies most that are dependent on trade, irrespective of whether they are exporters of technology or manufacturing, or commodity exporters. furthermore emerging markets are negatively affected by the decline in capital flows and the increased risk aversion of investors. the institute of international finance, for example, estimated inflows to emerging markets for 2001 at us $ 106 billion, compared with the earlier forecast of us $ 140 billion. the decline is ascribed to heightened risk aversion. similarly, while world exports were expected to rise by 2, 5 per cent last year, earnings of emerging markets were projected to decline by 2 per cent. 7. asia the weakness of japan is not only a problem for the broader global recovery, but for emerging asia in particular. most of the asian countries have strong export ties to japan and the continued weakness blocks off an important export destination.
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in 2013 and 3, 8 per cent in 2014. the more favourable outcome for next year is predicated, to a significant degree, on a stronger recovery in the advanced economies, particularly in europe. therefore this forecast is subject to downside risk. part of this disappointing growth story has been due to weak global demand for south africa β s exports, combined with the impact of low advanced economy interest rates on the exchange rate. the consequent global search for yield contributed to the appreciation of the currency for an extended period until around april 2012 which negatively affected south africa β s competitiveness. this adverse trend was reinforced by domestic factors including higher input costs of electricity, transport and labour, as well as a decline in the terms of trade since 2010. these factors contributed to the widening of the current account of the balance of payments from 2, 8 per cent of gdp in 2010, to 6, 4 per cent in the second and third quarters of 2012. the value of merchandise exports declined by 6, 6 per cent between the fourth quarter of 2011 and the third quarter of 2012, while the value of merchandise imports increased by 4, 4 per cent. net exports have contributed negatively to recent growth. south africa has been seen as a particularly attractive investment destination because of its well - developed financial system, including its foreign exchange and capital markets. furthermore, the depth and liquidity of the foreign exchange market, with a daily turnover of about us $ 17 billion, made it attractive for hedging emerging market risk, which contributed to the volatility of the exchange rate. while other emerging markets were implementing measures to stem these inflows, such measures were not seen to be appropriate in the south african case given these structural features. although we did not intervene directly to prevent the appreciation, we did take advantage of these circumstances to add to our holding of foreign exchange reserves, with gross reserves increasing from us $ 34 billion in 2008 to current levels of around us $ 50 billion. for most of the 2000s, portfolio investment into south africa was dominated by equity inflows, while inflows into the bond market were relatively small. however, as emerging economy bond markets became more attractive, this pattern changed. inflows into the bond market were given additional impetus with south africa β s inclusion in the citibank world government bond index in 2012, when bond flows totaled r88 billion ( compared with r47 billion in 2011 ), more than offsetting a net outflow of equities
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deposits. this is the essence of the prudential regulation of banks ; the objectives of which are the avoidance of banking crises and the protection of depositors. these objectives are both clear and, other than in the most exceptional of circumstances, achievable. what is problematic is to expect central banks to use their regulatory tools to achieve other objectives besides those of prudential regulation ; for example attempting to direct the credit allocations of banks. as with monetary policy, this will create conflicts of interest which are likely to bis central bankers β speeches undermine prudential regulation and make it harder to evaluate the performance of the central bank and hold it to account. 3. the operational independence of the central bank in common with many other central banks around the world, the bou has operational independence. in uganda this independence is guaranteed by the constitution which explicitly states that : β in performing its functions the bank of uganda shall conform to this constitution but shall not be subject to the direction or control of any person or authority β. what does operational independence actually mean in the context of the central bank and why is it important? in essence operational independence pertains to the independence of the central bank to set its monetary policy instruments, such as the policy interest rate, free of any interference from other persons or authorities, such as ministries of finance. it does not mean that the central bank is free to set its own policy priorities or objectives. whether or not the central bank should prioritise the control of inflation or some other objective is an inherently political question which must be determined by a political organ. often this will be determined by the legislature, with the policy objectives set out in legislation, as is the case in uganda where the bank of uganda act specifies the functions of the bou and places emphasis on β achieving and maintaining economic stability β. within the specific framework of politically determined policy objectives, a central bank with operational independence is free to set its policy instruments to best achieve those objectives. operational independence is regarded as being of fundamental importance in the institutional governance of central banks because of the notion of the β time inconsistency β of economic policy making. this refers to the incentives that policymakers with short time horizons have to take decisions which may generate short term gains but at the expense of long term costs, and the recognition that rational private sector agents will understand the incentives facing these policymakers and take actions which will circumscribe any short term gains without necessarily mitigating the long term
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monetary policy plays a very important role in guiding expectations about the economy and the actions of the central bank. that is why we announce the cbr publicly at the start of every month and explain the thinking behind our interest rate decision. since the itl framework was introduced, we have been able, using our regular interventions in the money market, gradually to bring short term interbank interest rates quite closely into line with the cbr. the average 7 day interbank rate for november was 12. 6 percent, which is very close to this month β s cbr of 12. 5 percent. in turn other interest rates such as those paid on wholesale deposits are now also moving roughly in line with the cbr. as such the bis central bankers β speeches cbr is now proving quite effective in influencing the marginal cost of funds for commercial banks. we have been less successful in influencing the path of bank lending rates ; they followed the cbr up in the second half of 2011 but have been much slower in coming down this year, with the result that interest rate spreads have widened. i hope that, as our financial sector becomes more competitive and sophisticated, we will see bank lending rates become more responsive to changes in the marginal cost of funds for banks and interest rate spreads being reduced. finally i will briefly touch on the instruments of monetary policy. in the past, the main instrument of monetary policy was the regular primary auction of government securities, which we used as a tool to control the monetary base. under the itl monetary policy framework, our operating target is the interbank interest rate, not the monetary base, and the tool we use to influence the interest rate is secondary market operations in the money market, mainly repos and reverse repos. the primary auctions of government securities are now used to fund the government β s domestic borrowing requirement and to refinance the existing stock of securities as they mature, rather than as an instrument of monetary policy. furthermore, the government will fund fully its domestic borrowing requirement from the market, by issuing securities, without recourse to any funding from the central bank. it is possible that we might occasionally use a primary auction of securities for monetary policy purposes in the future, but this will be the exception rather than the rule and if we do so we will announce this explicitly, to avoid any confusion. i hope that you have found these remarks useful. as i noted earlier, transparency and communication play a vital role in modern monetary policy frameworks, so it is
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to the areas of most risk to consumers or the system. and, importantly, it will place consumer protection at the heart of day to day supervision. i firmly believe that these changes are not just important ; they are necessary β so that in a changing world we continue to deliver on our mandate in the public interest and in the interest of consumers. conclusion to conclude, the central bank and the hia are working hard to ensure that consumers get the best possible outcome. the insurance sector has an important role to play in ensuring that the products offered are clear, transparent and can be well understood. and consumers also have their own responsibilities in this regard β with increasing the level of financial literary in ireland an important objective to ensure they are equipped to act in their own best interest. and finally the financial sector is rapidly changing and becoming increasingly complex. in that regard, the central bank is changing too β so that we can continue to deliver for consumers in a more complex world. 1 see donnery " maintaining stability in the face of volatility β financial regulation in a rapidly changing world " november 2023 2 see central bank of ireland regulatory & supervisory outlook 2024 ( pdf 2. 08mb ) feb 2024 3 barry schwarz : the paradox of choice : why more is less 2004 4 see derville rowland https : / / www. centralbank. ie / news / article / speech - deputy - governor - derville - rowland - opening - remarks - for - launch - of - consultation - paper - on - reviewof - the - consumer - protection - code - 07 - mar - 2024 5 / 5 bis - central bankers'speeches
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year 2017, the ecb staff projections prepared in early march forecast growth of 1. 8 %. and judging by the current indicators, the euro area has a good chance of hitting that forecast. furthermore, the inflation rate of 1. 9 % is exactly where the ecb governing council wants it to be - below, but close to 2 %. yet the latest surge in inflation can mainly be put down to the sharp upturn in energy prices. that is to say, it is ultimately a baseline effect. and when that baseline 1 / 6 bis central bankers'speeches effect expires, the rate of inflation will shrivel again in the second half of the year, if not sooner. activity in the euro area may be steadily firming, but if we take the traditionally highly volatile energy prices out of the equation, inflation is actually still rather subdued. in recent months, core inflation hovered at around 1 % - that β s quite some way off the ecb governing council β s target rate. that domestic price pressures are still relatively muted can be attributed to a host of factors - all the more so, given that multiple countries are still feeling the after - effects of the crisis. and i β m not just talking about the huge piles of non - performing loans that are still saddling banks in a number of euro - area countries. viewed in isolation, those toxic legacy exposures are cramping the ability of banks to supply credit to precisely those young and dynamic enterprises that are entering the market. you could say it β s payback time for the failure to cleanse bank balance sheets sooner and more thoroughly. no, what i β m also talking about are enterprises and households across much of the euro area which are still busy scaling back what are, in some cases, high levels of debt. the fact that savings are outpacing investment in the euro area at the moment is one clear indication of the deleveraging process that is under way. yet some of the crisis - ridden countries have succeeded in stepping up their competitiveness and transforming current account deficits into surpluses. but improving price competitiveness through wage moderation naturally has a dampening impact on domestic price pressures. retrenchment efforts by general government can likewise soften the upside pressure on prices. in theory, that is. i say that because those efforts have waned perceptibly since 2013. or to put it another way β most euro - area countries are currently far removed from a concerted aus
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the right thing and ensure a quick and fair resolution for these customers. we have communicated this to their ceos. thank you, i will now take your questions.
