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dynamics depend on the difference between the nominal interest rate and nominal gdp growth, the debt - to - gdp ratio is also sensitive to the interest rate on the public debt, which depends on market confidence. if financial markets believe that the government will not have any problem rolling over its debt in future years, interest rates will be lower and it will be easier for the government to service the debt. conversely, market concerns about debt sustainability will raise interest rates, making it more difficult for the government to borrow in the markets. 14 hence, expectations are self - fulfilling, permitting both a good and a bad equilibrium. to facilitate a smooth exit from the programme, it is therefore important that financial market concerns about the future debt service burden of the irish sovereign are allayed. continued sound implementation of the programme is crucial, while developments at the european level can also be helpful. i have already noted the importance of economic developments in europe to ireland β s growth. in addition, european policy announcements can also have a significant impact on market confidence and the irish sovereign β s ability to re - enter the markets. in this regard, markets responded positively to the 29 june eu summit statement and the announcement of the ecb β s programme of outright monetary transactions. 15 irish sovereign yields declined sharply, facilitating limited bond issues since then. however, these positive developments depend crucially on market sentiment, which can change rapidly. any new development leading to a reassessment of euro area risk by financial markets could result in an abrupt reversal of the recent declines in yields. the 29 june eu summit announcement of the potential future use of the esm to recapitalise banks following the establishment of banking union could reduce the total nominal level of debt. however, the timeframe for implementation of the esm and uncertainty about the amount of banking - related public debt that would be eligible, were the esm to be applied retrospectively, are unclear. for ireland, greater certainty on this issue could provide support for successfully exiting the programme in 2013. the announcement also included a reference to examining the situation of the irish financial sector. this has raised expectations of a possible reprofiling of the promissory notes, on which the government makes an annual payment of β¬3. 1 billion, or 2 per cent of gdp. agreement that results in a more favourable time profile of payments would improve the see β rettung fur den musterknaben β, der spiegel, january 7, 2013, p. 28.
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by the manager itself, it is not, or not mainly, the possible default of the manager that should concern regulators. on the other hand, the actions of asset managers may affect the financial system and the general economy through their systemic consequences on market developments. the key questions are then whether, to what extent and under what conditions non - bank intermediation can amplify market movements and determine instability. it is, therefore, essentially a macro - prudential question. understanding and measuring such risks will require data, research and careful reflection ; tackling them is likely to require new or reinforced supervisory tools and, quite possibly, a broader mandate for supervisory authorities. why do we need a macroprudential framework for the non - bank financial sector? we shall start by briefly reviewing certain macro - stability issues and the reasons why they may have become more significant than in the past. i shall focus on three main issues of concern : ( i ) pro - cyclicality, ( ii ) the size of non - bank financial institutions, and ( iii ) systemic liquidity risks ( β runs β ) and leverage risks. let me tackle the pro - cyclicality issue first. the collective behaviour of asset managers, insurers and pension funds can lead to undue amplifications of market volatility. 1 empirical analyses show that institutional investors β trading may cause substantial temporary price effects, both at the asset level and at the aggregate level. 2 during downturns, trades by institutional investors in financial distress may turn into fire sales, and a temporary price effect may be further magnified so as to put severe pressure on market liquidity. 3 this amplification effect can have wide - ranging negative repercussions on the banking sector, on households β savings, on firms β funding, and ultimately on the entire economy. a clear example was the outbreak of the financial crisis, when a complex network of connections through derivatives and shadow banking activities turned $ 500 billion of losses on sub - prime mortgages into $ 4 trillion of write - downs on assets at global level. 4 see for example chan l. and lakonishok j. ( 1995 ), β the behavior of stock prices around institutional trades β, journal of finance 50 : 1147 - 1174 ; keim d. and madhavan a. ( 1997 ), β transactions costs and investment style : an inter - exchange analysis of institutional equity trades β, journal of financial economics 46 : 265 - 292 ; jones c
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downward revision reflects the deterioration of the international context and, in particular, the further weakening of world trade and the rise in oil prices, whose effects on exports and production activities in italy appear to have been compounded by the appreciation of the exchange rate. the rate of inflation, obtained using the consumption deflator, is expected to reach 0. 1 per cent and to rise to 1. 7 per cent in 2017. the current legislation scenario for the two years 2016 - 17 is largely in line with the estimates available today. among the recent assessments by leading private and institutional forecasters, the government β s estimate for growth in 2017 is at the lower end of the scale ; however, generally speaking the other forecasts discount the negative effects of the increase in indirect taxes envisaged under the eu β s β safeguard clauses β, which instead are taken into account in the government β s unchanged legislation scenario. following the publication in august of the gdp data in the second quarter, the main forecasters revised their growth forecasts significantly downward for 2017 as well. according to both the oecd β s interim economic outlook released in september and the average assessments of the analysts polled by consensus economics in the same month, output will grow by 0. 8 per cent in italy both this year and the next. a less favourable outlook was depicted last 15 september by confindustria β s centre for studies, which estimated an increase of 0. 7 per cent this year, slowing to 0. 5 per cent in 2017. compared with the current legislation scenario, the government β s policy scenario predicts sharply higher growth for next year ( 0. 4 points ) and lower inflation ( 0. 8 points ). the difference is owing to the cancellation of the vat hike envisaged under the safeguard clauses coupled with other interventions the government intends to make in its next budget law. these include public investment in infrastructure, tax incentives for firms that invest, and income support for pensioners. overall, compared to the current legislation scenario the measures planned for 2017 entail an increase in net borrowing amounting to almost half a percentage point of gdp, and a comparable rise in output. the implicit multiplier in this forecast is high, also in view of the normally lagged response of private expenditure to budgetary measures. the government estimates that the absence of any vat increase will contribute 0. 3 percentage points to gdp growth in 2017, a rather strong effect when compared to the econometric estimates based on past
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joint session of the fifth committees of the chamber of deputies ( budget, treasury and planning ) and of the senate of the republic ( budget ) preliminary hearing on the 2016 update of the economic and financial document testimony of the deputy director general of the bank of italy luigi federico signorini chamber of deputies rome, 3 october 2016 mr president, honourable members of parliament, i wish to thank the fifth committees of the chamber of deputies and of the italian senate for inviting the bank of italy to give testimony on the 2016 update of the economic and financial document. given the brief time that has elapsed since its publication, i will focus mainly on the macroeconomic outlook and on developments in the public finances this year ; i will then make some preliminary remarks on the finance plans and outlook for the next few years. 1. the macroeconomic outlook the italian and euro - area economies continue to benefit from today β s extremely accommodative monetary and financial conditions. the outcome of the uk referendum initially triggered considerable fluctuations on the international markets, which subsequently eased ; a few months on, the effects on the markets have proven limited, in part thanks to the action of monetary authorities. uncertainty persists, however, about the longer - term implications of the uk β s decision to rescind its membership of the european union. world trade growth has been slower than expected. in the euro area the recovery is proceeding but at a slower pace than a few months ago. consumer price inflation is inching upwards, but core inflation has yet to record the robust growth required to bring it closer to the inflation objective. according to the ecb staff macroeconomic projections released on 8 september, euro - area real gdp will expand by 1. 7 per cent this year and by 1. 6 per cent in both 2017 and 2018. hicp inflation is projected to average 0. 2 per cent in 2016, and to rise to 1. 2 and 1. 6 per cent in 2017 and 2018 respectively. in italy stuttering economic growth in the second quarter β which had not been foreseen at the start of the year β reflected stagnant domestic demand. lower investment in machinery and equipment was mostly offset by a further increase in that on transport equipment. since the start of the recovery in 2014, investment in italy has been more sluggish both in comparison to other euro - area countries and relative to what is generally the norm when countries are pulling out of a recession. our analyses and findings from business surveys indicate that investment
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as capital and liquidity, be located? should each local subsidiary of the banking group hold a minimum of liquid assets, irrespective of whether they are needed for its business model? or is it sufficient to fulfil liquidity requirements at the consolidated level? centralised liquidity management at group level seems clearly beneficial from the perspective of financial integration. however, there are also risks associated with closer integration in the banking union. as supervisor, the ecb can grant waivers for liquidity requirements at national as well as crossborder level on a case - by - case basis. while the creation of a truly european banking system is certainly in the ecb β s interest, its supervisory mandate calls, above all, for the safety and soundness of the institutions under its supervision. waiving liquidity requirements and large exposure limits could increase the interconnectedness within the banking group and lead to possible contagion effects4 in a banking union which has no common deposit insurance scheme and where the single resolution fund ( srf ) still lacks a fiscal backstop. the current incomplete banking union is asymmetric : while decisions on liquidity waivers are taken at european level, the relevant risk - sharing mechanisms are still national. in each country, bank depositors are protected by the national guarantee scheme. if a bank fails and the single resolution fund does not have sufficient resources available to finance its resolution, which may well be the case for some time, until the common element of the srf is sufficiently advanced, it is a national credit line that backs the srf. in this context, the ecb β s supervisory board decided this spring that there should always be a floor on the liquidity coverage ratio for those subsidiaries 3 / 5 bis central bankers'speeches that are significant on a stand - alone basis. this is to ensure that they hold a sufficient level of high - quality liquid assets to respond to liquidity needs at national level. 5 liquidity ring - fencing reflects the absence of a common fiscal backstop in the banking union. completing the banking union it would be unfair not to acknowledge the progress that we have made towards the banking union. my main point is that we have to be more ambitious. completing the union is not a longterm project. if the aim is to foster cross - border integration of banks, finalising the union has to be done within a timeframe that banks can work with when they make their strategic decisions on how to adjust their business models. in the
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evolving views about the prospective standing of sovereign issuers β credit. with this in mind, let me turn now to the challenge of calibrating the size and duration of purchases that can deliver that yield constellation and, indirectly, the set of financing conditions consistent with our objective. for this, we rely on the current theory and empirics of quantitative interventions by central banks. the theory available today stipulates that it is primarily by announcing that the central bank will withdraw a certain stock of long - term bonds at a certain horizon, and thus a share of duration risk that otherwise would have to be borne by the market, that an asset purchase programme can impact on the term premium and on the yield curve in general. it is important to emphasise that it is the amount of duration that we extract relative to the amount of duration that otherwise would be in the market that produces the impact. in this respect, keeping the size of the app portfolio constant at a certain nominal level does not necessarily safeguard a given amount of accommodation. by keeping the portfolio of assets acquired under the app constant in nominal terms, it is difficult to prevent the ageing of the portfolio, i. e. its 4 / 6 bis central bankers'speeches gradual loss of duration as the securities held in the portfolio mature. although re - investments of the proceeds from principal payments of the maturing securities can, to a certain extent, offset this endogenous decay of the average portfolio duration β by replacing short - term expiring securities with the purchase of longer - term securities β this substitution effect is generally not strong enough to maintain the average maturity of the portfolio relative to that of the market portfolio at a level consistent with a given amount of accommodation. in addition, of course, the amount of duration that is supplied to the market by public and private issuers is not constant and indeed typically trends up. thus, keeping the central bank portfolio steady at a certain nominal level means that, in relative terms, the fraction of duration risk that is withdrawn from the market tends to fall. as time passes, the endogenous loss of duration in the central bank portfolio is bound to exert increasing upward pressure on the term premium. when the governing council will eventually judge that the transition to a sustained adjustment is likely to be completed within a medium term horizon with a sufficiently high degree of confidence, this endogenous process will act as a self - correction mechanism. in those conditions, the higher expected returns on business investment will make borrowing
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repo market. but one needs to look beyond aggregate data to understand the full impact of the ecb β s app. 2 / 10 bis central bankers'speeches for example, there has been no overall fall in average euro repo market turnover since the great financial crisis. daily volumes in the repo market even rose in recent years, despite the considerable increase in excess liquidity. you can see this clearly on my first slide. according to mmsr data, turnover was close to β¬350 billion daily in the second quarter of this year, up from around β¬250 billion a few years ago. what has changed, however, is the type of transaction executed in the repo market. this you can see clearly on this slide and on the next. first, there has been a clear shift from unsecured to secured transactions since the crisis. second, as can be seen on the next slide, increasing excess liquidity has led to a notable decline in the share of trades backed by general collateral ( gc ), which is traditionally used to obtain funding for cash management purposes. this may suggest that proceeds from the sales of securities, together with the ecb conducting its main refinancing operations at fixed rate full allotment, have increasingly acted as a substitute for funding in the interbank market. at the same time, we have observed an appreciable increase in collateral - driven or specific repos. you can see this on the right - hand side. in other words, repos are increasingly conducted as a means to move securities among market participants, not primarily to raise cash. 6 there might be several reasons for this. smaller inventories held by market - makers after the crisis, for example, may cause them to source bonds in the repo market more often. alternatively, short - selling activity may have increased, a phenomenon often observed at, or close to, monetary policy turning points when investors expect yields to rise. one factor that is likely to have contributed to the rise in special repos is policy - induced scarcity, however. this can best be seen when considering the german bund market. here, our purchases have absorbed a multiple of net issuance in recent years, meaning that we have actively reduced the stock of outstanding bonds held by private market participants. the consequence is that investors in search of these securities increasingly need to pay a premium, a specialness premium, which, broadly speaking, reflects the costs of the difficulty in finding a lend
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pieces before further cutting them into smaller slices. many industries were arranged and regulated along this line. for example, in the auto industry, a truck maker only produced trucks whereas a bus maker made buses only, and car maker manufacture just cars. furthermore, in the truck sector, production of heavy - duty trucks, light trucks and agricultural trucks were separated. if an enterprise wished to operate beyond one sub - sector, approval was needed, which was in fact very difficult to get. this was also true for foreign trade. in order to prevent competition and pricing problems among the more than a dozen state - owned trade companies, the trade business was carefully divided among them. for example, the national trading companies in china were established to specialize respectively in machinery, instrument, chemical products, textiles, silk, medicine, minerals, metals, edible oil, cereals and foodstuffs import and export. as the economy evolves, such segmentation increasingly became out of place in a market economy, nor was it contributing to competitiveness. in the financial sector, market demand for financial products has also changed. if we divide the financial business too much, this will affect the growth of financial institutions, and their ability to satisfy customers'need. of course, this may be convenient for the supervisors, because one supervisor only need to know one sub - sector. yet, regulation and supervision should develop with the times, along with economic growth. ii. in order to create a favorable environment to promote cross - sector operation, one need to properly understand the current situation and history. it is not easy to properly understand history. for example, in the aftermath of the great depression in the u. s., the 1933 securities act were adopted to provide for separate operation of the securities, insurance and banking sectors. but many years after that, efforts of revisiting the great depression found many other explanations of the crash. one of the conclusions is whether the financial sector was divided was not a fundamental factor contributing to the great depression, and consequently, the 1933 securities act was an misinterpretation of the history. indeed, those who have undergone the situation might not be able to properly understand it. there are both superficial reasons and deep rooted reasons for explaining the occurrence of an incident. sometimes, superficial reasons and deeprooted reasons are very different. furthermore, many economic problems are counter - intuitive. how to properly understand and interpret history will always be a challenge for economists and policy makers alike. as i have said
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and β’ on financial market infrastructure, this too is very much work - in - progress. do any of these really matter? if we are going to talk about asean integration, we certainly need to have a thriving market that can connect and compete with the rest of the region. while many jurisdictions in asean β and asia for that matter β remain bank - centric, the pressure on the banking books needs to be mitigated when 15, 20 and 25 year loans are generated from a funding base largely made up of savings deposits. the gapping risk is significant and the global focus on liquidity risk makes this issue even more stark. bis central bankers β speeches but being bank - centric cannot be taken independently of the other financing alternatives. while we have 262 publicly - listed companies with a market cap of usd 279. 5 billion, the average for the rest of asean - 5 is 612 listed companies with a market cap of usd 406. 9 billion. our gs turnover ratio of 0. 49 is also lower than the average for the rest of asean - 5 which is at 0. 69. the lower trading activity could be attributed to several factors. the net effect however is that we have less liquidity in the secondary market and with that comes our challenges with benchmarks. renewed reform agenda ladies and gentlemen, the numbers are available for everyone to see. but beyond the figures, i trust that today β s forum is a call to action, highlighting where we are and what needs to be done. from today β s proceedings, allow me to offer my own thoughts on four issues. first, the capital market development blueprint is our guidepost in terms of three facets : price, volume and infrastructure. we strive for price discovery to develop a robust yield curve. we should do this by trading on exchanges or electronic platforms, premised on government securities that have depth across the curve. we should also be unrelenting in upgrading the financial infrastructure to ensure competitive and efficient markets, enhance market discipline and protect investors. second, asean integration of capital markets provides both investors and issuers new opportunities. we can only effectively reap these opportunities by ensuring that our own market is competitive. thus, the challenge is to appreciate what needs to be done, first for our market but with an eye towards the regional market. this agenda is massive because we need to focus on trading and post - trade infrastructure ( from ccps to csds, to sss, trs ) to applying established standards (
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eli m remolona : going the extra mile for financial inclusion speech by mr eli m remolona, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the 2024 cerise + sptf annual meeting, manila, 5 june 2024. * * * introduction sec ( securities and exchange commission ) commissioner javey paul francisco, social performance task force executive director laura foose, cerise executive director cecile lapenu, microfinance council of the philippines, inc. chairman gilbert maramba, kabalikat para sa maunlad na buhay, inc. president and bsp ( bangko sentral ng pilipinas ) adviser ed [ uardo ] jimenez, card bank vice chair and senior management adviser dr. dolores torres, guests, ladies and gentlemen, good morning. welcome to the social performance task force annual meeting. we are set for four days. four busy days of training, breakout sessions, and field visits here in the philippines. thank you especially to those who have travelled from afar to join us here today. our theme today is all about going the extra mile to build effective financial inclusion - - a principle we at the bangko sentral ng pilipinas hold dear. let me give you a quick overview of our progress. gateway to financial inclusion in 2015, only 22 percent of filipinos had bank accounts. by 2021, that figure had risen to 56 percent. we see digital payments as a gateway to financial inclusion. these payments have increased dramatically from just 1 percent in 2013 to 42 percent in 2022. this progress was achieved with the help of so many partners. it started with a strategic roadmap - the national strategy for financial inclusion launched in 2015. it was followed by an updated strategy in 2022. the financial inclusion steering committee, which i chair, includes 21 government agencies working together to develop inclusive policies. as you know, for our efforts to work, it is critical to build trust in formal financial services. hence, the bsp has been actively involved in consumer protection. we have worked alongside lawmakers and regulators to enact the financial consumer protection act. 1 / 2 bis - central bankers'speeches moreover, we are developing a consumer protection and market conduct supervision framework. to make the most of financial inclusion, filipinos need to be financially literate. the bsp has set up a financial education partnership framework to extend our reach. our
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alert mechanism report finansinspektionen ( 2012 ) : den svenska bolanemarknaden ( the swedish mortgage market ) modestino, a. s., & dennett, j. ( 2012 ) : β are american homeowners locked into their houses? the impact of housing market conditions on state - to - state migration β, working paper no. 12 - 1, federal reserve bank of boston bis central bankers β speeches
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has cost the people of sweden thousands of kronor more per year. the real effects have a high social and economic price one of the more tangible effects of the crisis of the 1990s was its impact on the labour market. having gotten used to a level of unemployment of a few per cent, we then saw unemployment increase to double figures over only a couple of years. overheating at the end of the 1980s and the resulting financial crisis almost doubled long - term unemployment. and, of course, shocks to the national economy of this kind do not spare us citizens in our role as taxpayers either. problems in the banking sector impact the country β s citizens in several ways a banking crisis thus impacts individual citizens in several ways. lower or even negative growth leads us, as employees, to run an increased risk of unemployment and to earn lower wages than would otherwise have been the case. when the growth path falls over the longer term, we also have to count on lower pensions. bank crises also risk being costly to us in our role as taxpayers. if the government is forced to compensate those who have put money into a bank, or even take over and capitalise a bank on the ropes, there will be less funding left for other purposes. taxes will be higher or public welfare lower β or both. as almost all citizens are also bank customers, they are also impacted more directly. a crisis in the swedish banking system would lead to higher funding costs for the banks and thus higher lending rates. customers in a bank needing to be restructured may also need to change bank and negotiate conditions under circumstances that would probably not be particularly favourable. all of this risks leading to major difficulties for households. and this is something that we saw all too many examples of at the start of the 1990s. financial crises ultimately threaten fundamentally important social functions an even more serious financial crisis could even threaten fundamentally more important social functions. households are dependent on the banks β ability to manage payments so that they can receive wages, purchase food and so on. in turn, our banks are dependent on the financial market as a whole. if a serious crisis should break out β if the payment systems should stop working, if the banks should stop trusting each other or if the banks should cancel payments β there would be problems for a great many of us. as a conjectural experiment, we could ask ourselves how many swedish households would be able to cope with a week or two in which neither charge cards nor atms functioned. thankfully, we haven
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pulling more than its weight in the current solvency ii construct β the resulting incentive being for insurers to reduce the insurance risk they are taking. however, the ma as currently formulated rewards taking certain non - insurance risks, potentially in significant quantum, and with a set of incentives that may be misaligned. we therefore see quantitative reform of both the risk margin and matching adjustment, as integral to any package. the pra seeks a calibration package that is better able to capture how liability transfer values are likely to be impacted by the assets held to back the business. such a package should also take account of different financial and economic conditions that might pertain at the point that a transfer became necessary, including times of stress. these properties would provide supporting evidence of the economic reasonableness of the calibration. and it would provide assurance that the package is serving its policyholder protection purpose. in particular, as ma portfolios become more diverse then a question arises as to whether the assets currently backing a book of business are assets that another party would be able and willing to take as funding. to achieve a material reduction in the level and sensitivity of the current risk margin, the pra considers it necessary for the design of the ma to appropriately reflect uncertainty around future credit risk experience that would likely be reflected in any transfer price. the fs is the key determinant as to the amount of any expected future investment profit firms can recognise upfront. a calibration of the fs that is too low exposes firms to risk that this future investment profit does not emerge in practice and the associated implications this would have on their ability to meet their liabilities as they fall due. a successful outcome of the solvency ii review will be db scheme members, trustees and insurance policyholders having long - term confidence in the resilience of the insurance sector, and in the security of their benefits. conclusions and next steps solvency ii has only been in force for around six years, but we have already learnt a lot. particularly in respect of the relationship between the regulatory framework and firms β business models. this makes approaching reform both complex and sensitive at the industry level, and for the various and varied individual players. but reform is necessary, to put in place a regime for the uk that provides the right level of resilience and investment incentives into the long - term. this regime will build on the experience and unexpected shocks we have seen in recent years, and create the capacity to deal
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benoit cΕure : the importance of euro interest rate benchmark reforms welcome address by mr benoit cΕure, member of the executive board of the european central bank, at the first meeting of the working group on euro risk - free rates, at the ecb, frankfurt am main, 26 february 2018. * * * on behalf of colleagues from the european commission, the european securities and markets authority, belgium β s financial services and markets authority and the european central bank ( ecb ), welcome to this first meeting of the working group on euro risk - free rates. thank you for dedicating your time and resources to supporting the working group in successfully delivering on its mandate. i would particularly like to thank koos timmermans, chief financial officer of ing group and vice - chairman of ing bank, for agreeing to chair the working group. i am convinced that the group will benefit from his extensive experience in european banking and financial markets. the task at hand is of utmost importance. first and foremost, the working group has a mandate to identify and develop an adoption plan for a risk - free overnight rate that can serve as a basis for an alternative to the benchmarks currently used in the euro area. as a second step, the working group should explore ways to ensure a smooth transition to the preferred new rate. both the financial and public sectors have a keen interest in a smooth and successful reform of the reference interest rate. for the financial sector, reference rates play a pivotal role because they are widely used in a broad range of financial products and contracts. in the past, we have seen banks become increasingly reluctant to participate voluntarily in benchmark panels, mainly due to potential litigation and compliance risks as well as increasing contribution costs. together with the declining activity in the underlying market, this has undermined confidence in the reliability and robustness of existing benchmarks. for the public sector, a smooth and successful reform is needed to underpin the good functioning of euro area money markets and trust in the related products. for the ecb in particular it is vital as monetary policy is initially transmitted through financial markets. a more reliable and robust reference interest rate may also enhance financial stability, for three main reasons : first, without robust fallback arrangements, a loss of confidence in reference rates may lead to market functioning being disrupted. second, poorly designed reference rates, given their underlying role in many financial contracts, may transfer risks and pricing errors across financial markets, or create greater and unnecessary basis risk. ultimately,
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ben s bernanke : global imbalances β links to economic and financial stability speech by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the banque de france financial stability review launch event, paris, 18 february 2011. * * * by facilitating the allocation of the world β s savings to the most productive uses, the free flow of capital across national borders confers substantial economic benefits, including the promotion of economic growth. that said, we have seen a number of episodes in which international capital flows have brought with them challenges for macroeconomic adjustment, financial stability, or both. such challenges have tended to arise in two situations : first, when the β rules of the game β of the international monetary system β the policy responses that countries are expected to take to help foster a balanced global economy over time β are either poorly articulated or not observed by key countries ; and second, when the financial systems of nations receiving strong capital inflows have not been up to the task of investing those inflows productively. these issues are hardly new. in the late 1920s and early 1930s, the u. s. dollar and french franc were undervalued, with the result that both countries experienced current account surpluses and strong capital inflows. under the unwritten but long - standing rules of the gold standard, those two countries would have been expected to allow the inflows to feed through to domestic money supplies and prices, leading to real appreciations of their currencies and, with time, to a narrowing of their external surpluses. instead, the two nations sterilized the effects of these capital inflows on their money supplies, so that their currencies remained persistently undervalued. under the constraints imposed by the gold standard, these policies in turn increased deflationary pressures and banking - sector strains in deficit countries such as germany, which were losing gold and foreign deposits. ultimately, the unwillingness of the united states and france to conduct their domestic policies by the rules of the game, together with structural vulnerabilities in financial systems and in the gold standard itself, helped destabilize the global economic and financial system and bring on the great depression. the asian financial crisis of the late 1990s illustrates a somewhat different type of risk associated with large cross - border flows of capital. during the 1990s, strong capital inflows helped support robust growth in many asian economies. but thailand β
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##quities of many other industries, and one conventional explanation for this is that banks are quite opaque. it has become increasingly clear that investors cannot easily know the level of risk they are acquiring with any particular bank equity position. when it comes to assessing share values, uncertainty can often breed doubt : it seems reasonable to expect, as a long - run proposition, that more - accurate market valuations of bank equities will follow better disclosure. the three pillars discussed in the basel consultative documents flow directly from this multifaceted view, and the rank - ordering of their importance in the long run is not indicated by the number of pages devoted to each in the consultative documents. in the long run, the supervision pillar remains critical, but the supervision must be even more risk - focused and increasingly concerned with validating systems. line supervisors will evaluate the quality of risk management and examine the adequacy of the risk measures. without good supervision, the other pillars cannot stand. for example, accurate internal risk - based ( irb ) inputs are surely crucial to obtaining reasonably accurate regulatory measures of capital adequacy. and the market will not believe or use risk disclosures unless it believes that the underlying risk measures, like ratings and the probabilities of default, have been validated. thus, supervisors must validate the risk measures to support both capital regulation and market discipline. market discipline will become increasingly important. given informative and comparable disclosures of internal risk measures, the market will react more quickly and appropriately than any regulator to variations in risk postures, and such responses will help banks strike the right balance between risk and reward. formal capital regulation is the most familiar of the three pillars, and the one to which the most pages are devoted β no doubt because it, by definition, contains more β rules β that must be explained. capital ratios will serve as a trigger for corrective actions for banks that get into trouble. projecting ahead many years, better risk management may mean that troubled banks will be far fewer than they have been historically. ideally, the three pillars will work in an integrated way to strengthen banking systems. nonetheless, during the transition to a working basel ii, we may have to lean on capital regulation more than we hope to in the long run. in navigating that transition, our overarching goal should be to advance the practice of risk management and encourage its wider adoption. and we all should accept that a lot of work remains both for banks and for supervisors.
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also bring new challenges and risks. for example, as a result of the shift in the relative importance of the transmission channels of monetary policy. interest - rate decisions may transmit to the real economy differently through markets than they do through the banking sector. this calls for careful analysis. and possibly a reassessment of the effectiveness of our monetary policy instruments. these instruments are bis central bankers β speeches currently primarily geared at the banking sector. however, to be able to influence financing conditions beyond the banking sector we may need to introduce new instruments. 15. another possible consequence is that risks may shift to the shadow banking sector. a sector that is currently less transparent and less regulated than the traditional banking sector. it is yet unclear what could be the financial stability implications if such a development were to occur. in any case, it would warrant enhanced monitoring of developments in the sector. one could even argue that a more formalized supervisory framework should be put in place. finally, it could be conceivable that macro - prudential policy measures would have to be applied beyond the banking sector. 16. as for the potential risks associated with developing capital markets, let me highlight one more issue. some might worry that by developing financial markets we will again see the introduction of complex financial instruments. the type of obscure instruments that according to many were the root cause of the global financial crisis. here, i would like to reiterate firmly that this is clearly not what i envisage. rather, the goal of capital markets union is to create a level - playing field by introducing simple standards that improve transparency. only then, can capital markets union foster financing flows that support economic growth in a sustainable way. dear participants, let me wrap up my address. 17. i presented to you a central banker β s view on capital markets union, and why i think this a very important initiative. today, the discussion on capital markets union is still at an early stage. the agenda is being set as - we - speak. having an exchange of views on such an important topic with esteemed members of the capital markets community could not have come at a better time. therefore, i very much look forward to the discussions later today. i β m confident that this conference will yield many interesting insights. new ideas that will bring us closer to completing this important pillar of our economic and monetary union. thank you for your attention. bis central bankers β speeches
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effectiveness of the system, to direct sufficient resources to it and to ensure equal opportunities for children from all strata of society in order to encourage and nurture excellence. education is a very important issue that will aid economic growth in the long term as well as reduce social gaps. in israel, as elsewhere, the yield on education has increased a great deal in recent years. 3. banking competition : the bachar committee achieved its mission of increasing competition in the credit field, but now we face the challenge of boosting competition in the retail field. here, the supervisor of banks is the major player, and together with the management of the bank of israel and me, is examining ways to strengthen competition in the banking system including making it easier to transfer accounts from one bank to another, and more besides. there is the field of bank charges, and in this context the bank of israel has already prepared a bill that would grant the supervisor of banks the authority to regulate fees in areas that have no competition. this bill will be submitted in the next few days. 4. in infrastructure : in this context i refer to the fields of transportation β roads, rail, public transport β and the field of electricity β and here it is important to carry out the planned reforms. 5. real estate : here our emphasis is mainly on developing a more efficient real estate market, on land ownership ( the israel lands administration ) and on easing the bureaucratic processes such as planning, licensing and registration. reform in this field is clearly not a simple matter but it is important to begin freeing the real estate market in israel from its many current restrictions. 6. defense spending : this is very much on the agenda of the day, and i am happy to see that a committee headed by former director general of the ministry of finance, david brodet, is dealing with this subject, and the bank of israel is involved. clearly every country has the responsibility of defending its citizens, but it is difficult to know exactly what resources are required. it is easy to err in either underestimating or overestimating the funds needed. so it is important to establish from time to time a select group of professionals, such as the current committee, to check this matter thoroughly, and it is important too to follow through on any resulting recommendations. 7. health : this subject often pops up on the agenda and, among other things, it is important to examine the pricing of various health services. i would like to add here that overall the
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, as a result, mortgage defaults were relatively low in the crisis, high mortgage debt did appear to have had an impact more generally. evidence from the crisis supported the view that more debt is associated with deeper downturns. bank research showed that highly indebted households in the uk cut consumption more sharply over 2007 to 2009 ( chart 1 ). 11 and during the global financial crisis, countries with higher aggregate debt levels relative to incomes had deeper falls in aggregate consumption and hence deeper downturns ( chart 2 ). chart 1. change in consumption relative to income by lti between 2007 - 09 ( a ) ( b ) ( c ) chart 2. higher household indebtedness was associated with sharper falls in consumption during the crisis percentage point change in consumption to income ratio adjusted consumption growth 2007 - 12 ( a ), per cent - 5 - 10 - 15 - 20 united kingdom - 25 0 to 1 1 to 2 2 to 3 3 to 4 β₯4 mortgage lti ratio sources : living costs and food ( lcf ) survey, ons and bank calculations. ( a ) change in average non - housing consumption as a share of average posttax income ( net of mortgage interest payments ) among households in each mortgage lti category between 2007 and 2009. ( b ) lcf survey data scaled to match national accounts ( excluding imputed rental income, income received by pension funds on behalf of households and fisim ). lti ratio is calculated using secured debt only as a proportion of gross income. ( c ) repeat cross - section methodology used, with no controls for other factors, or how households may have moved between lti categories between 2007 and 2009. - 2 - 4 - 6 - 8 - 10 household debt to income in 2007, per cent sources : floden, m ( 2014 ) and oecd national accounts. ( a ) change in consumption is adjusted for the pre - crisis change in total debt, the level of total debt and the current account balance. see floden, m ( 2014 ), β did household debt matter in the great recession? β available at www. martinfloden. net / files / hhdebt _ supplement _ 2014. pdf. our aim was to guard against an upside risk. in 2014 the bank β s monetary policy committee β s central forecast was that in the medium term house price inflation would fall back and rise broadly in line with the 2014 stress test was based on a scenario, in
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shocks to which others are responding are similar to those with which the mpc must contend. to my mind, there are some important differences in this regard : first, cost pressures are stronger in the us. american unit costs have increased by 3 % in the past year and are growing above historical averages, while unit costs in the uk are currently rising by around half that rate or at a speed notably below that consistent with the inflation target. 4 second, the uk economy is twice as open as the us and is therefore more exposed to global weakness, dragging on exports. 5 third, this also means that pass - through of weak global inflation, compounded by exchange rate appreciation, is likely to exert a greater and more persistent drag on uk inflation. partly as a result, after adjusting for one - off factors, core inflation is firmer in the us than the uk. fourth, the stance of fiscal policy differs markedly. the uk is undergoing the largest fiscal consolidation in the oecd, with the structural deficit projected to decline by around 1 percentage point a year on average over the next four years, having fallen only 1 / 3 percentage point on average over the past three. in contrast, us fiscal policy is expected to loosen notably over next three years. finally, the bank of england β s control over macroprudential policy reduces the need to use monetary policy to address financial stability considerations. recall that, despite an expansion that started two years before our own, the fed has only raised rates to our lofty level of Β½ %. this last point is not facetious. as my mpc colleague jan vlieghe argued in a speech yesterday, a variety of structural factors have likely depressed the so called equilibrium interest rate, or the rate consistent with the economy operating at full employment and inflation at target. 6 bank staff have estimated many of these drivers. in my long - held view, rate rises, when they come, are likely to proceed at a gradual pace and to a limited degree for some time. most economics is at the margin, and the tightening of monetary policy β once warranted β is likely to be marginal for some time. given all of that, what are the prospects for a rate rise in the uk? last summer i said that the decision as to when to start raising bank rate would likely come into sharper relief around the turn of this year. well the year has turned, and, in my view, the decision proved straightforward : now is not yet the
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the determination and strong 4 / 5 bis central bankers'speeches will of all the travellers on that journey. concerning the future path of monetary integration in africa, my hope is that this conference will become a memorable signpost. thank you very much for your attention. 1 brunnermeier, james and landau 2016 : " the euro and the battle of ideas ". 5 / 5 bis central bankers'speeches
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studies, no 09 / 2007. woodford, m. ( 2003 ), interest and prices, foundations of a theory of monetary policy, princeton university press.
