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erkki liikanen : is more always better? accountability, and the clarity of message transparency, introductory remarks by mr erkki liikanen, governor of the bank of finland, at the panel discussion " is more always better? transparency, accountability, and the clarity of message ", ecb central bank communications conference, frankfurt am main, 14 november 2017. * * * why do we need transparency? is more always better? there are two basic reasons for transparency in monetary policy : the first is public accountability of central banks. the second reason is better policy effectiveness. anders chydenius, the 18th century finnish clergyman and economist drafted the world β s first freedom of information act ( enacted in the kingdom of sweden in 1766 ). this was 98 years after the riksbank was founded. chydenius summarized the connection between transparency and political liberty in the following way : " the liberty of a nation is preserved not only by the laws, but by public information and knowledge as to how they are being administered. " 1 chydenius β statement presents the accountability argument for transparency in its simplest and the most forceful way. the rule of law alone is not sufficient for freedom, but the transparency of the use of executive power is also necessary. until a generation ago, central banks were rather secretive organizations, shrouded in a kind of monetary mystique. this started to change in the 1990 β s, when the independence of central banks rose to the top of the reform agenda, in order to improve the credibility of monetary policy. as central banks became more independent, it was natural that accountability and transparency had to develop as well. citizens and their political representatives needed to be able to monitor how central banks used their independence. considering the ecb, an important forum for its accountability are the regular hearings of the president of the ecb at the european parliament. these hearings are both a forum of scrutiny and a venue for communication of policy goals and strategies. the accountability framework was strengthened further after the ecb was entrusted with the powers of banking supervision in the euro area. since then, also the chair of the supervisory board appears regularly in the european parliament. beyond the formal accountability requirements, the ecb was the first major central bank to organize regular press conferences after each monetary policy meeting of the governing council. they are not just one - directional communication but enable useful interaction between the press and the president and the vice - president of the ecb. a more recent, but a very important step
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also a policy adviser with an ambition to design rules to improve international coordination as well as better coordination of domestic economic policies. he prepared a study for the league of nations entitled international currency experience ( 1944 ). this report was distributed to delegates at the united nations monetary and financial conference at bretton woods in july 1944. his study contained many of the seeds of the bretton woods agreement, although he was not among its architects. ragnar nurkse was in favour of fixed but adjustable exchange rates. he understood that a precondition for such an arrangement is an agreement with the major powers on the coordination of economic policies. for it to function smoothly, the major powers would have to pursue disciplined monetary and fiscal policies with the objective of price stability. interestingly, price stability was not among the objectives of the bretton woods agreement. many modern elements were present in the thinking of the economists at the league of nations. nurkse was one of those modernists. endres and fleming ( 1998 ) mention that nurkse's colleagues at the league of nations had recommended rules - based monetary policy and central bank independence already before him ( nurkse joined the league in 1934 ). disciplined monetary and fiscal policies in major countries continue to be a prerequisite for international monetary stability. nurkse would not disagree. central bank independence, a monetary policy strategy based on the objective of price stability, central bank transparency which makes monetary policy predictable, and the elimination of excessive deficits are the cornerstones of macroeconomic policies in europe today. nurkse would not disagree.
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said, cbdcs may come in different shapes and forms ; therefore, adequate design and implementation are needed in order to minimise their impact. this is not a minor task and requires careful analysis. there are many interlinked design options and they all have to be considered, both individually and holistically, in order to ensure they are a perfect fit. this is, in fact, what the eurosystem is currently doing in the context of the digital euro. no decision has yet been made regarding its issuance or its final design, but we launched the investigation phase of the project last year in order to ensure we are prepared in the event that future developments warrant its launch. our work is now focused on deepening the conceptual analysis by assessing the different design options, as well as the distribution model. the first step was to identify the use cases to focus on, namely those that better support the policy objectives of a digital euro and facilitate network effects. payments in e - commerce and physical stores, as well as person - to - person payments are, clearly, natural candidates. they either represent important market segments or have a clear potential to grow, and they rely heavily either on cash or on non - european providers and technologies. payments between governments and individuals have also been considered a priority, given their potential synergies with the aforementioned ones. in any case, focusing now on these payment segments does not mean ruling out others, but simply leaving them for future stages. the next step of the analysis has covered what we consider to be the foundational design options. they refer to the way a digital euro should be transferred, the level of privacy and the tools to control excessive use and, hence, limit its impact on the stability of the financial system. as regards the transfer mechanism, we have decided to prioritise a digital euro solution in which transactions are transmitted online and validated by a third party, since this model covers the broadest set of use cases and supports the eurosystem's policy objectives. peer - to - peer validated offline payments are also going to be further explored, but this option presents a number of technical and regulatory challenges that make its time to market more uncertain. privacy is a design consideration that was rated high in importance by respondents to the public consultation we carried out at the end of 2020. 1 in principle, a digital euro should provide the same level of privacy as current digital payment solutions in order to comply with the regulatory framework. however,
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miguel fernandez ordonez : the state of spain β s economy testimony by mr miguel fernandez ordonez, governor of the bank of spain, before the parliamentary budget committee in relation to the draft state budget for 2011, madrid, 5 october 2010. * * * ladies and gentlemen, i appear before this committee in connection with parliament β s discussion of the state budget for 2011. in my view, this budget will be crucial for spain β s economic future and it will be subject, more than on any other occasion, to in - depth analysis and close scrutiny not only by spanish society as a whole but also by the main supranational agencies, by our european partners and by the international financial markets on which spanish households, firms and governments obtain the funds they need to finance much of their activity. as is known, spanish budgetary policy responded most forcefully to the global economic and financial crisis, in step with the support programmes for the financial sector, coordinated at european level, and with the firm, resolute action by the european central bank, which drastically cut its interest rates and implemented a wide range of conventional and non - conventional measures to prevent liquidity tensions from ultimately shutting down the european financial system. the fiscal policy response undoubtedly contributed to softening the adverse effects of the crisis on the spanish economy. set against this, however, the surplus on public finances rapidly turned into a burgeoning deficit and public debt moved into an accelerating dynamic which, had it not departed from relatively comfortable levels, would have also placed the debt ratio at excessively high levels. such was the position of our public finances when the greek fiscal crisis, which first became discernible in late 2009 and ultimately burst onto the scene in spring this year, shifted the focus of international economic and financial attention onto the situation of public finances in a broad set of countries. investors rapidly took stock of the potential problems of unsustainability implicit in greek deficit and debt dynamics and they began to closely examine the possible existence of similar risks in other member states. the upshot was that the instability on sovereign risk markets spread to the european economies evidencing the greatest vulnerabilities, whether because of the speed of the recent deterioration in their public finances or because of the scale of the macroeconomic imbalances that had built up before the crisis. i honestly believe that the financial tensions in recent months in europe, in general, and in our country, in particular, were largely due to an overreaction
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third area for improving productivity. the need for investment 4 / 6 bis - central bankers'speeches when you compare canada's recent productivity record with that of other countries, what really sticks out is how much we lag on investment in machinery, equipment and, importantly, intellectual property. the global economy continues to change rapidly, and in many sectors, it's not machinery and equipment that are key - it's investment in intellectual property. increasingly, companies need to own or have the rights to patents that will allow them to compete by adopting productivity - boosting processes. weak investment has been a problem in canada for a long time. you can go back 50 years and find a persistent gap between the level of capital spending per worker by canadian firms and the level spent by their us counterparts. however, the situation has become worse over roughly the past decade. while us spending continues to increase, canadian investment levels are lower than they were a decade ago. economists and policy - makers across the country have worked hard to understand the root causes of why canadian businesses seem reluctant to invest. at the bank, we are constantly talking to companies, asking them about their challenges and opportunities. our business outlook survey consistently shows that companies say they plan to increase their spending on machinery and equipment. but we haven't seen it in the data, at least not yet. adding to the puzzle is the fact that canada has many advantages that should lead to higher investment and productivity. we have a well - educated labour force. we have a strong research culture at our universities that is driving advances in technology. and we have trade agreements that give us better access to global markets than any country in the world. to understand the lack of investment, it might be helpful to look at the incentives that companies see. if firms have high profits, high margins and limited competition, they may not feel as much pressure to invest. statistics canada published a report last month that draws a link between decreasing competition within canada and declining investment levels. 2 another challenge for companies may be a lack of policy certainty. in some cases, incentives or regulatory approaches can change from year to year. we have also heard from companies that are naturally wary of a regulatory approval process that can be both lengthy and unpredictable. and, of course, the past few years have been a challenging time for making investment decisions. the pandemic caused tremendous levels of instability and uncertainty. a backdrop of global trade tensions is certainly not helping matters. more recently, we've
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carolyn rogers : time to break the glass - fixing canada's productivity problem remarks by ms carolyn rogers, senior deputy governor of the bank of canada, to halifax partnership, nova scotia, 26 march 2024. * * * introduction good morning. canada's economy was built by trade and immigration. halifax is not just a key port - it has also been the landing spot for countless new canadians. so i'm glad to be here, speaking to a group like the halifax partnership, which is dedicated to helping canadian businesses grow and thrive. we've just passed the fourth anniversary of the start of the covid - 19 pandemic. it's been four difficult years. beyond its human toll, the pandemic upended economies around the world and sparked the biggest global inflationary episode in decades. this led central banks - including the bank of canada - to raise interest rates sharply so that we could get inflation under control. for the past two years or so, the bank's governing council has focused on restoring price stability. that's almost all we've talked about in our speeches. and we've heard directly from canadians who have struggled with inflation and who are feeling the impacts of higher interest rates. the good news is that monetary policy is working, and inflation has come a long way down. we're not all the way back to target, and we know we need to finish the job. but we have made a lot of progress. and so it's a good time to reflect on how the economy has changed in canada and around the world and to think about what those changes mean for the future. when we look ahead, we see a future where inflation may be more of a threat than it has been over the past few decades. we know that many of the forces that helped create a benign environment for inflation in the past, such as globalization, are going to fade away, or even reverse. we know that changing demographics and the economic impacts of climate change will tend to put upward pressure on prices. persistent global trade tensions also raise the risk of future inflation. so, at the bank of canada, we're turning our thoughts - as well as our speeches - to this future. and today i want to talk about a topic that is critical to our ability to navigate a future that's more prone to inflation : productivity. productivity is a way to inoculate the economy against inflation. an economy with low productivity can grow only so
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the management of state assets. 6th implementing a more focused policy for attracting foreign direct investment ( fdi ), as domestic savings are insufficient to meet the investment needs of the greek economy. emphasis should be placed on reducing the tax burden, improving public administration efficiency and removing major disincentives, such as bureaucracy, legislative and regulatory ambiguity, especially regarding land use, and the remaining capital controls. 7th maintaining labour market flexibility and pursuing structural reforms in the goods and services markets in order to boost competition and increase innovation and productivity growth. 8th improving the quality and safeguarding the independence of public institutions. independent and well - functioning institutions enhance long - term economic growth. in this context, a speedier delivery of justice, legal certainty and a clear and stable legal framework are essential conditions for strengthening the public β s sense of fairness and justice, for improving the investment climate and for accelerating economic growth. 9th enhancing the so - called β knowledge triangle β, i. e. education, research and innovation, as well as the digitalisation of the economy by adopting policies and reforms that support research, technology diffusion, entrepreneurship and foster closer ties between businesses, research centres and universities. this would contribute to further increasing r & d spending and the ict sector β s share in gdp. however, exploitation of ict calls for continuous development and training in new technologies, the adoption of innovative products and the enhancement of start - up entrepreneurship. overall, sustained efforts are required to foster innovation and r & d spending in order to boost greece β s digital transformation. 6. the emu dimension 6. 1 progress over the past 20 years the euro area was quite successful during its first ten years. real gdp per capita grew on average at par with the us, there was substantial nominal and real convergence, and the ecb was able to credibly bring inflation close to target. during the first decade of economic and monetary union ( emu ), the number of emu members increased from the original 11 to 15. moreover, the euro immediately became the second most important world currency. the euro β s share in foreign currency reserves has remained broadly stable at 20 % since its creation. the low interest rate environment and easy access to credit slowed down structural reforms and led to excessive public and private borrowing. the financial crisis of 2007 β 2009 and the euro area sovereign debt crisis that followed, brought to the surface the flaws in the initial design of emu. emu lacked the tools to avert and to contain the crisis. the
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stability and growth pact ( sgp ) failed to control the build - up of public debt in the pre - crisis period. there was no sufficient monitoring and control over macroeconomic imbalances, such as the evolution of the current account and private debt. the sovereign - bank β doom loop β amplified the financial crisis and the 5 / 11 bis central bankers'speeches recession. euro area crisis management and resolution tools were poor or non - existent on account of concerns about moral hazard, and due to the lack of the appropriate institutional setting. there was no provision for risk - sharing in the initial emu architecture. in this context, the ecb forcefully stepped in to restore market confidence, to contain the sovereign debt crisis and to support the euro area economy, by safeguarding price and financial stability. the ecb β s response provided the time required for euro area governments to take the actions necessary to strengthen the emu. policy actions have focused on addressing institutional weaknesses, structural fragilities and excessive risk - taking that led to the sovereign debt crisis and the negative feedback loop between sovereigns and banks, which in turn undermined euro area stability. the key initiatives were the provision of intergovernmental loans to greece ; the establishment of the efsf, and its successor the esm ; the creation of a banking union with a single supervisory mechanism and a single resolution mechanism and the introduction of stricter rules on banking regulation and supervision ; the establishment of the european systemic risk board and the development of appropriate macro - prudential tools, which allowed greater emphasis on identifying and addressing system - wide risks ; the strengthening of the sgp ; the initiation of the macroeconomic imbalance procedure and the european semester. as a result of the above initiatives, all member states that received eu - imf assistance are back on their feet, macroeconomic imbalances have been corrected to a large extent, and growth has been restored. economic expansion in the euro area as a whole continues, albeit at a slower pace, and eu banks have become more resilient to financial shocks over the past two years, as reflected in the results of the recent eu - wide stress tests. moreover, emu admitted four additional member states in the course of the crisis years. notable progress was made in the june 2019 euro summit, where a broad agreement was reached a ) on the budgetary instrument for convergence and competitiveness ( bicc ) for the euro area ( and for erm ii member states on a voluntary basis
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ric battellino : the strength of the australian economy and financial markets remarks by mr ric battellino, deputy governor of the reserve bank of australia, at the launch of the 2007 australian financial markets report and the invest australia gold book, sydney, 19 september 2007. * * * it β s a pleasure to take part in the launch of these two reports that highlight the strength of the australian economy and financial markets. i would like to congratulate invest australia, the asx and afma for putting together such comprehensive and informative documents. they are of immense benefit not only to market participants and foreign firms looking to enter the australian market, but also to regulators, academics and students. i would also like to congratulate the three organisations more generally for the excellent job they do in supporting, promoting and helping to regulate australian financial markets. this is important work because finance makes such a vital contribution to the australian economy, not only directly, but also through its role in supporting other sectors of the economy. as noted in the invest australia report, australia has had an extended period of strong economic growth, which is about to head into its seventeenth year. even if we take just the past decade, real gdp has grown by a cumulative 40 per cent and nominal gdp has grown by 90 per cent. financial markets have exhibited even faster growth over this period. the value of companies listed on the asx has grown by 275 per cent, and the value of debt securities on issue in australia has increased by 170 per cent. the growth of turnover in financial markets has been even more dramatic, increasing by 290 per cent over the decade. so while the nominal economy has almost doubled in size over the past ten years, turnover in financial markets has almost quadrupled. the remarkable thing is that the pace of growth shows no sign of slowing. the members of the campbell inquiry, who helped set australia on the path of financial deregulation and market development, would i think be very pleased at the way the financial system has evolved over the ensuing 25 years or so. the previous speakers have outlined the highlights of the reports being launched today, so i won β t repeat them. rather, what i would like to do is take a step back from the impressive figures contained in those reports, and consider two questions : β’ why do financial markets and market turnover consistently grow faster than the economy as whole? and β’ what does all this increase in financial activity mean for the real economy? turnover and gdp let me
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. β’ and lastly, and perhaps more importantly, innovation has reduced costs, so the barriers to saving and investment, and to changing portfolio structures, have diminished. what does the increase in financial activity mean? let me now move to the second question. financial market activity is, of course, not an end in itself β at least for those people not employed in the finance sector β so the important question most people want to know is what this increase in financial activity means for the real economy. here, i think, the answer is a very positive one. vibrant, competitive and innovative financial markets work to increase the availability, and reduce the cost, of finance. there are some obvious examples of how this affects our day - to - day lives. take the housing market. the development of wholesale capital markets provided funding for non - bank lenders and allowed them to compete with deposit - taking institutions in housing lending. this led to a substantial reduction in interest margins on housing lending, from about 400 basis points 15 years ago to a little over 100 basis points today. this has been a very material benefit to australian households. the benefits of financial market development have not been restricted to households. interest margins and the cost of borrowing have also come down for businesses, as financial intermediaries have competed with capital markets in meeting businesses β funding needs. fifteen years ago, the average interest margin on business loans was 570 basis points ; today it is only 135 points. in short, the trading and innovation that we see in financial markets eventually flows through to reduced costs for the users of financial services. this has meant that the amount spent by households and businesses on financial services has grown much less than financial activity. for example, even though financial activity has risen by a factor of several times gdp over the past decade, the finance and insurance sector β s share of national income has risen only slightly, from around 5Β½ per cent to around 7 per cent. financial innovation has also allowed households and businesses to reduce risks. firms have been better able to structure their financing to suit the characteristics of their businesses and to manage the risks associated with their revenue flows. foreign exchange and commodity derivatives are good examples of innovations that have helped many australian companies in this regard. the overall effect of all this has been to make the economy more resilient and stable. the ability of the australian economy to come through the asian financial crisis largely unscathed owed importantly to the fact that australian firms and financial institutions had been able to hedge a lot
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central bankers, whatever the regulatory environment they are operating in. in - depth knowledge of the banking sector and the various financial institutions is extremely useful when it comes to reacting and making decisions during periods of turmoil in the credit and money markets. since the beginning of the crisis, central banks have had to judge almost instantly the appropriateness of injecting liquidity in different forms and for different timeframes. it is therefore particularly important to be able to assess the quality of the market participants and the reality of their needs. more generally, it is crucial during periods of crisis to distinguish between liquidity problems and solvency problems. therefore it is a considerable advantage to have all the cards in one β s hands. as regards the infrastructure of supervision, it seems clear to me that simple, robust and pragmatic plans have shown their efficiency compared to more sophisticated and complex schemes. during the last few months, at no time have i felt that our organisation was deficient or was preventing me from obtaining adequate information needed to make the necessary decisions. we have managed to deal with all situations, and i have observed the efficiency of our supervision system on a daily basis. nonetheless, it is clear that an in - depth and comprehensive debate on the optimum structure of financial supervision in europe is necessary. structures have to adapt to the rapid integration of the markets. i firmly support the lamfalussy process and i am convinced that the current efforts to improve and develop this process deserve our full attention. i also firmly believe that the process must be carried out with pragmatism and completely in tune with reality rather than based on a theoretical scheme or vision. * mr chairman, ladies and gentlemen, we are living through an extremely difficult period of economic history. i am nonetheless firmly convinced that in france and europe we have both the tools necessary to help us out of this crisis and the necessary vision to guide our actions. the public authorities have shown their willingness to shore up the financial system. it is now essential that the system proves to be dynamic and takes the initiative, as it has in the past, so that the credit that is essential to the economy is available in sufficient quantity and quality. i am sure that credit agricole will, as it has in the past, muster the necessary energy for the benefit of our economy. thank you very much.
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francois villeroy de galhau : card payments in europe β latest trends and challenges speech by mr francois villeroy de galhau, governor of the bank of france, at the bank of france conference β card payments in europe β latest trends and challenges β, paris, 18 january 2016. * * * ladies and gentlemen, dear yves mersch, dear mario nava, first and foremost, on behalf of banque de france, i would like to warmly welcome you all in paris. i am delighted to open this conference dedicated to card payments in europe. a large number of european actors involved in the card payments market are represented today, including regulatory authorities and market players, and i have no doubt that the debates that are going to take place will give us a valuable insight on the latest trends and the challenges they bring with them. before leaving the floor to our speakers and panelists, i would simply like to share with you a few thoughts on two of those challenges, one addressed to the supply side of the card payments market and one to the regulatory community. i. first challenge : the sustainability of the dominance gained by cards as payment instruments. will the most used payment instrument in europe continue to rise or will it fall? over the last decade, payment cards have steadily consolidated their dominance as the most used non - cash payment instruments in france and europe. in 2014, payment cards were used for more than 47 billion transactions in the european union, that is to say a level almost identical to the overall combined number of transactions involving credit transfers and direct debits, respectively the second and third most used payment instruments. in france, payment cards were used in more than 50 % of all non - cash payments transactions, amounting to nearly 9. 5 billion operations in 2014, compared to only 3 billion transactions in 2001. the specificity of card payments is that they occur for transactions of a relatively small amount ( 47β¬ in average in france ), making it the strongest alternative to cash for proximity payments. this situation is the result of years of efforts made by market stakeholders to build a secure, efficient and convenient payment instrument. the french community was at the forefront of such evolution with the early adoption in 1992 of chip for payment cards, which has been followed by the introduction and the subsequent widespread adoption of the emv standard. this latter evolution has been the cornerstone of the uptake of payment cards by allowing fast and secure transactions through europe. this predominance of payment cards may nonetheless
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hosted by the ecb in which all euro counterfeits β banknotes and coins β can be found, including classification details, descriptions and images. we supply valuable information about the technical characteristics of imitated security features. as currency counterfeiting is increasingly becoming an internationally organised crime, the eu has established a european police force β europol β which benefits from the same support as that mentioned above. alongside europol and on a case - by - case basis, direct contacts to foreign police forces are established with the support of our national police. 4. details on the improvement of security features our third strategy refers to the improvement of security features. here we are at the front line of economic and technological developments. the experience to be gained by the bundesbank from the first euro series is that while there is a large number of level 2 and level 3 features, there is a lack of effective level 1 features for the general public in everyday situations. ( level 1 : general public, level 2a : verification aid and human sense, level 2b : retail detectors yes / no, level 2c : cash machine centres, level 3 : machine authentication features exclusively for ncbs / ecb. ) 61 branches and 17 operating units ( part of the branches ) as at 30 september 2005. 4 / 6 there is therefore a strong need to develop overt security features for the second series of euro banknotes that are self - explanatory and self - verifying. 4 firstly, we must improve and continue to develop existing security features in order to achieve better quality and ensure resistance to counterfeiting. today, intaglio printing uses new engraving technology and enhanced artwork and scientific techniques to produce a range of unique security benefits. the following overview contains some examples of applications of this advanced engraving technology : multitonality : a very different appearance of the same colour can be achieved by varying the thickness of the ink layer. - fine line printing : very fine details within images or text ( microtext ). - high tactility areas : high relief that everybody can feel on the banknote ( eg enhanced tactility areas for the visually handicapped ). in addition, enhanced optically variable inks ( ovi ) have been developed. for instance, colour shifting effects can be combined with three - dimensional and moving effects within one ink. furthermore, special security threads and foils with transparent and opaque areas can show very brilliant effects in colour ( switch ) and gloss. secondly, the β intelligent
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i said before, the stability of our financial and monetary systems depends on more than these columns and microprudential supervision. a sound macroeconomic and fiscal basis is equally important, and it is not central banks but policymakers that have the means and the legitimacy to ensure this basis. bis central bankers β speeches
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there were often political tensions between the need to save individual institutions in order to prevent the whole system from collapsing and the moral hazard concerns of bailing out large institutions. however, even crisis - prevention tools may be politically unpopular, especially in good times. furthermore, as has been argued in an international monetary fund staff discussion note7, financial stability is difficult to measure but crises are evident, so policy bayoumi, t et al. ( 2014 ). β monetary policy in the new normal β. international monetary fund staff discussion note. page 11 of 12 failures are observable, unlike successes. as noted in the paper, β central banks would find it difficult ( even ex post ) to defend potentially unpopular measures, precisely because they succeeded in maintaining financial stability β. any perceived failures on the financial stability front have the potential to undermine monetary policy independence through a general loss of credibility of the central bank. in conclusion, the role of central banks has changed since the global financial crisis. there is a sharper focus on financial stability issues, and there is also a different way of looking at these issues. this, however, does not mean that other areas of policy have been downplayed. in the wake of the crisis, central banks were relied upon, possibly excessively so, to help the recovery from the global recession and to avoid deflation. the recovery has taken some time. fortunately, there appears to be a sustained recovery in the global economy, and there are now tentative moves by central banks in the advanced economies to normalise monetary policy settings. it would also appear that the concerns that extraordinary monetary accommodation would generate widespread inflation have not transpired. although central banks have been given expanded mandates, the role of ensuring price stability has not been undermined or minimised. it is as important and as relevant as ever, and remains a crucial pillar of central banking. thank you again, bank of ghana, for the honour of addressing you at this celebration of 60 years of central banking in your country. page 12 of 12
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t t mboweni : signing of a syndicated loan and comments on the south african economy comments by mr t t mboweni, governor of the south african reserve bank, on the occasion of the signing of the usd1, 5 billion dual tranche syndicated term loan facility, london, 18 july 2005. * * * ladies and gentlemen, i am delighted to address you once again on an occasion such as this and even more delighted to be back in this great city. with the weather you are having here, we could quite easily be experiencing an african winter aβ¬Β¦ i mean summer. it is a pleasure to welcome you here and to be amongst friends such as yourselves who have shown great confidence in south africa. as many of you live in this city, and almost certainly all of you have operations in london, i think it is right and proper, as we gather here only 10 days after the attacks on london, that i express our sympathy and condolences, on behalf of the south african reserve bank, to those who have been affected. the number of many familiar faces present here today reflects both your commitment to south africa, as well as the south african reserve bank's commitment to building strong relationships with a range of financial institutions. the foreign credit facilities we seek to establish with international institutions such as yourselves are utilised from time to time, or fully drawn down over the period of the loan to supplement our foreign reserves. in this case the us $ 1, 5 billion facility is being used to prepay the us $ 1 billion dual currency term loan facility concluded in june 2003 and tranche b of the dual currency term loan facility concluded in july 2002. in the run - up to this syndicated loan, we were very encouraged to discover during our discussions that the market was more than willing to support a dual - tranche transaction, namely a three - year and a five - year tranche, at reasonable pricing. in negotiating the 2005 facility we took into account the maturity profile of the country's foreign debt, our financing strategy, as well as the desirability of re - establishing the five - year benchmark. whereas not too long ago, a five - year maturity would still have been the subject of debate, today it seems very natural for us to borrow for five years, and thus pave the way for other south african borrowers. it is therefore with great pleasure that we celebrate the successful conclusion of this syndicated loan. the loan was oversubscribed and
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of the vice - presidents of the national committee for substantiation of the national euro changeover plan, founded last year, which prepared a set of documents that emphasise the need for a substantial degree of convergence before entering the euro area. in fact, it is the maastricht treaty that explicitly stipulates the need for β a high degree of sustainable convergence β. yet, this requirement seems to have been overlooked sometimes. let me point out that by convergence i refer to all four types of convergence that must be taken into account : nominal, real, institutional and structural. nominal convergence is easily quantifiable, as the specific criteria are clearly defined in the maastricht treaty. but we also have to ensure the compatibility of our institutions with those in the euro area and this is the essence of institutional convergence, a process where the central bank and its independence are 1 / 4 bis central bankers'speeches particularly important. while structural convergence focuses on adapting the structure of our economy to that of the euro area, real convergence, measured by gdp per capita ( at pps ) as a percentage of euro area / eu average, is the best proxy for the development level of a nation. romania has certainly come a long way in terms of economic convergence, a process whose inception is tied to the prospects of eu membership, witnessing a significant increase in per capita gdp as a share of the euro area average ( based on pps ), from 31. 3 percent in 2005 to 60. 4 percent in 2018. peer countries recorded a similar trend : bulgaria went from about 33 percent to 47 percent, while czechia, hungary and poland, which started from a more advanced level, added 11 to 23 percentage points to the same indicator during 2005 β 2018. however, this process is still far from completion in these non - euro new member states. talking about real convergence, practical experience has showed us that the eurozone is not a β convergence club β, as its members did not necessarily improve their real convergence after joining it. the euro area is not a cosy place for economies with lagging competitiveness or rigid markets. in this context, a high enough level of real convergence ( in addition to the compliance with the nominal convergence criteria ) is needed when joining the euro area, to limit the costs associated with losing monetary policy independence. a high enough level does not mean that we are so ambitious as to aim for a convergence level of 90 % of the eurozone average or a level
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exclusively taken by individual borrowers. these loans account for around 10 % of total loans to households, and individuals with chf - denominated loans ( 75, 412 ) account for 2. 1 % of the total number of individual borrowers. for comparison, in poland, the number of chf borrowers exceeds 500, 000. the rationale behind the boom in chf lending during 2007 - 2008 is in close connection with the social factors. the chf borrowing costs were lower at the credit agreement date, which ensured easier access to lending for lower income borrowers, as well as larger loans for larger income borrowers. on the other hand, the unfavourable developments in the chf may have a major adverse impact on debtors β capacity to repay the loans. a simulation of the instalments of a standard loan in chf, ron and eur respectively, extended in december 2008, shows that : ( i ) at the credit agreement date, the monthly instalments on chf - denominated loans were lower compared with similar monthly instalments on loans granted in ron or eur, and ( ii ) the impact of the change in the exchange rate and / or the interest rate was stronger on chf loans than on those in the other currencies. the number of chf borrowers is on the decline ( by 31. 8 % in november 2014 compared with december 2008, i. e. by around 35, 200 ). the drop is due to loan repayment, loan conversion into another currency, their removal from the balance sheets or their sale. the number of chf borrowers fell at a faster rate compared with the household loan dynamics at aggregate level, the number of debtors moving down 15 % between december 2008 and november 2014. the number of chf loans witnessed a similar development. credit risk associated with chf - denominated loans is relatively higher compared with other currencies. in november 2014, the npl ratio on household loans in chf stood at around 12 % versus 9. 4 % for all foreign currency - denominated loans to households, yet the dynamics were similar to those of foreign currency - denominated loans overall. bis central bankers β speeches recent studies also identify heightened risks and correspondingly high costs associated with chf loans to unhedged borrowers at an international level, particularly in non - euro area countries. individuals with chf - denominated loans are not a homogeneous group
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vitas vasiliauskas : the experience of the bank of lithuania in investing in china β s bond markets speech by mr vitas vasiliauskas, chairman of the board of the bank of lithuania, at the global summit on β reserves management : navigating volatilities and the frontiers of innovation β, beijing, 9 december 2019. * * * good afternoon, ladies and gentlemen, it β s my pleasure to join you today. in terms of investing in china β s bond markets, the bank of lithuania has been one of the pioneers among the central banks in europe and beyond. we have also recently become the managers of the ecb β s renminbi portfolio. i suspect this is the main reason why i was invited to this summit. therefore, i do not want to dwell on things that you all are very well aware of. instead, i will focus on something you probably have not heard about β on the β china experience β of the bank of lithuania, describing how and why we β went to china β. later i will provide some remarks on the remaining obstacles for further involvement of institutional investors β such as ourselves. i will conclude by briefly discussing the overall prospects of renminbi internationalisation β the over - arching topic of our panel today. but, before moving on, let me just briefly mention a couple of points on the international role of the renminbi, which will show why the timing of our involvement in the chinese bond markets was not so self - evident. indeed, over the last few years, china has made progress in opening up the country β s financial sector. from lifting the caps on foreign ownership in financial sector institutions, to increasing access to its onshore market β china is making more renminbi - denominated assets available to foreign investors. but these achievements were enabled by one key turning point that came before the most recent developments. the major milestone, of course, was the addition of the renminbi into the imf β s sdr basket in 2016. this was a historic event, signalling to global investors that china was emerging as a significant stakeholder in the global monetary and financial system. subsequently, international investors, particularly sovereign investors, became much more interested in china. in this context, the bank of lithuania was ahead of the curve in 2012. that year, we decided to become one of the first central banks to enter china β s onshore bond market. this decision had come well before the ren
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vitas vasiliauskas : anti - money laundering and counter terrorist financing - from challenges to possibilities speech by mr vitas vasiliauskas, chairman of the board of the bank of lithuania, at the international conference anti - money laundering and counter terrorist financing : from challenges to possibilities, vilnius, 1 october 2020. * * * dear market participants, regulators, supervisors, financial intelligence representatives, a warm welcome to our international conference on anti - money laundering and counter terrorist financing. the virtual event hosted by the bank of lithuania has been set up together with our partners from acams baltics chapter, fintech hub lt and the association of lithuanian banks. i sincerely thank everyone who has contributed to organising this conference despite the difficult circumstances. a number of high - profile european cases of the alleged systematic use of banks for money laundering have been reported over the last few years. some of these cases concern the nordicbaltic jurisdictions. although no serious breaches have been reported in lithuania β s financial system, this context affects the whole region, especially in terms of reputational risks. given the cross - border effects of such cases on integrity and resilience of domestic banking sectors, we are in need of close international cooperation β to which this conference will contribute. furthermore, important changes are taking place in the financial sector. novel business models are reshaping virtually every area of financial products and services. this creates new opportunities. but the ongoing disruption also poses substantial challenges and can open gaps in the regulatory perimeter. we thus need to stay alert and constantly search for new ways to update and improve our frameworks for anti - money laundering ( aml ) and counter terrorist financing ( ctf ). effective aml / ctf measures can go a long way in preventing and fighting financial crime. however, overly tight regulation, zero tolerance for any risk, and the prospect of harsh sanctions can result in de - risking. this is when financial institutions terminate business relationships with clients to avoid, rather than manage, risk. one practical example of this is the withdrawal of correspondent banking relations β a serious issue for the lithuanian financial sector. if taken to an extreme, de - risking can result in increased financial exclusion. it may also bring higher risk transactions out of the regulated system into more opaque, informal channels, and become even harder to monitor. in other words, de - risking poses an important risk to our financial systems. today β s panels on the aml / ctf development and the de - risking
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to embed this preferred habitat mechanism in their macro - economic models so as to explicitly incorporate this transmission channel of qe. 5 franco modigliani and richard sutch, β innovations in interest rate policy, β american economic review, vol. 56, pp. 178 β 197, 1966. gauti eggertsson and michael woodford, β the zero bound on interest rates and optimal monetary policy, β brookings papers on economic activity, no. 1, pp. 139 β 235, 2003. there are a number of empirical studies that attempt to decompose long - term government yields into the expected path of short - term interest rate and premium components. for japanese government bonds, see kei imakubo and jouchi nakajima, β estimating inflation risk premia from nominal and real yield curves using a shadow - rate model, β bank of japan working paper, no. 15 - e - 1, 2015. james tobin, β a general equilibrium approach to monetary theory, β journal of money, credit and banking, vol. 1, pp. 15 β 29, 1969. han chen, vasco curdia, and andrea ferrero, β the macroeconomic effects of large - scale asset purchase programmes, β the economic journal, vol. 122, pp. f289 - f315, 2012. bis central bankers β speeches second, forward guidance, which is another element of unconventional monetary policy, is generally supported both in theory and in practice. in theory, forward guidance could pin down the future expected path of policy rates by clarifying the central bank β s policy reaction function and thereby reducing the volatility of financial markets. in fact, forward guidance, together with a strong commitment to policy objectives, has been used effectively in various policy settings across jurisdictions. third, let me discuss the β quantitative β aspect of quantitative easing. does the size of the central bank β s balance sheet matter in itself and, if so, why? some theoretical economists argue that qe is effective from the viewpoint of monetary financing of the government budget. however, this is the opposite case of ben bernanke β s quote : it works well in theory but cannot be applied in practice. monetary finance is widely understood to run the risk of eroding the credibility of the central bank and thereby potentially increasing risk premiums rather than reducing them. furthermore, recent experience in the united states and the united kingdom has demonstrated that an unconventional monetary policy works even in the midst
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spectrum of activities and risks, based on an approach tailored to the degree of sophistication of financial market participants, both in the g10 and beyond. from a prudential standpoint, the ratio will capitalise on the progress already made in improving risk supervision and control, while making it easier to compare methods at the international level. accordingly, it is clearly important that credit institutions should actively pursue the work they have done so far. in this respect, i think it is safe to say that french banks operating in the international arena are making every effort to ready themselves for 2006. 3. 3 new accounting standards should foster international harmonisation and promote greater financial transparency the introduction of new accounting standards is a major undertaking for companies in general and for credit institutions in particular. the aim of this project is highly ambitious, namely to arrive at worldwide standards that can improve financial security and accounting transparency. this is necessary to restore confidence in financial markets. at the internal level, credit institutions must quickly adapt their information systems to these new requirements. however, there are in - depth discussions at present about the draft standards applicable to financial instruments. we have taken part in these discussions and advocated caution, in particular, in view of the strong temptation to give precedence to the markto - market and mark - to - model approaches, which are more sensitive to calculation parameters than to the actual situation of the reporting entity, with the result that earnings and equity likely to become abnormally volatile. i hope that the outcome of these discussions will lead to accounting procedures that take into consideration the realities of credit institutions β operations and business practices. as you are aware, the quality of the accounting rules applicable by banks is of fundamental importance for supervisors. moreover, the appendixes to this annual report include a study of the prudential consequences of the international accounting standards that will apply in europe from 2005 onwards. * in sum, french credit institutions in 2002 amply displayed their ability to withstand cyclical contingencies. improvements can still be made in terms of risk spreading and surveillance. this is one of the factors to which the commission bancaire will play close attention as banks prepare and phase in information systems ahead of the introduction of basel 2 and new accounting standards. in addition to the two studies i have already mentioned, the appendices of the annual report include a review of risk management in financial conglomerates. let me also mention that a summary of the commission bancaire β s judicial decisions is being published at the same
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emmanuel tumusiime - mutebile : increasing information sharing through mous remarks by prof emmanuel tumusiime - mutebile, governor of the bank of uganda, at the uganda law society - financial sector consultative meeting for increasing information sharing through mous ( memorandums of understanding ), kampala, 22 march 2010. * * * distinguished guests, ladies and gentlemen good morning i am greatly honoured to deliver the opening remarks at this consultative meeting. i would like to thank all of you for responding positively to the invitation to this consultative meeting whose main objective is to promote institutional networking and information sharing with strategic partners to improve market efficiency. the presence of the various financial sector experts in this consultative forum is testimony that you are committed to finding durable solutions to the impediments that still exist in the financial markets. more specifically, this meeting is intended to identify the gaps that exist in the current arrangements for cooperation, to explore the scope of services and any other information that stakeholders need to share, and to generate proposals on the best legal frameworks for information sharing. some institutions may already be having adhoc arrangements for information sharing and cooperation but these arrangements may not be optimal and this forum should provide avenues for formalizing and strengthening existing arrangements. at the bank of uganda ( bou ), we consider information sharing as a key ingredient in the process of financial markets development. in this regard, the bou duly supports institutional efforts to formalize information sharing through mous. i am happy to note that at national level, all the financial markets regulators namely, capital markets authority, uganda insurance commission and the bank of uganda have an mou for sharing information on regulatory matters. in the design of the financial markets development plan ( fmdp ), specific initiatives were included on information sharing and networking using a top down approach from regulators to the regulated entities. this will not only ensure integration of service delivery in the financial sector but will also result into a majority of the population accessing financial services and products. the more we increase financial integration, the more we shall reach a greater population and the more we shall promote the development of financial markets. it is important for us to move in this direction in order to adequately to prepare ourselves to participate in the greater regional market and remain competitive. our expectation is that we should see more integration of the financial sector, enhanced networking, stronger linkages, higher level transparency and enhanced cooperation. all this should ultimately result in increased efficiency and reduction in costs of doing business