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borrowers are linked not only through intermediaries like banks, but also through nonbanks, such as money market mutual funds and hedge funds, and through the capital markets and securitization. regulation can only build resilience in, and affect intermediation and lending by, the parts of the system that are, in fact, regulated. regulatory policies that aim to increase the resilience of regulated institutions, and lean against asset bubbles by restraining the growth of lending by such institutions, can be circumvented when financial activities migrate into less regulated parts of the financial system, parts likely farther from the protections of deposit insurance and the lender of last resort. consequently, credit extension and associated vulnerabilities can increase outside of the heavily regulated banking system. in our current system of financial regulation β one that is diffuse and without a single, central regulator β the antidote to such differences in regulatory approach is to put a premium on a high level of cooperation and coordination among relevant financial regulators. comprehensive financial regulation is required, but comprehensive financial regulation is not the same as unified financial regulation. looking around this audience today, i see evidence of the fragmented american financial regulatory system. for example, we have representatives of banks regulated by the office of the comptroller of the currency, the federal deposit insurance corporation, and the federal reserve, many in tandem with state bank regulators ; we have bank holding companies regulated by the fed ; we have brokerdealers regulated by the securities and exchange commission, we have exchanges regulated by the commodity futures trading commission ; we have consumer financial products regulated by the consumer financial protection bureau ; and we have insurance companies regulated by the state insurance commissioners. i could go on. needless to say, it β s a complicated regulatory system. and such a fragmented structure itself demands unusual and extensive degrees of coordination and cooperation among financial regulators so as to maximize the potential for comprehensive and harmonized regulation. without such coordination and cooperation, there will be regulatory gaps and overlaps. from this perspective, it made sense to create yet another regulatory body β the financial stability oversight council β which is dedicated to the goal of coordination. the fsoc calls for agency head and senior - level staff participation of relevant financial regulatory bodies, requires regular meetings and reports on emerging risks to financial stability, and designates systemically important financial institutions. making regulatory tools work to manage emerging risk and create resiliency indeed, the goal of coordination among regulators is to make the
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overly easy financing conditions, rapid credit growth, and excess confidence about future market liquidity as those created by a lack to be clear, in these auctions, the price being determined is the price for borrowing central bank money against a given set of collateral. it is not the price to buy and sell the collateral outright or to lend cash unsecured. of liquidity. so how can we achieve symmetry in our approach? in my opinion, it is worthwhile for policy - makers to consider the promotion of macro - prudential regulations that could serve to restrain pro - cyclical liquidity creation among banks and market makers when appropriate. to be clear, the same tests should apply in terms of " when appropriate. " there would also be the added complication of determining where to house this regulatory authority, and how it would be coordinated across jurisdictions. despite these issues, this is a serious concern that warrants closer attention. conclusion the market turbulence that began last summer has eased in recent weeks. that progress, and perhaps the coincident start of the baseball season, has prompted some to muse about whether we are in the seventh, eighth, or ninth inning. i will not venture to be that precise, but i would note that baseball games frequently go into extra innings, and in any event, there is always another game and another season. it is important that we not let a sense of complacency distract us from learning the appropriate lessons, and acting accordingly, once the game begins again.
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this is equally true for physical and electronic payments. in my previous role as chief cashier, i led our work to issue banknotes printed on polymer. we harnessed innovative technology both in the security features selected, and in introducing a tactile feature on the new Β£10 polymer banknote to help blind and vision impaired people identify our notes. this meant we exploited technology to produce banknotes which are not only secure, but inclusive. and now we are assessing how we can embrace diverse technologies through rtgs renewal. although the bank has concluded that distributed ledger technology ( dlt ) is not yet sufficiently mature to provide the core for the next generation of rtgs, we still place a high priority on ensuring the new service is capable of interfacing with dlt. in summer 2018 we ran a proof of concept12 with four firms to develop payment arrangements using innovative technologies. importantly, the results demonstrated that participants using such technologies could connect to and settle in rtgs. this has informed our thinking on how rtgs could support settlement in a more diverse range of systems, and provided broader insight into the range of functionality the bank might need to offer to support this sector. we are also seeking to develop a renewed service that will be message network agnostic : capable of sending and receiving payment messages from multiple sources and interfacing with multiple messaging networks without compromising on levels of security or proof. and we will continue to support the resilience of the renewed rtgs by diversifying operations across two sites with a third stand - by settlement platform which is geographically remote. as i stressed at the start, the bank needs to reflect the diversity of the people it serves and so increasing the diversity of the bank β s workforce is at the top of our agenda. we have set ourselves stretching but https : / / www. bankofengland. co. uk / - / media / boe / files / payments / rtgs - renewal - proof - of - concept. pdf all speeches are available online at www. bankofengland. co. uk / news / speeches achievable targets in respect of increasing the representation of women and bame colleagues at all levels of the business. 13 and we have implemented a wide range of initiatives designed to improve diversity in our recruitment, development and retention of talent across a range of protected characteristics. as a member of the bank β s senior leadership team, i have personal accountability for delivering a step change in the bank β s diversity. this is
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daniel mminele : south african national payment system framework and strategy document β vision 2015 opening remarks by mr daniel mminele, deputy governor of the south african reserve bank, on the occasion of the launch of the south african national payment system framework and strategy document β vision 2015, pretoria, 12 september 2011. * * * good day ladies and gentlemen. thank you for accepting our invitation to the launch of the south african national payment system framework and strategy document β vision 2015. the mandate of the south african reserve bank β s national payment system department ( npsd ) to oversee the payment system, emanates from the enabling legislation which is the south african reserve bank act, 1989 ( act no. 90 of 1989 β sarb act ). section 10 ( 1 ) ( c ) of the sarb act makes provision for the bank to perform such functions, implement such rules and procedures and, in general, take such steps as may be necessary to establish, conduct, monitor, regulate and supervise payment, clearing or settlement systems. during 1995 the bank published its first south african national payment system framework and strategy document β vision 2005. the vision 2005 document spanned a 10 - year period and contained strategies to modernise the south african national payment system ( nps ) and to align the domestic nps developments with international best practice. with the achievement of the major milestones and objectives envisaged in this document, a process was embarked upon to re - evaluate the nps vision, which process culminated in the strategy document published in april 2006, referred to as vision 2010. the vision 2010 focused, inter alia, on access for bank and non - bank participants, oversight of the nps, enhanced security and operational resilience in the nps, regional and international participation in payment system development, as well as increasing awareness of the features nps. the key strategic objectives outlined in the vision 2010 document have similarly been implemented and achieved. in late 2009 and early 2010, the npsd embarked on an extensive consultation and factfinding process to determine any new challenges facing the nps, and to establish if refinements to the strategic direction of the nps were required. payment systems are by nature dynamic and fast changing, and various challenges emerged nationally and internationally. it was decided that due to the demands and challenges facing the nps, a refinement of the strategic direction was required. the purpose of this framework is to provide a high - level updated strategic direction for the payment system up
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factors, including the debate on nationalisation of mines, work stoppages in manufacturing industries, health and safety shutdowns, and a lower output in an agricultural sector that had grown very rapidly in previous years. the marginally stronger growth rate in 2011 ( estimated at just over 3 percent ) compared to 2010 ( 2. 9 per cent ) was due to better outcomes in tertiary sectors, particularly trade, catering and accommodation, transport, storage and communications, and financial services, underpinned by sustained growth in government spending. how did we respond to the crisis? given the unfolding of the shocks hitting the south african economy, the monetary and fiscal policy responses were largely reactive. the main forward - looking macroeconomic policy setting and decisions were made some years earlier, and enabled a sustained moderation in the economic effects of the crisis. like many other emerging market economies, capital inflows and upward pressure on the exchange rate played a complicating role in how the economy responded to the shocks and to policy. the inflation targeting framework, put in place in 2000, had largely aligned inflation expectations of economic agents with the reserve bank β s forecasts. with a change in policy on exchange market intervention, the it framework also allowed the currency to float and absorb major shocks without forcing major interest rate adjustments. this cushioning role was critical at the time of the lehman crisis, because it allowed the monetary authorities to continue lowering interest rates as inflation moderated even as investors sold rand denominated assets in the near - panic selling of β risky β assets of the time. post - lehman the value of the rand against the us dollar declined by about 35 per cent as did the currencies of many emerging market economies. south africa β s sound fiscal position and the high level of commodity prices implied a return of capital into the economy once risk perceptions had moderated. over the course of 2009, the rand strengthened, averaging r8. 44 to the us dollar in the year, and beginning 2010 at r7. 37. the underlying real equilibrium exchange rate of the rand was high because of the terms of trade and sound policy. bis central bankers β speeches the initial sharp depreciation of the currency might have generated stronger economic outcomes for exporting and import - competing sectors, but it is likely that the net effect of a persistent depreciation on the economy would have been negative at the time. it is also important to remember that these competitiveness gains would have been very small due to the
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from the university of toronto, a winner of a bank of canada fellowship award, is doing innovative work in this area. of course, we will also continue to talk directly to canadian companies to gather intelligence on the spread of ai. the future of money finally, there is the central banker β s favourite subject, money. technology is affecting how canadians make payments, so it will affect money too. to start with, payments canada is working with the bank and with the major financial institutions to modernize our core payments systems. this will allow for wider access and more innovation. the first stage is to replace the wholesale system, now over 20 years old, which manages transfers between major financial institutions and through which the bank of canada operates. most of the work on the new wholesale system should be completed in 2020. now, the wholesale system handles most of the dollar value of payments. but there are thousands of times more retail transactions on any given day. so, modernizing the retail payments system is a top priority. two to three years from now, you will be able to execute transactions between yourselves in real time β a major advance over today β s lags. these prospects have the bank thinking hard about the future of money, especially cash. a decade ago, more than half of all transactions in canada were done with cash. today, that number has dropped to about one - third. it is more and more common to see people tap a card or take out their phone to make a payment. canadians are also doing more business online, and more than half of us have sent money with paypal or interac e - transfer. certain businesses have begun to accept only electronic payments. 4 / 6 bis central bankers'speeches i believe that central bank money β the bank notes you have in your pocket β will always provide an important public good : an individual β s sovereign right to make payments with an instrument that is universally accepted and final. a private digital currency cannot deliver that, regardless of how widespread its use may become. the other nice thing about cash is that it will still work even during power blackouts or cyber attacks. as a consequence, bank notes will probably always be around to some degree, if only as a contingency for unusual events. all things considered, then, it is an open question whether the bank of canada would ever see the need to issue a currency in digital form as a substitute for cash. nevertheless, the world of money is evolving very rapidly, so we need to