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banks will participate in key ccps across the globe. it is essential that the financial institutions that participate in and rely on ccps are able to conduct effective due diligence to understand the risks they face as members and take appropriate steps to mitigate those risks. third, owing to mutualisation, losses and liquidity shortfalls in the event of a member default may spread to other participants. crisis propagation may be further driven by interdependencies of changing complexity. these can exist between ccps and other financial institutions, for example, through interoperability arrangements. note that the same large financial institutions, being clearing members of many ccps, increase interdependencies even in the absence of interoperability. finally, existing differences in regulation may lead to regulatory arbitrage and potentially to a race to the bottom. moreover, the use of a centralised infrastructure depends, in some instances, on exemptions from registration or the application of equivalence or substituted compliance with foreign infrastructures. where foreign ccps cannot be used, compliance with mandatory clearing under domestic laws may inhibit cross - border transactions. new risks related to central clearing the globalisation process has triggered a trend towards global clearing that in itself may lead to further unintended consequences and may create new risks [ slide 6 ]. the trend towards increasingly large global ccps is similar in nature to that of horizontal integration which the committee on payment and settlement systems ( cpss ) looked at in greater detail in a bis central bankers β speeches report of 20101, concluding that larger global ccps may have certain advantages, but may also lead to systemic risks, reduced benefits of central clearing, and regulatory frictions. moreover, it appears that for many banks, indirect access is their preferred way to get access to clearing services so as to comply with the clearing obligation. client clearing seems thus to be dominated by a few large global intermediaries. a factor contributing to this concentration may be higher compliance burdens, where only the very largest of firms are capable of taking on cross - border activity. this concentration creates a higher degree of dependency on this small group of firms. there are also concerns about client access to this limited number of firms offering client clearing services. for example, there is some evidence of clearing firms β cherry picking β clients, while other end - users are commercially unattractive customers and hence unable to access centrally cleared markets. these are all developments that i believe the international regulatory community may wish to carefully monitor and act
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, thereby underpinning economic activity and safeguarding medium - term price stability. against this background, the governing council decided the following : first, we will continue to conduct net asset purchases under the pandemic emergency purchase programme ( pepp ) with a total envelope of β¬1, 850 billion until at least the end of march 2022 and, in any case, until the governing council judges that the coronavirus crisis phase is over. based on a joint assessment of financing conditions and the inflation outlook, the governing council 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. we will purchase flexibly according to market conditions and 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 envelope need not be used in full. equally, the envelope can be recalibrated if required to maintain 1 / 4 bis central bankers'speeches favourable financing conditions to help counter the negative pandemic shock to the path of inflation. we will continue to reinvest the principal payments from maturing securities purchased under the pepp until at least the end of 2023. in any case, the future roll - off of the pepp portfolio will be managed to avoid interference with the appropriate monetary policy stance. second, net purchases under our asset purchase programme ( app ) will continue at a monthly pace of β¬20 billion. we continue to expect monthly net asset purchases under the app to run for as long as necessary to reinforce the accommodative impact of our policy rates, and to end shortly before we start raising the key ecb interest rates. we also intend to continue reinvesting, in full, the principal payments from maturing securities purchased under the app for an extended period of time past the date when we start raising the key ecb interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. third, the governing council decided to keep the key ecb interest rates unchanged. we expect them to remain at their present or lower levels until we have seen the inflation outlook
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governor of the central bank of kuwait, basel a. al - haroon, in the 46th ordinary session of the council of the governors of the arab central banks and monetary authorities, held in jeddah, kingdom of saudi arabia on september 18, 2022. page 1 of 4 in line with its proactive approach adopted since march 2020, the central bank of kuwait has taken several measures and actions through its various monetary, supervisory and hedging instruments. at the level of monetary measures, the central bank of kuwait cut the interest rate several times in march 2020 down to all - time low 1. 5 % to reduce the borrowing cost and ensure that the temporary liquidity issues at the cbk - regulated units would not turn to permanent issues to their solvency. this step was followed by a series of measures related to financial stability including activation of its emergency plans and those of the banking sector to address the requirements of the pandemic, as well as taking a package of measures within the macroprudential policy to ease the regulatory requirements upon the outbreak of the crisis, the most important of which was releasing the prudential capital buffers of 2. 5 %, facilitating liquidity requirements to provide a wider lending space for banks, and reducing the risk weights related to exposures to small and medium enterprises, thus supporting the vulnerable sectors. as regards, the financial stability, the measures included payment moratoriums for the affected customers, obligating banks not sell or seize the collateral, and instructing banking sector units to conduct a comprehensive review of their credit and investment portfolios. to mitigate the economic and financial damages, and maximize the benefits from the aforementioned monetary and financial measures, the central bank developed and implemented a clear plan to follow up on the situations during the pandemic, in light of the data on the conditions and spreading infection. the central bank of kuwait formulated a set of goals to curb the crisis repercussions and ensure business continuity, support the crucial sectors, and prevent the short - term liquidity crisis from turning into a solvency crisis. having launched a package of anti - crisis measures, the central bank of kuwait maintained its vigilant monitoring of the local and global economic developments, oversight over the banking sector and monitoring its financial soundness indicators. the sector's results revealed that some banks took advantage of the mitigants to practice their business comfortably without any pressures as a result of the crisis. development of a plan to exit the stimulus environment
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and achieve financial stability at large. central bank of kuwait - public ΨΉΨ§Ω
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Ψ±ΩΨ²Ω the role of effective supervision is also critical because not every risk can be pre - defined in a rulebook. while overseeing the dynamic world of finance, supervisors must be agile enough to suitably correct course in line with the constantly changing nature of the banking industry or the emergence of new risks. in the second part of my speech, i would like to touch upon two such emerging concerns ; cyber threats and climate change. addressing emerging concerns ensuring resilience against cyber threats first, consider the issue of cyber threats. growing footprint of technology is influencing every facet of the banking business, transforming banks β internal processes as well as their engagements with customers. as the role of technology deepens from a mere support function to a platform central to everything that banks do, the likelihood of new risks emanating from ubiquitous and connected technologies loom large. materialization of such risks will not only disrupt vital financial services but will also undermine the security and confidence in the financial system. in fact, the scale and sophistication of cyber - attacks is already on the rise. examples include data breach at target of 70 million credit card users, a cyber - attack on equifax compromising data of 143 million customers, and the hacking of over 100 million customers β data at capital one bank. no wonder, cyber risk features as a key concern in different industry surveys. for instance, respondents to the bank of england β s systemic risk survey of 2h - 2018 quoted the risk of a β cyber attack β as the second major threat to the system, only behind the brexit induced political risk. the growing threats of cyber risk need to be reflected in banks β operational risk capital charge. incidentally, the basel committee has revised its operational risk methodology by replacing the existing three techniques with a simplified standardized measurement approach and expects that its implementation, due by january 2022, will increase capital risk charge for operational risk by 18 % for a group of banks currently using standardized approach of the old regime. while it is not clear how much of the increase in operational risk charge is driven by the recognition of growing cyber threats, greater capital allocation for operational risk is a step in the right direction, given the increasing significance of such low probability but high impact risks. however, reliance on capital alone will not suffice. supervisors must ensure that banks
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their exports to the prices that they pay for their imports - have improved by about 14 per cent since late 2001. this has contributed importantly to higher real incomes and stronger domestic demand. how has the canadian economy been adjusting to these various economic forces? in the bank's last monetary policy report, published in april, we noted that we have seen increased business investment spending in oil and gas extraction, in other mining activity, and in wood - product manufacturing. these sectors are benefiting from higher world prices for their products. we are also seeing rising investment in sectors that are not very exposed to international trade, such as electric power generation, finance and insurance, and information and cultural industries. in these latter cases, firms are reacting to strong growth in domestic demand. we've also had very strong investment in housing. but in other sectors that are highly exposed to international trade, prices are either falling or are rising very slowly. here, i am referring to goods - producing sectors, such as auto parts, furniture, and clothing manufacturing, as well as service sectors such as tourism. firms in these industries are feeling the pressure of the higher canadian dollar, and they are also facing increased competition from other regions of the world. the good news is that many canadian firms are making the necessary adjustments. investment spending is being directed towards increased specialization, higher productivity, and lower costs. since much of the productivity - enhancing machinery and equipment is priced in u. s. dollars, the stronger canadian dollar has made it easier for firms to invest in equipment that boosts productivity. stiffer competition is also encouraging firms to seek new markets, increase their specialization, and offer more value - added, customized services. other adjustments are also taking place. a growing number of firms are looking to cut costs by importing more inputs. we've certainly seen this type of adjustment taking place among manufacturers of telecommunications equipment. other firms are phasing out the production of goods and services with low profit margins and concentrating on those that yield higher returns. current economic developments in canada and manitoba through its monetary policy, the bank is helping these adjustments by supporting domestic demand. in our april monetary policy report, we projected that domestic demand would grow by almost 4 per cent in 2005. according to recently released data, it grew by slightly more than expected during the first quarter of the year. so we continue to see evidence that strong domestic demand is offsetting the smaller contribution that net exports are making to economic growth. on 14 july, we
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william c dudley : the us financial system β where we have been, where we are and where we need to go remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the reserve bank of australia β s 50th anniversary symposium, sydney, 8 february 2010. * * * today, my remarks will focus on the u. s. and global financial systems : β’ what went wrong to produce the worst financial crisis in the past 70 years? β’ where are we now? β’ what should be our top priorities to ensure that this never happens again? as always, my views are my own and do not necessarily reflect those of the federal open market committee or the federal reserve system. with respect to what went wrong, it is important to recognize that the financial crisis occurred for a host of reasons and, thus, there is no single silver bullet to avoid such crises in the future. at the heart of the crisis was a tremendous buildup in leverage, which our regulatory framework failed to prevent. large amounts of opaque, illiquid, long - term assets were financed by short - term liabilities, and much of this financing occurred in the shadow banking system. when the housing bubble burst, financial asset prices fell and exposed the deep linkages and overall fragility of our system. interbank funding markets seized up, the shadow banking system crumpled and several major financial firms β banks and nonbanks alike β collapsed or approached the brink of collapse. extraordinary interventions of governments and central banks around the world were necessary to prevent a complete collapse of the financial system and the broader economy. as a general matter, regulators did not appreciate beforehand how vulnerable the system was to shocks. in particular, there was a failure to appreciate the important interconnections among the banking system, capital markets, and payment and settlement system. for example, the disruption of the securitization markets caused by the poor performance of highly rated debt securities led to significant problems for major financial institutions. these banks had to take assets back on their books, backstop lines of credit were triggered, and banks could no longer securitize loans, thus increasing the pressure on their balance sheets. this reduced credit availability, which increased the downward pressure on economic activity, which caused asset values to decline further, and in turn, increased the degree of stress in the financial system. moreover, regulators did not adequately understand how the dynamics of the system tended to exacerbate shocks, rather
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non - bank counterparties of gsibs to trade with the bis central bankers β speeches gsibs on terms equivalent to those found in the isda resolution stay protocol. this further step is needed in order to limit the potential for arbitrage within the market and to promote greater stability in the event of a necessary resolution. as we move this work forward, we should acknowledge and take stock of the significant advances achieved over the past few years, while at the same time remain focused on our responsibility to address the challenges that remain. thank you for your kind attention. bis central bankers β speeches
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##sbursed, which is the highest level so far. this supported the profitability of corporates, which has been on a constant rise since 2015. the corporate sector ended 2018 with a net profit of rsd 500 bn, which is by rsd 126 bn or by one third more than the year before. if we look at company size, we will see that profitability was in the positive zone in all categories β from micro to large enterprises. lending activity movements dinar interest rates movements ( p. a., in % ) ( excluding the exchange rate effect, y - o - y rates, in % ) 10. 3 5. 6 3. 6 2. 75 corporates loans - outstanding amounts * households loans - outstanding amounts * 7 years government securities * * key policy rate * * source : nbs, ministry of finance. * as of june 2019 * * as of july 2019 9. 7 15 9. 4 5 8. 9 - 5 - 5 - 10 - 10 - 15 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 - 15 20. 2 total ( lhs ) households ( lhs ) enterprises ( lhs ) investment loans ( rhs ) source : nbs. positive fiscal trends extended into 2018 β serbia recorded a fiscal surplus of around 0. 6 % of gdp. the share of public debt in gdp dropped by 4. 1 pp y - o - y to 53. 8 % in 2018, and went further down to 51. 8 % in may 2019. in the context of financial stability, particularly important is the reduction in the dollar share of public debt in the previous two and a half years, from around one third to around one fifth of total public debt in june this year. also, the country β s external position is sustainable. for four years in a row the current account deficit was fully covered by the inflow of foreign direct investment, which in 2018 reached eur 3. 5 bn or 8. 2 % of gdp. full coverage of the current account deficit continues in 2019. we have preserved financial stability. in such an environment, appreciation pressures prevailed in 2018 as well. the dinar strengthened against the euro owing to good macroeconomic indicators, greater interest in long - term investment in serbia and rising exports of goods and services. to prevent excessive short - term volatility of the dinar exchange rate, we intervened in the interbank foreign exchange market on both sides β by buying and selling foreign currency. we bought eur
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paper form but also its electronic form. government agencies from singapore are working with the chongqing port and logistics office to conduct a pilot to digitalise bills of lading, including the mtbl, using tradetrust. tradetrust is an interoperable framework to support the exchange of electronic documents. it uses distributed ledger technology to allow trade actors to establish the authenticity of a digital document. if we can scale the use of tradetrust within the cci - ilstc, banks will be able to use these electronic documents for trade financing and we can effectively eliminate the risk of 1 / 3 bis central bankers'speeches fraudulent mtbls. more broadly, the greater use of electronic trade documents will make verification checks easier, reduce the incidence of fraud and human error, and ultimately lower costs. but to achieve this, all stakeholders need to adopt digital tools and upgrade their trade practices. we need close collaboration among government agencies and private sector players. there are promising signs of progress. root ant, a singapore fintech firm has signed an agreement with the bank of china ( boc ) to serve as the trade financing platform on the singapore side, enabling traders, logistics companies, and boc β s branches to exchange electronic trade documents under the cciilstc for trade financing purposes. i look forward to more of such digital trade pilots bearing fruit over the next couple of years. collectively, these will transform how trade is conducted on the cci - ilstc. our second focus area is green finance. china and asean will require significant green financing to make our transition to a more sustainable future. it is estimated that to achieve carbon neutrality, china will require more than 500 trillion rmb or us $ 78 trillion in green and low carbon investments over the next 30 years. asean will require some us $ 2 trillion in green investments over the next 10 years. as an international financial centre, singapore has made serving asia β s transition towards sustainability through green finance a key priority. singapore can play an important role in supporting china β s green financing needs. there is a deep green financing and investor pool based in singapore looking for green assets in asia. during 2017 to 2020, domestic and foreign corporates have successfully issued us $ 8 billion of green, social and sustainability linked bonds in singapore. how can singapore and chongqing work together to mobilise green financing and investments in a safe, sound, and orderly manner? let me offer four suggestions. first, we must help corporates understand the value of green
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will continue to strengthen our supervisory and regulatory regimes and market infrastructure, consistent with new international standards and best practices. as we have done in the past, we will calibrate these changes to take into account our environment and regulatory objectives. 10. mas is supportive of global reform efforts to strengthen capital and liquidity frameworks. we have always considered capital adequacy and effectiveness of a bank β s risk management and capital planning processes as important parts of overall prudential management of banks. as a member of the basel committee on banking supervision, we participated actively in international discussions that helped shape the broad agreement reached earlier this week on the main design elements of the new capital and liquidity reform package. other design details such as calibration, and phase - in arrangements as well as the framework for regulatory buffers will be determined later in the year. we would like to see a set of final proposals that can be implemented globally in a meaningful manner to promote the long term stability of the banking system. there should be a judicious balance between limiting banks β activities that are incongruent to their role as an intermediary of financial flows, and allowing them to perform their role in facilitating economic activity and sustaining the recovery. mas will continue to be actively involved at these discussions to shape the proposals. 11. our singapore banks start from relatively strong capital and liquidity positions. they are generally well - capitalised and have in practice maintained capital ratios much higher than our minimum requirements. as such, on a relative basis, we do not expect the proposals to affect them in a significant manner. nevertheless, the global reforms will set new norms for the banking sector and the singapore banks would have to take these into consideration in their capital and liquidity plans moving forward. 12. i mentioned last year that mas will be reviewing the corporate governance regulations and guidelines for locally - incorporated banks and significant life insurers. we have since issued a public consultation paper setting out proposed enhancements to the corporate governance framework for these financial institutions. the main thrusts of the proposals emphasise the need for directors to have the relevant skills and commitment to oversee the operations of the financial institutions, and the important role of independent directors on the board. mas will issue our response to the public consultation shortly. 13. on market conduct, mas has issued two consultation papers on the sale of listed and unlisted investment products, to strengthen safeguards for retail customers and enhance mas β regulatory powers. we will be issuing
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timothy n j antoine : launch of results of financial literacy and financial inclusion survey remarks by mr timothy n j antoine, governor of the eastern caribbean central bank, at the launch of results of financial literacy and financial inclusion survey, basseterre, 18 september 2023. * * * salutations members of the monetary council members of the eccb board of directors dr. didacus jules, director general of the oecs commission ms. lilia buruncic, director for the caribbean, world bank and team ms. helen gradstein and team from the united nations capital development fund ( uncdf ) dr. valda henry, deputy governor ms. tracy polius, chief director ( policy ) mrs. c. teresa smith, director of the research, statistics and data analytics department heads of department, management and staff mr. imran williams, project manager and oecs project team, now the director of finance in the government of saint lucia mrs. gail gray - phillip, head of uwi global campus, st. kitts and nevis mr. edwin st. catherine, ceo, data point solutions inc. and team specially invited guests students members of media fellow citizens and residents of the eccu introduction greetings from your eastern caribbean central bank! we work for you. 1 / 4 bis - central bankers'speeches today, we are pleased to share the results of our inaugural financial literacy and inclusion survey. we could not undertake this effort without partnerships. consequently, at this juncture, i wish to highly commend all those associated with this survey, especially mrs. c. teresa smith and dr. leah sahely from the eccb, and the entire project management unit at the oecs commission led by mr. imran williams, now the director of finance in the government of saint lucia. i wish also to acknowledge the technical and financial support of the world bank under the caribbean digital transformation project ; mr. edwin st. catherine whose company, data point solutions inc., executed the survey ; and all the persons who participated in the survey. why did the eccb commission this survey? here at eccb, financial inclusion is a strategic priority. financial inclusion refers to access to a range of financial services including banking, credit and insurance. investopedia defines financial literacy as the ability to understand certain financial issues and use financial skills for personal financial management such as budgeting and investing. in a region which boasts high levels of adult literacy ( high 90 per
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territory to oversee financial institutions not regulated under the banking act. the bank established a payment system council to research, consult, and advise on payment system policy, in an effort to make the system in the eastern caribbean currency union more effective, efficient, reliable and secure. one of the benefits from this will be that, in any of the bank's member countries, you can have ready access to your accounts through the use of debit and credit cards. there were also positive developments with respect to the bank's money and capital market development programme during the year. among these was the increase to five, in the number of governments participating in the regional government securities market, following the issue of treasury bills by the government of antigua and barbuda. these five governments have benefited from a reduction in their cost of borrowing, while the public is now able to invest in a larger pool of investment instruments. with respect to the eastern caribbean securities exchange, the listing of two prominent regional companies, grace kennedy limited of jamaica and firstcaribbean international bank limited of barbados, is evidence that the efforts of the bank to promote the eastern caribbean securities exchange as the caricom exchange, are beginning to bear fruit. as part of the effort to promote business development and to infuse an entrepreneurial spirit in the region's youth, the bank collaborated with private and public sector partners to introduce the junior achievement programme in st kitts and nevis. successful programmes are already operating in grenada and saint lucia under the auspices of other interested parties in those countries. the bank intends to work with partners in the other currency union countries where the junior achievement programme does not yet exist, to ensure that it is implemented. recognising the importance of public understanding and involvement in the economic development thrust, the bank continued to expand its public education and awareness programme throughout the year. among the initiatives targeting school children, the media and the public were : β’ a savings and investments course, which has now been implemented in grenada, st kitts and nevis, montserrat and anguilla ; β’ media round table discussions in all of the eccb member countries. β’ press briefings, following monetary council meetings, which have been aired on radio and television in member countries. β’ regional interactive discussions on the economic performance of currency union countries, and β’ the opening of the oecs / eccu exhibition centre with a mission to promote an understanding of the people, culture, history and economies of the oec
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, in particular tax regimes, and safeguards against misuse of liberalised current account regime to effect capital transfers. sound management will also avoid dollarisation of the domestic economy and internationalisation of domestic currency. fifth, operationally, management of capital account involves a distinction not only between residents and non residents or between inflows and outflows but also between individuals, corporates and financial intermediaries. the financial intermediaries are usually a greater source of volatility amongst these. if such financial intermediaries operating in the developing countries are owned or controlled by foreign entities / investors, there is perhaps greater tendency to volatility in the flows. it is noticed that such foreign owned / controlled intermediaries are often influenced by considerations other than domestic economy and have less appreciation of local conditions - apart from the issues relating to cross - border supervision of financial intermediaries by the host country supervisor. sixth, the prudential regulations over financial intermediaries, especially over banks, in respect of their forex exposures and forex transactions must be effective and a dynamic component of management of capital account as well as financial supervision. such prudential regulations should not be treated as capital controls. seventh, capital controls should be treated as only one of the components of management of capital account. as liberalisation advances, the control - regime would contract, and thus, it is the changing mix of controls that charecterises the process of liberalisation in management of capital account. eighth, capital controls may be price based, including tax - regimes, or administrative measures. depending on the legal framework and governance structures, the mix between the two would vary. as liberalisation advances, the administrative measures would get reduced and price - based increased, but the freedom to change the mix and reimpose controls should always be demonstrably available. such freedom to exercise the policy of controls adds comfort to the markets at times of grave uncertainity. finally, as mentioned by professor kenneth rogoff, a distinction needs to be made between de jure and de facto financial integration in general and hence, in the context of capital account in particular. in practice, there are difficulties in measuring the degree of financial integration. however, the institutional structures, both of public policy and markets, need to be evolved to meet the imperatives of liberalised capital account. in the final analysis, the basic issue in any policy context is whether capital controls lead to distortions in exchange rate or the liberal
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bis study states, non - linear interaction emerges when losses from default on an instrument depend on movements in market risk factors, or conversely, when changes in the values of instruments due to movements of market risk factors depend on whether there is a default or rating migration. in these circumstances, the two types of risk are inextricably linked, and attempts to measure them separately and then combine them can lead to substantial biases. in fact, research shows cases in which the combined risk is actually higher than the sum of the components leading to β compounding effects β as opposed to diversification effects. a particularly clear example is foreign currency loans, which constitute a sizable part of lending in certain countries. consider a bank lending in foreign currency to domestic borrowers. these positions contain market risk ( exchange rate risk ) and credit risk ( default risk of borrowers ). now assess the two risks separately. when for example the domestic economy slows, ceteris paribus, the probability of domestic borrowers defaulting increases. when the domestic currency depreciates, ceteris paribus, the value of the loan in domestic currency increases as it is denominated in foreign currency. so, on the surface one could think that the two effects offset each other. but this reasoning would neglect the strong relationship between exchange rate changes and default risk in this type of contract. the ability of a domestic borrower to repay a loan in foreign currency depends in a non - linear way on fluctuations in the exchange rate ( unless the domestic borrower has other revenues in the foreign currency in which the loan is denominated ). a home currency depreciation has a particularly major effect on the repayment amount and therefore repayment probability of a foreign currency loan by an unhedged domestic borrower, which tends to be stronger than the valuation effect mentioned above. 18 ) similarly, floating or adjustable rate loans have coupons that change as interest rates change. therefore, if the coupons on the loans adjust frequently ( or in the limit continuously ), then the interest rate risk of the loan is passed on to borrowers, and therefore, assuming the loans do not default, they have no market risk for the bank. if credit risk is computed separately from market risk, then the credit risk of the loans is computed while holding interest rates constant. this treatment of credit risk can miss an important interaction between market and credit risk. for example, if probabilities of default are increasing in interest
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glenn stevens : finance and economic development in australia address by mr glenn stevens, governor of the reserve bank of australia, to the committee for economic development of australia ( ceda ) annual dinner, melbourne, 12 december 2006. * * * it is a great pleasure to be invited to address the annual general meeting of ceda, continuing a long tradition of such addresses by governors of the reserve bank of australia. ceda β the committee for economic development of australia β began in 1960, an initiative of d. b. copland. copland, one of australia β s most remarkable economists of the depression era, was a member of β giblin β s platoon β, whose history is recorded so nicely in the recent book of that name. 1 ceda has over the years made a substantial contribution to debate in a number of fields, from trade policy to taxation policy, from indigenous affairs to infrastructure. interestingly enough, the list of publications on ceda β s website does not include any which are overtly financial in their focus. i do not say this as a criticism β perhaps the reason you have invited central bank governors to speak so regularly is to cover that very set of issues! but it seems appropriate, given ceda β s core focus on economic development, to address the questions : what is the role of finance in economic development and growth? how does the financial system contribute? how can financial events sometimes be detrimental to economic growth? what can be done to ameliorate those risks? what risks do we face at present? history the growth we take for granted in the modern world is actually a fairly recent phenomenon in human history. prior to the industrial revolution in western europe, living standards rose, if at all, very slowly. according to angus maddison β s data, the real per capita gdp of the united kingdom rose between 1500 and 1820 at an average rate of only 0. 27 per cent per annum. 2 at that pace, living standards doubled about every 250 years. in other words, a person would not live all that much better than their grandparents β assuming they could discern any difference. from 1820 to 1913, the rate of increase rose to 1. 15 per cent. that β s a very big change. at that pace, living standards doubled in about 60 years. in the 20th century β despite wars, the great depression, the great inflation and various other problems β growth per head rose further. australia β s per capita growth was 1. 70
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glenn stevens : still interesting times address by mr glenn stevens, governor of the reserve bank of australia, to the chamber of commerce and industry ( western australia ) and the chamber of minerals and energy ( western australia ) corporate breakfast, perth, 7 september 2011. * * * it is very good to be with you this morning. in the process of deciding a title for this address, i recalled that three years ago i was talking in public addresses about the times being interesting, perhaps a little too interesting. that still seems to be the case, hence the title. as you know, yesterday the reserve bank board met here in perth. the board reviewed the international and local information to hand since its last meeting, and decided once again to leave the cash rate unchanged. the reasons for that decision were given in the statement released following the meeting. more information on the nature of the discussion and considerations the board took into account will be published in the minutes of the meeting, two weeks from yesterday. i do not want to dampen any of your undoubted eager anticipation for what may be contained in those minutes. what i will do is say a little more about the sequence of decisions the board has taken over recent months. to do that in appropriate context, it is worthwhile first recounting the framework for monetary policy that has been in operation since the early 1990s and that continues to guide the decisions of the board. so i will say something about that. then i will describe how the flow of recent events, viewed through that framework, has had a bearing on decisions. the framework for monetary policy the framework for monetary policy is a medium - term, flexible inflation target. it seeks to achieve a rate of increase in the consumer price index of between 2 and 3 per cent, on average, over time. this arrangement has a fair bit of history now. the reserve bank began to articulate it in the early 1990s and it has been formally agreed between successive treasurers and governors, in published statements, beginning in 1996. 1 the β on average β specification allows the bank to take account of the fact that it cannot finetune inflation over short periods, and of the obligation to promote, insofar as monetary policy can, full employment, which is another of the bank β s charter obligations. having a numerical goal takes account of the importance of inflation expectations, and seeks to provide an anchoring point for them β which is a critical function of any monetary policy regime. it also provides a focal
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purchased by the ecb to β¬1. 1 trillion in 2020. this is a large sum in order to maintain financial stability in the debt markets, in particular in the government bond markets, and to safeguard the monetary policy transmission mechanisms. in addition, of course, we have the fiscal policies of national governments and the european commission, as well as the decision by the eurogroup last week. do you think that the measures adopted last week by the eurogroup are enough to deal with the severity of the problem, or should the finance ministers have gone further? with coronabonds, for example, or similar solutions. the agreement made was a commitment that goes in the right direction. it β s important to remember that. to reach a compromise, everyone has to give way a little and to believe in it. the agreement is a sign of political commitment. as for other possible measures, such as coronabonds, the ecb has always been in favour of the existence of a fiscal instrument at european level that can complement monetary policy. it is just that this is a political decision. we are in favour of it, we think it would be a good thing for the euro area, but we will see what happens. the european council meets on 23 april. we consider it to be a useful instrument, but it is not up to the ecb. it β s for the european governments to decide. 1 / 3 bis central bankers'speeches and what do you expect will happen? do you think that it β s possible to reach a political agreement to take this step towards coronabonds or is it just a dream? i couldn β t possibly say what will happen. all i can say is that the current situation is difficult and that the commitment made by the eurogroup was positive, but let β s see. the possibility of a recovery fund being set up is a good idea. the size of the fund and how it is funded is left open to discussion. that β s why it depends on what the european governments decide. why did the ecb decide to launch a new programme, the pepp, just a few days after announcing that it was strengthening the previous programme. was your initial assessment of the situation too optimistic? within three or four days we saw a rapid deterioration in the situation. containment measures were taken in several countries, and we realised that the impact on the economy could be enormous, with repercussions on the financial markets. it was a swift reaction on our part
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deal is available here. 3. see schnabel, i. ( 2020a ), β never waste a crisis : covid - 19, climate change and monetary policy β, 17 july. 4. see lagarde, c. ( 2021 ), β towards a green capital markets union for europe β, 6 may. see also panetta, f. ( 2021 ), β sustainable finance : transforming finance to finance the transformation β, 25 january. 5. banks seem to increasingly factor in climate - related risks, for example by pricing climate - related policy exposures in their loan portfolios and reducing lending to polluting companies and projects. see, for example, de greiff, k., delis, m. and ongena, s., ( 2018 ), β being stranded on the carbon bubble? climate policy risk and the pricing of bank loans β, discussion paper series, no. 12928, centre for economic policy research ( cepr ), may ; altunbas, y., marques, d., reghezza, a., rodrigues - acri, c., and spaggiari, m., ( 2020 ), β do banks fuel climate change? β, working papers series, ecb, forthcoming. 6. see de haas, r. and popov, a. ( 2021 ), β finance and green growth β, european banking center discussion paper series no 2018 - 001. 7. see flammer, c. ( 2021 ), β corporate green bonds β, journal of financial economics, pp. 20 β 39. however, evidence on the impact of green bonds on carbon emissions is mixed : other studies have found that the issuance of green bonds is not associated with a decrease in the carbon emissions at the firmlevel. see ehlers, t., mojon, b. and packer, f. ( 2020 ), β green bonds and carbon emissions : exploring the case for a rating system at the firm level β, bis quarterly review, september. 8. as stressed by ignazio visco at the recent green swan conference hosted by the bank for international settlements ( bis ), these externalities are particularly relevant as emissions entail spill - overs to other markets and countries. such spill - overs create an additional need for coordinating mitigation policies across countries to avoid undue delays in countering the effects of climate change. see visco, i.
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. because we are in a period of excess demand, we need a period of lower growth to balance things out and bring demand back in line with supply. the reduced spending that results from this rebalancing will ultimately lead to lower inflation. monetary policy works like a chain reaction or sequence of events. but that sequence takes time. both history and research tell us that changes to the bank β s policy rate affect different households and sectors of the economy differently and at different speeds. 1 if you β re making a big purchase or investment β one that requires a loan β you β ll feel the impact of higher rates immediately. and the sectors that are most sensitive to changes in interest rates are the ones that cool first. the housing sector is a clear example of this. most people take out a mortgage to buy a house. an increase in mortgage rates may cause us to delay a purchase or to purchase a less expensive house. this leads to a slowdown in housing activity. as housing activity slows, people tend to spend less on furniture and other housing - related goods. it takes longer for monetary policy to bring down price growth in other goods and services β especially services β because they aren β t directly tied to borrowing. instead, they adjust over time as overall spending moderates. let me turn now to our deliberations leading up to yesterday β s decision. not surprisingly, governing council discussed how the economy has evolved since july. we noted that while the canadian and global economies are showing signs of slowing, the canadian economy is clearly in excess demand. although growth in gross domestic product in the second quarter was slightly weaker than we had projected in july, consumption and business investment grew at a significant pace. labour markets are tight, and inflation is high and broadening. with short - term inflation expectations remaining high, and all three of the bank β s core measures of inflation moving up, governing council discussed the ongoing risk that inflation becomes entrenched. the longer inflation expectations remain high, the greater the risk that elevated inflation becomes entrenched. if that were to happen, higher inflation could become self - fulfilling, and a damaging cycle would be set in motion. we want to ensure this scenario does not materialize because if it does the economic cost of restoring price stability will be much higher. this led to our decision to raise the policy interest rate by 75 basis points to 3. 25 %. by front - loading interest rate increases now, we β re trying to avoid the need for
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remarks by carolyn rogers senior deputy governor calgary economic development september 8, 2022 calgary, alberta economic progress report : restoring price stability good morning, everyone, and thank you for the opportunity to be here. this is my second public speech since joining the bank of canada at the end of last year, and i am really pleased to be out west this time. i grew up in western canada and over the course of my career have lived in every province from manitoba west to british columbia, including some time here in calgary. my favourite time to be out west is in the fall, during harvest. it β s a time of year that holds a lot of promise and brings back many fond memories for me. i β m looking forward to spending the next couple of days speaking with business leaders like you, hearing their perspectives on the albertan and canadian economies. but first, i β d like to offer you some of the bank β s views β particularly on the economy and monetary policy. i plan to cover three things this morning. first, i want to spend some time discussing our current view on the canadian economy and inflation, specifically. the consumer price index ( cpi ) was 7. 6 % in july, down slightly from june β s rate of 8. 1 %. while it looks like we might have seen the peak of overall inflation in canada, inflation excluding gasoline prices has continued to rise and broaden across goods and services. there are also some significant uncertainties, particularly in global commodity markets, that could set us back. and although most days it feels like the pandemic is behind us, we are heading into winter, and that means more time indoors. if we β ve learned anything over the last two years, it β s to expect the unexpected. of course, the second thing i want to talk about is our most recent rate decision. yesterday the bank raised the policy interest rate by 75 basis points. this came on the heels of july β s decision to increase the policy rate by a full percentage point. in total, the bank has increased the policy rate by 3 % since march. i β ll spend some time explaining why we have chosen to front - load rate increases β i would like to thank erik ens and kristina hess for their help in preparing this speech. why we think this has been the right response to the current underlying causes of inflation in canada. the third and final thing i will spend some time on is the path forward. i hope to give you a
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mario draghi : exchange of views with members of the irish parliament introductory statement by mr mario draghi, president of the european central bank, during his exchange of views with the house of representatives, dublin, 8 november 2018. * * * thank you, chairman. i am happy to be back in dublin and honoured to be invited to speak at the oireachtas. on this occasion, i am joined by my colleague, philip lane, whom you meet regularly in his capacity as governor of the central bank of ireland. while the ecb is accountable to the european parliament, we greatly value our exchanges with national parliaments. in september, some of you already met the chair of the supervisory board, daniele nouy, in frankfurt and discussed the ecb β s supervisory policies. in full respect of the functional separation between the ecb β s monetary policy and its supervisory tasks, today is an opportunity to discuss our monetary policy and policies to make the euro area economy and its constituent parts more resilient. in this respect, i expect an open exchange from this meeting, which will give us a chance to listen to and better appreciate each other β s positions. i am conscious that i am speaking in a country that went through a severe crisis. the irish people made tremendous efforts, for which i have great respect. and these efforts are now paying off. the euro area economic outlook ten years after the start of the global financial crisis, the euro area economy is performing well β and has been for some time. we have now seen 22 consecutive quarters of economic growth, while over 9 million jobs have been created and the unemployment rate has declined to 8. 1 %, its lowest level since november 2008. the irish economy has seen a particularly strong expansion in recent years. ireland is now growing at the fastest pace of any euro area country. unemployment has been falling too, and now stands well below the euro area average. this is all the more impressive given the severe crisis ireland went through and the legacies it is dealing with, including high private debt and arrears. looking ahead, while some sector - specific data and selected survey results have been somewhat weaker than expected, the latest incoming information overall suggests that the broad - based expansion in the euro area, and in ireland, is set to continue. against this background, euro area inflation is expected to continue to converge towards the ecb β s objective of below, but close to, 2 % over the medium term. getting to this
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##gour. fourth, companies which met their demand from external borrowings are likely to revert to domestic markets given the widening of spreads overseas. finally, banks are now provisioning for loan losses which remain manageable. with these developments private sector credit is expected to gain momentum. growing liquidity and competition forced banks to lend close to and in some instances below kibor and overall there was softening of lending rates. resultantly, the benchmark kibor has also shown rationalization and 6 - month kibor has registered a decrease of 61bp on a y - o - y basis and is currently around 10. 0 %, despite the increase in discount rate by 50bp. banks have also been responsive on deposit side to the central bank calls. in november, pakistan banking association announced a consensus view of the industry to raise deposit rates for saving accounts to minimum of 4 % and also prior to that there have been series of announcement of new products for investors holding certain balances with commercial banks. these measures along with the zero crr for long dated deposits and moral suasion of central banks has resulted in growth in share of time deposits and rise in weighted deposit rates by 181 bps on fresh deposits / 157 bps on outstanding deposits, relative to december 2005. sbp has further been facilitating both the export and long term refinancing. the outstanding funds provided by the state bank and banks to exporters at 7. 5 % reached rs132 billion as on 3 - 11 - 2007 β which is higher than last year β s trends. sbp has honoured applications for around rs 6. 8 billion ltfeop contracted prior to july 2007. at the same time, it announced the implementation of 3 % interest rate subsidy for spinning sector and continued to pay r & d support expeditiously which has now reached rs25 billion on a cumulative basis since its introduction and sbp disposed off almost 270, 000 cases of it. the scheme for long term financing facility will be operationalized in january 2008 as soon as the details of its workings have been well understood by the commercial banks. this is a broad based facility which will make available long term credit for fabric, garments, made up, towels, rice processing, leather & leather garments, sports goods, carpet & wool, surgical instruments in the core categories, and fisheries, poultry & meat, engineering goods etc in the developmental categories of industrial sectors and is expected to finance both domestic and imported plant and machinery equipment for
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all exporters reporting exports of rs 300 million annually or fifty percent of their production capacity whichever is lower. in order to facilitate matters banks are now allowed to make advance payments upto 100 % of fob or cfr value of goods against firm registered contracts and lcs. exporters are allowed issuance of bill of lading on document acceptance and document payment basis and also can retain 10 % of export proceeds in the foreign currency accounts. in conclusion, our economic assessment and support for industry should help provide for clear direction of economic trends and expectation, while positioning industry to plan its futuristic investment in accordance with market incentives.