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emmanuel tumusiime - mutebile : providing better access to banking in uganda speech by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the official opening of imperial bank uganda limited, acacia mall branch, kampala, 10 march 2014. * * * the shareholders of imperial bank uganda limited members of the board of directors ; senior management and staff ; distinguished customers ; invited guests ; ladies and gentlemen. i am greatly honoured to be invited as chief guest at this official opening of a new branch of imperial bank at acacia mall. let me begin by congratulating the directors and the management of imperial bank for the progress they have made in expanding the bank β s foot print in the ugandan banking market. this is the fifth branch that the bank has opened since it began its operations in uganda three years ago. it will provide better access to premier banking services for the bank β s customers in this vibrant business location in the city. uganda currently has 25 commercial banks in operation, compared to only 15 at the end of 2007. in the last six years, 12 new banks have entered the market in uganda, of which imperial bank is one of the most recent. it is pertinent to ask what benefits has the almost doubling of the number of commercial banks operating in uganda delivered to bank customers in this country. i would like to spend a few minutes addressing this question. for many years, during the colonial period and in the three decades after independence, our banking markets were dominated by a relatively small number of banks, mostly foreign or publicly owned. competition was not very vigorous and access to banking services was very limited for the majority of the ugandan population. this began to change in the 1990s, with new privately owned banks entering the market. since the mid 2000s, new entry into the banking market has gathered pace, comprising for the most part banks which are subsidiaries of african banks, especially banks from nigeria and kenya. imperial bank is part of this trend ; its parent bank is kenyan. the new entry into our banking market has spurred a dramatic expansion of the physical presence of banks in uganda. the number of commercial bank branches has expanded from 194 in 2007 to the current level of 544. the 12 new entrants to our market in the last six years contributed 152 of these new branches. the expansion of banking has also brought many new customers into the banking system. in 2007 there were 2. 2 million bank accounts held in commercial banks. this
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the spokes of the system and thus makes the joint responsibility for tasks possible. the governing council is the highest decision - making body of the ecb, consisting of executive board members and governors of the national central banks. apart from the fundamental notion of joint responsibility, two guiding principles of the treaty determine the operational side of the system. first, subsidiarity prescribes that the responsibilities lie at the lowest possible level. in the context of the european community, this principle respects national sovereignty and reflects the heterogeneity of its member states. second, the treaty prescribes an efficient allocation of resources. in other words, the system should be effective at the least cost. in practice, there may be trade - offs between the principles of subsidiarity and efficiency, but gross inefficiencies should, of course, be avoided. tasks of the european system of central banks now, with this basic system framework in mind, let me turn to the actual tasks of the national central bank that follow from the system. in the paper, i cover the tasks of deciding on and executing monetary policy, foreign reserve management, the collection and production of statistics, external relations, and the operational aspects of payment systems and banknotes. given time constraints, i will limit myself to the conduct of monetary policy. the fundamental notion of joint responsibilities adds value in the sense that it offers checks and balances in the monetary policy process. for example, the participation of ncb - governors increases accountability and the quality of decision - making. indeed, given their joint responsibility for price stability, all national central banks have not only the right, but also the obligation, to fully prepare their governor in his or her capacity as an ecb - council member. although fundamental to the system, the notion of joint responsibility allows for institutional flexibility when it comes to the effectiveness of monetary policy β as this clearly lies at the heart of monetary union. let me first of all emphasise that the present size ( 18 members ) of the governing council has never been a stumbling block for effective, and where necessary, rapid decision - making. nevertheless, there is the perception that, with further emu - enlargement, the size of the team could hamper the effectiveness of monetary policy. that is why the treaty of nice goes as far as to offer the possibility to restrict the number of votes in the governing council on monetary policy. clearly, on the basis of the fundamental notion on which the system is
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. and if the world or parts of the world find themselves in a severe downside scenario, then there will be significantly higher health and economic returns from a higher vaccine coverage. high and upper - middle income countries have been able to reach high vaccine coverage across their populations, surpassing global targets. early this year, 70 % of the population of g20 countries have now been fully vaccinated. unfortunately, while progress has been made, the delivery of covid - 19 vaccines against global targets remains unequal and falls short of the expectations. 6. differences in economies currently, around 50 % of announced vaccine donations by high - income countries have been delivered to low - income countries. although the acute impact of the covid - 19 pandemic now seems to be fading in most parts of the world, there is still an opportunity to minimise the cost of having to live with the virus. about 130 countries failed to meet the imf's vaccination target of 70 % by mid2022 - similar inequalities persist in terms of access to tests and treatments. universal vaccination, according to the imf, remains the best shield against new variants and persistent health - related absenteeism. and this universal vaccination should be backed by broad public health campaigns to promote vaccine uptake. the imf continues : " governments should also intensify efforts to resolve vaccine supply and distribution bottlenecks and ensure equitable access to treatment. public support for better systematic responses to future epidemics and research into new vaccine technologies, including for a more widely effective pan - coronavirus vaccine, remains essential. " 3 / 4 bis - central bankers'speeches 7. role of prevention for the economy in the netherlands, like in all other developed western countries, the current healthcare system is under immense pressure. challenging choices must be made to ensure a viable healthcare system in terms of funding, staffing and political backup. we expect a shift in focus from care to prevention and to sectors where quality and accessibility have been most under pressure in the past few years. preventive intervention will be needed, which can consist of the obvious, like preventive screening, vaccins or lifestyle campaigns. albeit important, prevention measures could also be expanded to include housing, food programmes, help with indebtedness, education and environmental policy. making better choices now means that we must implement those interventions that will improve our health. this will not only benefit our public health as a whole, but also
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of debt dynamics. let me say upfront that the commission's proposal is a step in the right direction. that said, the " fiscal rules trilemma " iv provides a useful matrix to analyse its merits relative to current rules. the trilemma states that it is impossible to fulfil simultaneously the following three objectives : i simplicity, which can also be understood as political intelligibility and ownership ii flexibility, i. e. the ability to adapt to specific economic situations or unforeseen developments, and iii enforcement, i. e. the extent to which the rule is binding. in practice, the current stability and growth pact includes too many β and too complex β flexibility provisions and escape clauses to compensate for the " one size fits all principle ", while efforts to improve its enforceability proved ineffective. the reform must strike a better balance between these three features β simplicity, flexibility and enforcement β in order to make the fiscal framework more effective and operational. as regards simplicity, the fact that the new framework is built around a single operational indicator, i. e. a net primary public expenditure aggregate, is a major improvement compared to structural deficits. in principle, this new indicator should be easier for governments to measure and oversee, and would entirely fall within their control. it is also simpler to use as a communication tool in the public debate, which would help to make the new rules politically intelligible and acceptable. on flexibility, the proposal goes a long way towards better tailoring the efforts required to country - specific circumstances. the expenditure path would be defined in a pragmatic process, based on a debt sustainability analysis and after a thorough discussion between the commission and member states. each country would commit to a national medium - term plan including structural reforms and public investment programmes. this process acknowledges that debt heterogeneity is too high between 2 / 3 bis - central bankers'speeches member states to dictate a single debt reduction rule β 66 % of gdp in germany vs 144 % in italy in 2022 β while enhanced dialogue with national authorities should improve political ownership and hopefully compliance with the framework. but this brings me to enforcement. we should nevertheless seek to ensure that the national plans do not turn into political negotiations and result in insufficiently ambitious fiscal adjustments. i must admit that i do not 100 % believe in the wisdom of institutional processes or in enlightened economic debates for sufficiently steering national cycles. they must be complemented with common rules and anchors
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with commercial bank money or central bank money means that they cannot be used to create reliable stores of value. in addition, as pointed out in the g7 report on stablecoins issued last year, stablecoin schemes are significantly exposed to risks of various nature, including legal, financial, operational and compliance risk concerning money laundering and terrorist financing, competition law, consumer and investor protection. the risks identified must be seriously addressed if stablecoins are not to become the Β« weak links Β» undermining the safety of our payment systems. this is all the more important as some of these risks would be amplified and new risks might arise if stablecoins are adopted at a global level. stablecoins of potentially large size and reach β so - called global stablecoins β may indeed pose additional challenges of system - wide importance both domestically and internationally, for the transmission of monetary policy, as well as for financial stability. they could also have implications for the international monetary system more generally, including currency substitution, and could therefore pose challenges to monetary sovereignty. 2 β what role for regulatory and oversight authorities? in this context, it is first and foremost the responsibility of the private sector to design stablecoin schemes that do not bring undue risks to our payment systems. for that purpose, regulatory and oversight authorities have an important role to play in order to ensure that the risk management requirements to be met are clear, comprehensive and complied with, while preserving the potential for technological innovation offered by crypto - assets. to that end, they should in my view focus on three main tasks : - firstly, working on a regulatory response that preserves the positive potential impact stablecoins might have on the efficiency of our payment systems. given the rapid pace of innovation, which is also characteristic of stablecoin initiatives, this pleads for developing an agile, pragmatic and proportionate regulatory response rather than setting up an ad - hoc, unique and comprehensive framework. this would be simpler, faster to implement and to adjust, and be more likely to achieve level - playing field conditions. in the european context, this is an encouragement for building on and adapting the functional coverage of existing regulatory frameworks and, in some cases extending their geographical coverage. what comes to mind in particular is the framework for crypto - assets service providers created in france with the 2 / 4 bis central bankers'speeches pacte bill, and the european framework for e - money issuers, investment funds and financial market infrastructures. this also
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bank of india act 1934, rbi first introduced the scheme of export financing in 1967 which was intended to make short - term working capital finance available to exporters at internationally comparable interest rates. the ecr scheme has been reviewed from time to time based on the stance of monetary policy. it has been merged with the system level liquidity provision with effect from the fortnight beginning on february 7, 2015. 19. in response to recent global crisis, a special refinance facility was introduced under section 17 ( 3b ) of the reserve bank of india act, 1934 under which all scbs ( excluding rrbs ) were provided refinance from the reserve bank equivalent to up to 1. 0 per cent of each bank β s ndtl as on october 24, 2008 at the laf repo rate up to a maximum period of 90 days. banks were encouraged to use this facility for the purpose of extending finance to micro and small enterprises. the eligible limit of the ecr facility for scheduled banks ( excluding rrbs ) was also increased from 15 per cent to 50 per cent of the outstanding export credit eligible for refinance at the prevailing repo rate under the laf. in order to provide liquidity support to housing, export and mse sectors, the reserve bank also provided refinance facility to the national housing bank ( nhb ), export and import bank ( exim bank ) and small industries development bank of india ( sidbi ). 20. now, in place of reserve bank, financial institutions such as national bank for agriculture and rural development ( nabard ), sidbi, and nhb, extend refinance to banks as well as nonbanking financial institutions. mudra bank, new institution for development of micro units is refinancing through state level institutions, and delivering loans to nbfcs, mfis, rural banks, district banks, nationalized banks, private banks, primary lending institutions and other intermediaries. 4 / 7 bis central bankers'speeches financial inclusion 21. the concept of β financial inclusion β gained global attention during the 2000s through its link with the achievement of the millennium development goals ( mdgs ) set by the united nations ( un ). the reserve bank of india has however been undertaking various initiatives over the last five decades to help the underprivileged participate in the country β s economic development. 22. on april 2012, india became the first bric member to join cgap 5, the
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the ingredients to deliver a serious global recession. from financial crisis to a synchronised global recession in view of the strong interactions between the financial system and the real economy, a financial crisis often gives rise to an β adverse feedback loop β. as risk taking capacity of the banks erodes with pressure on capital, and as greater risk aversion leads to tighter credit standards, flow of money for financing real activities becomes difficult. this was seen in both money market and credit market in the advanced economies. when leading wall street banks were feared to fail, inter - bank market had to freeze, due to generalised lack of trust. the credit market, in turn, witnessed severe pressure on the capacity to lend ; moreover, the deleveraging process gathered steam over time, where everybody wanted to minimise the losses. the real economic activity decelerated as aggregate demand, particularly private consumption and investment demand shrank under the pressure of deleveraging, wealth loss associated with falling asset prices, increasing unemployment, and deteriorating climate for investment and employment. as the real effects of the financial crisis magnified over time and the initial decoupling perception turned out to be a myth, the imf revised its global growth outlook for 2009 downwards repeatedly from 3. 9 per cent in july 2008 to - 1. 4 per cent in july 2009. the volume of world trade has also been projected to contract by 12. 1 per cent in 2009. it is the serious real costs of a financial crisis that has led to large scale use of fiscal and monetary policy stimulus all over the world. in view of the adverse feedback loop in the advanced economies, policies have aimed at addressing both financial stress and the economic recession, since addressing any one would not weaken the vicious loop. lower interest rates, ample liquidity and fiscal stimulus have been used to contain the adverse real effects ; while for restoring stability to the financial system, measures like raising the capital of banks and financial institutions and addressing the impaired assets have been adopted. the indian economy before the global crisis india had emerged as a leading emerging market economy ( eme ) by the time when the subprime crisis started. the average gdp growth of 8. 8 per cent during the 5 year period 200308 was not only one of the highest in the world in the recent period, but it had also permanently raised india β s growth trajectory to a higher level. there was a clear structural transformation, driven by reforms, globalisation and significant increase in domestic savings and
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espana finds that indirect effects from a gas price shock are quite persistent, peaking after one year5. considering this historical evidence for the euro area, even if gas prices have returned to levels close to those at the start of the war in ukraine, the upward effects of gas prices on core inflation could still be significant in the short term. however, if the significant reduction in gas prices continues, it should be expected to gradually begin to trigger reverse transmission effects. consequently, at the current the remaining 30 % is the part that the mo del canno t identify as a demand o r supply co mpo nent. it is an unexplained co mpo nent that sho uld not be given an interpretatio n under the appro ach used. bo rrallo, f., l. cuadro - saez and j. j. perez ( 2022 ). β rising food co mmodity prices and their pass - thro ugh to euro area co nsumer prices β, analytical articles, economic bulletin 3 / 2022, banco de espana. lo pez, l., s. parraga and d. santabarbara ( 2022 ). β the pass - thro ugh of higher natural gas prices to inflation in the euro area and in spain β, bo x 4, β quarterly repo rt o n the spanish eco no my β, economic bulletin 3 / 2022, banco de espana. juncture, we could well be at some sort of crossroads, where the lagged effects of the past increases in commodity prices would still be present, but diminishing, and the first effects of the most recent decreases would be emerging and on the rise. 6 in this regard, the symmetry of the downward response is also an open question. some support for this hypothesis can be found in recent developments in upstream stages of the price formation process. in particular, non - energy industrial consumer prices are still accelerating ( as the flash estimate for january shows ). however, industrial prod ucer prices ( excluding energy ) have decelerated significantly since last spring and this deceleration is rather widespread among components. in any case, the transmission and broadening of inflationary pressures is occurring at different speeds and intensities across expenditure components. pressures on underlying inflation have so far been highly concentrated in particular expenditure items like household equipment and maintenance, transport, and activities involving more social contact. some of their prices
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tarisa watanagase : inflation targeting β a reflection on thailand β s experience opening remarks by dr tarisa watanagase, governor of the bank of thailand, at the bank of thailand β s international symposium on β challenges to inflation targeting in emerging market countries, β bangkok, 13 november 2006. * * * honorable guests, distinguished participants, ladies and gentlemen, first, i would like to extend a very warm welcome to all of you here today. this is the second time that the bank of thailand organizes a symposium at an international level. our first international symposium, β practical experiences on inflation targeting, β was held in october 2000, a few months after we had adopted inflation targeting as a new monetary policy framework for thailand. but this symposium today is the first one that brings together central bank governors, senior central bank executives, world - renowned academics and policy experts from leading international organizations. many of you have extremely tight schedules and some have to travel a very long distance. i would like to express our great appreciation for your presence and very much hope that what we will learn together in this symposium is beneficial to all of us. ladies and gentlemen, thailand formally adopted inflation targeting as a monetary policy framework on may 23, 2000. the change in policy regime was a result of our search for an appropriate nominal anchor after the floating of the thai baht in july 1997. in the interim period, we used monetary aggregates as our policy target. it was during that time that we came to recognize that the relationship among monetary aggregates, inflation, and output in thailand did not have sufficient stability and predictability to make monetary aggregates a good nominal anchor of our monetary policy. inflation targeting then appeared as a natural choice for our new monetary policy regime. from that day onward, price stability has become the bank of thailand β s overriding policy objective. the core inflation rate was, as it is now, to be kept within a 0 - 3. 5 percent range. when thailand adopted an inflation target some six years ago, the policy regime was a relatively uncharted territory for emerging market economies. although the history of inflation targeting dates back to 1990 with the adoption of an inflation target by the reserve bank of new zealand, prior to 1998, inflation targeting was pursued mostly by developed economies. the first substantial crosscountry study of inflation targeting, published by ben bernanke, thomas laubach, frederick mishkin and adam posen, who is here today, in 1999,
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industries in major countries, are not subject to legislation requiring consolidated supervision. some have banking subsidiaries in the uk, owned by companies established under article xii of the new york state banking act. accordingly these companies and their uk subsidiaries are subject to consolidated supervision by the new york state banking department. the involvement of a home country supervisor in this way gives us a degree of comfort which allows the ring - fencing to be less stringent than it would otherwise be. however this clearly falls a long way short of comprehensive consolidated supervision of the entire investment banking group. there is a lively debate in the us at the moment about the most appropriate regulatory structure for all financial institutions, and particularly for investment banks. this tends to be regarded in the us largely as an internal matter. but the fact that the large us financial institutions have a global reach inevitably makes that debate a matter of great interest and concern to the international financial community. we are optimistic that legislation will soon be enacted to address these concerns. it would certainly be disappointing if it is not. conclusions though i have attempted this morning to identify some features of regulation on which we might well agree, i doubt whether there is such a thing as an β optimal β regulatory structure. each country has its own legacy of supervisory structures and approaches. but an appropriate international structure is one which works as seamlessly as possible and has clear lines of responsibility ( at least, that is what we expect from international banking groups β controls ). one co - ordinating regulator for each institution could play a crucial role in such a structure. the question of the number of regulators is, in my view, less important ; no one has yet suggested we set up one body world - wide to carry out all supervision, so whatever our own vision of an optimal regulatory structure, it will have at its centre a requirement for supervisors from different disciplines and in different countries to communicate effectively with one another. this weekend β s conference is a good opportunity to do that.
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the banking and financial services acts were put on the statute book. it is therefore not surprising that over there, as well as over here, there is criticism of the existing structure, and pressure for change. our own system, with its monopolistic approach to the origination of legislation, does not generate competing draft bills. but the marketplace for ideas on regulatory reform is, i can assure you, just as well contested. critics of the existing british system object on three counts : that the failures of the last decade demonstrate its inability to cope with strains and crises ; that it is unnecessarily complex, with overlapping and sometimes even conflicting responsibilities ; and that it has failed to keep pace with changes in institutional and market structures ; the distinctions on which it was based no longer effectively apply. it is not my aim today to give a comprehensive assessment of the validity of all these arguments. and, in any event, just as in the us, there is a heavy political dimension to this debate. but i would make a few observations on the arguments advanced for change. the uk system is complex, although it is no more complicated than the equivalent arrangements in some other countries with similarly sophisticated financial markets. ( indeed, were i not a guest here, i might say that the us system was rather more labyrinthine than ours. ) those who argue for simplification point to duplication of function and cost, especially between the sib and the front - line financial services regulators. there is undoubtedly a case to answer in that area, as both the sib and the sros would acknowledge. but the legislation we have explicitly dictates a two - tier structure. it is also true that institutions now tend to be involved in a variety of different businesses. banks own securities houses, fund managers, and insurance companies. insurance companies are diversifying into banking, and so on. so that even though there should always be a lead regulator, looking at the overall position of the business, institutions still face the costs of complying with the requirements of several regulators. but the question underlying these arguments about complexity and overlap is more fundamental. should regulation be based around institutions ( it is institutions which fail, after all ) or around functions or types of business which call for specialist regulatory knowledge? the uk system is organised neither along wholly functional nor wholly institutional lines. in today β s markets, where firms are a mass of subsidiaries and business units, no major market participant deals with a single regulator across all its businesses
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and comparing the euro area with its major global partners, the fiscal problem appear relatively modest. next year, the average euro area budget deficit will be in the order of 4. 6 %. by 2012 it is expected to decline further to 3. 9 % ( source ec autumn 2010 economic forecast ). these expected numbers are about half the corresponding expected figures for the us and japan. the problem, the source of the current tensions clearly reside with national fiscal developments, notably localised in those countries that have not done enough to correct imbalances or to prepare for difficult times, when times were still good. we know that for several years, fiscal policies in some european countries have breached both the letter and the spirit of the stability and growth pact. the pact calls for budgets that are close to balance or in surplus over the cycle, deficits always below 3 % of gdp and a public debt level of below 60 % of gdp. when a few years ago it became clear that in some important countries fiscal policies would not be able to meet the rules of the stability and growth pact, it was not the policies that were changed but the pact. this was clearly a dark moment in the history of european policy decision making. in 2004 and 2005, the governments of the three largest member economies coalesced to try and dismantle the stability and growth pact. it was a very fierce battle at the time, and the ecb publicly voiced its grave concerns. the recent crisis has demonstrated that growing underlying macroeconomic imbalances can also destabilise fiscal policies and place a country on an unsustainable trajectory. a boombust cycle can mask a fiscal problem for a long time and suddenly expose the problem when it turns. high fiscal elasticities tend to curb budget deficits β and even produce overall surpluses β when asset price run - ups boost revenues from financial and housing transactions. the same elasticities, however, will send the budget into distress when the boom reverses. the second area of policy slippage concerns macroeconomic policies. here what stands clearly in front of the policymakers is the sustained increase in unit labour costs whose growth in some member countries has consistently outpaced both domestic inflation and euro - area average union labour costs. such competitiveness losses cannot be sustained forever, and catching - up phenomena can only explain a limited part of the process. sooner or later adjustments in unsustainable economic policies have to be made. fiscal and structural policies need to keep domestic demand
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take this occasion to share with you the following observations : 1. appropriate laws and regulations are needed to foster a regulatory environment that is conducive to financial innovation. it is worthwhile to attempt new ideas as long as they would not contravene the requirements of existing laws and regulations. however, we must have a full understanding of the related risks. and, we must have an appropriate risk control system or measures to mitigate or eliminate the risks. apart from complying with necessary regulatory procedure, the new ideas must facilitate market development without impairing the rights of consumers. to this end, the qdii scheme for stock investment can serve as a classic example. the introduction and moderation of the qdii scheme as well as the gradual opening of the mainland capital market represent an important step towards financial system reformation. these measures are also financial innovation conducive to financial market development. based on this situation, we can expect more innovation in financial policies. in the near future, a wave of keenly anticipated innovations in financial institutions, products, service and cooperation will arise from innovated financial policies. 2. there should be ongoing observation of changes in market development, analysis of special needs of customers, segmentation of customers and markets, as well as the establishment of a system to trace the demand of market and customers. the regulators should proceed in tandem with the pace of market development and monitor changes and characteristics of consumer demands. as far as financial products are concerned, asset management and structural financing that are selling like hot cakes are good examples. 3. financial innovation should be adapted to time, place and people. this issue has been explored before with macao as an example. 4. maintain good communication between regulators and market participants. it is normal for regulators to receive tons of complaints and enquiries from consumers. as these letters are mostly pinpointing financial products and services, regulators would gain a better understanding or come up with a general idea on the types of services demanded by consumers during the course of handling these complaints and enquiries. 5. investors and consumers need education. it is desirable to initiate a two - pronged measure. based on the objectives of protecting the rights of the consumers and investors as well as facilitating the penetration of the financial market, the regulator can actively embark on financial consumption related education through various channels such as the media and topical exhibitions etc. on the other hand, the market participants are encouraged to launch more promotions that are infused with educational
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radovan jelasic : new economic challenges in 2009 in view of the global financial crisis speech by mr radovan jelasic, governor of the national bank of serbia, at the general meeting of the serbian chamber of commerce dedicated to considering new economic challenges in 2009 in view of the global financial crisis, belgrade, 23 december 2008. * * * ladies and gentlemen, allow me to thank the serbian chamber of commerce for inviting me here today. i hope that my short speech will, if not help resolve numerous issues our economy is currently facing, than at least point to the challenges that lie ahead. looking at the macro level, we can see that after pursuing restrictive fiscal and monetary policies over the past few decades, all developed economies have recently opted for unprecedented relaxation of their policy stance ( the us budget deficit, for instance, will be around 15 % in the current fiscal year ). like many other countries of the region, however, serbia cannot resort to similar measures for several key reasons : - even in the best of times, serbia ran a high fiscal deficit and the money, primarily from privatization, was spent rather than set aside into reserves for the present challenging times ; - extra money paid into the budget over the past several years was used for wages, pensions or material costs, etc. rather than for investment purposes. - serbia is not an eu member and has no access to substantial additional sources of finance ( e. g. eu loan to hungary equalled eur 6. 5 billion and to latvia β eur 3. 1 billion ). this is a consequence of a slow and inefficient transition process, but also of a populist response to spending demands. it is, however, important to note that, by agreeing on an arrangement with the imf, serbia has made a significant step in the right direction. in these turbulent times, this will provide not only a firm macroeconomic anchor, but will also enable the conduct of a coherent and transparent macroeconomic policy. like all other countries of the world, serbia has to adjust to the new global economic circumstances which will reflect on all aspects of business activity : from the number of employees to the volume of operations, from market analysis to, perhaps even undesired, selling off parts of businesses. this reminds me of a story about two men in the woods who suddenly notice a bear standing only a couple of meters away. and the moral of the story is : any danger could also be seen as an opportunity
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problem resolution in the eu will affect serbia as much as the turbulences have ( the example of the car industry ) ; - some problems cannot be resolved in serbia before they are resolved in vienna, frankfurt, milan or paris. β helicopter ben β is currently a popular nickname of the chairman of the us federal reserve, ben bernanke. mr. krugman, this year β s nobel laureate, recently stated that it was time to β shovel money into the economy β. the question, however, is : in what way, to whom and how much? but let us turn back to the case of serbia. for instance, if you were to offer an interest - free loan to us steel in order for it to maintain the present volume of operations and keep all its employees, they would decline it as that would mean producing goods not for sale but for replenishing stocks (! ). the same is true for tigar β michelin. what these companies need are buyers, i. e. a car industry that can produce and sell cars. sometimes, it is more profitable to halt production altogether, than to take out a loan, even if it is interest - free! the problem therefore lies in the market, i. e. in the lack of buyers! and finally, what is to be done : - we should significantly increase budgetary investments, primarily for financing the corridor 10 highway, building additional energy producing capacities, implementing infrastructural projects from irrigation to railway lines, i. e. creating additional jobs where demand for products / services is guaranteed! but the share of investment can only increase if spending goes down! - serbia has many institutions that ought to intensify their activities in the period ahead : smeca, aofi, development fund and various other guarantee funds providing start - up credits as well as loans for small and medium - sized enterprises. we have the framework set up, but much needs to be done in terms of effort, people and money! - in serbia, if inflation goes down, so will the key policy rate and, consequently, the cost of borrowing. this, however, will not resolve our problems but will only moderate their impact to a certain extent. thank you for your attention!
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). the shift towards digitalization in services represents a great opportunity for expanding access to finance ; at the same time, it can increase financial exclusion unless it is supported by appropriate literacy, both financial and digital, and by adequate governance. digital transformation enhances financial inclusion if it effectively reaches the most vulnerable and financially underserved, including micro and small enterprises, and if these individuals and businesses are equipped with the financial competences that allow them to make informed decisions. we must ensure that a wider access to digital financial infrastructure does not translate into irresponsible financial behavior, which can, in turn, endanger growth and financial stability. to fulfil the work plan commitments, the g20 presidency mandated some implementing partners ( ips ) β including the oecd, the sme finance forum and the world bank β to provide analyses and stock - tracking reports on the gaps and opportunities, in terms of digital financial inclusion, that emerged during the pandemic crisis. as to policy response, we will concentrate on two main areas. one concerns raising digital financial awareness for both households and msmes. the other one aims to foster innovative regulatory and supervisory approaches that encourage the development of inclusive and responsible digital financial services while granting adequate protection to final customers, including from cyber risk. the 2021 gpfi β s focus on digital financial inclusion will also take into account remittances and the most effective actions needed to support them, also in times of crisis. 10. i have briefly touched upon three themes of the agenda of the g20 finance track under the italian presidency. all three challenges β climate change, preparedness in health policy and financial inclusion β must find adequate and coordinated responses in order to advance onto a β sustained β and β sustainable β recovery path. great uncertainty still surrounds the evolution of the epidemic and the related economic developments ; the outlook is nevertheless positive. it is therefore essential that we enter a new phase in which our tasks move toward a more far - sighted policy perspective. we must address the legacies of this unprecedented crisis and some structural long - standing challenges, for the prosperity of our communities. the g20 is the proper world forum for that. global issues β such as climate change and pandemics β require global solutions. designed by the printing and publishing division of the bank of italy
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β the g20 agenda in 2021, under italy β s leadership β global investor roundtable of the global foundation speech by daniele franco senior deputy governor of the banca d β italia rome, 3 february 2021 1. ladies and gentlemen, it is a great pleasure to contribute to the 2021 global investor roundtable of the global foundation. let me thank the secretary general steve howard for inviting me and for his kind introduction. governor visco addressed the rome roundtable last november and illustrated the prospects for the italian presidency of the group of twenty ( g20 ). i will update you on recent developments. i would like to start off by saying a few words about the context in which italy began its presidency. 2. we all know that the current global crisis is one of unprecedented magnitude. since the inception of the pandemic, more than 100 million individuals have been diagnosed with covid - 19 worldwide ; almost 30 million cases have been recorded in europe. more than 2 million people have died because of it, about one third of them in europe. the pandemic, combined with the containment measures introduced to curb the spread of the virus, plunged the world economy into one of the deepest recessions in recent history. in 2020, despite a short spell of recovery during the summer, world gdp declined by about 3. 5 per cent, the largest contraction since wwii. economic losses in the euro area and the uk have been particularly severe. fiscal and monetary authorities responded swiftly with massive expansionary interventions. the measures were aimed at strengthening the healthcare systems, at supporting firms β and households, and at preserving orderly monetary and financial conditions. the short - term objective of mitigating the immediate consequences of the pandemic was achieved, preventing the drying - up of liquidity, avoiding an immediate credit crunch that could have led to a large wave of defaults, and taming deflationary pressures that would have scarred the economic fabric of our economies and generated financial instability. 3. according to the latest projections released by the imf, global economic activity will surpass pre - pandemic levels by the end of 2021, with world gdp growing by 5. 5 per cent. the forecast has been revised positively, in light of expectations that vaccines would remove current restrictions in the second half of the year. however, projections are heterogeneous across world regions, owing to the differences in the access to healthcare, the effectiveness of relief measures, the exposure to cross - country spillovers, and structural
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1 the increase in australia's population growth over the past decade is largely due to increased immigration ; the rate of natural increase has not changed that much ( graph 2 ). over recent times, net overseas migration has, on average, added around 1 per cent to our population each year. the increase from natural sources has averaged around 0. 7 per cent per year. https : / / www. rba. gov. au / speeches / 2018 / sp - gov - 2018 - 08 - 08. html 2 / 18 8 / 8 / 2018 demographic change and recent monetary policy | speeches | rba graph 2 there has been a reasonable amount of year - to - year variation in net overseas migration. migration increased sharply at the height of the resources boom when demand for skilled labour was very strong, and then subsequently declined as the mining investment boom came to an end. in this way, migration has helped our economy adjust to large swings in the demand for labour. it has also helped address some particular skills shortages. a second factor that accounts for the step - up in the level of migration and the year - to - year variation is a marked increase in the number of overseas students studying in australia and changes in the policies around student visas. there are currently more than 500, 000 overseas students studying in australia. over recent times, it has been common for around one - sixth of foreign students to stay and live and work in australia after completing their studies. [ 1 ] this has boosted our population. it has also boosted the nation's human capital. people living in australia who were born overseas are more likely than the average australian to have a post - secondary school qualification ( graph 3 ). we also benefit from stronger overseas connections when foreign students return home after studying in australia. https : / / www. rba. gov. au / speeches / 2018 / sp - gov - 2018 - 08 - 08. html 3 / 18 8 / 8 / 2018 demographic change and recent monetary policy | speeches | rba graph 3 the effects of faster population growth on our economy and society are complex and they are widely debated. as a number of commentators have noted, population growth has put pressure on our infrastructure. as a country, we were slow to increase investment in infrastructure to meet the needs of our more rapidly growing population. investment in this area has now picked up, particularly in transport, which, in time, will help alleviate some of the pressures. we were also slow to increase the rate of home
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electricity prices in some cities have declined recently after earlier large increases, and changes in government policy are likely to result in a decline in child care prices as recorded in the cpi. there have also been changes to some state government programs that are expected to lead to lower measured prices for some services. together, these changes mean that our forecast for headline inflation for 2018 is now 1ΒΎ per cent. looking beyond these short - run dynamics, inflation is still expected to rise as the economy moves closer to full employment. the labour market is gradually tightening and it is reasonable to expect that this will lead to a lift in both wages growth and inflation. this tightening of the labour market is evident in the steady increase in job vacancies, with the number of vacancies, as a share of the labour force, at the highest level in many years ( graph 15 ). it is also evident in the increase in the number of firms reporting that it is difficult to find workers with the necessary skills. as expected, the tighter labour market is leading to higher wage outcomes in certain pockets of the labour market. over time, we expect that this will become a more general story, although this is going to take some time. graph 15 https : / / www. rba. gov. au / speeches / 2018 / sp - gov - 2018 - 08 - 08. html 16 / 18 8 / 8 / 2018 demographic change and recent monetary policy | speeches | rba in terms of the financial risks facing the economy, things have also been broadly moving in the right direction. for a number of years, risks were rising due to the nexus of high and rising levels of debt and escalating housing prices. over the past year, though, housing price declines in the largest cities have reversed a small part of the earlier gains. borrowing by investors has also slowed considerably, largely because of reduced demand by investors. there has also been a tightening of credit standards. while banks are competing strongly for customers with low credit risk, their appetite to lend to riskier borrowers has lessened a bit. some of the non - bank lenders are providing credit to these borrowers. this change in financial trends has helped reduce the build - up of risk. it is helpful that this change is taking place at a time when the world economy is growing strongly, the unemployment rate is trending lower and the economy is recording good growth. this is assisting with the adjustment and means that, notwithstanding the changes in the housing market,
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mr. greenspan comments on the importance of technological development and the value of education for economic growth in the united states remarks by the chairman of the us federal reserve system, mr. alan greenspan, at the building dedication ceremonies at the kenan - flagler business school, university of north carolina on 12 / 9 / 97. i welcome the opportunity to join dean fulton, president broad, president emeritus spangler, chancellor hooker, hugh mccoll, and the many other distinguished guests on the podium today. it isn β t every day that we have the opportunity to dedicate a new building devoted to the research and training that our young people need for conducting business in a global setting. this new facility - - the mccoll bulding - - has been equipped with state - of - the - art information technology that will enhance the ability of the faculty and students of kenan - flagler to prepare for an exciting future in our global economy. the university has made this important commitment at a time when our businesses and workers are confronting a dynamic set of forces that will influence our nation β s ability to compete worldwide in the years ahead. one of the most central of these forces is the rapid acceleration of computer and telecommunications technologies, which can be reasonably expected to appreciably raise our standard of living in the twenty - first century. in the short run, however, the fallout from rapidly changing technology is an environment in which the stock of plant and equipment with which most managers and workers interact is turning over increasingly rapidly, rendering a perception that human skills are becoming obsolete at a rate perhaps unprecedented in american history. i shall endeavor to place this most unusual phenomenon in the context of the broader changes in our economy and, hopefully, explain why the value of education, especially to enhance advanced skills, is so vital to the future growth of our economy. wealth has always been created, virtually by definition, when individuals use their growing knowledge to interact with an expanding capital stock to produce goods and services of value. assisted by the whole array of market prices, entrepreneurs seek to identify the types of products and services that individuals will value, especially the added value placed on products and services that customers find better tailored to their particular needs, delivered in shorter time frames, or improved in quality. this striving to unbundle the particular characteristics of goods and services in order to maximize their value to each individual inevitably results in the shift toward value created through the exploitation of ideas and concepts, rather than simply the utilization of
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janet l yellen : the outlook for the us economy and economic policy speech by ms janet l yellen, vice chair of the board of governors of the federal reserve system, at the 2011 annual meeting of the financial management association international, denver, colorado, 21 october 2011. * * * for more than 40 years, the financial management association international has promoted the advancement of knowledge about financial decisionmaking and its dissemination to practitioners worldwide. the association β s efforts benefit not only private - sector participants in financial markets, but also policymakers in central banks and governments who strive to ensure that the financial system works effectively to support global economic growth. as one of the many beneficiaries of the association β s work, i am honored to receive this year β s outstanding financial executive award. my comments today will focus on recent economic and financial market developments, along with their implications for the outlook and for economic policy. i will begin by pointing out that, although the u. s. economy continues to grow, the recovery has been proceeding at a disappointingly slow pace. moreover, slow growth leaves the economy vulnerable to downside shocks, such as the potential for adverse developments in global financial markets. i then will discuss ways that monetary policy and fiscal policy can support the economic recovery and address these risks to the expansion. let me note at the outset that these remarks reflect my own views and not necessarily those of others in the federal reserve system. the us economic outlook since the middle of 2009, the u. s. economy has been recovering from the most severe recession and financial crisis to afflict our country since the great depression. certainly, conditions have improved in a number of ways during these past two years : output growth has resumed, and private - sector employment has risen about 2 - 1 / 2 million since payrolls troughed in early 2010. industrial production has generally advanced solidly, business investment in equipment and software continues to rise briskly, and u. s. exports have grown at a robust pace. in addition, financial market functioning is much better than in the depths of the crisis ; the quantity and quality of capital and the size of liquidity buffers in the banking system have improved significantly ; nonfinancial business balance sheets are mostly in solid shape ; and credit conditions, although still tight, have eased somewhat for many businesses and households. despite these improvements, the pace of the economic recovery has been less vigorous than any of us would have desired and than most forecasters had anticipated. indeed
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in relation to their possible cross - border use. the close interrelation between stable - coins and central bank digital currencies β due to their common transactional and store - of - value purposes, which are such that they may either complement or replace each other β warrant the importance placed on maintaining a holistic view of the payments sector. the late curzio giannini, my former colleague and author of one of the most insightful books on the history of central banks ( the age of central banks, 2011, 2004 in italian ), argued that β in the case of money, the definition moves around the concept of payment technology : the set of conventions, objects and procedures that make possible the extinction of the relevant obligations of the exchange activity β. we need to keep proceeding carefully with the examination of these conventions, objects and procedures, in line with our mandates of price stability and as guardians of the currency. after all, physical, electronic or virtual, the efficiency and stability of what we call β fiduciary money β is ultimately dependent on trust, on confidence β which indeed shares the same etymological root with β fiduciary β. and this is ultimately what we have to preserve. 3 / 3 bis central bankers'speeches
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central bankers have extensively examined the relationship between public and private money. for example, in marcello de cecco β s book on money and the empire ( 1975 ) we read of the substantial efforts of english banks to prevent the bank of england from collecting deposits during the xix century. on the other hand, in 1999, at the jackson hole symposium held by the federal reserve bank of kansas city, discussing old and new challenges for central banks, mervyn king speculated that ( in a world of electronic transactions in real time ) without the centralisation of settlements β central banks, in their present form, would no longer exist, nor would money β. even more than the β end of money β, the consequence would have been the potential β end of monetary policy β, with the return to a pure exchange economy or the loss of central banks β monopolistic supply of base money that technology would have made possible. but the importance of a centralised system built around an outside money issued by the central bank, which preserves its value and acts as a lender of last resort, and an inside money, issued by the banking system in connection with its role of maturity transformation, has emerged forcefully during the pandemic. i would therefore like to focus on three questions. one striking feature of the pandemic crisis is that banks, thanks to the progress made after the global financial crisis, have been an important stabilisation factor. in many countries, for example, the banking system has been the vehicle through which government support measures ( such as guarantees and moratoria ) have reached households and businesses. on the other hand, some types of money - market mutual funds have experienced severe problems. they required the central bank to step in and are now under scrutiny. would similar problems have also emerged for providers of private money - like assets? even more striking has been the importance of monetary policy. not only have prompt and exceptional liquidity provisions preserved accommodative financial conditions, consequently preventing a generalised tightening of credit and averting the risk of a spiralling crisis, but also the measures enacted by central banks have allowed governments to access the financial resources needed to support households and firms without market tensions emerging. absent a monetary authority, would issuers of stable - coins have been able to maintain the stability of the financial system? and would they have been able to preserve the value of their currencies in both normal times and during a crisis? a third, fundamental, question concerns inflation.