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develop plans to deal with whatever contingency arises. we will have more to say about this early in 2020. given this context, the bank needs to think about other emerging payment technologies. these include cryptoassets, such as bitcoin, as well as stablecoins, such as libra. because these are potentially global, they are attracting attention from central banks and other regulatory authorities. such innovations will bring new risks to the financial system. we need to understand these risks and apply appropriate regulation. one area of particular interest to central banks is cross - border transactions. as usual, the bank will be working on many more issues in 2020 than i have been able to summarize here. before i conclude, though, let me mention one topic that has garnered a lot of interest lately : modern monetary theory. essentially, the idea is that governments that can issue their own currency can never go bankrupt. accordingly, rather than borrowing from the public by issuing bonds, governments should spend as much newly issued money as needed to keep the economy growing and maintain stable inflation. this sounds like modern monetary theory is offering a free lunch, and most of us know there is no such thing. first, the idea is not monetary. government spending is a fiscal decision, not one for the central bank. second, the idea is not modern. it has been tried many times in the past, and the record is not pretty. for example, in the late 1960s the us government was running large fiscal deficits to finance the war in vietnam. this led to very rapid money creation. the result was a breakdown of the bretton woods system of fixed exchange rates and a surge in global inflation spanning the 1970s. there are far better means of avoiding slow growth and deflation β promoting innovation, providing infrastructure, removing impediments to international and intranational trade, eliminating red tape β just to cite a few obvious examples. with stronger trend growth, fiscal and monetary policy can focus on buffering economic fluctuations. conclusion it is time for me to conclude. we can see the broad forces of low interest rates, rising debt and technological change working in combination to stress households, companies and governments. the impact of these forces will keep the bank of canada busy in 2020 and beyond. the precise way these forces will unfold is highly uncertain. all of us β consumers, business people, policy - makers β will have to deal with these sources of uncertainty over the long term. that sounds challenging, and i
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. in 2001, taken on its own, the figure was as much as 1Β½ percentage points. in my view, both temporary and long - term factors have contributed to germany's relatively poor performance in the euro area. as far as the temporary factors are concerned, it should be remembered that, already in the run - up to stage three of european monetary union, interest rates had fallen sharply in a number of eu countries with previously fairly high short and long - term rates of interest. for example, interest rates for long - term government bonds in italy and spain, even in 1995, were 5 to 6 percentage points higher than the rates for german federal bonds. as the home of the former anchor currency in the erm, germany did not benefit directly from this process of interest rate convergence. another cause of relatively weak growth in germany is the crisis in the construction industry, especially in eastern germany. in this sector, the capacity built up immediately after reunification exceeded the longer - term ability of the real estate market to absorb it. reduced construction activity depressed german economic growth. without the decline in investment in construction since the mid - 1990s, the shortfall in german growth compared with the euro area as a whole would therefore not have been as great. by contrast, construction activity in other european countries has remained an important mainstay of economic growth. consideration also has to be given to the fact that living standards in the monetary union are still very disparate. since the poorer countries are supposed to catch up with the emu average, they have to go on growing more strongly than those countries which have already achieved a high level of income. one very important β if not the most important and continuing β reason for the inadequate pace of economic growth in germany is the heavy burden of taxes and social security contributions. added to this are strict regulations in some parts of the economy. above all, there is too little labour market flexibility in germany. in periods of a cyclical downswing, the rise in unemployment in germany was far sharper than the fall during periods when there was an upturn. for instance, the number of people out of work in western germany rose from its cyclical low point between 1991 and 1997 by some 1. 3 million to around 2. 5 million. by 2001, the number of unemployed had been reduced by no more than just over half a million. in germany, the incentives to take up employment are restricted by the high - level marginal burden imposed by taxes and other public levi
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are to be expected on that front either. german companies rely mainly on bank loans. and bank loans to the domestic private sector have shown hardly any further increase during the past few months. in september, they were only 1 % up year over year. in actual fact, there are some indications that banks are showing a certain amount of restraint in their lending. in addition to narrow margins in lending business, the very high number of business insolvencies and the fact that many enterprises have a low level of capital is likely to have played a part in this. the quality of banks β loan portfolios has deteriorated. however, our empirical studies have also clearly revealed that the cause of the weak credit growth in germany lies not so much in the banks β behaviour as in the situation of the economy as a whole. this means that the marked slowdown in credit expansion is mainly the outcome of a cyclically induced subdued demand for credit. in my view, the currently weak development of credit cannot therefore be cited as evidence of a general credit crunch in germany. allow me now to come to my third point and make a few remarks on the insurance companies. the insurance sector in germany is one of the most important institutional investors. in june 2002, the financial assets of the entire sector amounted to almost 1000 billion β¬ at book values. more than onethird of that amount was invested in the capital markets. by far the largest part of that figure was invested by life insurance companies, which β at the end of the first half of 2002 β had equities ( excluding participating interests ) and mutual fund shares to the amount of β¬160 billion. life insurance companies have invested 20 % of their financial assets in equities. the fact that share prices have now fallen by around 60 % from their peak in march 2000 has led to a significant fall in insurance companies β overall earnings and thus also to a reduction in capital bonuses for policyholders. so far, however, this has not generated any destabilising effects on the capital market. even in 2002, insurance companies have still been making new investments of around β¬12 billion net in equities and mutual fund shares. moreover, the insurance companies have a major self - interest in protecting the entitlements of their clients. they have has therefore established a rescue company for failing institutions, although β up to now β this company has not had to take any action. the extensive depreciation requirements due to the significant shares losses have been mitigate
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##ting systemic risk by providing the liquidity needed to oil the wheels of the financial system ; Β· oversight of infrastructures such as the national payment system as well as financial markets in order to ensure the smooth and efficient functioning thereof ; and Β· supervising the financial system on an ongoing basis. the central bank acts as the guardian of financial stability, which is necessary to efficiently allocate resources and absorb liquidity shocks. the bank has to continuously and comprehensively monitor potential threats to financial stability. this is necessary for prevention of crises, but in the event that they do occur, also for swift crisis resolution. the central bank should consider regulatory and / or operational intervention in cases where financial stability is threatened. the promotion of the efficiency and effectiveness of the financial system. the central bank is concerned with the robustness of the financial system both on a national and global level as disruptions in settlement in securities markets have the potential to spread to payment systems and to the financial sector in general. the central bank has to ensure compliance with international best practices and standards as laid down by institutions such as the bank for international settlements and the international monetary fund. standards such as the bis core principles for systemically important payment systems and the group of thirty recommendations regarding securities clearance and settlement are the result of collaboration and shared experiences between the major financial institutions in the world and provide a blueprint that a country should consider to become a global player and be internationally competitive. the role of the central bank in this regard can thus be summarised as : Β· ensuring that policies relating to the efficiency and safety of payment systems are designed to comply with the aforementioned international standards, bearing in mind that the implementation of such standards should be done with the appropriate degree of flexibility to adequately cater for the individual circumstances of each country ; Β· monitoring, but also participating actively in the development of standards relating to payment systems and cooperating with stakeholders in improving such standards ; and Β· fostering and developing public policy that supports the financial system in a country. this would include addressing legal and regulatory impediments to the effective and efficient functioning of the financial system. key features of a sound and robust financial system a sound financial system is one that remains stable and efficient in the wake of shocks such as interest rate hikes, severe exchange rate fluctuations, financial crises in other systems, but also noneconomic events such as terrorist attacks. robust financial systems are characterised by three basic characteristics : flexibility, resilience and internal stability. a financial system is flexible in that
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and manage the financial system in a country. why is it important to build financial infrastructure? a sound and robust financial system is a key contributing factor to financial stability in a country. although a definite causal link exists between real economic stability and financial stability, sound and robust financial systems play an important role in reducing the risk that distortions in the real economy will develop into a financial crisis and could even minimise the adverse effects of such a crisis in the event of it occurring. a sound and robust financial system is essential for mobilising capital that is necessary for sustainable economic growth. the major objectives of macroeconomic policy in a country are the level of employment, price stability, gdp - growth as a measure of economic growth and equilibrium on the balance of payments, especially in open economies such as those in the sadc region. domestic financial system weaknesses have potential repercussions on exchange rate stability and the balance of payments. an unsound domestic banking system will be less capable of providing an efficient foreign exchange market and will complicate monetary policy decision making by distorting the link between interest rates, economic activity and inflation. this will by implication make monetary targeting more vulnerable to policy errors. underdeveloped or developing economies are dependant on investment and uncertainty about the soundness of the national payment system in a country may trigger capital flight or deter foreign investors, thereby putting pressure on the balance of payments and deepening economic recessions. this is likely to, in turn, have an adverse knock - on effect on the level of employment and the general inflation level. furthermore, a country that does not conform to international standards and best practices with regard to its financial system, risks isolation from the international economic community. globalisation is a global trend toward the freer flow of trade and investment across borders, resulting in the integration of the international economy. in a globalised world, no country can afford being isolated, as there is no room in a globalised world for an economy isolated from world trade and foreign investment. globalisation also brings many benefits such as access to foreign capital, global export markets and advanced technology much needed in underdeveloped and developing countries. these benefits have positive social and economic consequences such as faster economic growth, which, in turn, alleviates poverty, leads to higher labour and environmental standards and facilitate democratisation. countries that resist globalisation, risk being marginalized. in order to become a role player in regional and international trade, countries have to ensure that
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some say there is nothing fundamentally new here : technology has always played an important role in driving change in the financial sector : from the telegraph to the atm ( celebrating its fiftieth birthday this year ) ; from screen - based trading to online banking. harsher critics even suggest the very phrase β fintech β is little more than a marketing tool, promoting hype over substance. but this time is different, i believe, in four key ways : - first, since the financial crisis, financial intermediaries have faced unprecedented pressures to reduce costs to ensure their business models can deliver the sorts of returns expected by investors. some estimates put the necessary cost reductions as high as 35 - 40 %. savings of that scale sunday times hiscox tech track 100 league table 2017, available at : http : / / www. fasttrack. co. uk / league - tables / tech - track - 100 / mckinsey estimate of cost reduction required for uk and european banks to meet an 8 % cost of capital : see http : / / www. mckinsey. com / industries / financial - services / our - insights / a - brave - new - world - for - global - banking. all speeches are available online at www. bankofengland. co. uk / speeches require transformational, not incremental, change β and that inevitably involves technology. - second, technology has become much more easily and cheaply available in recent years, reducing entry costs sharply. until surprisingly recently, standing up competitive financial services technology required access to expensive dedicated systems and communications links β something rarely if ever available to new entrants. perhaps for that reason, key parts of the financial system have remained based on a patchwork of reliable, but sometimes startlingly old, hardware and software. the development of secure internet communications, service - based applications allowing firms to buy as much ( or as little ) support as they need, open - source code and other key pieces of infrastructure have changed all that, making it radically cheaper to build potentially transformational technologies whilst only incurring the marginal costs of doing so. - third, major advances in the services available to consumers of non - financial products have made them much more demanding of a similar consumer experience from banks and their peers. younger consumers in particular now rely totally on their phones, and expect the same ease of use, choice and service integration they get from the so - called β gafa β ( google, apple, facebook and amazon