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. the different ways in which we experience artworks would appear to be a rich seam of inspiration, particularly given our respective banks β collections. β art in the workplace β does, after all, offer a very special situation in which to encounter creativity. day - to - day working life tends to revolve around performing a clear set of tasks and the routines they entail. there β s no denying that artworks in the workplace can sometimes also be a disruptive element, or quite literally β get in the way β whenever technical equipment or the like is being installed. and yet time and again, there are moments in which a work of art does indeed catch our eye, thereby creating another setting in which the topic β art & viewer β comes to the fore. the thematic group entitled β back to figuration β brings together works whose very format alone makes them stand out. for the most part, these are paintings dating back to the 1980s β a time in which a group of artists deployed gestural brushstrokes and applied layer upon layer of paint in revisiting figurative art. representational though these works may be, there is more to them than just a depiction of reality. these brief remarks are all i would like to say about the exhibition. no doubt you will make many more discoveries this evening β particularly in the way the exhibits contrast with one another β and be inspired to β build dialogues β of your own. and you wouldn β t be alone β on our first tour of the exhibition, pierre wunsch and i both found that this setting made artworks we knew from offices and conference rooms appear in a whole new light. before i conclude, let me just say how grateful i am to everyone who made the exhibition project such a success. i owe particular gratitude to yves randaxhe and anne bambynek, the curators of the belgian art collection. together with their counterparts from frankfurt, iris cramer and anja hagebarth, they have devised the exhibition in an ongoing dialogue, and the end result is most impressive. this art exhibition is uncharted territory for us, too. we β re delighted to have this forum to present our collections beyond the confines of our respective central banks. let β s hope that our invitation to β build a dialogue β with artworks which are otherwise reserved for our colleagues, guests and visitors will meet with the interest of the general public. thank you for your attention. 2 / 2 bis central bankers'speeches
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bundesbank is doing in this regard. first, we have been upgrading a large number of our cash processing machines located across our network of branches in germany. second, we are in the process of setting up our new state - of - the - art cash center in dortmund. once operational, this branch will pool operations previously performed by five other branches. it will be equipped with automated transport vehicles and high - bay warehouses. these substantial investments in the existing cash infrastructure are necessary to ensure that cash remains one of the variety of payment options that customers can choose from for their everyday transactions. 3 external resilience of the cash cycle 2 / 4 bis central bankers'speeches ladies and gentlemen, just like the human body, the cash cycle is essentially a closed system. working smoothly and efficiently from within is the foundation on which everything else is based. but this by itself is of little use if the system is not resilient against external influences. attempts to inject counterfeit banknotes into the financial system are one example of this. the good news : their success is limited in the euro area. enhanced security features were introduced with the issuance of the new europa series of euro banknotes. this is to keep ahead of counterfeiters, and the banknotes are also more durable than the first series. placing explosives around atms is a bolder example of an external attack that tends to receive considerable public attention. generally speaking, storing wealth β be it in electronic or physical form β will always attract illegal activities. the way to counter these is with effective law enforcement β white blood cells, if you like. safety measures tend to imply further regulations. regulations tend to generate costs. it is an obvious trade - off. but the only cash cycle that households will trust in is a safe one. trust is particularly important in times of crisis. cash is naturally immune to power outages, failing payment systems or even large - scale cyberattacks. we observe sharp spikes in cash demand in regions affected, for example, by earthquakes or hurricanes. a safe and resilient cash value chain can act as a cushion for households during periods of economic uncertainty. cash does this by establishing a link between households and the central bank. to date, this link has been physical and, for the most part, established via commercial banks. in my view, having a tactile means of payment is important. our evidence suggests that this helps households keep their personal budgets in check. 2 moreover, physical cash
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the single resolution mechanism decided that these two banks did not deserve to be resolved, which according to european law means rescuing some part of the banks, and that the banks should go into liquidation. but going into liquidation means that state aid rules apply, so any public money then requires two things. it requires that shareholders and subordinated debt - holders participate in the costs, which is the case in the two banks, because they go to the entity with the bad assets β¦ but not senior bond holders? constancio : no, but the point β if the solution, for instance, under brrd, had been applying 2 / 3 bis central bankers'speeches precautionary recapitalisation in that case also senior bond holders would not have been bailed in. so it β s not much difference from a situation of precautionary recap, which is foreseen in the law. it β s not an exception. it β s not a special privilege. everything was decided according to the two laws that apply in these cases, with, in the case of the brrd, the potential exception of precautionary recap, which is in the law, and state aid rules. this was applied. at the same time, as a result of state aid rules, and logic, policy, the overall capacity of the banking sector in italy went down. so there was downsizing ; there was restructuring. indeed, everything was applied according to european legislation. is that just the beginning now for the italian banking sector? as we all know, it has a huge slab of npls. can we be prepared for more of these kind of β¦ constancio : i don β t anticipate anything of that sort. there is the situation which was announced also during these days that is about to be concluded regarding monte dei paschi di siena, but that has been discussed with the european authorities, and very likely it will have, as was stated in the past few days, a solution very soon for that case. 3 / 3 bis central bankers'speeches
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equivalent to β¬700 billion in extra debt for firms and households at a time when we should be aiming to reduce debt. more fundamentally, meeting our objective is about credibility. if a central bank sets an objective, it can β t just move the goalposts when it misses it. confidence comes from every party fulfilling its mandate. and that β s what the ecb will do, as the treaty demands of us. questions about the ecb β s policy so the ecb is playing β and will continue to play β its part in supporting confidence, price stability and a robust recovery. but i know that our policies are not uncontroversial. the low interest rate environment and our unconventional measures are seen by some as a cause for concern. i would not be surprised if that is the case for many of you here. let me discuss what i see as the three main issues. the first is the perception that low interest rates unfairly punish savers. low interest rates of course lead to lower returns on safe assets, such as deposits. but what matters for savers is what their assets can actually buy β i. e. real returns β and how their overall portfolios are performing. and it turns out that on this metric, the situation isn β t nearly as bad as it β s often thought to be. as our colleagues at the bundesbank have shown 2, the real return on a typical private portfolio for a german household since 2008 has been around 1. 5 %. that is lower than the pre - crisis average, to be sure. but it β s hardly an β expropriation β of savers. in fact, it β s better than in several repeated periods since the early 1990s. see speech by mario draghi at the european banking congress : monetary policy : past, present and future, frankfurt am main, november https : / / www. ecb. europa. eu / press / key / date / 2015 / html / sp151120. en. html bundesbank monthly report article : german households β saving and investment behaviour in light of the lowinterest - rate environment, october 2015 : https : / / www. bundesbank. de / redaktion / en / downloads / publications / monthly _ report _ articles / 2015 / 2015 _ 10 _ households. pdf? _ _ blob = publicationfile bis central bankers β speeches a related concern is that low interest rates cause people to save more
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have been losing a bit of steam and growth has recently not been robust enough to reduce high unemployment. in australia, growth has been quite solid over the past year, unemployment is relatively low, and inflation has, for the moment, declined. in fact, growth trends have been favourable over several years now in comparison with many other economies. the charts below, comparing trends in australia β s real gdp per capita with that of several countries, are illustrative. of course we cannot match the extent of growth in china β a country where living standards are rapidly increasing in a process of β catch up β to the higher levels of high - income countries ( graph 1 ). but it is clear that compared with the us or europe, or japan, australia β s per capita output and income has done pretty well over the past several years ( graph 2 ). graph 1 graph 2 the task ahead, then, is to seek as far as possible to continue a solid trend like this, through various challenges which lie ahead. the future is of course unknowable, and economic forecasts unfortunately are not very reliable. but we have no option but to try to form a view of how things will probably unfold. we think the global economy will record reasonable growth over the coming year, though not as strong as the past year ( a strength that, incidentally, surprised most observers ). we think australia β s terms of trade, after reaching a 60 - year high in the current quarter, will probably decline a bit, but remain high. we expect that this high level of relative export prices will add to incomes and spending, even as the stimulative effects of earlier low interest rates and budgetary measures continue to unwind. we expect, and indications from businesses are that they do as well, that resource sector investment will rise further β as we experience the largest minerals and energy boom since the late 19th century. even with continued caution by households, that probably means that overall growth, which has been at about trend over the past year, will increase in 2011 to something above trend. we think that means that the fall in inflation over the past two years won β t go much further. of course that central forecast could turn out to be wrong. something could turn up β internationally or at home β that produces some other outcome. we spend a fair bit of time thinking about what such things could be. possible candidates might be a return to economic contraction in the united states, or a bigger
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glenn stevens : monetary policy and the regions address by mr glenn stevens, governor of the reserve bank of australia, to the foodbowl unlimited forum business luncheon, shepparton, 20 september 2010. * * * thank you for the invitation to come to shepparton. no one knew, when the invitation was issued almost a year ago, that you would be battling floodwaters just a couple of weeks prior to today. it is good to see the recovery already well advanced. in the global economy, recovery from the effects of a different kind of deluge β a man - made one β has been under way for a while. progress has been quite varied, however, and the outlook is uncertain just now. i will give an update on those matters today. it also seems a fitting occasion to talk about β monetary policy and the regions β, since a question we are often asked is how we take account of differing economic conditions across the country in the setting of monetary policy. i will offer some perspectives on the issues that arise when we have one policy instrument for a fairly diverse economy. the essential message here is that such diversity matters, but is often not as pronounced as people assume, because all the parts of the economy are ultimately connected. things that affect one sector tend to have spillover effects elsewhere. furthermore, economies have a certain capacity to adjust to differing conditions. in australia this works reasonably well. current economic conditions the global economy continues to present a mixed picture. in the asian region, most countries have well and truly recovered from a downturn that occurred in late 2008 and the first few months of 2009. the main exception is japan. in the bulk of cases, economies are much closer to their potential output paths now than they were a year ago and policies are moving to less expansionary settings. as a result, over the year ahead the growth in the asian region is unlikely to be as rapid as over the year to mid 2010, when the β v - shaped β recovery was in full swing. similar comments could probably be made about latin america. in europe, the german economy has been powering ahead this year, reaping the benefits of many years of attention to containing costs and building productivity. but other continental economies are not as strong, and some are in the grip of a very painful adjustment to a world of constricted private credit and limits to budgetary flexibility. in the united states an expansion has been under way for some time, but seems lately to
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only be finalised with a delay. the second method of payments is the direct transfer or token system. in this system money or a form of money is established, which can be directly handed from one person to another, with or without the direct involvement of any bank in the transaction. these forms of money are purchased from an issuer, who ultimately carries the obligation to redeem them. the transaction is final at the point when it occurs, and is not dependent on the operation of some underlying settlement system. cash is the most widespread example of a token system, but in fact there are a number of other examples, such as multiple - trip train and bus tickets. in determining whether electronically stored monetary value is β money β, it is worth reflecting on the main attributes of currency, i. e. the notes and coins issued by the reserve bank. currency is a standard product and is therefore easily recognised and identified. it is risk - free, in the sense that the reserve bank stands fully behind it. it is fully negotiable. possession of currency is sufficient to establish a right of use, and it can be simply handed to someone else in order to make a payment. usage is anonymous and not directly traceable. it is convenient and efficient for making small payments. it is valid for payment in all places and circumstances, and its status can only be questioned where forgery is suspected. payments made by means of currency are definite. they are final and irrevocable at the point when they are made, and are not dependent on the operation of any clearing or settlement arrangements. these attributes collectively imply that currency is generally accepted. however, it is not in all cases the preferred method of payment, particularly for higher value transactions, since use of currency involves handling, storage and security costs which may not arise to the same extent with other methods. payment by means of certain electronic methods score well on some aspects and poorly on others. however, the relative importance of these various attributes is very dependent on the type of payment being made. cash can be very convenient in some situations, but a real nuisance in others β and the same is true for other technologies. probably the key conclusion is that different payment technologies are not inherently inferior or superior to one another. rather, each one of them has an appropriate place as, indeed, the current happy coexistence of a number of overlapping or competing alternatives clearly indicates. stored value cards and other new forms of payment will result in some
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being developed or are already available for electronic payments and banking and which are, or could be, activated through atms, telephonic devices, personal computers, intelligent cards and card - reading devices. most central banks are specifically considering the impact these products and e - commerce will have on their functions, and the regulatory and operational requirements which are necessitated. in south africa, several major banks have already launched internet banking services and all the major banking groups are investigating, or developing, multi - purpose smart cards using microchip technology which enable electronic β purse β facilities. although these new payment technologies are still in various stages of development, the south african reserve bank, as other central banks around the world, has a direct interest in anticipating their likely policy implications. emerging electronic money products may require regulatory adjustment or intervention which will arise from : the need to limit the systemic and other risks which may threaten the stability of, and confidence in, the national payment system ; the need to provide consumers with adequate protection from unfair practices, fraud and financial loss ; the need to ensure the central bank β s ability to conduct monetary policy ; and the need to assist law enforcement authorities in the prevention of criminal activity. while these products are still being developed, the bank is reluctant to impose regulation that could hamper the introduction of innovative and promising technologies. at this stage, the bank is of the view that it should rather concentrate on understanding the emerging technologies and the issues they represent. opportunities which these new technologies offer should also be investigated and exploited to the benefit of the country as a whole, i. e. how the emerging technologies can be used to make financial services more accessible to those in the low income, unbanked and rural communities in south africa ; and how the emerging technologies can be used for cash displacement and to solve problems such as the cost of cash handling and robberies. 3. the characteristics of electronic payments basically two methods of making payments can be distinguished. the first is the account transfer system. in this system customers issue instructions to banks to debit the account of the person making a payment and to credit the account of the person receiving the payment. payment methods which fall into the account transfer category include cheques, debit cards, credit cards and telephone banking. depending on the type of technology that is used, these payments can in some cases be finalised immediately after they have been made, for example debit card transactions. other account transfer payments, notably cheques, are conditional, and will
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amando m tetangco, jr : financial capability as a 21st century life skill speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the citi - ft financial education summit, makati city, 5 december 2012. * * * mr. michael zink, head of asean and singapore citi country officer ; mr. sanjiv vohra, citi country officer for the philippines ; secretary imelda nicolas, chairperson, commission on filipino overseas ; ms. brandee mchale, chief operating officer, citi foundation ; mr. david pilling, financial times asia editor ; ms. kathy hurley, executive vice president, education alliances, pearson foundation ; distinguished resource persons ; experts and practitioners in financial education ; friends who have traveled from other countries ; my colleagues in the bsp ; ladies and gentlemen, good morning everyone! finally, this annual financial education summit is in the philippines. now on its 9th year, it continues to enjoy such high level of interest and support for its relevance to the times. congratulate and thank citi and ft and the other sponsors and organizers of this gathering. for starters, its forum theme β financial capability as a 21st century life skill β is an outright declaration that financial capability is a must - have - skill. i agree with this statement. indeed, the ability to make sound financial choices and decisions is essential to ensure one β s financial well - being. and yet, most people are sorely lacking in this necessary skill. the summit β s keynote session pushes the envelope further : it raises the social, economic and moral imperatives of bridging the financial capability gap. discussions are also bound to be thought - provoking on the topic β the ultimate financial education challenges β impact, scale and sustainability. β ladies and gentlemen. the organizers of this summit have brought together world - class finance education experts and advocates to tackle these important issues. the bangko sentral ng pilipinas is therefore pleased that it is a host partner in this financial education summit. for your information, the bsp was also co - host in the last two days of the asia and the pacific regional meeting on child and youth finance organized by the child and youth finance, international. and three months ago, the bsp co - hosted with the oecd in cebu the asian seminar on financial literacy and inclusion. it must be obvious, financial education
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practices, share our learnings and exchange ideas. these include : 1 ) the international network for finance education ( infe ) created by oecd to promote and facilitate international cooperation on global financial education issues ; and 2 ) the group of the alliance for financial inclusion ( afi ), which counts as members policy makers and regulators in the developing world who are committed to financial inclusion. ladies and gentlemen. in scaling up its activities for consumer protection, the bsp is also intensifying its information campaign to ensure that intended benefits actually accrue to financial consumers. for instance, we have been working on enhancing transparency in credit transactions to make sure people are not overcharged with β flat β interest rates and similar misleading methods. to ensure proper and immediate dissemination of such consumer protection measures, no less than our deputy governors explain the issues through mass media, including radio. this may not mean much to some, but for tricycle drivers, for instance, who pay their motorcycles on instalment, the right to demand correct pricing translates to higher income for him and his family. it is not enough therefore to craft responsive policies. we need to communicate and educate the people on what these means for them. on the other hand, we also need our people to be responsible and vigilant in protecting their rights. indeed, financial capability is a life skill that can lead to a better life. i wish all of you therefore a fruitful and successful financial education summit. thank you and mabuhay! bis central bankers β speeches
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the banks form a very dominant part of the financial sector. registered banks, of which there are currently 18, represent the lion's share of the total financial system, both in terms of total financial system assets and deposit liabilities. in terms of financial system stability, registered banks are by far the most important players in the financial system. and of the 18 registered banks, only about 5 banks could be regarded as systemically important, together holding more than 80 % of total registered bank assets. the new zealand banking system is also unusual in another way - the nature of its ownership. all but two of the registered banks are foreign owned, with the two new zealand - owned banks being very small relative to the system as a whole. the foreign - owned banks operate either as subsidiaries or as branches of foreign banks, with most of the largest banks being wholly - owned subsidiaries of australian and british banks. as i will note later in this speech, this raises particular complications for the nature of the corporate governance arrangements in these banks and raises interesting policy questions for the reserve bank as guardian of the financial system. as i have indicated, a fundamental component of new zealand's approach to the promotion of financial stability is the emphasis it places on the importance of corporate governance as a means of encouraging banks to effectively identify, monitor and manage their business risks. this approach recognises the critical role which directors have in overseeing the stewardship of their bank. indeed, it is worth noting that the new zealand banking supervision framework, with its heavy emphasis on encouraging sound risk management through strong corporate governance arrangements, is somewhat unusual by international standards. in most countries, the standard approach to banking supervision involves reliance on prudential regulation of banks, where a bank's risk positions are substantially constrained by regulatory limits imposed by the supervisory authority. it also typically involves some form of on - site examination of banks by the supervisors. in contrast, the new zealand supervisory framework quite deliberately avoids the use of prudential regulation - except in limited areas, such as minimum capital ratios and limits on lending to related parties. and the reserve bank does not conduct on - site examinations of banks. our supervisory framework is deliberately light - handed in nature, in the sense that we minimise our intrusion into the management of banks'risks and the structure of their operations. instead, we try to foster robust " self discipline " in banks through the corporate governance and disclosure frameworks we have established. that said, i should make it clear that, although
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of non - executive directors. and, of course, many countries have their own national codes of good corporate governance, either developed by government or by the private sector. new zealand is no exception, with the institute of directors having issued a raft of very useful guidance material to directors. there are few absolute " rights " and " wrongs " in the field of corporate governance, but some key principles stand out. in particular, let me highlight a few basic principles to which we in the reserve bank attach considerable importance in a banking sector context. β’ first, i would particularly stress the importance of directors having a sound understanding of their company's business, the nature of its risks and its strategic direction. this provides the foundation for the sound management of any company. it is absolutely crucial in a bank. β’ second, we firmly believe that the ultimate responsibility for ensuring that a company's risks are being properly identified, monitored and controlled lies in the boardroom. β’ third, we place considerable emphasis on the importance of having an adequate representation of non - executive and independent directors on the board, and a clear separation of the position of board chairman and chief executive officer. β’ fourth, it goes without saying - but i will say it anyway - that there is a fundamental need for directors to be scrupulous in ensuring that, individually and collectively, potential conflicts of interest are avoided or at least managed in ways that do not compromise the interests of the company. β’ we also stress the importance of rigorous internal and external audit arrangements - where the external auditor has a strong measure of independence and is not conflicted by having other significant financial interests in the company. β’ finally, as the governor of a central bank that has placed strong emphasis on disclosure by registered banks, and which sets high standards on its own financial disclosures, it will not surprise you to know that we stress the importance of regular, timely, comprehensive, meaningful and reliable financial disclosures of a company's affairs. these kinds of principles feature strongly in the reserve bank's approach to the supervision of banks in new zealand. before going on to explain our approach, and the central role that banks'corporate governance plays in our framework, it may be useful to set the scene by highlighting the key features of the new zealand financial system. some of them have particularly interesting implications for corporate governance. the new zealand banking system is relatively unusual by international standards in a number of respects. first, unlike the financial systems of many countries, in new zealand
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condition for the effective and successful operation of the eth and the snb. for without independence, ladies and gentlemen, research cannot be free and monetary policy cannot be shielded from special interests. but independence is neither a law of nature nor a matter of course. rather, it is rooted in the population's belief that our institutions deliver their best results when they are independent. in other words, independence pays off for the population because they benefit from stable prices and scientific progress. but how can this belief best be upheld, especially given that it is continuously being challenged by a wide range of stakeholders? what does independence rely on? first, the eth and the snb must genuinely live their independence and perform their tasks as well as they possibly can. in the case of the eth, for example, this means always conducting unbiased research, sharing its results with interested parties, thereby making them accessible and verifiable, and meeting the highest educational standards. for the snb this means ensuring that monetary policy is always geared to maintaining price stability. but it also means constantly developing its analyses and methodologies. maintaining a dialogue with the academic community is very important here. 2 / 4 bis - central bankers'speeches second, both institutions must be accountable. the snb must report comprehensively on its activities to the federal assembly and to the public. the eth board, on the other hand, must report annually to the federal council on the fulfilment of its strategic objectives. and third, if the eth and the snb are to retain their independence, it is essential that they only pursue objectives that are covered by their mandates and for which they have the appropriate instruments. a special interest - driven expansion of our remits would not be compatible with our independence as enshrined in law. moreover, such an expansion would have no democratic legitimacy and this could sooner or later lead to a restriction of independence. the eth and the snb must limit their activities to those areas for which the legislature granted them independence and the requisite instruments. moreover, if they are to continue fulfilling their statutory mandates, neither institution can allow itself to stand still. on the contrary, they must be highly flexible in order to respond to a rapidly changing environment. this is why the law affords the eth and the snb substantial latitude when it comes to the fulfilment of their tasks. a look at the recent past demonstrates just how important this latitude is : geo
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should neither flag in our commitment nor in the demands we make on ourselves. ladies and gentlemen, the eth and the snb bear a considerable responsibility for the development of our country. by ensuring price stability, the snb makes a significant contribution to creating stable economic and social conditions in switzerland. the eth ensures technical innovation and scientific progress. economic stability and scientific progress complement each other perfectly. these qualities enable switzerland to assert itself in a constantly changing world and to find solutions to new challenges. independence is critical to the fulfilment of both of our institutions'mandates. upholding this principle is not always convenient ; indeed, defending it may even require courage at times. nonetheless, our two institutions should continue to live their independence, to hold fast to it and to demand again and again that it be respected. may i take this opportunity to thank sincerely all of you who contribute with such dedication and enthusiasm to research, teaching and innovation at the eth. our country needs you and we are proud of you. after all, you are the ones who prevent us, in the words of zurich's business community during the debate about the siting of the snb's governing board, from becoming intellectually'ossified '. keep up the good work! thank you. 4 / 4 bis - central bankers'speeches
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derville rowland : global factors shaping asset management remarks by ms derville rowland, deputy governor of the central bank of ireland, at the irish funds annual global funds conference, dublin, 23 may 2024. * * * good morning, thank you to irish funds for the invitation to address your annual conference. it is always a pleasure to have the opportunity to attend your events and hear the perspective of the funds and asset management industry. yours is truly a global industry. so let me give you some perspectives of the global factors shaping asset management at the moment. economic activity was surprisingly resilient through 2022 to 2023 and recent global growth forecasts have been revised upwards. 1 near term financial stability risks have also receded as disinflation is entering its so - called " last mile ". we need to all remain watchful for strains in the cre market, stalling disinflation and looking to the medium term - the build - up of debt in public and private sectors. 2 recent imf reports also suggest that medium - term global growth prospects remain weak. turning closer to home, euro area financial stability conditions have improved as recession risks decline. 3 in a european policy context, change also continues - we have seen political agreement reached on the eu's artificial intelligence act and on proposals around the eu's antimoney laundering ( aml ) package. the revised eltif regulation has entered into application, with the first irish eltifs subsequently being authorised. in the face of the many challenges the eu faces, there has been an emphasis on eu competiveness, a renewed focus on progressing capital markets union. and climate issues remain a perennial, pertinent and persistent backdrop to both policy and risk discussions. how people, politics and institutions respond to these changes will very much be shaped by major events like the forthcoming european parliament elections and the formation of the new agenda for the next european commission. that agenda will of course continue to be shaped by the prevailing themes of ever increasing interaction and strategic autonomy, which will raise important issues in the context of the funds sector, including evaluating eu - level supervision and reliance on third countries. while there are many uncertainties about the future, there are many things which are known. we know that economic growth in the european union has remained low since the 2008 global financial crisis. while the eu has responded well to crises such as the covid - 19 pandemic, the war in ukraine and resulting energy crisis,
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central government. monetary policy cannot persistently affect these preferences. it can however provide a stable backdrop against which individuals and businesses can make decisions about the most efficient allocation of their resources. references acemoglu, d, s johnson, j robinson ( 2004 ) β institutions as the fundamental cause of longrun growth β, nber working paper 10481. barro, r ( 1995 ) β inflation and economic growth β, nber working paper 5326. boulhol, h, a de serres and m molnar ( 2008 ) β the contribution of economic geography to gdp per capita β oecd economics department working paper 2008 / 10. bruno, r and w easterly ( 1998 ) β inflation crises and long - run growth β, journal of monetary economics 41, 3 β 26. de serres, a, n yashiro and h boulhol ( 2014 ) β an international perspective on the new zealand productivity paradox β, new zealand productivity commission working paper 2014 / 01. graham, j and c smith ( 2012 ) β a brief history of monetary policy objectives and independence in new zealand β, rbnz bulletin 75 ( 1 ), 28 β 37. khan, m s and a s senhadji ( 2001 ) β threshold effects in the relationship between inflation and growth β imf staff papers 48 ( 1 ). smith, c ( 2004 ) β the long - run effects of monetary policy on output growth β, rbnz bulletin 67 ( 3 ), 6 β 18. khan and senhadji ( 2001 ). a caveat to these results is that this and other such empirical work uses a relatively short period of modern experience in attempting to identify effects on long term growth. bis central bankers β speeches
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do something, anything β to get the economy back to full employment. and for many, including many economists, this means having the federal reserve maintain its zero interest rate policy or further still, engage in a second round of quantitative easing β now called qe2. some are even suggesting these actions are necessary for the federal reserve to comply with its statutory mandate. interpreting the policy mandate the fomc β s policy mandate is defined in the federal reserve act, which requires that : β the board of governors of the federal reserve system and the federal open market committee shall maintain long - run growth of the monetary and credit aggregates commensurate with the economy β s long - run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate longterm interest rates β. there is, within the act, a clear recognition that our policy goals are long - run in nature. in this way, the act recognizes that monetary policy works with long and variable lags. thus, the fomc should focus on fostering maximum employment and stable prices in the timeframe that monetary policy can legitimately affect β the future. the fomc must be mindful of this fact and be cautious in pursuing elusive short - term goals that have unintended and sometimes disruptive effects. in recent weeks, some have argued that with inflation low and the jobless rate high, the federal reserve should provide additional accommodation. such an action β the purchase of assets by the central bank as a policy easing tool β would mark a second round of quantitative easing. while there are several ways to accomplish this, many suggest that the most likely method would be for the federal reserve to purchase additional long - term securities, including u. s. treasuries. proponents of qe2 argue that it would provide a near - term boost to the economy by lowering long - term interest rates while raising inflation. these benefits would arise from the purchase of u. s. treasury securities, which would lead to lower u. s. treasury and corporate rates. these lower interest rates would then stimulate consumer and business demand in several ways, including encouraging mortgage refinancing that could lead to increased consumer spending, boosting exports through a likely lower exchange rate, and fostering higher equity prices, thereby creating additional wealth. such a move is said to be consistent with the fomc β s september 21, 2010 announcement, which stated that it was β prepared to provide
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deleveraging that is hopefully winding down. if the purported benefits are small, what are the possible costs? first, without clear terms and goals, quantitative easing becomes an open - ended commitment that leads to maintaining the funds rate too low and the federal reserve β s balance sheet too large. the result is a further misallocation of resources, more imbalances and more volatility. there is no working framework that defines how a quantitative easing program would be managed. how long would the program continue, and what would be the ultimate size? would purchases of long - term assets continue until the unemployment rate is 9 percent or 8 percent or even less? would purchases continue until inflation rises to 2 percent or 3 percent or more? would the program aim to reduce the 10 - year treasury rate to 2ΒΌ percent or 2 percent or even less? without answers to these and other questions, qe2 becomes an open - ended policy that introduces additional uncertainty into markets with few offsetting benefits. as central bank assets expand under quantitative easing, what will be the exit strategy? in the midst of a financial crisis, we may not have the luxury of thinking about the exit strategy. in current circumstances, however, we must define an exit strategy if the objective is to raise inflation but contain interest rate expectations. if history is any indication, without an exit strategy the natural tendency will be to maintain an accommodative policy for too long. while i agree that the tools are available to reduce excess reserves when that becomes appropriate, i do not believe that the federal reserve, or anyone else, has the foresight to do it at the right time or right speed. it may work in theory. in practice, however, the federal reserve doesn β t have a good track record of withdrawing policy accommodation in a timely manner. second, we risk undermining federal reserve independence. qe2 actions approach fiscal policy actions. purchasing private assets or long - term treasury securities shifts risk from investors to the federal reserve and, ultimately, to u. s. taxpayers. it also encourages greater attempts to influence what assets the federal reserve purchases. when the federal reserve buys long - term securities β such as the $ 1. 2 trillion in mortgage backed securities it purchased during the financial crisis β it favors some segments of the market over others. and when the federal reserve is a ready buyer of government debt, it becomes a convenient source of cash for fiscal programs. during a crisis this may be justified, but as
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slowdown in trade weighed on the most important channels of monetary union benefits. a third reason is that our domestic policies have not always been optimal : the reform momentum stalled and long - term growth was not always a priority. certainly some of our panellists will be exploring these aspects further. at this point, i would like to recall slovakia β s successful preparations for the euro. while the euro was, and still is, a political project β both in the eu and in slovakia β it is also based on sound economic fundamentals. from a political economy point of view, our euro adoption process was a role model of economic policymaking. we analysed the costs and benefits very deeply β and given the information set we had at the time, most of the analyses are still valid. all the analyses were openly published. we discussed the project with all relevant stakeholders and tried to make sure no one was left behind. we set a target date for euro adoption and ended up being one of the very few countries that never shifted the target adoption date. and today, ten years on, we are looking back with an open mind to see which of the expectations were fulfilled and which were not. as you well know, the final decision on our euro accession was made in july 2008, just before the global financial crisis broke out in september. we could not have hoped for better timing. the euro shielded us from the initial hit of the crisis, while in other emerging markets, exchange rates plummeted. the drop in demand and in oil and food prices at the end of 2008 meant there were no price pressures in early 2009. thus, we were maybe the first country in which the euro was adopted without consumers perceiving any price increases. had we not adopted the euro in 2009, we would not have been able to meet the maastricht criteria for the next 4 to 5 years, as the government deficit increased substantially. you might say we were lucky, but i would rather concur with the great biologist and chemist louis pasteur that fortune favours the prepared. shortly after our entry, slovakia and the rest of the euro area were faced with the most severe financial crisis in european history. the measures taken by the eurosystem were unprecedented and the easing cycle that started in 2008 is only now coming to an end. outside of japan, this is probably the longest easing cycle in the history of central banking. the euro, now twenty years old, can certainly be described as a mature currency
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ivan sramko : euro implementation in slovakia speech by mr ivan sramko, governor of the national bank of slovakia, at the opening of the european central bank exhibition in the national bank of slovakia, bratislava, 24 september 2008. * * * i am pleased to welcome you at the present ceremonial opening of the exhibition of the european central bank about euro and on the eve of a big international conference on euro implementation in slovakia. it is more than symbolic that this exhibition is located just here, on the grounds of the national bank of slovakia. already from the very beginning, when the initiatives for euro implementation in our country were only emerging, the nbs several times declared its support for the entry into the monetary union as soon as practicable. our recommendations were based on serious analysis aβ¬ β we were assessing the readiness of our economy for the eu membership, we were evaluating how quickly the slovak economy would be able to approach the economies of the countries within eurozone, we were assessing the possibilities to comply with the maastricht criteria from the points of time and costs. of course, we were considering both favourable and unfavourable impacts of our future membership in eurozone. according to all the analysis available the benefits were clearly prevailing. the development of euro implementation strategy in 2003 and later on the creation of the national plan of euro implementation in 2005 followed. the predictions and analysis were the basis for setting the economic policy that ensured smooth preparation of our economy to euro. at present, all the decisions and assessments are known and with the new year the common currency will become a part of our everyday life. by accepting the euro as the national currency slovakia will become the member of a strong club of monetary union states and a new space will be opened for our country for its stabile economic development which will be reflected in other aspects of our lives. hundreds of people from various institutions have been participating at various projects relating to the access of euro. many of them have been the employees of the national bank of slovakia. i would like to thank all of them for their efforts and persistency by which they significantly contributed to the fact than on january 1, 2009, slovakia will become the 16th country of eurozone. i would also like to thank the colleagues from the ecb and partner central banks for their support and co - operation. ladies and gentlemen, i believe we will all get used to euro in the course of time and that euro will become a natural part of our lives. i wish
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potete dire che qualcosa sia impossibile. β β when one is determined as regards the desired goal, one must act without making multiple hypotheses on the risks of failure. as long as you did not try it, you cannot state that the endeavour is impossible β. it is that very spirit of the founding fathers that tommaso was always referring to. that very spirit of the founding fathers that is inspiring us today when we are drawing the lessons from the crisis. tommaso was not only a man of culture, a brilliant economist, a remarkable central banker, an important member of the italian government, a true and visionary european. he was also an extraordinary and exemplary friend. the depth of his culture and his personal qualities helped him to establish exceptional and friendly relationship with his colleagues. je peux le dire en francais, admirablement, car il parlait francais mieux que les francais, comme jacques delors le sait mieux que personne. merci tommaso, notre ami si cher, notre ami si regrette, pour cette amitie profonde et pour tout ce que tu as fait au service de notre union europeenne. i thank you for your attention. bis central bankers β speeches
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there is always the likelihood of ups and downs occurring in economic activity in certain regions, there is judged to be only a slight possibility of a double - dip recession or recurrence of the crisis. in this situation the bank of korea will conduct monetary policy appropriately in keeping with our particular economic situation. at the same time it intends to seek the further strengthening of international policy cooperation such as the construction of a global financial safety net in order to bring about coexistence and prosperity while warding off renewed crises. as the chair country of the g20 meeting, now preparing for the seoul summit in november this year, we intend to firmly anchor our vision of β the korean economy as a model for the world economy β.