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last crisis. in addition, 18 / 29 there is evidence that the lower the level of synchrony between the economic and financial cycles of the countries in which banks operate, the greater these benefits. 5 in this respect a profound reflection at the european and the international level on the regulatory treatment of diversification in the banking business may be appropriate, so that, in conjunction with the greater complexity it may entail, some of its beneficial effects on banks β risk profiles may be afforded better recognition. sixth, nor should we overlook the importance of operational risk being correctly managed by banks. operational risk accounts for 9. 3 % of the risk - weighted assets of spanish deposit institutions by volume, slightly below the european average ( 10. 5 % ). in any event, we know on past experience that the deterioration in solvency associated with an operational risk event can be high. indeed, for european banks affected by the most serious operational events, this deterioration has remained over 1. 25 pp of cet1 in the last five years, rising to 2. 1 pp in 2018. as i mentioned in my introduction, in the case of spain, potential costs associated with legal risks continue to contribute to operational risk at deposit institutions. the processes linked to past litigation, for example over floor clauses, have had an estimated cost for the sector of more than β¬2. 2 billion up to june 2019. moreover, there are other significant legal processes still pending settlement. in addition, legal risk and certain other factors relating to banks β conduct have had a significant impact on the reputation of the banking sector, and not only in spain. in this respect it is important to note that reputation and customer confidence are fundamental to the banking business. in consequence, and also from a purely economic standpoint, given that in the long term litigation costs are far higher than the possible benefits that some banks in 5 see i. argimon ( 2017 ), β decentralized multinational banks and risk taking : the spanish experience in the crisis β, banco de espana working paper no. 1749. 19 / 29 may have obtained in the short term as a result of questionable behaviour, banks should strive to reverse this trend, providing their customers with financial products and services suited to their needs and capabilities, and also supplying the key information in a clear and transparent manner. similarly, banks should address the technology risk stemming from the impact of the adoption of new technologies on, for example, the probability of suffering cyberattacks, with extremely high
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y v reddy : regulators β eyes on financial institutions comments by dr y v reddy, governor of the reserve bank of india, published in january 2007 issue of the banker, london. it can also be accessed at www. thebanker. com. * * * as we move from a world based on relationships to one based on transactions, can our banks be far behind? indeed, banking has been transformed, perhaps unrecognisably, and regulators and customers are taking notice. in the 1970s, a visit to the bank meant face - to - face time, assistance with problems, financial advice, and often just a friendly chat with your banker who you knew and trusted. today, many customers and banks prefer point - and - click transactions, and face time can sometimes mean fees. and whether you are in chennai or chicago, the person answering your bank query is probably in bangalore. what does this mean for the banks, their customers and regulators? banks rely less on customer loyalty and more on efficiency. reputational concerns that were once paramount are less critical β witness the million - dollar penalties routinely imposed on some of the global banking giants ; yet, they continue to grow. efficiency rules fee - based income has overtaken net interest margin income. customers enjoy efficient transactions, but find themselves unequipped to make the best possible financial decisions with regard to their banking needs. it is perhaps significant that bank regulators, who were until recently content with bank licensing and applying prudential regulations while encouraging competition, are now focusing on preparing customers to deal with the banks. today, some banks levy a penalty or an interest charge for not maintaining a minimum balance, for not operating a bank account for a certain period, and for other negligent behaviour β although the interest charges paid by the bank for similar negligent behaviour are less than those paid by the depositor. these treatments are often sanctified by the terms and conditions imposed when an account holder opens an account. but in signing the contract, customers are not as empowered or as cautious as they should be. this could be due to several reasons, among them the prevalence of nonstandard contracts that make comparison of competing products difficult and tend to dampen competition. educating consumers in response to overcharging on credit cards and other issues, bank regulators are taking initiatives to prepare customers for the market by educating them ( through financial education initiatives ), counselling them ( through credit counselling ), and assuring them ( of "
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with the central bank. also, in the presence of the exchange rate depreciation, such policy has brought about easing monetary conditions, serving the promotion of the economic activity. however, the pass - through of easing monitoring policy on interest rates of banking products has been limited, due to liquidity constraints of the banking system and weakened demand of the public sector for funds. on the other hand, the banking system itself has been reserved with regards to lending, as a result of the increased risk in the economy and performance of loan portfolio quality. the alleviation of these problems would help to more fully transmit the monetary policy and enhance its effectiveness. the country β s external position continues to be characterized by a high and upward current account deficit. during the first three quarters of the year, the deficit was fully covered by capital and financial account inflows, resulting in increased foreign exchange reserves of the bank of albania. however, the inflows have been significantly favoured by privatization receipts and by public sector borrowing. both these items are limited in time and size, making necessary a steadier correction of the external position of our economy. this correction should aim at covering the trade deficit with stable funding resources, in the form of foreign direct investments and promoting export industries in branches that may constitute a competitive advantage for albania. however, short - term developments in foreign trade for october to november show a somewhat different performance compared with the first nine months of the year, testifying a modification of the trends observed earlier. thus, the country β s exports fell in annual average terms by about 7. 4 percent, recording a slowdown in comparison with the average decline by about 19 percent during the first nine months of the year. on the other hand, imports recorded an annual average decline of 17 % per cent over these two months, compared with the average annual decline of 7 percent recorded in 2009. these developments contain encouraging signs for sustainability of the balance of payments in the short run fiscal policy had an expansionary nature during most of the year, being materialized in a budget deficit of 6 percent of gdp. the increase of budget deficit reflects both the action of automatic stabilizer in the form of decreased revenues, and the intended countercyclical character of fiscal policy, through increased wages and capital expenditures. the country β s economic activity slowdown has dictated a slow pace in budget revenue growth, especially after the first quarter of the year. in late november, the annual growth of budget revenues was only 2 percent, almost
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progress with regard to strengthening other economic and financial equilibriums. safety nets in the financial system have been strengthened. the institutional framework that shapes the coordination, design and implementation of measures for safeguarding financial stability has been improved. the legal framework that disciplines contract enforcement has been improved. credit risk has been lowered and non - performing loans have been reduced, although their level remains high. after peaking in 2015, albania β s public debt appears to be set on a downward trend. also, our external position remains stable and current account deficits have been financed by high levels of foreign direct investments. turning to the latest developments, the bank of albania deems that the recent economic 1 / 2 bis central bankers'speeches and financial indicators have been in line with our projections. this performance reconfirms our scenario of expectations for the outlook. the bank of albania expects economic activity to improve in the medium - term horizon. this improvement will enable the return of the economy to equilibrium, the further improvement of indicators in the labour market, and the return of inflation to target. the outlook remains positive, but its guaranteeing requires prudent economic policies and further structural reforms. such policies and reforms should be, in essence, a continuation of the philosophy that has guided the initiatives and steps we have undertaken in the recent years. to sum up, the bank of albania judges that : the actual economic policy combination, based on an accommodative monetary policy and fiscal policy stance set on public debt reduction, should be maintained. the monetary policy should maintain the accommodative stance in the medium - term horizon, whereas the intensity of the monetary stimulus should adapt to the needs of the country β s development. the business climate at home should be further improved. the bank of albania considers that the attraction of foreign investments as well as the support and stimulation of domestic investments should be at the focus of decision makers. structural reforms should be accelerated and albania β s competitive advantages should be enhanced further. in conclusion, i would like to once again thank the imf mission for the useful and constructive discussions. 2 / 2 bis central bankers'speeches
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##entliche verschuldung, wirtschaftswissenschaftl. seminar, bd. 8., stuttgart 1979 statutes of the escb and the ecb, available at http : / / www. ecb. int / ecb / legal / pdf / en _ statute _ from _ c _ 11520080509en02010328. pdf bis central bankers β speeches
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is to be seen in the context of β flexible inflation targeting, β which must be understood as a goal to be achieved over the medium run β allowing the ecb to pursue a steady hand strategy to stabilize expectations. at the bank on international settlements ( bis ) we have recently had very relevant and interesting discussions on different central banking strategies, including flexible inflation targeting, which soon will be published. an important contribution to the role of central banks nowadays is their increasing involvement in financial sector stability and banking supervision. one of the lessons of the big economic crisis of the 1930s had been that price stability and also stability of the real economy cannot be achieved without stability of the financial sector of an economy. in the golden days of the β great moderation β this lesson seems to have been lost to a large extent ; there was a tendency to separate the role of central banks and of financial market agencies. today, in the context of the recent crisis, we again observe a tendency toward a stronger role of central banks with regard to microprudential β and especially macroprudential β supervision. a specific example is the new supervisory role of the ecb in the context of the great project of a european banking union, especially the european single supervisory mechanism ( ssm ). as a central banker i am fully aware that banking supervision is one of the most risky tasks in economic governance, especially with regard to reputational risks. no central banker with a healthy survival instinct will therefore actively try to obtain an encompassing mandate for banking supervision. on the other hand, given the huge potential for market failures in this field β like different forms of asymmetric information and problematic incentive structures β there is a clear need for public intervention β and somebody has to do it. after a period of de - regulation we are now in a period of re - regulation. maybe we just see the usual oscillation from one end of the spectrum to the other, meaning that after too much deregulation we now may see too much re - regulation, especially too much of uncoordinated regulation. but in any case, effective regulation needs effective supervision and there are valid economic arguments in favor of independent central banks taking on a larger role in banking supervision. in my view this also holds for the specific case of the ecb assuming greater responsibilities for banking supervision. one has to be aware, however, that we have to deal with a very specific case with regard to institutional, economic and legal set - up. to mention just a few
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should take advantage of the potential of both fortifying fundamentals and managing risks in order to waterproof against financial storms. the mexican economy mexico β s economy has weathered volatility relatively well during the last two years. for example, currency depreciation has been lower than that observed in many other emerging economies. orderly market conditions have prevailed, with bid - ask spreads remaining tight and operating volumes high. this strength likely reflects a set of sound economic policies, including moderate and relatively stable public debt ratios, low inflation and a well - capitalized and liquid banking system. furthermore, mexico β s flexible exchange rate regime has served as a buffer against turbulence, become a mechanism of self - discipline for authorities and market participants, and resulted in less pass - through to inflation. the mexican peso sees more trade than many advanced - nation currencies, and it is the most traded among those of emerging economies. 4 additionally, the local debt market has become attractive to foreign holders, and this is beginning to be the case for foreign issuers as well. foreign holdings of local β currency government bonds, as a percentage of total domestic public debt outstanding, have run at around 37 percent. this share has remained relatively stable in the wake of brusque market reactions to talk of eventual tapering of federal reserve asset purchases last year and so far continues to do so. a high concentration of these holdings in long tranches of the yield curve provides some basis for believing that many investors see their positions as a long - term bet. in other words, perhaps they are here to stay. however, as we are in unchartered waters, we cannot rule out the possibility of significant downward adjustments in these holdings, amid changing market sentiment or shrinking carry - trade opportunities as u. s. monetary normalization proceeds, among other possible causes. after a year and a half of weakness, mexico β s economy started to rebound during 2014, notwithstanding some lower growth in the third quarter reflecting, in part, temporary factors. the main impulse has come from consolidation of u. s. economic activity and associated higher demand for mexican exports. domestic spending has also gained some steam, mainly through private investment and, to a lesser extent, from consumption. consumer confidence has been at somewhat low levels but appears on the mend according to evidence from november data. the growth outlook is one of gradual improvement. a close economic relationship with the united states is a positive factor for mexico. before the u. s. recovery took off
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, it was a see bank for international settlements ( 2013 ), triennial central bank survey of foreign exchange and derivatives market activity in 2013, april. bis central bankers β speeches disadvantage vis - a - vis many commodity - exporting countries, which enjoyed the benefits of high and ascending commodity prices. the tables, however, now appear to have turned. 5 monetary policy in the last two years became more accommodative in the context of lower economic growth. rate cuts from march 2013 to june 2014 totaled 150 basis points, and the policy interest rate is currently at 3 percent. since july 2014, annual inflation has surpassed the upper limit of the variability interval around the permanent 3 percent target, due mainly to transitory factors. pressures from the effect over the year of tax hikes, and from the noncore component of the national consumer price index, especially livestock prices, have made themselves felt. inflation is expected to be lower in 2015, on a path of convergence to the permanent target. this development would be extremely timely as it would contribute to increasing the economy β s resilience to a possibly more difficult international financial environment. but convergence implies not only achieving but also maintaining the target level. upside inflation risks should be carefully monitored. one may come from substantial hikes in minimum wages. others are a prolonged weaker currency due in part to financial market stress, and renewed pressures from noncore inflation. analysts β inflation expectations for all periods, although stable, remain above the bank of mexico β s permanent target. concluding remarks approaching monetary normalization in advanced countries will make life more complicated for fund managers, especially in light of very low global interest rates, historical minimums for bond spreads, and record highs in many stock markets. beset by heightened uncertainty, emerging markets will see added challenges. portfolio weights are already heavy with their assets, a stumbling eurozone recovery could derail some of them, and lower growth in china could further dent demand for commodities, on which many emerging economies depend as exporters. financial authorities need to work hard to underpin macroeconomic fundamentals by focusing on how to strengthen fiscal and monetary policies, as well as regulatory and supervisory frameworks in the financial system. they should also remain fully alert to financial risks and keep stability at the fore of their concerns. after some fragility, mexico β s economy appears to be on an upturn, pulled by a stronger recovery in the united states, as well as more momentum from domestic demand. the expected approach of inflation
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rundheersing bheenick : otc sales to the public remarks by mr rundheersing bheenick, governor of the bank of mauritius, at the launching ceremony of the over - the - counter sale of treasury bills / treasury notes at the new headquarters of the bank of mauritius, port louis, 24 july 2007. * * * distinguished guests of the financial community chairman of the mauritius bankers association ltd our first customers to the otc sales ladies and gentlemen i am grateful that you are all here with us this morning to share the launching ceremony of the over - the - counter ( otc ) sales to the public. the reasons for which we are re - launching the sale of treasury bills and treasury notes directly to the public are manifold. as you would already know, the honourable rama krishna sithanen, deputy prime minister, minister of finance and economic development announced in his 2007 / 08 budget speech that the bank of mauritius will re - launch the retail sale of treasury bills / treasury notes directly to the public. this practice had been stopped for some time. you would also have no doubt noted that saving performance of the country has been doing downhill. the saving rate fell from 22. 6 per cent in 2004 to hardly above 16 per cent in 2007 and this at a time when secondary market sales are open and the stock exchange has been encouraged by the central bank to offer government papers directly to the public. just to provide you with an indication of this low performance, the sale of government of mauritius treasury bills and treasury notes through stock broking companies on the stock market have amounted to a grand total of barely above rs1 million in july 2007. so, we thought we need to do something to stop the decline and encourage our savers to invest in treasury instruments. we thought we have to work on ways to stimulate the development of the secondary market for government securities and provide an additional investment opportunity to individual investors. for these reasons, we are offering this morning a whole range of instruments ranging from short - dated treasury bills to 4 - year paper. these instruments will give us a term structure and also an indication of the appetite of our savers for papers of different maturities. furthermore, primary bidders and dealers will have a better feel of where the market is heading. we are today logging quite a few firsts. let me mention a few of them : β’ today, for the first time members of public are having access to the banking hall of the new headquarters building β’ today,
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for the first time and we are using our counters ; and β’ today, for the first time the banking hall of the new headquarters building is being used. we are today starting the migration process of our whole banking operations from the old to the new building. we are hopeful that two to three weeks down the line we would have completed the move to the new headquarters. so, we have three impressive firsts for a small occasion. i am pleased to invite directors of the board of the bank as well as our first customers to move forward for the formal launch of the otc sales. ( unscrolling of display ) after the formal launch, we shall move towards the counters. i believe that whenever there is something new, there must also be something old. so, to mark the start of transactions at our new counters and with a view to coining this momentous occasion, i found it most auspicious to strike the gong which was offered to us by the central bank of kenya at the time of the inauguration of our old building in 1972. i thank you all for your presence with us this morning.
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almost every village within a 5 km radius in 25 states and 7 uts covering 99. 94 % of identified villages. but we cannot remain content with this, and efforts are continuing to achieve universal access to financial services and products. at the same time the policy focus is being repositioned from β access of financial services β alone to β usage β and β quality β of financial services as well. the fi - index constructed by rbi, which is an indicator of our efforts in this direction, is based on the above three dimensions viz., β access β, β usage β and β quality β. the weights of the index are forward - looking with higher weights given to the deepening aspect of financial inclusion ( β usage β and β quality β ). responsible and sustained financial inclusion requires balancing opportunity and innovation on both the supply and demand side. on the supply side, it includes steps to provide affordable and easy access to savings account and suite of appropriate financial products & services. on the demand side, it seeks to improve financial literacy and awareness which helps in increasing demand for financial products and services. these demand side and supply side measures should ideally complement each other. in emerging market economies like india, there is generally a disequilibrium amongst the demand and supply side factors. while the traditional brick and mortar structures have helped in taking basic banking services to the nook and corners of our country, the advent of digital dbie. rbi. org. in https : / / www. rbi. org. in / scripts / atmview. aspx? atmid = 136 rbi annual report 2021 - 22 innovations in the extension of financial services, have the potential to be an enabler for graduating to the next level of financial inclusion where the quality of inclusion takes precedence over just availability of financial services. india as a continental economy with multiple languages and cultures, different and sometimes even difficult terrains, large population and low - income levels need to ensure inclusive growth. the focus is thus not only on opening the bank accounts but also making available a bouquet of financial services transactions, payments, savings, insurance, and ensure easily accessible and affordable credit to the customers. inclusive credit will have to be the bed rock of inclusive financial inclusion. the committee on financial inclusion ( chairman : dr. c. rangarajan, rbi, 2008 ) explicitly included β timely and adequate credit at an affordable cost β for vulnerable groups in the definition of the financial inclusion. the committee on medium - term path to financial
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, seeking to protect customer β s interests and minimising systemic concerns. digital only nbfcs : second, rbi came out with registration guidelines for digital - only nbfcs, as the name suggests, is an nbfc running solely on a digital platform without any brick - and - mortar presence ( except for administrative purpose ). rbi enabled healthy innovation in credit intermediation by permitting the setting up an nbfc over a digital platform in 2018. though not a new category of nbfc, their licensing conditions mandates on them to provide their products only in a digital mode. here too, protection of consumers have been kept paramount and the entities are required to maintain audit trails by putting in place required it infrastructure with adequate safeguards on unauthorised access, alteration and destruction of data, if any. regulatory features such as explicit consent for data sharing, domestic location of servers, maintaining audit trails, information security audit, etc. are progressive and at the same time pre - emptive in nature. digital banking unit : with digital banking emerging as the preferred mode of delivery along with β brick and mortar β banking outlets, the concept of digital banking units was announced in the union budget 2022 - 23 and the guidelines for operationalising these units were issued by rbi earlier this year. scheduled commercial banks have been authorised to set up digital banking units which are intended as specialised fixed point business units housing certain minimum digital infrastructure for delivering digital banking products & services as well as servicing existing financial products digitally, in both self - service and assisted mode. it is expected that such units would enable customers to have costeffective, convenient and enhanced digital experience of such products and services in an efficient, paperless, secured, and connected environment with most services being available in self - service mode at any time. creating market infrastructure for inclusive credit india has made significant strides in creating enabling digital infrastructure in financial services space. upi, gstn, treds, jam trinity and account aggregators ( aa ) to cite a few. this strong ensemble of digital infrastructure has stabilised and as it matures, would pave way for expansion of credit in a seamless and timely manner which could be made digitally available in an almost paperless environment. aa β s capability to aggregate financial data spread across different financial service providers and to leverage this data to build analytics and insights to help consumers in their financial planning would allow financial service providers to offer customized products to their customers. the aa framework also has
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under the liquidity coverage ratio ( lcr ), banks are required to hold sufficient high - quality liquid assets ( hqla ) to be able to cover their net cash outflows in a 30 - day stress scenario. in this scenario, bank bills maturing within the next 30 days are treated as a cash outflow, so the bank issuing them would be required to hold an equivalent amount in hqla. to improve the stability of 1 - month bbsw, the asx has announced a change to the methodology that is expected to result in a significant reduction in the proportion of days when 1 - month bbsw can be directly calculated using transactions. see asx ( 2019 ), β consultation on changes to 1 month bbsw vwap methodology β, available at : < https : / / www. asxonline. com / content / asxonline / public / notices / 2019 / mar / 0160. 19. 03. html >. the rba has highlighted this issue in previous speeches : kent c ( 2018 ), β securitisation and the housing market β, address to the australian securitisation forum conference, 26 november ; debelle g ( 2018 ), β interest rate benchmark reform β, keynote at isda forum, hong kong, 15 may bulletin bulletin Β© reserve bank of australia, 2001 β 2019. all rights reserved. https : / / www. rba. gov. au / speeches / 2019 / sp - ag - 2019 - 03 - 19. html 19 / 19
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local buyers, who are more familiar with rmbs, and offshore buyers, most obviously in europe, who are more familiar with covered issuance. corporate issuers in many respects, the corporate segment has been the quiet achiever of the australian debt market over the past few decades. the stock of bonds on issue from australian entities grew solidly from the mid 1990s until the financial crisis. although the significance of market - based funding as a share of total debt funding for australian corporates has fluctuated somewhat, over the long run, debt market funding has grown in line with the funding needs of the corporate sector ( graph 6 ). as i just noted, the investment - intensive composition of growth over the next few years is likely to see continued strong corporate issuance by australian names, particularly resources companies. for more details see debelle ( 2010 ), β the state of play in the securitisation market β, address to the australian securitisation conference 2010, sydney, 30 november. bis central bankers β speeches graph 6 non - resident issuers β kangaroos and australian dollar eurobonds the fastest growing segment of the australian capital market over much of the past decade, and certainly in recent months, has been australian - dollar issuance by non - residents β the market of most interest to the audience here today. initially, much of this issuance was offshore in the eurobond market, but increasingly issuance has moved to the onshore β kangaroo β market ( graph 7 ). graph 7 in addition to the shift in the location of market activity, an important compositional shift is occurring with new issuance increasingly dominated by aaa - rated names ( graph 8 ). this probably reflects the increased risk aversion of investors in the post - crisis environment. bis central bankers β speeches graph 8 growth in the aaa - segment of the market has been underpinned by rapid growth in issuance among the supranational and sovereign agencies ( ssa ) group. ssa issuance in all currencies has grown rapidly in recent years, as these borrowers have responded to the large fiscal demands stemming from the impact of the global recession on public budgets in a range of jurisdictions. in addition, ssa issuers have displayed a growing tendency to issue in australian dollars over recent years. last year, australian dollar issuance accounted for more than 8 per cent of ssa issuance in all currencies ( graph 9 ). graph 9 this greater tendency to issue
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banks in mauritius have had a longer journey than the other banks and even the central bank, there is still a very long way to go! though barclays is licensed primarily by the bank of mauritius, it is also regulated by the financial services commission for some of its activities. its business is thriving and its contribution to the financial sector is expected to grow further over time. banks should invest to tap the local as well as the regional market further to expand the contribution of the financial sector to gdp, from its current level of around 12 per cent. ladies and gentlemen, the bank of mauritius makes forecasts but it can β t predict the future. yet, the only certainty which can shape our steps is that there is an urgent need for the banking and finance industry to reinvent itself if it wants to stay relevant in an increasingly competitive global environment and with rapid digitalisation of banking business. in this regard, the bank of mauritius wants to give an even greater dimension to our competitiveness and resilience through technology, discipline and innovation. barclays, from what i understand, has been very busy lately in the area of fintech and blockchain. barclays has a tech forum consisting of leading fintech and it professionals. last year, it has filed two patents on secure digital data operations and data validation and storage system with the u. s. patent and trademark office. i therefore invite the management of barclays mauritius to support the bank of mauritius β vision for the banking industry by contributing in terms of expertise and technology. the bank of mauritius has focused on modernising the banking infrastructure. just a few months ago, we launched maucas, our mauritius central automated switch. barclays will be joining the instant payment system next month and the card payment system early next year. maucas is a game changer that will open up new possibilities for banks, businesses and entrepreneurs. the new payments ecosystem will also allow for the participation of banks and non - bank operators. 2 / 3 bis central bankers'speeches i am pleased to share that we are working on several ground - breaking projects that will propel our financial jurisdiction in a new era. i shall be sharing the details in two weeks β time at our annual dinner with major economic stakeholders. do bear with me as i want to keep some surprises in store for that day β¦ ladies and gentlemen, the celebration of the 100 years of presence of barclays in mauritius is an opportunity for me to congratulate barclays for its journey and
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rundheersing bheenick : all change now address by mr rundheersing bheenick, governor of the bank of mauritius, on the occasion of the re - branding of south east asian bank ltd as bramer banking corporation ltd, port louis, 29 august 2008. * * * a very good evening to all of you. i always like to open a new bank β β’ it is good for aspiring staff β’ it encourages others to do better β’ it is good for competition in the high street β’ it is good for customers β’ and it is good for the country there is much goodness in new banks. let β s have more of them. competition is at the heart of good governance. a new bank forces us all to re - examine our credentials, our levels of service, our standards, and our performance in this highly competitive and unforgiving world. i heard recently of a case where someone wanted to open a new account with a large sum of money β one established bank proposed one week to complete the procedures to do so while a new bank, just a couple of yards up the road, did it on the spot within five minutes. such is the nature of the market β continued renewal. an upstart can take on a giant β¦ β¦ β¦.. and win! a new bank is like β the gentle rain from heaven upon the place beneath β β β it brings fresh showers to the thirsting flowers from the seas and the streams β. it is a refreshing breeze. so, i am delighted to be here on the occasion of the refreshing of south east asian bank ltd as bramer banking corporation ltd. it is indeed becoming quite a refreshing season, especially as this event today signals the entry into the domestic banking scene of the british american investment group β a mauritian conglomerate with a well - established presence in other segments of the financial sector, both locally and overseas and, which, based on total assets, ranked 9th in the local business league in 2007. 1 so, on this new breeze, we have insurance, foreign exchange, leasing, and much else. i therefore see this event having more far - reaching consequences going well beyond the domestic financial sector and reflecting the broader economic ambitions of the country. for we need banks, not just in the business of money lending, but at the heart of sustained economic and social development. in this specific case, the brand change brings with it the promise of a fresh focus for its business and the type of customers it will
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year record high of 9. 0 % in september. meanwhile, short - term inflation expectations among the general public have also steadily risen from the mid - 2 % level at the beginning of the year to the mid - to - upper - 4 % level in july. however, it has recently been fluctuating at a somewhat lower level. in contrast to this, long - term inflation expectations remain relatively stable near the inflation target of 2 %. going forward, consumer price inflation will likely remain at around 5 % for some time. however, inflation is expected to slow gradually due to heightened economic downward pressures at home and abroad, and show a further gradual decline next year, resulting 1 / 3 bis - central bankers'speeches in a pattern of a high - pace first half and a low - pace second half. however, concerning the pace of these developments, there are great uncertainties surrounding growth at home and abroad, and oil price movements. a detailed look at factors behind these uncertainties suggests that, first, various upside risks could deter the pace of this slowdown. in the international energy markets, for example, there are significant risk factors, such as a production cut by opec + and stronger sanctions on russia. still, high inflation expectations can affect wage and price setting and heighten the persistence of the current high inflation. furthermore, the size of the increase in electricity bills next year will significantly reflect the burden of rising costs accumulated so far, and is highly likely to be larger than what is reflected in our november forecast. meanwhile, we cannot rule out the possibility of a steeper slowdown in inflation. first, international oil prices have recently fallen to the 70 - dollar range due mainly to concerns about a global economic slowdown, significantly below the assumption made in our november forecast. demand - side downside pressures could also increase further, in line with an accelerated slowdown in the domestic and global economy and a contraction in real estate market activity. meanwhile, the easing of containment measures in china could act as both upward and downward pressures on inflation here, depending on whether it succeeds or not. if successful, a chinese economic recovery would pick up, which could boost international commodity prices. on the other hand, if the situation worsens, any recovery in the chinese economy would be delayed, which could aggravate the downward trend in energy prices. moreover, the possibility has been raised that changes in economic and labor market conditions may transmit differently to prices in comparison to the past. unlike in periods
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moreover, in the course of export - led growth centering around the manufacturing industry, sectoral imbalances have built up - between the manufacturing and the service industries, and between exports and domestic demand - and these are becoming obstacles to sustainable growth. for this reason, skeptical views about the asian economy β s future are also emerging in some corners. given this mix of expectations and concerns for the asian economy β s future, i think we can see the conference here this week as a very timely and meaningful one, in having brought together many great scholars and policy authorities from around the world, to consider the possibility of sustainable economic growth in asia and soberly discuss the future challenges and policy responses. 1 / 3 before discussions begin here today, i would like to say just a few words about some of the challenging tasks now confronting the asian economy. the first task is to change our growth paradigm. going forward we will have to break out of the paradigm of extensive growth based on the expansion of production factor inputs, and move to one of intensive growth driven by innovation. productivity in major asian countries has already clearly slowed since the global financial crisis. and in response, we need to design a scheme of social and economic incentives to modernize the old systems and practices now blocking higher productivity growth, and to stimulate innovation. it will also be very important to promote fair competition and revitalize r & d investment, through the restraint of rent seeking and the easing of regulations, and to discover thereby new technologies and new engines of growth. the second task is to push ahead with economic rebalancing. we need to move from export - led growth to growth characterized by a balance between exports and domestic demand. to boost domestic demand, we need to build a virtuous cycle between growth, employment, and domestic demand by actively nurturing smes and service businesses that contribute greatly to job creation. macroeconomic policy can also be utilized to support the domestic demand expansion. but we should bear in mind that, if expansionary fiscal and monetary policy stances become even a bit prolonged or excessive, this can undermine fiscal soundness and cause a buildup of financial imbalances. it will thus be necessary, while focusing on sustainability from the medium - to longterm perspective, to implement our monetary, fiscal and macroprudential policies harmoniously, along with our micro - structural reform policies. the third challenging task facing the asian economy is our response to population aging. even if we succeed in shifting the
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ewart s williams : the importance of adequate capitalisation in the insurance industry remarks by mr ewart s williams, governor of the central bank of trinidad and tobago, at the signing agreement between guardian holdings limited and international finance corporation, port - of - spain, 1 december 2010. * * * i wish to congratulate guardian holdings limited on the consummation of this very significant relationship with the ifc. this new partnership should not only strengthen ghl β s balance sheet, but should redound to the benefit of the public by increasing the availability of insurance products to markets that are not currently well - served and in this list, i include, small businesses, micro - finance institutions and agribusinesses. over the past several months the insurance industry has been overrun by a chorus of bad news involving institutions in which the central bank has intervened. unfortunately, even with its potential for contagion, the current turmoil obscures an insurance industry with tremendous strengths and resilience. the subsidiaries of the guardian holdings group are an integral part of this structurally strong and resilient insurance sector. since its establishment in june 1996, the guardian holdings group has blossomed into an integrated financial services entity, covering life, health, property and casualty insurance, pensions and asset management. ghl has spread its wings throughout the english and dutch caribbean and is now listed on both the trinidad and tobago and jamaican stock exchanges. guardian life, the flagship company of the group is a major player in the life insurance sector accounting for 38 per cent of the market β s contract liabilities. guardian general has become the region β s largest indigenous property and casualty insurance company. as the largest general insurance company in trinidad and tobago, guardian general holds 26 per cent of market share and 21 per cent of total assets of the sector. among the many best - practices adopted by ghl is the annual review by a. m. best to assess the financial strength of its insurance subsidiaries and to ensure that the companies are in a position to meet their obligations to policyholders. in june 2010, a. m. best gave a rating of a β ( excellent ) for the financial strength of both guardian life and guardian general. according to best, the excellent rating reflected ghl β s improved balance sheet, the decline in total debt and lower intangibles following the write - off of goodwill related to its european property and casualty operations, and its adequate level of risk adjusted capitalization. in the case of ggil,
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jwala rambarran : from diagnosis to action β advancing the caribbean reform agenda statement by mr jwala rambarran, governor of the central bank of trinidad and tobago, at the 2013 caribbean breakfast with the imf managing director, ms christine lagarde, port of spain, 13 october 2013. * * * salutations : the honorable denzil douglas, prime minister of st. kitts & nevis the honorable keith mitchell, prime minister of grenada madame christine lagarde, managing director, imf on behalf of the caribbean group of countries at the imf, trinidad and tobago is deeply privileged and honored to have the opportunity to deliver the opening remarks at the 2013 breakfast meeting with the imf managing director. madame lagarde, we thank you for taking the time to continue the dialogue on matters of interest to caribbean nations β a small but very important segment of the fund β s membership. i assure you that we highly value this forum. it is indeed a unique opportunity for the caribbean to have open, frank and sincere dialogue with the leadership of the fund. heightened engagement we are encouraged by the increasing level of engagement taking place between the fund and caribbean small states, especially over the past year. the fund has organized two high - level caribbean forums β the first in trinidad and tobago in september 2012 and the second, more recently, last month in the bahamas. a seminal paper entitled β caribbean small states : challenges of high debt and low growth β were among the papers on small states prepared by imf staff and presented to the executive board in march of this year. these were useful starting points for analysis, research and discussion on the challenges facing small states, particularly those in the caribbean. we stress the importance of not losing traction on these issues by following through with the directives of the board. we look forward to the promised consultation with caribbean authorities on the small states paper and to the presentation of the guidance note on conducting surveillance in small states, which is scheduled for december 2013. technical assistance we continue to be well - served by high - quality technical assistance, mainly through cartac, in the areas of macroeconomic analysis, debt management and public financial management. in particular, we appreciate the fund β s willingness and flexibility to conduct the study on regional financial interconnectedness, which is almost similar to conducting a caribbeanwide financial sector assessment program ( fsap ). the policy recommendations from such a study would be very useful to strengthening financial stability across the region and enhancing
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luis de guindos : the inflation outlook and monetary policy in the euro area keynote speech by mr luis de guindos, vice - president of the european central bank, at the first annual conference, organised by the central bank of cyprus, limassol, 4 october 2023. * * * introduction i will start by giving you an overview of the economic outlook for the euro area before going on to look at how the ecb has adjusted its monetary policy to this outlook. i will then discuss in more detail the transmission of our monetary policy in the current environment and the sources of uncertainty that appear particularly relevant at this stage. the outlook for inflation and growth in the euro area economic activity broadly stagnated over the first half of the year and is likely to remain subdued in the coming months. weaker foreign demand and tight financing conditions are dampening growth, especially in the manufacturing sector. the services sector, which had been resilient so far, is now starting to " catch down " to manufacturing. the labour market remains resilient despite the slowdown in activity, with the unemployment rate standing at its historical low of 6. 4 per cent in august. however, there are signs that labour market momentum is slowing as the economy weakens. the employment purchasing managers'index declined significantly between the second and the third quarters of 2023, despite a slight uptick in september. the services sector, which has been a major driver of employment growth since mid - 2022, is now also creating fewer jobs. in september ecb staff revised down projected gdp growth, particularly for this year and next, due to a greater contractionary effect from tightening financing conditions and the weakening international trade environment. beyond the near term, ecb staff expect growth to recover owing to higher real disposable income thanks to rising wages and falling inflation, which is set to underpin spending. ecb staff now expect the euro area economy to expand by 0. 7 % in 2023, 1. 0 % in 2024 and 1. 5 % in 2025. inflation fell markedly from its double - digit peak last october, with the headline rate having declined to 4. 3 % in september ( flash estimate ). in the coming months, the sharp increases recorded in the autumn of 2022 will drop out of the yearly rates, lending further support to a deceleration in inflation. at the same time, underlying price pressures remain strong, although most measures of inflation have started to ease thanks to
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policy rates. what happened? the incoming macroeconomic data remained in line with our baseline scenario and confirmed that risks to price stability are mainly on the upside over the medium term, as identified by both our economic and monetary analysis. however, the continued financial market volatility and ongoing reappraisal of risk has undoubtedly led to an increase in uncertainty surrounding the economic outlook, due to the possible effects of these financial developments on the real economy. therefore, it was appropriate to gather additional information before drawing further conclusions for monetary policy. this ( very attentive ) " wait and see " attitude did not jeopardise the maintenance of price stability over the medium term. indeed, a market - driven tightening of monetary conditions could be observed, as money market rates have risen, lending standards have somewhat tightened and the euro exchange rate has again appreciated. by the way, let me remind you that the eurosystem has no target for the euro exchange rate, as the primary objective concerns internal stability. however, the exchange rate is an important indicator in the economic analysis, in particular to the extent that it influences the overall outlook for price stability. at its last meeting on 4 october, the ecb governing council still considered this outlook for price stability over the medium term to be subject to upside risks. it gave itself a period of time to analyse incoming information in order to refine and update its risk assessment. in particular, should financial market tensions persist or intensify, they would affect financing conditions more significantly and eventually economic activity too. these downside risks are, i think, relevant both for the growth and the inflation outlook, as they have the potential to alleviate some of the expected upward pressure on prices of a cyclical nature embedded in the baseline scenario. conversely, should the financial turbulence fade away and the main scenario be confirmed, our monetary policy should be and would be ready to counter possible upside risks to price stability. uncertainty having increased, times have once again become more challenging for central bankers. more than ever they require from us to make appropriate, overall and forwardlooking judgments.
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s understanding of financial services through financial education and literacy. we have made progress in some areas but a lot of work still needs to be done. some of our recent achievements include : β’ new cbsi act : a new cbsi act was passed by parliament in november last year and one of the new provisions in the law is to specifically include financial inclusion as a mandate of the bank. this now formalises the bank β s involvement in financial inclusion activities. β’ review of legal framework : and to ensure that our other laws also support these efforts, we have, with adb support, completed a review of other laws and policies last year to ensure any legal impediments to financial services innovation are identified and addressed. β’ simplified kyc requirements : one of the barriers is the stringent bank requirements for opening bank accounts. so in collaboration with the anti money laundering commission, we have issued to the commercial banks simple requirements for identifying customers when opening bank accounts. this will make it easier for more rural people to open accounts with the banks. β’ financial education : in partnership with the ministry of education, we have set up a working committee to integrate financial education into the national school curriculum, targeting class one up to form three. the revision of the curriculum has bis central bankers β speeches been done but further work is required to prepare course materials and train teachers. β’ adult financial literacy : this is a very important area for us, given the low literacy level in the country especially among rural adults. the central bank is actively engaged in financial literacy through its money smart day programs, its weekly money matters radio program, and also through financial literacy workshops for communities and women groups. these achievements have been possible because of close collaboration and partnership with key stakeholders. working together with other stakeholders is critical if we are to achieve the goals and objectives we have set ourselves in terms of financial inclusion. i am sure this is also true for your respective countries. but i think our biggest weakness is trying to measure what we have done. how are we performing against our set targets? this is where data and indicators become very important. we need relevant data to measure progress and review our performance. and i am delighted to note that the whole of tomorrow is devoted to this very important issue. concluding remarks i would like to conclude by reiterating the importance of continuing to work together to address our common challenges as we strive to enable more of our people benefit from financial services. at the same time i would like to register our appreciation to
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both of our key partners, the pacific financial inclusion program ( pfip ) and alliance for financial inclusion ( afi ) for the tremendous support to piwg. this support has enabled the group to progress their financial inclusion agendas and hopefully to make an impact in our countries and also on the international stage. finally, i would like to wish you all a lively, interesting and productive meeting. thank you for your kind attention. bis central bankers β speeches
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, other specifically, the loan is collateralized by all of the assets of the company and its primary non - regulated subsidiaries. these assets include the equity of substantially all of aig's regulated subsidiaries. federal regulators, and other stakeholders in developing a stronger, more resilient, and better regulated financial system.
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available β which point to a budget deficit approaching 10 % of gdp in 2010 and to a public debt ratio that might exceed the threshold of 60 % of gdp β augur a drastic change in outlook, with the possibilities of fiscal policy boosting spending having been exhausted. fiscal measures that call into question the commitment to budgetary stability in the medium term should be categorically avoided, since that would adversely affect the cost of raising funds and confidence in the spanish economy, and it could also generate expectations of future tax rises that might ultimately sterilise the expansionary effects of the measures adopted. public - sector debt must be prevented from becoming an obstacle once the spanish economy is better placed to grow. accordingly, priority must be given to promptly defining a credible strategy to reduce the deficit to levels compatible with budgetary stability, once the exceptional circumstances that led to the rise in the deficit have disappeared. the demand - side expansionary fiscal and monetary impulses are proving very powerful and are contributing to the alleviation of the contractionary forces at play. evidently, though, the possibilities of further using these types of policies have become notably constrained, both at home and abroad. it should also be borne in mind that, once the economic and financial fragility beleaguering the world economy has been resolved, demand - side policies should adopt a more neutral stance. all these considerations on the diagnosis of the spanish economy in the current international crisis and on the limited leeway available to demand - side policies mean, rather, that economic policy has a central role to play in implementing the reforms that help improve productivity and the behaviour of the factor and product markets. it is in this area that the authorities undoubtedly have effective room for manoeuvre, and also considerable responsibility. let me begin with the labour market, which is where the most pressing problems are to be found. the scale of job destruction has once more highlighted the existence of distortions that emerge with force in recessions and compound contractionary trends. and there is a risk that, as in the past, the surge and change in level in unemployment may stick and that this will delay subsequent recovery. labour market dysfunctions are also closely linked to the discouraging behaviour of the economy in respect of gains in economic efficiency and in productivity, hampering the possibility of attaining genuine improvements in competitiveness and of raising growth potential. economic recovery in spain requires structural changes that will encourage technologically dynamic productive sectors with high growth potential to take up the
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risks and how to keep them in check, we need a macroprudential framework in which various instruments can be combined to optimal effect. what is the best way of achieving this? firstly, it is essential to recognise that ensuring financial stability as a whole is generally dependent on the decisions made by a range of different bodies. these need to act together in order to ensure financial stability. to create the necessary basis for a functioning macroprudential framework, the exact institutional set - up of the regulatory authorities is of the utmost importance. first and foremost, objectives, mandates and responsibilities need to be clearly defined. in switzerland, for instance, finma β the financial market supervisory authority β is responsible for the regulation and supervision of individual banks. the snb, on the other hand, is required to contribute to financial stability. with regard to switzerland β s two big banks, there is a clear overlap between institutional and systemic risks. in this context, an exact definition of the responsibilities of the snb and finma is of central importance for optimal macroprudential supervision and regulation. the revised memorandum of understanding between the snb and finma is an important step in this direction. secondly, to ensure that the institutions involved can optimally carry out the roles assigned to them, it is also important to give them the right tools. in concrete terms, this means that the snb would, for example, need to have more extensive information about the stability of financial institutions β regarding their risk exposure, interdependences, etc. β or it would require specific instruments enabling it to take the right decisions when implementing macroprudential policy. thirdly, the crisis made it clear that closer international cooperation between regulatory authorities is vital. functioning international coordination mechanisms are required to counter future crises earlier and more effectively. international cooperation is the only way to check undesirable developments on the globalised financial markets. conclusion ladies and gentlemen, the stable economic growth and low inflation of the last two decades could not prevent the emergence of vast imbalances in the global financial system, as the financial and economic crisis clearly showed. such massive economic shocks are bound to have an impact on how central banks work. nevertheless, ensuring price stability remains our top priority. the crisis made it evident that central banks have an effective set of instruments that can be used to mitigate the negative impact of financial crises. the unconventional measures used in this regard also proved to be effective. yet despite these measures, the cost of
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and efficiently. bank negara malaysia was appointed as the single regulatory and supervisory body for dfis under the act. in carrying out the regulatory and supervisory function, the central bank's focus is primarily to promote the development of sound and robust dfis capable of performing their mandated roles effectively. seven dfis are currently placed under the purview of the act. recognising the unique characteristics of each dfi, regulations and policies have largely been tailored - made to suit the different roles and functions of each dfi with the view of facilitating and strengthening their operations. in general, the dfis are required to ensure that their operations and activities are in line with their mandated roles, underpinned by good corporate governance and best practices. they are required t o operate with transparency, especially with regard to information disclosure on their corporate performance, in order to enhance credibility and to harness greater confidence from the public that they serve as well as from the government. strategies formulated have also been focussed on enhancing the clarity in the roles and functions of the dfis, with a view of minimising the overlapping of functions and increasing dfis'effectiveness in serving the targeted sectors. this has led to a number of initiatives to realign and enhance the strategic focus through the restructuring of selected dfis. one is the merger of the exim bank and mecib to enhance their synergy in export promotion. the 4 / 5 other important initiative is the rationalisation of bank pembangunan and bank industri, which will result in the establishment of an sme bank. the sme bank, a specialised agency dedicated to the promotion of sme development, will commence operations in october 2005 and is envisaged to better serve the needs of smes through the provision of a comprehensive range of financial and non - financial services. in particular, the sme bank will focus on nurturing the smes and promoting entrepreneural development, through the provision of financial and business advisory services, including financial management, business diagnosis and marketing support. recognising the importance of human resource development as part of the capacity and capability enhancement strategy, several initiatives have also been undertaken to enhance the skills of dfis, particulary in the provision of advisory services and micro financing. in collaboration with the japan international cooperation agency, bank negara malaysia is currently embarking on a project to enhance the capabilities of dfis in providing advisory services to the smes.