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continues to reflect the current constellation of interest rates. while the narrow spread between the rates on different short - term deposits fosters shifts in the allocation of funds to the most liquid assets contained in m1, the steep slope of the yield curve also encourages such shifts from m3 to longer - term deposits and securities outside m3. the annual growth rate of bank loans to the non - financial private sector turned slightly negative in september, with annual loan growth to both non - financial corporations and households declining further and being negative. at the same time, the monthly flows of loans to households remained positive and even increased, while those of loans to nonfinancial corporations were negative. in the case of households, the latest data provide further confirmation of a levelling - off at low rates. in the case of non - financial corporations, the subdued levels of production and trade, as well as the ongoing uncertainty surrounding the business outlook, continue to dampen firms β demand for bank financing, a tendency which is likely to prevail in the coming months. in this respect, it is worthwhile to note that the growth of loans to enterprises typically only picks up with some lag compared with the cycle in economic activity. at the same time, the ongoing improvement in financing conditions should support the demand for credit in the period ahead. against the background of highly demanding challenges, banks should take appropriate measures to strengthen further their capital bases and, where necessary, take full advantage of government measures to support the financial sector, particularly as regards recapitalisation. to sum up, the current rates remain appropriate. the incoming information and analyses that have become available since our meeting in early october have confirmed our expectations. while annual hicp inflation was - 0. 1 % in october, according to eurostat β s flash estimate, it is expected to turn positive again in the coming months and to remain at moderately positive rates over the policy - relevant horizon. at the same time, the latest information continues to signal an improvement in economic activity in the second half of this year. the governing council expects the euro area economy in 2010 to recover at a gradual pace, recognising that the outlook remains subject to high uncertainty. medium to longer - term inflation expectations remain firmly anchored in line with the governing council β s aim of keeping inflation rates below, but close to, 2 % over the medium term. cross - checking the outcome of the economic analysis with that of the monetary analysis confirms the assessment of low inflationary pressure over the medium
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everyday financial choices that many of us make. the lack of basic knowledge about financial products and services and their risk - return framework is one common instance of financial illiteracy that is widely observed. the greed for higher returns eventually culminates into a crisis involving larger number of retail investors. this basic lesson holds true not just for an individual investing his hard earned savings in financial products, but also for a bank or financial institution that manages public funds and channels them, either as investments or loans. thus, appreciation of various aspects of financial literacy and how it impacts our lives holds the key to prudent financial planning and welfare maximisation, both - at the individual level and for the society as a whole. why is financial literacy necessary? i, now, come to the second question : why is financial literacy necessary? together with financial inclusion and consumer protection, financial literacy forms a triad, which is necessary for ensuring financial stability. not only do the three have a bearing on financial stability, they also have a strong interplay among each other, with each having a vital impact on the other. thus, financial literacy has significant relevance for financial inclusion and consumer protection. without financial literacy, we cannot expect to make major headway in either financial inclusion or consumer protection. financial inclusion, essentially, involves two elements, one of access and the other of awareness. it is a global issue, and the relative emphasis on the two elements varies from country to country. for developed countries with widespread financial infrastructure, the access to financial products / services is not a matter of concern. it is more of a financial literacy issue in that market players / consumers are required to be educated about the characteristics of the available financial products / services, including their risks and returns. in developing countries like india, however, the access to products itself is lacking. therefore, here, both the elements, i. e. access and awareness need to be emphasized, with improving access assuming greater priority. financial stability, as a policy objective, refers to the avoidance of financial crises as also to the ability of the financial system to limit, contain, and deal with the emergence of imbalances before they pose a threat to the economic processes. 1 the recent global financial crisis is a glaring example of how lack of financial literacy can impact financial stability. the genesis of the crisis was in the sale of inappropriate mortgage products to sub - prime borrowers, who did not understand the product characteristics. the crisis was also fanned by the creation of sc
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awareness of basic financial products. some of the steps that have been taken by the reserve bank and other stakeholders to promote financial literacy in india are as under : β’ outreach visits by top executives of reserve bank of india to remote villages : the objective of these visits is to understand the ground level position, spread awareness about benefits of being connected to the formal financial system and disseminate information about the functioning of rbi. β’ rbi website β a link on financial education in the rbi website, containing material in english, hindi and 11 vernacular languages, which includes comic books on money and banking for children, films, messages on financial planning, games on financial education and link for accessing the banking ombudsman scheme. β’ awareness β distributing pamphlets, comic books, enacting plays and skits, arranging stalls in local fairs, exhibitions, participation in information / literacy programmes organized by press. books on financial planning for students and new professionals have also been released. β’ financial literacy centres ( flcs ) have been opened by various banks with focus on the spread of financial literacy, to create awareness about financial products and provision of counseling facilities for customers of banks. there were 575 flcs in the country as on september 30, 2012. bis central bankers β speeches β’ conducting town hall events across the country, including in tier ii and smaller cities, bringing together commercial banks and other stakeholders. β’ newsibition on mint road milestones has become the focal point for financial literacy activities with all activities relating to financial literacy coalescing at a common forum at each centre β’ setting up of a monetary museum by rbi to create awareness about money and banking among general public and spread knowledge about the history of money. β’ use of mobile financial literacy vans by banks in the north eastern states β’ awareness programmes on various government sponsored self employment schemes involving bank loans and subsidy by government agencies like kvic, dics and sc / st corporations. β’ mass media campaign tie ups with educational institutes, financial awareness workshops / help lines, books, pamphlets and publications on financial literacy by ngos, financial market players, etc. β’ national and state level rural livelihood missions have large number of field functionaries for proper handholding support to large number of self help groups. β’ large number of websites / portals of banks / state level bankers committees disseminating information on banking services β’ conduct of financial literacy programmes by rural self employment training institutes in line with the β catch them young β strategy for our financial education initiatives, the reserve bank launched the rbi
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to 1 / 4 percent, where it remains today. the fomc anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time. with the federal funds rate close to zero, the federal reserve has focused on alternative tools to ease conditions in credit markets. we have established new lending facilities and expanded existing facilities that aim to enhance the flow of credit to businesses and households : we increased the size of the term auction facility to help ensure that banks could obtain the funds they need to provide credit to their customers ; we expanded our network of swap lines with foreign central banks to help ease conditions in global dollar markets that were spilling over into our own funding markets ; we established facilities to promote the functioning of money market mutual funds and the commercial paper market ; and we introduced the term asset - backed securities loan facility, or talf, which is designed to facilitate the renewed issuance of consumer and small business asset - backed securities. in addition, to improve the functioning of the mortgage market and to support housing markets and economic activity more broadly, the federal reserve has begun to purchase large amounts of agency debt and agency mortgage - backed securities. the measures taken since september by the federal reserve, other u. s. government entities, and foreign governments have helped improve conditions in some financial markets. in particular, strains in short - term funding markets have eased notably since last fall, and london interbank offered rates, or libor β which influence the interest rates faced by many u. s. households and businesses β have decreased sharply. conditions in the commercial paper market also have improved, even for lower - rated borrowers, and the sharp outflows from money market mutual funds in september have been replaced by modest inflows. in the market for conforming mortgages, interest rates have fallen nearly 1 percentage point since the announcement of our intention to purchase agency debt and agency mortgage - backed securities. corporate risk spreads have also declined somewhat from extraordinarily high levels, although bond spreads remain elevated by historical standards. likely spurred by the improvements in pricing and liquidity, issuance of investment - grade corporate bonds has been strong, and speculative - grade issuance, which was near zero in the fourth quarter, has picked up somewhat more recently. nevertheless, significant stresses persist in many markets. for example, most securitization markets remain closed, and some financial institutions remain under pressure. as i noted, the ongoing stresses in the financial markets have been accompanied
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christopher j waller : getting closer speech by mr christopher j waller, member of the board of governors of the federal reserve system, at the federal reserve bank of kansas city, kansas city, missouri, 17 july 2024. * * * thank you, jeff, and thank you to the federal reserve bank of kansas city for the opportunity to speak to you today. 1 so far, 2024 has been a challenging year for economic forecasters, and for monetary policymakers. after significant progress in 2023 toward the federal open market committee's ( fomc ) price - stability goal, inflation jumped in the first quarter. at the same time, both the labor market and economic growth ran strong enough that some commentators wondered whether monetary policy was restrictive enough and whether rate hikes should be back on the table. these twists and turns in the economic data shifted everyone's expectations back and forth as to when the fomc might begin lowering its policy interest rate and how many cuts there would be this year. during this time, my consistent view was that there was no urgency to cut rates until the committee is confident that inflation is returning sustainably to 2 percent. then, in the second quarter, data on inflation and the labor market moderated in a way that suggests progress toward price stability has resumed. the data over the past couple months shows the economy growing at a more moderate pace, labor supply and demand apparently in balance, and inflation slowing from earlier this year. these are all developments that support progress toward achieving the fomc's dual - mandate goals. for reasons that i will elaborate on later, i believe current data are consistent with achieving a soft landing, and i will be looking for data over the next couple months to buttress this view. so, while i don't believe we have reached our final destination, i do believe we are getting closer to the time when a cut in the policy rate is warranted. before turning to the economic outlook, let me say a word about central bank communication - in particular, communication about the policy path. central bankers use communications to try, as much as possible, to describe the extent of progress, and even more importantly, the remaining path to the ultimate destination. the problem is that there may not be just one path to the ultimate destination - it depends on the incoming data. for example, when leaving work, you have a normal route to get home, and that is the base case for your estimated commuting time.