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that can be communicated using tablet pcs and smartphones today is incomparably greater than using clay tablets. our current evolution in ict is paving the way for ever - growing digitalized information to be swiftly collected, processed and communicated at ever - decreasing cost across space. the new icts have the potential to provide not only economies of scale but also economies of scope and hence give market power to those who successfully apply those technologies. as we learned from dutch history, the future shape of the financial industry will be significantly influenced by the contemporary evolution in ict, although it may be difficult to predict today what the future shape of the industry will be. this afternoon, we talked about how banks could harness the power of technology to drive sustainable growth. tomorrow, we will talk about how the financial sector will need to continue evolving to serve a transforming society. we will also talk about the implications of the evolution on the role of financial regulation and supervision. on the opportunities side, the evolution will open up immense possibilities for many individuals and firms to carry out a wide range of financial transactions across time and space. for example, it has strong potential to promote financial inclusion. a world bank report finds that 69 percent of adults had an account at a bank or mobile money provider in 2017, up from just 51 percent in 2011. it also reports that globally 1. 7 billion adults remain unbanked, yet two - thirds of them own a mobile phone that could help them access financial services. 8 a joint report from the center of financial inclusion at accion and the iif shows that the market for inclusive insurance is also vast and potentially profitable, based on the confluence of rising income in emerging markets and ict that is bringing down the cost of distributing insurance and measuring risks. 9 on the challenges side, the degree of market failures could be magnified by our current evolution in ict. we hear concerned voices that the current evolution could lead to concentration of data and resources in a small number of economic agents. the economies of scale and scope derived from the new icts could encourage greater reliance of core banking services on globally concentrated third - parties. this, in turn, could seriously complicate the existing principal - agent problem and magnify market failures. although the key role of financial regulation and supervision remains unchanged, we should leverage innovative technology in financial supervision. and we should continue to monitor and assess the impact of evolving market structures and of the evolution in ict on the nature of the market failures that need to be addressed
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further at present, there is a concern that downward pressures on prices stemming from weak demand might intensify in coming months. on the supply side, a variety of elements are at work, e. g., technological innovation, increase in efficiency in the distribution system, and deregulation, all of which exert a downward pressure on prices. take domestic wholesale prices for example. declines in prices of electric equipments and other machines have been most pronounced under the influence of a very rapid technological innovation. for another example, declines in consumer prices have been accounted for in large part by imports and import competitive goods, e. g., clothing. let me hasten to add to it by saying that the bank of japan has never argued for so - called β good price declines. β instead, the bank has repeatedly said that the present price developments have been under the complex influence of both demand and supply elements, and therefore, no one can afford to understand on the basis of movements of price indices alone whether the ongoing price developments are consistent with sound developments in the economy. the issue of utmost importance is whether the current weak prices will invite declines in corporate profits and / or incomes of workers, leading to a deflationary spiral, or vicious cycle of economic recession and price declines. the bank of japan is of the view that japan β s economy has so far avoided such a deflationary spiral, but that because economic growth has recently weakened further as i mentioned a few minutes ago, the economy has entered the phase that warrants enhanced attention to price developments. 3. deliberation on monetary policy a. improvements in the way of liquidity provision and reduction in interest rates decisions of february 9 and february 28, 2001 now let me offer my thought about monetary policy on the basis of the economic and financial developments i have discussed. as you are well aware, the bank of japan decided at its monetary policy meeting of february 9, 2001 on both improvements in the way in which liquidity is provided to the market and a reduction in the official discount rate by 0. 15 percentage points. with respect to liquidity provision, we decided upon three specific measures : introduction of a lombard - type standby lending facility, active use of outright purchase operations of short - term government securities, and preparation for bill purchase operations at all offices of the bank. at the monetary policy meeting of february 28, 2001, the bank decided to reduce, by 0. 10 percentage points, both its target level of overnight call
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from sunday to thursday, so that the weekend would be on friday and saturday, has been approved. terrorist crimes and their financing law, stipulated under the anti - money laundering law, has been approved. the custodian of the two holy mosques β may allah protect him β is very well known for his devoted concern with citizens and their needs and his keenness for enhancing the level of their well - being and providing a decent livelihood for them. he issued his kind directives to take necessary measures for addressing and alleviating the poverty level, supporting social security, approving salary and cost of living allowance increases, turning employees on wages item into state employees, addressing housing problems and supporting specialized development funds. we pray to the almighty allah that the kingdom β s citizens will have many returns of this dear and national occasion and that the custodian of the two holy mosques, hrh the crown prince and the second deputy prime minister will be in good health. may the kingdom continue to enjoy security and stability, so that the development march will continue under our wise leadership. bis central bankers β speeches
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education services, in addition to the scholarship program of the custodian of the two holy mosques for pursuing higher education abroad which is a long - term investment in human resources. the kingdom has maintained high sovereign ratings of solvency as indicated by international rating agencies. most recently, fitch international credit rating raised the rating of the kingdom from aa - to aa with a stable outlook, which highlights the strength of its economy and financial position, and makes it more attractive for domestic and foreign investments. there is a great and deep - rooted confidence in the continued strong growth and overall development of the saudi economy under the wise leadership of the custodian of the two holy mosques. at the level of the financial and banking sectors, domestic liquidity increased from sar 553. 7 billion in 2005 to sar 1, 545. 1 billion at the end of 2013, recording a growth rate of 179. 1 percent, or an average annual increase of sar 123. 9 billion. the banking sector also registered strong and sustainable growth during that period, overcoming the repercussions of the global financial crisis, and, thereby, serving the national economy in accordance with the latest secure technology in the field of banking and financial services. the total assets of banks more than doubled from about sar 759 billion in 2005 to sar 1, 893 billion at the end of 2013. the number of bank branches during the same period increased by 44. 4 percent to 1, 768. automated teller machines rose by 202. 6 percent, to 13. 9 thousand distributed to various towns and villages in the kingdom, providing modern and secure banking services. as for sama, its total assets went up from sar 619. 4 billion at the end of 2005 to sar 2, 738. 7 billion at the end of 2013, increasing by 342. 2 percent. bis central bankers β speeches the custodian of the two holy mosques β may allah protect him - has paid great attention to economic affairs. he has presided the supreme economic council since its inception. under his instructions and guidance β may allah protect him - a number of resolutions, aimed at raising the level of economic performance and paving the way for sustainable growth, were taken. a rapid review of the royal orders and resolutions of the council of minsters pertaining to economic and financial affairs, issued during the last nine years, will reveal a huge quantum. some of which are the following : the resolution to inaugurate the largest integrated economic city in the middle
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mark carney : jane austen to feature on bank of england banknotes remarks by mr mark carney, governor of the bank of england and chairman of the financial stability board, at jane austen β s house museum, chawton, 24 july 2013. * * * good afternoon, and welcome to chawton, home in her final eight years to jane austen and her family. this cottage occupied a special place in jane austen β s life, as a return to the countryside brought contentment after an unhappy spell in bath. all six of jane austen β s best known novels were published after she moved to chawton, and three of them were written in their entirety here. it therefore gives me great pleasure to be here today to announce that jane austen will be the next character to appear on the bank of england β s Β£10 note, replacing charles darwin. jane austen will become the 17th historical figure to feature on our banknotes. she merits her place in this select group as one of the greatest writers in english literature. her novels have an enduring, timeless and universal appeal β they have never been out of print since first being published, have inspired numerous modern adaptations and are loved by people around the world. austen β s combination of sharp wit, engaging narrative, knowing satire and social commentary has ensured her place among the country β s favourite authors. i am delighted now to unveil the image for the new jane austen note. it features a portrait adapted in the late 19th century from an original sketch by jane β s sister and closest friend cassandra, together with the quote β i declare after all there is no enjoyment like reading! β from pride and prejudice. our intention is that the austen note will be introduced within a year of the recently announced churchill Β£5 note, so that the new note could come into circulation as early as 2017. i am certain she will prove to be a popular choice. this will not, however, be the first time that the austen name has appeared on a banknote. jane β s brother henry set himself up as a banker with interests here in hampshire as well as in london. at that time many banks were small and local, and could issue their own banknotes. the british museum in fact holds a Β£10 note from henry austen β s bank in alton, just a couple of miles from here, listing on the note the names of the partners in the bank : austen, gray and vincent. unfortunately, while jane austen wrote in an early work that β when
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β s house museum, for hosting today β s event. elizabeth, over to you. bis central bankers β speeches
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6 percent ; california β s is 2. 59 percent ; and new york β s 2. 06 percent. now, let β s look at job creation in texas since june 2009, the date that the national bureau of economic research ( or nber, the body that β officially β dates when a recession starts and ends ) declared the recent economic recession to have ended. there are several ways to calculate texas β contribution to national job creation from june 2009 through the end of june 2011. one is to look at the number of jobs created by all 50 states, including those that have lost jobs since the nation β s anemic recovery began. using this metric, through june of this year texas has accounted for 49. 9 percent of net new jobs created in the united states. another way to calculate texas β contribution to job creation is to lop off those states that have continued losing jobs and consider only those that have positive growth in employment these past two years. using this metric, texas has accounted for 29. 2 percent of job creation since the recession ended. these are the facts. you may select whichever metric you wish. regardless, it is reasonable to assume texas has accounted for a significant amount of the nation β s employment growth both over the past 20 years and since the recession officially ended. this raises the obvious question β what kind of jobs are being created in texas? here are two charts that might help you form an opinion. bis central bankers β speeches the first provides a breakdown of employment growth by sector since the recession ended, listing each employment sector by its weight in the employment mix of texas. the most jobs have been created in the educational and health services sector, which accounts for 13. 5 percent of texas β employment. the second - most jobs have been created in the professional and business services sector, which accounts for 12. 5 percent of the texas workforce. the mining sector, which includes support activities for both mining and oil and gas, employs 2. 1 percent ( yes, two - point - one percent ) of texas β workers. in the second chart, you will see that these jobs are not low - paying jobs. the average weekly wage in the education and health services sector is $ 790 ; in the professional and business services sector it is $ 1, 117 ; and in the mining sector, the average weekly wage is $ 2, 271. together these three sectors account for 68 percent of the jobs that have been created in texas in the past two years. i
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debt, combined with the fomc β s commitment to hold short - term rates near zero until mid - year 2013, some cynical observers might interpret such a policy action as a β bernanke put. β my long - standing belief is that the federal reserve should never enact such asymmetric policies to protect stock market traders and investors. i believe my fomc colleagues share this view. connecting the dots now, how do you connect the dots between texas β record of economic growth and my dissenting vote? despite the fact that texas has severely limited social services and an education system that faces great challenges, people and businesses have been picking up stakes and moving to texas in significant numbers over a prolonged period. 3 it should be noted that in the last census, texas gained population and congressional seats, while california β s population growth and congressional representation was static and new york β s was diminished. jobs have been created for american workers in texas in several different sectors, not just in the oil and gas and mining sectors. people have taken those jobs of their own free will, even though the jobs may not measure up to the compensation levels everyone would like. and yet texas, like all states, is subject to the same monetary policy as all the rest : we have the same interest rates and access to capital as the residents of any of the other 49 states, for the federal reserve conducts monetary policy and regulates financial institutions under its the code of the woosters, by p. g. wodehouse, new york : doubleday, doran, 1938. see β texas : what makes us exceptional? where are we vulnerable?, β speech by richard w. fisher before the 2010 pre - session legislative conference, dec. 2, 2010. bis central bankers β speeches purview for the nation at large. from this, i draw the conclusion that private sector capital and jobs will go to where taxes and spending and regulatory policy are most conducive to growth. therein lies a lesson for our fiscal policy makers as they grapple with their monumental task of reconfiguring fiscal policy and eliminating the prevailing uncertainty about their remedy. we live in a world that, through steadfast sacrifice of the american treasure and with blood and capable diplomacy, won the cold war, induced the chinese to pull back the bamboo curtain and opened up the majority of the world to once unimaginable economic opportunity. china, the rest of southeast asia, eastern europe, india, most
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italy and the others? before the crisis there were marked differences in wage costs and competitiveness, in greece in particular. these persistent differences have created serious tensions within the euro area. macroeconomic imbalance adjustments are not made via the exchange rate in the monetary union. that β s why it β s essential that the labour market and the goods and services markets work well. the bank for international settlements is worried about risks caused by monetary policies that are too accommodative. what β s your reply to that? our main objective is to ensure price stability. the financial crisis has created deflationary risks. our monetary policy measures have played a key role in the economic recovery, which is necessary for inflation to gradually return to levels in line with our objective. the question is knowing whether the central bank has gone too far in its monetary policy easing. now that the gap between growth potential and real activity is narrowing, have we accomplished our mission? at this stage, my reply is no. the economic expansion that is under way is not yet feeding through into higher inflation. we are not changing our priorities, but we must take into account the improvement in economic conditions when calibrating our measures. should an end date for qe be announced? no new decision has been taken since the governing council meeting on 7 september. we had concluded that a very accommodative monetary policy stance would remain essential to our mission and that we would decide in the autumn on the calibration of our purchase programme for the period beyond the end of the year. 2 / 2 bis central bankers'speeches
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quite the contrary : some indicators suggest the reverse. i know that i am not addressing all possible criticism with these points, but i hope that those listening to me will begin to ponder whether some of that criticism has perhaps been somewhat unbalanced. some criticism of monetary policy is more pertinent, however, and i would like to address three points. it has been asked why the monetary policy committee raised interest rates when the bank has forecast that inflation will subside markedly next year. does that forecast make the rate hike unnecessary? there are two answers to this. first, the rate hike is a part of the forecast, and if it is not implemented, the forecasted inflation path will no longer be the most likely one. bis central bankers β speeches second, the inflation outlook is uncertain and, in light of current inflation expectations, it would be imprudent not to take action. it has also been asked whether there is a transmission mechanism in place at present. do higher interest rates reduce inflation? it is a bit paradoxical to say that interest rates have little impact and then make a terrific fuss about them. be that as it may, the transmission mechanism is certainly damaged at the moment, and it was somewhat damaged before the crash as well. but there is a transmission mechanism in place. the weight of non - indexed, variable - rate loans has increased. low deposit rates have fostered a shift towards investment in real estate in the recent term, and some have expedited purchases of consumer durables. finally, there is some impact on the exchange rate in spite of the capital controls, both because of decisions by owners of offshore kronur on whether they expatriate their interest and because domestic residentsare subject to a repatriation requirement but not a conversion requirement. it has been asked why we are raising interest rates when there is no economic overheating and investment is at a minimum. it is true that the economy is not overheated, so rate hikes do not have the intention of affecting that. but interest rates do affect inflation even though the current situation does not entail overheating. these effects come through a stronger currency and lower wage drift. furthermore, it is very common that central banks begin to shift towards a neutral monetary stance by raising nominal interest rates before the slack has disappeared so as to avoid sharper increases later at the tipping point between slack and excess demand. examples of this are the european central bank β s rate hike earlier this year
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the commission β s proposal and supporting impact assessment. they give a profound base for fruitful discussions on the intriguing topic of structural reform. it deserves a fair debate and parliamentary discussion. i am happy that the negotiations have already started in the council working group and are scheduled to continue throughout the summer. but naturally the pace will pick up only in the autumn, when the new commissioner and commission have been selected and the new parliament starts its work. the proposed regulation would give the authorities powers to implement a structural reform that would prevent depositor protection from becoming an incentive for banks to engage in excessive risk - taking. together with the eu framework for bank recovery and resolution and the single resolution mechanism, the proposed regulation would reduce the pervasive too - big - tofail and too - complex - to - fail problems also among the largest and most trading - intense banks in europe. moreover, i think it is safe to say that the simplification of the large, complex european banks would facilitate the task of the single supervisory mechanism. if consistently implemented, structural reform would improve market discipline and redirect the european banking sector towards better serving the real economy. [ slide 29 β measures are needed to improve market discipline ] we need to take the necessary actions to achieve financial sector stability while ensuring economic sustainable growth and prosperity in the eu. [ slide 30 β on the role of banking ] thank you! bis central bankers β speeches
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the context of scarce natural resources. in a market economy, economic transformation and reallocation is the business of the financial markets. but what kind of financial markets can support and promote such growth? how can it be regulated in the global context? what kind of international monetary system can provide the infrastructure for it? and what does it require of the central banking community? tomorrow afternoon is dedicated to the issues of finance and economic growth. the keynote speech will be delivered by janet yellen, vice chairman of the federal reserve board. the final panel will include governor stanley fischer from the bank of israel and professors philippe aghion from harvard and martin hellwig from the max planck institute in bonn. bis central bankers β speeches i am thrilled by the prospect of learning from this set of the world β s foremost minds, gathered here today, and am looking forward to many stimulating and fruitful exchanges. once more, let me extend to you all a very warm welcome. let the conference begin! bis central bankers β speeches
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until the asian crisis hit in 1997, the existing restriction on capital inflows were only applied to foreign borrowings by banks and companies with government - linked projects and net open foreign exchange position ( nop ) on banks as a prudential regulation. prior to the crisis, this system had contributed to sustained high economic growth, thereby promoting our long term development program. foreign capital inflows had also fostered the deepening of domestic financial sector by expanding market liquidity. however, the benefits of capital inflows, in particular in the early 1990s, were undermined by financial market imperfection stemming from lax regulation and supervision and moral hazard due to implicit guarantees. these problems were reflected in the inefficient allocation of capital, unhedged foreign liabilities, and inflated asset prices. as market confidence in the prospect of the economy of the emerging market in asia faltered, reversal of capital outflows could not be arrested, thereby leading to capital account crisis. with the hindsight of the asian crisis, the central bank has sought to strengthen the monitoring on the capital movement and minimize speculative transactions. to this end, in 2001 bank indonesia issued a regulation on the non - internationalization of the rupiah. subsequently, when a wave of capital reversal and speculation against the rupiah triggered by rising world oil prices heightened in 2005, we issued a series of micro policies addressing the imbalances in the demand and supply in the forex market. furthermore, prudential regulation in the banking sector was also strengthened through a tighter ruling on the nop and particular transactions in forex trading. indonesian floating exchange rate regime needless to say to fellow governors that the choice of an exchange rate system depends to a great extent on the condition of a country at a given time. in the current context of indonesia, under a free capital mobility and limited amount of international reserves, we believe that our floating exchange rate system adopted on august 14, 1997 is an optimal choice. the system, we believe, provides a built - in discipline in a market whereby all other infrastructures are not sufficiently strong. this float will in part create a break on imprudent overseas borrowing, because in doing so market participants will have to factor in the cost of possible movements of rupiah. we are fully aware that in the case of domestic financial markets with imperfections, such as the thin forex market and limited availability of hedging instruments, a floating rate system often leads to high vol
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, such as job creation and improvement of incomes. for this reason, the inflation targeting framework retains the fundamental monetary policy paradigm of striking the optimum balance between inflation and output. apparently, when a central bank faces a dilemma of choosing between inflation and growth, inflation remains the priority. an example of this can be seen in the problems we faced last year, when world oil prices almost doubled. this disturbing trend became highly problematic for monetary policy because not only did it boost inflationary pressure, but also inhibit economic growth. many suggested that the central bank did not need to respond to this temporary surge in inflation. however, our view at the time was that despite the temporary nature of the disturbance, the inflationary impact emanating from the higher oil prices through increased price for other goods and services, such as transport and wages, would drive up core inflation. in this situation, the tight policy was necessary to prevent sustained escalation in public inflation expectations. the third characteristic of the itf is that monetary policy is implemented on a transparent basis with measured accountability. in my view, with elements like these, inflation targeting is more than a mere framework for monetary policy. inflation targeting promotes the good governance of a central bank. by announcing the inflation target to the public, the central bank commits itself to its achievement. uncertainty over future inflation will ease because public inflation expectations have a point of reference, and thus economic costs arising from uncertainty will also be reduced. communication to the public on the future monetary policy direction is also vital so that the public can anticipate the central bank monetary policy and to avoid β surprises β that could trigger volatility in the money market. to strengthen policy effectiveness in this present age of disclosure, the central bank must also carry out a process of educating the public on what the monetary policy objectives are, the strategy for achieving these objectives, and what lies behind the decisions taken. one example involves the communication of the monetary policy response to soaring oil prices and risks from global imbalances at a time of weak conditions in the real sector and high unemployment. communications between the central bank and market players are also necessary, especially when financial markets are experiencing turbulence. in financial markets fraught with asymmetric information, the wealth of information held by the central bank is frequently of great benefit in mitigating this issue and thus preventing panic and herding by investors. in this regard, the credibility of the central bank is crucial. concluding remarks under the environment of financial integration, the task of
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, the share of green energy in total energy demand and energy intensity of gdp. in the baseline scenario, the indian economy grows at the rate of 6. 6 per cent per year β which is its average growth rate over the last decade β but without taking actions to fulfil its environmental commitments. a decline in energy usage per unit of economic activity by 2. 3 per cent annually is assumed with steady carbon sequestration at 0. 3 gigatonnes. this scenario is associated with increasing emissions. an alternate scenario retains the gdp growth assumption of 6. 6 per cent per year. it focuses on meeting immediate ndc objectives like reducing emission intensity and raising renewable energy's share to 50 per cent in electricity generation by 2030. achieving net zero emissions by 2070 would require even more energy efficiency, with energy intensity declining to 5. 0 per cent by 2070. green energy's share should reach 70 per cent by 2070. under this scenario, greenhouse gas emissions peak by 2032 - 33 and india reaches net zero by 2070. energy consumption in 2070 is projected to be 1. 8 times the level of 2021 - 22, compared to 7. 2 times in the baseline scenario, but it will be difficult to maintain the longterm growth rate of 6. 6 per cent. a second alternate scenario assumes that india would achieve annual real gdp growth of 9. 6 per cent between 2023 - 24 to 2047 - 48 which is required for it to become an advanced economy by 2047. with respect to climate goals, however, the assumptions in this scenario are the same as in the baseline. higher growth would translate into even higher energy requirements and emissions. the total primary energy requirement and net ghg emissions are estimated to be 12. 5 times and 10. 5 times higher, respectively, than their levels in 2021 - 22. the best scenario, assuming a gdp growth of 9. 6 per cent per annum over the period 2023 - 48 while adhering to the ndc commitments, will require more aggressive efforts than the current ndc targets, involving sharper declines in energy intensity and a higher proportion of green energy. energy intensity, which has been steadily declining since the 1990s, needs to decrease by 5. 4 per cent annually, and green energy's share must rise to around 82 per cent by 2070. energy consumption in 2070 would be 3. 1 times higher than in 2021 - 22. india β s aspiration to become an advanced
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towards a greener cleaner india 1 good morning to you all! i am delighted to be here again at the prestigious annual central banking seminar, a flagship event of the federal reserve bank of new york for which it has earned global renown. it is truly an honour to interact with central bankers from around the world, our community of tomorrow. you embody the theme of india β s g20 presidency β vasudhaivya kutumbakam : the world is one family. the climate is striking back in my past interactions in this seminar, i have dwelled on macroeconomic stability ; price stability ; exchange rate stability ; financial stability β all essentially issues centered around the core competence of conservative central bankers from which we are reluctant to stray. after all, central banks stand for stability. today, however, i will venture to address a theme which threatens to overwhelm all these aspects of stability β the sum of all fears, to borrow the name of a gripping 2002 movie starring ben affleck and morgan freeman. it is a theme about which several central banks have expressed reservations about engaging in order to avoid mission creep, while others have expressed inability in view of lacking the instruments inaugural address delivered by michael debabrata patra, deputy governor, reserve bank of india ( rbi ) at the new york fed central banking seminar organised by the federal reserve bank, new york, on october 9, 2023 at new york, usa. valuable comments received from soumasree tewari, ranjeeta mishra, harendra behera, asish thomas george, and editorial help from vineet kumar srivastava are gratefully acknowledged. to deal with it. the stark ominous reality is that the climate is striking back. central banks cannot be immune or inactive any longer. climate change is not new. the earth β s climate has changed in the past, and quite drastically. the smithsonian national museum of natural history has released findings about the earth β s temperature over the last 500 million years 2. they show warm temperatures dominating most of the time, with global temperatures repeatedly rising above 26. 6 degree celsius ( Β°c ) and even above 32Β°c β much too warm for ice sheets or perennial sea ice. in fact, polar caps cannot exist when the temperature crosses 18Β°c. this is the fever line. about 250 million years ago, it was too hot for even swamps to exist! in the last 100 million years, global temperatures have peaked twice. in
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ardian fullani : medium and long - term development priorities in albania speech by mr ardian fullani, governor of the bank of albania, at the joint press conference with the ministry of finance and the international monetary fund mission, tirana, 27 september 2013. * * * dear minister of finance, dear mr. ilahi, dear media representatives, the past two weeks have seen very intensive discussions on the current situation of the albanian economy, the state of public finances, the developments in the financial system, as well as on the country β s development perspective and management of economic policies, which should support albania β s sustainable and long - term growth. as the governor of the bank of albania, i am pleased to see convergence on a common and real diagnosis of the current situation, and also on many viewpoints about medium - term and long - term development priorities. i would like to share with the media several opinions of the central bank on these issues. two days ago, at its monthly meeting on monetary policy, the bank of albania analysed the latest information on current and expected performance of the economy. i made public the conclusions of this analysis at a press conference following the meeting. however, i will telegraphically re - present our main conclusions to put our suggestions for the future into the proper context. the albanian economy is suffering from cyclical weaknesses, which appear in the form of a weak aggregate demand and are reflected in low and below - potential growth of the economy. in simpler terms, consumer spending of albanian households, private sector investments, public spending and external demand for albanian goods and services do not manage to fully use the productive capacities of the economy. the low aggregate demand leads to low increase in employment, wages and production costs, and hence to low inflation rates. also, it poses difficulties for many businesses and is translated into increase in nonperforming loans in the banking system. in this context, undoubtedly, promoting and stimulating the economy should be a priority of the macroeconomic policies. the bank of albania deems that besides the classic instruments of the economic stimulus, monetary and fiscal policies, attention should be paid to smoothing uncertainties in the economy. i will briefly address three of these elements. first, in our opinion, the fiscal policy has limited space for economic stimulus. the rapidly expanding public debt increases the vulnerability of the albanian economy and may make the fiscal stimulus counterproductive. we deem that the fiscal policy should focus on monitoring the public debt in the medium and
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contract enforcement. β’ second, the improvement of by - laws that regulate the collateral enforcement and write - off of bad debt from banks β balance sheets. the definitive solution to this problem would signal to the banking system that albania is a country where lending is safe. all these steps would stimulate the economic activity and restore economic equilibrium. however, the albanian economy is also suffering from structural weaknesses, which restrict the growth rate. i would not like to examine this aspect in detail but i think it's reasonable to reiterate my message that albania should speed up structural reform. it should be anchored to the eu convergence process and aim at adopting its best models and rules. through public investment and economic incentives, it should aim at a more effective and competitive economic structure, capable of generating a rapid and sustainable growth. bis central bankers β speeches
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. shoe - leather costs, tax distortions and menu costs. moreover, their export industry is expected to lose competitiveness. inflation dispersion and the role of policy with view on inflation dispersion, for a central banker, the natural question of the role of monetary policy arises. monetary policy in the euro area is necessarily uniform ; therefore it cannot exert a direct influence on inflation differentials. in a way, one may even conclude that it should not try to bring down inflation dispersion beyond a certain level. β breathing β of relative prices is an essential element of the equilibrating and adjustment mechanism and in that sense a crucial feature of the functioning of market economies. as such, a certain level of heterogeneity in inflation rates can be interpreted as a reflection that necessary price adjustment processes are taking place. moreover, the eurosystem has already taken account of inflation heterogeneity explicitly by spelling out its stability policy objective in terms of a medium - term euro - area inflation rate of β just under 2 percent β. given the current dispersion of inflation rates, in my opinion, the safety margin implied in this definition is sufficient to protect all member countries against deflation. however, the eurosystem has to continue to analyse national developments in inflation rates and check if they are compatible with the prevailing price norm. if persistent deviations of a national inflation rate can be traced back to inappropriate domestic policies or other unwarranted domestic developments, such as inadequate wage policies or structural deficiencies, national policy is asked to react, taking area - wide monetary policy as given for their decisions. the effect of structural reforms on inflation differentials can be expected to be ambivalent. due to the different speeds at which structural reforms are being implemented in the various countries, a temporary increase in inflation dispersion may be induced. for example, the deregulation of the telecommunications industry in some countries has led to a pronounced decrease in prices for quite a long time. in the long run, however, retrenching rigidities on product and labour markets is expected to increase an economy β s capacity to adjust efficiently to shocks and thus to reduce the probability of enduring inflation differentials. iv. conclusions i think my quick tour through the topics of inflation persistence and inflation dispersion has shown that there are still many open questions left. we still do not know enough about the factors that determine inflation persistence in the euro area ; we cannot even
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. thus, i believe the european declaration of rome is right when it says : β we have united for the better. europe is our common future. " thank you for your attention. 5 / 5 bis central bankers'speeches
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david dodge : bank of canadaaβ¬β’s views on the canadain economy and its monetary policy objective opening statement by mr david dodge, governor of the bank of canada, to the house of commons standing committee on finance, ottawa, 1 may 2007. * * * good morning, mr. chairman and members of the committee. we appreciate the opportunity to meet with your committee, which we usually do twice a year, following the release of our monetary policy report. we believe that these meetings help us to keep members of parliament and, through you, all canadians, informed of the bank's views on the economy and about the objective of monetary policy and the actions we take to achieve it. when paul and i appeared before the finance committee last october, we noted then that the outlook for growth in the canadian economy had been revised down slightly from earlier expectations. in our latest monetary policy report, which we released last thursday, we noted that canada's economic growth did indeed slow, but recently, inflation has been higher than expected. after considering the full range of indicators, the bank now judges that the canadian economy was operating just above its production capacity in the first quarter of this year. we expect that, over the projection horizon, domestic demand will continue to be the main driver of growth in canada. with the u. s. slowdown now expected to be somewhat more prolonged than previously projected, net exports should exert a slightly greater drag on canada's growth in 2007. the canadian economy is now projected to grow by 2. 2 per cent in 2007 and 2. 7 per cent in both 2008 and 2009. this would return the economy to its production capacity in the second half of 2007 and keep it there through 2008 and 2009. core inflation should remain slightly above 2 per cent over the coming months, given pressures on capacity and the impact of higher core food prices. but with the economy projected to return to its production capacity in the second half of this year and with further easing of pressures from housing prices, upward pressure on core inflation is expected to moderate, bringing the core inflation rate back to 2 per cent by the end of 2007. total cpi inflation is projected to rise above the 2 per cent inflation target in the second half of this year, peaking below 3 per cent near the end of 2007 before returning to the target by mid - 2008. we at the bank continue to judge that the risks to our inflation projection are roughly balanced, although there is now a slight tilt to the upside
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. last tuesday, the bank left its key policy rate unchanged at 4 1 / 4 per cent. the current level of the policy interest rate is judged, at this time, to be consistent with achieving the inflation target over the medium term. mr. chairman, paul and i will now be happy to answer your questions.