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masaaki shirakawa : provision of subordinated loans excerpt from an address by mr masaaki shirakawa, governor of the bank of japan, at a meeting with banks β top management, tokyo, 24 march 2009. * * * at the policy board meeting held on march 17, the bank of japan decided to explore a new framework for providing subordinated loans to banks. we have invited today representatives of banks which are subject to international capital standards to explain the background and the bank of japan β s view on the decision. the funding conditions for firms have deteriorated rapidly since last autumn due to the increased strains in global financial markets after the collapse of lehman brothers. while financial institutions have retained the financial intermediation function accordingly by increasing lending, the environment surrounding financial institutions has become increasingly severe due to the stock price plunge and the domestic economic downturn. fund raising in financial markets for funds over the fiscal year - end has mostly been completed, but the firms continue to face difficult funding conditions. while the cp market has started to restore its function, funding in the capital market has been limited to the firms with high ratings. looking ahead, while demand for funds to secure liquidity for the year - end and the fiscal year - end and demand for working capital due to the rise in raw material prices until last summer will decline, demand for funds to continue and to restructure business are expected to gain momentum. there might be a case in which the financial intermediation function will not be carried out smoothly from a macro perspective, if the strains in global financial markets increase and financial institutions become more conscious of possible capital constraints in the future. if financial institutions become more conscious of taking credit risk and all financial institutions take the same action simultaneously, the adverse feedback loop between the finance and the economy may intensify through financial institutions β restraining from accumulating their assets, leading to the fallacy of composition, although the action is judged as rational for each individual institution. as a result, that might weaken the capital strength of each financial institution. from that point of view, concern is for the influence of a possible decline in stock prices. while the amount of stocks currently held by financial institutions is significantly reduced compared with the early 2000s, it remains unchanged that they hold substantial market risk associated with stockholdings. although stock prices have recently somewhat rebounded, the financial systems in the u. s. and europe have remained unstable. it should be avoided that each financial institution's consciousness
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policy is rarely constrained by the zero lower bound and thereby minimizes the adverse consequences for macroeconomic stability. why comfort zones? these considerations provide the foundations for a broad consensus among academic economists and monetary policymakers around the world that the optimal inflation rate is in the range of about 1 to 3 percent ; that is, an average inflation rate outside this range would be detrimental to longer - run health of the economy. in light of that consensus, it might seem natural to specify price stability in terms of a range of acceptable outcomes for inflation. indeed, several present and past fomc participants have used the term " comfort zone " and specified a 1 to 2 percent range, thereby providing valuable information regarding their views about what levels of inflation are consistent with the federal reserve's dual mandate. 12 the analytical case for a point objective nevertheless, while a " comfort zone " approach may seem appealing, analytical considerations reveal some disadvantages of that approach as well as some significant benefits of specifying and maintaining a point objective for inflation. the pitfalls of comfort zones in particular, i would like to highlight three specific pitfalls associated with the " comfort zone " approach. confusion about objectives. first, when the price stability objective is formulated in terms of an acceptable range of inflation outcomes, the policy implications may be difficult to interpret. for example, if the comfort zone spans a range from 1 to 2 percent, does that mean that policymakers are equally comfortable with inflation rates of 1. 1 percent and 1. 9 percent? furthermore, confusion about inflation objectives might make it harder for a committee of policymakers to decide on the appropriate course of monetary policy. when one member advocates a more accommodative policy stance than other members, it may not be clear whether that reflects a more negative outlook for the economy or a greater willingness to allow inflation to settle in or near the top of the comfort zone. thus, the comfort zone approach might lead to greater confusion in policy deliberations and hence produce a less effective decisionmaking process. perverse expectations dynamics. second, framing price stability in terms of a comfort zone could lead to perverse expectations dynamics and thereby generate larger fluctuations in economic activity, especially if policymakers maintain a neutral stance regardless of where the inflation rate falls within the comfort zone. the term " comfort zone " appeared in the headline of a september 2002 new york times interview with former federal reserve governor laurence meyer ( stevenson, 2002 ) and has subsequently been used by federal reserve officials on numerous occasions,
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capital, the pra may consider whether this indicates failings in the governance process by which the insurer sets its risk appetite. that supervisory statement also set out some of the factors we expect boards to take into account in setting a risk appetite for capital, including : the quality of capital resources ; the results of stress and scenario testing ; levels of uncertainty in forecast earnings ; inherent uncertainty in the technical provisions ; credit ratings and market reputation ; any non - linearities and discontinuities that may arise due to combinations of adverse events ; recovery options available ; and the potential impact of firm failure on policyholders. central to setting capital risk appetite is the sensitivity of the balance sheet to changes in key risk drivers, including changes in market and underwriting conditions, and the emergence of large claims. since the introduction of solvency ii, the pra has been collecting data from large uk life insurers on the sensitivity of their capital positions to movements in key uk market variables, including interest rates, credit spreads, credit rating downgrades and property prices. across firms at year - ends 2016 and 2017. chart 4 below shows the averages of these sensitivities individual insurers β positions fall in a range around these averages. the most material sensitivity is to changes in interest rates. a large fall in interest rates would lead to a reduction in capital surplus over the scr. other significant market movements leading capital positions to deteriorate include a fall uk property prices, downgrades in credit ratings of corporate bonds, a fall in uk equity markets and widening in the spread between sterling interest rate swap and gilt yields. but life insurers β capital positions are not especially exposed to a widening of credit spreads, partly because of the insulating effect of the solvency ii matching adjustment. the interest rate sensitivity is primarily due to the risk margin. risk margins for annuity writers increase by 40 % - 50 % for a 100bps fall in interest rates, which the pra believes to be excessive. insurers do not https : / / www. bankofengland. co. uk / prudential - regulation / publication / 2018 / financial - management - and - planning - by - insurers - ss https : / / www. bankofengland. co. uk / prudential - regulation / publication / 2017 / solvency - 2 - data - collection - of - market - risk - sensitivities - ss the aggregate solvency ratio
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area : it is not enough to read about issues, we need to be learning about them first hand from key players and analysing our findings from a financial stability perspective. the fsa also shares responsibilities in this area. they too will be asked for advice by hmt. their starting point is the assessment of the strengths and weaknesses in the individual institutions and markets they supervise, and the potential consequences of problems or failures at individual institutions. an important factor for the bank relates to london β s position as a major financial centre. although our specific focus and interest is the systemic conjuncture as it affects the uk, possibilities of contagion in an increasingly global market mean that we have to be alert equally to developments in global capital and financial markets. and it means we have to understand the dynamics and interrelationships of markets ; how new products work ; and the possible behaviour patterns of intermediaries, investors, and borrowers. above all we need to be focused on where major risks are most likely to emerge and the market dynamics if those risks start to crystallise. and we need to distinguish those which are systemic from a myriad of fascinating developments, many of which are just β noise β but which could otherwise distract us. b ) risk reduction : oversight of payment systems the second area where we, and typically other central banks, are required to perform is oversight of payment systems. payment systems facilitate economic transactions of goods, services and financial assets and are an essential component of a well functioning financial system. so reduction of risks in these systems, for example through the introduction of our real time gross settlement system, is clearly a priority from a systemic perspective. c ) provision of liquidity and preparation for a financial crisis and thirdly the mou stipulates that we need to be in a position to inject liquidity at all times. this means that we must be able to provide liquidity in normal times, as well as in times of stress or crisis. this puts an increased onus on well developed and tested crisis management plans, and a particular focus on ensuring that we are able to undertake a range of official financial operations in exceptional circumstances. 4. financial stability : parallel processes recognition of these three β must do β areas is a starting point in deciding the scope of our financial stability work and in enabling us to fulfil our mou mandate. but it does not provide a clear steer on what we actually have to do to carry out our functions efficiently and effectively.
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geographically widespread, but particularly devastating in some communities right here in new york city, including breezy point, the rockaways, and portions of staten island, and in so many cities and towns along the long island, new jersey and connecticut waterfronts, such as long beach, seaside heights, spring lake and hoboken. estimates of the costs of disruption to economic activity β that is, services that couldn β t be rendered and goods that couldn β t be produced because of protracted transit shutdowns, power outages and other such damage produced by the storm β are particularly difficult to pin down. thus, it will be some time before concrete figures are available. however, the early read from recently - released data confirm these disruptions have been widespread. every one of the new york city area firms that responded to our recent empire state manufacturing survey β fielded one to two weeks after the storm β indicated that the storm disrupted activity at their firm, and 40 percent of them indicated that they were completely shut down or severely crippled for at least five days. furthermore, the number of workers filing initial claims for unemployment insurance in both new york and new jersey surged to more than triple their pre - storm levels in the week after sandy hit, suggesting at least 70, 000 storm - related job losses in these two states thus far. these data suggest that the disruptions that we have seen, and continue to see, could be substantial. we can quantify the losses in terms of days of lost output. given the regional gdp of $ 1. 4 trillion, a rough calculation yields a loss of $ 3. 8 billion for each full - day equivalent of lost output in the region. bis central bankers β speeches a considerable part of this lost activity will be offset over time or be replaced by a temporary shift of activity from hard - hit areas to less - affected places. but, in a services - based economy, much activity cannot be shifted in time : restaurants, for instance, can β t serve six meals a day to make up for lost business. the fact that many people who would have dined in lower manhattan in the weeks following sandy are instead patronizing restaurants near their homes or near temporary work sites represents an offset for the regional economy as a whole. but that β s little consolation for the original restaurant, which may in turn need to lay off some of its people or could even possibly go out of business. and, of course, this applies even more dramatically to businesses in hard -
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pongpen ruengvirayudh : the current economic situation and recent monetary policy developments opening remarks by ms pongpen ruengvirayudh, deputy governor for monetary stability of the bank of thailand, at the joint foreign chamber of commerce in thailand ( jfcct ), bangkok, 21 may 2014. * * * distinguished guests, ladies and gentlemen, 1. it is my pleasure to be back here at the joint foreign chambers of commerce ( jfcct ). first of all, i would like to thank jfcct for inviting me and would also like to thank all the members of jfcct for your continuing contribution to the economic development here in thailand. economic outlook 2. a great deal has changed both domestically and externally since i was here last year. with respect to domestic economy, the prolonged political stalemate has weighed considerably on confidence, exacerbating the already fragile economy. externally, the announcement of the us fed to scale down its quantitative easing program since may 2013 has led to turmoil in financial markets across emerging economies. today, i therefore would like to take this opportunity to share briefly with you my thoughts on the country β s economic outlook, the medium - term challenges we face and monetary policy of the bank of thailand. 3. when it comes to current economic assessment, the slowdown of the thai economy over the last year, in combination with uncertainty over the ongoing political conflict, is a growing concern for many. the nesdb two days ago announced that gdp growth in 1q14 contracted by 0. 6 % ( yoy ), compared to same period last year. signs of moderation were witnessed in various economic activities, such as consumption and investment, as well as in government spending, despite signs of a rise in some exports. as the political deadlock lingers, tourism has begun to feel the impact. in the last mpc meeting of april 23rd, the committee projected that the thai economy in will grow less in 2014 than the previously assessed at 2. 7 percent. this will be mainly due to the weaker - than - expected economic momentum in the first quarter of the year and the political impasse posing downside risks to domestic demand and tourism. however, the economy is expected to resume its normal growth in 2015. 4. notwithstanding the short - term headwinds, there are also causes for optimism. global economic activity has been firming up. growth has gathered momentum in the us, the euro area and japan. recent government β s
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, portfolio flows averaged 1. 27 % of gdp, of which general government comprised 0. 197 percentage points ( pp ), public corporations 0. 004pp and all other flows 1. 066pp. from 2010q1 to 2019q4, total portfolio flows averaged 2. 9 % of gdp, comprising 2. 02pp for government, 0. 22pp for public corporations and 0. 65pp for all other flows. but when you know the money is coming anyway, it becomes much harder to insist on policy rigour. second, these flows permitted the build - up of a large sovereign debt position. debt, famously, is a troublesome form of financing because the lender shares relatively little risk with the borrower β unlike, say equity investments, where unsuccessful projects directly affect share prices and dividends. 20 sovereign debt is particularly problematic, because declining government creditworthiness also spills over to the credit profiles of firms and households. with time, it leads to higher taxes and lower public sector investment to accommodate higher interest payments. an unsustainable fiscal position can therefore become a drag on the whole economy. third, capital flows eroded potential growth. we often talk about the importance of institutions to growth, but debt can be used to weaken institutions by funding systems of patronage and corruption, driving out skilled and diligent public servants. many private sector firms will also follow the money, redirecting their efforts from productive enterprise. through these two channels, capital flows helped subvert the market incentives and competent bureaucracies that power modern economies. our macro framework delivered resilience through a floating exchange rate, low foreign currency debt exposures, and careful regulation of the financial sector. but resilience is not enough ; if you are going to absorb capital flows, you also need to get allocation right. huge non - resident flows into public sector debt can actually make this more difficult. today, we face the consequences. with too much borrowing, not much domestic saving and limited non - resident appetite for our assets, interest rates must rise to restore balance. the alternative is an inflationary balance of payments problem, which is plainly against the south african reserve bank β s mandate. this does not make the reserve bank popular, but facts are facts. we have gotten ourselves back in the trap we escaped in the mid - 1990s. for a discussion, see adair turner, between debt and the devil, princeton, nj : princeton university press, 2016. reflecting on this whole
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sturzenegger, β does it matter how central banks accumulate reserves? evidence from sovereign spreads β, nber working paper no. 28973, june 2021. available at : https : / / www. nber. org / papers / w28973 agustin samano β international reserves and central bank independence β, policy research working paper no. 9832, 2021. available at : https : / / openknowledge. worldbank. org / handle / 10986 / 36483 olivier jeanne and damiano sandri, β global financial cycle and liquidity management β, bis working papers no. 1069, january 2023. available at : https : / / www. bis. org / publ / work1069. pdf in addition to these tools, we should consider our macro policy narratives. for a start, we need to rediscover the dangers of government borrowing. responsible policymakers never forget that fiscal debt is risky. but the nature of policy discussions is that while many claims are valid, some points get more emphasis than others. in the past decade, one such point was that fiscal consolidation hurts growth and is therefore self - defeating. another was that higher government debt levels were safer than previously thought. i have personally observed these claims justify sustained fiscal slippage in south africa. if we had felt the urgency of debt sustainability more keenly, we would have had a wiser conversation. we need a more responsible set of narratives around fiscal risks. 35 we also need to think more clearly about allocative efficiency. one of the strongest lessons i have learnt as a policymaker is that poor countries are poor not simply because they do not have money, but because they do not use money effectively. too often, there is a tendency to look at a problem, cost out a solution and focus on raising the cash. implementation is just a black box. but good policymaking starts with implementation and the financing need should reflect what can be used efficiently. indeed, one might cast the volatile and often damaging history of capital flows as a conflict between budget constraints and capacity constraints. capital flows provide spending power and can radically shift the budget envelope, but implementation capacity is stickier, and budgets can easily overshoot capacity. this point is relevant, once again, in the global dialogue about climate change justice and the financing that should be directed from rich countries to poor ones. there is a strong focus on costing the climate change impact for poor countries and
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also to non - price factors like their intra - month cash flow cycles. not surprisingly, participation by banks and primary dealers tends to be more limited, because banks have access to higher - yielding ioer and primary dealers are typically net cash borrowers in the repo market. however, primary dealer take - up does increase when repo rates, particularly in the inter - dealer market, fall below the on rrp rate. take - up data by counterparty type, updated with a quarterly lag, are available under β historical data β at http : / / www. newyorkfed. org / markets / omo / dmm / temp. cfm. bis central bankers β speeches quarter - end operation. indeed, requested bids in the september 30 operation exceeded the cap by about $ 100 billion, some bids were only partially filled, and on rrps were awarded at a stop - out rate of zero percent. in december 2014 and march 2015, the early provision of additional investment capacity through term rrp operations spanning the quarter - end dates, on top of the $ 300 billion of capacity provided through on rrps, provided confidence to money market counterparties that sufficient investment opportunities would be available. 19 absorbing some investment demand in term operations ahead of those quarter ends likely kept demand for on rrps on the quarter - end dates below the cap and helped to keep money market rates above the on rrp offering rate. given an apparent high degree of substitutability between overnight and term rrps, cumulative take - up in these operations helps us to assess variability in potential demand for safe investments around peak times and to evaluate how much capacity the federal reserve might need to provide in an on rrp facility to satisfy demand sufficiently to maintain interest rate control ( figure 6 ). 20 while our testing suggests that the current parameters of on rrp operations have worked successfully with ioer to control short - term interest rates, there are limits to what we can learn from testing. importantly, we will likely not know the level of support that proximity to the zero lower bound has provided to money market rates until we start to move away from it. demand for on rrps following liftoff could remain relatively steady. but it could conceivably be much greater than what we have seen at higher levels of interest rates or as regulatory and structural changes in money markets boost demand for safe assets, which i will discuss momentarily. additionally, having some excess capacity, also known as headroom, in
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the motivation for many fed funds trades. 21 with an abundant supply of reserves available, banks β need to borrow funds to meet their reserve requirements or to clear financial transactions has been dramatically reduced. meanwhile, entities that have surplus cash but are not able to earn ioer, such as federal home loan banks, lend funds at sub - ioer levels to banks that borrow them for the purposes of depositing them at the fed to earn ioer. as a result, the size of the fed funds market has declined relative to pre - crisis levels and the nature of most fed funds activity has changed. nevertheless, trading volumes remain reasonably robust. since july 2014, the average overnight borrowing in the fed funds market that banks report to the fed through our fr 2420 reporting form has been roughly $ 50 billion, with an average of about 300 transactions per day ( figure 7 ). 22 moreover, longerterm correlations between fed funds and other money market rates remain robust, with the fed funds rate remaining a suitable measure of banks β marginal borrowing costs. a variety of regulatory changes and other developments have also influenced motivations for participating in fed funds and other money markets. liquidity and capital rules affect the management of bank balance sheets and the costs of many money market transactions, affecting banks β incentives to engage in short - term borrowing, arbitrage between different money market rates, and provide customers access to their balance sheets. notably, regulatory changes affect different institutions in different ways. for example, changes to the calculation of fdic deposit insurance assessment fees affect primarily domestic banks. the implementation of basel iii banking standards also varies by jurisdiction, so the rules for foreign bank branches operating in the united states are somewhat different than those for domestic institutions. 23 the effects of regulatory requirements on money market dynamics can be seen especially around key financial reporting dates. as many market commentators have noted, some borrowers actively manage their balance sheets on quarter - end dates. the perceived costs associated with new regulatory requirements on capital and liquidity ratios may further incentivize such behavior, particularly by foreign institutions. borrowers β responses appear to contribute to the period - end dynamics i described earlier, including declines in money market volumes, increased volatility in money market rates, and elevated participation in the rrp operations as cash investors face temporarily reduced investment options from private counterparties. importantly, the increase in rrp take - up can be understood as a consequence, rather than a cause, of private market balance sheet reductions on quarterend
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economic transactions by protecting property rights, enforcing contracts, and organizing the physical and regulatory infrastructure to facilitate economic activity. good governance provides a very important set of pillars, which are critical in the design of an economy. the most widely cited ones are transparency, accountability, rule of law and participation. let me go over these four principles rather quickly. transparency ensures that the necessary information is freely available and directly accessible to those who will be affected by decisions and their enforcement. accountability is a mirror image of the authority. it is critical for decision makers to be responsible for the consequences of their decisions and actions to those who will be affected. in democracies, every independent institution or organization is accountable to the public and to its institutional stakeholders. participation is the cornerstone of democracies, where every person in the system, in one way or the other, has a voice in the decision - making process. and last but not least, good governance requires a fair legal framework and impartial enforcement of this legal system that protects property and individual rights and constitutes a strong base for prudent policy - making. the rules need to be preset, predictable and applied equally regardless of whether the parties in dispute are domestic or foreign, individuals or state. enforcement of rules in speedy and impartial manner would create a self - fulfilling environment, where adhering to contracts voluntarily becomes the norm and there is little need to formally recourse to the legal system. how can we match governance practices with the current financial turbulence? it is too early to make a judgment about the institutional failures that have led to current financial turbulence, but we have a few clues on what went wrong. lack of transparency and accountability is at the top of the list. in retrospect there were some important gaps in the u. s. regulatory structure that caused poor underwriting and some fraudulent practices in the sub - prime mortgage sector. parties in the originate to - distribute chain did not have incentives to generate and provide information on the quality of assets. we can add poor investor duediligence practices and poor performance of credit rating agencies to that list. public disclosures required of financial institutions were not enough to shed light to the risks associated with their on - and off - balance sheet exposures. public authorities were way behind in assessing and regulating the complex financial instruments created by financial engineers. of course, accommodating global monetary and financial conditions also contributed to highrisk appetites, high leverage and search for high yields.
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durmus yilmaz : in search of an appropriate policy mix for emerging economies β monetary policy in turkey in the aftermath of the global financial crisis speech by mr durmus yilmaz, governor of the central bank of the republic of turkey, at the euromoney central and eastern european forum, vienna, 18 january 2010. * * * dear guests, during the global financial crisis, almost all countries focused on containing potential adverse effects of the crisis on domestic economy ; turkey was not an exception. following the intensification of the crisis, the central bank of turkey ( cbt ) delivered sizeable and frontloaded cuts in policy rates, reaching 1025 basis points from november 2008 to november 2009. during this period the cbt not only cut policy rates rapidly, but also pursued a counter - cyclical liquidity policy to support the functioning of money and credit markets, thereby strengthen the impact of the rate reductions on economic activity. these efforts were successful in bringing back turkey on a strong recovery track. the healthy household balance sheets and solid banking system allowed a rapid rebound in domestic demand. starting from mid - 2009, the turkish economy has been facing a domestic demand driven rapid recovery. meanwhile, strengthening capital inflows has further exacerbated the divergence between the domestic and external demand, creating new policy challenges. rapidly widening current account deficit coupled with short term capital inflows and exchange rate appreciation called for a different approach to monetary policy. in order to cope with this new situation, we have slightly modified our existing framework of inflation targeting by explicitly highlighting the increasing role of financial stability in our objective function. accordingly, first we have announced the details of our exit strategy from crisis measures in april 2010. as a first step, we have normalized the liquidity support facilities and brought back the try reserve requirement ratios to pre - crisis levels of 6 percent. second, we started to highlight the macro financial risks and contingent policy responses. for example, we have stated through our policy documents that, if divergence in growth rates between domestic and external demand continues in the forthcoming period, and if this pattern of growth coexists with rapid credit expansion and deterioration in the current account balance, it would be necessary to utilize other policy instruments such as reserve requirement ratios and liquidity management facilities more effectively. the primary objective of the cbt is to achieve and maintain price stability. however, the recent crisis has taught us that this single objective may not be enough for attaining macroeconomic and financial
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jean - claude trichet : the development of euro area statistics from an ecb perspective speech by mr jean - claude trichet, president of the european central bank, delivered at the third ecb conference on statistics, frankfurt am main, 4 - 5 may 2006. * * * colleagues, fellow central bankers, ladies and gentlemen, it is a pleasure for me to address you on the occasion of the closure of the third ecb conference on statistics. with this conference, we have continued our biennial tradition of holding a dialogue between the compilers of statistics and policymakers, academics and other users on the development of statistical requirements. this tradition was started four years ago by eugenio domingo solans, the first ecb executive board member responsible for statistics, who left the ecb in may 2004 and sadly passed away soon afterwards. the subject of this conference has been financial statistics for a global economy, and i would like to use this occasion to share with you some reflections upon the four themes discussed during this conference, namely : 1. are financial statistics good enough to capture globalisation? 2. what are the challenges for national data collection in a global world? 3. which are the statistical implications of financial stability and financial integration? and finally 4. what can we say on global statistical governance? i will obviously focus on the necessary development of euro area statistics and i would like to begin with a brief review of the recent developments in these statistics. recent developments in euro area statistics an evaluation of current euro area statistics should start with three observations. first, official statistics provide the foundation for both the economic and the monetary analysis of the ecb and therefore for its monetary policy. in addition, they are indispensable for the other functions of the ecb, for other economic policy - making in europe and for a smooth functioning of the financial system. this also means that high demands are placed on these statistics. second, it is still less than a decade ago that the statistical requirements for the european economic and monetary union were agreed and that the first euro area statistics became available. it can now be concluded that the compilers of statistics in europe have gone a long way towards harmonising their national statistics and meeting the requirements in a relatively short period of time, and i would like to compliment them on this achievement. third, this progress has been possible thanks to excellent cooperation within europe β s statistical community, which consists of national central banks ( ncbs ), national statistical institutes ( nsis ), eurostat
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β perceptions of structural, supply - side differences, and their implications for relative future corporate earnings growth, than by relative macroeconomic policies. no doubt at some point such perceptions will change - or the anticipated differences in future earnings growth be discounted by the change in asset prices, including the effect of exchange rates. there are some tentative signs that this may be beginning to happen. but in the meantime it is not at all clear that there is much that we could do - even if we wanted to - to weaken sterling against the euro by marginal changes in short - term interest rates. as it is our interest rate differential over the euro zone has halved since the euro started, while our exchange rate against the euro has appreciated by around 15 %. we do already, of course, take full account of the exchange rate - and other prices - in both our forecasts and our policy decisions. indeed, it was partly to avoid pushing sterling higher and so aggravating the imbalance within the economy, when we were not wholly convinced that we needed to take that risk in order to achieve the inflation target, that the committee refrained from further monetary tightening over the past eight months. but looking ahead the risks and uncertainties are such that it would be unrealistic to suppose that we can altogether exclude the need for further tightening at some point. leaving on one side possible, though not necessarily likely, international developments outside our control - a hard landing in the us, for example, or a precipitate realignment of exchange rates, or a further spike in the oil price - there are two major uncertainties. the first is the familiar uncertainty relating to the path of overall demand growth. on almost any basis, we start from a position in which the economy as a whole is operating close to capacity. that is reflected in the evident tightness of the labour market, including increasing evidence of skills shortages. if we are to avoid a potentially sharp reversal in earnings growth and accelerating inflation, we need to see a slowdown in the rate of domestic private sector demand growth to accommodate not only the stabilisation of our external current account balance but also the public sector expenditure growth which the chancellor has already announced, not to mention whatever he may be planning to announce tomorrow. there are signs that this slowdown in private sector demand growth may be beginning to happen, but that is certainly not yet assured - and over - generous tax cuts would not help. i must tell you that i am surprised by the
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##comitantly and as a consequence of this stabilisation of inflation at a low level, we have also seen lower volatility in macroeconomic variables. but it would be wrong to conclude that this correlation between globalisation and low inflation demonstrates a causal relationship. indeed several other factors β independent of globalisation β can be identified as helping to explain these good results. i see at least four. in the first place, the very rapid progress in science and technology, in particular information and communication technologies β leading to significant productivity gains which coincide with globalisation and, moreover, are one of its underlying causes. in the second place, structural reforms which have been introduced in the industrialised world from the beginning of the 1980s and which have gradually increased throughout these economies. these structural reforms, like the spread of technological progress, have helped to increase the growth potential of the economies and thus to facilitate price stability. in the third place, the greater budgetary discipline which has recently characterised most economies following the previous period of poor fiscal management. and finally, the monetary policy pursued by the central banks and their enhanced credibility. i would particularly like to stress the last point. whatever the influences being exerted in the context of globalisation, the basic principle which allows the anchoring of monetary policy remains : in the long run, inflation is a monetary phenomenon. as a consequence, globalisation does not affect the central role and overriding responsibility of central banks to preserve price stability. in the short term, the central bank must continue anchoring inflation expectations at a level that is consistent with the central bank β s definition of price stability. let me illustrate this by means of an example. let β s take the significant increase in energy prices over the last few years. i will assume that a central bank credibly commits to maintain stable prices and is fully and unequivocally trusted by the public and by other policy - makers. the corporate sector, which uses energy as an input for its production processes, observes a significant and sharp rise in the price of oil. since there is a credible commitment to price stability over the medium term and inflation expectations are well anchored at low levels, entrepreneurs easily understand that it is the relative price of energy that is rising, while the aggregate price level may not increase as much. therefore, their incentives to fully pass the increase in input prices to consumers are reduced because, if they did, their competitiveness could be significantly eroded, especially in an increasingly competitive global environment. hence
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jean - claude trichet : the role of central banks in a globalised economy speech by mr jean - claude trichet, president of the european central bank, on the occasion of the 13th conference de montreal, montreal, 18 june 2007. * * * ladies and gentlemen, thank you for inviting me to the 13th conference of montreal hosted by the international economic forum of the americas. i am delighted to speak today before such a distinguished audience. i greatly appreciate your objective to organise wide - ranging and open discussions on major international economic issues. the theme of this year β s conference β succeeding through uncertainty : from risk evaluation to strategic decisions β is a very timely and challenging one. we at the european central bank often have to navigate uncertainties and find that our monetary policy strategy is of great help in setting the course. one of the themes most discussed in the conference programme is globalisation, and rightly so given its huge importance. i would like to investigate with you the role of central banks in a globalised economy. first, i will outline some of the features of the debate. second, i will reflect on the integration of the euro area within the globalised economy. third, i will reflect on some of the implications of globalisation for central banks. 1. globalisation and some of its underlying trends globalisation encompasses several phenomena and trends which have led to a growing interdependence of most economies throughout the world. it displays its effects through a strong increase in cross - border transactions in goods and services, capital, labour and natural resources. i would add that, at the same time, we are witnessing a substantial increase in the cross - border exchanges of ideas and concepts between the various institutions, organisations and non - trading companies. the concept of globalisation has been of vital importance over the last 20 years β and has been even more so in the last ten years β thanks to a combination of factors, including the diffusion of ever more sophisticated and affordable information and communication technologies. the cost of shipping goods has fallen. economies have continued to open up and many trade and financial barriers have been lifted. national barriers to the circulation of goods, services and production factors are diminishing everywhere. foreign direct investment ( fdi ) flows have also surged, leading to an internationalisation of production processes and new ways of doing business as companies have established affiliates abroad both to gain access to foreign markets and to reduce input costs. globalisation has allowed many emerging countries to enter and compete in world markets
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olli rehn : impact of structural economic changes on monetary and macroprudential policies keynote speech by mr olli rehn, governor of the bank of finland, at the 2019 risklab / bof / esrb conference on systemic risk analytics, helsinki, 24 may 2019. * * * ladies and gentlemen, welcome to the bank of finland. i want to thank the co - organisers, the european systemic risk board and risklab, for the opportunity to share my thoughts at this conference on systemic risk analytics β not least because in the aftermath of the global financial crisis, the maintenance of financial stability has regained its original position as the second key pillar of central banking policy. this comeback stems from certain permanent features of our economies and their development. modern economies are in constant change. some changes are cyclical. economic variables like gdp, housing prices and the volume of lending often increase strongly in upturns and decrease equally strongly in downturns. at times, economies are hit by booms. at other times, they are hit by downturns and recessions. economies are also subject to more fundamental, longer - term changes. in economic history, major changes in technology, population growth and economic systems have had sweeping effects on economic growth, the welfare of citizens and the birth and death of occupations and industries. it is our task β as economists, social scientists and other scholars β to try to identify the key short - term and long - term economic changes and to weigh their consequences, benefits and risks. the policymakersΒ΄ challenge, in turn, is to make proper adjustments in their economic and other policies when old policies become outdated for the new world. in this keynote, i try to identify some major ongoing economic changes that in my view require a rethinking of current monetary policy strategies and macroprudential policies. structural economic changes and monetary policy let us start from the monetary policy, in general and in the euro area. before addressing the longer - term issues, it may be worthwhile to remind ourselves of the major economic recovery that has taken place in the euro area since 2013. in five years, more than 10 million new jobs have been created. unemployment β although still too high β has declined by 4 percentage points to below 8 per cent. the accommodative monetary policy of the european central bank has substantially contributed to the recovery. recently, the global growth outlook has been shadowed by significant uncertainty. the trade tensions between the us and china have escalated
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of today and tomorrow, as we are in the middle of the climate - and energy - related economic transformation, with very substantial needs of sustainable finance and investment. all in all, the enhancement of financial stability and economic growth should continue to be key priorities in developing the economic and monetary union. the future of emu is too broad a subject to be covered here in depth, but i see a lot of merit in the manifesto of 14 german and french economists, published last year. the manifesto is essentially a synthesis of β german β and β french β economic thinking, aiming at creating a genuine stability union by uniting sound incentives and rules with a sufficient dose of insurance and stabilization. to wrap up, modern economies are indeed in perpetual change. economics, as a science, provides tools for understanding these changes. policymakers, in turn, need to have the wisdom to adapt their strategies and policies if and when their old ways turn out be inadequate. and β as always in economic history β economic changes will bring new, unforeseen systemic risks. we should make our economic systems and architectures resilient enough to withstand the realisation of such risks. and as central banks, we need to keep our powder dry, just in case if some known or unknown risks nevertheless start to materialise. with these thoughts, i thank you for your attention. 4 / 4 bis central bankers'speeches
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gathered over the next week or so. we will then take account of them and produce a revised draft early in april. there will be one final round for β fatal flaw β comments after that before seeking endorsement by the various fxcs of a document we can take to the global foreign exchange committee meeting in new york on 25 may. for example, in australia, we will be looking for the afxc endorsement of the code at our next meeting in early may. following the meeting of the global foreign exchange committee, the first phase of the global code will be publically released. we have already started on the work of drafting the material in phase two of the code. we will continue with that over the next year, again having a number of rounds of comment from market participants through the fxc process. our intention is that the complete code will be released following the global foreign exchange committee meeting in london in may 2017. at the end of that process, for the code to be effective and for it to achieve what we want it to achieve, it will need to be accepted and endorsed by the fxcs and market participants more generally. that said, the process does not really end, because as the foreign exchange market continues to evolve, the code will need to evolve with it. i will have more to say about how this ongoing evolution of the code might occur in due course. adherence to the code at the same time as we have been drafting the code, we have also been devoting considerable time and effort to develop adherence mechanisms which promote and incentivise widespread adoption of the global code by market participants. clearly, that has been an issue with the bis central bankers β speeches various existing industry codes that have been in place in a number of markets over many years. it is very evident that they were often ignored, wilfully or otherwise. for an industry code to have value in affirming appropriate norms of behaviour, it has to become effectively adopted in the marketplace. while adherence to a single, consistent code of good practice is widely regarded to be in the interests of the market, the global code will be voluntary. as i said earlier, we are working with the industry to produce a voluntary, principles - based code of conduct rather than a set of prescriptive regulatory standards. it will not impose legal or regulatory obligations on market participants, nor will it supplant existing regulatory standards or expectations. there is already a substantial body of law and regulation that applies to the fx activities
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department of education to include in the curriculum of grade school students basic topics on savings and money management. concluding remarks to conclude, governance is a reflection of the values of individuals within an institution. the initiatives we have started to promote good governance are only as good as the people observing them. this is similar to the art of making ceramics. different potters shaping the clay will come out with different interpretations of the same pattern, although each one of them followed the same process and used the same tools. the challenge for us, in this case, is to ensure that the potters have the skills, the right values and perspective in shaping the delicate piece of art. thank you and good day.
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will arbitrage the u. s. natural gas price down, possibly significantly, through increased imports. in addition to increased supplies from abroad, north america still has numerous unexploited sources of gas production. significant quantities of recoverable gas reserves are located in alaska and the northern territories of canada. negotiations over the construction of pipelines connecting these northern supplies to existing delivery infrastructure are currently under way. * * * to be sure, the dramatic changes in technology in recent years have made existing oil and natural gas reserves stretch further while keeping energy costs lower than they otherwise would have been. seismic imaging and advanced drilling techniques are facilitating the discovery of promising new reservoirs and are enabling the continued development of mature fields. but because of inexorably rising demand, these improved technologies have been unable to prevent the underlying long - term prices of oil and natural gas in the united states from rising. conversion of the vast athabasca oil sands reserves in alberta to productive capacity has been slow. but at current market prices they have become competitive. moreover, new technologies are facilitating u. s. production of so - called unconventional gas reserves, such as tight sands gas, shale gas, and coalbed methane. production from unconventional sources has more than doubled since 1990 and currently accounts for roughly one - third of u. s. dry gas production. according to projections from the energy information administration, the majority of the growth in the domestic supply of natural gas over the next twenty years will come from unconventional sources. in many respects, the unconventional is increasingly becoming the conventional. in the more distant future, perhaps a generation or more, lies the potential to develop productive capacity from natural gas hydrates. located in marine sediments and the arctic, these ice - like structures store immense quantities of methane. although the size of these potential resources is not well measured, mean estimates from the u. s. geological survey indicate that the united states alone may possess 200 quadrillion cubic feet of natural gas in the form of hydrates. to put this figure in perspective, the world's proved reserves of natural gas are on the order of 6 quadrillion cubic feet. * * * in the decades ahead, natural gas and oil will compete in the united states with coal, nuclear power, and renewable sources of energy. as the manner in which energy is produced and consumed evolves, it is not unreasonable to expect that, in the long run, the prices per unit of energy from various sources would tend to converge
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markets. at the liquefaction end of the process, new investments are in the works across the globe. in qatar alone, five large - scale projects have begun construction or are at advanced stages of development. in january, egypt exported its first lng cargo. enormous tankers to transport lng are being constructed, even without being dedicated to specific long - term delivery contracts. the increasing availability of lng around the world should lead to much greater flexibility and efficiency in the allocation of energy resources. according to tabulations of bp, worldwide imports of natural gas in 2003 were only 24 percent of world consumption, compared with 59 percent for oil. clearly, the gas trade has significant margin to exercise its price - damping opportunities. in the united states, import terminals in georgia and in maryland have reopened after having been mothballed for more than two decades. the added capacity led to a noticeable increase in lng imports last year, but lng imports still accounted for less than 3 percent of u. s. consumption. 2 u. s. natural gas consumption in 2004 amounted to 22. 3 trillion cubic feet. additional import facilities, both onshore and offshore, are being developed. according to the federal energy regulatory commission, the number of approved and proposed new or expanded lng import terminals in the united states stood at thirty - two as of last month with a capacity to import 15 trillion cubic feet annually, far in excess of any pending needs. clearly, not all of these projects will come to fruition. some will be abandoned for economic and business considerations, and others will fail because of local opposition, motivated by environmental, safety, and other concerns. the larger question, of course, is what will increased world trade in lng and expanded u. s. import capacity do to currently uncompetitive natural gas prices in the united states? during the past couple of years, when u. s. prices of natural gas hovered around $ 6 million btu, import prices of lng in europe have ranged between $ 2 and $ 4 per million btu, and those in japan and korea have generally been between $ 3 and $ 5 per million btu. estimates of production and delivery costs of lng to north america appear to hover around $ 3 per million btu. in the short run, exporters to the united states are likely to receive our domestic price, currently above $ 7 per million btu. but unless world gas markets tighten aggressively, competitive pressures
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collective action of fund cohorts, not idiosyncratic risk management issues at individual funds. to put it another way, there are significant advantages in closing a stable door at the right time. there is clearly hidden leverage, interconnectedness and channels of propagation that we do not yet fully understand, and vulnerabilities building - up in the non - bank sector. these knowledge and data gaps need addressing. i am delighted a fellow ally in calling for urgency in addressing this issue, governor of the banque de france, francois villeroy de galhau, is also with us today. you may have seen recently francois urging global regulators at the financial stability board to β deliver now on clearer and stricter rules β to strengthen resilience of the funds sector19. i couldn β t agree more. welcome francois. conclusion let me conclude by referring back to an economic philosopher. as john stuart mill said, β he who knows only his own side of the case doesn β t know much about it. his reasons may be good, and no - one may have been able to refute them ; but if he is equally unable to refute the reasons on the opposite side, and doesn β t even know what they are, he has no grounds for preferring either opinion " 20. listening to the perspectives of the financial system β s participants is fundamental to effective regulation. it helps us understand what β s working, what isn β t and what may need to change as the financial system changes. agile and forward - looking regulation requires connection. engagement with the central bank β s stakeholders is a core part of our approach to regulation. it helps us to explain what we are doing, and why, so that all market participants understand our actions. today is another example of that. thank you for joining us. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 1. see ippoliti, e. introduction : philosophy for finance. topoi 40, 707 β 713 ( 2021 ) for an overview of this approach. 2. see aristotle, politics 1252a β 1260b 3.