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based on their own circumstances and needs, but taking also into account what is going on outside their borders. such action has the best chance of mitigating the effects of global shocks on their economies and, by extension, on the international economy. when we all do what is right for our domestic economies, we are also most likely to do what is right for the world economy.
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lawrence schembri : stress prevention β central banks and financial stability remarks by mr lawrence schembri, deputy governor of the bank of canada, at a joint bank of canada, international monetary fund, centre for international governance innovation and peterson institute for international economics workshop, ottawa, ontario, 6 may 2016. * * * for the better part of the past two centuries, central banks have played an important role in the maintenance of financial stability, but primarily one of β stress or crisis management. β in particular, central banks have served as lender of last resort, providing liquidity to prevent stress from sparking contagion in solvent, but illiquid, financial institutions. but that role is starting to change. while central banks responded boldly to the global financial crisis with liquidity provision and monetary policy actions to avoid a repeat of the great depression, the severity of the economic fallout obliges us to ask whether they could have done more to prevent it, rather than just trying to manage and mitigate its economic impact. this query goes well beyond considering whether monetary policy aggravated the financial vulnerabilities that contributed to the crisis and raises broader questions concerning the responsibilities of central banks. it β s time, then, for central banks to rethink their role in financial stability : β’ first, by recognizing that while the best contribution monetary policy can make to financial stability is price and macroeconomic stability, this is a necessary, but not sufficient, condition for financial stability ; β’ second, by focusing on crisis prevention through means other than monetary policy, while at the same time modernizing their role as liquidity provider or lender of last resort ; and β’ third, by enhancing their contribution to financial stability by exploiting two of their key strengths β their financial - system - wide perspective and their analytical capacity. going beyond monetary policy as a crisis prevention tool in thinking about enhancing the role of central banks, we should reconsider two notions that have helped to advance our analysis. the first is the β lean versus clean β debate. as lars svensson has compellingly argued, monetary policy is too blunt an instrument to be used to mitigate financial vulnerabilities. other tools are better suited for this purpose. the second notion is the β lines of defence β analogy, with monetary policy serving as the last defensive barrier when other measures to reduce financial vulnerabilities and mitigate systemic risks are either absent or inadequate. this view suggests that actions be taken sequentially. consider,
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, for 2008 interest income may still benefit from the positive impact of business inertia. amid a sharp drop in gross value added in the financial services sector, real gdp growth in 2007q3 turned out at 0. 7 %, below trend estimates. the decline of net results for 2007 by 11. 5 % does also not warrant optimism for the contribution of the financial sector to gdp in the last quarter of the year. this figure is, however, not yet published for luxembourg. the renewed fall in equity markets at the beginning of the year coupled with a 5 % drop in january of net assets of the fund industry, is also likely to be a further drag on economic activity in luxembourg. among the series of stress testing tools and macro - prudential indicators designed by the bcl, the bcl built its own index to evaluate the degree of the banking sector β s vulnerability. the recent estimates ( see chart 9 ) show an increase of the degree of banks β vulnerability from the end of 2006 to the third quarter of 2007. however, the index forecast for 2008 and 2009, based on the december eurosystem macro - economic projections, seems to indicate that the degree of vulnerability would tend towards its average level. still, it remains to be seen how profitability in 2008 will be affected adversely by further valuation losses, increased funding costs, slowing credit growths, declining non - interest income. the bcl β s retail interest rate statistics reveal that the banks β response to the money market disruptions and the increase in wholesale funding costs falls short of what several observers had feared. according to the data up to december 2007, the bank lending rates applied on new loans ( at variable rates ) to households for house purchase have in the course of 2007 actually eased by 20 basis points relative to the 50 basis points increase in the ecb minimum rate. as regards non - financial corporations, the reference rate of loans at variable rates is very often the 3 - month euribor. on this segment, we have noted a strong impact as the lending rates rose by more than 70 basis points in 2007, hence 20 basis points more than the adjustment in the key central bank rates. but that is still substantially lower than the rise in the money market rates which, at their peak, reached more than 100 basis points since january 2007. interest rates however are only one criterion of credit conditions. banks can also adapt to more stringent credit standards by raising the collateral requirements for example. our bank lending survey
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and variable lags. second, the mandate underlines that price stability is assessed euro area wide, the governing council not reacting to national or regional developments. the ongoing accession process will have no impact on this underlying philosophy. our will to be as transparent as possible so as to allow agents to internalise stable price developments in their expectations is key to accountability and will remain so with accession. in order to underline that we pay great attention to developments in the real economy, i am very glad that i am able also now to invite a representative of the real economy to this rostrum, namely the chief financial officer of the largest steel company in the world. i am very glad to count him among the supervisory board of the luxembourg central bank. i think very appropriately that he will also dwell on something which is similar to my mind, namely that you also have to see globalisation from luxembourg and not go the other way around and start with globalisation and then try to come back to your national attitude. we only can realise our aims in the context of the international environment and therefore i am very glad and interested to hear now what mr. michel wurth will have to tell us. thank you very much for your attention.
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. we can only hope that the recovery process will not encourage complacency with regard to the significant amount of repair work that still needs to be done, because the idea is not simply to return to where we came from, but to effect changes that will ensure that next time we will be at least better prepared and be in a position to limit the damage and its costs. difficult as the process is, the work under way in different fora pertaining to the reform of the international financial architecture and enhancing regulatory and supervisory standards needs to continue, and we cannot afford to lose the sense of urgency. 3. inflation targeting in south africa during the global crisis, south africa was in the fortunate position, where it did not have to consider responding to the economic slowdown with unconventional monetary policy. however, before i look at more recent monetary policy developments in south africa, i thought that it may be useful to touch briefly on the bank β s mandate. as is the case in many parts of the world, the role and responsibilities of the south african central bank and the appropriate focus of its work has come into much sharper focus. section 224 ( 1 ) of the south african constitution, from which the bank gets its mandate, describes the primary objective of the south african reserve bank as being β to protect the value of the currency in the interest of balanced and sustainable economic growth in the republic β. therefore price stability is core to the mandate of the bank. however, it is clear that price stability is not an end in itself, but in the interest of balanced and sustainable growth. it follows then that, as far as the constitutional mandate is concerned, both economic growth and by implication employment, need to be taken into account when making decisions on monetary policy. to give effect to these constitutional imperatives, the bank has been mandated by government to maintain low inflation within an inflation targeting framework. this framework is a means to achieve the objective. it is not an end in itself. we note the current debates around the appropriateness of our mandate and questions about how that mandate is executed. the sarb has indicated its willingness to openly engage various stakeholders to both explain its approach and to explore with them any ideas they may bring forward. governor marcus has identified improved communication and stakeholder engagement as a priority, and has underlined this by creating dedicated capacity in her office for stakeholder engagement and outreach. inflation - targeting was introduced by several countries in the 1990s under relatively benign conditions with generally favourable outcomes. the financial
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daniel mminele : a perspective on south african monetary policy address by mr daniel mminele, deputy governor of the south african reserve bank, at the rand merchant bank fixed income seminar, cape town, 28 january 2010. * 1. * * introduction good afternoon ladies and gentlemen. thank you to rand merchant bank for the invitation to participate in this fixed income seminar. the global crisis has certainly changed the way many people think about things and has changed the manner in which the world operates. it has also taught us that a lot of people actually know far less about how the economy works than they would like others to believe, the implication being that it is particularly when things are going well that we should be asking ourselves β why β, and not assuring ourselves that it has been good judgement only 1. since the emergence of the global financial and economic crisis, the interest in the role of central banks and their work has risen to an unprecedented level. as you are aware that interest has also been accompanied by a much higher level of scrutiny. south africa has not been an exception and indeed the debate is continuing. my speech today will initially briefly touch on recent monetary policy responses to the global crisis. i will then provide a perspective on the mandate of the south african reserve bank, our monetary policy framework and its implementation in recent times, and conclude by making some remarks on the exchange rate within that context, as this is a topic which has also received much attention recently. 2. monetary policy responses to the global crisis the global financial crisis that started in 2007 and the ensuing deterioration in world economic growth necessitated drastic adjustments to fiscal and monetary policy in developed and emerging market economies in order to support economies and to ease credit market conditions. the origins of the crisis, its widespread nature and the extent of the financial market turbulence and the spill - over effects to other sectors of the economy prompted central banks to review their monetary policy implementation frameworks and to implement policies that, only a few years back, were not on their radar screens, and certainly outside the β comfort zone β of many. central banks responded with both conventional and unconventional monetary policies to the global financial crisis. during the early stages of the crisis, central banks adjusted their normal refinancing facilities, for example, they lengthened the maturity of their money market operations and extended the universe of securities they were prepared to accept as collateral for borrowing from the central bank. during this period several initiatives were announced by central banks acting both individually and in concert ( e
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temporary. i would like to conclude by coming back to newton's experiment, where he split white light into the colours of the spectrum using a prism, and then recombined them using a second prism. after breaking the challenges of financial stability down into a spectrum of five questions β which are not exhaustive β i would like now to recombine them into a single certainty : we, as supervisors and regulators, we the acpr, will do everything within our power to safeguard financial stability in the new macrofinancial landscape. i shall give the floor now to dominique laboureix : i would just like to congratulate him on his appointment as chair of the european single resolution board, and thank him warmly for his powerful work as secretary general of the acpr for the past three years. 1 those subject to solvency ii. 2 the ecb blog, bitcoin's last stand, 30 november 2022. 4 / 4 bis - central bankers'speeches