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amando m tetangco, jr : building on progress, bringing in changes speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the development budget coordination committee briefing to the senate committee on finance on the fy 2017 proposed national government budget, manila, 30 august 2016. * * * senator loren legarda, chair of the senate committee on finance, committee members, members of the economic team, colleagues, ladies and gentlemen, good morning. as a resource institution of the dbcc, the bsp is pleased to provide this committee with an update on the emerging trends in the monetary, external and financial sectors of the economy, and to present the overall rationale behind the macroeconomic assumptions underlying the 2017 budget. let me highlight the key themes of the bsp β s presentation. first, the country β s macroeconomic fundamentals remain strong and its underlying story of resilience continues. the economy has sustained its growth above the historical average. inflation is expected to be within the government β s target in 2017, supported by favorable supply conditions and well - calibrated monetary policy. second, we acknowledge that the economy faces external risks from the weak world economic outlook, uncertainty and divergence in global monetary policy settings, and volatility in oil prices. in the domestic front, weather disturbances could exact a toll on both growth and prices. nonetheless, policymakers have sufficient space to address these risks. higher yet responsible fiscal spending targeted at further enhancing economic potentials could support sustained growth. timely implementation of supply - side measures would also help keep prices manageable. the country β s banking system remains healthy and fundamentally sound, serving to effectively intermediate funds to finance the needs of the various economic sectors. the bsp continues to guard against potential risks to price and financial stability, and remains prepared to implement further policy actions, as needed. finally, let me point out that the way forward calls for sustaining the economic gains by continuing to pursue reforms that will help boost the economy β s flexibility and productivity. for its part, the bsp will remain firm in its commitment to price and financial stability through forward looking monetary policy and purposeful reforms in the financial system, as we continue to build on our progress while we bring in the needed changes. i will end my brief presentation by sharing the legislative priorities of the bsp under the current administration. madam chair, this chart shows
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next move would be. the comments of fed reserve chair janet yellen over the weekend, however, signalled that the fed could raise rates sooner rather than later, stating that the case for a rate hike has risen in recent months. market expectations are currently seen as too low. nonetheless, until that next move actually happens there could still be market volatility. β’ third is the significant drop in global oil prices due to abundant supply and weak demand in the international oil market. the decline in oil prices could affect our imports in a positive way but cash remittances in a negative way. β’ fourth is brexit. while some of the initial negative impact on financial markets has dissipated, there is still need to see what will transpire during the transition to full implementation of the exit. if recession holds sway in the uk, global economic prospects could be diminished. bis central bankers β speeches despite these external headwinds, madam chair, the economy has exhibited notable resilience. latest gdp outturn exceeded market expectations and those of other highperforming asian economies including china, indonesia, and malaysia. it bears noting that the drivers for our growth have been broadening. β’ on the production side, industry, supported by manufacturing and construction, has added more growth impulses. β’ on the expenditure side, higher public spending and private investments are additional growth drivers together with personal consumption. inflation remains benign. headline inflation averaged 1. 4 percent in january β july 2016, driven largely by supply side factors such as lower domestic rice and petroleum prices, downward adjustment in electricity rates, and the provisional rollback in jeepney fares. meanwhile, core inflation, which excludes certain volatile food and energy items, averaged 1. 7 percent in january β july 2016. inflation expectations continue to be broadly in line with the inflation target over the policy horizon. inflation forecasts by international financial institutions, particularly, the imf and institute of international finance also indicate benign inflation readings for both 2016 and 2017. on the country β s monetary conditions, ample domestic liquidity and the healthy growth in bank lending continue to support economic growth. domestic liquidity grew by 12. 4 percent in june 2016, reflecting robust domestic credits. bank loans, which increased by 17. 6 percent, continue to flow into the country β s productive sector. data as of june 2016 show that one - fifth of the total bank loans went largely to wholesale and retail trade ; motor repair ; transportation and storage ; and information and communication sectors
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than waiting to β mop β up after the bust? certainly we have seen that monetary policy cannot fully offset the effects of financial crises for two reasons. first, crises may impact output before the response of monetary policy is felt. second, crises typically reduce potential supply growth, for example by disrupting the supply of credit to productive firms. a failure to take financial instability into account creates an unduly optimistic view of where the taylor frontier lies, especially when it is based on data drawn from a period of stability. relative to a taylor frontier that reflects only aggregate demand and cost shocks, the addition of financial instability shocks generates what i call the minsky - taylor frontier, shown in chart 5. this reflects the influence of misperceptions, financial cycles and the search for yield. on the minsky - taylor curve, for a given degree of inflation variability, output is more volatile in the long run than on the simple taylor curve. ignoring financial instability might mean choosing a policy reaction function that is believed to imply a trade - off at point o in chart 5. in fact, the true trade - off is given by point p. once that is understood then the optimal policy reaction function might well change and correspond to a trade - off at point q. 22 the examples i have given suggest the possibility that there is a trade - off between meeting the inflation target in the short run and reducing the risk of a financial crisis in the long run. to shed light on whether that possibility warrants a change to the way we implement inflation targeting, i want now to conduct a counter - factual thought experiment and ask whether monetary policy before 2007 might have moderated the crisis if it had not simply pursued a target for inflation. a counter - factual monetary policy 1997 β 2007 i want to ask whether, with the benefit of hindsight, monetary policy should have been set differently during the period of the so - called great stability. should interest rates have been higher during that period in order to mitigate some of the growth of credit, rise in asset prices, and increase in the leverage of the banking system? many commentators today seem to think that the answer is clearly yes β though i seem to remember that fewer said so at the time β and most of the another mechanism, working through banks β leverage, is posited by adrian and shin ( 2011 ). they show that if banks target a value - at - risk constraint, then monetary policy loosening can increase risk taking. the reduction in policy
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a floor for the minimum level of foreign exchange reserves a country is required to maintain ; ( ii ) the aim of resolution is to find a cooperative solution negotiated between a debtor and its creditors. no particular class of creditor should be in a privileged position, unless the instrument in question explicitly gives it preferred creditor status ; ( iii ) the use of temporary standstills β possibly sanctioned by the international community β would allow time for a country to negotiate with its creditors. in the absence of a formal mechanism to achieve this, the imf can indicate its endorsement of a standstill by being prepared to provide new money to a country which has temporarily suspended payments to its creditors ( often referred to as imf lending into arrears ). by making standstills part of the furniture β or one of the bricks β they would be seen not as an ad hoc response, which might lead to contagion in other emerging markets, but part of an approved process ; ( iv ) measures, including perhaps strictly temporary capital controls, to prevent capital flight by domestic residents in exceptional circumstances. it would be odd to sanction a standstill of payments to foreign creditors while allowing domestic residents to move assets overseas without restriction. the essence of the middle way is to find practical steps forward to enable emerging markets to better manage the liquidity positions of their external liabilities, and to reduce their dependence on debt finance. crises will still occur. but the aim is to reduce their frequency and severity. to that end there is one further policy which is fundamental to the success of the middle way β transparency. 5. transparency transparency is one of the most popular words in economic policy today. and for good reason. much has been said about transparency, and, interestingly, much has been done. why is transparency so important? in itself, transparency will neither prevent nor resolve financial crises. but transparency can help reduce the frequency of crises β by alerting not only markets but also policymakers to problems on the horizon β and their severity β by minimising the surprises about the scale of any liquidity problems. in korea, the foreign currency exposure of its banking system was not known until after the crisis had hit. and in thailand, the true state of the foreign exchange reserves was unknown even to its own finance ministry, let alone financial markets. so transparency can be seen as a β second best β policy when purist solutions to financial crises are unavailable. it is in the context of the middle way that transparency
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funds. this void could most likely be filled by lending to small and micro enterprises and retail clients. as you are aware, the assessment of credit needs of small & micro enterprises and retail, is a different ball game altogether. a nondisruptive shift would require the bank staff to acquire new capabilities for credit appraisal of self - employed individuals and people with little or no credit history. the competition in the shape of small finance banks, with a mandate to focus exclusively on small business units, small and marginal farmers, micro and small industries and other unorganized sector entities, which would operate through technology - focused, low cost structure, is already on the anvil. as part of this strategic shift, banks would also need to improve their analytical abilities for big data. as i spoke earlier about lending to customers with little or no credit history, banks would need to employ some non - conventional tools for assessing credit worthiness of such bis central bankers β speeches customers, which can, among others, include credit card usage, travel patterns, bill payment history and so on. lack of attention to these segments by the banks might allow p2p lenders to sneak in and compete for the piece of the pie. here again, i would like to use the caveat that we are yet to finalise our regulatory stance on p2p lending. ( iv ) ifrs implementation : with the mca announcing the much awaited ind as implementation road map for the financial sector, scheduled commercial banks ( other than rrbs ) are required to comply with the standards for accounting periods beginning from april 1, 2018. in this endeavour, the banks would need to deal with challenges resulting from implementation of expected credit loss ( ecl ) based provisioning framework, classification and measurement of financial assets and impact of alignment of the regulatory guidelines with ind as on regulatory capital computations under the basel iii framework, leverage and liquidity ratios, etc. as a supervisor, our off - site reporting formats would need to be revisited. in essence, huge capacity building initiatives at the level of both the regulator and the regulated are required. while it may not be possible to precisely quantify the impact of ind as implementation at this stage, rough estimates globally indicate a transitional impact of 25 β 50 % increase in provisioning levels on account of implementation of ecl based provisioning framework. a 2014 international survey1 of select banks indicated that over half of them expected an impairment provision increase of up to 50 per cent across all asset classes.
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jean - claude trichet : lessons from the crisis speech by mr jean - claude trichet, president of the european central bank, at the european american press club, paris, 3 december 2010. * * * ladies and gentlemen, i would like to start by thanking the organisers for inviting me to share with you my thoughts on the economic and financial crisis. the crisis is not yet over, but we should certainly start drawing lessons and we should certainly start implementing them. times are challenging, and europe β s citizens expect all policy - makers to be up to the responsibilities of fulfilling their respective mandates. as far as the european central bank ( ecb ) is concerned, i recall that we were among the first central banks in the world to react to the outbreak of the financial turmoil back in august 2007. since then, we have continued to act with a posture that i have called β credible alertness β. this posture includes both standard monetary policy, which is implemented through interest rate changes, and non - standard policies, which are implemented, in essence, through special liquidity operations and interventions in some bond markets including covered bonds. it is my opinion that the ecb β s governing council has demonstrated a strong ability to keep the european monetary vessel on course through the waves of a financial storm that has often been defined as the most serious since the great depression. throughout the global crisis, resolute action by policy - makers has helped to avoid a repeat of the economic policy disasters of the 1930s β and to foster close cooperation around the world, including among central banks. but recent developments in european sovereign debt markets remind us that the crisis is not yet over. they also remind us that economic and monetary union rests on two pillars : an β economic β pillar and a β monetary β pillar. the β monetary β pillar obviously refers to the ecb, its mandate and its independence. the β economic β pillar comprises the fiscal regime enshrined in the stability and growth pact ; the national frameworks of economic policy ; and the system of mutual surveillance. it is very important to understand β and it has perhaps not yet been sufficiently understood β that the developments we are currently witnessing in europe β s economy have to do with the β economic β functions of economic and monetary union. they have essentially three origins : unsound fiscal policies in a number of member states ; inappropriate macroeconomic policies in a number of member states ; and overall an inadequate system of surveillance by all member states. this is the triangle
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the bank - sovereign nexus, have plagued the euro area for a long time. given the importance of banks for credit provision to the real economy, the ecb employed a wide variety of unconventional instruments to address impairments in monetary transmission. at the same time, deposit insurance schemes and macro - prudential policies are still a national responsibility and the banking sector remains fragmented along national lines. financial frictions may therefore also emerge along national lines. this creates additional uncertainties and interdependencies for the ecb. before i conclude, let me say some more words about the design of emu in light of these ecb - specific challenges i just mentioned. in the aftermath of the crisis, emu β s functioning has been enhanced, for instance, by the establishment of the european β knows and unknowns of monetary policy instruments : implications for monetary policy strategies β, speech at the european banking institute β s policy conference, frankfurt, 14 november 2019. stability mechanism and the steps towards a european banking union. such enhancements help align the incentives for policy action by other players with those of us, monetary policymakers. this is helpful for monetary policy in two ways. first, it reduces the likelihood of adverse shocks hitting the economy to which monetary policy would need to respond. and where monetary policy would need to respond to risks to price stability, the risk of undesirable side - effects is reduced. there is however no room for complacency. future steps to complete the emu could provide further comfort to the ecb that monetary policy will not be the only game in town. fostering more risk - sharing, would for instance entail developing a capital markets union and completing the banking union by means of a european deposit insurance scheme. this, by the way, was already foreseen by han de jong as early as in 1980, when he joined the european commission to work on proposals for harmonizing deposit insurance schemes in europe! conclusion so let me conclude. today i discussed what i see as the main challenges for central banks worldwide and the ecb in particular. these challenges underline the need for a review of the monetary policy strategy under the new ecb - presidency. and, as i have also tried to illustrate, some of these challenges imply that elements and lessons from other central banks cannot always be transposed onto the ecb. a discussion is therefore warranted on the merits of increased flexibility. the ecb has to navigate its policy in a world characterised by
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net zero is underpinned by a resilient financial system. one which can manage the challenges associated with climate change. and one which can propel the green transition forward. members of the public may only see the outcome of such propulsion, just as i only see the swan above the surface. but, those who regulate, and operate within, the financial system know that the status quo will not suffice. significant work is required. i look forward to doing that work together, so that we can make the graceful transition a reality. thank you.
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. de haan ( 1990 ) : fighting the arch - enemy with mathematics. statistica neerlandica 44, 45 β 68. 3 article 127 of the treaty on the functioning of the european union. 4 article 3 of the treaty on the european union. 5 β breaking the tragedy of the horizon β climate change and financial stability β, speech given by mark carney, governor of the bank of england and chairman of the financial stability board, lloyd β s of london, 29 september 2015. 6 the maximum cumulated amount of carbon emissions consistent with holding the increase in the global average temperature to below 2Β°c. 7 oecd ( 2017 ) : investing in climate, investing in growth. www. oecd. org / environment / cc / g20 - climate / synthesis - investing - in - climate - investing - in - growth. pdf 8 eu 2030 climate and energy framework, ec. europa. eu / clima / policies / strategies / progress _ en 9 munich re ( 2018 ) : β hurricanes cause record losses in 2017 β the year in figures β. www. munichre. com / topics - online / en / 2018 / 01 / 2017 - year - in - figures # furtherinformation 10 geneva association ( 2014 ) : the global insurance protection gap : assessment and recommendations. 11 french treasury, banque de france and acpr ( 2017 ) : l β evaluation des risques lies au changement climatique dans le secteur bancaire, february. top - down assessment based on the nine sectors which display the highest level of co2 emissions. 12 de nederlandsche bank ( 2017 ) : waterproof? an exploration of climate - related risks for the dutch financial sector. 13 article 173 of the french energy transition act of 17 august 2015. 14 joint statement by the founding members of the central banks and supervisors network for greening the financial system, 12 december 2017. 15 new climate economy ( 2016 ) : the sustainable infrastructure imperative financing for better growth and development. newclimateeconomy. report / 2016 / wp - content / uploads / sites / 4 / 2014 / 08 / nce _ 2016report. pdf 16 www. climatebonds. net / files / reports / cbi - green - bonds - highlights - 2017. pdf 4 / 4 bis central bankers'speeches
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better than anyone how long it would take to give birth to a single currency. nonetheless, these political premises call for vigilance, because they would lead to fragmentation rather than monetary diversification, but also because they resonate with other, more economic arguments. other, shorter - term forces are at work. the supply of safe global dollardenominated assets depends on the united states β fiscal capacity, while demand for these assets is set to grow. yet, the recurring us debt ceiling crisis - this year was particularly acute - may erode international investors'confidence in dollar - denominated assets, making triffin's dilemma more topical than ever. in addition, the fight against inflation in the united states has led the fed to rapidly raise its rates since 2022, which has potentially difficult consequences for the financial stability of the many countries that are de facto dependent on the us dollar. all these forces could lead to changes to some of the balances of the current international monetary system. admittedly, despite its gradual erosion from around 65 % in 2016 to 58 % in 2022, the weight of the dollar is likely to remain strong in the medium and long term. vii however, many currencies, including not only the euro but also the canadian and australian dollars, are already being increasingly used as reserve assets. a collective move towards a more multipolar international financial system therefore seems to be underway. however, a confrontational ( non - ) system, or disorderly fragmentation, would only lead to instability and inefficiency. viii in order to increase monetary confidence, we also need to preserve certain virtues of the current ims : stable, based on collective rules, market - oriented, and that offers widely accepted safe assets. page 4 sur 6 iii. the euro as a complementary asset for a more multilateral ims we europeans must be proactive and involved in what depends on us : the euro should play a greater international role. it is already the second most widely used currency in the world, but its current weight, around 20 % by most measures, ix does not reflect its potential. as an emblem of the qualities of the type of ims one would wish for, it is the currency of a jurisdiction with strong and stable democratic institutions, independent central banks, the rule of law and deep financial markets. it is supported by a soft power based on compliance with international rules, multilateralism and openness. the euro is also at the heart of vast international
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in the banking system. we have also taken steps to reduce risks posed by the use of short - term wholesale funding by actors outside the banking system. these include leading an effort to reduce reliance by borrowers in the tri - party repo market on intraday credit from clearing banks and increasing the regulatory charges on key forms of credit and liquidity support that banks provide to shadow banks. in part because of these actions and in part because of market adjustments, there is less risk embedded in short - term wholesale funding markets today than in the period immediately preceding the financial crisis. the short - term wholesale funding markets are generally smaller, the average maturity of short - term funding arrangements is moderately greater, and collateral haircuts are more conservative. in addition, the banking organizations that are the major intermediaries in short - term wholesale funding markets are much more resilient based on the measures i discussed earlier. nevertheless, we believe that more needs to be done to guard against short - term wholesale funding risks. while the total amount of short - term wholesale funding is lower today than immediately before the crisis, volumes are still large relative to the size of the financial system. furthermore, some of the factors that account for the reduction in short - term wholesale funding volumes, such as the unusually flat yield curve environment and lingering risk aversion from the crisis, are likely to prove transitory. federal reserve staff is currently working on three sets of initiatives to address residual short - term wholesale funding risks. as discussed above, the first is a proposal to incorporate the use of short - term wholesale funding into the risk - based capital surcharge applicable to u. s. gsibs. the second involves proposed modifications to the bcbs β s net stable funding ratio ( nsfr ) standard to strengthen liquidity requirements that apply when a bank acts as a provider of short - term funding to other market participants. the third is numerical floors for collateral haircuts in securities financing transactions ( sfts ) β including repos and reverse repos, securities lending and borrowing, and securities margin lending. modifications to the nsfr could be designed to help address the types of concerns described in my previous testimony regarding sft matched book activity. in the classic fact pattern, a matched book dealer uses sfts to borrow on a short - term basis from a cash investor, such as a money market mutual fund, to finance a short - term sft loan to a client, such as a leveraged investment fund. the
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all financial companies. under the proposal, financial companies subject to the concentration limit would include insured depository institutions, bank holding companies, savings and loan holding companies, foreign banking organizations, companies that control insured depository institutions, and nonbank financial companies designated by the fsoc for federal reserve supervision. consistent with section 622, the proposal generally defines liabilities of a financial company as the difference between its risk - weighted assets, as adjusted to reflect exposures deducted from regulatory capital, and its total regulatory capital. firms not subject to consolidated risk - based capital rules would measure liabilities using generally accepted accounting standards. we anticipate finalizing this rule in the near term. credit risk retention section 941 of the dodd - frank act requires firms generally to retain credit risk in securitization transactions they sponsor. retaining credit risk creates incentives for securitizers to monitor closely the quality of the assets underlying a securitization transaction and discourages unsafe and unsound underwriting practices by originators. in august 2013, the federal reserve, along with several other agencies, revised a proposal from 2011 to implement section 941. the federal reserve is working with the other agencies charged by the dodd - frank act with implementing this rule to complete it in the coming months. rationalizing the regulatory framework for community banks before closing, i would like to discuss the federal reserve β s ongoing efforts to minimize regulatory burden consistent with the effective implementation of our statutory responsibilities for community banks, given the important role they play within our communities. over the past few decades, community banks have substantially reduced their presence in lines of businesses such as consumer lending in the face of competition from larger banks benefiting from economies of scale. today, as a group, their most important forms of lending are to small - and medium - sized businesses. smaller community banks β those with less than $ 1 billion in assets β account for nearly one - fourth of commercial and industrial lending, and nearly 40 percent of commercial real estate lending, to small - and medium - sized businesses, despite their having less than 10 percent of total commercial banking assets. these figures reveal the importance of community banks to local economies and the damage that could result if these banks were unable to continue operating within their communities. banking regulators have taken many steps to try to avoid unnecessary regulatory costs for community banks, such as fashioning more basic supervisory expectations for smaller, less complex banks and identifying which provisions of new regulations are relevant to smaller banks. in
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have added to this. but even under a very flexible interpretation of our medium - term inflation objective, i am convinced that not acting would have meant failing in our mandate. without our measures, current inflation would be much lower and the inflation outlook would be much worse. moreover, economic activity would be subdued, there would be fewer jobs, and a sound public budget would be more difficult to achieve, even in germany. silently giving up on the commonly agreed inflation objective, which has served the ecb well for the last 13 years, is not an option. this would make our monetary policy less credible and would in itself create instability. we shouldn β t return to a policy that constantly redefines monetary policy objectives on the basis of short - term considerations. in a monetary union, the single monetary policy, through its focus on stable prices, acts as the indispensable anchor to a range of economic policy decisions established at national and regional level. this makes keeping a steady hand in monetary policy particularly important. de - anchoring inflation expectations would be a source of instability in its own right. this would be counterproductive at a time when europe is already confronted with so many challenges. bis central bankers β speeches this principle of stability needs to prevail over the often one - dimensional and short - sighted criticism of the ecb β s measures expressed in various places. in germany, the ecb has recently been repeatedly criticised for hurting savers through the currently very low interest rates. but people are not just savers β they are also employees, taxpayers and borrowers, as such benefiting from the low level of interest rates. thanks to improved economic conditions, stimulated not least by monetary policy, real income and employment in germany have increased in recent years. in other words, we need low interest rates now to ensure a normalisation of economic conditions, including higher returns on savings in the future. the origins of the current worldwide low level of interest rates are not only monetary, however. the euro area, for example, generates excess savings of over 3 % of its gdp. in conjunction with other factors, this export of savings adds at a global level to the downward pressure on interest rates. in other words, low interest rates are a symptom of macroeconomic interdependencies and measures which go well beyond monetary policy. certainly, monetary policy would become more effective if other euro area policy areas did more to generate stable and sustainable growth, embedded in a credible set of rules.
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the first set of measures should therefore create the conditions for sustainable growth in the respective member states. this starts by enforcing the commonly agreed fiscal rules, using exsiting fiscal space. and in all countries, budgets should be made more growthfriendly, for instance by redirecting spending to research and education and lowering the charges on labour. furthermore, growth - enhancing structural reforms are important. the rate of implementation of the eu country - specific recommendations is dismal, and the macroeconomic imbalance procedure is hardly being used. but making europe credible starts with delivering on what has already been agreed. the second package of measures concern what can be done collectively by euro area countries to strengthen the foundations of our single currency. an improved governance structure is needed to rule out the possibility of the euro area gradually sliding into a regime of fiscal or financial dominance. or even worse, a combination of the two if we don β t find a clear solution to the infamous sovereign - bank nexus. we must consistently guard against such developments. the priority must therefore be to complete the banking union and to establish the capital markets union, as well as regulatory clarity on how to avoid excessive risk concentration on banks β balance sheets. deeper institutional changes can be considered in the longer term, as proposed in the five presidents β report in 2015. these are the conditions for stable growth in a stable environment. this will unleash the investment which our continent needs to lift its long - term growth rate and secure its future. this is the best conceivable way to support europe β s savers. in order to guarantee this, the ecb β s monetary policy will remain committed to its price stability objective. bis central bankers β speeches
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consumer - facing ), has important implications in relation to how economic shocks are transmitted to and from the sme sector. while granular data on sme reliance on each of these revenue sources are not available, much can be inferred from economy - wide input - output tables. for example, the latest cso data show that manufacturing and business services sectors are the most export orientated, while construction and distribution sectors have the highest shares of direct consumer sales. domestic business - to - business sales are most relevant to agriculture, business services and distribution sectors. a full understanding of the different sectoral interlinkages is of paramount importance in identifying the risks facing the sme sector. the experience of the sme sector since 2008 illustrates the importance of understanding the differences in inter - sectoral linkages across individual firms within the sector. between 2008 and 2012, sme employment levels declined by almost a fifth, which is about double the decline experienced by larger firms during the crisis. while employment fell in nearly 1 / 5 bis central bankers'speeches all sme sub - sectors, industry and construction were most affected. most severely, the reversal in the construction sector saw a 50 percent decline in employment. by 2014, employment in larger firms was just 5 per cent lower than 2008 levels, while still 15 per cent lower for smes. there are many factors which determined the magnitude of the economic shock faced by smes. one striking example is the difference in experience for those retail firms selling durable and non - durable goods. in the case of durables ( such as motors, furniture, hardware and electrical goods ), sales fell by 40 to 50 per cent during the crisis. in contrast, food sales in 2012 and 2013 were close to identical to those on the eve of the recession. the recovery in ireland in recent year has included a substantial contribution from the sme sector. the share of smes reporting increased sales almost doubled between 2013 and 2016, with rising activity levels in all the main business sectors. while we see expansion across all sme size categories ( micro, small and medium ), the recovery has been weakest for smaller, non - exporting smes. we observe similar patterns in the data on firm profitability. surveys carried out by the ecb also point to a relatively strong recovery in ireland : growth in turnover and profitability has been stronger here than in most other countries in the euro area in recent years. sme investment is also showing signs of recovery. recent research from
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% 20investment % 20in % 20economic % 20recovery % 20article. pdf 3 using interest rates on non - financial loans under β¬250, 000 as a proxy for sme lending rates. 4 the guide is available here. the press release issued in june 2016 is available here. 5 / 5 bis central bankers'speeches
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to whom the product can be offered. and you need to be sure that the product is being offered in a manner which is both suitable and appropriate for the client to which it is being offered. 29. the flexibility embedded in regulations is easy appreciate. more products add to depth and liquidity in financial markets. more importantly, they enable more efficient hedging of risks. but there are risks on both sides of the spectrum. the introduction of new products can get limited by the ability of market participants to offer them. our experience has been that only some of the authorised dealers are able to offer even marginally sophisticated structured products to their clients which results both in lower liquidity in products and incomplete markets, and in depriving segments of end - users of benefitting from the flexibility provided in the regulations. but again, there are risks of authorised dealers dealing in products which they do not understand or are not able to price independently or of offering them to customers who do not understand the product or where it is not suited for them. we are all aware of past such incidences that teach us about the pitfalls to avoid. of course, our directions on market makers in otc derivatives seek to provide a principle - based regulatory framework to address these risks. hence it is imperative that these regulations are adhered to in both letter and spirit. 30. there are also new players in the playing field. traditionally, the foreign exchange market was characterised by a closed user group with banks being the only authorised dealers and a few domestic corporates being the primary clients. exporters and importers with small hedging needs and individuals with personal forex requirements were marginal players essentially accessing the market as price takers. the regulatory framework now permits non - residents to access the domestic foreign exchange market to hedge their risks and also, in case of non - deliverable derivatives, to access the market without the need for underlying exposures. domestically, as the economy is opening up with increasing capital account convertibility and getting more and more integrated with the global economy, there are an increasing number of domestic entities getting exposed to foreign exchange risk and hence may need to access the foreign exchange market. going forward, these trends are likely to accentuate. with different players, there will be diverse needs and authorised dealers will need to gear up to serve these needs. illustratively, the hedging needs of an exporter or importer are very different from that of a corporate issuing foreign currency denominated
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reserve β s purchase of treasury securities. the worry here is that the federal reserve β s purchases are β monetizing the debt β and that therefore these purchases will ultimately prove inflationary. in a world of excess reserves and a positive ioer, either the ioer or the fed funds rate could conceivably be used as the primary instrument of monetary policy. the federal reserve would have precise control over the ioer and this would lead to some variability in the actual fed funds rate. this would not be much of a departure from the recent past in which the actual fed funds rate has tended to fluctuate closely around the fed funds target. regarding the fed β s treasury purchase program, i want to make two points. first, with the fed funds rate constrained at zero lower bound, policymakers needed to find other ways to stimulate economic activity. the agency debt and agency mbs purchase programs proved effective in narrowing credit spreads in the debt and mbs market, but the federal reserve would have encountered diminishing returns in terms of impaired market function if it had raised the sizes of these two programs further. this suggested that the best course to hold down mortgage rates and other private borrowing rates would be to engage in a treasury purchase program that would put downward pressure on treasury rates. in this regard, the fed β s purchases have not been motivated by accommodating an expansive fiscal policy and the large fiscal deficits that are its consequence. i can assure you that the federal reserve will never engage in a program to accommodate or facilitate an unsustainable fiscal policy program. instead, these programs were designed to help ease financial conditions at a time that the federal reserve could not push the fed funds rate below zero. second, the program is small. so even if one were to take a darker view of what the federal reserve has done, it is important to put the purchase program in context. even after completion of a purchase program of up to $ 300 billion of treasuries, the federal reserve β s holdings of treasuries will be smaller than they had been in august 2007 on the eve of the crisis. moreover, as a share of treasuries outstanding, the fed β s share will be the lowest since the early 1990s. overall, the federal reserve β s balance - sheet expansion has had notable benefits. the asset purchase programs have helped to keep longer - term private interest rates relatively low, and the expansion of liquidity facilities has helped to restore more
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##dative monetary policies. the creation of a macroprudential framework with its own objectives, authorities and tools provides an important complement to monetary policy. in the long term, the complementarity naturally arises because the respective objectives are intertwined and one cannot be achieved without the other. at the same time, they complement each other equally well in the short term. when asset prices, leverage, financial exuberance and strength of the economy and inflationary pressures move in the same direction, monetary policy and macroprudential policy typically pull in the same direction too. on the other hand, when financial imbalances increase amid an environment characterised by relatively muted inflation, the twin goals of price stability and financial stability can be best achieved by resorting to two separate instruments, in line with the tinbergen principle. 4 while more restrictive monetary policy may be able to lean against the build - up of financial imbalances, targeted macroprudential measures are typically a more efficient way of addressing their causes. this is especially relevant in the euro area, given its multi - country composition. macroprudential measures can be targeted to specific member countries to address the build - up of local imbalances, which cannot be addressed in an efficient manner by the single monetary policy. the presence of macroprudential policy should, however, not lead monetary policy to neglect financial stability issues. when the build - up of financial imbalances affects a large part of the economy, only monetary policy rates have the ability to reach into all β corners of the economy β ( to borrow from jeremy stein β s remark ). 5 and when the build - up of financial imbalances pervades the economy, monetary policy should stand ready to adopt a leaning - against - the - wind posture. the monetary policy horizon in pursuing its price stability mandate, monetary policy can inadvertently exacerbate financial stability risks. as monetary policy operates under uncertainty, there have been episodes of monetary policy mis - calibration throughout economic history, but the consequences for financial stability very much depend on the prevailing financial regulatory regimes. monetary policy mis - calibration may lead to the build - up of financial imbalances in particular when the central bank is faced with a sequence of positive cost - push shocks that curb domestic price pressures for a prolonged period of time. think, for instance, of the gradual penetration of new technologies in recent decades β primarily the internet and related digital technologies β which boosted on - the -
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##udence, patience and persistence remain the guiding principles for our monetary policy. significant monetary policy stimulus is still needed to support the further build - up of domestic price pressures and headline inflation developments over the medium term. the protracted period of low interest rates that contribute to the ongoing economic expansion necessary for the continued sustained convergence of inflation has so far not given rise to discernible financial stability risks in the economy as a whole7. in the present environment and at the current stage of the monetary policy cycle, however, it is important to be mindful that keeping rates low for long periods can raise challenges for financial stability further down the road. in this context, activating macroprudential instruments where needed is essential to ensure resilience, contain procyclical behaviours and prevent the emergence of financial imbalances. macroprudential measures are the appropriate response in situations where signs of financial imbalances are not pervasive. they can be targeted to specific member countries or sectors to address the build - up of local imbalances, which cannot be addressed in an efficient way by the single monetary policy. macroprudential measures have already been proposed or implemented in some euro area countries. authorities have taken decisions to calibrate the systemic risk and countercyclical capital buffers, as well as sectoral capital requirements for real estate and housing, and to introduce caps on loan - to - value ratios to counteract emerging risks. conclusion our monetary policy measures have proven effective in sustaining a resilient recovery and addressing the risks to price stability. this in turn provides a strong contribution to financial sector resilience. looking ahead, significant monetary policy stimulus is still needed to support the gradual build - up of price pressures for inflation to return to levels below, but close to, 2 % in a durable fashion. at this stage of the cycle, careful monitoring of the risk - taking channel of monetary policy is important. while there is no evidence of excessive misalignment across asset classes in the euro area right now, there are signs that valuations are stretched in specific market segments. 4 / 5 bis central bankers'speeches macroprudential instruments are best placed to counteract the emergence of specific financial imbalances in an efficient and targeted manner. macroprudential policy and monetary policy thus complement one another in pursuit of their respective objectives. 1 for a comprehensive overview, see carmen m. reinhart and kenneth s. rogoff ( 2013 ), β
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the same time, the recession has been deep and has left unprecedented and unacceptably high unemployment. until economic growth is able to significantly reduce unemployment, the authorities should not become complacent in their efforts to continue the structural and institutional reforms essential to overcome the crisis. it is clear that for the successful completion of the rebalancing process europe needs more investment and higher domestic demand growth. we therefore need a more coordinated approach to macroeconomic policy at the euro area level to achieve higher demand growth, bis central bankers β speeches as well as the continuation of structural reforms in all member countries in order to increase growth and facilitate a more encompassing rebalancing process. at the same time, to support national structural reforms in stressed countries, the enactment of the announced contractual programmes with financial means to support their implementation should play a significant role. finally, it would be important if a future decision could be reached to implement at the euro area level what is referred in the president van rompuy β s report β towards a genuine economic and monetary union β as β β¦. the establishment of a fiscal capacity to facilitate adjustment to economic shocks. this could take the form of an insurance - type mechanism between euro area countries to buffer large country - specific economic shocks. such a function would ensure a form of fiscal solidarity exercised over economic cycles, improving the resilience of the euro area as a whole and reducing the financial and output costs associated with macroeconomic adjustments β. in the view of the president van rompuy β s report, a stable emu needs to be built on four pillars : financial union, fiscal union, economic union and political union. member states have been able to decide a remarkable sequence of reforms in the past few years and there is now a much clearer vision of what rules and institutions are essential for monetary union to function more effectively. the single currency needs strong common institutions. strong institutions to supervise and stabilise the financial market ; to guide fiscal policies ; to coordinate economic policy, guarantee competitiveness and encourage sustainable growth. this is the vision that should guide us in all our endeavours to definitely overcome the european crisis. thank you for your attention. bis central bankers β speeches
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the economic downturn and the need to backstop banks, that sovereign debt began its steep rise and became a driver of the crisis in itself. drawing the right lessons for the euro area in emphasising this private debt - focused narrative for this crisis, my aim is not to negate the importance of fiscal policies. fiscal policies certainly should not have been pro - cyclical, and fiscal discipline today is essential to ensure sustainable debt levels in the future. my aim is rather to ensure that we recognise the central role played by the financial sector in the crisis and so draw the right lessons for the future. the most important such lesson is that the euro area needs stronger governance of financial policies β an ability to identify and curb cross - border financial flows and hence prevent debtdriven imbalances. the decentralised system of supervision we had before the crisis, based on loose cooperation between national supervisors, simply did not permit this. it is therefore misleading to say that the crisis was solely the result of periphery countries living beyond their means as a matter of policy. the authorities had to respect the single market rules and could not contain alone the large capital inflows that were fueling the imbalances. indeed, with a national approach to supervision, the forces driving financial developments lay largely outside the legal capabilities of national supervisors. in saying this, i do not deny that supervisors were also too slow to react, due in part to a belief in self - regulating markets. yet had they tried to contain these financial inflows, it is questionable whether they could have done so successfully. the conclusion i draw is as follows : to have an integrated financial market and overall stability there cannot be purely national supervision. instead, there has to be supervision at level of the market β that is, at the european level. let me therefore turn to the single supervisory mechanism. bis central bankers β speeches the benefits of the single supervisory mechanism the ssm, which will formally take over supervision in november next year, is being designed to solve the β financial trilemma β 1 created by national supervision β that is, to support financial integration and maintain financial stability by moving supervision to the european level. it will address both the institutional and macro - prudential limitations that supervisors faced before the crisis. starting with the institutional limitations, the key innovation of the ssm is that it creates genuinely european supervision, by which i mean supervision on both core and peripheral banks. from november next year, every bank in europe will be part