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christian kettel thomsen : danish economy, financial risks and cash speech by mr christian kettel thomsen, governor of the national bank of denmark, at the annual meeting of finance denmark, copenhagen, 4 december 2023. * * * check against delivery as new governor in danmarks nationalbank, there are many things i will be doing for the first time. one of them is to give this annual speech. i've really been looking for - ward to this. another new task was when i recently signed a 50 - krone banknote. in terms of denomination, i may have had higher ambitions for my first signature. nevertheless, it was a reminder for me of the important role that cash still has, and will continue to have, in our society. i will return to this later on in my speech today. but first a few reflections on the danish economy and the financial sector. the developments in the past four years really show how quickly the eco - nomic situation can change. but if we look at economic activity in denmark right now, danmarks na - tionalbank's assessment is that we're heading for a soft landing. especially considering that the modest economic growth we're currently experiencing stems from large danish companies having increased their production abroad, i. e. outside the borders of denmark. disregarding danish companies'production abroad, danish gdp has ac - tually been stagnant since early 2022. and inflation also seems to be heading for a soft landing. it has fallen very significantly β initially because energy prices have dropped from the very high levels seen last year. but even though inflation has decreased a lot, we're still not there yet. we thus expect inflation to rise again early next year and to end at three per cent for the year as a whole. 1 / 6 bis - central bankers'speeches what we're seeing now is that where inflationary pressures used to come from the outside β including in the form of high energy and food prices β the pressures have now started to shift to being driven by domestic con - ditions, especially pay increases. here, we expect that the effects of the higher pay increases from the col - lective agreements concluded in spring are now beginning to make themselves felt, and they will contribute to keeping up price increases for some time to come. we also expect a slight decline in employment over the coming years, but employment in denmark will remain very high. to get inflation under control, the
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speeches published date : 19 may 2022 " a future ready workforce for an international financial centre " - opening remarks by mr ravi menon, managing director, monetary authority of singapore, at singapore financial forum 2022 on 19 may good morning from singapore. i am pleased to join all of you, including our overseas singaporeans and their friends, as well as leaders and professionals from singapore β s financial centre at today β s forum. singapore β s financial centre is doing exceedingly well, and prospects remain bright for the years ahead. the financial sector performed strongly throughout the covid - 19 pandemic. the sector [ 1 ] grew by an annual average of 7. 2 % during 2020 - 21, four times faster than the overall economy. the last two years also saw 5, 800 net jobs created in financial services. growth has been broad - based β across banking, insurance, asset management, and payment services. we have grown steadily as a leading fund management and domiciliation hub, with 500 variable capital companies incorporated in singapore since we introduced this new investment fund structure just two years ago. we are now asia β s leading foreign exchange centre, with fx trading volume growing an average 13 % every year from 2017 to 2021, with a modern e - fx trading ecosystem taking deep root. we are powering asia β s development, with infrastructure investment growing five - fold and project finance by 80 %, from 2016 to 2020. the singapore economy remains on track to grow by 3 β 5 % in 2022 barring a further worsening in the external environment. the russia - ukraine conflict has generated both growth and inflation risks globally. but the ongoing recovery of the global economy from the covid - 19 pandemic and associated restrictions will provide support to economic activity. the financial sector should grow at least as fast as the overall economy. more importantly, the asian growth story remains intact, and singapore β s financial centre is well positioned to support and grow with asia. the asian development bank estimates that strong exports and domestic demand will drive developing asia β s growth at more than 5 % per annum in the coming years. demand for financial services typically grows faster than income as the middle class and mass affluent base expands. we are seeing the development of new capabilities which will add more engines of growth to our financial sector. in private markets, singapore β s private equity and venture capital ecosystem is providing smart capital and business networks to the rapidly expanding pool of growth companies here and across the region. in wealth
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, which has seen promising results. 90 % of the 2019 cohort who were from non - tech jobs completed the programme and have taken on good tech jobs in financial institutions. another 530 are going through the programme from the 2020 and 2021 runs. i am pleased to say that ibf is launching the fourth run of this programme this year, with close to 700 training places β which is double the number offered last year. ibf and wsg will also launch a new wealth management accelerator programme ( wmap, pronounced as β we - map β ). wmap targets mid - career professionals with a passion for customer relationship management and an interest in pursuing a career in wealth management. the three - month programme will include structured and on - the - job training to provide participants with the skills to be licensed and hired into relationship management roles. seven major retail banks are participating in this inaugural programme, to fill close to 200 job roles. the third pool of local talent that we want to tap on is our network of overseas singaporeans. overseas singaporeans in finance and in technology are well placed to excel in singapore β s international financial centre. they have a solid understanding of overseas markets, useful networks, and good experience working in a cross - cultural environment. indeed, many returning singaporeans have progressed well in their careers and taken on leadership roles here. take for example melissa lim who returned from germany. melissa is a technology & innovation strategy director at standard chartered bank, where she is involved in driving the bank β s tech strategy and other transformation projects. prior to that, melissa spent five years in frankfurt, germany, where she was the head of investment platform transformation at allianz global investors, leading a global team to deliver strategic investment transformation programmes. melissa is one of the panellists for the relocation fireside later today, so do tune in to hear more from her. i hope that more overseas singaporeans β when you are ready to return home β will take up opportunities in singapore β s vibrant financial sector, grow further in your careers, and make a difference here in asia. as important as growing the singaporean core, we must continue to welcome and embrace high quality global talent. i know questions have been raised on singapore β s continued openness to global talent. first, the pandemic - related border controls were very difficult for many of our expatriate staff and their families. many firms faced challenges bringing in foreign manpower due to our border controls. today, we are
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##s to a unified assessment scheme. the asset quality review has given us a deeper insight into the banks β bis central bankers β speeches procedures, thereby making it possible for us to check which differences between banks are justified and to ascertain where we need to probe critically. we will use the knowledge that we have obtained through the peer group review for other supervisory activities as of 4 november. thus far, these processes have been carried out at the national level. we are now going to harmonise them throughout the euro area, thereby making it easier to compare the respective risk situations of banks, thus enabling us to target our supervisory activities better. federal structure β central decision - making critical voices have warned us in the past about losing sight of the diversity of the european banking sector and wanting to typify a β european β bank. i admit that, in the process of harmonising and centralising decision - making powers, there is always also a danger of seeing everything at par. the ecb is, however, protected from such developments by institutional barriers. as national supervisory authorities participate in the supervisory process, the ecb remains close to regional market and banking structures. moreover, the ecb β s staff will take a keen look at the business models and risk profiles of each directly supervised bank. the kick - off meetings, which have been taking place since early summer between the current supervisors, the ecb and the banks, are simply a first step. in this connection, allow me to stress the inherent dangers in supervision not only of being too far removed, but also of being too close. other viewpoints and new supervisory approaches and methods may sharpen our perception and mitigate the danger of accepting a bank β s unjustified customs merely because they have long been familiar to us. the comparisons and analyses i referred to earlier will also help to counter this danger. but that is not all. we will also address this issue in terms of our staffing policies. the head of a joint supervisory team ( jst ) must come from a different country to the country in which the institution it is supervising is established. in concrete terms : the head supervisor for deutsche bank will be a french lady ; bnp paribas will be supervised by an italian man. in addition, there will a rotation of staff members among the jsts. all in all, this will not only enable us to reach more objective judgements about a bank, but will also foster the development of a common supervisory culture. banking
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this year, it is difficult to assess its effectiveness comprehensively. however, it could be instructive to review ex ante the robustness of the analytical toolbox assigned to the esrb, and consider ex post whether such a toolbox would have enhanced policymakers understanding of systemic risk prior to the crisis. before doing so, i should make clear that the purpose of the esrb is not to predict crises. the academic literature on early warning signal models, developed over the years, suggests that, for a number of reasons, the scope for error in predicting crises is substantial. either the eruption of a crisis is missed or a period is wrongly identified by the start of a crisis. for this reason, the esrb β s analytical toolbox is based on early warning models and indicators designed to identify emerging vulnerabilities or imbalances that could lead to financial instability. these models aim to perform three functions in particular. first, to identify the variables which are associated with financial instability. to this end, an index of aggregate macro - financial imbalances, or of institution - specific vulnerabilities, is tested against variables such as credit growth, property price changes, private sector leverage and current account deficits, to discover which variables predict that index. measures of bank leverage, balance sheet growth and maturity mismatches may also be used in order to gauge the extent to which the financial sector is driving developments. second, to assess the relative importance of different risks for financial stability. this is done using β adverse scenarios β that are designed and macro stress - tested to establish the potential severity of different types of risk and the overall resilience of the financial system to severe shocks. such models, including top - down stress test of individual institutions, allow risks to be assessed more broadly and at a higher frequency than is possible with bottom - up exercises run by financial institutions, thus enhancing the β real time β information on systemic risk available to policymakers. third, to assess the financial channels through which risk can be propagated, thereby factoring - in potential second - round effects. the use of contagion and spillover models allows, for example, the assessment of the impact on the financial system of the failure of a particular financial institution or of turbulence in a particular sovereign debt market. bis central bankers β speeches we could consider how this framework would have functioned if applied retrospectively. for example, the monitoring of the credit - to - gdp ratio as an early warning
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muhammad bin ibrahim : today β s risks, tomorrow β s claims keynote address by mr muhammad bin ibrahim, assistant governor of the central bank of malaysia, at the international claims convention 2010 β today β s risks, tomorrow β s claims β, kuala lumpur, 19 april 2010. * * * first of all, i congratulate the malaysian insurance institute, the australasian institute of chartered loss adjusters and the association of malaysian loss adjusters for their excellent efforts in jointly organizing this convention, themed β today β s risks, tomorrow β s claims β. i understand that this is the leading insurance claims event with an exciting programme for insurers, loss adjusters, risk managers, claims industry specialists, suppliers and industry associations. the convention provides a platform for the relevant parties involved in insurance claims to examine and deliberate on the growing challenges in insurance claims with a view to formulate anti - fraud best practices in the insurance industry. the global insurance industry as a whole remained resilient despite the deepening of the global financial crisis in 2009 that is expected to potentially lead to more insurance fraud cases. whilst the decline in the financial markets has put significant pressure on insurers β investment portfolios, the aggregate financial position of insurers remained strong to weather the crisis. the financial sector in malaysia, following a decade of financial reforms that include strengthening the regulatory and supervisory framework, and building the domestic financial infrastructure, is now bolstered by high capitalization levels, sound asset quality and sustained profitability. as a result, it was well - positioned to weather the deterioration of the external environment. the structured development of the insurance industry over the years in particular, spurred on by various capacity building initiatives, had yielded positive outcomes contributing to continued growth. the performance of the insurance industry is expected to improve in 2010 on the back of the economic recovery and increasing awareness on the role of insurance as a protection and financial planning tool. improvements in the employment market, rising disposable income and revival in economic activities will generate spins - off to the insurance sector and create greater demand for insurance products. nevertheless, the operating environment for the insurance industry in 2010 is expected to remain challenging. despite the optimism on the economic and financial conditions as the financial markets continue to stabilize in early 2010, the low - yield investment environment will continue to pose near - term challenges for insurers. in the past, investment earnings had predominantly been relied upon to offset any setback in insurers β underwriting performance
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mr. carse reports on the initiatives taken concerning financial industries in fujian, hong kong and taiwan speech by the deputy chief executive of the hong kong monetary authority, mr. david carse, at the symposium on the financial exchange and cooperation of fujian, hong kong and taiwan, held on 8 / 8 / 98. i am pleased to be here this morning to welcome you to this symposium. the chinese banks β association is to be congratulated for organizing this important initiative with the co - sponsorship of the fujian provincial government and chinatrust commercial bank. the idea of the symposium, as i understand it, is to facilitate the exchange of ideas concerning the financial industries in the three regions and the exploration of cooperative opportunities between them. 2. such an initiative could not have come at a better time. the current financial crisis is creating havoc among the asia economies. initially, the damage was felt in the financial sector. but the full impact is now being seen in the real economy as output and trade are crippled by higher interest rates, the burden of foreign currency borrowing and the credit crunch. the mainland of china, hong kong and taiwan have survived the crisis in better shape than most other economies in the region. but they have not been unaffected as events of this week have demonstrated in hong kong where we have witnessed further speculative pressure on the hong kong dollar. 3. in this kind of uncertain economic environment, it is all the more important that we should be trying to maximize the opportunities to develop trade and investment links between neighbouring economies. that is why this symposium is timely and important. the existing economic links between fujian, hong kong and taiwan provide a solid platform on which to build for the future. taiwan and hong kong are already major trading partners with taiwan β s exports to hong kong accounting for 23. 5 % of its total exports in 1997. visitors from taiwan also account for a significant proportion of the total number of visitors to the territory and thus make a major contribution to the tourist industry in hong kong which, as you will know, currently needs all the help it can get. 4. trade between hong kong and fujian is also growing rapidly in both directions and both hong kong and taiwan are a major source of overseas investment into the province. there are over 10, 000 hong kong enterprises in fujian. 5. the hong kong presence in fujian includes a number of banks from hong kong, including bank of east asia. the same bank also maintains a branch in taiwan which puts it in a good position to take advantage
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), tracking euro area wages in exceptional times, the ecb blog. 6. see p. adrjan, r. lydon ( 2022 ), wage growth in europe : evidence from job ads, central bank of ireland economic letter 2022 - 07. 7. see arce, o. and sondermann, d. ( 2024 ), β low for long? reasons for the recent decline in productivity β, the ecb blog, 6 may. 8. these patterns are charted in my recent speech lane, p. r. ( 2024 ), β disinflation in the euro area : an update β, speech at the university college dublin economics society, 15 april. 9. see also c. lagarde ( 2024 ), β building confidence in the path ahead, β speech at the ecb and its watchers xxiv conference, organised by the institute for monetary and financial stability, goethe university. 10. see chart 37 in lane, p. r. ( 2024 ), β the analytics of the monetary policy tightening cycle β, speech at stanford graduate school of business, 2 may. 11. for a more extensive discussion of the rate setting criteria, see lane, p. r. ( 2024 ), β the analytics of the monetary policy tightening cycle β, speech at stanford graduate school of business, 2 may.
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, for instance, calmfors, l. ( 2002 ) : β emu : s effekter pa lonebildningen β ( the effects of the emu on wage formation ), appendix 2 to stabiliseringspolitik i valutaunionen ( stabilisation policy in the monetary union ), kommitten for stabiliseringspolitik for full sysselsattning vid ett svenskt medlemskap i valutaunionen ( the government commission on stabilisation policy for full employment in the event of swedish membership of the monetary union ), sou 2002 : 16. policy, there may be an increased tendency to choose shorter agreement periods. if membership were to lead to more stable inflation than now, the agreement periods could instead become longer, as it would be considered easier to predict nominal wage increases. the degree of wage flexibility is also affected by social norms - reductions in nominal wages are most often considered unacceptable. it appears that nominal wage reductions can only be implemented in extreme situations, for instance, if a company β s survival is at stake. emu membership might not comprise a sufficiently major change. econometric studies of how wage flexibility is affected by, for instance, erm membership give mixed evidence. wage formation thus represents an uncertainty factor. some studies indicate greater wage flexibility and others show no effect at all. the conclusion reached by the stabilisation policy committee is that swedish membership of the eurosystem most likely will entail wages becoming more flexible, but that changes could be limited. the riksbank has not yet taken a stand on the committee β s report ; we will be presenting our views on it in the autumn. the consequences of excessively high wage increases in the event of swedish membership of the eurosystem can be compared to β learning the hard way β, i. e. that sweden would lose competitiveness and suffer rising unemployment. this type of development could force an adaptation in wages in the long run. however, it risks being a costly route, particularly with regard to unemployment, which could stick at higher equilibrium levels than before. in other words, it is something that we should all endeavour to avoid. there is also a possibility that employers would resist demands for higher wage increases to a greater extent than before, as it would no longer be possible for a depreciation of the krona to help maintain competitiveness. increased mobility in the labour market?
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mr backstrom asks the question β is there a new economy? β speech given by mr urban backstrom, governor of sveriges riksbank and chairman of the board of directors and president of the bank for international settlements, at a conference arranged by the stockholm chamber of commerce and veckans affarer, held in stockholm on 25 january 2000. * * * first a word of thanks for the invitation to attend this conference and discuss matters to do with the question β is there a new economy? β. besides considering that issue, i shall be looking at other factors that may affect economic developments in sweden, together with their implications for the future construction of monetary policy. monetary policy aims at promoting economic stability the riksbank β s primary concern is, as we all know, the future path of inflation. but our deliberations about how to keep inflation at a low and stable level can equally well be described as the riksbank β s endeavour, with the aid of the repo rate, to ensure that the economic trend in sweden continues to be favourable. this is because in most situations the task assigned us by the riksdag ( sweden β s parliament ) - β to maintain price stability β - amounts to acting so that the development of production and employment in sweden is as stable as possible. there have certainly been times when a tightening of swedish monetary and fiscal policy has led to an economic downturn and increased unemployment. as a rule, however, this has happened when price and wage increases had already taken off and the economy was therefore well on the way to becoming overheated. this can be likened to a driver who has to slam on the brakes because the car is travelling too fast and heading for the ditch. in such a situation, braking heavily is the only remaining chance of avoiding a serious accident. the best way of avoiding such a situation is continuously to adjust one β s speed - be it in a car or in economic activity - to the prevailing conditions. the speed limits on our roads are regulated, of course, by laws enacted by the riksdag and are also conditioned by the state of the road in question, the weather and other considerations. in the same way, the rate of economic growth is subject to economic laws and the prevailing conditions. driving schools teach us to keep an eye on the road well ahead so that we can adjust the car β s speed in good time. in that way, abrupt shifts can hopefully be avoided and, by
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##ans and the economy, which are in turn dependent on a strong and competitive financial sector. the risk of drawing on the guarantee and potential impact on singapore β s reserves are low. this is a measured, precautionary action that will help us to weather the global economic slowdown and the ongoing financial crisis in international financial markets.
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will have an important role to play in the years ahead. it is hard to tell at this point what the specific growth opportunities will be. we just have to watch very closely how these trends unfold. but overall, mas is undiminished in its optimism and confidence in the prospects for the financial industry in singapore. 1 the circuit breaker refers to the tightened restrictions on movements and gatherings of people imposed from 7 april to 1 june 2020, aimed at slowing the spread of the covid - 19 virus in singapore. 2 bny mellon and deutsche bank are the two new players. the existing seven are citibank, standard chartered bank, ubs, jp morgan, bnp paribas, xtx, and jump trading. 3 / 3 bis central bankers'speeches
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gross settlement ( rtgs ), electronic trading platform ( negotiated dealing systems β order matching ) ( nds - om ) and a separate central counter party ( ccp ) in the clearing corporation of india ltd ( ccil ) for guaranteed settlement are among the steps that were taken by the reserve bank over the years towards this end. the system makes g - sec trading practically risk free and efficient. 21. the system of primary dealers ( pds ) was established to provide support to the market borrowing programs of the government and also to impart liquidity in the secondary markets. subsequent to the withdrawal of the reserve bank of india from the primary market, as mandated by fiscal responsibility and budget management act 2003, the pd system has been underwriting the entire government of india market borrowing. 22. to meet the diverse funding and hedging needs of the participants, there is need for a wide array of instruments and products which would also offer benefits of diversification in the portfolio. over the years, several instruments like zero - coupon bonds, capital - indexed bis central bankers β speeches bonds, floating rate bonds, separate trading of registered interest and principal of securities ( strips ), bonds with call and put options, cash management bills, inflation indexed bonds have been introduced after wide consultations with market participants. plain vanilla fixed coupon bonds, however, remain the mainstay of issuances. 23. reserve bank has always focused on improving liquidity in the debt markets. reserve bank has constituted a working group ( chairman : shri. r gandhi ) to examine ways to improve liquidity in government securities and interest rate derivatives market which made several recommendations including suggestions for consolidation of debt. many of the working group recommendations are being implemented. the recommendations, such as, truncating the time window for bidding in the primary auction ; changing the settlement cycle of primary auctions in treasury bills ( t - bills ) from t + 2 to t + 1 ; conduct of primary auctions in g - sec as a mix of both uniform - price and multiple price formats ; re - issuances of existing securities in state development loans ; and migration of secondary market reporting of otc trades in g - sec ( outright and repo ) from pdo - nds to nds - om and croms, respectively, have been implemented. work is in progress with regard to recommendations on consolidation of public debt. 24. as a result of the dms, all sustainability indicators, viz., level of debt
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these incentives are offered in the context of the so - called " international headquartering " policy. according to the latest central bank of cyprus forecasts of december 2022, the growth of the cypriot economy is expected at 2, 5 % this year which compares well to the euro area average of 0, 5 %. inflation is expected to decelerate in 2023, levelling at 3. 3 %, from 8. 1 % in 2022. foreign investment in cyprus, as i mentioned before, constitutes a significant driver for development. in recent years, major multinational firms in the information, communication and technology industry ( ict ), have relocated or expanded their activities in cyprus, supporting cypriot gdp and reinforcing the vision to transform cyprus into an emerging technology hub in the mediterranean. cyprus'importance as a foreign investment hub is also reflected in the greenfield fdi performance index1, created by fdi intelligence, according to which in 2021, cyprus was ranked in 18th place out of 84 countries included in this index ( climbing by 50 places compared to 2020 ). undoubtedly, the shipping sector is another important pillar of cyprus'economic success. limassol, cyprus'maritime capital, is the home of influential names in the shipping industry, which boosted the country to the top ranks of the sector. indicatively, cyprus is the largest third - party ship management centre in the european union, one of the largest in the world2 and is primed for further growth. the importance of the sector is evident in the balance of payments data where it ranks third in terms of its contribution to the total value of exports of services at 19 % for 2021, after the financial services and ict sectors, with contributions of 32 % and 23 %, respectively. concluding remarks let me conclude by underlining the challenges for policy makers : the global inflation dynamics are currently being addressed by central banks, but the fight is far from over. monetary policy is being utilised at a different pace in different regions, due to the differences in economic fundamentals. however, we should not forget that other policies also play a role. for instance, state support should avoid horizontal measures and instead use targeted fiscal measures, 3 / 4 bis - central bankers'speeches which focus on the economically vulnerable, in order to support social cohesion but avoid undermining monetary policy measures against inflation. finally, regarding the shipping sector, it is and will continue to be the backbone of the global economy. in fact, when talking about the
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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, frankfurt am main, 7 december 2006. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to today β s press conference. let me report on the outcome of our meeting, which was also attended by the president of the eurogroup, prime minister juncker, and commissioner almunia. at today β s meeting, we decided to increase the key ecb interest rates by 25 basis points. this decision reflects the upside risks to price stability over the medium term that we have identified through both our economic and monetary analyses. today β s decision will contribute to ensuring that medium to longer - term inflation expectations in the euro area remain solidly anchored at levels consistent with price stability. such anchoring is a prerequisite for monetary policy to make an ongoing contribution towards supporting sustainable economic growth and job creation in the euro area. after today β s increase, our monetary policy continues to be accommodative, with the key ecb interest rates remaining at low levels, money and credit growth strong, and liquidity in the euro area ample by all plausible measures. therefore, looking ahead, acting in a firm and timely manner to ensure price stability in the medium term is warranted. the governing council will monitor very closely all developments so that risks to price stability over the medium term do not materialise. turning first to the economic analysis, according to eurostat β s first estimate, the quarter - on - quarter growth rate of real gdp in the euro area for the third quarter of 2006 was 0. 5 %. the data thus confirm our assessment that economic activity continued to expand robustly, while moderating from the very strong rates seen in the first half of the year. domestic demand remained the main driver of economic growth in the third quarter, confirming the anticipated broadening of the recovery and pointing to the increasingly self - sustaining nature of economic expansion in the euro area. the information on economic activity from various confidence surveys and indicator - based estimates supports the assessment that robust economic growth has continued in the fourth quarter of this year. looking ahead, the conditions remain in place for the euro area economy to grow at solid rates around potential. while some volatility in the quarterly growth rates is likely to emerge around the turn of the year, associated with the impact of changes in indirect taxes in a large euro area country, the
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zone that comprises 12 countries requires adaptation on all sides, though i am confident that we are moving up a rather steep learning curve. the months ahead will also see the final phase of our preparations for the introduction of euro banknotes and coins. guaranteeing an adequate supply of euro banknotes and coins for some 300 million citizens of the euro area, adapting cash dispensers ( atms ) and vending machines, switching the displays of retail prices, and the many other necessary changes - all this adds up to an organisational and logistical task on an almost unprecedented scale, not only for the ecb and the national central banks, but also for the member states'governments, the banking community and retailers. the preparations for these manifold challenges have now become a clear political priority. the true " test " of the euro, however, will be its acceptance by the european citizens as " their " currency. in order to familiarise the public with the new currency, its appearance and security features, the ecb, the national central banks, the governments of the euro area member states, the european commission as well as the banking community have embarked on a major information campaign. the ecb and the 12 national central banks of the euro area alone have earmarked eur 80 million for their public relations efforts. in addition, we are preparing to open an ecb information centre at the eurotower in frankfurt. in the weeks to come, we will also be launching a special " euro website ". finally, in order to gain the citizens'trust in the euro, we will have to " safeguard the currency " in a broader sense, and that includes setting up a comprehensive system to protect our new currency from counterfeiting. to this end, the ecb and the national central banks have joined forces with the governments of eu member states, europol and the european commission, and the necessary provisions are being finalised. mr. president, ladies and gentlemen, in addition to the ecb's immediate challenges, the longer - term success of the euro is also linked to the wider constitutional evolution of the european union. the draft resolution of the assembly, for instance, calls for the establishment of a true economic union as a complement to monetary union. unfortunately, the concept of " economic union " does not appear to be very well defined. in fact, i would argue that the eu, with its single market and a vast number of common rules governing economic life, has already reached an advanced stage
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njuguna ndung β u : banking and financial sector developments in kenya remarks by prof njuguna ndung β u, governor of the central bank of kenya, at the kenya institute of bankers 2nd national banking & finance conference, mombasa, 26 june 2014. * * * mr. reuben mbindu, chairman, kenya institute of bankers ; chief executives of commercial banks and other financial institutions here present ; distinguished ladies and gentlemen : it is with great pleasure that i join you this morning at the start of this landmark conference. i take this opportunity to thank the kenya institute of bankers for fulfilling its promise to hold such a conference on an annual basis. i appreciate your invitation to this conference and applaud everyone who participated in organising this conference for their commendable commitment. ladies and gentlemen : my task this morning is to represent the cabinet secretary to the national treasury who could not make it as the chief guest to this 2nd national banking and finance conference. let me start with some few remarks on the performance of kenya β s banking sector. the banking sector has recorded an improved performance β the sector β s balance sheet expanded by 15. 6 percent from ksh. 2. 50 trillion in may 2013 to ksh. 2. 89 trillion in may 2014 mainly supported by an expansion of banking services and financial inclusion. consequently, the sector β s profitability increased by 12. 5 percent from a profit before tax of ksh. 48. 7 billion for the quarter ended may 2013 to ksh. 54. 8 billion for the quarter ended may 2014. the gradual improved performance has been supported by continued rollout of innovative banking products, adoption of cost effective delivery channels, and continued expansion of banks across the country and beyond kenya. ladies and gentlemen : as part of kenyan banks desire to improve their performance, they have explored business opportunities within and beyond kenya β s borders. as at 31st december 2013 : β’ eleven kenyan banks had established subsidiaries in east african community ( eac ) member states and south sudan. one kenyan bank owned a 50 % stake in a mauritius bank while another kenyan bank had a minority stake of 11. 4 % in a bank operating in malawi. β’ the eleven kenyan banks had established 288 branches in eac member states and south sudan as compared to 223 branches in 2011. β’ the foreign subsidiaries had a total of 5, 219 employees compared to 3, 760 in 2011. β’ the total assets of the foreign subsidiaries stood at ksh, 306. 3 billion
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njuguna ndung β u : the future of financial service delivery in kenya introductory remarks by prof njuguna ndung β u, governor of the central bank of kenya, during the second scenario building workshop on β the future of financial service delivery in kenya β, nairobi, 16 april 2010. * * * chief executives of commercial banks here present ; distinguished guests ; colleagues ; ladies and gentlemen ; i am honoured this morning to be addressing this distinguished gathering. allow me therefore at the outset to thank you for accepting our invitation to attend this second scenarios building workshop on the future of financial service delivery in kenya. i am deeply convinced that our deliberations today will go a long way in shaping the future of our financial industry as was the case with the first workshop held last year. ladies and gentlemen : this year, nairobi scenario ii workshop comes at a time when a number of countries around the world are increasingly pursuing the development of branchless banking policy frameworks. this indicates branchless banking is receiving increasing international attention and capturing the imagination of a wide array of players and international bodies. in particular, as part of its commitment to financial inclusion, the g - 20 has established the access through innovation ( ati ) subgroup of the financial inclusion experts group. ladies and gentlemen : kenya β s financial inclusion agenda is premised on its current development blueprint, vision 2030. under this vision, kenya aspires to be a middle income country by 2030 and the financial sector is expected to mobilize substantial financial resources required to realize this vision. in addition, savings rate are targeted to increase to 32. 0 percent within the period. for this to happen, financial reach, inclusion, and deepening to increase financial instruments will need to take place. the central bank on its part will have to foster stability and accessibility of the kenyan financial system. in this regard, we will continuously implement reforms to : strengthen the banking sector through an enhanced legal and regulatory framework including scaling up minimum capital requirements. address structural rigidities that impact adversely on the cost of financial services. some of these we need to learn from you and then we can improve the environment for you. enhance efficiency and safety of payment and settlement systems through use of innovative internet and mobile based solutions. as it were, reliable and efficient payment systems increase both the effectiveness of monetary policy and minimize payment system risks. ladies and gentlemen : in order to accomplish the tenets of branchless banking across the globe, we need to unanimously
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restore that government β s long - term solvency. the key factor here is that any resultant losses can also be borne by the bondholders without causing the financial system to collapse. in the eurosystem, these bondholders are frequently banks. if the sovereign - bank nexus is to be broken, the current preferential regulatory treatment of sovereign bonds should be ended at the earliest possible opportunity. not until banks have begun to hold sufficient capital against government bonds and the size of individual exposures has been made subject to limits will banks be able to effectively cope with the process of restructuring sovereign debt. and only then is there likely to be any concrete political will to take such action. bis central bankers β speeches 5. risk sharing economists like peter kenen 5 pointed out more than 40 years ago that a functioning monetary union was predicated on risk sharing between its constituent entities. the calls which i discussed just now for a lender of last resort to be introduced for sovereigns can be seen as just as much of a manifestation of these thoughts as the notion of introducing in the euro area a common unemployment insurance scheme, or, taken to the extreme, mutual liability in the form of euro bonds. but besides the problems i mentioned earlier which such a risk - sharing arrangement would cause in a monetary union and the question of striking the necessary balance between liability and control, i believe it would also be short - sighted to confine the risk - sharing debate to just the fiscal dimension. in the united states, for instance, researchers 6 have found that fiscal policy absorbs just 10 % to 20 % of economic shocks and thus prevents a local income shock from sparking a drop in consumption on the same scale. private forms of risk sharing play a much greater role. integrated capital markets smooth out cyclical fluctuations between the us states to a much greater extent β especially integrated equity markets, which cushion something like 40 % of volatility. if a business β s shareholder base is spread across many different states, so, too, will potential losses caused by a shock in that business β s home state ripple out beyond the confines of that particular region. hence, economic divergence between the individual us states is kept in check. in much the same way, the broad group of shareholders benefit from economic developments elsewhere in the united states when the economy is booming because their investment portfolios are more diversified. so business cycle divergence is kept in check in this direction, too. private risk sharing also manifests itself through loans taken out
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bringing the entire financial system to its knees. or put differently : no bank should ever become so entangled in the rest of the financial system that its collapse would pull the whole web apart β banks should not be β too big to fail β. it is clear that the incentive problems i β ve just described would continue to exist if bail - outs were simply to be transferred from the central bank to fiscal policymakers. an example would be rescuing banks using taxpayers β money even though resolving them would be the wiser course of action. we cannot have governments providing free insurance, as such an implicit government subsidy makes banks too big and too risky. systemically important banks, in particular, therefore need to play a role in protecting themselves against default by increasing their equity capital and ensuring a minimum total loss - absorbing capacity ( tlac ) for their liabilities. by having banks bear the costs of their own protection, incentives are set for risk - conscious activities. banks simultaneously become more resilient, and the contagion effects are reduced should a bank run into difficulties all the same. we have seen some progress already with regard to equity capital. basel iii significantly strengthened the requirements for both the quantity and the quality of equity capital. however, to date, the binding rules have been based exclusively on risk - weighted capital. the risk weighting is supposed to prevent banks from investing too heavily in high - risk assets. during the financial crisis, however, we found out the hard way that the risk weighting does not always reflect the actual risk of an investment. therefore, in my opinion, a capital regime that is also geared to total assets is absolutely necessary. hence, the leverage ratio is to become part of pillar 1 of basel iii and thus binding from 2018. stricter capital requirements will help to increase the internal capital adequacy of banks. but capital does not come for free. this means that stricter requirements may also reduce the banks β readiness to take on any risks at all ; that is, to lend. but that would slow economic momentum. ultimately, this is also a balancing act. however, it seems clear that additional efforts to expand banks β capital base would be advisable, especially for systemically important banks and those that will just barely meet the basel iii requirements. but even stricter capital requirements cannot entirely prevent individual banks from collapsing. and this is okay. after all, the possibility of failure is essential in a market economy. this is why functioning resolution regimes are
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there have been reported layoffs, the numbers are quite small compared to the total number of overseas filipinos. we also expect further growth for the business process outsourcing sector in 2009 as recession in the global economy is seen to encourage outsourcing to streamline costs. this scenario should challenge our rural banks to work better on growing your business and clientele so that you can capture a bigger share of our expanding economy, particularly in the resilient countryside. how, then, should rural banks move forward? in our view, it is critical for rural banks not to waver in their resolve to pursue reforms that would ensure strength and stability of your banks. in this context, your banks β risk infrastructure is a key component that will allow you to identify and act on risks that may arise ; credit risks and liquidity risks are particularly important. in the case of risks, a proactive approach is preferable over remedial management. for instance, credit risk can be mitigated by generating high quality information and acting prudently based on this information. on the other hand, it is important in managing liquidity risk to strike the appropriate balance between actively deploying funds through loans and investments and in retaining enough of a defensive position so that liquidity is available when the need arises. again, this poses its own challenges for rural banks because of the narrower exposures from focused lending to a local community. another important aspect is your commitment to maintain strong capital positions not simply for compliance but for prudent control of leverage. management should ensure that your banks have sufficient buffer whenever risks turn into losses, through careful allocation of scarce capital to alternative exposures. while we will not dictate your allocation, your adherence to maintain capital adequacy above our regulatory floor rate of 10 % reflects commitment toward prudential control and financial governance. on our part, we at the bangko sentral will continue with banking reforms that will encourage improvement of capital positions and broaden the avenues for better risk management. we will move forward with the implementation of consolidated and risk - based supervision ; the enhancement of corporate governance and disclosure standards ; and fostering transparency in financial reporting. if you recall, these initiatives which we have vigorously implemented in recent years are instrumental in instilling order and depth in the banking system ahead of the onset of the global financial crisis. the bangko sentral will also maintain its policy approach of enabling banks, particularly rural banks, to increase the scale and scope of
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amando m tetangco, jr : banking on governance for growth and stability speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the rural bankers association of the philippines ( rbap ) 2009 national annual convention, manila, 15 may 2009. * * * ladies and gentlemen of the rural bankers association of the philippines led by mr. tomas gomez iv, outgoing president, and mr. omar andaya, incoming president of rbap, supporters and advocates of our rural banking sector, colleagues from the bangko sentral, special guests, members of media, ladies and gentlemen, good morning. we at the bangko sentral ng pilipinas join you in celebrating 56 years of rural banking in the philippines. this is 56 years of partnership with local communities in invigorating countryside development β a fruitful partnership that has seen our rural communities grow and develop alongside rural banks. indeed, key indicators for the rural banking sector show steady growth even in the midst of the global financial crisis and the closure of a number of rural banks engaged in unsafe and unsound banking practices. among others, the operating network of rural banks continues to increase. as of end december 2008, the network of rural and cooperative rural banks, consisting of head offices and branches, was at 2, 148, higher than 2, 133 in 2007. while there was a net decline in the number of head offices from 727 to 703 as a result of closures and mergers, this was more than offset by the increase in the number of branches. the net effect is a larger network capable of delivering banking services directly to a wider market. in addition, rural banks are exhibiting greater innovation and dynamism by seizing opportunities presented by technology. the industry enhanced its banking services delivery with the installation of more automated teller machines ( atms ) : from only 83 in 2007 to 113 as of end december 2008. a number of rural banks have also ventured into electronic banking to beef up delivery of financial services : the number of rural banks offering e - banking services such as cash cards and mobile banking have increased to 47 in 2008, from only 5 banks in 2005. it is important to note that the increasingly broader and deeper reach of rural banks, comes at a time when bank deposits in all but one of the regions were on the rise. consolidated deposits of 6 million savers with rural banks as of end december 2008 reached more
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denis beau : emerging supervisory priorities - technology, risk culture and sustainability opening remarks by mr denis beau, first deputy governor of the bank of france, at the bcbsbscee - fsi high - level meeting for europe on banking supervision, session : β emerging supervisory priorities : technology, risk culture and sustainability β, vienna, 21 may 2019. * * * accompanying slides of the speech. along with some other national central banks, in particular the bank of england and the dutch national bank, the banque de france ant its supervisory arm, the acpr has started to work on sustainability risks since 2015, in particular on financial risks arising from climate change. this willingness to take ownership of this issue was linked with the requirement from the french energy transition act of 2015 to prepare a report discussing the feasibility of stress - testing exercises focusing on climate change - related risks, though the scope of the report was finally broader as it discussed the relevance of these risks for french banks. our conclusions, published in march 2017, were that climate - related risks, in particular transition risks in the case of french banks, were relevant for financial stability, although the horizon of materialization was perceived way beyond the one underlying most of the risks we currently supervise and horizon of decision of banks. from this point of view, it was deemed within the mandate of the supervisor to raise awareness and enhance ownership of these potential risks throughout the banking sector via regular meetings with institutions. it also emphasized the need to collectively think how, as a supervisor and a central bank, we should deal with risks and avoid the build - up of new vulnerabilities ( e. g. helping to enhance the financing shift towards low - carbon sectors ). those reflections gave birth to the network for greening the financial system in december 2017. as a continuation of this work and also in the spirit of bringing our contribution to the reflections of the ngfs, the acpr surveyed both main french banking and insurance companies in 2018 to take stock of progress they have achieved in dealing with climate change - related financial risks. the main takeaways from both surveys have been published last april 10th 2018 in two reports1. the report dedicated to the banking sector2 includes three main observations : there is a shift in the governance of climate change - related risks from a β coporate and social responsability - only β perspective towards a two - pronged approach which integrates traditional risk departments. this trend is nevertheless mainly observable in the biggest and
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in the position to adopt resulting guidelines or requirements ( in the eba case ). nevertheless, at a moment where networks or work streams are burgeoning, especially within european institutions, we should be very careful about the good coordination of these different initiatives to avoid redundancy and duplication. it is also important that the nfgs, which remains a club of the willing, ensure some minimal degree of cooperation and harmonization by issuing high - level recommendations. from this point of view, i welcome the six very important recommendation issued in april directed to supervisors, central banks and the financial sector : i ) integrating climate - related risks into financial stability monitoring and supervision ; ii ) integrating sustainability factors into own - portfolio management ; iii ) bridging the data gaps ; iv ) building awareness and intellectual capacity and encouraging technical assistance and knowledge sharing ; achieving robust and intentionally consistent climate and environment related disclosure ; vi ) supporting the development of a taxonomy of economic activities. in the longer - run, when there will be a global convergence about the necessity to issue global standards and regulatory requirements, global standard setter such as the bcbs and fsb would need to take the lead on addressing climate change - related risks. 12 1 main findings : climate change : which risks for banks and insurers? acpr. banquefrance. fr / sites / default / files / medias / documents / as _ cover _ note _ en. pdf analysis and synthesis no. 102 : β french insurers facing climate change risks β april 2019 acpr. banquefrance. fr / sites / default / files / medias / documents / as _ 102 _ climate _ change _ insurers _ en. pdf 2 analysis and synthesis no. 101, β french banking groups facing climate change - related risks β, april 2019acpr. banque - france. fr / sites / default / files / medias / documents / as _ 101 _ climate _ risk _ banks _ en. pdf 2 / 2 bis central bankers'speeches
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, about β¬1 trillion ( or 30 per cent ) below the peak reached in june 2012. during the same period, the balance sheets of the federal reserve and of the bank of england had expanded by around 60 and 10 per cent, respectively. 7. a forceful and unprecedented monetary policy response therefore became warranted : it was important to preserve the credibility of our actions and underpin expectations. at the beginning of 2015 the governing council decided to extend its programme of asset purchases to public sector securities. under this new expanded asset purchase programme ( app ) the eurosystem is making monthly purchases amounting to β¬60 billion. as explicitly stated, the programme is scheduled to continue at least until the end of september 2016, and in any event until we will observe a sustained adjustment in the path of inflation consistent with a return to price stability. 8. the choice of this particular measure was driven by the consideration that outright asset purchases allow a more direct control of the size of the increase in our balance sheet, and hence of the monetary stimulus itself. the decision to purchase government securities reflected the need to focus on assets available in quantities sufficient to ensure an adequate degree of monetary accommodation and whose returns are able to influence the conditions of the real economy. 9. the app is a new programme for the euro area, but it is not a revolution in monetary policy making in general. central banks around the world have relied on large - scale asset purchase programmes to further stimulate the economy and fulfil their mandates after hitting the zero lower bound. such measures were taken, as we all know, by the bank of japan, the first time in 2001, and by the federal reserve and the bank of england, following the global financial crisis in 2008. it seems to me that i. fisher, β the debt - deflation theory of great depressions β, econometrica, 1, 4, 1933. m. casiraghi and g. ferrero, β is deflation good or bad? just mind the inflation gap β, banca d β italia, questioni di economia e finanza ( occasional papers ), 268, 2015 ; c. borio, m. erdem, a. filardo and b. hofmann, β the costs of deflations : a historical perspective β, bis quarterly review, march 2015. s. neri and a. notarpietro, β inflation, debt and the zero lower bound β, banca d β italia
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- led growth model to a consumption - led model. combined with the previous bouts of leveraged expansion, china now has a number of sectors that suffer from the twin ailments of overcapacity and high leverage. bad loans in the banking system are likely to grow over current levels β stressed loans are estimated to be around 5. 5 % of the bank loan book today. in addition, there may be serious weaknesses in the shadow banking system, which could feed back to banks. clearly, cleaning up the financial system will be a challenging but necessary task. work at the imf suggests that a 1 - percent permanent negative shock to china gdp caused by one - off 1 - percentage decline in its real gdp growth will knock off 0. 23 percentage points from global growth in the short - run 3. a key question is whether we in saarc region are at significantly more risk than others. the answer probably is no because none of us is primarily commodity exporter to china, but it cannot be an unqualified one. trade could be impacted due to second round effects β we export to those who traditionally export to china and have thus slowed down β and due to similarity in trade patterns with china β we compete with those who now have excess production capacity. on the financial side, exposure to china is large for the asia - pacific banks, especially for banks from hong kong, singapore and australia and much less for banks from our region. however, some of our countries, though not india, have significant borrowing from chinese banks, and these borrowings could become costlier if chinese banks turn inwards. moreover, financial market losses in china can heighten the risk premia that industrial country investors will charge for investing in our region, and the result could be capital outflows of the kind that were seen last august and early this year. chinese growth will depend not just on its policies, but on growth elsewhere in the world. there appears to be a general consensus that global growth has been too slow for too long. the imf downgraded its outlook for global growth in 2016 and 2017 by 0. 2 and 0. 1 percentage points, respectively. it is true that downside risks and uncertainties to the global outlook are large in the backdrop of event risks i have alluded to. however, a more careful look at the data suggests some care in jumping to the conclusion that growth has been slow. global growth has averaged 3. 5 per cent since 1980 and, in
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results. finally, another interesting finding is that the issue was not only one of quantity but also about prices. banks β proximity to buffers appears to have affected the cost of lending. the reasons behind this problem are unclear. it may have occurred because the level of uncertainty was very high for banks, and they were foreseeing that there might be losses in the future, and thus wanted to keep these buffers so they could be used to cover those losses. that is one possibility. the lack of formal guidance by supervisors on the rebuilding of these buffers might be another issue. low profitability may also be a reason for this result or market stigma. we are now in the process of trying to understand precisely the origin of this problem. closely related to this and a very important issue is the question of releasable buffers. in the basel framework there are some buffers, in particular the countercyclical buffer, that are intended to be activated in boom periods, precisely in order to make banks more resilient, and to be deactivated during recessions. here the analysis of the basel committee suggests that the release of such buffers had a positive effect on lending during the pandemic. the results, for example, specifically for the euro area, for which we had more microdata, suggest that banks are adjusting internal capital targets cyclically : in boom periods banks reduce their own internal capital targets, and they do the opposite when there is a recession. the evidence also points to the fact that macroprudential authorities have the ability to influence these internal capital targets by releasing or activating the ccyb ( countercyclical capital buffer ). this is precisely why the evidence points to the fact that the release of the capital buffer also generated a reduction in banks β internal capital targets and this ultimately allowed them to provide more credit to the economy. if i combine all this information, the one thing that is clear to me now, which i think we need to think more about it in the next stage, is that we need to consider whether there is sufficient releasable capital in the system. let me give two very concrete examples of why i think this is necessary. the best example is the covid - 19 crisis. in many jurisdictions,, we were observing the emergence of systemic risk in the economy before the crisis, and that is why many public macroprudential authorities decided to activate the ccyb. then a completely exogenous
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##rkfed. org / newsevents / speeches / 2020 / sin201020 2 / 5 20 / 10 / 2020 the federal reserve β s corporate credit facilities : why, how, and for whom - federal reserve bank of new york that in making an assessment of credit eligibility, we broadened our use of ratings to include perspectives from all nationally recognized statistical rating organizations. providing broad access also applies to the service providers that support the facilities. in early september, we announced the expansion of counterparties to the smccf, including several smaller and minority - owned broker - dealers. 13 in early october, we announced the launch of our process to re - bid our engagement with the facility β s investment manager. this process has begun with the ccf cash management role, and in the coming weeks and months we will re - bid the remainder of the role. together, these efforts allow us to expand the reach of our operations while making tangible progress on our commitments to diversity and inclusion, including to minority -, women -, and veteran - owned firms. let me now turn to transparency and accountability. in the spirit of these principles, we have reported to the public in near real - time our market activity, including the details of every smccf transaction. our holdings are publicly reported on a weekly basis through the fed β s h. 4. 1 release. every month the fed publishes the full holdings in a detailed congressional report. we also provide the attributes of the broad market index, including detailed issuer - level weights. aside from portfolio activity, we have also disclosed the ccf β s legal agreements. on the new york fed β s website, you can find all documentation with the department of treasury that governs the operation of the facilities, as well as all contracts with external vendors. on the latter, we remain committed to disclosing all fees to service providers as they are paid. impact on credit conditions as you all know, corporate credit conditions have recovered substantially from the worst strains of march. research from the new york fed estimates that, within the first three months following the ccf announcement, credit spreads retraced about 90 percent toward pre - pandemic levels, with two - thirds of the improvement occurring on facility announcement dates ( i. e., before purchases even began ), and that half of the improvement in bid - ask spreads since the peak in march occurred on the initial announcement date itself. 14 this provides strong evidence that the market found credible the design
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from cyber threats. i therefore invite you today to become part of the euro cyber resilience board ( ecrb ) for pan - european financial infrastructures β a regular forum where we can work together in a trusted environment. the ecrb β s objective is to enhance the cyber resilience of financial market infrastructures and their critical service providers, as well as that of the wider eu financial sector, in line with international standards. this will be achieved by fostering trust and collaboration and facilitating joint initiatives β whether among market players or between market players and authorities. the ecrb will thus contribute to the overall stability of the eu financial system. the ecrb will have no formal powers to impose binding measures and will not make supervisory judgements. its legitimacy will stem from the voluntary commitment of its members to abide by its common positions, statements and strategic views. the ecrb will be chaired by the ecb, which will be closely involved together with national 1 / 2 bis central bankers'speeches central banks and observers from the relevant european public authorities. this will ensure that the ecrb acts in the interest of europe as a whole. its common positions, statements and strategic views will be adopted by consensus. to kick off the work of the ecrb, we would like to reflect with you on possible work items which we could address collectively. as part of this, we will also report on two of our most recent activities. first, a cyber resilience survey, developed under the eurosystem oversight cyber resilience strategy, was conducted across more than 75 payment systems, central securities depositories and central counterparties throughout europe. as you will see, the survey highlighted a number of very pertinent issues for discussion, such as cyber governance, training and awareness, and cyber incident response. second, the eurosystem is currently finalising the main elements of the european threat intelligence - based ethical red - teaming ( tiber - eu ) framework. this is an interesting concept which we hope will raise the level of cyber resilience in europe and enable cross - border, crossauthority testing, which has not been done before. we look forward to hearing your feedback on these two initiatives. we will also update you on the forthcoming market - wide exercise, which will explore the challenges of a specific cyber scenario and see how we can work closer together in times of crisis. i am confident that we will have a fruitful discussion. i will now hand over to my colleague sabine
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s no point artificially setting the interests of different countries against each other, because we are all in the same boat β¦ your policies have also weakened the banks, who have seen their margins shrink to the point that some of them are no longer concerned about charging for deposits. on the one hand, interest rates are not low because of the ecb. us lowering our β key rates β ( for example, the rate at which bank deposits held with the ecb are remunerated ) to very low or even negative levels means that there is a savings glut in the economy : the natural rate of interest has fallen due to weak growth, the ageing population and a sort of anxiety in the global economy leading to demand for very safe assets, like government bonds. but for monetary policy to work and stimulate the economy, the interest rates set by the central bank have to be below this equilibrium rate. if one wants to return to a situation in which savings generate returns and conditions are supportive for the financial sector, criticising the central bank achieves nothing. action needs to be taken on the fundamentals to boost returns on capital, which would naturally lead to interest rates increasing, and the central bank could follow. on the other hand, it is true that the fact that the yield curve is flat, in other words that interest rates are low across the maturity spectrum, is weighing on the financial sector. indeed, the difference between the long - term performance of savings and the short - term cost of funding is currently almost zero. but what is weighing even more heavily on the profitability of european banks is that they have a cost base that is much higher than that of banks in the united states, japan, the united kingdom and scandinavia, and that, in certain countries, they have nonperforming loans on their balance sheet that no longer yield a return. and finally, there are too many banks in europe and consolidation has not started. so, we need fewer banks in the euro area? the banking union hasn β t yet enabled consolidation within the sector. we need to see crossborder m & a activity in the banking sector, and we also need to overcome a number of obstacles to banking activity. but the banking union has played a useful role in stabilising a sector that is now much more robust than it was in 2012, since the ecb has taken on the role of banking supervisor and has strengthened capital and liquidity requirements. it is important to recognise that one of the
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efforts to recruit high - fliers. the days when a prestigious university degree alone certifies your excellence has now come to an end. given the fast - evolving nature of work - related knowledge, we all need to strive to improve ourselves and develop expertise, while the bank needs to provide you with its full support. it is time for us to focus our endeavors on replacing the outdated belief, that only exceptional talent can get into the bank of korea, with a new perspective, where anyone with a decade of experience at the bank of korea will be worth scouting by headhunters. in order to achieve this, it is necessary to delegate job authority effectively, empowering individuals to take responsibility and make key decisions even at lower levels. also, we need to break away from the existing framework, where authority and responsibility were concentrated in a few hands and where only the governor represented the bank of korea. sharing information across the bank is crucial to prevent any monopolization of information within our organization. furthermore, when engaging in external communication, each one of us needs to embody our role as representatives of the bok and as experts in our respective fields. i will support these changes by reinforcing our human resources and performance evaluation systems, to ensure that employees who take the lead in driving these changes receive appropriate rewards and recognition for their contributions. dear members of the bank of korea, i want to highlight once again that the upcoming year will be a crucial period that requires changes in both policy decisions and in our own organizational management more than ever. given the diverse economic conditions prevailing across countries, it is imperative for us to conduct a more sophisticated policy operation to promote the stability of the korean economy. at the same time, we must actively perform our role as a government policy advisor, contributing to the medium - to long - term direction of the korean economy. also, in terms of organizational management, our focus should be on ensuring that our staff can tangibly experience the benefits of a more rewarding and fulfilling work life. as the old saying goes, we should create the new by learning from the old. let's build upon the achievements of our predecessors and create a new tradition to elevate the status of the bank of korea. i specifically would like to encourage our younger employees to be at the forefront of this transformation. i've heard that these days younger people often ask, " why? " or, " me? " or, " now? " when assigned a task. here
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seung park : korea β s experience in the choice of bank supervisory arrangements speech by dr seung park, governor of the bank of korea, at the 39th seacen governors β conference, colombo, sri lanka, 12 february 2004. * 1. * * introduction this afternoon, i would like to talk about korea β s experience in the reform of the financial supervisory system. in april 1998, korea established an integrated financial supervisory body responsible for banking, securities, and insurance. as you may be well aware, the united kingdom and japan launched integrated financial supervisory systems : the u. k. in october 1997 and japan in june 1998. in some ways, therefore, korea was going along with a new international trend toward bringing together financial supervision within a single agency. the republic of china, and governor fai - nan perng will correct me if i am wrong, intends to set up an integrated financial supervisory body this july. and the people β s republic of china has, meanwhile, stripped the central bank of its bank supervisory function and established a separate bank supervisory agency. in most other seacen member countries, i understand that the central bank exercises the function of bank supervision. so i think that my fellow governors may have a deep interest in proposals to establish a separate financial supervisory body. i believe that korea β s experience, in this regard, may be of some help to you in this area. let me now express my deep thanks to our gracious host, governor jayawardena, for providing me with this opportunity. 2. establishment of integrated financial supervisory agency the financial supervisory system prior to integration until the 1998 reorganization, korea had several supervisory bodies responsible for different types of financial institutions. the office of bank supervision of the bank of korea ( bok ) supervised commercial banks. it authorized the market entry of new banks, laid down prudential regulations, held on - site examinations, and exercised discipline over them. two other major supervisory bodies were the securities supervisory board responsible for securities companies and the insurance supervisory board, the insurance company watchdog. both these supervisory bodies came under the direction of the ministry of finance and economy ( mofe ). debate over the integration of financial supervisory bodies great changes had, however, been taking place in the financial institutions β operating environment particularly since the mid 1990s. following korea β s admission to the oecd in late 1996, competition in the korean financial market became fiercer and fiercer as the financial and capital markets were thrown open in line with oecd
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dollar petronas sukuk and bond took approximately one month, from structuring the instrument and date of submission to the authorities, to book building and the issuance date β reflecting the efficiency of the malaysian market. prior to this, malaysia has also seen wide ranging ringgit - denominated issuances by nonresident issuers. multi - nationals, foreign corporations and multilateral agencies such as the international finance corporation, international bank for reconstruction and development, and the islamic development bank have successfully issued sukuk in malaysia. all these issuances garnered overwhelming response from resident and non - resident investors as reflected by the oversubscription of these sukuk issuances. the liquidity and tradability of these ringgit issuances have been supported by the diverse range of players in the domestic islamic financial system and the increasing demand from foreign investors. the establishment of cmh marks a further milestone in the development of the islamic financial system under the mifc initiative, sustaining the continued evolution and the development of islamic finance. i wish to acknowledge the endorsement of the ministry of plantation industries and commodities and the support by the malaysian palm oil board, malaysian palm oil association and malaysian palm oil council as well as the cpo industry players towards this initiative. on this occasion, i wish to take the opportunity to congratulate the team at bursa malaysia, bank negara malaysia, the securities commission and the market players for their perseverance in concluding this project that was started two years ago and in making it a reality today.