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policy space in a negative spiral. as we have seen in other countries, if inflation consistently falls short of the central bank β s objective, consumers, workers, and businesses start to expect lower inflation to continue. expectations of low inflation can create a self - fulfilling dynamic with actual inflation, making it even more difficult for the central bank to boost inflation. and because inflation is reflected in nominal interest rates, that, in turn, can reduce the amount of policy space the central bank has available to prevent the economy from slipping into recession. in fact, in recent years, central banks around the world have had to use a larger variety of policy tools than they have traditionally used to support the recovery. some issues to explore given the new normal of low equilibrium interest rates and low sensitivity of inflation to slack, it is prudent to assess how well various approaches worked both here and around the world, with a view to identifying the best ways to promote the goals the congress assigned to us. earlier this month, we held a conference in chicago where we heard from experts as well as community organizations, small businesses, labor organizations, and retirees. we are looking at our tools and strategies, assessing not just the various approaches that were undertaken, but also approaches that have been proposed but not tried. one of the ideas discussed in chicago is that the federal reserve should explicitly promise to β make up β for misses on inflation during a downturn. the federal reserve could hold interest rates lower after a recession is over, perhaps by promising not to raise interest rates until inflation or the unemployment rate have reached particular levels. 5 a related idea discussed in chicago is average inflation targeting, meaning the federal reserve would aim to achieve its inflation objective, on average, over a longer period of time β perhaps over the business cycle. 6 this approach could also have aspects of a makeup policy, depending on how it is designed. while such approaches sound quite appealing on their face, they have not yet been implemented in practice. there is some skepticism that a central bank would in fact prove able to support above - target inflation over a sustained period without becoming concerned that inflation might accelerate, and inflation expectations might rise too high. 2 / 4 bis central bankers'speeches at the chicago conference, we also heard how difficult it can be to estimate with any precision the β maximum employment β leg of our dual mandate. 7 there is no fixed destination point for maximum employment β no single number where we can be sure we are β there. β maximum employment
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radovan jelasic : issues of key importance for the national bank of serbia and also for the country speech by mr radovan jelasic, governor of the national bank of serbia, at the serbian economic summit, belgrade, 4 november 2008. * * * ladies and gentlemen, regardless of all political and economic challenges during the last two years, serbia managed to maintain its economic stability. and the challenges have been quite a few, what with things like adoption of the new constitution, early elections, presidential elections, kosovo issue and again early elections, oil and agricultural shocks, etc. however, the challenge we are currently facing comes from abroad and forces upon us a new set of rules, puts things into a different context and requires a different perspective β if not to adopt a completely new pattern of thinking and working criteria then at least to think and work faster and more efficiently. and though i am convinced that serbia will again be successful in fighting these difficulties, allow me to point out today some issues of key importance, not only for the nbs, but for the country as a whole. these are as follows : 1. market has grown less tolerant now of eventual mistakes in macroeconomic policy as we are still paying for the mistakes made in earlier years. the speed and intensity of change in the course of the last several days is unprecedented in modern history : spreads double overnight, first rate institutions lose their hard earned reputation, state ownership is not only commended but positively reflected in prices of shares, while valuation of balance sheet items at market prices β one of the key pillars of market economy β is suddenly put aside for better times. but what are the implications for serbia? the spreads are changing now, even the exchange rate, and we are receiving bills for all that we have not, or have only partially done. however, it is solely up to us how we shall proceed, whether we are ready for a complete overhaul or shall try to muddle through for some time yet. serbia still has two choices : a ) not to change anything of consequence or to make only slight changes which would contribute to further growth in consumption and increase the current account deficit, hence necessarily leading to a change in the exchange rate, problems in budget execution and higher inflation, or b ) to make a turnaround in its economic policy, freeze consumption and allow only for the increase in capital investment. fare meter is ticking and each day lost is a loss for serbia. i am convinced, however, that we not only
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of monetary policy. the bank has been implementing powerful monetary easing under " quantitative and qualitative monetary easing ( qqe ) with yield curve control, " aiming to achieve the price stability target of 2 percent. this policy framework was introduced exactly a year ago, and at this meeting with you last year, i talked about the new policy, which had just been introduced. " qqe with yield curve control " consists of two components. the first is an inflation - overshooting commitment, in which the bank commits itself to expanding the monetary base until the year - on - year rate of increase in the actual cpi exceeds 2 percent and stays above that level in a stable manner. the second component is yield curve control, in which the bank controls short - and long - term interest rates under the guideline for market operations decided at every monetary policy meeting. looking back at the one year since its introduction, japan's long - term interest rate has been stable at around zero percent, which is the target level, and bank lending rates as well as issuance rates for corporate bonds have been at extremely low levels. moreover, financial institutions'lending attitudes as perceived by firms have remained positive both for large and small firms, and the year - on - year rate of increase in the amount outstanding of bank lending has been in the range of 3. 0 - 3. 5 percent recently. such highly accommodative financial conditions, as well as proactive initiatives by financial institutions, have been firmly supporting corporate activities in japan. although there is still a long way to go to achieve the price stability target of 2 percent, the bank will continue to persistently pursue powerful monetary easing with a view to achieving the target at the earliest possible time. thank you. japan's economy and monetary policy speech at a meeting with business leaders in osaka september 25, 2017 haruhiko kuroda governor of the bank of japan chart 1 real gdp ann., tril. yen real gdp ( level, s. a. ) cy06 source : cabinet office. chart 2 external demand exports global manufacturing pmi s. a., di global economy advanced economies emerging and commodity - exporting economies s. a., cy 2015 = 100 real exports cy10 cy10 notes : 1. figures in the left chart for the global economy are the " j. p. morgan global manufacturing pmi. " figures for advanced economies as well as emerging and commodity - exporting economies are calculated as
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have embarked on further policy easing, exacerbating the so - called monetary policy divergence. in the early part of this year, the european central bank ( ecb ) announced their long awaited qe programme of approximately eur1, 1 trillion, while the dovish stance at last week β s policy meeting reinforced expectations for further easing. in japan, the recent economic contraction and renewed deflation fears fuelled speculation that the bank of japan ( boj ) could announce more qe. in addition, various central banks in aes reduced their policy rates in 2015, for example canada, australia ( both by 50 bps ), new zealand ( 75 bps ) while sweden and switzerland moved further into the territory of negative interest rates. china also started easing monetary policy since november 2014, reducing their benchmark policy rates on six occasions and the reserve requirement ratio four times. the latest easing by china happened as recently as last week, reflecting the chinese authorities β concern about future bis central bankers β speeches growth expectations and the overall health of the economy. surprisingly, this resulted in broad em weakness with losses being registered on both equity and currency markets. perhaps this reaction is a reflection of increased risks to the chinese economic outlook. the gfc set the tone for monetary policy implementation and liquidity provision to significantly influence balance sheet dynamics in aes ( and in order to restore dysfunctional interbank markets ). in emes, however, this phenomenon was less apparent, with only the pboc active in this regard. this was because, as em central banks did not face the β zero lower bound β constraint, they could still use traditional policy tools ( such as policy rates ) to respond to external shocks. in addition, many em countries recovered more quickly from the gfc than their ae counterparts, further reducing the need for exceptional policy measures. nonetheless, the expansion of the balance sheets of major central banks has not been without effect on emerging markets, and has at times complicated the task of the latter β s central banks. ample global liquidity triggered capital flows into em countries, in many cases encouraging public and private leveraging and fuelling credit growth. such developments would typically prompt a policy response in the form of higher interest rates. however, with interest rates differentials with aes a key driver of portfolio flows and currency appreciation, some em central banks found themselves facing increasingly complex challenges. despite the current delay in the fed β s expected monetary policy normalisation path, the fed and the bank
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the eurozone and japan, as well as capital outflows from china, could result in greater investments into em from these regions, counter - balancing to some extent the impact of us tightening. in summary, recent experience makes it quite clear that changes in aes β monetary policies have been a key driver of developments and sentiment towards emes and market volatility, as the years of low interest rates and unconventional monetary policy have seen increased international exposures to emes. conclusion in conclusion, it would appear that policy challenges and, specifically, the β divergence β between the major central banks will continue to have major bearings on emerging economies in the foreseeable future. market strains have eased over the past few weeks, in part because of growing indications that the federal reserve would take the risk of a further deterioration in financial conditions in consideration before any policy decision. nonetheless, the consensus view remains that while lift - off has been delayed, it will still happen in the not - too - distant future ; and its impact on global portfolio flows and em assets remain highly uncertain. so does the impact on the world economy and global financial markets from current or potential stimulus in the eurozone, japan and china. against, this background, it is clear that central banks cannot afford to be complacent, as the risks related to global monetary policy and macroeconomic developments remain high given the globalised nature of the world economy. this is unchartered territory, and the risks of further market turbulence are tilted to the upside. in light of possible implications for financial stability and resilience, and for domestic price developments, central banks β and the south african reserve bank among them β will have to exert continued and utmost vigilance. thank you. bis central bankers β speeches
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sabine lautenschlager : interview in der spiegel interview with ms sabine lautenschlager, member of the executive board of the european central bank, in der spiegel, conducted by mr michael sauga on 7 january 2015 and published on 10 january 2015. * * * mario draghi, the president of the european central bank, intends to undertake largescale purchases of european government bonds in order to counter the rate of inflation in the euro area. will you agree to that? inflation in the euro area has been below the targeted rate of just under 2 % for quite some time now, and forecasts for the next few months predict little change. that is why it has been, and continues to be, right and proper for the ecb to discuss appropriate countermeasures. however, i am currently not convinced by large - scale purchases of government bonds. why not? in monetary policy - making, i regard purchases of government bonds as the last resort. in this context, the peculiarities of the euro area as a currency area encompassing 19 sovereign states must be taken into account. there must a threat of exceptional risks materialising, and there must be reasonable balance between the benefits of, and risks entailed in, such a programme. i do not believe that to be the case at present. what we should do instead is wait until the measures that we have put into place only recently can take full effect. despite these measures, which include the negative interest rate on deposits and purchases of securitised private sector credit, december for the first time saw inflation in the euro area drop to below zero. many economists are warning of deflation such as that experienced by the global economy in the 1930s when consumers no longer wanted to buy anything because they all expected prices to continue to fall. isn β t that reason enough for decisive intervention? i don β t want to gloss over the situation, but you can β t speak of deflation at the moment. what we are observing is a persistently low inflation rate that is due, among other factors, to the fact that prices of energy and food have declined significantly. at the moment, however, i cannot see any signs of consumers expecting steadily falling prices and thus changing their spending patterns. the purchases of government bonds are intended not only to raise the rate of inflation, but also to encourage banks, in particular those in southern europe, to again extend more loans to the corporate sector. can that work? i