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##ation instrument and makes for a different risk distribution between the parties concerned. through this development, our system seems to be shifting towards a β defined contribution β system, for lower than expected investment results and reduced indexation will result in lower benefits. however, it certainly still is not a dc system in all respects. in a dc system, the risks are entirely borne by the individual worker, while average pay schemes are characterised by risk sharing and intergenerational solidarity. if returns are lower than expected, the active and next generation may be resorted to in order to safeguard post - actives β benefits. however, the use of indexation as a steering instrument increases the risk of erosion of the future value of our pensions. this risk is directly related to the indexation ambition and the corresponding contribution reduction that pension funds will be required to formulate under the financial supervisory framework. social partners are of course free to determine the indexation ambition themselves, but everybody should bear in mind that their pension β s value will be considerably eroded if during the accrual phase indexation is incomplete. proceeding from 2 % indexation, one - third of the total capital accumulated at the age of 65 is made up of these indexation allowances. to the extent that full indexation is too ambitious, a stable value pension must surely be feasible? this ambition may be pegged to the ecb β s inflation target of 2 %, the lowest indexation percentage that a pension funds should strive to ensure. transparency the adjustments in the supervisory framework and the transition to the average pay scheme are closely related to the financial recession that pension funds have faced in recent years. this brings me to transparency. owing to the traditional actuarial and accounting techniques, the actual financial position of pension funds was insufficiently transparent. pension funds were required to value their investments at current prices, whereas liabilities were valued at a fixed actuarial interest rate of 4 %. this led to a situation that prevented timely identification of hidden surpluses and deficits. due to this lack of transparency, the higher yields realised during the stock market boom were translated too soon into contribution reductions and more generous pensions, without it being evident how lower - thanexpected yields would have to be absorbed. to many dutch pensioners it came as a complete surprise that β lower than expected investment yields β could mean no or lower indexation. apparently, they had failed to read the key features document, or gave up reading when they came to the small
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letters section. nearly all pension regulations contain an escape clause that renders indexation only obligatory if permitted by the funds available. this makes it imperative, though, that the actual value of these funds can be verified. transparency is therefore of the utmost importance. and transparency is just what was lacking. i shall show this to you on the basis of the following two figures ( see annex ). the first figure reflects two funding ratios. the blue curve represents the traditional funding ratio, the red curve the funding ratio based on market rates. the figure shows that the funding ratio based on the fixed actuarial interest rate rose in the second half of the nineties and did not decline until after 1999, when the creeping slump had set in. if you just look at the liabilities side, thing become a lot clearer yet. the blue curve stands for the liabilities at the fixed actuarial interest rate. the red one, for the liabilities at the market rate. what may be concluded from this chart is that the room for indexation did not start to narrow until as late as 2000, but, due to the declining trend in the capital market interest, already in the early nineties. in fact, the use of a fixed actuarial interest rate has masked half of the actual increase in pension liabilities. the financial problems in recent years have made all the parties concerned more aware of the risks incurred by pension funds. implementation of the financial supervisory framework should enhance transparency and consistency between the values of investments and liabilities, making hidden reserves visible. compare this to the tower of winds by the renowned japanese architect toyo ito. the tower of winds, a ventilation tower for the subterranean space of yokohama station, is equipped with 2, 000 computer - steered light bulbs that respond to wind, sound and temperature. in daytime, the light is reflected by aluminium panels, bringing out the building β s cylindrical shape. in night time, the lamps transform the tower into a transparent structure. our pension system should eventually resemble that tower, looking beautiful during the day, and revealing its internal structure and robust foundation during the night. besides making visibility of reserves mandatory, the financial supervisory framework contains stricter provisions regarding cost - effective contributions, with a view to creating more clarity about the market - comparable costs of pension commitments. moreover, funds should offer more insight into the way they have distributed the risks between the parties concerned. they must communicate their indexation ambition to the participants in unambiguous terms. a
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efficient retail payment system. notwithstanding all of these developments, we recognize that the fintech narrative goes beyond just the bsp. in fact, more pioneering solutions are cutting across regimes of different regulators of the financial sector. this is why in the 3rd quarter of last year, the financial sector forum, composed of four financial regulators in the country, namely the securities and exchange commission ( sec ), the insurance commission ( ic ), the philippine deposit insurance corporation ( pdic ) and the bsp, formed a fintech committee aimed at harmonizing regulatory responses to fintech innovation in the financial sector. among the priority agenda that the fsf - fintech committee undertook was identifying the numerous fintech use cases and the scope of authorities of each regulators. through clear understanding and increased collaboration, financial regulators can quickly anticipate changes, assess technological trends across different sectors, and optimize the potential of digital innovations to provide more convenient, and efficient financial services. the cross - cutting nature of fintech developments has also magnified the importance of shifting to activity - based regulations. likewise, i am pleased to share that the fsf - fintech committee is in the initial stages of crafting a cooperative oversight framework which will institutionalize our collaboration and clarify regulations to all supervised and would be supervised entities. but again ladies and gentlemen, we are just one side of this financial equation and we need your support in striking the balance of ensuring that regulatory and supervisory frameworks are in tune with emerging trends and developments. we hope that you can actively help us shape this narrative into something that is desirable, safe, sustainable, inclusive and rewarding for all stakeholders, most especially the filipino people. 3 / 4 bis central bankers'speeches as we move forward in this collaboration, i hope that we all keep the benefit of the filipino people in mind. thank you for the opportunity and i am looking forward to engaging conversations with all of you. needless to say that the bsp, as your partner in promoting financial innovation and inclusion, will remain dedicated and committed in supporting beneficial fintech innovations through an enabling policy and regulatory environment. thank you and i wish everyone a fruitful conference. 4 / 4 bis central bankers'speeches
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must be effectively managed and that the financial system remains safe and sound. 1 / 4 bis central bankers'speeches the first lane refers to collaborative engagements. the continuing collaboration with industry players and other financial regulators represents a β whole - of - government approach β, ensuring policy consistency and minimizing, if not fully preventing, regulatory arbitrage. with this in mind, the bsp openly engages with fintech players and innovators through a flexible β test and learn β environment or the β regulatory sandbox β that enables us to fully understand emerging business models while assessing attendant risks. i will not dwell on specifics but generally, the framework consists of five important steps commencing from the enabling stance adopted by the bsp during initial engagement with the applicant, guided and clear rules for implementation, until continuing monitoring of matured services. with such an approach, we are able to timely employ risk - mitigating actions and craft appropriate policies revolving around consumers β welfare and protection and secure financial system. the middle lane refers to our capacity building initiatives. in 2018, we established a dedicated financial technology subsector ( ftss ) to institutionalize the operational and cyber - resilience of the financial system. under ftss is the technology risk and innovation supervision department ( trisd ), which is primarily responsible for conducting onsite and offsite it supervision of regulated entities, as well as maintaining a comprehensive and flexible regulatory framework relating to it supervision. trisd is also in charge of cybersecurity surveillance and promoting digital or fintech innovation through bsp β s regulatory sandbox. equally important is the payment systems oversight department ( psod ) which is mainly responsible for the payments oversight, licensing and policy development for a safe, efficient and reliable national payment system. it espouses on the use of technology as enabler of innovation in payment systems and is the lead in enforcing a holistic payment oversight framework, including the national retail payment system. we are also in the midst of implementing solutions that make use of artificial intelligence and machine learning for regulatory and supervisory processes. these regtech and suptech tools aim to augment areas of risk management, regulatory reporting, consumer complaint oversight and regulatory compliance automation. this includes a chatbot, an automated complaint - handling system which uses predictive analytics to address consumer concerns and an api that automates the collection, processing, and analysis of data from supervised institutions. supervised entities that cannot immediately migrate to the api - based reporting can use the fi portal
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sides β like mario draghi or, more recently, jorg kukies β after all, i β m one of that ilk, too. if you ask me, what we need is more interaction and more dialogue β and never more so than in times like these in the face of increasingly complex topics. taking on an official post for the res publica is always something of a commitment, and i do hope that many more bankers will offer to take a public position. rest assured : the experience of working in an official capacity for the common good is far more rewarding than advocating the interests of the few. and who is better placed to say that than me, having lived in both worlds? the work that piled up on my desk these past eight years encompassed a wide variety of topics. the term of office of carl - ludwig thiele and myself was undoubtedly an era marked by substantial change, and events kicked off during our very first weekend in office, when the first 2 / 5 bis central bankers'speeches greek rescue package needed to be assembled in basel amid intense political and time pressure. carl - ludwig thiele and i spent our first week at the bundesbank attending two meetings a day of the bundesbank's financial crisis team β believe you me : that was a particularly intense way to get started back in may 2010. much has changed since then. the period of low interest rates is posing an entirely new set of challenges for the banking and central banking communities. supervision of large institutions has now evolved into european supervision. structural change in the banking world, sparked by the triple whammy of low interest rates, digitalisation and regulatory reforms, is something we all need to get to grips with β credit institutions, central banks, banking supervisors and not least consumers and bank customers. i would not be exaggerating if i said these were the stiffest challenges in decades. looking to the future, i dare say that geopolitical risk might prove to be more significant than economic risk. let β s hope i β m wrong. just as times have changed, so, too, has the agenda. ask me to select the headlines for my term of office at the bundesbank and i would pick out topics like the capital markets union, of which i was an early advocate in spite of some resistance. there are other subjects such as the profitability of credit institutions in germany, brexit and everything it involves, and not forgetting the emergence of new fin
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my tenure here at the bundesbank. and being an alumnus of the classical school of economics, i am also a passionate advocate of the market economy, committed to stability, and sceptical about excessive government influence. and let β s be honest here, with that kind of profile, where better to work than at the bundesbank? on a very broad note, i found the bundesbank to be a place where, without having to disown my ordopolitical beliefs, i was able to devote my attention to my responsibilities and to raise fresh topics β and not just the uncontroversial ones. you can β t measure anyone, least of all a banking supervisor β felix hufeld will know what i β m talking about β in terms of whether they keep everyone happy. to quote franz - josef strauss : β everybody β s darling, everybody β s idiot β. i have always been in favour of taking a stance, standing up for clearly defined viewpoints, always being open for dialogue, and positioning the bundesbank ahead of the curve. during my term of office, i felt my natural role was as the bundesbank β s ambassador. that was not just how i interpreted the position itself β it was also a deep - seated passion of mine to heighten the bundesbank β s standing β in the world of banking, in the markets, among other german and global institutions, in the fiscal policy sphere, in matters of economic education β 1 / 5 bis central bankers'speeches and to accomplish all that not only in germany, but around the globe. hardly surprising, then, that i spent a lot of time β a huge amount of time, in fact β jetting around the world over the past eight years. my wife could tell you a thing or two about that. as the bundesbank β s g20 deputy, the presidencies in korea, france, mexico, australia and turkey fell within my direct term of office ; as for the g7, my tenure coincided with the presidencies of canada, france, the usa, the united kingdom and germany. my role as the bundesbank β s imf deputy took me on regular visits to washington, but also to imf meetings in tokyo and lima. on top of that, i travelled to the bis in basel, the oecd in paris, and the european parliament and the commission in brussels, and so on. i have a confession to make :
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bandid nijathaworn : the future of monetary policy remarks by mr bandid nijathaworn, deputy governor of the bank of thailand, at β south east asia central banks / bank for international settlements ( seacen / bis ) seminar on central bank challenges in emerging market economies in the post - crisis era β, kota kinabalu, malaysia, 21 january 2010. * * * first, let me thank seacen and the bis for asking me to lead off the discussion on this important topic. for the seacen economies, i think two important questions stand out. the first is what went wrong with monetary policy and what can we learn from it? and the second is what more can we do to improve our understanding of monetary policy so that long - term price stability can be assured while the risk of financial instability is avoided? although the current global financial crisis has been a dramatic experience for central banks, it also offers an opportunity to reassess both the intellectual underpinning and the practical implementation of monetary policy. as we all know, monetary policy in the last fifteen years did cover almost the whole of a global business cycle, starting from the period of the socalled β great moderation β when there was a perceived end to economic volatility with interest rates remaining low for an extended period, to the current global financial crisis that saw aggressive use of monetary policy by the major central banks to combat economic contractions with near - zero interest rates and the use of unconventional measures. this reassessment, therefore, is important and will provide a useful starting point for a better deliberation of monetary policy going forward. for this morning, i want to focus my remarks on three issues : first the lessons we can learn from the crisis ; second how to move forward to strengthen monetary policy framework in light of the crisis to ensure long - term price and financial stability ; and third the relevance of inflation - targeting as a monetary policy framework in the post - crisis era. from the crisis, there are a number of important lessons that can be drawn. the first is that monetary policy remains the right instrument to maintain a low inflation environment which is crucial for sustainable growth. but the most important lesson from the crisis is that low and stable inflation alone is not sufficient for ensuring financial stability. this is because the risk to financial stability can come from many sources other than domestic inflation. in the current crisis, it was the housing bubble and excessive risk - taking by the financial institutions that
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m r pridiyathorn devakula : financial markets and new financial instruments opening address by mr m r pridiyathorn devakula, governor of the bank of thailand, at the seacen - imf institute course on financial markets and new financial instruments, bangkok, 6 september 2004. * * * dr. subarjo joyosumarto, mr. sunil sharma, distinguished speakers and participants, it is indeed a pleasure for me to be here this afternoon to officially open the seacen - imf institute course on financial markets and new financial instruments. on behalf of the bank of thailand, i would like to extend a warm welcome to everyone of you to bangkok. today β s course is the second of three seacen courses that the bank of thailand plans to host this year. we are pleased to be given the opportunity to support the work of the seacen centre, and all its member central banks. these series of courses are indeed most topical, as the global economic recovery gathers momentum, financial market activities also pick up, along with innovative financial practices and instruments. the imf recently adjusted its forecast of global gdp from 4. 6 percent to 4. 9 percent, the highest growth rate in nearly three decades. economic performance in asia has also been in sharp contrast to the situations we faced four or five years ago, reflecting the synchronized recovery of the global economy. with the strong economic recovery comes the demands from firms and enterprises for more sophisticated and efficient services from their financial intermediaries. this is expected to happen in asia as well. the authorities therefore need to be mindful of the inherent risks associated with new financial instruments and practices. to promote growth and financial stability sound macroeconomic and prudential policics are required, as well as vigilance in the supervision and regulation of markets and intermediaries. these include being better prepared to withstand increased volatilities in financial markets and improving the structural resilience of the financial system. as we all know, the cost of financial instability can be grave not only for the country in which thc financial turmoil emerges, bot also for the international financial system as a whole. we saw this in the mexican crisis in 1994 / 95 and again in the asian crisis in 1997 / 98 where international investors β confidence was undermined thus imposing significant economic and social costs in all affected countries. the globalisation of markets and the increasing importance of financial stability have prompted central banks to be active and vigilance in
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francois groepe : the south african economy, policy mandates and international central bank cooperation address by mr francois groepe, deputy governor of the south african reserve bank, at the tenth annual international operational risk working group ( iorwg ) conference, cape town, 22 april 2015. * * * introduction good evening ladies and gentlemen. i wish to extend a warm and hearty african welcome to you and i hope that you will thoroughly enjoy tonight β s gala dinner. it is my privilege and honour to host this gala dinner on the occasion of the tenth annual international operational risk working group ( iorwg ) conference. i wish to personally thank the co - chairperson, ms donna brenner, for supporting the south african reserve bank β s ( sarb ) bid to host this important conference in this wonderful city. i, furthermore, wish to express my sincerest gratitude to all the delegates and their spouses, many who have travelled from abroad for gracing us with your presence and contributing to the debates and the discussions. the sarb has enjoyed a long and beneficial relationship with the iorwg and all its member central banks and it is my wish that this conference will further cement the strong and mutually beneficial bi - and multi - lateral relationships that have been built over many years. before we proceed with dinner, i would like to share with you some thoughts about the south african economy and our policy mandates and the importance of international cooperation among central banks. south africa and the global economy south africa is a small open economy with a population of 54 million and a gdp of some usd 350 billion. this equates to a gdp per capita of usd 5 900 and usd 12 100 on a purchasing power parity basis. the tertiary sector has expanded rapidly over the last decade or two and now accounts for nearly two thirds of the economy. one of the huge challenges the country faces is structural unemployment, which is around 24 per cent with youth unemployment as high as 50 per cent. in order for the country to keep unemployment levels stable, the economy needs to grow at approximately 3 per cent per annum. the country β s economic recovery after the global financial crisis was initially broadly in line with the global recovery with economic growth registering at 3, 0 per cent and 3, 2 per cent in 2010 and 2011, respectively. since 2011, the economic recovery has slowed with growth slowing to 2, 2 per cent and 1, 5 per cent in 2013 and 2014, respectively. growth for 2015 is projected at 2
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i see little evidence of substantial structural change in recent years. rather than attributing the slow recovery to longer - term structural factors, i see growth being held back currently by a number of headwinds. first, although the housing sector has shown see bernanke ( 2012 ). see daly and others ( 2011 ) for an overview. bis central bankers β speeches signs of improvement, housing activity remains at low levels and is contributing much less to the recovery than would normally be expected at this stage of the cycle. second, fiscal policy, at both the federal and state and local levels, has become an important headwind for the pace of economic growth. notwithstanding some recent improvement in tax revenues, state and local governments still face tight budget situations and continue to cut real spending and employment. real purchases are also declining at the federal level. uncertainties about fiscal policy, notably about the resolution of the so - called fiscal cliff and the lifting of the debt ceiling, are probably also restraining activity, although the magnitudes of these effects are hard to judge. 30 it is critical that fiscal policymakers put in place a credible plan that sets the federal budget on a sustainable trajectory in the medium and longer runs. however, policymakers should take care to avoid a sharp near - term fiscal contraction that could endanger the recovery. third, stresses in credit and financial markets continue to restrain the economy. earlier in the recovery, limited credit availability was an important factor holding back growth, and tight borrowing conditions for some potential homebuyers and small businesses remain a problem today. more recently, however, a major source of financial strains has been uncertainty about developments in europe. these strains are most problematic for the europeans, of course, but through global trade and financial linkages, the effects of the european situation on the u. s. economy are significant as well. some recent policy proposals in europe have been quite constructive, in my view, and i urge our european colleagues to press ahead with policy initiatives to resolve the crisis. conclusion early in my tenure as a member of the board of governors, i gave a speech that considered options for monetary policy when the short - term policy interest rate is close to its effective lower bound. 31 i was reacting to common assertions at the time that monetary policymakers would be β out of ammunition β as the federal funds rate came closer to zero. i argued that, to the contrary, policy could still be effective near the lower bound. now, with several years of
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simply too important to be left to the market. 1 / 4 bis - central bankers'speeches second, in the absence of a public anchor, the emergence of new kinds of digital assets could harbour instability and confusion among citizens about what is money and what is not. take for example crypto assets, held or used by 16 % of americans and 10 % of europeans in 2021. their unbacked variants β such as bitcoin or ether β are too volatile to act as a means of payment. and while stablecoins are designed to be less volatile, and therefore more suitable for payments, they are vulnerable to runs - and often not backed at all as we witnessed earlier this year. this highlights the importance of the european crypto - assets regulation ( mica ) that will protect consumers against some of the risks associated with crypto assets. third, the entry of big techs into payments could increase the risk of market domination and dependence on foreign payment technologies, with consequences for europe's strategic autonomy. already now more than two thirds of european card payment transaction are run by companies with headquarters outside the european union. designing digital public money by designing digital public money we can get ahead of these developments and ensure that confidence in the monetary system is maintained and innovation is nurtured. issuing a digital euro would indeed safeguard people's confidence that " one euro is one euro ", allowing them to convert private digital money at par into digital central bank money. it would ensure that money continues to be denominated in euros. and it would be based on a european infrastructure, facilitating intermediaries to scale payments innovation throughout the euro area and thus strengthen europe's strategic autonomy. our work on exploring the underlying rationale, potential benefits and risks and core design principles of a digital euro has made good progress. it is not a race, but as a matter of fact the euro area is at a relatively advanced stage in exploring a central bank digital currency ( cbdc ). but to realise this vision, the focus of our work now shifts to the concrete design and embedding the digital euro in a sound legal framework. this is as an area where colegislators have an even more important role to play. i'm therefore very much looking forward to the legislative proposal for establishing a digital euro which the european commission will propose shortly. in particular, co - legislators must define the balance between competing public objectives in the policy areas that the treaty assigned to them. two aspects come to
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. another interesting area for exploration is the provision of standardised abs prospectus templates, including common diagrams, which would allow non - specialised investors greater ability to make comparisons across products. abs are of course highly diverse instruments and so i would not propose to shoe - horn all types into a single form. rather, the idea is to provide a common starting template for describing abs transactions that could then be departed from as needed. my concern here is that prospectuses and broader transaction documentation must inform both legal and financial specialists. some creative thinking on how to present the information in an accessible manner may help preserve legal precision while avoiding information overload. this would build on what i believe are the very helpful esma proposals for a transaction summary. looking forward, i believe that greater standardisation of abs products is a key goal to stimulate greater market activity. sme abs, for instance, are widely acknowledged to be extremely heterogeneous across eu countries, in part reflecting both the type of business and banking relationships that prevail in each jurisdiction. any efforts that could be made to bis central bankers β speeches enhance the transparency and consistency of abs structures could, i believe, provide greater comfort to investors reluctant to take the plunge into these instruments. treatment of abs by credit rating agencies my third proposal relates to the treatment of european abs by credit ratings agencies. currently many abs in stressed economies are constrained by the rating of the corresponding sovereign. the rationale put forward by rating agencies is that there are immitigable risks that affect all issuers and assets in a particular country, above all the sovereign. as regards calibration, some quantitative and many qualitative factors are taken into account by the agencies when setting this ceiling. yet, i question whether this ceiling is appropriate. for example, i am not aware of any defaults on greek rmbs or abs transactions, despite the partial sovereign debt exchange in 2012. or, in italy, the vast majority of rmbss appear to be constrained by the sovereign ceiling despite an average of 25 % current credit enhancement. and, from my latest check, the ecb β s composite index of systemic stress for the euro area is around the 5th percentile of the distribution since january 1999 and six times lower than the median from 2010 to 2012. this suggests that many of the systemic risks used to justify the country ceiling approach seem far off. from all these examples, and others, i find it hard to believe that the redenomination risk that
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##ystem will discontinue the production and issuance of β¬ 500 banknotes. the elimination of the largest - denomination banknote is hoped to have an impact in limiting the underground economy and making all kinds of illegal transactions more difficult. its use in ordinary transactions has not been large in any case. some people have been disappointed by this decision, and interpreted it as a sign that the ecb is taking a more negative view on the future of cash in general. this is a misinterpretation. the decision should not be overdramatized. for a comparison, in the u. s. the $ 100 bill is the largest banknote. the ecb is not taking a radical step in discontinuing a β¬ 500 banknote. at the same time the new series of β¬ 200 and β¬ 100 notes will be introduced to meet the all the demand. there is no change in our attitude on the future of cash. * * * to conclude, cash has never been more interesting than now. increasingly, the central banks and the whole society need analyses which go to the foundations of the monetary and payments system. i trust this conference will make a valuable contribution to this fascinating research area. i thank you for your attention, and wish you a very productive conference day. bis central bankers β speeches
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seppo honkapohja : financial innovation and financial stability β comments speech by mr seppo honkapohja, member of the board of the bank of finland, at the shanghai forum, shanghai, 26 may 2014. * * * slides can be found on the bank of finland website. introduction : the global financial crisis and the crisis in europe the start of the global financial crisis can be dated in different ways. one plausible date is almost seven years ago in august 9 in 2007. significant turmoil in financial markets appeared after activity closures in some hedge funds specializing in us mortgage debt were announced. the scale and the economic ramifications of the crisis have been vast. the resulting economic downturn in 2008 for a while resembled the pace of developments in the great depression. 1 liquidity support operations by central banks at different stages, explicit state guarantees to banks and expansionary fiscal policies succeeded in stopping the recession and changed the course of developments in comparison to the 1930 β s. in europe, a further stage of the crisis appeared in 2010 when a sovereign debt crisis hit some euro area countries. the euro crisis has its roots in the specific features of construction of the european monetary union, but it was also triggered by the second - wave shocks following the global financial crisis. [ figure 1 : substantial crisis impact on the real economy, particularly in europe ] the financial crisis weakened the euro area economies and it also weakened bank balance sheets. in several countries governments were forced to support their troubled banks, which in turn adversely affected government finances. in some countries public finances became weak, which fed back to the credibility of their banking sectors, thus creating a notorious bank - sovereign feedback loop. troubled countries β membership in the monetary union added to the challenge to restore their competitiveness as traditional tools such as devaluation were no longer available. it became evident that the fiscal rules agreed in the monetary union had not always been honored. these developments raised concerns about credibility of the weak euro area countries in international capital markets. the so - called existential risk of the euro zone emerged. the culmination of the eurocrisis in mid - 2012 was tamed by the creation of the ecb β s omt ( outright monetary transactions ) program. i quote president draghi β s promise that β within [ its ] mandate, the ecb is ready to do whatever it takes to preserve the euro β. 2 omt is a conditional promise to buy in the secondary market without limit government bonds
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john hurley : the β¬15 silver mestrovic coin speech by mr john hurley, governor of the central bank and financial services authority of ireland, at the launch of the β¬15 silver mestrovic coin, dublin, 12 february 2007. * * * your excellency, ladies and gentlemen, i would like to welcome you here today to the launch of this coin bearing the design prepared so long ago by ivan mestrovic. it is hard to believe that it was eighty years ago. ivan mestroviΓ¦ was a sculptor, an architect, a writer and a participant in important political events of his day. he studied at the vienna academy of art in the early nineteen hundreds at the height of the vienna secession movement. he was awarded the grand prix for sculpture at the 1911 world exhibition in rome. and from 1923 to 1942, mestroviΓ¦ was dean of the zagreb academy of arts. a committee was set up in 1926, chaired by the irish poet and nobel prize winner, william butler yeats, to recommend designs for the coinage of the new irish state. ivan mestroviΓ¦ was one of the internationally renowned artists approached to put forward designs. as a result of communication problems, however, it was ultimately not possible to include his work in the process. nonetheless, it is very interesting to see what was thought about his design at that time. w. b. yeats himself called it β one magnificent design β. thomas bodkin, at that time a governor of the irish national gallery, described it as β a superb design β. the official report of the committee referred to it as β a magnificent piece of work β and recommended to the government that an alternative use for it be found. over the years, many possibilities were examined. and for more than forty years, it has been the design on the seal of the central bank of ireland, which you can see displayed here. for my years here as the governor of the central bank and financial services authority of ireland i have been familiar with this excellent work. it is now a particular pleasure for me to see the design, which was intended for use on a coin, at last finding its true home. and what a beautiful coin it makes. i think that great credit is due to the croatian monetary institute on the excellence of their work. the end result they have achieved fully validates the comments made originally in 1927 and, in my view, does full justice to the excellence of ivan
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sharon donnery : central bank risk management in a changing institutional and regulatory environment speech by ms sharon donnery, deputy governor ( central banking ) of the central bank of ireland, at the joint bank of portugal and european central bank conference on " risk management for central banks ", lisbon, 26 september 2017. * * * introduction robert f. kennedy once said β like it or not we live in interesting times β. 1 as central bankers, supervisors, or market participants alike, those working in financial markets have certainly come through some extraordinarily interesting times in recent years. for central banks, risk management is at the intersection of both central banking and supervisory structures, and the financial market. it is, therefore, a pleasure to speak to some of the issues which are emerging in this space, particularly in the context of the changing european institutional architecture and regulatory environment. during recent years, fragile, and indeed unstable, economic and market conditions have required central banks to assume potentially substantial financial risks. these were taken with the objective of maintaining the appropriate functioning of the monetary policy transmission mechanism and restoring price stability. this fundamental shift in the risk profile of central banks β response is an integral part to performing our role and to fulfilling our mandate of bringing inflation below but close to 2 per cent over the medium term. in parallel, following the financial crisis, regulatory reform has focussed on better safeguarding the stability and efficiency of an increasingly globalised financial system and, importantly, mitigating the impact of future market failures. these changes have brought a whole array of new regulatory policies. while most of the policy reforms are directed at commercial financial institutions, all financial market participants, including central banks are affected β not least by the important structural changes with the advent of banking union. for the purposes of today β s discussion, the focus of my remarks is on the implications for central bank risk management. the implications, however, differ, depending on which part of a central bank β s mandate one focusses. it is possible to discern different implications of the recent developments in regulatory frameworks for risk management policies and practices, depending on whether we focus on monetary policy, financial stability, supervision, reserves management, or payments and settlements. moreover, some of the implications of regulatory developments are not yet fully understood given many are still at an early stage of implementation. today, i would like to briefly discuss three aspects of recent developments in regulatory frameworks for risk management in central banks : 1. the impact of regulation on central
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to disseminate this to investors and other interested parties on a regular basis. see β summary of european industry commitments to the european commission regarding transparency in the european securitisation market β ( www. europeansecuritisation. com / industry - letter - 08feb08. pdf ). the institute of international finance ( iif ) also has an active agenda of work, covering risk management, liquidity, valuation, ratings, and transparency. ( see http : / / www. iif. com / press / press + releases + 2007 / press + 46. php ). rating agencies to expand their scope as widely as possible, and for banks to use off - balance - sheet vehicles ; and β’ improving crisis management arrangements, including the process for providing liquidity to institutions under stress and for restructuring weak and failing banks. measuring and adjusting for risk the focus of this work is the recent structural changes in banking and credit markets and ways to prevent those making the financial system more prone or less resilient to large cyclical swings. that is important. but we have been here before. it is not so long since a vast amount of work was set in train in the wake of the ltcm crisis in 1998 and again after the dotcom boom blew out. while each crisis has its own idiosyncrasies there are common elements and they too need to be addressed. in my view the key lies in the measurement of risk and the repeated inclination to underprice risks at the top of the cycle and thus take comfort from exaggerated estimates of risk adjusted returns ; and the corollary, a tendency to overprice risk as the cycle swings down. at the macro level it is hard to assess what is a warranted rise in asset prices and what an unsustainable boom ; in regulation it has proved hard to design systems which adjust appropriately for the cycle, never mind which effectively lean against it ; and at the micro level firms find it difficult to measure the risks in their strategies and to base their targets and incentive systems on risk adjusted returns. we must try to align incentives between actual risk and return by improving risk management practices ( for example on off - balance sheet activities ) and rectifying the revealed weaknesses in the originate - to - distribute model whether in the us mortgage market, in valuation practices or in the use of rating agencies. but we know that many of the incentive problems are deeply embedded β after all, asymmetry is inherent in
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john gieve : the return of the credit cycle β old lessons in new markets speech by sir john gieve, deputy governor of the bank of england, at the euromoney bond investors congress, london, 27 february 2008. the original speech, which contains various links to the documents mentioned, can be found on the bank of england β s website. * * * introduction the turmoil in credit markets since august has been novel in some ways ; but in others, the longer it has gone on the more familiar it has seemed. it has been looking less and less like the crystallisation of a β tail β risk β the β unprecedented and unforeseeable β event described by northern rock directors β and more and more like the unwinding of a wider credit boom during which risk premia had become unsustainably compressed. the excesses may have been most obvious in the complexities of structured credit and the sub - prime sector but they have not been confined to them. as in previous banking cycles, a period of strong growth, low interest rates and rapid increases in asset prices lead to over confidence and bad lending at the top of the cycle ; defaults, deleveraging and retrenchment follow in the downswing. but the way this old story has unfolded through the new credit markets has sprung some unpleasant surprises, including the speed with which losses in just one market in one country β the housing market in the us β have disrupted wider credit markets in all advanced economies. the upswing β a new structure of banking the roots of the problem lay in the so - called β great stability β of steady growth and inflation and in particular the last five years of persistently low nominal interest rates. the confidence born of that stability was combined with an increased institutional demand for fixed income and heightened international competition among the largest banks to develop scale. that led to a remarkable decline in corporate investment yields which was matched, and for a while seemed justified, by declining volatility ( see chart 1 which shows the fall the spreads and volatility of high yield bonds ). 1 and it put pressure on investors to find new ways of generating returns from credit. at the same time advances in it and financial modelling allowed the development of new derivatives, and the slicing, dicing and recombining of credits in new structured credit instruments. the search for yield would have made the us sub - prime mortgage market attractive to many investors. what made it irresistible was the financial engineering that
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costs amounting to β¬1, 300. 7 it β s also encouraging to see that the united states, mexico and canada have agreed on an updated free trade agreement. but the most important thing here is to preserve the rule - based multilateral trading system overall. this also means that existing rules have to be upheld. unfair trading practices such as dumping in the steel industry cannot be tolerated. the rules also have to be enhanced. many parties are now pushing for better protection of 5 / 8 bis central bankers'speeches intellectual property rights. just recently, 13 partners β among them the eu β signed a communique with the intention of reforming the world trade organization and making it more sustainable. on the whole, it seems to me that the threat of an all - encompassing global trade war has diminished, if anything, of late. having said that, the measures already adopted in the trade dispute between the united states and china are certainly likely to have macroeconomic repercussions. it is chiefly the two main players that can expect to sustain losses. according to model - based analyses performed by the bundesbank, economic output could be Β½ per cent lower in both the united states and china over the medium term compared with potential developments in the absence of the trade dispute. other economies would also tend to be harmed, albeit to a lesser extent. the euro area and germany would suffer only a little. but nor should germany assume that it will benefit from the spat while remaining unscathed itself. in total, the punitive tariffs are likely to dampen global trade by just under 1 per cent after a certain interval. 7 challenges of globalisation and technological advances from an economic perspective, it β s clear that free trade gives a long - term boost to general prosperity. yet a shift is under way in employment prospects and also relative wages. globalisation has its winners and losers. studies show, for instance, that china β s integration into the global economy, in particular, led to notable job losses in manufacturing in the united states. more new jobs were probably created β but in other sectors and often in completely different locations. local labour markets seem to have adapted only slowly, and the lifetime income of workers who lost their jobs declined considerably. 8 for germany, on the other hand, globalisation created major opportunities to export to eastern europe and china. 9 in this way, it helped germany to retain manufacturing jobs β although this is also in net terms. equally, technological progress has its winners and losers
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shifting from a rule - based to a risk - based approach requires mas to sharpen its supervisory capabilities. it involves assessing key risks faced by individual financial institutions and their ability to manage these risks. we are building more comprehensive risk profiles of individual institutions, leveraging on technology and better information collection. primary responsibility for risk management rests with the board and senior management of the institutions themselves. this is why strengthening corporate governance standards in financial institutions has been a key priority at mas for several years. building on earlier initiatives, we have issued a consultation paper, proposing to set higher standards of financial transparency and corporate governance for locally - incorporated banks and direct insurers. we have proposed making it mandatory for the roles of the chairman and ceo to be separated, and strengthening the independence of boards of directors from substantial shareholders. we have received good feedback on these proposals and will issue a final set of guidelines shortly. a less prescriptive regulatory approach requires that consumers be empowered through enhanced disclosure and education to make better - informed decisions themselves. this is particularly relevant in the current context of financial innovation which has spawned a growing array of retail products and services with enhanced distribution networks. mas will work closely with industry associations and other public sector agencies to develop consumer guides and educational programmes to raise the financial literacy of consumers. we have also facilitated the development of industry - based mechanisms to offer consumers faster and more cost - effective ways to settle disputes with banks and insurers. the banking industry has set up a consumer mediation unit and the insurance industry the insurance disputes resolution organisation. enhancing organisational effectiveness the year was also eventful for mas as an organisation, as we continued to build on our structure, systems, and people to better meet the challenges posed by a changing and uncertain external environment. we restructured the organisation to better integrate our supervisory functions, align resources with our objectives, and build technical and managerial depth. we stepped up efforts to enhance the skills and expertise of our staff, sending more of our staff on external attachments to financial institutions and supranational organisations, and putting in place a more systematic approach in functional training. the integration with the previous board of commissioners of currency, singapore ( bccs ) was carried out successfully following the merger on 1 october 2002. annual accounts a few quick words on mas β financial statements. the authority β s total assets grew 18. 6 per cent during the year ended 31 march 2003 to s $ 153. 9 billion. about 11 per cent or s $ 16 billion is
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mortgages through covered bonds has been reflected in household lending rates. in combination with very low risk weights and corresponding low capital requirements on residential mortgages, banks may have favoured such lending. as a result, corporations seeking financing may be pushed into bond markets through a crowding out effect. in addition, a vibrant market could make bond financing more attractive and pull corporate borrowers to the market. higher interest rates on banks β corporate loans may contribute to this effect. in some of the markets in europe that have seen substantial deleveraging, loans to smes have been provided at steep interest rates. however, the economic situation and investment demand in general are probably much more important in determining overall growth in investment financing by banks. in general, banks still provide loans to profitable enterprises. to sum up : the covered bond market provides investors with a broad set of investment opportunities, banks with cheap funding and house buyers with ample credit. at the same time, extensive regulatory measures safeguard the solvency and liquidity of the banking system as a whole. a well - capitalized banking system with stable and liquid funding options is a prerequisite for markets to develop and thrive. that includes the covered bond market. thank you for your attention. 2 / 3 bis central bankers'speeches 3 / 3 bis central bankers'speeches
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in the same direction, as it provides the proper incentives for prudent management of external liquidity and borrowing. it also helps in the economy β s process of real adjustment when facing a deterioration in the external scenario. in terms of both the exchange rate and access to credit, it is of high importance not to distort the incentives of financial institutions and firms to prudently administer their risks in a complex environment. to sum up, i would like to point out once again that the board of the central bank of chile strongly believes that as a country, and particularly as a bank, we are well prepared to confront periods of stress. we are certainly not immune to the events outside our borders, and risks are very high today. we have at our disposal the necessary tools to mitigate the effects of more adverse external conditions but, most importantly, we can and will use them whenever the situation calls for it. solid proofs of this are the measures we have taken in the last weeks. thank you. bis central bankers β speeches table 1 world growth ( annual change, percent ) average 00 - 07 ( e ) 2011 ( f ) dec. 11 mp report 2012 ( f ) jan. 12 weo dec. 11 mp report 2013 ( f ) jan. 12 weo dec. 11 mp report jan. 12 weo world at ppp 4. 2 5. 0 3. 8 3. 8 3. 5 3. 3 4. 1 3. 9 world at market exchange rate 3. 2 3. 9 2. 8 2. 8 2. 7 2. 5 3. 2 3. 2 united states 2. 6 3. 0 1. 7 1. 8 1. 8 1. 8 2. 2 2. 2 eurozone 2. 2 1. 9 1. 6 1. 6 - 0. 1 - 0. 5 1. 0 0. 8 japan 1. 7 4. 4 - 0. 7 - 0. 9 2. 0 1. 7 1. 6 1. 6 china 10. 5 10. 4 9. 1 9. 2 8. 2 8. 2 8. 5 8. 8 rest of asia 5. 1 7. 8 4. 5 4. 9 4. 4 5. 0 4. 8 5. 0 latin america ( excl. chile ) 3. 5 6. 3 4. 2 4. 2 3. 6 3. 6 4. 0 3. 9 commodity exporters 3. 1 2. 9 2.