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number of cheques over the country β s population, or cheques per capita, it is at 7. 1. this figure is much higher than 3. 9 in advanced countries such as norway, finland and australia. it is also worth noting that 92 % ( or 18. 4 million ) of the total adult population in malaysia have banking accounts and of these, about 74 % ( 13. 7 million ) of bank account holders have internet banking accounts. however, although 74 % of the bank account holders have internet banking access, only 43 % ( 5. 9 million ) of the internet banking subscribers are active users in conducting financial transactions. in this regard, we have not reached a stage where the masses are familiar or have gained sufficient trust in using internet banking to conduct their financial transactions. it is through educational programs such as this roadshow event that we hope the businesses will take the opportunity to learn more about the security safeguards and safe practices to gain sufficient confidence to adopt online banking and conduct e - payments. touching on the issue of security, the banking industry has implemented additional security features such as the introduction of two - factor authentication to ensure the validity of internet banking users in addition to the use of user identification and password. for your information, the losses due to internet banking fraud, accounts for only 0. 0002 % of the total transactions of rm3 trillion recorded in 2012 and this figure has declined to 0. 0001 % of the transaction amount of rm2. 6 trillion in the first nine months ( january β september ) this year. the speakers will share with us more about the safety features and safe practices to conduct internet banking afterwards. to encourage the migration to e - payments, bank negara malaysia has announced a new pricing strategy for payment services in march this year. the transaction fee for ibg conducted via internet and mobile banking has been reduced from rm2 to 10 sen with effect from 2 may 2013. this is to give the public and businesses an 11 month head - start to adopt e - payments before the cheque processing fee of 50 sen is imposed on 1 april 2014. the adjustment to the ibg and cheque prices is to align them closer to their cost of production. the actual cost of production is about rm3 per cheque and currently consumers pay only 15 sen for the stamp duty per cheque leaf. the 11 months delay in the increase in cheque fee was intentional to allow the public and businesses to familiarize themselves with the use of online banking to
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##pr. this would be the trade - off for the continuity thus provided. ii. beyond brexit, building a financial eurosystem clearly, brexit is, and will remain, bad news not only for the united kingdom, but for europe as well. but to a certain extent it can also represent an opportunity to restructure the european financial system. we have an effective monetary eurosystem consisting of the ecb and the 19 national central banks ; we have the legal framework for a single financial market and β in part β a banking union ; we have an exceptional savings capacity β one of the highest in the world β with an annual flow of eur 400 billion in euro area financial savings in the second quarter of 2018. 2 however, as yet we do not have a β financial eurosystem β, made up of stronger and paneuropean financial institutions and shared market infrastructures. let β s be clear : there will not be a single city for the continent, but rather an integrated polycentric network of financial centres, with specialisations based on areas of expertise. a polycentric system of this nature can function, as illustrated by the united states : new york β s financial centre is favoured by corporate and investment banks, chicago β s financial centre handles futures, while boston specialises in asset management. paris is well qualified to become the β market hub β of this new european constellation. our capital hosts four of the euro area β s eight global systemically important banks, the top life and non - life insurance sector and asset management industry, one of the leading bond markets and the largest continental commercial paper market with neu - cp. it is also the biggest private equity investor in continental europe. in addition, the french financial authorities, including the banque de france and the acpr, are working together to facilitate the dissemination of sound and safe financial innovations and to foster the scaling up of sustainable finance. moreover, paris offers the leading source of highly qualified financial services personnel. consequently, many global banks have already decided to transfer the majority of their market activities to paris. this new system will require a single rulebook implemented in a harmonised manner. and we are close to achieving it in the banking sector, but we are not quite there in the insurance sector. it is thus necessary to further strengthen the role of the european supervisory authorities, and france supports β although it remains a little too alone in doing so β the commission β s proposed reform of the esa
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our set - up, with a clear medium - term focus, the eurosystem does not need or have to react mechanically to short - term deviations of monetary growth from the reference value. instead, monetary developments, i. e. both the developments of the components of m3 and of its counterparts, are analysed very carefully in order to examine and extract their information content for future inflation. * * * part 2 : the achievements of the eurosystem β s monetary policy what preliminary assessment can we make of the first six years of the single monetary policy? i would like to underline the following points, considering successively price stability, macroeconomic stability and convergence, monetary stance and predictability. 1. the achievement of the overriding policy objective : price stability confronted with a series of adverse exogenous supply shocks ( affecting in particular oil prices, food products and services prices ) leading to a rise in the hicp of above 2 % in year - on - year terms from 2000 to 2002, the level around which the hicp has hovered since, the eurosystem has been able to achieve its main objective : since the eurosystem became responsible for monetary policy in the euro area, hicp inflation has averaged 2 %, which is near to the β close to but below 2 % β at which we aim over the medium term. let me remind you that hicp inflation was around 4 % in the 1980 β s and about 9 % in the 1970s [ see figure 1 ]. until recently, the single monetary policy also succeeded in stabilising and anchoring medium to longterm inflation expectations at around 1. 8 % to 1. 9 %, despite all the above mentioned shocks. that is to say, once again, at a level close to, but below, 2 % in accordance with our definition of price stability β whether one takes the inflation expectations derived from surveys ( for example, consensus forecast, or the ecb survey of professional forecasters β [ see figure 2 ] ) or those drawn from market data, notably index - linked government bonds. recently, the awareness of a durable higher cost of oil has pushed expectations slightly above 2 %. the last december key ecb interest rate β s hike has however brought these market expectations back to 2 % that is to say in line with our definition of price stability over the medium term. 2. macroeconomic stability and convergence price stability has not come at the expense of higher unemployment. moreover, there are no visible signs
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jessica chew cheng lian : financial inclusion strategies in asean economies speech by ms jessica chew cheng lian, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the asean financial inclusion forum, kuala lumpur, 25 april 2017. * * * it is a great honour for bank negara malaysia to host the first asean financial inclusion forum. we warmly welcome you to kuala lumpur. let me also especially thank the distinguished speakers from indonesia, philippines, singapore and thailand ; and experts from afi, uncdf and the world bank for graciously taking the time to share your invaluable experience in pursuing financial inclusion strategies with participants of this forum. asean today is one of the fastest - growing and most dynamic regions in the world. we are home to 630 million people and a burgeoning middle class, with individual economies that are diverse in terms of demography, income level, resource endowment, financial sector development ; and economic size, structure and systems. a vibrant sme sector contributes 50 to 80 percent of asean β s workforce and accounts for 96 percent of enterprises in the region, linked by more extensive cross - border production networks and the intensification of intra - regional trade and investment activities. growth for the region is still expected to outperform average global growth in 2017 and 2018, and this is expected to be sustained going forward. asean β s growth story has been supported by greater traction in recent years in regional financial integration which will expand sources of financing and investments for economic activities, deepen the region β s financial markets, and enhance the competitiveness of asean businesses through efficiency gains ( for example through lower costs of payments and settlements ). growth and development across the region however does not guarantee equal opportunities for all to lift their social and economic circumstances. nor can it therefore be assumed that income and wealth divides will narrow. history bears this out, as despite advances in financial globalisation over several decades, income inequality has actually worsened in many parts of the world β including both developing and developed countries. for asean, a key priority has therefore been to ensure that greater economic and financial integration progresses in lockstep with greater financial inclusion. for many policymakers in this room, the challenges are pressing with 265 million or 44 % of adults in asean who are still unbanked. this represents nearly half of the adult population in the region who do not have access to safe and reliable basic banking services, with broader implications for health, economic and social outcomes. asean
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. 9 percent in 2002, even as the population grew substantially. 2001 and early 2002 was $ 27, 000. refinancing activity surged further in the second half of 2002 : according to one set of federal reserve staff estimates, mortgage refinancings totaled $ 400 billion in the third quarter of 2002 and more than $ 550 billion in the fourth quarter of 2002, after averaging $ 325 billion ( quarterly rate ) over the preceding six quarters. from a macroeconomic point of view the refinancing phenomenon has very likely been a supportive factor. the precise effect is difficult to identify, since we cannot know for sure how much of the spending financed by equity cash - outs might have taken place anyway. fairly generous assumptions about the propensity of households to devote equity cash - outs to new spending suggest that refinancings may have boosted annualized real consumption growth between ΒΌ and Β½ percentage point in the second half of 2002, the period of maximum impact. a fairly substantial gap still remains between the current level of mortgage interest rates and the average level of interest on the outstanding stock of mortgages, suggesting that refinancings should continue at a brisk pace in the early part of this year. as refinancings slow later this year, however, they will create a slight drag on consumption growth relative to 2002. an important aspect of the surge in mortgage refinancings is that, on the whole, they have probably improved rather than worsened the average financial condition of the household sector. notably, a substantial portion of equity extraction, probably about 25 percent, has been used to pay down more expensive, nondeductible consumer credit ( such as credit card debt or auto loans ), with additional funds used to make purchases ( such as cars or tuition ) that would otherwise have been financed by more expensive and less tax - favored credit. in short, the consumer has taken advantage of an unusual opportunity to do some balance sheet restructuring. this restructuring has not come at the cost of a dangerous increase in leverage. as already noted, loan - to - value ratios for home mortgages have barely changed in recent years. moreover, analysis by members of the federal reserve staff suggests that the great bulk of cashed - out equity has been taken out by older, long - tenure homeowners who have gone into the transaction with high levels of home equity ( often 100 percent equity ) and have retained substantial equity after the transaction. in summary, a deeper analysis shows that much of the
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' fear of floating'which means the tendency for their central banks to quickly resort to raising interest rates whenever the exchange rate is in danger of falling. what the chilean finance minister called the australian model, of course, is not unique to australia, 4 but it is associated with australia in latin american and asian economic circles because of australia's success in withstanding the asian crisis. while some countries such as chile see it as a sort of role model, many asian countries have chosen a different path by running current account surpluses, building up large holdings of international reserves and resisting changes in their exchange rates. as you know, we think this is a major reason for the growing global payments imbalances, and would be happier if they followed a model closer to our own. but that is another story. the interesting issue for other economies, particularly emerging market economies, is how do you reach the situation where you can borrow abroad in your own currency, or, to put it differently, where investors in other countries will willingly hold assets denominated in your own currency. when we look back and see how australia reached this position, it is a very interesting ( and reasonably recent ) story. the major step occurred when the government decided that it would borrow honestly from its own citizens. that is, it would stop using captive arrangements that force financial institutions to take government paper, and stop setting the interest rate on its own paper. in our case this occurred when we introduced the tender system for selling treasury notes in 1979 and bonds in 1982, and soon after made clear that the government would no longer borrow from the reserve bank, but instead borrow from the public to finance the budget deficit dollar for dollar. at first we had to accept very high interest rates, but in time demand for government paper expanded, and most importantly overseas investors began to find australian government bonds denominated in australian dollars an attractive investment. it was not necessary to ask them to invest, nor to do'road shows'on wall street to entice them. at the canada and new zealand also have the characteristics listed when describing the australian model. for a discussion of the difference between australia and some other commodity exporters, see : barry eichengreen and ricardo hausmann ( 1999 ), β exchange rates and financial fragility, β in federal reserve bank of kansas city, new challenges for monetary policy, pp329 β 368 ; and ricardo j. caballero, kevin cowan and jonathan kearns (
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not been needed. that is all i wish to say about oil prices, other than to add the caveat that i am only talking about the increases to date. obviously, if we enter a new round of similar increases, the situation would have to be reassessed. world interest rates it is well known that the world has recently gone through a phase of exceptionally low interest rates, but i am not sure that people appreciate how low they were by historical standards. in fact it is not much of an exaggeration to say that interest rates in mid 2003 were at their lowest level for a century. this was the time when official overnight rates β the ones set by central banks β were 1 per cent in the united states, 2 per cent in the euro area, and zero in japan. the only qualifications i have to make to my earlier generalisation is to concede that rates may have been slightly lower during the second world war in some countries such as the united states and united kingdom when quantity rationing was the norm, but they have not been lower in peace time. we can construct an indicator of world interest rates for a century or more using a weighted average of the rates for the united states, united kingdom, germany and japan. graph 1 shows the results for official overnight interest rates or their nearest equivalent since 1860. although the graph is dominated by the high interest rates during the great inflation of the 1970s, the readings for 2002 and 2003 are lower than any other time in this long span of years. 1 part of the explanation is that inflation was low, but it was only low compared to the post - war standard β it was not low compared to most of the period covered by the graph. in fact if we construct simple measures of real interest rates ( based on realised inflation rates ), they were also low by the standards of earlier low inflation periods. 2 in table 1, real interest rates in the first five years of this decade are lower than in any previous decade apart from those containing the two world wars and the 1970s. graph 1 the observation for 1923, the year of the weimar inflation in germany, had to be deleted because it did not fit on the scale. the problem with most measures of real interest rates is that they become negative during periods of unanticipated rises in inflation such as the 1970s. for this reason, meaningful comparisons of real interest rates ( using realised inflation rates ) should only be made for periods of low and stable inflation such as the present.
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on the medium term acknowledges that monetary policy cannot steer price developments in the short term. at the same time, it reflects the notion that measured policy reactions to threats to price stability can prevent unnecessary volatility being introduced into the economy. the ecb's quantitative definition of price stability has established a range of inflation outcomes deemed compatible with price stability. the range definition that we have adopted reflects the degree of uncertainty attached to the meaning and measurement of the concept of price stability. it allows uncertainty about the measurement bias in the hicp to be accommodated within the range, while ensuring that " true " price stability ( zero inflation ) is included. moreover, the definition provides a " buffer " in the face of economic shocks and avoids the impression that monetary policy is equipped to fine - tune price developments with a high degree of precision. regarding the definition of price stability, i wish to emphasise two further aspects. first, it is defined with reference to the euro area as a whole. the ecb has made it very clear that monetary policy cannot, and should not try to, address regional or local economic problems. secondly, the governing council aims to avoid both inflation and deflation. we are well aware of the potential problems associated with the hitting of the zero lower bound on nominal interest rates and the attendant potential loss of effectiveness in the conduct of monetary policy under conditions of persistent price deflation. this is an important reason why there is a safety margin, in the form of small positive inflation rates below 2 %, in our definition. in order to form an appropriate assessment of the success or failure of the ecb's monetary policy, the medium - term orientation of the ecb's policy should be borne in mind. monetary policy needs to be evaluated over a sufficiently extended period. the ecb's policy can be considered successful if price stability, according to our definition, has prevailed for most of the time and if variability of inflation has remained low. from the start, the definition set by the governing council has served very well the purpose of anchoring medium - term inflation expectations. this is evident from inflation expectations derived from market surveys or from the analysis of yields on long - term bonds. this stability of inflation expectations is remarkable given that we had to face substantial shocks to the price level in the euro area β mainly stemming from energy and food prices β over the past three years. the definition of price stability has thus reduced inflation uncertainty, thereby lowering the risk premia included in longterm
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innovation and other market developments. as you know, the dodd - frank act created a council of regulators, the financial stability oversight council, to coordinate efforts to identify and mitigate threats to u. s. financial stability across a range of institutions and markets. the council β s monitoring efforts are well under way, and this new organization has contributed to what has been a very positive atmosphere of consultation and coordination among its member agencies. the council is also moving forward with its rulemaking responsibilities, including rules under which it will be able to designate systemically important nonbank financial institutions and financial market utilities for additional supervisory oversight, including by the federal reserve. for its part, the federal reserve has also made organizational changes to promote a macroprudential approach to regulation. among these changes is the establishment of high - level, multidisciplinary working groups to oversee the supervision of large, complex banking firms an appendix to this testimony provides details on the federal reserve's progress in meeting its responsibilities under the dodd - frank act. bis central bankers β speeches and financial market utilities, with a strong focus on developments that have implications for financial stability. we have also created an office of financial stability policy and research to help coordinate our efforts to identify and analyze potential risks to the broader financial system and to serve as liaison with the council. a second major objective of financial reform is to mitigate the threats to financial stability posed by the too - big - to - fail problem. here the dodd - frank act takes a two - pronged approach. the first prong empowers the federal reserve to reduce a sifi β s probability of failure through tougher prudential regulation and supervision, including enhanced risk - based capital and leverage requirements, liquidity requirements, single - counterparty credit limits, stress testing, an early remediation regime, and activities restrictions. the federal reserve and other agencies face the ongoing challenge of aligning domestic regulations with international agreements, including the basel iii requirements for globally active banks. these efforts are going well ; in particular, the federal reserve expects to issue proposed rules on the oversight of sifis later this summer and, working with other banking agencies, is on schedule to implement basel iii. ending too - big - to - fail also requires allowing a sifi to fail if it cannot meet its obligations β and to do so without inflicting serious damage on the broader financial system. thus, the second prong of the dodd - frank act β s effort to end
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, suggests that the output gap was close to the lower end of this range. 12 however, an alternative structural approach suggests that the output gap was closer to 1ΒΎ per cent in the fourth quarter. 13 this reflects material slack in total hours worked, as well as a level of labour productivity that is considerably below its trend. other labour market indicators also point to a greater degree of slack than the conventional measure. for potential output is the level of output that can be sustained in an economy without adding to inflationary pressures. identifying the current level of potential output is necessary to estimate the output gap, which is a key measure of inflation pressures. the conventional measure is based on the extended multivariate filter method ( see l. butler, β the bank of canada β s new quarterly projection model part 4. a semi - structural method to estimate potential output : combining economic theory with a time - series filter, β technical report no. 77, bank of canada, 1996. for a description of the structural approach, see β appendix a : potential output β on page 27 in the october 2013 monetary policy report. bis central bankers β speeches example, the proportion of involuntary part - time workers and the average duration of unemployment are still elevated ( chart 12 ). explaining the current level of core inflation with the phillips curve is not easy. simple econometric estimates of the coefficient on the output gap, b, would suggest a value of around 0. 1. conditional on our assessment of economic slack as 1ΒΌ per cent ( the midpoint of the range ), this would predict core inflation of 1. 9 per cent. this is well above actual inflation, which is running at about 1 per cent. of course, the true coefficient b could be bigger than 0. 1. as you might expect, we have looked at this at the bank of canada. and indeed, we find that controlling for factors not captured in this simple equation could increase the coefficient to around 0. 3. 14 this produces a predicted value for core inflation of 1. 6 per cent. this is better, but it still leaves a significant portion of the weakness in inflation unexplained. given the high degree of uncertainty around real - time estimates of the output gap, it is possible that the level of economic slack is greater than currently estimated. indeed, the range we provide in the monetary policy report is designed to convey this uncertainty. however, even assuming a coefficient of 0. 3 on the output gap, we would need
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focus on the impact of trade on u. s. jobs β both positive and negative β and discuss some possible policy responses. trade and jobs does opening u. s. markets to foreign producers destroy jobs at home? the expansion of trade or changes in trading patterns can indeed destroy specific jobs. for example, foreign competition has been an important factor behind declining employment in the u. s. textile industry, including in my home state of south carolina. job loss β from any cause β can create hardship for individuals, their families, and their communities. i will return shortly to the question of how we should respond to the problem of worker displacement. for now, however, i will point out that trade also creates jobs β for example, by expanding the potential market overseas for goods and services produced in the united states, as i have already discussed. trade creates jobs indirectly as well, in support of export activities or as the result of increased economic activity associated with trade. for example, gains in disposable income created by lower consumer prices and higher earnings in export industries raise the demand for domestically produced goods and services. domestic production and employment are also supported by expanded access to raw materials and intermediate goods. the u. s. jobs created by trade also tend to offer higher pay and demand greater skill than the jobs that are destroyed β although a downside is that, in the short run, the greater return to skills created by trade may tend to increase the wage differential refer also to bhagwati ( 2004 ). between higher - skilled and lower - skilled workers and thus contribute to income inequality ( bernanke, 2007 ). the effects of trade on employment must also be put in the context of the remarkable dynamism of the u. s. labor market. the amount of " churn " in the labor market β the number of jobs created and destroyed β is enormous and reflects the continuous entry, exit, and resizing of firms in our everchanging economy. excluding job layoffs and losses reversed within the year, over the past decade an average of nearly 16 million private - sector jobs have been eliminated each year in the united states, an annual loss equal to nearly 15 percent of the current level of nonfarm private employment. 6 the vast majority of these job losses occur for a principal reason other than international trade ( kletzer, 2001 ; bernanke, 2004 ). moreover, during the past ten years, the 16 million annual job losses have been more
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rationale, the scope, the limits the objectives and the instruments ought to be clarified to the extent possible since there is a paradigm shift in the role of the financial sector in economic growth and social justice. expectations of public from regulation need to be clearly appreciated and if necessary moderated. at an operational level, arrangement for information exchange and coordination must be put in place and reviewed on a continuous basis. at a legislative level, changes to distinguish owners, regulators and market participants in the financial system are essential. above all, designing and managing all these changes require a combination of political will and professional skill. thank you.
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with financial markets, which should admittedly be two - way for optimal results, exclude communication by / with the government? naturally communication by / with the government, by its very nature, will have a differential and, at times, overlapping impact. but how does it affect the independence of the central bank and its policy effectiveness? this dimension poses a challenge for communication policy. third, the education function of central bank communication, that professor blinder referred to, may be more important in emes. in fact, such a function may enlarge the role of a central bank in the emes, when it carries credibility. in this regard, let me quote from an undelivered speech of a distinguished central banker 2 on the subject. β communication is not just about transparency. it is also about education, guidance and steering things in the right direction. in this, the central bank can be an honest broker between the government and the public and even the parliament. β in fact, a central bank can influence changes in public policy that are relevant to monetary and financial policies. for example, at the cost of modesty, let me quote mr. tarapore, a respected central banker. " β¦ when the definitive history of india β s policy on gold is written up, the speech by dr. y. v. reddy, deputy governor, reserve bank of india, at the world gold council conference on 28 november 1996 will stand out as a watershed as it is perhaps the only speech by a senior indian official which squarely takes on issues on gold policy and it will be appropriately recorded as a forerunner of major policy change ". 3 fourth, relative to many other institutions in the public sector, central banks in many emes happen to have professional skills, experience and objective and independent thinking which can be drawn upon by the government, especially during the process of reform, in particular reforms in the financial sector. structural changes involving institutional and legal changes in emes may need active inputs from the respective central banks. how do theory, practice and expectation of a transparent and independent central bank reconcile with these practical compulsions? fifth, the issue of financial stability is of great significance and enormous complexity for central bankers in the emes. these economies vary considerably with regard to their fiscal, current account, openness to external sector, and dependence on oil - earnings or oil - imports. yet, the analysts in the financial markets often treat them as a group, presumably because the emes are perceived to be high -
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system of european banking supervision. we have joined forces to make the banking sector safe and sound. in my view, this was the right thing to do. over the past decades, the financial system has turned into a global village. as a result, a crisis, say, affecting a single bank can quickly spread around the entire globe β as happened in 2008. this is particularly true for monetary unions such as the euro area. here, problems can spread even faster and may threaten the financial stability of the entire union. therefore, european banking supervision brings real benefits. it allows us to look beyond national borders and national interests. when we supervise banks and take decisions, we take a truly european view. at the same time, we can compare banks across the euro area and gain many more insights than national supervisors could. we can draw on a huge pool of expertise as our analyses are based on the knowledge and experience not only from the ecb but from across europe and beyond. all in all, the ecb itself brings together staff from 28 different countries. so not only do we have lots of data and information but we also have the resources to analyse it. all this helps to spot potential problems early on and thoroughly assess their impact. we can combine the best approaches to banking supervision from 19 different countries. we can ensure that high standards are uniformly applied in the entire euro area. this creates a stable and predictable business environment for banks that operate across borders. wherever they go in the euro area, they are supervised to the same standards and methods. the idea of harmonisation goes beyond supervision ; it is the theme of the entire european banking union. in january 2016, a european resolution mechanism for banks was introduced. it ensures that banks across the euro area can be resolved according to the same rules. a european deposit guarantee has not yet been agreed upon β but even without one we have made good progress. altogether, the banking union helps to create a level playing field for banks. this is the ground on which a truly european banking sector can emerge. and contrary to what 2 / 6 bis central bankers'speeches some people say, a large common market is better than isolated national ones. a common market creates more jobs, more income and more wealth. on that note, let us move to the second part of my speech. growing apart β brexit and the banks it seems that by now we have got used to political events that defy all expectations. last june, however, it was still a
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muhammad bin ibrahim : financial services industry β opportunities and challenges for asia and europe speech by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the 12th asia - europe business forum : β the potential role of islamic finance in contributing to global financial stability β, brussels, 4 october 2010. * * * i am honoured to be invited to speak at this asia - europe business forum themed β financial services industry : opportunities and challenges for asia and europe β. during a time of global economic challenge and uncertainty, following the recent unprecedented global financial and economic crisis, it is timely for this forum to take place as a platform for business leaders and policymakers across asia and europe to reflect on the challenges and to discuss on solutions that can contribute to restoration of global financial stability. my address has a specific focus on islamic finance since over the last ten years it has grown phenomenally and it will play an important role in promoting greater global financial stability. in the current search for an enduring solution to ensure stability of financial systems, islamic finance offers tremendous potential in shaping more resilient financial systems that enables financial intermediaries to function efficiently within national economies and across borders. the much talk about discussions that banking should return to its fundamental functions of providing financial services which add value to the real economy, represents the very principle of islamic finance that explains its relative resilience during the crisis. effects of the 2008 / 09 global financial crisis and asia β s response the recent crisis had the global financial system badly shaken with widespread effects of an unprecedented scale across the world. the asian region has however demonstrated remarkable resilience during the crisis as most countries in asia entered the crisis period with a sound set of economic and financial fundamentals, mainly attributed to the lessons learned from the asian financial crisis of the late 1990s. it was painful. it was a bitter lesson. we embarked on a bold reform that fundamentally alters the landscape of our financial system. but the payouts have been tremendous. the governments of the asian economies have now the flexibility to implement large stimulus, given the strong economy and low public debt levels in the region. credit flows to the private sector remain undisrupted as financial institutions in the asian countries were strong and well capitalised. the household and corporate sectors in asia were also not over leveraged. furthermore, asia was not confronted by widespread unemployment. the various reform measures had enabled the asian economies to build more shock absorbers and reduced the number of shock amplifiers in their economies following the
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/ speeches chart 9 : cbps portfolio relative to sector key ( a ) as at 5 january 2017 ( b ) as at cob 4 january 2017 source : bank calculations all speeches are available online at www. bankofengland. co. uk / speeches
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programs will be terminated when conditions are no longer so adverse. those programs and others have been designed to be unattractive in normal market conditions and will naturally wind down as markets improve. however, our newly purchased treasury securities and mbs will not mature or be repaid for many years ; the loans we are making to back the securitization market are for three years, and their nonrecourse feature could leave us with assets thereafter. but we have a number of tools we can use to absorb the resulting reserves and raise interest rates when the time comes. we can sell the treasury and agency debt either on an outright basis or temporarily through reverse repurchase agreements, and we are developing the capability to do the same with mbs. we are paying interest on excess reserves, which we can use to help provide a floor for the federal funds rate, as it does for other central banks, even if declines in lending or open market operations are not sufficient to bring reserves down to the desired level. finally, we are working with the treasury to promote legislation that would further enhance our toolkit for absorbing reserves. our work on the framework for exiting these programs is one indication that we are focused on maintaining price stability over time even as we concentrate for now on promoting economic recovery. another such indication is our increased emphasis on defining the price stability goal more clearly. already the fomc has extended its forecast horizon to indicate where the governors and reserve bank presidents would like to see inflation coming to rest over time. and we are continuing to discuss within the committee whether an explicit numerical objective for inflation would be beneficial. under current circumstances, those benefits would include underscoring our understanding that our legislative mandate for promoting price stability encompasses both preventing inflation from falling too low in the near term and from rising too far as the economy recovers. have we compromised our independence? no. central banks all over the world and the legislatures that created them have recognized that considerable independence from short - run political influences is essential for the conduct of monetary policy that promotes economic growth and price stability. to be sure, in the process of combating financial instability, we have needed to cooperate in unprecedented ways with the treasury. our actions with the treasury to support individual systemically important institutions have sparked intense public and legislative interest. as chairman bernanke has indicated, the absence of a regime for resolving systemically important nonbank financial institutions has been a serious deficiency in the current crisis, one that the congress needs to remedy. congress
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to restore the equilibrium between supply and demand for capital. monetary policy amid low interest rates what does the lower level of interest rates worldwide mean when it comes to conventional monetary policy? if interest rates are already low, monetary policy is less able to respond to shocks. if the economy and inflation weaken, a central bank will normally stimulate economic activity by lowering interest rates. this mitigates the slowdown and stabilises prices. if interest rates are already low, however, a central bank only has a few moves at its disposal before rates reach zero. and once that happens, conventional monetary policy ends. the restrictions on the latitude of conventional monetary policy are even more pronounced in the case of switzerland. indeed, our country has traditionally been known for its political and economic stability, and the swiss franc is thus viewed by investors as being particularly safe. in return for this security, they are prepared to hold investments in swiss francs at lower rates of interest than they would in other currencies. this has in the past led to interest rates in switzerland generally being lower than in other countries. therefore if monetary policy page 3 / 8 needed to be eased, the starting point for interest rate cuts was correspondingly lower here than elsewhere. monetary policy reaction to the major economic crisis ladies and gentlemen, the global financial and economic crisis broke out eleven years ago, and was followed by a marked decline in economic output and inflation. at that time, the snb had to switch to an expansionary monetary policy stance in order to fulfil its mandate. we initially responded with conventional measures, and quickly lowered interest rates to virtually zero. the global financial crisis was swiftly followed by the sovereign debt crisis in the euro area. the attendant uncertainty on the financial markets bolstered demand for the swiss franc as a safe haven, thus putting appreciation pressure on our currency. to counter these upward forces, we had no option but to resort to unconventional means. we intervened on the foreign exchange market, and in september 2011 introduced a minimum exchange rate against the euro. from mid - 2014 onwards, the international monetary policy environment began to change. on the one hand there were increasingly clearer signs that the us was about to adopt a tightening stance, whereas in the euro area a loosening of monetary policy was becoming more and more likely. the euro subsequently depreciated markedly against the major currencies. as a result, by the beginning of 2015 the minimum exchange rate was no longer sustainable. to retain control over our monetary
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funds, life insurers and banks? the marked weakening in the economy would cast a pall over the earnings prospects of swiss companies, and swiss equities would come under pressure. although short - term interest rates in switzerland would no longer be negative, there would be little change in capital market interest rates owing to the deterioration in the economic outlook. all in all, the level of interest rates would thus remain low, and so too would the yields on long - term swiss franc bonds. ultimately, there would be scarcely any significant improvement for savers, pension funds, life insurers and banks. the same goes for the real estate market. although its momentum would be curbed somewhat if we were to cease charging negative interest, there would be little change in the low level of interest rates and the impact would therefore be limited. in the current situation, the risks to financial stability must be addressed with focused macroprudential measures. this will then curb demand for mortgages and real estate and strengthen banks β resilience. ladies and gentlemen, abandoning the negative interest rate in the current environment would weigh heavily on the swiss economy. this would not help either savers or pension funds, nor would it be beneficial for financial stability. in other words, as things stand at present, removing the negative interest rate would not be in the interests of our country as a whole. focusing on the big picture we introduced the negative interest rate after careful consideration of the advantages and disadvantages. we continually assess its effectiveness, and objectively analyse the costs and benefits. global economic activity has weakened in recent months. although gdp growth is likely to pick up again somewhat after stagnating in the second half of 2018, the inflation outlook for this year and next is subdued. in addition to this, given the economic and political uncertainty in many countries, the situation on the financial and foreign exchange markets remains fragile. page 6 / 8 against the current backdrop, our unconventional monetary policy with the negative interest rate and our willingness to intervene in the foreign exchange market as necessary remains both essential and appropriate. and this is in part also because it does not attach greater weight to any individual issues over others, and is instead at all times focused on the interests of switzerland as a whole. the negative interest rate has its place among the instruments at the snb β s disposal, which include conventional and unconventional measures alike. it is incumbent on us to use the instruments best suited to tackling the situation at hand
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living standards and populations, but growth in both was glacial. in the fifteenth century, the great mass of people were engaged in the same productive practices as those of their forebears many generations earlier. smith lived at a time when market forces were beginning to erode the rigidities of the remaining feudal and medieval practices and the mercantilism that followed them. influenced by the ideas and events of the reformation, which helped undermine the concept of the divine right of kings, a view of individuals acting independently of ecclesiastic and state restraint emerged in the early part of the eighteenth century. for the first time, modern notions of political and economic freedom began to gain traction. those ideas, associated with the age of enlightenment, especially in england, scotland, and france, gave rise to a vision of a society in which individuals guided by reason were free to choose their destinies unshackled from repressive restrictions and custom. what we now know as the rule of law - namely protection of the rights of individuals and their property - widened, encouraging people to increase their efforts to produce, trade, and innovate. a whole new system of enterprise began to develop, which, though it seemed bewildering in its complexity and consequences, appeared nonetheless to possess a degree of stability as if guided by an " invisible hand. " the french physiocrats, among others, struggled in the middle of the eighteenth century to develop rudimentary principles to untangle that conundrum. those principles were an attempt to explain how an economy governed by a calculable regularity - that is, natural law and, as characterized by the physiocrat vincent de tournay, " laissez - faire, laissez - passer " - would function. the physiocrats'influence, however, waned rapidly along with the influence of other political economists as evidence grew that their models were, at best, incomplete. j. m. keynes, the general theory of employment, interest, and money, 1936, p. 383. it was left to adam smith to identify the more - general set of principles that brought conceptual clarity to the seeming chaos of market transactions. in 1776, smith produced one of the great achievements in human intellectual history : an inquiry into the nature and causes of the wealth of nations. most of smith's free - market paradigm remains applicable to this day. smith was doubtless inspired by the physiocrats
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. our research is conducted in accordance with data principles recognizing the important responsibilities associated with collecting and analyzing indigenous data to ensure that indigenous data sovereignty and governance are respected. the third, and perhaps most important, is empowerment. our research and programs enable our reserve banks to assist indigenous communities through information and resources to plan their own economic futures. for example, our native economic and financial education empowerment program works with indigenous communities to provide free economic and personal finance education that incorporates indigenous language and culture. our working communities challenge facilitates local collaboration to increase economic opportunity in rural areas. this program serves as a first - of - its - kind venue to connect tribal leaders, nonprofit organizations, and private - and public - sector leaders around economic development efforts. most recently, leaders convened to understand data gaps across the full partnership and how they can better leverage data across organizations as they work toward expanding the number of living - wage jobs and reducing rates of childhood poverty within the community. indigenous voices and perspectives are a critical part of this effort. we're also developing new data tools and research partnerships that help indigenous communities conduct research on economic opportunities. for example, our native american funding and finance atlas is a publicly available interactive map tool that identifies the financial institutions, lending activity, and economic development programs in their tribal community and surrounding areas. i'm proud of the federal reserve system's efforts to further indigenous financial inclusion, and i'm grateful for this opportunity to learn from the dedicated efforts of our network partners. there is so much important and impactful work happening, and i look forward to the progress that we will continue to make together. thank you. 1 the views here expressed are my own and not necessarily those of my colleagues on the board of governors of the federal reserve system or at the reserve banks. return to text 4 / 4 bis - central bankers'speeches
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, either a micro issue involved a firm or a group of people, or a macro - issue where the system no longer functions the way it should. 2 / 6 bis - central bankers'speeches we now have an opportunity to get the design right for amla so that it is set up in a way that when a shock or risk crystallises that it stands up to scrutiny. in recent years, there has been no shortage of risks and shocks in financial crime meaning getting the set - up of amla right is even more pronounced. in my view, to realise amla's full potential as the fulcrum of an effective and responsive eu aml framework, there are a number of factors that are essential to its success2. first, amla must have a clear mandate and adequate powers that allows it to have an effective risk - based approach to achieve its regulatory outcome secondly, it needs to have strong governance and operational independence to carry out its tasks free of outside pressures from a governance perspective. thirdly, amla has to have sufficient skills and capabilities so that it can identify, manage and mitigate the risks and vulnerabilities in the european system. fourthly, it can build on strong foundations already laid around information sharing, data, technology & innovation risk - based approach in regulatory design, a simple but effective concept has been put forward by malcolm sparrow - " pick important problems and fix them " 3. while this is easier said than done given the common challenges of implementation, it is fundamentally the issue for amla to consider. the important problems faced by amla includes the increased complexity and prevalence of financial crime across the union, the nature and scale of risk and the divergent approaches to mitigate those risks by different supervisors. the establishment of a single central aml authority is seen as a key solution to these problems. amla needs to employ a risk - based approach from the outset, while tackling divergent approaches across jurisdictions. this is a big challenge. we need to ensure that we strive to be holistic but not too homogenous in approach. amla needs to tackle risks across the internal market on a pan - european basis but recognise that financial crime risks differ in different sectors, countries and regions in europe. undoubtedly, commonalities exists between financial crime risks but how they manifest in different markets is not the same. given the scale of the responsibilities and tasks for amla, there is a risk that an overly prescriptive approach to what
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the correct monetary policy instrument. the snb will continue to enforce it with the utmost determination. bis central bankers β speeches
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fout! onbekende naam voor documenteigenschap. two issues to take on together european banking summit β building a positive future for europe β brussels, 2 october 2019 at the end of the first day of the european banking federation β s banking summit in brussels, frank elderson gave a keynote speech. in his speech, mr. elderson highlighted two important topics that must be at the top of the agendas for the financial sector in the period ahead : combatting money laundering and greening the financial system. for both topics the financial community, and society at large, need to intervene collectively. fout! onbekende naam voor documenteigenschap. we are all here today, bankers, policymakers, supervisors and politicians alike, because we all share a common responsibility. it β s up to all of us to look to the future. to anticipate what this future may bring. and to make sure we prepare for it. i am sure the grandeur of your surroundings has not escaped your attention. our venue today, the magnificent steigenberger wiltcher β s hotel, was built over a century ago, in 1913. it was constructed in the late art nouveau style, as a grand hotel, and named after its founder, the anglo - belgian sydney - charles wiltcher. looking around you, you may be forgiven for thinking nothing here has ever changed. for over a hundred years. but no. this hotel became the wiltcher β s & carlton hotel, following a collaboration with the world - famous carlton. then in 1935, this building was converted into the offices of a belgian pharmaceutical company. in 1993 it was renovated, and reverted to a hotel. after that it was bought by the german steigenberger group. the hotel we are in now opened in 2015 after a two and a half year refurbishment. it is a building that has stood the test of time. and it is as impressive and as relevant today, as it was when it was built over a century ago. it was built to endure. and - with the necessary renovation - it will still be relevant in 50, 100, 200 years β time. but can we say the same about our financial system? will our financial system still be relevant, not only in 10, but in 50, 100, 200 years β time? we need a financial system that is resilient to shocks. we need a financial system that is receptive to
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as limited experience and data constraints in measuring their effectiveness, and further theory building and testing will be required. as a result of increases in the variety of toolkits and also advances in monetary policy making, central banks need to be more careful about how they communicate. these points are related to the recent decision of the bank of japan made at the end of april to conduct a review of its monetary policy from a broad perspective. since the late 1990s, when japan's economy fell into deflation, the bank has implemented various monetary easing measures. we will review the interaction between these measures and economic activity, prices, and financial conditions, and the positive effects and the side effects, drawing on the knowledge in japan and abroad. iii. new opportunities finally, i would like to talk about new opportunities. in recent years, both academics and policy makers have benefitted greatly from digitalization. they have exploited new types of data in their analyses, including highly granular data at the level of individual firms, households, and persons ; daily and intraday high - frequency data ; people flow data ; and text data. improvements in computational power have made the analysis of such data far easier and more advanced than before. these examples of new opportunities played a particularly large role in understanding economic conditions at the outbreak of the pandemic, for instance. in the rapidly changing economic conditions brought about by the spread of the virus, it became necessary for policymakers to observe the economic activities of firms and individuals on a weekly or daily basis. the bank of japan was no exception. for example, the bank used high frequency data such as consumption developments based on credit card payment data and nighttime population of downtown tokyo based on smartphone location data. iv. conclusion 3 / 4 bis - central bankers'speeches we are now about to start the 28th boj - imes conference. this year's mayekawa lecture will be given by professor maurice obstfeld of university of california, berkeley. professor obstfeld served as honorary adviser to the imes from 2001 to 2014 and has participated in boj - imes conferences 12 times. i have had the pleasure of participating with him in nine of them. i am looking forward to his lecture based on his experience as an academic, policy maker, and old friend of the bank of japan. in the keynote speech, professor athanasios orphanides of mit, one of our honorary advisers, will share his views on the policy communication aspect of monetary policy strategy, in
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narrow list of complaints to which banks and insurance companies have agreed. in thinking about the statutory backing for the ombudsman β s office, it may be necessary to have a flexible legal framework where the foundations are enshrined in law, but scope and operational arrangements are set in regulations. independent governance is a second, critical design issue. ideally, the office of the financial services ombudsman should be independent of consumers and of the financial services industry, whose disputes are being handled. in deciding cases, the ombudsman also needs to be independent of the central bank, because the ombudsman is acting as an alternative to the courts. so it is helpful for the ombudsman office to have an independent board, with a balanced membership reflecting persons with an understanding of regulation, the financial industry and consumer protection. a third design issue revolves around the coverage of financial businesses. a significant number of complaints received by the ombudsman are outside its terms of reference. the office received 409 banking complaints which were outside its terms of reference in 2003 β 2012, 179 more than the qualified banking complaints it received for review. in 2011 β 2012, the office received 1, 173 enquiries regarding complaints outside the banking and insurance sectors. many complaints which fall outside the ombudsman β s terms of reference relate to bank fees and pricing of bank products and services, lapsed insurance policies, insurance premium charged, personal injury for motor vehicle accidents, credit union shares and loans, and general pain and suffering. expanding the ombudsman β s mandate to include credit unions, the unit trust corporation, pension schemes and mutual funds would go a long way in strengthening the credibility of the scheme. finally, in order to deliver on this expanded mandate the ofso would need to be better resourced with the skill sets and talent as its jurisdiction and workload grows. the staff complement in the ombudsman β s office are currently seconded from, or approved by, the central bank. once a statutory financial services ombudsman is established the ombudsman would appoint the staff who would work for the scheme and not be seconded from the central bank. the central bank and the ofso will be reviewing the draft report. once finalized and accepted, the final report will form the basis for a proposed policy document ( ppd ) on upgrading the regime of financial consumer protection. the ppd will serve as the starting point for initial discussions and
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that we hear a lot about but very little and sustainable consumer education and financial literacy programs have been carried out. whilst we can say that we have a high literacy rate in fiji, financial literacy in itself, however, is not very high. the bulk of the population in fiji, in fact are financially illiterate. financial institutions must ensure that they carry out consumer education programs. consumers must know very clearly the financial products and services on offer, what these are intended for and their advantages and disadvantages. consumers must be made aware of all bank fees and charges and options available in financial products. consumer education will help consumers make the right choices. the legal cliche of β let the buyer beware β is not just the responsibility of the consumer but it is very much that of the financial institutions who are issuing the financial services and products. a well - designed consumer education program helps minimize or removes possible customer complaints. the reserve bank has drawn up a public awareness program on financial literacy so as to assist in the education and financial literacy of fiji consumers. we intend to engage in discussions with key stakeholders such as commercial banks, donor agencies, nongovernment organizations and others from the private sector over the coming months. this program is expected to be rolled out by the middle of this year. in this regard, we had convened the first meeting of the national task force committee on financial inclusion. a subcommittee of this task force has been formed known as the financial literacy subcommittee and their responsibility is to drive a financial literacy program throughout fiji. it is intended that financial literacy be taken through the education curriculum in fiji both at the primary and secondary school level. let me now turn to what the reserve bank has done with regards to the management of consumer complaints and the steps taken to ensure that consumer complaints are addressed. the reserve bank has set up a complaints unit within the bank for addressing consumer issues and complaints within the financial system in fiji. on 1st january this year, the reserve bank issued a policy guideline to the commercial banks and licensed credit institutions on complaints management. the policy ensures that commercial banks and licensed credit institutions put in place processes and procedures that will enable the effective and efficient management of complaints by the public. the banks and licensed credit institutions are encouraged to conduct public awareness about their complaints management processes. the reserve bank encourages the consumers to raise their complaints with the commercial banks and licensed credit institutions. where consumers are not satisfied with the outcome of their complaints with the financial institutions, they should raise these concerns directly
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private consumption is continuing to rise at a subdued but stable rate and its composition seems to be shifting in favour of durable goods, cars in particular. there are no signs that in the coming two years the economy will exceed the level of potential output at which inflation is liable to pick up. the level of inflation expectations is also compatible with the inflation target. the exchange rate has been weaker than assumed in the latest inflation report and the current level of the effective exchange rate does not mirror fundamental trends in the economy. this points to some future appreciation. meanwhile, gdp growth in 1996 seems to have been somewhat lower than the riksbank counted on, which implies a somewhat larger output gap. all in all, the picture of future inflation does not appear to have changed from the assessment in the december inflation report. the conclusion in that report - that monetary policy is relatively well balanced - therefore holds good. the riksbank is continuing to evaluate effects of the interest rate cuts that were implemented during 1996, together with new information about real economic activity, inflation expectations and the exchange rate. this in turn will determine the future course of monetary policy, that is, whether the repo rate should be kept at its present level or whether there is any limited room for manoeuvre.