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the design of a purchase programme has even taken place. moreover, this is not about german positions. the only issue that is crucial for me is whether large - scale government bond purchases are appropriate for our currency area and whether the benefits are greater than the risks. and i am sceptical about that. bis central bankers β speeches
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aware of and analyze very carefully. but economic theory and our experience so far support the view that, on balance, the benefits of opening up to the rest of the world outweigh the costs. tonight, i have laid down some of the factors that i consider relevant in trying to come to a judgment about the desirability of further economic integration in north america, and about what needs to be done if canadians decide to pursue this. i am looking forward to the insights that others may have on this issue as the conference unfolds. 6 / 6
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adopt policies of deeper north american integration, would it still make sense for us to keep our own currency? or should we be thinking about adopting the u. s. dollar as our currency? first, let me stress that monetary union is an issue that should be considered once we have made more progress towards establishing a single market for goods and services, capital, and labour. without a single, well - functioning market for labour, a single currency could impose great adjustment costs on workers. but suppose we were on track to achieve a single market. should we then be thinking of a monetary union as well? the response to this, which i have set out in earlier speeches, is that it depends, to an important extent, on how close or how far apart are the industrial structures of the two countries. although it is always possible that at some future time those structures could converge ( they could also diverge! ), the reality is that, right now, they are quite different. this means that economic shocks tend to affect our two economies differently. in these circumstances, a separate floating currency facilitates adjustment to those shocks at least cost, in terms of lost output or higher inflation. but suppose we were well on our way to achieving a true single market for goods and services, labour, and capital. then it would be sensible to consider a common currency in the context of the industrial structures prevailing at that time, with a view to ascertaining whether the benefits of lower transaction costs associated with a common currency outweighed the higher costs of economic adjustment. 5 / 6 conclusion let me wrap up by summarizing my main points. fundamentally, the decision to deepen economic integration in north america is a political one that canadians and their governments will have to make. from a purely economic perspective, i have, as an economist, a strong predilection for continuing to tear down barriers to trade - preferably, multilaterally, but, realistically, first within canada and north america. over the long haul, that is going to encourage a more efficient, productive economy, greater opportunities for canadian entrepreneurs and workers, and, most importantly, higher living standards for canadians. to be sure, certain costs are involved in all of this. fuller integration with the united states could make us more vulnerable to fluctuations in economic activity in that country. and we may no longer be able to tailor policies to fully meet our own needs or to foster particular canadian industries. these are issues that we ought to be
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mr. hannoun discusses the operational framework for emu and the challenge of managing price stability speech by the deputy governor of the banque de france, mr. herve hannoun, at the financial times european economic and monetary union conference in london on 20 / 11 / 97. i am delighted to take part in this discussion on the framework for the single monetary policy in stage three. i will address what i consider to be the two main categories of issues in this context : those related to monetary policy strategy on the one hand, and those related to the execution of monetary policy operations on the other hand ; in other words, strategic and operational issues. 1. strategic issues what are the main strategic issues relating to the formulation of the single monetary policy? i will consider in turn : β’ the final objective, β’ the intermediate target, β’ the role of the exchange rate as an indicator, and β’ the starting level of interest rates in the euro area at the end of next year. 1. 1. final objective : a quantified definition of price stability the final objective of the single monetary policy is clearly stated in the maastricht treaty : according to article 105, β the primary objective of the escb shall be to maintain price stability β. only a monetary policy geared towards the objective of price stability can create the conditions for durable and sustainable growth. to reach this objective, three conditions need, in my view, to be fulfilled : β’ firstly, the monetary strategy should be set in a medium - term framework. more generally, the european policy mix should consist both of a medium - term stability - oriented monetary policy and of a medium - term fiscal policy aiming at a balanced budget ( or β close to balance β as stated in the stability pact ). 1 this medium - term stability - oriented policy mix is the best we can do to create the conditions for durable growth in the euro area. and it is now widely agreed in the european union that the policy mix should not give the illusion that it can fine tune the economy ; 1 by urging governments to aim for a fiscal position close to balance or in surplus in the medium term, the stability pact enables them to let automatic fiscal stabilizers come into play during recessions without exceeding the 3 % reference value. in short, it allows them to create a fiscal buffer during normal economic periods that can be drawn on if an asymmetric shock occurs. β’ secondly, the strategy pursued should provide a clear anchor to inflation expectations. this
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implies the public announcement of a quantified definition of the final objective of price stability ; for instance, the banque de france aims at an inflation rate not exceeding 2 % ; β’ thirdly, the strategy should be based on a forward - looking approach. this is because the transmission of monetary policy decisions to the economy takes place with relatively long lags. estimates of these lags between interest rate changes and their effects on inflation vary between one and two years. as a consequence, central banks have to look ahead before they take monetary policy decisions. a case in point was the recent decision by several continental central banks, including the banque de france, to raise their main refinancing rates on 9th october. this move was justified by the need to pre - empt inflationary pressures early enough, although current inflation remained low. in my view it is very important to make the public aware of the concept of the β pre - emptive strike β, which is at the heart of central banking. 1. 2. intermediate target : more arguments in favour of monetary targeting, with a caveat in order to provide an anchor to inflation expectations and to look ahead, central banks make public an intermediate target which they commit themselves to respecting. announcing an intermediate target also enhances the accountability of the central bank. this is why article 12 of the statute of the ecb explicitly refers to decisions relating to intermediate monetary objectives as one of the main responsibilities of the governing council of the ecb. two possible strategies have been selected by the emi council as potential candidates to be recommended to the ecb, namely monetary targeting and direct inflation targeting. 2 in the case of direct inflation targeting, the inflation forecast made by the central bank can be viewed as fulfilling the role of the intermediate target. 3 let me dwell a moment on the choice the ecb will have to make between direct inflation targeting and monetary targeting, unless it chooses to combine elements of both strategies. inflation targeting stresses the responsibility of the escb for achieving and maintaining price stability. however, there are some difficulties in the process of forecasting inflation over the medium and longer term. as mervyn king recently stated, β such a forecast cannot be a single number. it must be presented for what it is, namely a probability distribution β. 4 furthermore, inflation targeting could imply more formal cooperation with the government since the latter is in a position to influence price developments. finally, inflation targeting has admittedly proven useful in progressing towards price stability, as
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are indications that this rate has declined since the onset of the financial crisis. as such, further work could provide a clearer picture across a wider range of assets and markets, with triparty collateral management systems serving as a good starting point to better grasp the rate of reuse in secured financing markets. another important element that affects the availability of collateral assets is settlement arrangements and, here again, the eurosystem is working with the market to see how enhancements to settlement arrangements could overcome existing inefficiencies. given that settlement arrangements influence both the availability and mobility of collateral, i will move on to the topic of mobility and address settlement arrangements in parallel. mobility of collateral an important function of collateral in financial markets is that it should have the capacity to β change hands β when needed. thus, collateral should be mobile. inefficiencies in settlement arrangements, however, including at the level of financial market infrastructures, reduce the amount of assets that can be quickly mobilised and, therefore, the overall availability of collateral assets. the eurosystem, like other central banks, therefore supports and fosters initiatives that contribute to improving the availability and mobility of collateral, without overlooking the need to preserve transparency and legal certainty. let me mention first the initiatives within the eurosystem itself β target2 - securities ( t2s ) being the most notable. the launch of t2s will make securities settlement β including collateral mobilisation β safer and more efficient for market participants and central banks alike. with the migration to t2s, a number of operational barriers which currently exist for cross - border settlement will be removed and operational friction will be reduced, allowing collateral to move more easily from where it is, to where it is needed. t2s will be an important piece in the β mosaic β of post - trade settlement. t2s will overcome the technical difficulties encountered today in quickly transferring collateral assets. the common and extended settlement timetables across t2s markets will also support more efficient mobilisation and management of collateral assets and, in this way, t2s is a crucial step to a better functioning financial market, at least from an operational point of view. the eurosystem has also taken initiatives in relation to the services for mobilisation of collateral for its own credit operations. one of the most significant developments in this respect is the introduction of support for cross - border triparty collateral management services which will go - live towards the end of this month. trip
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sufficiently large player in the foreign exchange market to affect the exchange rate ; and ( iii ) a microstructure channel β where the central bank has sufficient information about the a few years ago the reserve bank of new zealand considered whether to stop holding reserves. this would have sent a powerful though not totally convincing signal that there would be no intervention, because intervention can also be financed by borrowing. included in ishii et al ( 2006 ) is material on the mechanics of foreign exchange intervention, which can be seen as providing a partial answer to the ieo's concerns that fund staff are not equipped to give practical advice on intervention and other practical exchange rate issues, including how to develop the needed market infrastructure. in any case, it is not entirely clear that the staff should be experts in the nitty - gritty of exchange rate intervention, which is highly country and institution dependent. it is probably better in this area for the fund to help the central bank of the concerned country to obtain technical assistance from a central bank that is or has been in a similar situation. this was attempted in the indonesian program in 1997, but it became clear there that the forces moving the exchange rate were too powerful to be stemmed by intervention alone, however sophisticated it might be. i have avoided using the calvo - reinhart term " fear of floating ", preferring rather to try to explain why countries often intervene. ishii et al ( 2006 ) describe the approach of the mexican authorities, which involved selling options to sell foreign exchange if the exchange rate depreciated to a specified value. this approach may have encouraged the development of hedging instruments by the private sector. operation of the market and the forces active in it to be able to intervene in particular ways or at a particular time such that it can move the rate. in the face of significant capital flows, these channels are unlikely to be able to influence the rate for very long without supportive macroeconomic policy. that is why it has been so hard to find major effects of intervention per se on the exchange rates of the major industrialized countries. however, where capital flows are controlled or the country is not yet well integrated into the global capital markets, and provided policymakers are willing to intervene on a sufficiently large scale, the portfolio balance channel can operate to enable the country to have a sustained effect on the exchange rate, as the chinese and the russian cases illustrate. interventions are not costless. unless they are sterilized they are likely to