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and funding. strengthening of private sector definitely would have positive signal to potential foreign investors, who will be able to start business by using local comparative advantages. 1 / 2 bis central bankers'speeches numerous examples show that foreign investors are still facing complex bureaucratic procedure and inadequate legal framework. 3 however, after overcoming initial problems and period of adjustment to local conditions, foreign investors successfully run businesses for a long time and we are very proud that most of investors are staying and reinvesting in the country. potential of our country has been recognized during the recent ebrd annual meeting and business forum, which was held in sarajevo and which produced large success regarding future investment in the country. i would like to thank eu institutions, ecb and the escb for working with us on reforms. experience of these institutions is of very important for us in process of building of our system, which should be aligned with eu regulations. also, financial assistance from eu institutions and member - states make possible to carry out and complete these essential reforms. thank you 2 / 2 bis central bankers'speeches
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andreas dombret : can regulation contribute towards greater stability of the financial system? speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the general conference to mark the 60th anniversary of the osterreichische bankwissenschaftliche gesellschaft, vienna, 1 october 2012. * * * ladies and gentlemen, β can regulation contribute towards greater stability of the financial system? β my answer to this question is, β yes, but β¦. β or to be more precise : β yes, but only if we pay more attention to certain things in future. β what do i mean by that? i would like to begin by emphasising the great achievements that we have reached so far. the international financial system is considerably more resistant today than it was just a few years ago. many important regulatory measures were tackled under the g20 financial sector reform agenda. many initiatives have been converted into legislation or have already entered into force ; others will follow in the months ahead. now i come to the β but β i just mentioned. in order to make the financial system truly safer, i believe we must pay more attention to the following two aspects in the future than we did up to now. first, we must have a closer look at the consistency of the many different regulatory projects. second, we need to intensify international cooperation. let me speak briefly about these two aspects 1 ) pay greater attention to the consistency of regulation we are currently working on a number of topics to make the international financial system more stable. of course, the progress made so far varies from one area to the next. at this point i would like to mention just three examples that keep us busy at the moment : β’ the transposition of capital requirements laid down in basel iii into european law ( crd iv / crr ), β’ the new solvency regime for the european insurance sector ( solvency ii ) and β’ the eu european market infrastructure regulation ( emir ). this small selection is enough to demonstrate the wide range of reforms that have been launched β from banks to insurers to individual financial instruments. this is both right and necessary. however there is a danger that we may lose overview of the financial system as a whole by pushing ahead with sector - specific regulations largely independently of one another. we need to be aware of this risk and focus our attention more on the systemic aspects of regulation. it is important to adopt such an approach in order, for example, to effectively
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in potential growth played an important role. even before we began to struggle with deflation, potential growth in japan had started to show a secular decline due to both an ageing and a falling trend in population, as well as a slowdown in capital formation. thus, potential growth is estimated to have dropped to current levels of as low as Β½ percent from about 4 percent in the early 1990s ( chart 2 ). this is not good news in itself, but it does help prevent the negative output gap from widening. sargent, t. j. ( 1999 ) : the conquest of american inflation, princeton university press, princeton. benhabib, j., s. schmitt - grohe and m. uribe ( 2001 ) : β β the perils of taylor rules, β β journal of economic theory, 2001, 96 ( 1 - 2 ), pp. 40 β 69 ; bullard, j. ( 2010 ) : β β seven faces of β the peril β, β β federal reserve bank of st. louis review, september / october, pp. 339 β 352. another important hypothesis is that inflation has become less responsive to the output gap. bis central bankers β speeches ii. lessons learned what lessons can we learn from this experience? to avoid falling into deflationary equilibrium, especially in the face of huge negative shocks, i think that it is important for the authorities to adhere to the following three principles. first, we definitely need to avoid a financial crisis. in 1997, we lacked a solid safety net such as a deposit insurance system and a bank resolution mechanism that could effectively deal with a systemic disruption. we failed to stop a large - scale banking crisis because these institutional frameworks were not in place. it was only in the wake of this painful experience that we set up a robust system for the prevention and management of financial crises. second, we need to keep a close eye on external events. in 1997, we underestimated the vulnerabilities of asian economies and it took some time for us to realize the depth, magnitude and interconnected aspects of the asian currency crisis. third, anchoring inflation expectations is critical for monetary authorities. we must not become complacent about seemingly stable long - run inflation expectations. this is because inflation expectations are inherently difficult to measure accurately and are susceptible to downward shifts once low inflation is observed for a certain period of time ( i. e. inflation expectations are formulated in an adaptive manner ). we
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. jp / en / announcements / press / koen _ 2014 / ko140423a. htm bis central bankers β speeches long - term fiscal sustainability. in trying to escape from deflationary equilibrium, i believe that the monetary and fiscal policies that used to be conducted independently under an inflationary equilibrium, need to be pursued using a different approach. the joint statement issued by the bank and the government in january last year may have been playing an important role as a coordination device to enable the collective conduct of monetary and fiscal policies. this joint statement is an important foundation of abenomics. close cooperation between monetary and fiscal authorities can be observed not only in japan, but also in other areas where unconventional monetary policy has been deployed. 5 for instance, when the bank of england introduced its asset purchase facility, a letter from the chancellor made it clear that the british government would provide an indemnity to cover any losses arising from the facility. however, this close cooperation does not necessarily imply the loss of central bank independence for the following two reasons. first, a clear mandate of inflation targeting guarantees active monetary policy down the road. the zero lower bound on the nominal interest rate ties the hands of central bankers when it comes to deflation. as for inflation, central bankers can and should adjust policy rates flexibly if inflation is likely to stay above the stated target. second, governments well understand the importance of fiscal prudence. in the recent g20 communique, the respective governments made a firm commitment to maintaining fiscal sustainability. as the second arrow of abenomics, the japanese government has already made an important step forward in this respect by raising the consumption tax rate in april this year. presumably because of this commitment to fiscal sustainability, survey figures for long - run inflation forecasts in advanced economies have not increased to levels much above targeted inflation rates, although these figures are subject to considerable uncertainty, as i mentioned before. these forecasts for japan have not yet reached even 2 percent, although they do seem to be on a steady rising trend. iv. importance of raising potential growth since i have talked about the first and the second arrows of abenomics, let me touch upon the third arrow before concluding my presentation. as i mentioned, the decline in potential growth in japan has limited the range of the negative output gap. together with demand recovery, lower potential growth seems to be contributing to the recent rise in inflation through the tighter capacity constraint. in fact, the latest output gap is
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sector β s loans and assessing ability of debt repayment of the private sectors, especially the middle and the low income groups. second, on exchange rate policy, the main challenge is that the thai baht has been on an appreciating trend due to various factors, including capital inflows surge into the region, structural change in the world economy, growth differential between advanced and emerging economies as well as accommodative monetary policy in advanced economies. generally, allowing the exchange rate to be determined by the market can serve as an automatic stabilizer in the short - term and as an important price signal and catalyst for structural change in the long term. so, as the first line of defense, the exchange rate should be determined by market mechanism and from both the market and our own assessment, the thai baht still remains broadly in line with economic fundamentals. however, the bot stands ready to use policy instruments at our disposal to prevent and manage dysfunctional market conditions, excessive speculation or exchange rate overshooting. it should be noted also that, the baht appreciation at this juncture provides an opportunity for businesses to upgrade their technology and productivity. given scarce labor and increasing wages, productions in thailand need to shift from labor intensive to a more capital intensive industries and thus more import of capital goods and machinery are made cheaper during this investment up - cycle. third, on capital flows management. in october 2012, the bank of thailand launched the capital account liberalisation master plan. this master plan aims to facilitate thai companies to diversify their investments abroad, especially in neighboring countries. this would encourage private companies to operate their businesses more efficiently by expanding their markets and production bases, which in turn will help strengthen their competitiveness. facilitating outflows also helps capital flows to be more balanced. the bank of thailand, for instance, has removed the limit for thai individuals β outward direct investment, raised the limit per investor, and eased regulations for transfers of foreign currencies to facilitate investment in foreign securities. recent surge of capital inflows to the region is likely to continue as long as advanced countries continue their extra - loose monetary policies and as long as the prospect of this region remains much more positive than advanced economies. there is no one - size - fits - all measure to deal with impact of short term capital inflows on the economy. the bank of thailand thus utilizes policy combinations, namely : allowing exchange rate adjustment as a first buffer ; liberalising outward investments by residents ; exercising
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exchange rate intervention to deal with excessive movements ; and should circumstances deem necessary, the bank of thailand is prepared to consider appropriate measures in order to prevent serious impact on the economy. last but not least, other than the monetary policy, there is still a concern over the structural problem of the thai economy in the medium and the long term. given the tight labor market and increasing wage costs, we need to improve the country β s infrastructure and productivity. this involves the upgrading of technology and innovation to move thailand up the value chain. the well - being of workforce, as well as quality of education and training are also crucial to increase competitiveness ahead of the aec integration. this cannot be done by only one party. long - term coherent vision and concerted efforts among all agencies, both public and private, are needed. ladies and gentlemen, to close my remark this evening, i believe that the jcc will have a big role in shaping thailand β s future and i hope that with the long history of partnership between japan and thailand, we will continue our close cooperations in all aspects in the years to come. thank you. bis central bankers β speeches
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more global colleges for significant cross - border firms will become active in the near future. while colleges are a sensible approach to dealing with the global nature of the financial industry, they have their limitations, especially in a global context. in contrast to eu colleges, global colleges have no legal basis, and this hampers supervisory cooperation and information - sharing. dnb currently chairs two global colleges. in these colleges we provide for several it tools to encourage as much information - sharing and cooperation as possible, provided that the confidentiality of supervisory information is assured. conclusion ladies and gentlemen, let me conclude. the crisis has reminded us all too well that a new structure for financial supervision in europe is urgently needed. in a european context, the proposals of de larosiere group are a good point of departure, though specific amendments are required. at the end of may, the european commission will present its reaction to the de larosiere group proposals. i will give our present position. to improve macro - prudential supervision, the european systemic risk council should be set up as soon as possible. open issues about its mandate and institutional design should be resolved. regarding microprudential supervision, i am in favour of more centralised european decision - making, but only if the necessary requirements for such a leap forward are fulfilled. the central issue we need to settle on is burden - sharing at the european level. in a global context, the scope of supervision should be broadened and include all financial systemically - relevant institutions. in line with the g20 declaration, the functioning of colleges of supervisors should be supported.
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mr. wellink looks at the united kingdom and emu speech by the president of the nederlandsche bank, dr a. h. e. m. wellink, at the meeting of the nederlandse city lunches in london on 16 / 6 / 98. introduction britain has a love - hate relationship with europe. love, because the uk, too, favours a powerful europe generating peace and free trade relations worldwide. at the same time, however, britain has always been in two minds about its own role, opposed as it is to a federal europe, where national sovereignty is curbed. it is not for nothing that churchill did not envisage his own country as part of a united europe at that time. the relationship between the united kingdom and europe is complicated further by the existence of a third party : the united states. the united states sometimes seems a more attractive partner. it is always easier, in a relationship, be it between states or between husband and wife, to operate with someone from one β s own background, in this case anglo - saxon, than with a partner from a totally different culture. all told, however, the british seem to be favouring europe. newt gingrich, the chairman of the us house of representatives, is wrong. he has said that britain would do better to join the north american free trade association than to take up with emu ; but what is the point of that? after all, both economically and politically, the uk has much stronger ties with europe. tony blair is evidencing a greater sense of reality when he holds that his country β s future lies in the heart of europe. the question is, however : is he talking about the next few years or about the distant future? the british are hesitant about european integration, as they have always been. the uk only joined the ec in 1973, when they were sure of its success. a similar process would seem to be taking place where emu is concerned. at first, the uk was eager to be in on the process, completely liberalizing its capital movements, but it subsequently demanded an opt - out clause so as not to be forced to take further action. such an approach is risky. there is always the chance than when jumping onto a moving train, one ends up between the train and the platform. a few years ago, no one was able to foresee that on 1 january 1999 emu would be setting off with eleven out of the fifteen
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only adding to the size of the shortfall that the customer ultimately faces in a default. boards of directors need to take a direct interest in whether the rescheduling arrangements that have been put in place are working and treat their customers fairly on this point. they need to satisfy themselves that the banks β strategy for mortgage arrears is up to the task. more of that in a moment. at the heart of the marp process is the case - by - case determination by the bank as to whether a rescheduling is appropriate and which scheme is to be offered. under the code all lenders are required to carry out formal six monthly reviews to assess the appropriateness of each arrangement. we plan to lift the lid on this process as part of our inspections and look very closely at how the banks are working through individual cases. we would expect banks to develop and share with us their decision - making trees for determination of individual cases. we want to understand the staffing arrangements for these decisions. we think that it would be best practice for banks to establish the net present value of the alternative rescheduling approaches ( much as us lenders are doing ) and we want to see whether lenders are developing such best practice approaches. these various efforts are designed to encourage the development of a wider menu of rescheduling options to address the arrears problem. in introducing any of these measures to assist distressed borrowers it is essential to ensure that people who can service their debts are not given an opportunity to escape from their obligations. the state through its taxpayers has already assumed too great a burden in this crisis. careful calibration of measures and a targeted, case - by - case, approach must be the hallmarks of current and future policy for the resolution of arrears problems. while loan modification may be necessary in some cases, there will be adverse consequences for the homeowner β while they may be able to stay in their homes, there will likely be a loss of ownership. these arrangements must be targeted at those who genuinely cannot make the normal menu of rescheduling options work. bis central bankers β speeches as the governor of the central bank, patrick honohan, recently explained, resolution will be effective only if it is guided by clear principles. these include ; 1. affordability for the borrower of any modified repayment plan ( that is to say, recognising the true scale of the problem based on a sufficiently comprehensive assessment of
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industry, address at the central bank insurance conference ( 15 february 2019 ) 6 withdrawal of the united kingdom from the european union ( consequential provision ) bill 2019 ) 7 esma : esma and eu securities regulators agree no - deal brexit mous with fca ( 1 february 2019 ) 8 central bank of ireland : fcaannounces window for notifications under their temporary permissions regime ( 16 january 2019 ) 9 source : eurostat. 10 lane, philip r : the irish crisis, cepr discussion paper no. 8287 ( 2019 ) and whelan, k. : ireland β s economic crisis : the good, the bad and the ugly, journal of macroeconomics, vol. 39, pp. 424 β 440 ( 2014 ). 11 source : cso national accounts statistics. 12 o β rourke, k : a short history of brexit : from brentry to backstop, penguin books 13 in 1998, the services sectors accounted for about 64 per cent of employment β at the end of 2018, this share has risen to over 76 per cent. 14 central bank of ireland : quarterly bulletin β contributions to gdp 15 o β rourke, k : a short history of brexit : from brentry to backstop, penguin books 16 european commission : eurobarometer survey ( autumn 2018 ) 17 central bank of ireland : quarterly bulletin β qb1. figure for 2018 is estimated as full data for the year not yet available 18 central bank of ireland : quarterly bulletin β qb1, box c p35 ( january 2019 ) 19 national competitiveness council : ireland β s competitiveness challenge 2018 ( december 2018 ) 20 lane, philip r : the treatment of global firms in national accounts, central bank of ireland economic letter, vol. 2017, no. 1 21 o β rourke, k : a short history of brexit : from brentry to backstop, penguin books 22 lawless, m, siedschlag, i. and z studnicka : irish enterprise exporting patterns in goods and services, esri research bulletin ( april 2017 ) 23 see conefrey, t. irish agriculture : economic impact and current challenges. central bank of ireland economic letter, vol. 2018, no. 8 24 intertradeireland : potential impact of wto tariffs on cross - border trade ( june 2017 ) 25 see teagasc β brexit update : possible impacts on the irish beef industry β. for an overview see
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, we need to better understand and address global imbalances. at 40 percent of world gdp, global external imbalances β measured by the sum of the absolute values of net creditor and net debtor international investment positions β are now at a historical peak and four times larger than in the early 1990s. and finally, we must take account of new public goods in international agreements. ii. global public goods and development global public goods β notably climate and social inclusiveness β are a matter of concern for all : politically they create rising expectations, and economically they generate externalities. deficient provision of these goods can have huge disruptive effects on economic, financial, and social systems, with large welfare costs, still more in developing countries. the simple truth is that we have underestimated these expectations, for too long. the so called β washington consensus β was economically sound, but socially too weak. nothing sustainable is achieved without a strong economy, so let β s stick to that mandate. but globalisation has often been viewed as having mainly benefited large corporates β and their tax avoidance β as the prosperous, globally mobile class β and the rapid growth of their income. inequalities between countries β in particular between the north and the south β have fortunately decreased, those within countries have increased. and younger generations are demanding that we ensure the protection of the planet. a lot has been achieved in recent years. for instance, the bwi have contributed to the significant reduction of poverty at the global level : since 1990, the number of people living in extreme poverty worldwide has dropped by 1. 1 billion. but much remains to be done. in this respect, the bwi can play a key role by focusing on their core competencies, β namely surveillance, technical assistance and lending β, and by developing new tools for the analysis of macro - critical issues such as climate change, digitalisation, and inequalities. we should aim at a better coordination between the bwi and other international organisations including un bodies ( un development programme, un climate change conference, un conference on trade and development β¦ ). given the insufficient achievement of economic development in africa and part of south asia, there is a need to review the functioning of development aid. we could say the same concerning climate change, stronger coordination between un bodies and the bwi could be achieved, with the latter providing the macro - financial framework needed to assess risks and policies, following the example of the ngfs. * * let
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the β upside β β by ever increasing demands β and on the β downside β β by criticism of prolonged low interest rates and non - standard policies. today, it seems all the more important to me to restate three principles : monetary policies cannot do everything, and cannot perform miracles. they cannot repair the damage caused by protectionist uncertainties ; they can neither replace reforms conducive to long - term growth, nor more growth - enhancing fiscal policies. monetary policies in the major advanced economies are guided by their sole domestic mandate : price stability and contracyclical demand management. they are not targeting exchange rates. this is the fruitful paradox of recent years : the coexistence of β domestically focused β policies that results in a β globally - cooperative β monetary environment. and for this purpose, monetary policy must be conducted in full independence. that is, independently of political powers, of course, and we regret to have to say it again. but also 1 / 3 bis central bankers'speeches independently of short - term pressures or any particular economic interests. so we take account of market indications, but we must not be market dependent ; this includes not relying too exclusively for inflation expectations on market - based measures. we are data dependent and i say this in particular for the ecb : in our coming governing council meetings, we will assess actual economic data and we will act accordingly if and when needed. ii. financial stability issues and crises on financial stability issues, the bretton woods system has undergone numerous disruptions and crises since its inception, including its quasi break - up in 1971. and a decade after the gfc, we still have to define the future of our current international monetary system, or β non - system β as many describe it. today we will discuss financial stability risks caused by the growth of cross - border flows and financial assets. over the past few years, international capital flows have been too abundant in good times, β potentially fueling domestic bubbles and destabilising national financial systems β but also prone to β sudden stops β in bad times. the exponential increase of contagion effects through cross border flows and stocks, but also asset price volatility, has led to an evolution of the imf β s view on capital flows, from its original doctrine of liberalisation, into a more pragmatic institutional view. more importantly we need to enhance the crisis prevention toolkit and avoid excessive risktaking. our first line of defense to address financial stability
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they were created β. is the global governance we are dealing with today still relevant? clearly it is not. we need to craft a global framework of economic and financial relations that is inclusive and not only serves the needs of a few large economies. the g - 7 has for long been acting as the steering committee for global economic governance, the g - 7 is an exclusive economic club for rich countries and has outlived its usefulness, since some members in the club are no longer part of the richest members in the global economic environment and their influence will decline even further in the years to come. countries like china, india, brazil and russia are playing an increasingly important role as the engines of growth in the global economy, and none of them are members of the g - 7. i am sure that the g - 20 will become more relevant in the period ahead, since the g - 20 is small enough to allow for meaningful discussions, yet its global influence is broad enough to incorporate all the major players. as a collective the g - 20 contributes almost 90 per cent of global gross domestic product and trade. the g - 20 as a forum has also already proven its ability to contribute to the global dialogue and providing imputes for new global economic governance. the global crisis of today provides us with a new opportunity to act comprehensively and collectively for the long term β rather than selectively and separately for the short run. we need the necessary resolve to work increasingly in a cooperative fashion with institutions such as the imf, the bis and the fsf and the g - 20 to come up with action plans which should be implemented urgently and comprehensively. we need new global governance structures that are inclusive for all the stakeholders. thank you very much.
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in the us and the european systemic risk board ( esrb ) in europe as well as new regulations introduced in other countries aim to mitigate systemic risk by means of macroprudential measures. in barro, robert j. ( 1995 ). β inflation and economic growth. β nber working paper series, no : 5326. reinhart, c. m. and rogoff, k. s. ( 2008 ). β this time is different : a panoramic view of eight centuries of financial crises, β nber working papers, no. 13882 ; taylor, a. ( 2012 ). β the great leveraging, β nber working papers, no. 18290. bis central bankers β speeches this context, turkey established the financial stability committee in 2011. along with the central bank, the committee is composed of the banking regulation and supervision agency, the capital markets board of turkey, the savings deposit insurance fund and the undersecretariat of treasury. distinguished guests, now i would like to briefly mention turkey β s contributions to global financial stability. turkey became a member of the financial stability board ( fsb ) in 2009. in 2014, turkey will participate in g20 troika and assume presidency of the g20 in 2015. during the period from 2014 to 2016, when turkey will be taking part in g20 troika, our representative from the undersecretariat of treasury will be assigned to the fsb steering committee. turkey became a member of the basel committee on banking supervision ( bcbs ) and the group of governors and heads of supervision ( ghos ) in 2009. the central bank of the republic of turkey will participate in the fsb steering committee during the period 2013 β 2015 when it will be chairing fsb regional consultative group for the middle east and north africa ( mena ). the new constituency group, formed upon an agreement signed within the international monetary fund ( imf ) governance reform framework, includes austria, hungary, the czech republic, slovakia, slovenia, belarus and kosovo along with turkey. according to this agreement, during the periods of 2014 β 2016 and 2018 β 2020, turkey will assume the executive director position on behalf of the group for two - year terms. at the latest g - 20 meeting held in los cabos, a number of emerging market countries including turkey declared their intention to contribute to global financial stability by increasing the resources of the imf. the central bank of the republic
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stability ; ( 4 ) protect consumers ; and ( 5 ) promote a safe, efficient, inclusive, and innovative payment system. 6 the approach articulated in the guidelines is based on a foundation of risk management and mitigation, recognizing that access to fed accounts and services can create significant risks. the systematic evaluation of these different risks is intended to establish a framework ensuring similar treatment for legally eligible institutions with similar risk profiles across the reserve banks. for example, requests for accounts and services from non - federally insured institutions would generally be subject to a higher standard of review. the board expects reserve banks to collaborate on reviews of account and service requests, and conduct ongoing monitoring of approved accountholders, to ensure that the guidelines are implemented in a consistent manner. publishing the guidelines is an important step to providing transparency and consistency across the federal reserve system. however, more work remains to be completed before a process is established to fully implement the guidelines. in the meantime, there is a risk that the guidelines could establish false expectations regarding the timeline for evaluating and acting on these requests. in closing, i'd like to once again thank the venture center for hosting this event and for providing the opportunity to get together to discuss innovation in financial services. it's great to finally be back in little rock and to have the chance to meet so many of you in person after such a long time. commissioner marshall, i look forward to our discussion. 1 these remarks reflect my views and not necessarily those of my colleagues on the board of governors or the federal open market committee. i am grateful for the assistance of federal reserve board staff jeff ernst, kavita jain, molly mahar, jason hinkle, and kirstin wells in preparing these remarks. 2 board of governors of the federal reserve system, federal reserve publishes paper describing landscape of partnerships between community banks and fintech companies, news release, september 9, 2021. 3 board of governors of the federal reserve system, federal reserve board provides additional information for banking organizations engaging or seeking to engage in crypto - asset - related activities, news release, august 16, 2022. 4 86 fed. reg. 16, 837. 5 board of governors of the federal reserve system, money and payments : the u. s. dollar in the age of digital transformation ( pdf ), january 2022. t 6 board of governors of the federal reserve system, federal reserve board announces final guidelines that establish a transparent, risk - based, and consistent set of factors for
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the riksbank in its contacts with the general public and make monetary policy more transparent. analysis and debate would be concentrated on factors that monetary policy influences. this, however, presupposes the existence of an underlying yardstick that can take every conceivable transitory effect into account. such measurements are difficult to construct. specifying all the circumstances that have to be considered so as to obtain the best picture of underlying inflation and doing this in advance is not a simple matter. using underlying inflation also has the drawback that essential information about the inflation process may be overlooked. for example, changes in import prices are a part of the domestic inflation process because they affect price setting in trade. in the present state of our art, the drawbacks of changing to a measure of underlying inflation for the riksbank β s monetary policy are greater than the advantages. as i have indicated, however, the cpi may be markedly affected by transitory effects. it is therefore important to monitor measurements of underlying inflation that have been stable over time. the path of the underlying inflation process is an important factor in the riksbank β s monetary policy decisions. gradual recovery in growth terms, 1996 was weaker than 1994 and 1995. the slowdown mainly came from marked stock reductions and a contraction of public sector operations. but even the growth of final demand in the private sector tended to slacken in 1996. there are now clear signs of an economic recovery ; the volume growth of exports remains high, along with indications that a stronger increase in private consumption is on the way. what, then, will be inflation β s path in the years ahead? the riksbank considers that at present the swedish economy has unutilised resources and even if growth does pick up during 1997 and 1998, it is unlikely that these resources will be activated to such an extent that the inflation target is in danger. the scenario in the december inflation report involves a gradual increase in the rate of inflation in the coming years. the main explanation for this upward movement is that the transitory effects - from lower interest rates and a stronger exchange rate - which kept inflation down in 1996 will be fading. the registered rate of cpi inflation is then expected to approach inflation β s underlying trend, which in the years ahead is judged to be more or less in line with the inflation target. lower inflation propensity the new price and other economic information in recent months reinforces the impression that price pressure is low. to this extent, the conditions
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bank's risk - management process and its own assessment of capital adequacy before such ratings may be applied in the determination of the bank's statutory capital requirement. supervisory review of capital, the second pillar of the new accord, will be a critical complement to minimum capital requirements. supervisors will have to evaluate how well banks are assessing their capital needs relative to their risks, including whether banks are appropriately addressing the relationship between different types of risk. market discipline, the third pillar, performs an essential role in ensuring that the capital of banking institutions is maintained at adequate levels. since effective public disclosure enhances market discipline and allows market participants to assess a bank's capital adequacy, disclosure can be a strong incentive for banks to conduct their business in a safe, sound and efficient manner. south africa has made good progress with preparations for the implementation of basel ii on 1 january 2008. the south african reserve bank remains committed to providing a regulatory environment that will allow south african banks to adopt international best practice. south africa β s financial sector is held in high regard, and the introduction of basel ii will enable south african banks to maintain, if not strengthen, their international standing, to the benefit of the economy. 4. the basel core principles countries use the basel core principles as a benchmark for assessing the quality of their supervisory systems and for identifying future work needed to ensure sound supervisory practices. the core principles have also been used by the international monetary fund and the world bank in the context of the financial sector assessment program. changes have occurred in banking regulation over the years, however, and much experience has been gained with implementing the core principles in individual countries. subsequently, the basel committee established the core principles liaison group to update the core principles to reflect these changes. this is to ensure their continued validity, usefulness and relevance as a flexible, globally applicable standard. the updated principles remain focused on banking supervision. issues related to the necessary infrastructure for effective banking supervision are discussed as preconditions and provide background for the assessment. the review also stresses the importance of the independence, accountability and transparency of bank supervisory authorities. recently, an exercise benchmarking the bank supervisory framework of south africa against the revised core principles was conducted and areas of non - compliance identified. an action plan has been initiated to implement the changes, thereby ensuring that the south african bank supervisory framework meets international standards. 5. the global financial sector according to the 76th annual report of the bis, the main risks confronting the
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been significant investment flows into south africa over the past year. non - resident investors bought a net r13 billion worth of south african equities during may 2006 and r460 million the first half of june 2006. despite generally negative sentiment towards emerging market - market assets, they continued to buy r768 million worth of bonds in may and r4. 5 billion in june. about this there can be little argument, for all that i have done is to summarise the facts. it is also not in dispute that the repo rate, the rate at which the south african reserve bank will lend to the banks, was increased recently, primarily on account of deteriorating risks to the outlook for inflation. what we can debate, and what i look forward to hearing your views about, is the nature of the conflict regarding the outlook for interest rates in south africa. the south african reserve bank monetary policy review ( may 2006 ) states it as follows : β on the one hand the inflation outlook, as reflected in the recent inflation forecasts of the bank, has improved significantly β¦ β on the other hand, there a number of developments that have led the mpc to remain vigilant β. this was before the last meeting of the mpc. does a dilemma remain and how would you characterise it? let me have your views.