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so that deflation as well as inflation are avoided, monetary policy can then exercise a stabilising influence and help to smooth economic fluctuations around the long - term trend. problems arise if resource utilisation becomes so high that inflation starts to accelerate and the central bank has not intervened. people may then begin to count on inflation remaining high in the longer run. a higher level of inflation may then be established, whereas the effects on production and employment will be only temporary. this is a reason why the central bank should act with foresight and be alert to the development of inflation expectations. the potential for influencing fluctuations in activity around the trend is dependent on people β s appraisal of the central bank β s determination and ability to maintain price stability. central bankers talk of the importance of credibility, by which is meant the extent to which people expect inflation to be in line with its targeted rate. the degree of credibility is conditioned by, for example, the historical record of inflation and the existence of government financial deficits. weak credibility calls for caution in monetary policy, just as higher credibility confers more room in which to manoeuvre. experience has shown, moreover, that even in the shorter run, the possibility of influencing employment and unemployment via monetary policy is very limited. limited fluctuations around the growth trend are by no means sufficient condition for a smooth development of employment and low unemployment. comparisons between countries and regions reveal that a similar growth pattern, even over a considerable period, can involve markedly divergent effects on employment and unemployment. this highlights the function of the labour market. it is there that measures must be taken in order to tackle problems with employment and unemployment. i want to underscore some conclusions from this discussion. monetary policy cannot have growth as the primary objective because it is not capable of influencing growth in the longer run. at the same time, monetary policy can be used to smooth fluctuations in activity around the growth trend. but i should emphasise that this presupposes that the central bank is committed to price stability and that its policy is perceived as credible. with low inflation, moreover, the economy will function more efficiently. it is important, i believe, to realise that price stability β s status as the monetary policy objective does not imply a lower priority for growth and employment as economic policy β s overall objectives. rather than being an impediment, low inflation creates good conditions for growth. in order for this to be combined with low unemployment, the labour market must
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. the historic statutory separation of banking and insurance was altered in 1999 when the congress enacted the gramm - leach - bliley act ( glb act ) and allowed well - managed and well - capitalized banks to affiliate with insurance underwriters and insurance agencies. that brings the federal reserve and state insurance professionals into the same circle. to date, about 630 bank holding companies have chosen to become financial holding companies, the vehicle under the glb act through which bank, insurance, and securities affiliations may take place. of those, about 165 ( more than 25 percent ) use the new glb act authority to engage in insurance agency activities while only 26 ( fewer than 5 percent ) are engaged in underwriting insurance that is unrelated to credit. all of these companies must comply with state laws governing the sales and underwriting of insurance. the significant interest by banking organizations in selling insurance makes sense. the banking system is still dominated, in number, by small banking organizations. more than 90 percent of the banks in this country have total assets of less than $ 500 million each. banks of all sizes have quite large branch networks - as of the end of last year there were almost 67, 500 branches of the more than 7, 800 commercial banks in this country. entering the insurance market as an agent, not as an underwriter, fits naturally with the nature of banking as an industry dominated by smaller providers. more broadly, banking organizations have developed good networks and systems for delivering financial products to consumers - a business model that does not always require manufacture of the product. insurance is increasingly viewed not just as a product that stands on its own, but as an important item on a menu of financial vehicles that help consumers create a portfolio of financial assets, manage their financial risks, and plan for their financial security. many consumers prefer to make their financial decisions and purchase financial planning products at a single location that offers a full package of financial services. thus, banking organizations are a natural alternative delivery system for insurance underwriters looking to expand their customer base. the affiliation of banks and insurance underwriters has been more modest. one large banking organization has affiliated with a large insurance underwriter, and one large insurance underwriter has acquired a small bank. in addition, several foreign banks with insurance operations abroad have begun to offer both insurance and banking products in the united states. before the glb act, these foreign banking organizations were required to choose between operating as a bank in the united states or engaging in insurance activities
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insurance supervisors to enhance our mutual understanding of our supervisory frameworks and to facilitate the sharing of supervisory information and consumer complaints. to date, we have information - sharing agreements with nearly all of the states and the district of columbia. while not all of these agreements have been spurred by an important affiliation that requires information sharing, the process of establishing these agreements has introduced us to the appropriate authorities in these states and begun a relationship that will improve our supervisory cooperation and effectiveness if difficulties develop down the road. it is important to have open lines of communication among supervisors and a framework and relationship with the states that prepare us to respond to developments as needed. we are also working with the naic and the state insurance supervisors to compare supervisory approaches for identifying and resolving troubled organizations. banks and insurance companies must comply with very different minimum capital requirements - requirements that are tailored to their businesses. it is important that in circumstances in which affiliated banks and insurance companies are experiencing financial stress, the bank and insurance supervisors be able to work cooperatively to resolve that stress without taking steps that help one regulated institution at the expense of the other. we think that efforts to understand each other β s supervisory tools and processes for identifying and resolving troubled institutions will allow functional regulators to work more effectively and cooperatively to find an early and effective solution to troubled institutions. to improve our own understanding of the issues developing in the insurance industry, we have also established resource centers at the board and at the federal reserve bank of boston to monitor developments in the insurance industry. we particularly value the fruitful relationships that we have had with organizations such as the naic, which has welcomed our input and worked to help educate us on important insurance issues, and with various state insurance supervisors, who have fostered cross - training opportunities for us. state regulation of multi - state entities when senator neil breslin, chairman of ncoil β s state - federal relations committee, testified earlier this month before the house financial services committee, he identified several initiatives that the states are taking to address issues involving modernization of state insurance regulation. ncoil is to be commended for initiating these efforts. while there are many structural differences between the banking and insurance industries, i would like to share with you the experience of the banking supervisors in maintaining a viable state banking supervision option in an increasingly interstate banking environment. until the early 1980s, banks were prohibited by a combination of federal and state law from establishing branches, or even bank affiliates, across state lines. in the mid - 1980s, several
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the first and second quarters of 2011 relied mostly on the industry and services sectors growth. owing to foreign demand, industrial output increased by 12. 3 % in annual terms, providing major contribution to the expansion of the economy in the first quarter. the services sector, topped by β trade, hotels and restaurants β, continued to support economic growth, although less than last year β s quarters. this sector β s annual growth marked 1. 8 % in the first quarter of 2011. the services sector performance is closely connected to consumer spending performance, which i will address later. after five quarters of contraction, the construction sector posted annual growth of 4. 6 %, triggered by higher public investments during this period. lastly, agriculture maintained growth and contribution rates similar to the last quarter of 2010. indirect data obtained from business surveys and monetary indicators suggest that this performance is and will continue to be along the same lines even during the second quarter and beyond. on the demand side, economic activity relied mostly on foreign demand and public spending, while private sector contribution was low. indirect data support the assessment for a weak private consumption performance during 2011 h1. in spite of increased available income and improved bank lending β as indicated by higher employment, real wage and consumer and house - purchase loans β consumer confidence was low. the albanian consumer continues to be cautious in spending, displaying added saving preference over a number of quarters. naturally, this behaviour is a structural correction of the consumption model shown over the past years, but the slow performance of consumer spending reflects, also, added uncertainty about the future. while the first component is welcomed, in the context of preserving macro - and micro balances, the second component may and should be corrected : households consumption has the potential to grow and be stimulated in the short and medium run. taking into account the significant impact of consumption on the gdp, its performance will substantially condition economic growth during this time span. bis central bankers β speeches private investments increased at moderate pace during 2011 h1 as illustrated by higher loans for investment and imports of capital goods. although financial terms β availability, liquidity and bank interest rates β are significantly improved, the existence of spare capacities in the economy limits the demand of businesses for investment. in the short run, the position of economic activity operating below its potential conditions a slow performance of investments. in the medium run, investments performance will reflect developments in internal and foreign demand performance. given the need for a more competitive albanian economy and its further orientation towards exports, stimulation of investment
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prices declined and investors experienced losses as the value of the underlying assets declined. this did not lead to stability issues in the broader system, although the freezes did cause hardship for some individual investors. so our own experience is that these types of disruptions in the asset management industry can be managed. however, the degree to which this lesson can be applied more broadly remains to be seen. globally, there is considerable effort being devoted to understanding the nature of the risks in this area, including whether these risks are any different to those that would arise if investment portfolios were managed directly by the individual investors themselves, without the input of an asset manager. a related stream of work β which in some way parallels similar work for the banking industry β is to examine what role regulation should play in addressing the various risks and what role the central bank should play. relevant issues here include : how prescriptive any liquidity regulations should be ; what are the merits of alternatives to fund freezes, such as exit fees and liquidity gates ; and what, if any, role should the central bank play when markets freeze and normally liquid assets cannot be traded. these are all difficult issues to deal with and perspectives range widely. i am sure that they will keep many of us busy over the years ahead. on that note, i would like to thank you for listening and i would be happy to answer any questions. bis central bankers β speeches references apra ( australian prudential regulation authority ) ( 2013 ) β implementing basel iii liquidity reforms in australia β, apra discussion paper, may. available at http : / / www. apra. gov. au / adi / prudentialframework / pages / implementing - basel - iii - liquidityreforms - in - australia - may - 2013. aspx. apra ( 2014 ), β apra finalises implementation of liquidity coverage ratio in australia β, media release no 14. 22, november. available at http : / / www. apra. gov. au / mediareleases / pages / 14 _ 22. aspx. cheshire j ( 2015 ), β market making in bond markets β, rba bulletin, march, pp 63 β 73. cusbert t and rohling t ( 2013 ), β currency demand during the global financial crisis : evidence from australia β, rba research discussion paper no 2013 β 01. debelle g ( 2014 ), β liquidity β, speech at
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in short, information technology raises output per hour in the total economy principally by reducing hours worked on activities needed to guard productive processes against the unknown and the unanticipated. narrowing the uncertainties reduces the number of hours required to maintain any given level of production readiness. because knowledge is essentially irreversible, much, if not most, of the recent gains in productivity appear permanent. expanding e - commerce is expected to significantly augment this trend. already major efforts have been announced in the auto industry to move purchasing operations to the internet. similar developments are planned or are in operation in many other industries as well. it appears to be only a matter of time before the internet becomes a prime venue for the trillions of dollars of business - to - business commerce conducted every year. not all technologies, information or otherwise, however, increase productivity - that is, output per hour - by reducing the inputs necessary to produce existing or related products. some new technologies bring about new goods and services with above - average value added per workhour. the dramatic advances in biotechnology, for example, are significantly increasing a broad range of productivity - expanding efforts in areas from agriculture to medicine. indeed, in our dynamic labor markets, the resources made redundant by better information are being drawn to the newer activities and newer products, many never before contemplated. the recent biotech innovations are most especially of this type, particularly the remarkable breadth of medical and pharmacological product development. one less welcome by - product of rapid economic and technological change that needs to be addressed is the insecurity felt by many workers. this stems, i suspect, from fear of job skill obsolescence. despite the tightest labor markets in a generation, for example, more workers currently report in a prominent survey that they are fearful of losing their jobs than was reported in 1991, at the bottom of the last recession. the marked movement of capital from failing technologies to those at the cutting edge has quickened the pace at which job skills become obsolete. the completion of high school used to equip the average worker with sufficient knowledge and skills to last a lifetime. that is no longer true, as evidenced by community colleges being inundated with workers returning to school to acquire new skills and by on - the - job training being expanded and upgraded by a large proportion of american business. it is not enough to create a job market that has enabled those with few skills to finally be able to grasp the first rung of the
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k c chakrabarty : introduction of international financial reporting standards ( ifrs ) - issues and challenges speech by dr k c chakrabarty, deputy governor of the reserve bank of india, at the inauguration of a national level seminar on international financial reporting standards ( ifrs ), mumbai, 11 february 2011. * * * dr naresh chandra, principal, birla college, former pro vice chancellor, mumbai university, dr shyam agrawal, eminent eye surgeon, shri m. m. chitale, veteran ca and chairman nacas, shri u. venkataraman, ceo - currency derivatives segment & whole time director, mcx - sx, principal of pdl college of commerce and economics and my dear student dr n. n. pandey, prof d. m. kadhi, convenor, other distinguished guests, ladies and gentlemen. i am delighted to be present here amongst you all on the occasion of the national level seminar on ifrs. needless to say, it is a very topical area which has been engaging the attention of the standard setters, government authorities and regulatory bodies for quite some time. i shall share with you a few of my thoughts on the issue. reading financial statements let me begin by talking about the most elementary and fundamental area of commerce and accountancy which is β how to read a financial statement β. to a lay man, financial statements comprise the balance sheet and profit and loss account. however, the numbers given in these alone do not give the correct picture to the reader unless one carefully goes through the notes to accounts, cash flow statements and qualifications, if any, in the auditor β s report and also appreciates the accounting policies followed by the enterprise. in some cases, ratio analysis, trend analysis and an industry peer comparison can be done to obtain a better perspective. a thorough study of all these aspects is required before a user can make an informed decision. the objective of financial statements is to provide information about the financial position, performance and cash flows of an enterprise that is useful to a wide range of users in making economic decisions. corporate financial statements with the notes and narratives surrounding them, are intended to enable investors to predict cash flows, determine returns generated on capital invested, assess the business liquidity, and evaluate management β s performance. financial statements are prepared by drawing an artificial line of cut - off at the year end, even though the business continues as a going concern. in many transactions, one leg of
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. i now turn to a fourth set of causes of banking problems, that can be labelled inadequate corporate governance. this term refers to an absence of the right incentive structure for bank owners, managers, depositors and supervisors to show prudent behaviour. perhaps the best way to throw light on these types of problems is by means of a well - known example, namely the downfall of the us savings and loans institutions. in the early 1980s, the supervisory authorities in the us sought ways to enable savings and loans institutions, which were generally in bad shape, to continue in business. the range of activities in which these institutions were permitted to engage was expanded, capital standards were relaxed and the level of deposit insurance was increased. as a consequence, many savings and loans institutions tried to grow out of their problems by investing in high - risk assets, such as property and so - called β junk bonds β. the point is that depositors were content to finance these risky investments, because of the generosity of the us deposit insurance at that time. moreover, with low capital standards, equity holders or owners had little to lose. finally, banking regulation in the us did not penalise bank managers for excessive risk - taking and allowed supervisors to delay corrective measures. when the property market started to collapse in the mid - eighties, many savings and loans institutions became insolvent, which eventually resulted in a loss of at least $ 150 billion for the us taxpayers. in order to prevent similar banking problems, bank regulation in advanced and emerging economies must incorporate the right incentives for all participants in the banking system. 13. if you look at the core principles you will find various sorts of incentives in this field. firstly, principle 3 requires that the licensing process should consist of, among other things, an assessment of the bank β s ownership structure as well as of its directors and senior management. the explanation of this principle makes clear that if the supervisory agency doubts the integrity and standing of a bank β s owner or manager, it should have the authority to prevent a specific ownership structure or the appointment of a certain bank manager. in this way, past imprudent behaviour of bank owners and managers is penalised by excluding them from responsible functions in the banking sector. 14. secondly, core principle 6 prescribes that capital requirements for banks should be no less than those established in the so - called basle capital accord. the basle accord sets minimum capital requirements of 8 % of the risk - adjusted assets of banks. bank
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as you might notice, i'm talking a lot about implementation, because that's where my concern lies. it seems that, 16 years after lehman, implementation fatigue has started to set in. political commitment for maintaining financial stability is usually the highest when the collective memory of the last crisis is still fresh. when this memory starts to fade, there is the risk that financial stability is taken for granted. something that can be left to the bureaucrats, to the technicians. not least because there are so many other policy priorities to deal with for governments. but that would be a mistake. we do need the involvement of politicians, of lawmakers, because without them, it becomes even harder to implement necessary regulations. after all, financial stability is the foundation for almost all public policy. if financial stability is gone, as a government you can forget about the other policy priorities. you will spend most of your time drawing up rescue plans for an economy in free fall. so we should not wait for the next crisis. we also need commitment in good times, when the work to develop and implement policy needs to get done. this commitment is even more important in a world that is getting more fragmented, both politically and economically. i am concerned about our capacity to work together on cross - border challenges in such a world. during the global financial crisis, policymakers around the globe were able to respond swiftly and 2 / 3 bis - central bankers'speeches effectively. in a fragmented world, such a swift response could become more complicated. this could prove costly because the most important challenges to financial stability are precisely the cross - border issues that we can only solve if we work together. and to the financial industry i would say : rules that strengthen the resilience of the financial system are in your best interest too. some in the industry view regulation as a constraint, something that limits profitability and imposes undue costs. but it's just the other way around. financial regulation is not an obstacle, it is an enabler of sustainable, long - term growth. globally implemented regulation strengthens international financial stability, levels the playing field, and, in turn, enhances the confidence of your shareholders, clients, and counterparties. strong regulation is not a constraint on the financial industry, it is an asset. 15 years after pittsburgh, strengthening the financial system is an unfinished history. partly that comes with the job. the financial system is always evolving, so our policy also needs to evolve. but,
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##8. this allows the bank of namibia to focus on its mandate to authorize payment instruments such as nampost smart card and electronic money instruments such as issued by mobipay. to assist the bank of namibia in carrying out the functions of oversight of the abovementioned service providers to ensure compliance with set standards. since its establishment, pan has developed in terms of both its structural arrangements and its stature. today, pan has a governing council, an executive office which is being launched today, and several payment clearing house ( pch ) working groups or committees. this has increased its operational efficiency and service delivery. bis central bankers β speeches pan has achieved many goals over the last several years. although i do not want to go into details of all the particular achievements, allow me to highlight a few major milestones at this occasion. pan facilitated the development of the national payment system vision 2015 which casts the roadmap for both bank and non - bank stakeholders to participate in a broader payment system which is efficient, cost - effective and secure. pan currently runs three pchs, each representing a retail payment stream being ; cheque, cards and electronic funds transfer ( eft ). this has increased the operational efficiency and effectiveness of the industry for the benefit of the national payment system in the provision of these services. ladies and gentlemen, with the commissioning of this office, pan will be better positioned to continue to be the co - ordinating body through which payment system stakeholders are able to voice their views, contribute to a mutually beneficial national payment system and through which payment system projects can be co - ordinated. any providers of payment services that are not authorised by pan are operating illegally and we therefore call on any payment service providers to please enquire at this office. it is with great pleasure therefore, that i commission the office of pan together with its new logo and website. please join me in congratulating pan on these achievements which pave the way towards an exciting and bright future for the national payment system of namibia. in conclusion, i have no doubt that pan will live up to its mission, β to maintain a world - class payment system that meets domestic, regional and international requirements β. thank you. bis central bankers β speeches
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to 0. 8 %, compared with 0. 9 % in november and 1. 0 % in october. this development was in line with previous trends ; i. e. it was due mainly to a further reduction in energy prices and also, in december, to a decline in the price increases in non - energy industrial goods. taking a forward - looking perspective, the general environment continues to suggest that there are no significant upward or downward pressures on prices in the short term. furthermore, the pattern of risks to price stability has remained broadly unchanged. on the one hand, downward risks could materialise if import or producer prices were to fall further. on the other, given current wage demands, wage developments, especially when measured in real terms, could become a matter of concern and fiscal policies would also pose a threat to the favourable outlook for prices and growth and employment prospects, if the credibility of the stability and growth pact were undermined. in addition, exchange rate trends need to be monitored closely given their importance for domestic price developments. in conclusion, taking into account the latest evidence available, the governing council has not altered its assessment of the outlook for price developments. the governing council therefore decided to keep ecb interest rates unchanged at the levels currently prevailing. i should like to take this opportunity to recall that real three - month interest rates, if measured as nominal rates corrected for current hicp inflation ( as a very incomplete proxy ), stood at a level of 2. 3 % in january ; this is approximately 80 basis points lower than the level one year ago. at the same time, real long - term interest rates, measured on a similar basis, have reached a level of 3. 0 %, which is around 110 basis points lower than in early 1998. these levels are very low, both in comparison with other countries and with historical data for the euro area. monetary and financial conditions therefore support continued economic growth in the euro area in line with price stability. i should now like to inform you about some other matters considered by the governing council. the end - of - day procedures relating to target and access to the eurosystem β s standing facilities were reviewed by governing council today. the governing council agreed that from tomorrow on the deadline for requesting access to the marginal lending facility will coincide with the deadline for access to the deposit facility, i. e. 30 minutes after the actual closing time of target. furthermore, the deadlines for requesting access to the eurosystem β s standing β 3 β
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ignazio visco : remarks on financing carbon neutrality remarks ( via prerecorded video ) by mr ignazio visco, governor of the bank of italy, at the roundtable on financing carbon neutrality, boao forum for asia annual conference, 20 april 2021. * * * let me start by thanking the boao forum for asia for the kind invitation to this conference and let me express my regret for the impossibility of joining you in person in boao. in these remarks, i will discuss the importance of international cooperation in supporting the transition to net carbon neutrality and i will briefly describe the related activities that we are carrying on within the group of twenty. climate change and the pandemic are the most important global problems of our times. there is no need to remind this audience that the growing use of fossil fuels is pushing greenhouse gas concentrations to levels that, unless forceful measures are taken, by the end of this century will lead to a rise in the temperature of the planet that would bring catastrophic consequences for our ecosystems. many of the root causes of climate change, such as deforestation and the loss of habitat, by increasing the chance of contact between people and wildlife also increase the risk of pandemics. as the united nation β s one health approach recognises, our health is closely connected to the health of the planet. climate change is, in particular, a classic example of a negative externality : carbon emissions represent a cost that spills over onto other markets besides the one in which they originated. but in this case, as pointed out by professor nordhaus in his nobel lecture, externalities are particularly thorny due to their global nature, which puts them outside the domain not only of markets but also of national governments, just like the pandemic is doing in these days. close international coordination is therefore needed. we must bear in mind that stopping climate change requires first of all a strong and consistent political determination : national governments are the only institutions that can provide incentives to β green β investments, levy taxes on carbon emissions, and introduce regulations limiting the amount of allowable emissions. but finance can go a long way towards helping and reinforcing this process, channelling more resources towards green investments. for these reasons, the finance track of the g20 has put sustainable finance among its top priorities. there is a lot that can and needs to be done. β filling data gaps and improving firms β disclosure is crucial in order to correctly assess climate - related financial
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. this will lead the way towards the venice climate summit, which will also be held next july, in which we will explore ways of scaling up dedicated finance to support global and consistent policies to pursue a just transition towards a carbon - neutral economy. let me conclude by saying that i am grateful for the fact that there has been a large recognition across all countries of the importance of this agenda. the transition to net - zero emissions is essential if we want to reduce the risks that climate change poses to the wellbeing of the present and future generations. by continuing to work together, central banks, supervisory authorities and the financial sector at large will be able to provide a key contribution to reaching our climate goals. 2 / 2 bis central bankers'speeches
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, which will reach 88 % of gdp in 2011 in both the euro area and the united kingdom, 100 % of gdp in the united states and 200 % of gdp in japan. these developments are the consequence of sizeable fiscal stimulus measures and of interventions in support of financial institutions in many advanced countries, but also of the sharp contraction in economic activity. in the euro area, adverse fiscal developments are a cause of particular concern in several countries, generally those that did not exploit more buoyant economic times to firmly consolidate their public finances. in the united states, too, some states ( e. g. arizona and california ) have adopted a less prudent approach to the management of their public finances than others. there is no doubt that fiscal policies have been put on a path that is not sustainable. indeed, as simulations for the euro area show, without a very ambitious fiscal adjustment effort, the debt ratio is projected to continue rising in the next decades. with an annual structural deficit reduction of only 0. 5 % of gdp, it will take the euro area 20 years or more to return to the pre - crisis debt - to - gdp level. substantially stronger consolidation efforts are warranted to bring the debt ratio down to a more prudent level of below 60 % of gdp and to prepare for the rising budgetary costs of the ageing population. the challenges are particularly large for countries with relatively high government deficit and debt levels, as well as a rapidly ageing society, and even more so for those that face relatively high interest rates and low potential growth. outside the euro area, bringing the public debt ratio back to safer regions appears even harder for the united kingdom, the united states and japan. given their high budget deficits and the high and rising debt levels, they must undertake very strong consolidation efforts to manage a reversal of the rising trend in public debt ratios. growing fiscal imbalances, if not promptly corrected, are a cause of concern for several reasons. let me focus on the three most important ones. first, high levels of government budget deficits and debt may push up inflation expectations and place an additional burden on the monetary policy of central banks and their task of maintaining price stability. second, large fiscal imbalances may drive up ( real ) medium and longer - term interest rates, with adverse consequences for private investment. given the large debt financing needs of many advanced countries, this constitutes a serious risk for the recovery. moreover, rising interest expenditure on government debt reduces the
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progress or a stagnation of growth, as long as we can find the right balance between addressing climate change and maintaining socioeconomic development. yes, it would be a difficult, long, and winding journey, but we hope that this two - day forum will contribute to charting the right path through it. here in hong kong, our emissions are very small given our small physical size, but we are committed to doing our part and will aim to achieve zero carbon emissions by 2050 through four main decarbonisation strategies : " net - zero electricity generation, " " energysaving and green buildings, " " green transport, " and " waste reduction ". 1 / 2 bis - central bankers'speeches as an international financial centre, the gateway linking up mainland china with the rest of the world, as well as asia's sustainable finance hub, we can do a lot more in climate finance. in fact, hong kong has been actively contributing to the region's transition by supporting sustainable financing, fostering innovation, and promoting thought leadership. as part of these strategies, the hong kong financial regulators have implemented various initiatives to promote sustainable finance and support the transition to a lowcarbon economy. for example, we have established the green and sustainable finance cross - agency steering group to coordinate the effort across the whole financial sector, whether it is banking, securities, or insurance, to green our financial system. we have also introduced the green and sustainable finance grant scheme to provide financial incentives to eligible bond issuers to take up sustainable financing. we have set up the hong kong voluntary carbon market, and also released new guidelines on climate - related disclosure of climate - risks and opportunities. so a lot has been done and there will be more coming, including the hong kong taxonomy. in 2022, more than one - third of the asia region's green and sustainable bonds and loans were arranged in hong kong, reflecting our increasing prominence in sustainable finance. the annual issuance of green and sustainable debt in hong kong has also seen remarkable growth in the last few years, expanding from just us $ 12 billion in 2020 to more than us $ 80 billion in 2022, a six - fold increase in just two years. our financial industry has taken significant steps to integrate esg considerations into their governance structures, strategic decision - making, risk management practices, and disclosure processes. we are also keen to join hand with like - minded peers like many of you here today. the ifc and hkma have had a
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strengthen their economic, social and political status. i would like, if i may, to illustrate further on this referring to my home country and the institution i have the honor to lead. ladies and gentlemen, since many years now, morocco engaged in a process of improving the situation of women, ratifying several international conventions and complying with un instruments on human rights in general and women rights in particular. since the beginning of the millennium, the process of modernizing society was hastened with major reforms aimed at entrenching the principle of gender equality and equity. in 2004, the civil status act ( moudawana ) was amended and the status of women in the family further strengthened. in 2011, the country approved a new constitution that enshrines human rights and gender equality. several laws have been adopted to ensure the harmonization of national legislation with international instruments that morocco ratified and whose primacy are now recognized over its domestic laws. in the same vein, and to coordinate the various initiatives aimed at promoting gender equality and including women β s rights in public policies and development programs, a governmental plan for equality entitled β icram β was developed for the period 2012 - 2016 and was later on expanded and extended until 2021. at the same time, a specific strategy for institutionalizing the principle of gender equality in the civil service was adopted in 2016. expo 2020 dubai women on boards key issues and challenges in the mena region speech of mr. abdellatif jouahri governor of bank al - maghrib ( moroccan central bank ) today, the real challenge remains to succeed in the effective implementation of these laws and programs and to ensure a regular and close monitoring, which is hardly an easy task. ladies and gentlemen, speeding up efforts to strengthen the economic role of women and reduce gender inequalities requires the mobilization of all stakeholders, government authorities, civil society, public and private institutions and national and international organizations. central banks, as regulators, can play their own role in this endeavor. at bank al - maghrib, we are continuously working to improve the representation of women in the boards of credit institutions through a gradual approach. for instance, in 2014 we laid down the obligation for such bodies to implement a policy aimed at ensuring a better representation of women. two years later, this directive was reinforced by making compulsory compliance with the principle of parity in the appointment of independent directors. our efforts in this regard are still ongoing with a new regulatory recommendation aimed at bringing the banking
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s economic integration to induce the desired prosperity, we need, besides the aforementioned conditions, to ensure that it is inclusive, mutually beneficial, and that it does not, above all, come at the expense of the most vulnerable countries and populations. ladies and gentlemen, in morocco, this has always been the preferred approach. believing in the virtues of free trade and market rules, the country has opted since the 1980s for openness and informed economic liberalism, where the quest fo9r efficiency and competitiveness is not to the detriment of social considerations and solidarity. 3 / 5 bis - central bankers'speeches in this respect, morocco's geographical and historical proximity to europe has not diverted it from forging partnerships throughout the world, and has, above all, never been at the cost of its african identity. his late majesty hassan ii used to say that " morocco is a tree whose roots are deeply anchored in africa and whose branches extend into europe ". the continent has always been at the heart of the country's strategic orientations, as reflected in many speeches made by his majesty king mohammed vi over the last quarter of a century. his majesty has often called for a win - win co - development and rolled out major projects like the morocco - nigeria gas pipeline, which should help diversify energy supplies for many countries on the continent, the contribution in ensuring food security on the continent, as well as the atlantic initiative, which aims to facilitate the commercial integration of several landlocked countries. our public policies on trade and investment generally dedicate a largely tailored and favorable treatment to relations with the rest of the continent, hence facilitating the establishment of several moroccan groups in financial services, mining, telecoms, real estate, etc. the development of casablanca finance city also falls within this approach and strives to create a regional financial and multiservice hub geared toward africa. the country is also home to the headquarters of africa50 and is working on its development to promote and facilitate investment in infrastructure. ladies and gentlemen, at bank al - maghrib, our international relations fall within this global vision charted by his majesty. we have encouraged and supported the banking sector to develop its external growth drivers in africa. we ensure that this expansion makes a real contribution to the development of host countries. moroccan banks are now present in over thirty countries on the continent, where they generate almost 23 percent of their business. as a central bank, we maintain close experience and expertise - sharing ties with many of the
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axel weber : challenges to the global economy speech by mr axel a weber, president of the deutsche bundesbank, at the european banking congress, frankfurt, 18 november 2005. * * * ladies and gentlemen introduction it is a pleasure and an honour to offer you some thoughts on current challenges facing the global economy. the european banking congress is always an appropriate forum for discussing global matters. this is especially true this year as the motto β eurasia β bull meets tiger β addresses two of the most important players of the international monetary system. many economists tend to view globalisation as a basically benign phenomenon and take comfort in the fact that the global economy has been marked by robust growth and tame core inflation in the past few years. that is certainly true. but, on the other hand, we are witnessing several instances of possible imbalances : β’ commodity prices have reached new record highs, β’ yet government bond yields are low and corporate bond spreads and emerging market bond spreads are also low by historical standards, β’ in some economies, low interest rates are fuelling housing price booms, β’ additionally, the world economy is awash with liquidity, β’ last but not least, global current account imbalances are at unprecedented levels. with regard to that last point : the question of sustainability and the unwinding of the us current account deficit is crucial not only for the us economy itself, but also for the world economy. and it will have repercussions for asia as well as for europe. especially as both regions are on aggregate largely dependent on external demand. for example, exports from emerging asia have grown by more than 10 % per annum over the past decade. they now account for 45 % of emerging asia β s gdp. at the same time domestic demand has been subdued in most countries of the region. facts about global imbalances current account imbalances have widened considerably in recent years. the us deficit is at unprecedented levels. according to imf projections it will reach over 6 % ( as a percentage of gdp ) this year and next year. cec countries will also exhibit significant deficits of nearly 5 %. east asian countries on the other hand are characterised by notable surpluses. here current account adjustments in the wake of the asian crisis have not been reversed. but the regional disaggregation makes clear that it is predominantly the chinese external surplus which is driving the regional aggregate. asian economies, excluding china, will β according to imf projections β witness a significant shrink
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##bitrarily but should instead reflect demographic trends and productivity gains. this brings me to the all - important question : how can an economy β s productivity be maximised? here, i would like to cite another economist who delivered some major input regarding growth theory : i refer to joseph schumpeter, who described the growth process as one of β creative destruction β under which an entrepreneur develops a new product or a cheaper method of production which then enables him to steal the market from his competitors. as a result, less productive businesses disappear from the market. overall, this serves to boost economic output. viewed from this perspective, the competitive forces unleashed by innovative enterprises are the engine of growth β and there is ample evidence to support this assessment. for example, as a rule, the prosperity - boosting effects of the european union have not arisen from higher trading volumes, as one might perhaps assume. rather, studies 1 show that the upturn in growth is mainly due to the fact that the expanded single market has intensified competition. and this increase in competition has in turn led to more innovative and therefore more productive enterprises. 3. common market for services this insight leads us directly on to several possible ways of increasing growth potential in germany and europe. the single market has proven extremely successful at simplifying trade in goods. as a result, competition here is intense. enterprises β market power does not enable them to charge large mark - ups on top of their costs ; levels are similar to those in the usa, for example. creating a transatlantic market β the ttip is a keyword here β could thus provide even more stimulus in this regard. the usa is the eu β s largest export market and its third most important import partner for trade in goods. as far as trade in services is concerned, the two regions share even closer connections. and it is precisely in the area of services that the eu still has some catching up to do in terms of intensifying competition. mark - ups on the cost of services are on average higher than in the usa. one could say that the european commission β s services directive has not lived up to expectations. creating a single market for services thus promises considerable economic benefits. the original intention behind the services directive was to anchor in law the β home country principle β, which already applies to trade in goods within the eu. this principle states that a service provider shall no longer be hindered by regulations in the importing country if it complies with national regulations
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lucas ( 1988 ) memorably wrote : the consequences for human welfare involved in questions like these are simply staggering : once one starts to think about them, it is hard to think about anything else. i. what drives growth in the long run? so let β s start to think : what does drive growth in the long run? in fact, growth theory β much like central banking β has come a long way. as everyone knows, solow β s work in the late β 50s produced two startling insights. 1 first, that smooth factor substitutability could rid us of the harrod - domar boom - bust cycle. this, in fact, paved the way for a proper analysis of solow ( 1956, 1957 ). bis central bankers β speeches sustainable growth. 2 his second insight was that growth was driven not only by factor accumulation but also by technological progress. fundamentally, technological progress and innovation are, over the long run, the prime drivers of economic growth and also important reasons for differences in international economic performance, even though demographic differences are also very relevant. higher growth rates of technical innovation raise output and can lower the non - inflationary rate of unemployment. but what is technical change? cracking open the solovian black box of technical progress has taken us from theories of learning - by - doing, to the impact of r & d on product variety and quality. the latter theories being underpinned by paul romer β s reflection on the fact that ideas are fundamentally non rival. 3 this concept, by the way, was not really new. the famous letter of thomas jefferson to isaac mcpherson expressed it very clearly in 1813. 4 the bottom line in all of this is that knowledge spillover between open, dynamic economies could benefit everyone. not surprisingly, these new developments in growth theory came replete with policy prescriptions. a more recent but allied literature suggested the following : how close an economy is to the technological frontier and whether its institutions facilitate convergence to that frontier are vital considerations. 5 in effect, a laggard country gains by implementing ( or jumping to ) frontier technologies. 6 ] but an economy near the frontier β or with an appetite to define that frontier β should increasingly favour innovation over imitation. like many close to european policy7, i find this an attractive framework. indeed, following world war ii, the european economies were remarkably catching up in productivity and technological terms and today are leaders in many fields, in particular as concerns the embedding of