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economies the following years, with the mexican crisis of december 1994 being the first example. thereafter, a series of banking and balance of payments crisis followed in latin america and elsewhere3. the impact of the fed β s tightening cycle in the 1990s on emerging markets was not as widespread as the 1980s episode had been, and countries like chile and colombia were able to st 1 remarks at the 2017 iif latin america economic forum, asuncion, paraguay on saturday april 1, 2017. i acknowledge the support of diego gianelli and mauricio hitschfeld in the preparation of this speech. these remarks do not imply endorsement by the central bank of chile or any of its board members. 2 there is a third episode between june 1999 and june 2000. this process of 150 bp hikes can be understood as the final adjustment along the 1994 episode. 3 see, for example, the discussion in garcia β herrero, a., 1997, banking crisis in latin america in the 1990s : lessons from argentina, paraguay and venezuela, imf working paper 97 / 140. see also sachs, j., a. tornell and a. velasco, 1996, financial crisis in emerging markets : the lessons from 1995, nber working paper 5576. weather this period relatively well and to keep high growth rates. 4 but there is ample evidence that, in a context of several macroeconomic imbalances in several emerging economies, the 1994 episode triggered a series of difficulties and crisis that configured the macroeconomic map in the developing world in the second half of the decade. in contrast, the monetary policy normalization process starting in 2004, did not have a negative effect on emerging economies. moreover, the 2004 β 2007 period was one of prosperity and stability across the developing world. of course, the global financial crisis of 2008 derailed everything, but it is difficult to argue that it was the consequence of the hiking cycle of the mid 2000s. if anything, it might have been the consequence of the lack of a timely normalization. hence, although there are many common features in the 1994 and 2004 cycles, the consequences were very different. what i want to do in this talk is to identify a few features that help us reflect why this was the case. i think this is useful to extract some lessons for the current process of monetary policy normalization in the us. 1994 β 2004 normalization cycles as a starting point, it is important to notice that the 1994 and 2004 episodes are comparable for
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yet the basel committee β s report found that banks did not obtain sufficient financial information to assess the types and extent of risk assumed by large, highly leveraged institutions. in particular, banks did not obtain the information needed to assess leverage, risk concentrations in particular markets, or the liquidity risk profile of individual institutions. the basel committee report also concluded that banks should develop more effective measures of potential future exposure, which refers to the possibility that credit exposures can change over time as market conditions fluctuate. the ability to measure potential future exposure is critical when dealing with large trading counterparties such as highly leveraged institutions, especially in volatile market conditions. unfortunately, methods for measuring potential future exposure have not kept pace with the growth and composition of trading activity. the basel committee β s report also showed that banks must develop approaches that better account for credit risk under distressed market conditions. a key lesson of the ltcm episode is that credit and market risk cannot be seen as completely distinct, but are liable to interact and reinforce each other under highly stressful conditions. the use of more rigorous stress testing, therefore, could have given banks better warning of the types of exposures they faced. together with this january 1999 report, the basel committee issued a sound practices document setting forth guidance for banks and supervisors on these topics. for example, these sound practices called upon banks to : β’ establish clear policies governing their involvement with highly leveraged institutions ; β’ adopt credit standards addressing the specific risks associated with these institutions ; β’ establish meaningful measures of potential future exposure as well as credit limits incorporating the results of stress testing ; and β’ monitor exposure on a frequent basis. i am pleased to report that the basel committee β s recommendations on highly leveraged institutions have been reinforced by the recommendations of subsequent efforts, including reports by the president β s working group on financial markets and the counterparty risk management policy group. there is clearly widespread agreement among both the private sector and the official community about the steps that firms need to take to address the weaknesses in risk management identified in the ltcm episode. the key remaining issue is the strength of the private sector β s resolve to implement these measures. for its part, the supervisory community is carefully monitoring the efforts of banks to follow through with the implementation of improved risk management practices for highly leveraged institutions. the basel committee intends to prepare a follow - up report on the progress banks are making. in my view, the degree of improvement will signal whether the industry has truly absorbed the lessons of the
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jean - claude trichet : the regulatory and supervisory reform in europe speech by mr jean - claude trichet, president of the european central bank, at the eurofi financial forum 2009, gothenborg, 30 september 2009. * * * ladies and gentlemen, it is a pleasure to be here among you and to say a few words of introduction before this distinguished panel. the purpose of my intervention is to lay out the main issues for our discussion. β’ substantive progress has been made in the regulatory and supervisory reform as a response to the financial crisis. a remarkable amount of technical work has been undertaken in a demanding timeframe. β’ all relevant initiatives have been coordinated globally, and the european union has been a frontrunner in a number key areas. let me mention three of them : credit rating agencies, hedge funds and compensation practices. β’ on credit rating agencies, the eu has already adopted regulation that will subject credit rating agencies to mandatory registration and oversight, to increase transparency and reduce conflicts of interest in the rating process. β’ with regard to hedge funds, the european commission has proposed a directive on alternative investment fund managers. this proposal, which is currently under debate, provides that alternative investment fund managers be subject to authorisation and harmonised regulatory standards, including minimum capital, as well as disclosure requirements. β’ on compensation practices, the european commission was among the first to incorporate in a directive the principles developed by the financial stability board ( fsb ) for sound compensation practices. moreover, the eu has been driving the international agenda in developing further implementation standards that will align compensation practices with long - term value creation, and discourage excessive risk - taking in the short - term. as a result, the g20 summit in pittsburgh calls on banks to defer bonus payments, disallow guaranteed bonuses, and introduce a claw - back clause. β’ overall, agreement has been reached globally on a comprehensive set of measures in response to the crisis. the capital framework has been strengthened by introducing stricter requirements for the treatment of securitisation exposures and off - balance sheet vehicles, as well as for credit risk in the trading book. disclosure requirements have been improved, to reduce uncertainty about banks β overall exposures in these areas. guidance has been published to address the shortcomings in banks β risk management practices. finally, international cooperation has been very strongly reinforced and supervisory colleges for large complex financial groups have been established. while a lot has been achieved, a lot remains to be done. this is no time for
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which will be presented here will analyse the role of income, home ownership and house price dynamics, household structure and intergenerational transfers in this process of wealth accumulation. i hope the exchange of ideas that will take place in the next two days will help us to further our understanding of how households manage their finances in a complex and uncertain world, to draw useful policy lessons and prepare for the next waves of the survey. and i hope this conference will spur research in this exciting field, from which we all, researchers and policy - makers alike, have so much to learn. thank you very much for your attention. eurosystem household finance and consumption network ( 2013 ), β the eurosystem household finance and consumption survey. results from the first wave β, statistical paper series, no 2, april. bis central bankers β speeches
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of a lead supervisor for all of the group β s subsidiaries and branches as well as in all subsectors of ongoing supervision throughout europe. large european banks have repeatedly advocated this model recently. from the point of view of regulators, however, there are some implications that need to be borne in mind. β’ supervisors in the host countries of cross - border banking groups would sacrifice much of their competency and sovereignty, even though these banks are systemically relevant in their respective markets. this primarily affects the new eu member states. β’ β level playing field β issues would arise if large banks supervised by the home - country supervisor β for example, in the reference market β were governed by rules which differ from those applying to banks that are not active across borders. on the issue of a β centralised european supervisory authority β 2 : this would be predicated on the existence of a number of conditions in order to enable effective and efficient supervisory activity. the most important β and especially problematic β aspects include β’ creating the conditions under european law to establish a centralised european supervisor, including amending the ec treaties ; β’ creating a single material supervisory ( procedural ) law ; β’ the absence of uniform insolvency legislation in the eu ; β’ the issue of creating a β two - class society β of financial institutions regulated by a european supervisor and those which are regulated by national supervisors yet simultaneously active in the same market. we must not forget the far - reaching political implications, either. after all, national supervisors in europe would have to hand over a large chunk of their political sovereignty. this also raises the issue of the democratic legitimacy of such a centralised structure. i believe that, so far, there has been too little or no discussion at all, of these aspects, which at the end of the day affect the question of a political union of european countries. here, politicians have to achieve results before banking supervisors can work on designing a european supervisory framework. iv while talking about work in cebs, i mentioned the concept of β mediation β. this procedure originated in the securities field ; in certain cases, mediation is governed by directives. the market abuse directive, for instance, envisages mediation by the β committee of european securities regulators ( cesr ) β in the event that, in a case of suspected cross - border market manipulation, one of the responsible securities supervisors refuses to turn over the necessary information. mifid calls for using mediation in disputes concerning determining the most liquid market for a given financial instrument
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on these countries. conversely, lending to households and corporations becomes more attractive, spelling an improved credit supply in certain countries. as it could become more expensive for countries to borrow funds, there is considerable resistance at international level to abolishing this preferential treatment. however, the topic is bis central bankers β speeches now on the agenda of the relevant committees, and my colleagues and i will not let up in the fight for change. 4. conclusion ladies and gentlemen i do not wish to take up too much of your time, so i shall refrain from going into further detail. my aim is merely to demonstrate that centralisation is not the only route to a stable monetary union. the union can also be stabilised with a decentralised structure, as long as the conditions are right. and until member states are prepared to surrender sovereignty in return for improved risk sharing, this is also the better route. incidentally, strengthening the maastricht framework would also relieve the strain on eurosystem central banks, which all too often had to take on the role of β sweeper β during the crisis. in the world of football, the position of sweeper has been outdated since back in the days of franz beckenbauer, and the emergence of the defensive back four has made it quite a rarity indeed. let us do the same, then, for monetary union ; let us replace the sweeper with a strong line of defence : a strengthened maastricht framework. thank you for your attention. bis central bankers β speeches
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