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and bank credit conditions. it is also multifaceted, because we take a sufficiently granular view that enables us to detect movements in specific market segments in a timely manner. last week, as it received a new round of staff projections, the governing council conducted a joint assessment of these multiple set of indicators against the evolution of our inflation outlook since the last projection exercise. we concluded that the increase in risk - free market interest rates and sovereign bond yields that we have observed since the start of the year could spur a tightening in the wider set of financing conditions, as banks use them as key reference points for determining credit conditions. therefore, if sizeable and persistent, increases in those market interest rates, when left unchecked, may become inconsistent with countering the downward impact of the pandemic on the projected path of inflation. based on this joint assessment, the governing council announced that it expects purchases under the pepp over the next quarter to be conducted at a significantly higher pace than during the first months of this year. while records of our weekly purchases will continue to be distorted by short - term noisy factors β such as occasionally lumpy redemptions β the step - up in the runrate of our programme will become visible when ascertained over longer time intervals. purchases will be implemented flexibly according to market conditions and always with a view to preventing a tightening of financing conditions that is inconsistent with countering the downward impact of the pandemic on the projected path of inflation. in addition, the flexibility of purchases over time, across asset classes and among jurisdictions will continue to support the smooth transmission of monetary policy. if favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the pepp, the 2 / 4 bis central bankers'speeches envelope need not be used in full. equally, the envelope can be recalibrated if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of inflation. the pepp is not the only tool the ecb is using to support favourable financing conditions over the pandemic period for all sectors of the economy. the third series of targeted longer - term refinancing operations ( tltro iii ) remains an attractive source of funding for banks. the tltros β built - in incentive structure ensures that banks have access to ample funding at very favourable conditions if they maintain their lending to the real economy. this supports bank - based financing conditions for
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arbitrarily the activities of financial intermediaries, but rather to ensure that risks that are inherent in all economic activity are sensibly managed and that an adequate cushion of capital is maintained to cover unexpected losses. supervisors therefore have to understand the business of the institutions they supervise, and the opportunities and risks to which they are exposed. this change in focus is placing a premium on new skills within supervisory authorities : the tools of economists, consultants and business managers are taking their place alongside the more traditional disciplines of law and accounting. this has important implications for the recruitment policies of official bodies, to say nothing of compensation practices. good supervision means the need for top - class supervisors. and this is ultimately in the interests of the industry too. my second point has to do with the focus of the oversight activities of the prudential authorities. the job of a regulator should not be to prevent any and all business failures. to attempt to do so would mean that banks would have to conform to excessively costly prudential standards. business would then tend to slip away to unregulated channels of intermediation. the end result would be a distorted competitive structure and a riskier, not a safer, financial system. the task of supervisors, and in particular of central banks, is to ensure the stability of the financial system at large. by that, i mean the capacity of the system to continue to provide intermediary functions to the wider economy. if supervisory oversight were exclusively conducted institution by institution, it would miss some of the most common sources of systemic risk. widespread instability usually arises not from idiosyncratic problems but from shared exposure to common risk factors. the financial cycle is the most common. typically, the upswing of a financial cycle results in an acceleration of credit expansion and rising asset prices. the two feed on each other, since credit expansion causes asset prices to rise, and rising asset prices justify increased lending. eventually, however, something happens to prick the bubble and the process goes into reverse. as asset prices fall, bad loans are revealed. if adequate capital cushions have not been built up, failures occur, and can be system - wide in their incidence. stopping this cycle is not easy. but it is an essential part of the task public authorities now face to build a more robust financial architecture. we will certainly have to encourage financial firms to improve their risk management at an institution level. beyond this, however, thought is called for on how to moderate the credit cycle
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into the right parts of that tricky ground, the european monetary union can be preserved as a place of stability that is worth living in. in the first 15 years since the euro was launched, people have enjoyed a stable currency. the average euro - area inflation rate was 2. 0 %, which is very close to the ecb governing council β s definition of price stability ( β below, but close to, 2 % β ). in the next 30 minutes, i will present my views on which additional piles are required and how they will need to be arranged in order to preserve the european monetary union as a stability union. in doing so, i will first look into what still needs to be done at the country level. from there, i will go on to address the weaknesses in emu β s institutional foundation. but before talking about what needs to be done, let us take a step back and consider what went wrong in the first place. bis central bankers β speeches 2. the origins of the crisis for many euro - area member states, the introduction of the euro ushered in a new era of abundant capital, due to the elimination of exchange rate risks. and standard economic reasoning suggests that capital should flow from capital - rich to capital - poor economies, where returns should be higher. however, the favourable financing conditions in the euro - area countries with previously higher interest rates mainly stimulated their domestic consumption, thereby raising prices and wages in the non - tradable sector. to put it in a nutshell : inflowing capital was not always put to productive use. overinvestment in real estate as well as public and private consumption failed to raise productivity in some member countries. unit labour costs soared, competitiveness declined. and the rigidity of labour and product markets meant that this process gained even more momentum. when the financial crisis broke out in 2007, the vulnerabilities became apparent : investor sentiment began to shift, and interest rates for the countries in question started to rise sharply, triggering a crisis that is still far from being fully resolved. how could it go so wrong? here is where the euro area β s unique institutional set - up comes in. the euro area teams up one common monetary policy with 18 national fiscal and economic policies. this approach reflects a currency area composed of sovereign member states. it grants member states enough room for manoeuvre to preserve their diversity, that is, to establish their own business models or to tailor institutions and policies to their own national
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channels of data communication with existing and potential customers and business partners through the internet. in this world, particularly in retail commerce, payments by paper have been the exception, not the rule. despite ongoing discussions about privacy and security in electronic commerce, credit cards have rapidly become the payment instrument of choice for consumers. interestingly, there have been experiments with new payment systems analogous to private currency. to date, these products have not been widely successful, despite the fact that some have offered significant degrees of privacy and security. instead, familiarity with and confidence in the credit card built up over more than half a century of use seem for now to have shaped behavior. some suppliers have sought to deepen confidence by voluntarily expanding consumer protections. in a twist of history, even gold coins can now be purchased on line with a credit card. experiments are also taking place to facilitate the use of debit cards in on - line transactions. the use of such instruments would clearly expand electronic payment capabilities over the internet to those with bank accounts who do not hold credit cards. experiments with technologies such as electronic money that do not even require bank accounts may yet find a role to play. new arrangements are also being tried that would mimic the flexibility of the check in making payments in diverse on - line transactions ranging from ad hoc person - to - person payments to routine business - to - business purchases. regarding the older electronic payment systems such as the automated clearinghouse ( ach ), both suppliers of payment services and the end users are continuing to look for new ways to build on the interbank processing efficiencies that these systems offer. one of the great ironies is that studies in the 1960s and 1970s led to recommendations that it would be more economical for society to build whole new electronic payment systems such as the ach than to adopt check - truncation technologies. although the ach has been extremely effective for automating some types of transactions, it has not been as widely used as originally anticipated. one of the problems has apparently been the relative lack of flexible and low - cost interfaces with consumers and with business systems similar to those that have been built up around the check. now, however, a range of experiments and businesses are building on the ach, and potentially on other electronic payment networks. in a revival of the idea of check truncation, projects have gone forward to truncate checks at the point of sale, as well as at lockbox locations, and to substitute ach payments. these
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the announcement in the annual policy statement of april 2008, the rbi over a period and after consultations with market participants has announced the following measures : o strengthening of the capital adequacy norms for off balance sheet transactions covering foreign exchange and interest rate exposures. it for instance, in the context of cds, the superintendent of the new york state insurance department mr. eric dinallo recently mentioned in his deposition before the hearing of a us senate committee on β the role of financial derivatives in current financial crisis β that β the insurance department has determined that covered credit default swaps are insurance and therefore potentially subject to state regulation... our goal is to ensure the terms of credit default swaps are written as a mechanism for protecting buyers against actual losses and not for betting on the credit quality of a third party. β mandated use of current exposure method for measuring the credit equivalent amount i. e. the exposures had to be marked to market, and prescribed provisioning requirement for the exposure amount as applicable to standard assets of the concerned counterparty. credit conversion factors were also increased across maturities. ( viii ) o in regard to asset classification it was clarified that the amount due on a derivative contract will be treated as npa if not received within 90 days. in that case all other funded facilities granted to the client will also be classified as non - performing asset following the principle of borrower - wise classification as per the existing asset classification norms. however, in the case of complex derivative contracts that were entered into between april 2007 and june 2008, the rbi suggested that the unpaid amounts may be parked in a separate account and borrower wise classification will not apply. o in cases where a derivative contract is restructured, the mtm value of the contract on the date of the restructuring should be cash settled. while the factors responsible for the crisis are many, one that is being debated widely is the contribution of fair value accounting framework for complex and conventional financial instruments in amplifying the crisis. the problem lies in the procyclical nature of the standard and the difficulty in valuing financial instruments when markets are illiquid or in distressed conditions. although fair value may increase transparency of the company accounts, it may not always reflect the true intrinsic value in both upswings and under excessively stressed market conditions. there is a need to distinguish the basic financial and prudential analysis from a purely β financial β accounting framework. there is also need to clearly appreciate that the accounting reporting has a
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) actions would be taken in as broad and neutral a manner as possible. ( iv ) the bank would act prudently, mitigating the risks to its balance sheet and managing its ultimate exit from such strategies at an appropriately measured pace. β’ if we were to use these unconventional policy measures, the bank would closely monitor a number of indicators to assess their effectiveness. β’ the most important would be the effect on overall financing conditions faced by households and businesses. β’ other indicators would be used to judge the direct impact of a particular instrument. for example : o the effectiveness of conditional statements about the future policy rate can be judged by their impact on longer - term interest rates. as i mentioned a moment ago, we saw almost immediately the impact of our 21 april policy interest rate announcement. o the effectiveness of quantitative easing would be judged in the first instance by a change in the yield curve and more generally by movements in broader financial conditions. o that of credit easing would be judged by reductions in risky spreads and increased issuance activity. o changes in credit terms and in the conditions faced by firms can also be assessed using the bank's business outlook survey and its senior loan officer survey. o in addition, the bank has constructed measures of borrowing costs and an overall financial conditions index for the economy. β’ to enhance transparency, the bank now offers a comprehensive website that details credit conditions in canada. the link can be found on the left side of our home page. β’ the unwinding of the bank's various facilities and its acquisition of assets β or the exit strategy β would be guided by the bank's assessment of conditions in credit markets and the inflation outlook. β’ a number of exit alternatives are available, including a natural runoff through the maturing of assets, the refinancing of acquired assets, and asset sales. β’ finally, the framework also describes how the bank would communicate its use of unconventional policy measures. press releases on each fixed announcement date would remain focused on the target overnight rate and on conditional statements about the future direction of policy rates. β’ the press release would also indicate any intention to carry out purchase programs and the approximate size of purchases. the bank would explain the broad objectives of any purchases and how they are to be financed. detailed operational decisions would be communicated in separate announcements. β’ press releases on fixed announcement dates and monetary policy reports would continue to provide an ongoing assessment of the economy and the outlook for inflation. speeches and parliamentary appearances, such as this one, would
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cycles the technology was diffused over a prolonged period, so the labour force had time to adjust. but this time adoption may happen much faster, creating more disruption and a loss of livelihoods that will be difficult to replace. so far, we don β t have much evidence that labour is being displaced by ai at rates that would lead to declines in total employment. if anything, digitalization β and the commercialization of ai β have likely been net job creators in canada. employment in computer systems design and related services, which is a proxy for digitalization, has risen 48 % since the end of 2019, compared with a 6 % increase in employment for the rest of the economy. this recent growth builds on an existing trend β while overall employment is up 17 % over the past decade, employment in the digitalization - related segment has more than doubled. but we know there are probably more profound effects to come. as ai becomes more established in the economy and its impacts more transformative, it could end up destroying more jobs than it creates. and the people who lose their work to automation may struggle to find new opportunities. this is a concern for us all. understanding and shaping the labour market impacts will be increasingly important as ai continues to advance and diffuse through our economies. price - setting behaviour in addition to productivity and the labour market, ai may also affect how businesses set prices. there is already evidence that digitally intensive firms change prices more frequently than less digitally intensive firms. 8 for us central bankers, this means the phillips curve might be steeper than previously thought. 9 when combined with a more shock - prone world, this suggests inflation could be more volatile than it was in the 25 years before the pandemic. ai could also affect the level of competition in the economy, although its impact is ambiguous. initially, ai - intensive start - ups could seize market share by undercutting incumbents. this would increase competition and lower prices. however, ai could also result in markets dominated by a handful of companies with monopoly power. in this scenario, ai would ultimately lead to less competition and higher prices. the monopoly effect is easy to imagine, with several superstar firms already dominating their sectors. fortunately, we have competition authorities to deal with undue market power. but authorities will need to keep pace. all this means central banks need to be closely attuned to how ai is affecting inflation, both indirectly through overall demand and supply and directly through price - setting behaviour. ai and central banks
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to let them forget the old ones. β it is very likely that economic agents will try to hold onto their old habits when the effects of the crisis subdue. appeals on regulators will pile up for a more lenient implementation of rules, regulations, and policies. politicians will face pressure from their constituents to give priority to local concerns at the expense of global coordination. dominant academic paradigm may restrict those who radically incorporate lessons of these days into their studies. and of course, central banks, as always, will be criticized for spoiling the party at its hottest moment by taking away the punch bowl. we should be aware that keeping the old habits will only give us a new and may be more severe crisis in the near future. thanks to the global efforts, lessons derived from the crisis have already started to initiate dramatic changes in the global financial governance. there have been encouraging developments in recent months to design a new global financial system to prevent future crises. in the recent meeting of g - 20 finance ministers and central bank governors, member countries confirmed their commitments to the principles of strengthening transparency and accountability, enhancing sound regulation, promoting integrity in financial markets, and reinforcing international cooperation. i believe the establishment of financial stability board with increased participation of emerging countries is a critical step in achieving these objectives. in recent years, as a byproduct of market - oriented structural reforms and prudent macroeconomic policies, the share of emerging countries in world output and their role in global financial markets has significantly increased. now, we are faced with a more diversified group of countries with different objectives and interests. since the rise of emerging economies has dispersed economic power, decision - making process and international cooperation has become more complicated. for legitimacy and effectiveness of measures and also for better global governance, emerging economies should involve in decision - making process and be part of the solution. however, emerging countries should also be aware of the fact that more power in decisionmaking process comes with more responsibilities. both developed countries and emerging market countries share the blame in global economic imbalances that worsened the magnitude of current crisis. in theory, the adjustment of imbalances should have taken place through either exchange rates or interest rates or both. mainly developed countries prevented that adjustment on the interest rates, whereas emerging market countries joined their counterparts by preventing adjustment on the exchange rates. today, many people debate the need for a new global reserve currency, creation of an international clearing system, enhancing the role of central banks, and establishment of a su
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mahesh kumar jain : some perspectives on banking supervision opening remarks by mr mahesh kumar jain, deputy governor of the reserve bank of india, at the 25th seacen - fsi conference of the directors of supervision of asia pacific economies, mumbai, 14 june 2023. * * * mr. mangal goswami, executive director, seacen centre, mr. raihan zamil, senior advisor, financial stability institute, directors of supervision of asia - pacific economies, ladies and gentlemen. a very good morning to all of you. the reserve bank is delighted to host this conference of directors of supervision. seacen research and training centre and fsi have curated an excellent line - up of topics that are both timely and pertinent, covering key banking risks in the asia - pacific region, lessons learnt from recent bank failures in the us and europe, and strategies for building resilience in banks. in the dynamic world of finance, it is imperative that we constantly adapt and learn from past experiences to navigate the challenges that lie ahead. this conference serves as a platform to exchange insights and foster collaboration towards a stronger and more resilient banking sector in the asia - pacific. 2. in the aftermath of the recent bank failures abroad, banking supervisors face the challenging task of finding a delicate balance between ensuring financial stability on the one hand and addressing the moral hazard implications of their actions on the other. by implementing prudent regulations, conducting effective risk - based supervision, promoting transparency, doing timely interventions, and maintaining independence and accountability, supervisors can strive to strike an optimum balance that fosters stability while minimizing moral hazard risks, ultimately contributing to a resilient and sustainable banking sector, which can support the real economy. 3. indeed, supervisors have come a long way from being mere regulatory compliance enforcers to becoming risk - assessors. new supervisory tools aim to instil a forwardlooking and calibrated supervisory approach based on principles of proportionality and risk perception. this approach involves constant focus on emerging risks and the business models at the supervised entities ( ses ). 4. today, i would like to share my perspective on some of the emerging issues, the indian experience, and a few areas that i believe are important for supervisors to focus upon. emerging issues 5. in the ever - evolving landscape of banking, several emerging challenges have surfaced, necessitating adequate attention and proactive measures. i would like to discuss three important issues.
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global demand and hence global rebalancing. euro area countries are currently taking a series of policy measures both to raise their growth potential and to make growth more sustainable. they are achieving greater sustainability by moving towards an economic model based less on external borrowing and more on internal competitiveness. indeed, according to harmonised competitiveness indicators based on unit labour costs have all registered significant improvements since 1999, ireland ( β 19 % since 1999 ), spain ( β 9. 5 % ), greece ( β 9 % ), and portugal ( β 6. 6 % ). the loss of competitiveness accumulated until 2007 has been totally offset since the beginning of the crisis. as a consequence, the eu commission forecast for this year is that all stressed countries will show a surplus on current account with the exception of greece with a deficit of just 1. 1 % of gdp. bis central bankers β speeches and euro area countries are increasing their growth - potential by implementing wide - ranging structural reforms. these include product and labour market measures, but also deeper reforms to tax systems, public administration and the judicial system. our monetary policy has been helping this process by improving our transmission mechanism and stabilizing markets. the decision taken last year on the programme of outright monetary transactions ( omt ) has been decisive in this respect. our recent decision to provide forward guidance regarding our main policy rate was also successful in stabilizing financial markets unduly affected be spillovers from the recent fed announcement of future tapering of quantitative easing ( qe ). europe is behind the us in economic recovery and inflation risks which implies that monetary policy has to stay accommodative for a longer period of time. our forward guidance is in line with our policy framework as it does not refer to any date or period of time but is instead totally conditional on developments in inflation prospects, in the economy and in money and credit aggregates β the pillars of out monetary strategy. at the same time, policy measures are underway at the european level that could help expedite this rebalancing process. these include initiatives by the european investment bank to boost lending to smes, and the possible introduction of contractual programmes with financial incentives to underpin structural reform implementation in stressed countries. a proposal by the european commission on the latter is expected before the end of the year. channel two : a stable financial system through banking union the second channel through which euro area developments can have a global impact is the process of building a genuine banking union in
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such unmistakable evidence of a loss of international competitiveness before acting. as our experience with the vast eurodollar markets demonstrates, once markets with scale and scope economies are lost, they are very difficult, if not impossible, to recapture.
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concentrated on primary commodities that are characterized by relatively slow growth, price instability and long β term deterioration of terms of trade. the need for african countries and zambia in particular to participate in the dynamic sectors of global trade such as manufactures and services cannot be over - emphasised. some analysts have attributed this lack of bis central bankers β speeches trade in service and manufacturing sectors to lack of competitiveness and products that insurer the exporter against any unforeseen losses. the demonstration by ati of their credit risk insurance products in this workshop will therefore, play a very important role in promoting trade and exports of non - traditional exports which lead to a diversified economy, job creation and sustainable economic growth. the credit risk insurance products also spur trade within africa by helping our local companies to become more competitive through increased access to credit facilities. ati has therefore, truly had a significant impact in africa, which is reflected in the over $ 10 billion worth of trade and investments it has attracted into the continent over the past decade. distinguished guests, ladies and gentlemen, as you are aware, staying competitive is what all companies strive to do. innovation plays a key role in this equation. i am therefore elated that this morning ati will speak about how it is providing innovative products and services to better suit the needs of banks and financial institutions. i am confident that the strategic partnerships of local banks and ati will provide an opportunity for growth in credit particularly to the small and medium enterprises which face major challenges in the trade sector. the bank of zambia therefore welcomes this workshop as it bodes well with our strategic objective of increasing access to financial services to 50 % of the population by 2015 from the current level of 37. 3 %. as i conclude, i want to assure ati that the proposal for the bank of zambia and all central banks in the comesa region to relax the capital reserve rules, by considering applying a lower risk weight on transactions that banks and financial institutions have insured with ati is receiving active consideration within the organs of the comesa central bank governors. let me commend ati for coming up with this innovative initiative which seeks to deepen our financial markets. finally, i challenge all of you this morning, especially participants from commercial banks to explore ways on how you can improve your products and services to better serve the entire zambian population with the products that ati will present to you this morning. distinguished guests, ladies and gentlemen, it is now my pleasure to declare the
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michael gondwe : facilitating trade and building economies on the african continent opening remarks by dr michael gondwe, governor of the bank of zambia, at the african trade insurance agency workshop for bankers, lusaka, 10 september 2013. * * * the secretary general of comesa, h. e sindiso ngwenya ; the director general of zambia development agency, mr andrew chipwende ; the ati chief investor relations manager, mr cyprien sakubu ; the representative for zambia, mr pizzaro lukhanda ; resource persons ; distinguished invited guests ; members of the press ; ladies and gentlemen. it is my honour and privilege to be amongst you all this morning. i wish to express my appreciation to the african trade insurance agency for extending an invitation to me to deliver a keynote address on this important workshop. let me begin by commending the african trade and insurance agency ( ati ) for the important role they continue to play in facilitating trade not only in this country but in the entire region and indeed the continent at large. i am no stranger to the role that ati plays in helping to build economies in the countries that it operates as i have been a client and a supporter of ati β s products and services in particular in my previous life as head of the pta bank. i have seen first - hand, the impact that ati has had in many countries, including in zambia, where ati has facilitated trade and investments worth more than $ 925 million since its inception. i am further informed that ati has so far this year supported zambian companies and businesses by offering insurance cover to some very large and essential projects primarily in the energy, mining, manufacturing and agriculture sectors valued at over $ 726 million. the agency has also continued to assist many african countries by facilitating foreign direct investments with its political risk insurance that protects investors. ladies and gentlemen, the role that trade plays in the economic growth and development of a country cannot be emphasised. there are many regions and countries of the world that have been able to lift their peoples from poverty to prosperity through trade. however, although africa in general and zambia in particular has an economy which is characterized by a relatively high degree of openness, trade has not been utilized to an extent of achieving rapid and sustainable economic development necessary to eliminate poverty. this failure for trade to serve as a catalyst for sustainable economic development could be attributed in part to the nature of africa β s export trade which is heavily
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their expectations and behavior in response to changes in monetary policy. fourth, with respect to the united states, the most popular versions of the taylor rule approximate how policy has evolved since the late 1980s β a period in which the federal reserve has been successful in keeping inflation in check ( figure 1 ). this suggests that policymakers, faced with the economic conditions of that period, weighted deviations from their goals in a manner similar to the weights used in these versions of the taylor rule. despite these attractive features, i do not believe that simple policy rules can take the place of in - depth analysis of economic conditions, evaluation of alternative policy plans, and ultimately policy judgment. while simple policy rules provide useful information to policymakers, their very virtue β simplicity β means they cannot capture all information that is relevant for policymaking. for example, such rules cannot easily incorporate asymmetric risks or financial stability issues. moreover, the usefulness of simple policy rules depends critically on the stability of the relationship between monetary policy and economic outcomes. if the relationship between in practice, so - called inflation - targeting central banks also tend to take into account employment and other aspects of the real economy ; hence, their approach is often referred to as β flexible inflation targeting. β more formally, a taylor rule can be represented as : ffr = r * + Ο + a ( Ο - Ο * ) + b [ 100 ( y - y * ) / y * ] where : ffr = federal funds rate r * = neutral real federal funds rate Ο = rate of inflation Ο * = target inflation rate y = output y * = output at full employment a = weight put on inflation gap b = weight put on output gap bis central bankers β speeches monetary policy and the real economy were stable over time, following a relatively simple and unchanging policy rule would likely generate acceptable results. however, if the linkage between monetary policy and the real economy is more variable, as i believe it is, then an approach that is more pragmatic and updates the policy setting in a clear and systematic manner based upon what the fomc learns over time will be more effective. in particular, a simple policy rule can generate poor macroeconomic outcomes when either the structure of the economy or the transmission mechanism of monetary policy changes in a significant way ( whether the change is temporary or permanent ). if private sector economic agents β workers, businesses, investors β thought we would implement a particular policy rule regardless of changes of these kinds, policy
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welfare losses generated by deviations from the central forecast path symmetrically. but i don β t believe that the potential losses are currently symmetric. in my view, the distribution of potential outcomes is currently skewed to the downside, reflecting risks posed by developments in europe and the impending u. s. fiscal cliff. moreover, the costs associated with such downside outcomes are likely to be considerably higher than the costs of realizing upside surprises. for example, consider two alternative scenarios : an economy that grows very quickly, but starting with some genuine spare capacity, versus an economy operating way below potential that stagnates, pushing the united states into a liquidity trap. in the first case, we have good tools with which to respond. as the economy moved closer to full employment, we could raise short - term interest rates and subsequently sell assets from our portfolio. by doing this, we would tighten financial conditions, slow the economy and ensure it remained on a path consistent with our dual mandate objectives. the losses to society from this scenario should not be very large, provided we act in a manner that keeps medium - term inflation expectations in check. but the losses to society may be very high in the second case. that is because β as japan has discovered over the past two decades β once in a liquidity trap it is not easy to return to full employment and price stability. pinned at the lower bound, we don β t have as good a set of tools as we would ordinarily have to push the economy back toward our dual mandate objectives. as a result of this asymmetry, we should give somewhat more weight to avoiding the liquidity trap outcome. embedded within the traditional taylor rule formulations is the implicit return path back to full employment and price stability that the fomc achieved in the past when faced with shocks that pushed economic activity below its potential level. 14 obviously, there is a cost to those who are unemployed longer than necessary with no offsetting gain in terms of greater price stability. but there also is another potential long - run cost. those who have been unemployed for a long period of time may lose their job skills and become less employable in the future. this can push up the non - inflationary rate of unemployment ( nairu ). not only is this bad for those who are unemployed due to the loss of their job skills, it is bad for the nation as a whole because the rise in the nairu lowers the effective productive capacity of the economy and
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mar guΓ°mundsson : up from the depths? speech by mr mar guΓ°mundsson, governor of the central bank of iceland, at the annual general meeting of the federation of icelandic fish processing plants, reykjavik, 24 september 2010. * * * honoured guests : i have called this speech, β up from the depths? β, a title that could refer to a number of things : analysis of the current situation and prospects for the future, for example, or the economic policy that could perhaps make the path swifter and / or safer. as regards the former, the questions are these : whether we have hit bottom, what the prospects are for an upswing, and how far we have to go until we achieve internal and external economic equilibrium, with a sustainable current account balance, inflation close to target, and labour and other factors of production utilised to a degree consistent with low, stable inflation. as regards the latter, the questions centre on what should be the contribution of various components of public policy in order for us to move forward on an even keel. i will touch on some of these factors in my speech today. i will assess the current situation and the economic outlook. then i will discuss how iceland can emerge from a capital controls regime and reintegrate into global financial markets β which are prerequisites for a strong upswing in investment and output. finally, i will say a few words about the growth outlook over a longer horizon. before i turn to iceland β s situation now and in the near future, i would like to place us in a wider international and historical context. iceland is truly a small country, and individual positive or negative shocks can trigger economic short - term developments that deviate markedly from those in the rest of the world. but in the end, the possibilities are always limited by global trends. since the latter half of 2009, the global economy has begun to grow again after the recession that followed the peak of the 2008 financial crisis, but there are still a number of questions about what will come next. output growth varies greatly from region to region, with a number of emerging economies soaring ahead while many of the developed economies hit hardest by the crisis are not growing fast enough to reduce unemployment, and near - term developments are a source of concern. at work here, to some extent, is the long - term tendency for the divide between emerging and developed countries to narrow. the trend is not necessarily a linear one, though ; it tends to play out
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opening remarks by mar guΓ°mundsson, governor of the central bank of iceland, at a conference organised by the bank and the reinventing bretton woods committee on the uncertain future of global economic integration, harpa concert hall and conference centre, reykjavik, 14 - 15 september 2017. i welcome all of you to this conference and the foreign participants to iceland. the conference is organised by the central bank of iceland and the reinventing bretton woods committee. the heading is broad and probably reflects in part the worries that some of us might currently have about the future of global economic integration. the topic encompasses both real economic integration β that is, trade in goods and services and the flow of labour and equipment across borders β and financial integration β that is, cross - border capital flows and stocks and associated activities of banks and other entities. the financial integration part will probably dominate the proceedings, not least because most of the speakers are current or former central bankers. i do not see that as a problem, as in my mind more work remains to be done in assessing the costs and benefits of global financial integration than regarding real side economic integration. after all, the post - war global economic order was initially based on the principles of free trade in goods, current account convertibility, and monetary stability through fixed but adjustable exchange rates vis - a - vis the us dollar. open capital accounts were the exception, however. real side economic integration was seen to be more important for economic progress than financial integration. it worked well for a long while, and some call the period from 1950 to 1970 the golden years. yet there were inherent flaws in this set - up that contributed to its demise in the early 1970s, not least the well - known triffin dilemma regarding the conflict between the domestic economic objectives of the country providing the main reserve currency and the required international supply of that currency. then capital accounts were opened up, with strong momentum in the 1980s and early 1990s. capital controls were increasingly undermined by technology and financial innovation, and strong arguments were being made to the effect that open capital accounts would bring significant benefits. after all, ongoing real economic integration at a global level demanded at least some degree of global financial integration. as the bis reminded us in its latest annual report β and jaime caruana might touch on in his keynote speech later in this session β trade and finance tend to go together. freer capital movements in turn undermined pegged exchange rates and thus contributed to the spread of flexible exchange rate regimes and
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improve performance in class, we need to ensure that we enhance the capacity of our teachers. we must recognise that computers alone are not magic and neither should they replace chalk and blackboards, but they should and can be used as a tool to aid learning. providing more computers at schools will do little without providing the tools that enhance teaching and research like internet. it is also pertinent that teachers obtain quality and professional training to harness and effectively utilise computers. i therefore urge you to consider enhancing computer literacy amongst your staff. in an information age, knowledge and effective use of computers along with sound education will be the cornerstone of a vibrant, modern society. this is why our teachers are absolutely critical to the future of our economy. i have no doubt that supporting our schools in the manner that the bank of zambia is doing today will lead to stronger motivation and morale amongst our students and teachers alike. i am certain that we all desire a country where our teachers and students are proficient in using computers and extract immense value from them. this should be the vision that we should all aspire. ladies and gentlemen, in conclusion, i would like to urge all students present here today take an interest in using computers. computers will assist you in your studies and make your lessons more effective, easier and enjoyable but they will not automatically make you a genius. the computer will open doors to communication, research and opportunities. remember that the goal of computer literacy is for the user to become an explorer, and an active seeker of information which i hope you will be, with this donation. seize what you have been bestowed with today. guard against vandalism and use the computer facilities to ensure a brighter future for yourselves. this is important because in future while computer knowledge will perhaps not immediately get you a job, it will ensure that you are one step closer to being employed. ladies and gentlemen, i also recognize the efforts of the former students association who have been soliciting for donations from various organizations. as former students we all have the responsibility of helping the school that has played a key part to what you are today. let us continue to support our beloved school. i thank you.
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caleb m fundanga : a brief look at corporate governance in zambia speech by dr caleb m fundanga, governor of the bank of zambia, at the launch of corporate governance guidelines for banks and non - bank financial institutions, lusaka, 28 november 2006. * * * β¦ the chairperson of the bankers association of zambia ; β¦ the chairperson of the institute of directors ; β¦ the chief executive officers of banks and non - bank financial institutions ; β¦ deputy governors, bank of zambia ; β¦ representatives of professional bodies ; media colleagues ; β¦ distinguished invited guests ; β¦ ladies and gentlemen. i wish to welcome you all to the launch of the corporate governance guidelines for banks and nonbank financial institutions, in particular, deposit taking non - bank financial institutions. as you all may be aware, the recent debacle of corporate scandals has resulted in the resurgence of interest in good corporate governance. these scandals have not been restricted to large businesses in the us or europe, but have surfaced in emerging economies as well, with equally devastating effects. this, together with concern about our environment and globalisation, has played an important role in this resurgence of interest in how companies are managed, directed and controlled. here in zambia, the collapse of a number of banks in the mid - 1990 β s has largely been attributed to poor corporate governance. some characteristics of this included dominant key shareholders, poor transparency and inadequate disclosure. consequently, the imf / world bank financial sector assessment program ( fsap ) undertaken in 2002 revealed the need to enhance financial stability in zambia by ensuring that the financial sector was adequately guided by corporate governance practices which conformed to international best practices. ladies and gentlemen, in order to guide this process, among other things, in 2004 the government approved a comprehensive five - year financial sector development plan ( fsdp ) that positioned good corporate governance as one of the pillars for promoting financial system stability. today β s launch, therefore, is a culmination of an extensive consultative process during which the bank of zambia engaged the banks and non - bank financial institutions, and other key stakeholders in round table discussions. local auditing firms, the world bank, ifc and the imf also contributed immensely to the production of these guidelines. in addition, the development of the guidelines took into account the standards set by the basel committee on banking supervision and the unique characteristics of the zambian business environment within which institutions operate and the many valuable lessons we have learnt along the way. the above notwithstanding, these guidelines only define the
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. good supervision is intrusive. supervisors must not stay on the sidelines of regulated financial institutions, relying solely or mainly on offsite analysis. the central bank must be a presence that is felt continuously. 2. good supervision is sceptical but proactive. supervisors must question, even in good times, the industry β s direction or actions. supervisors must have the capacity to identify risks, and to act on them. the central bank is most valuable when it is least valued. bis central bankers β speeches 3. good supervision is comprehensive. supervisors must be constantly vigilant about happenings on the edge of the regulatory perimeter. the central bank must not confine its interests to risks faced by its regulated entities and must go beyond to risks posed by other parts of the financial system. 4. good supervision is adaptive. supervisors must be in a constant learning mode to respond to new products, new markets, new services, and new risks. the central bank must adapt to changes at the regulatory perimeter, with an eye to new or unregulated areas. 5. good supervision is conclusive. supervisors must follow through conclusively on matters identified as these issues progress through the supervisory process to their final resolution. the central bank must take every identified issue, however, small, to its conclusion. judgement, not rules, is the key here. supervisors would do well to learn the secret to success of julie dickson, head of canada β s office of the superintendent of financial institutions, and who supervises the world β s strongest banks. ms. dickson β s secret to success is to focus on bearish forecasters like nouriel roubini, assume the worst, and avoid complacency. meanwhile, the bank has augmented its supervisory expertise with specialists. some of the more important initiatives included the establishment of an in - house actuarial unit headed by an experienced actuary. this unit allows the bank to closely monitor, analyse and set direct attention to the sufficiency of actuarial reserves held by life insurers, as well as being able to verify the adequacy of outstanding claim reserves for non life companies. going forward, the actuarial unit will be providing needed leadership in the development of an appropriate stress testing regime of the insurance industry. this, in turn, will support the bank β s financial stability initiatives. the bank has also increased its credit risk supervisory expertise. over the past four years the bank has been conducting thematic reviews
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2. 5 percent in 2011, before falling to a little above 2 percent in march 2012. local banks, however, have little exposure to investment in the distressed euro area. risks to bank stability seem relatively modest due to ample capital buffers, conservative provisioning, and high profitability. stress tests conducted by the central bank confirm the overall strength of banks : credit risks appear limited while market and liquidity risks are generally low. ladies and gentlemen, life insurance companies, excluding clico and british american, have generally strong capital positions and are profitable, despite the financial strains and sluggish economic environment of recent years. capital adequacy indicators for the life insurance sector have been trending downwards since 2009, as the industry builds its actuarial reserves to meet the new capital rules in the proposed insurance bill. the ratio of capital to technical reserves for life insurance companies stood at just over 30 percent in december 2011, well above the international benchmark, which usually ranges between bis central bankers β speeches 7 β 10 percent. return on equity in the life insurance sector increased from around 7. 5 percent in 2008 to just below 10 percent in 2011. in the general insurance sector, most large companies are well capitalized, although some are exposed to the occurrence of a major natural disaster such as hurricanes. many general insurance companies have been ceding a significant portion of their insurance business to international re - insurers in order to mitigate very large claims arising from natural disaster risk. some small insurance companies specializing in third party motor insurance appear undercapitalized. in addition to poor market conduct, third party motor insurers engage in non - payment and under - reserving of claims. it is instructive to note that the central bank intervened to close one motor insurer in 2010, after addressing insolvencies in the previous years, and has issued compliance directions to several companies. unless these smaller general insurance companies improve their pricing and capital positions, the central bank is likely to undertake further interventions in this part of the insurance sector. the insurance act requires insurance companies to maintain assets in their statutory fund to cover liabilities for policies owned by residents of trinidad and tobago. with the exception of one life insurance and two general insurance companies, all other insurance companies were compliant with their statutory fund requirements. the central bank is working with the non - compliant insurance companies to correct the deficiencies in their statutory funds. strengthening financial stability and the central bank i now turn to my third and final point
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