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originated in advanced economies, emerging economies too were affected, indeed by much more than they had thought possible. the contagion brought home a simple message. in a rapidly globalizing world, national and international financial stability are interlinked. they are really two sides of the same coin. another important lesson we learnt is that financial markets are not self correcting. indeed in the pre - crisis years, a consensus was building around the view that modern risk management has increased the resilience of the financial sector, and that any excess would self correct in good time. the crisis proved that to be wrong. as we unlearnt that, we also learnt some new insights β that it is difficult to detect signs of pressure building up in the system in real time, that the financial sector can contain pressure for a longer time than we think possible, and as a consequence, when the inevitable implosion takes place, it can be quite disastrous, or even catastrophic. we learnt that it is difficult to predict the precise nature of the implosion. for example, in the pre - crisis years, even the few who sensed stress bis central bankers β speeches building up in the system, thought there would be a currency crisis ; in the event the implosion took the form of a financial sector crisis. there were other lessons too. that a collection of rational financial institutions does not necessarily make a rational financial sector. in other words, rational behaviour at the individual institutional level does not aggregate to collective rationality because of the fallacy of composition. financial institutions are notoriously prone to herd behaviour. they have a strong collective tendency to over expose themselves to the same type of risk during an upturn, and become overly risk averse during a downturn which can lead the whole system on a downward spiral of risk aversion, market seizure and instability. converting lessons into policies i have so far spoken about the broader lessons of the crisis that have enhanced our understanding of the financial sector, especially of the financial sector in a highly integrated world. a logical question would be how are we converting those lessons into practical policies and systemic improvements. this is what i now want to turn to. as you all know, the last four years have witnessed a vigorous debate internationally on how to foster a strong, stable and sustainable financial sector. there has already been significant agreement on some reforms while some important issues are still under debate. emerging economies and global reforms there have been some questions about why emerging economies too should
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to 5. 4 per cent in the current decade ( table 1 ). transformation of the economy is quite apparent from the noticeable changes that have occurred in the sectoral composition of output. the share of services in the national income has steadily increased with corresponding fall in the contributions of agriculture and industry over the years. services sector now accounts for nearly two third of total output as against less than half in the early eighties and the nineties. share of industry declined marginally to 19 per cent from 20 per cent whereas share of agriculture registered steep decline from 38 per cent to just 17 per cent ( annex 1 ). this positive performance seems to be an outcome of reforms encompassing a range of measures that led to transformation spreading over all the sectors of economy. transformation brought in higher degree of sophistication and efficiency in operations of almost all the sub segments of real as well as financial sectors. moreover, domestic economy has become far more integrated with rest of the world which is visible not only in terms of growing trade volumes ; financial flows from and to the outside world have also been steadily growing. there are some experts who argue that india β s economic transformation needs to be attributed to change in policy orientation of 1980s rather than the reforms undertaken during 1990s. although they do recognise the possibility that improvement in 1980s might have run out of steam without further reforms undertaken in the nineties ( subramanian, 2007 ). while, academic debate as to what triggered the economic transformation might still be unresolved, there is a near consensus with regard to the important role of liberalisation process initiated in the early nineties in placing the economy on a higher growth path. the economic reforms that ushered in 1991 put forward some important political questions. the first question comes to our mind is about the timing of the reforms i. e. why the reforms were started only in 1991 and why not earlier? how the process of reforms continued despite changes in ruling party at the centre? how the direction of reforms sustained and remained irreversible despite various hurdles and hiccups? the answers to these questions, to a large extent, lie in the transformation in political spectrum of the indian electoral democracy. as one avid follower of india β s economy puts it, β - - - the greatest change in the last 10 years has been in the attitude towards reforms. whereas the vocal supporters of reforms within india were rare during the 1980s, virtually every political party today recognises the need for continued reforms β ( panagariya, 2008 )
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whose persistent weakness has had a major impact on economic and financial conditions more broadly, and will improve the financial condition of some households by facilitating refinancing. in addition, open - market purchases should benefit credit markets by adding liquidity and balance sheet capacity to the system. support for specific institutions in addition to those programs i have just discussed, the federal reserve has provided financing directly to specific systemically important institutions. with the full support of the treasury, we used emergency lending powers to facilitate the acquisition of bear stearns by jpmorgan chase & co. and also to prevent default by aig. these extensions of credit are very different than the other liquidity programs discussed previously and were put in place to avoid major disruptions in financial markets. from a credit perspective, these support facilities carry more risk than traditional central bank liquidity support, but we nevertheless expect to be fully repaid. credit extended under these programs has varied but recently has accounted for only about 5 percent of our balance sheet. that said, these operations have been extremely uncomfortable for the federal reserve to undertake and were carried out only because no reasonable alternative was available. as noted in the joint federal reservetreasury statement i mentioned earlier, we are working with the administration and the congress to develop a formal resolution regime for systemically critical nonbank financial institutions, analogous to one already in place for banks. such a regime should spell out as precisely as possible the role that the congress expects the federal reserve to play in such resolutions. liabilities having reviewed the federal reserve's main asset accounts, let me now touch briefly on the liability side of the balance sheet. historically, the largest component of the federal reserve's liabilities has historically been federal reserve notes β that is, u. s. paper currency. currency has expanded over time in line with nominal spending in the united states and demands for u. s. currency abroad. by some estimates, a bit over one - half of u. s. currency is held outside the country. other key liabilities of the federal reserve include the deposit accounts of the u. s. government and depository institutions. the u. s. government maintains a " checking account " with the federal reserve β the so - called treasury general account β from which most federal payments are made. more recently, the treasury has established a special account at the federal reserve as part of its supplementary financing program ( sfp ). under this program, the treasury issues special treasury bills and places the proceeds
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has widened significantly, in part reflecting the strength of domestic demand that has accompanied the further accumulation of capital gains. the continued increase in our net external debt and its growing servicing costs clearly are not sustainable indefinitely. β 4 β in light of the importance of financial markets in the economy, and of the volatility and vulnerability in financial asset prices more generally, policymakers must continue to pay particular attention to these markets. the federal reserve β s easing last fall responded to an abrupt stringency in financial markets and the effects that the consequent increased risk aversion was likely to have on economic activity going forward. we were particularly concerned about higher costs and disrupted financing in debt markets, where much of consumption and investment is funded. we were not attempting to prop up equity prices, nor did we plan to continue to ease rates until equity prices recovered, as some have erroneously inferred. this has not been, and is not now, our policy or intent. as i have discussed earlier, movements in equity prices can play an important role in the economy, which the central bank must take into account. and we may question from time to time whether asset prices may not embody a more optimistic outlook than seems reasonable, or what the consequences might be of a further rise in those prices followed by a steep decline. but many other forces also drive our economy, and it is the performance of the entire economy that forms our objectives and shapes our actions. nonetheless, in the current state of financial markets, policymakers are going to have to be particularly wary of actions that unnecessarily sow uncertainties, undermine confidence, and interfere with the efficient allocation of capital on which our economic prosperity and asset values rest. it is important not to undermine the highly sensitive ongoing process of reallocation of capital from less to more productive uses. for productivity and standards of living to grow, not only must capital raised in markets be allocated efficiently, but internal cash flow, including the depreciation charges from the existing capital stock, must be continuously directed to their most profitable uses. it is this continuous churning, this so - called creative destruction, that has become so essential to the effective deployment of advanced technologies by this country over recent decades. in this regard, drift toward protectionist trade policies, which are always so difficult to reverse, is a much greater threat than is generally understood. it is well known that erecting barriers to the free flow of goods and services across national borders undermines the division of
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as the global financial turmoil spread. the peso depreciated 13. 3 pct against the us dollar in 2008 against an 18. 8 pct appreciation in 2007. this loss in value was, nonetheless, in line with movements of other currencies in the region, which also depreciated against the us dollar. in addition, in terms of the real effective exchange rate over the past eight years, the peso has largely maintained its competitiveness against a basket of currencies of our major trading partners and competitor countries. in the meantime, we have been able to keep the gross international reserves at comfortable levels. gir stood at $ 36. 8 b at end november 2008, an increase of about $ 3 b over the end 2007 level. the build - up in gir has allowed us to keep the bop in surplus in 2008. at almost $ 37 b, gir is 5. 8 months β of imports and 2. 5 times short - term debt based on residual maturity. these ratios are at least twice the international benchmark levels of 3 months of imports and 1 time the debt ratio. the banking system remains sound. the series of banking reforms put in place over the last five years, and among others, the inherent conservatism and the domestic orientation of banks, as well as the bsp β s phased - in approach to embracing financial innovation, have resulted in minimal exposure of the banking system to the troubled international financial institutions. in addition, banks continue to be capitalized above the bis standard and bsp regulatory requirement ; bank balance sheets are at their strongest since the 1997 asian financial crisis ; and assets continue to grow. what do we foresee for 2009? 2009 will be a critical year. it could define how we will perform when the markets turn around. if you read most analyses of the us and major economies β downtrend, the expectation is these could last about 18 months. therefore, depending on when you begin your count, recovery in the us and maybe globally could begin in 2010. no one, however, can say for certain how deep and how long the global downtrend would be, nor how far markets would retreat. therefore it is incumbent upon us to continue to brace for further uncertainty in the global financial markets, recessionary trends that would spread to regions beyond the developed world ; and volatilities in commodity prices, particularly oil. how shall we respond to the unfolding environment? monetary policy in 2009 will
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event, acted quickly and appropriately, and our actions were successful. friday β s announcement on open market operations to address potential quarter - end funding pressures on interest rates followed this same approach : quickly diagnose the problem, develop the right action plan, and execute that plan. at the same time, it is equally important that we examine these recent market dynamics and their implications for the liquidity needs in relation to the overall amount of reserves held at the federal reserve. we will continue to monitor and analyze developments closely. as federal reserve chair powell stated in his most recent press conference, the fomc will assess the implications for the appropriate level of reserves and time to resume organic growth of the federal reserve β s balance sheet consistent with the successful execution of the fomc β s ample reserves framework. 2 that β s enough on recent events for now. i β ll turn to another very important issue, reference rate reform. libor won β t last forever some say only two things in life are guaranteed : death and taxes. but i say there are actually three : death, taxes, and the end of libor. everyone in the financial services industry needs to be aware that the date when the existence of libor can no longer be guaranteed is fast approaching. i titled remarks i gave on this subject earlier in the year β 901 days β to remind everyone just how little time both the public sector and market participants have to prepare for a world without libor. 3 we are now 831 days away from that world, and while some institutions are making good progress, others are sticking their metaphorical heads in the sand, hoping the issue will go away. even more concerning are those wearing rose - tinted glasses, getting nostalgic about libor and hoping for an extension to the deadline or a reincarnation of the rate. i cannot emphasize enough 2 / 5 bis central bankers'speeches that the clock is ticking and everyone needs to get their firms ready for january 1, 2022. a look at the numbers, and recent history, reveals the need for urgency. there are $ 200 trillion of financial contracts referencing u. s. dollar libor. 4 but the volume of actual transactions that term libor is based on is very small. when individual banks make libor submissions they are largely based on judgment, not real transactions. this makes the rate vulnerable to manipulation, and banks are increasingly reluctant to provide submissions, adding yet further risk around using the rate. the u. k.
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geoff bascand : brighter money β enhancing innovation and embracing heritage speech by mr geoff bascand, deputy governor and head of operations of the reserve bank of new zealand, at the launch of brighter money, wellington, 20 november 2014. * * * seeing people β s initial reactions to the new banknote designs is a heartening reminder of what an important role currency plays in our lives, and what a sense of pride and heritage our notes evoke. three years ago, when we launched the project to upgrade new zealand β s banknotes, we decided to retain representation of well - known new zealanders and flora and fauna on our notes. our research showed that new zealanders were satisfied with the themes of the existing notes and the denominations available. looking at the designs in print, we β re very proud of the way new zealand β s rich cultural diversity, world - class achievements and unique heritage have been brought to life as part of the new designs. from our world famous mountaineer and explorer sir edmund hillary, through to our nobel prize winning scientist lord rutherford, the stories that we β ve celebrated as new zealanders will continue to live on through future generations. some new ones may even emerge as the sharper and more colourful pictures on the notes bring flora, fauna, landscapes and history alive. but our brighter money doesn β t just celebrate innovation and the pioneering new zealand spirit through the images depicted on the banknotes β the notes themselves are at the forefront of banknote technology. it β s been 15 years since the current new zealand banknotes were last upgraded, and printing and design techniques have advanced significantly. in 1999, new zealand was one of the few countries to be printing banknotes on polymer β now, it β s increasingly common as central banks around the world work to produce durable, secure currency. security features have also advanced considerably in the last 15 years, and our new notes contain more sophisticated security elements that greatly enhance the overall design. the transparent windows are larger, and striking holographic features will help to make the notes very easy to verify, but hard to counterfeit. more details about these features will be made available closer to the time the notes are released. new zealand is very fortunate, in that we have low rates of counterfeiting by international standards. but since the last banknote upgrade in 1999, there have been significant advances in copying, scanning, and printing technologies and the cost of this technology has reduced. as a result, the economics of counter
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gent sejko : including monetary policy and financial shocks and trends in modelling and policy analysis address by mr gent sejko, governor of the bank of albania, to the tenth south - eastern european economic research workshop β including monetary policy and financial shocks and trends in modelling and policy analysis β, tirana, 1 december 2016. * * * dear participants, i am privileged to open the 10th south - eastern european economic research workshop organised by the bank of albania, and welcome all new and returning friends. i would like to congratulate bank of albania β experts that present every year their research works for discussion. this year β s workshop will focus on the main topics that prevail in the economic, political and academic debates in the field of economy, finance and central banking. the topic of this workshop is : β including monetary policy and financial shocks and trends in modelling and policy analysis ". the focus was placed on these topics on the grounds that the central bank and policy decisions should take into account an increasing number of shocks that are arising not only as a consequence of economic, but also of political, legal and regulatory phenomena. the challenges that monetary policy and financial stability are facing reflect the problems of the society in the economic, social and geo - political aspects. these challenges are best reflected in the noneffective functioning of the pass - through mechanism that should transmit and amplify the positive effects of central banks β decisions. these challenges increase ambiguity, uncertainty and volatility in goods, services and financial, markets, broaden and intertwine the nature of shocks and place the authorities vis - a - vis new and unprecedented phenomena. these developments render the well management of monetary policies and financial stability even more difficult as a result, scientific research needs to : explore and propose new solutions, more efficient empirical and theoretical models for policy implementation by central banks ; assess the effects of the adopted policies ; and, carefully observe the side effects in the economy or the financial system, which may potentially accompany such policies. due to unconventional monetary policies, central banking is practically in unexplored territories ; therefore, it is necessary to carry out an assessment of how the economy reacts to shocks under such circumstances. the bank of albania is interested in identifying potential shocks and their modelling with a view to guaranteeing optimal solutions in terms of prices, economic activity, employment and financial system soundness. for that reason, we invite you to discuss openly and thoroughly all the papers that will be presented during these two
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william c dudley : β us economy in a snapshot β opening remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the economic press briefing on the us economy in a snapshot, federal reserve bank of new york, new york city, 19 may 2016. * * * jonathan mccarthy, paolo pesenti, robert rich and joseph tracy assisted in preparing these remarks. welcome to our economic press briefing. today we are going to introduce you to a data product that we have been making available to the public, u. s. economy in a snapshot. my role is to put this product in the broader context of the federal open market committee β s ( fomc ) communication strategy about the economy and policy. my colleague robert rich will then walk you through the structure of the product and discuss excerpts from the may release. as always, what i have to say reflects my own views and not necessarily those of the federal open market committee or the federal reserve system. conventional u. s. monetary policy is conducted by targeting the level of the federal funds rate β an overnight interest rate on bank reserves. few participants in our economy have any direct interaction with this interest rate. how, then, is controlling this interest rate such an important part of setting monetary policy and steering an 18 trillion dollar economy toward the federal reserve β s dual mandate objectives of maximum sustainable employment and price stability? this is the remarkable aspect of monetary policy. just as a pebble dropped into a lake disturbs the water not just at the point of impact but ripples outward far from the origin, changes in the federal funds rate influence the prices of financial assets more broadly and this, in turn, affects the broader economy. an important insight of modern monetary theory is that this transmission of monetary policy to the broader economy through its many channels works best when the central bank is transparent about its goals, policy strategy and approach to implementing its strategy. in this case, market participants and households both understand and can anticipate actions by the central bank. by doing so, the transmission channels of monetary policy are enhanced. this places considerable importance on effective central bank communication. recognizing this, the fomc has undertaken many initiatives over the years to improve its communications with the public. these include providing clarification in terms of the goals of monetary policy, discussions of the fomc β s broad policy strategy, as well as fomc participants β ongoing explanations of their views on
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erkki liikanen : southern engines of global growth β china, india, brazil and south africa opening remarks by mr erkki liikanen, governor of the bank of finland, at the unu - wider conference, helsinki, 7 september 2007. * * * introduction thank you for your kind introduction professor shorrocks, and good morning, ladies and gentlemen, it is a great pleasure for me to be here to open this conference on southern engines of global growth. china, india, brazil and south africa β together with many other emerging market countries β are playing an increasingly important role in the global economy. their growing importance is being felt in many areas, including growth, trade, international finance, global governance, and geopolitics. as a backdrop, let me say first just a few words about the global economy. the ongoing global economic expansion is exceptionally broad in terms of geography. the strong growth in emerging market and developing countries is reducing the number of people living in extreme poverty, and the gap between average incomes of developing and developed countries is narrowing. these positive developments are clearly visible even for a casual observer, as i had the chance to witness earlier this year when i was traveling in subsaharan africa and latin america. however, despite these very favorable developments, there is no room for complacency. the extended period of rapid global growth has resulted in a build up of some tensions which, if left unaddressed, pose a threat to continued global growth in the longer term. one source of concern is global current account imbalances and the risk of their abrupt and disorderly unwinding. another source of concern is the uneven distribution of benefits of globalization within countries, which risks eroding support for globalization. these two concerns are closely linked to the rapid rise of emerging market countries. growth and trade as a small northern country with high per capita income, finland is quite different from the cibs - countries that are all large, southern, and still relatively poor. nevertheless, some of the factors behind finland's transformation from a poor agrarian economy to a modern advanced economy bear relevance to the current challenges of the cibs, or any other country that seeks to put in place conditions for sustained economic growth. first is a proactive attitude toward the internationalization of the economy, importantly through foreign trade. second is the importance of sound macroeconomic policies. that is, sound money, sustainable government finances and sustainable external position. third is a stable institutional environment
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for example, an estimated us $ 60 billion will be needed annually until 2022 to meet the basic infrastructure needs in asean alone 3. the asset - backed nature of islamic finance makes sukuk ideal for financing of infrastructure projects and would complement ongoing work by singapore to enhance the bankability of infrastructure projects in the region and involve more capital market participants. 13. in the meantime, it will be important to continue to strengthen key foundations such as global regulatory standards and best practices for islamic finance, and capacity building and talent development. to facilitate further growth of islamic finance in singapore, mas is working with the industry and other government agencies to provide clarity and certainty in the regulatory and tax treatment for sukuk. for example, some industry players have suggested that pre - approved standardised templates for common sukuk structures could be introduced to expedite issuance. 14. building islamic finance expertise has also been highlighted as crucial to supporting the continued growth of the industry. the singapore management university β s ( smu ) international islamic law and finance initiative is now in its 6th year, and seeks to carry out research and develop thought leadership in islamic law and finance, in collaboration with institutions in uk, malaysia and indonesia. smu also offers a masters in islamic law and finance, and will be graduating its third cohort of students this year. in addition, islamic finance has also been included as an eligible subject area under mas β finance scholarship programme, and industry players could look to tap on this scheme to groom promising talent. conclusion 15. to conclude, the deepening linkages between asia and middle east will continue to present significant opportunities for islamic finance. i hope the wibc asia summit will provide a useful platform for various stakeholders from asia, middle east and beyond, to explore new ideas and build networks to catalyse further growth. i wish all of you a fruitful conference. an overview of infrastructure opportunities in asean, kpmg. bis central bankers β speeches
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, and insurance industry associations, we put together a comprehensive package of unprecedented credit and premium reliefs. this helped many individuals and smes tide over a difficult period of financial stress. we achieved this together, not by regulatory fiat or coercion β maybe a little moral suasion β 2 / 3 bis central bankers'speeches but truly in a spirit of co - operation, driven by a sense of common purpose. thank you all so much for the support and for stepping up in singaporeans β hour of need. there is a saying : β the face you have at age 20 is the face nature gives you ; but the face you have after 50 is the face you earned β mas β face today, on our 50th anniversary, is perhaps marked with the scars of crises fought and overcome and hopefully also a few lines of wisdom gathered over the years. it is also β we like to think β a radiant face, as we look ahead with hope and confidence, to push the boundaries of innovation, to make finance more inclusive, more sustainable, and more purposeful, while ensuring it remains safe. thank you and have a good evening. 3 / 3 bis central bankers'speeches
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lim hng kiang : brief review of recent financial and economic developments in singapore congratulatory remarks by mr lim hng kiang, deputy chairman of the monetary authority of singapore and minister for trade and industry, at deutsche bank's 35th anniversary, singapore, 13 feb 2007. * * * distinguished guests, ladies and gentlemen, good evening, i am delighted to be with you this evening to celebrate deutsche bank's 35th anniversary in singapore. i am very glad to note as well that today's celebrations is also marked by deutsche bank's move to one raffles quay, the newest address in our financial district. it is testimony of deutsche bank's continued commitment to singapore. set up in 1972, we have seen deutsche bank singapore grow in size over the years. it has also witnessed and participated in the economic transformation of singapore, from a trading hub in the 1970s, to a major metropolis today. we are indeed heartened that, 35 years on deutsche bank continues to see opportunities to deepen its roots here. just last week, deutsche bank announced its group performance for 2006 and i must congratulate dr ackermann and your team, for registering yet another record year for deutsche bank. today deutsche bank is represented in many of asia's financial markets. we are indeed pleased that deutsche bank had made singapore the hub for your regional operations. we noted that some 1600 people are involved in a broad scope of activities including trading, treasury and investment banking here. to accommodate this, i understand that deutsche bank's trading floor in this building is one of the largest in singapore. singapore's economic growth for 2006 continues to stay strong at 7. 7 %, with almost 170, 000 jobs created last year. our market indices have breached the 3, 000 point mark and our gdp per capita has exceeded us $ 30, 000. we are also witnessing the strong growth of asia propelled primarily by the two economic powerhouses of india and china. the economies in south east asian have seen a resurgence with countries like vietnam rushing forth and is one of the fastest growing economies in the region. trade and investments among asian countries, and between regions including the middle east and asia, have increased substantially. we have also seen substantial wealth creation in the middle east and asia. asia is estimated to have about 2. 4 million high net worth individuals with assets over us $ 7. 6 trillion and comprise almost 20 % of global high new worth wealth. this is projected to grow annually by
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about 6. 5 % to about us $ 10. 5 trillion by 2010. all these represent substantial financial sector opportunities for deutsche bank in asia, including trade & infrastructure financing and wealth management. singapore, being at the heart of asia, provides global financial institutions a unique location to harness the growth opportunities from this region. singapore offers a stable and trusted environment for investments and businesses in the region. companies in singapore are supported by a robust network of infrastructure as well as an educated workforce, and coupled with open and consistent government policies. we strive to keep our markets pro - business and to keep operating costs competitive. being cost - competitive is not sufficient by itself. we need to make sure that singapore continues to stay at the confluence of business opportunities. to facilitate business reach into major markets, singapore has signed a series of free trade agreements with many of our trading partners include the us, india, japan, korea, vietnam as well as beginning free trade discussions with china and the gulf countries. i am certain these strong ties that singapore has built can only facilitate deutsche bank's business expansions in this part of the world. conclusion on that note, let me again extend my heartiest congratulations to deutsche bank on its 35th anniversary in singapore. we appreciate your commitment to singapore and hope that singapore will continue to play an important role in your growth in asia and the world. thank you.
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lisa d cook : hope, promise, and mentors speech by ms lisa d cook, member of the board of governors of the federal reserve system, at the samuel dubois cook center career achievement awards ceremony, the university club, washington dc, 1 april 2024. * * * thank you, dr. darity, for your kind introduction. i am profoundly moved to be surrounded by family and friends, and it gives me another opportunity to tell all of you that i would not be where i am today without your support. i include in that circle my fellow award recipients today, drs. cecilia rouse and peter blair henry. i am beyond humbled and honored to receive this career achievement award from the samuel dubois cook center on social equity at duke university, and i am inspired by what it represents. of course, to me, samuel dubois cook was simply " uncle sam. " my uncle sam was a korean war veteran, a political theorist, an activist, and the first african american tenured professor at duke and any major southern university. he then went on to become president of dillard university... the list goes on and on. now that was a lifetime of achievement. at morehouse college, uncle sam was a classmate of a young man named martin luther king, jr. before that, they picked tobacco together during the summer to earn the money they needed for their studies. uncle sam led the campus chapter of the naacp at morehouse and went on to become student body president ( twice ) and valedictorian. along with my mother mary murray cook, his brother and my dad rev. payton brailsford cook, my cousin and civil rights leader floyd mckissick, sr., and a host of other relatives, he instilled in me the deep belief of the civil rights movement that with faith, preparation, and great effort, things could and would be better. when i was beaten and suffered verbal assaults while desegregating my schools in georgia, i drew strength from the example set by my uncle, my aunts, my parents, and by dr. king and their conviction that there is great hope and promise in the world. it was - and remains - the duty of everyone in and who embraced and was inspired by the civil rights movement to make good on that hope and promise and to build a better future. i mentioned great effort. that was always paramount for my uncle sam. the new york times quoted his advice : " have a vision
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the balance of risks shifts between the need to support growth and the duty to safeguard financial and price stability, monetary policy stance will have to be adjusted accordingly. the bank of thailand stands ready to employ the right mix of policy tools under its purview to attain these goals. ladies and gentlemen, i believe that a balanced and judicious use of monetary policy tool has and will continue to play a critical role for ensuring long - term macroeconomic and financial stability. as always, the bank of thailand will strive to create a stable economic environment in which businesses can prosper on a sustainable basis, so that thailand will continue to be the destination of choice by long - term investors. let me close my remark by thanking the netherlands business community for the substantial contribution to the thai economy. i hope that the relationship between our two nations will continue to flourish. thank you. bis central bankers β speeches
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jacqueline loh : keeping green and impact in focus keynote speech by ms jacqueline loh, deputy managing director of the monetary authority of singapore, at asian venture philanthropy network ( avpn ) virtual conference 2020, 8 june 2020. * * * ms naina batra, chairperson and ceo, avpn distinguished guests, ladies and gentlemen 1. good morning. thank you for inviting me to the eighth avpn conference. i am very glad that avpn has pressed on with this flagship event virtually in these unprecedented times. the covid - 19 pandemic has resulted in significant health, economic and social challenges globally. the imf has projected that global gdp will contract by 3 % this year1, 2. marking a significantly deeper downturn than the 0. 1 % contraction in 2009 during the global financial crisis. β the power of networks β, which is the theme of this year β s avpn conference, is highly apt as we strive towards the united nations sustainable development goals ( un sdgs ). addressing complex and multi - dimensional challenges like climate action, inequality, and 3. quality healthcare and education requires policymakers, financial institutions, corporates, nongovernmental organisations, and multilateral development banks ( mdbs ), to come together on a common global challenge. the financial sector and mdbs have stepped up and shored capital towards building capacity in healthcare and pharmaceuticals, while supporting the recovery. 4. social and sustainability bond issuances totalled us $ 24 billion in the first quarter of this year2, nearly double that of the same period last year. the bond proceeds are channelled to support healthcare and pharmaceutical development, for the benefit of lower income households and small businesses. the world bank β s pandemic bond facility has been triggered, and will provide us $ 195 million in emergency financing to 64 of the world β s poorest countries to support their recovery. 3 5. today, i will focus on opportunities in green and sustainable finance, and impact investing. pushing forward with green finance for a sustainable world 6. the pandemic provides a prime opportunity for countries to β build back better β. it is important now, more than ever, that countries not only rebuild their economies and preserve jobs, but also in the process, intentionally build a more sustainable new economy. there have been growing calls for governments to prioritise or accelerate green infrastructure development as part of recovery plans. infrastructure development is critical to driving economic growth and improving social
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the way we seek to rationalise and solve problems ; and predictive models, the way we infer cause and effect. iv see e. g. riordan c m ( 2015 ), β diversity is useless without inclusivity β, harvard business review, august. v deloitte vi farmer, h, mckay, r, tsakiris, m, trust in me ( 2013 ) : β trust in me : trustworthy others are seen as more physically similar to the self β, psychological science vii see oecd viii oecd ix kahneman, d ( 2012 ) β thinking fast and slow β, london. see also sunstein, c. r, hastie, r ( 2014 ), β making dumb groups smarter β, harvard business review, december. x see e. g. page, s ( 2007 ) hewlett, marshall, m and sherbin, l ( 2013 ), β how diversity can drive innovation β, harvard business review, december ; rock, d., halvorson, h. g. and grey, j ( 2016 ), β diverse teams feel less comfortable β and that β s why they perform better β, harvard business review, september ; sunstein, c. r. and hastie, r ( 2014 ), β making dumb groups smarter β, harvard business review, december. xi see page ( 2007 ). xii see e. g. page, e ( 2011 ), β diversity and complexity β, princeton university press. xiii see e. g. jansen, r and aelen, m ( 2015 ), β biases in supervision : what are they and how can we deal with them? β, dnb occasional studies. xiv see e. g. sibert, a ( 2006 ), β central banking by committee β, de nederlandsche bank working paper 91, february ; ball, l ( 2012 ), ben bernanke and the zero bound, nber working paper 17836, february ; warsh, k ( 2014 ), transparency and the bank of england β s monetary policy committee, december. xv see haldane, a ( 2016 ), one car, two car, red car, blue car, speech given in redcar december and bank underground blog for examples. xvi newton, l ( 1990 ) β overconfidence in the communication of intent : heard and unheard melodies. β unpublished doctoral dissertation ( stanford, ca : stanford university ) as cited in
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seong - tae lee : koreaaβ¬β’s experience in relation to macro - prudential supervision luncheon speech by mr seong - tae lee, governor and chairman of the bank of korea, at the imf - fsc / fss international conference, seoul, 7 november 2006. * * * greetings i am delighted to see eminent figures from central banks and financial supervisory agencies, together with noted scholars from around the world, gathered here at this conference. korea's experience of financial crisis and the importance of macro - prudential supervision today i would like to tell you about korea's experience in relation to the theme of this conference, macro - prudential supervision. over the past ten years, we in korea have suffered two major episodes of financial instability. let me brief you on what lessons we have drawn from these difficulties. when the financial crisis, which took the form of banking and currency crisis, broke out toward the end of 1997, financial intermediation contracted abruptly. the economy was plunged into recession with the collapse of a large number of companies and financial institutions. the underlying causes of the financial crisis included poor risk management of financial institutions, macroeconomic disequilibria, and the lack of a crisis management capacity on the part of the policy authorities. renewed financial turmoil broke out in 2003 when credit card companies were hit by huge losses. stock and bond prices tumbled and investors rushed to pull out of money - market funds that were heavily overweight in bonds issued by credit card companies. while the 1997 crisis had been brought about by the inability of financial institutions to manage corporate sector risk adequately, the primary reason for the credit card crisis was a failure of their household - sector risk management. the instability was compounded by their herd behaviour in expanding their share of the household credit market. in fact, these two financial disturbances were overcome within a fairly short space of time thanks to the bold and decisive restructuring of financial institutions and companies, and the supply of liquidity by the central bank to deal with the credit crunch. the aftershocks of these crises, though, rumbled on for a long time and they still weigh down the dynamism of the korean economy. in the course of the crises, the labour market worsened and household credit delinquencies increased. this resulted in a prolonged contraction in consumer spending. firms became extremely risk averse in their investment behaviour, and this has weakened the growth potential of the economy. considering that the objective of macro -
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prudential surveillance is to support the stable growth of the economy by ensuring the stability of the financial system, i think that korea's experience over the last ten years underlines just how important macro - prudential surveillance really is. the importance of a micro - prudential perspective it goes without saying that the soundness of individual financial institutions, in other words the micro - prudential perspective, plays a key part in ensuring financial stability. given banks'crucial role in financial intermediation, their soundness, above all, is essential to financial stability. i think that the example i mentioned earlier of the troubles of korea's credit card companies shows the vital importance of banks'soundness. even though most credit card companies faced a serious weakening of their balance sheets, we were able to avoid a severe credit crunch thanks to the fact that banks'profitability and capital adequacy were, by then, much higher than in 1997. from the brink of failure in 1997, korean banks had improved their balance sheets and capital adequacy to a favourable level within a few years. this owed much both to the thoroughgoing financial reforms and to the financial supervisory agencies'drive to impose stricter standards of supervision. it is now well known how we overcame the financial crisis, so let us now leave it behind us and move on to what lies ahead. tasks ahead the soundness of individual korean financial institutions has made such great strides over the past ten years and there is now a much greater recognition of the importance of macro - prudential surveillance. having said that, we face new challenges in maintaining financial stability. in contrast to the real sector, the financial sector is intrinsically unstable. what is more, the progress in information technology, together with the advances in financial liberalisation and globalisation, have brought us increasingly sophisticated financial tools. financial linkages running between markets and between countries have also deepened greatly. this means that risk factors we have never faced before continue to rise up. in such circumstances, financial stability is not easily attained. it is, however, absolutely essential for the sustained growth of the economy together with price stability. as i draw close to the end of my remarks, let me touch on some directions for further development in korea to heighten the stability of the financial system, which is the common goal of both micro - and macro - prudential surveillance. firstly, a broad and diverse range of factors may affect financial markets and institutions. if we
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##lendars. htm. - 2outcomes rather than the outlook corresponds to the shift in our monetary policy approach that suggests policy should be patient rather than preemptive at this stage in the recovery. outcomes recent data indicate that activity has picked up this year. after a dip in the final months of 2020, personal consumption expenditures ( pce ) stepped up considerably so far this year, and spending on durable goods has been particularly strong. this pattern appears consistent with a quick spend - out from the consolidated appropriations act ( caa ) stimulus checks at the turn of the year, particularly among lower - income households that may have previously exhausted the funds provided in the cares act ( coronavirus aid, relief, and economic security act ). 3 like the spending data, the labor market data turned more positive in january and february following weakness at the end of 2020. although the unemployment rate has moved down 1 / 2 a percentage point since december, the k - shaped labor market recovery remains uneven across racial groups, industries, and wage levels. 4 the employment - to - population ( epop ) ratio for black prime - age workers is 7. 2 percentage points lower than for white workers, while the epop ratio is 6. 2 percentage points lower for hispanic workers than for white workers β an increase in each gap of about 3 percentage points from pre - crisis lows in october 2019. see, for example, the difference in high - frequency indicators of consumer spending between measures of total spending and spending in low - income zip codes in the weeks following the payment of stimulus under the caa. data are available from opportunity insights at https : / / www. tracktherecovery. org. for further discussion of differing spend - out of covid stimulus payments for different levels of household wealth, see, for example, ezra karger and aastha rajan, β heterogeneity in the marginal propensity to consume : evidence from covid - 19 stimulus payments, β working paper no 2020 - 15 ( chicago : federal reserve bank of chicago, may, revised october ), https : / / www. chicagofed. org / publications / working - papers / 2020 / 2020 - 15. see lael brainard ( 2021 ), β full employment in the new monetary policy framework, β speech delivered at the inaugural mike mccracken lecture on full employment, sponsored by the canadian association for business economics ( via webcast ), january 13, https : / /
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www. federalreserve. gov / newsevents / speech / brainard20210113a. htm ; and lael brainard ( 2021 ), β how should we think about full employment in the federal reserve's dual mandate? β speech delivered at the ec10, principles of economics, lecture, faculty of arts and sciences, harvard university, cambridge, mass. ( via webcast ), february 24, https : / / www. federalreserve. gov / newsevents / speech / brainard20210224a. htm. - 3workers in the lowest - wage quartile continued to face staggering levels of unemployment of around 22 percent in february, reflecting the disproportionate concentration of lower - wage jobs in services sectors still sidelined by social distancing. 5 the leisure and hospitality sector is still down almost 3. 5 million jobs, or roughly 20 percent of its pre - covid level. this sector accounts for more than 40 percent of the net decline in private payrolls since february 2020. overall, with 9. 5 million fewer jobs than pre - covid levels, we are far from our broad - based and inclusive maximum - employment goal. inflation similarly remains far from the goal of 2 percent inflation on average over time. both headline and core pce inflation were below 2 percent on a 12 - month basis throughout 2020 and came in at 1. 5 percent in january. finally, while vaccinations are continuing at an accelerating pace, over two - thirds of the adult population have yet to receive their first dose, and there are risks from more contagious strains of the virus, social - distancing fatigue, and vaccine hesitancy. 6 outlook as the economy reopens, the potential release of pent - up demand could drive stronger growth in 2021 than we have seen in decades. however, it is uncertain how much pent - up consumption will be unleashed when social distancing completely lifts, and how much household spending will result from the new stimulus and accumulated savings. with pce accounting for roughly 70 percent of the economy, this uncertainty about consumption spending contributes to uncertainty about activity, employment, and inflation. for more information on this analysis, see the box β disparities in job loss during the pandemic β in board of governors of the federal reserve system ( 2021 ), monetary policy report ( washington : board of governors, february ), pp
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, the government, chief justice and security agencies to work steadily to recover certain assets from shareholders, directors and loan defaulters of the erstwhile defunct banks. currently, there are fifty - two ( 52 ) cases in the various courts in the country, 50 of which have been assigned to specific judges / courts. in addition, over sixty ( 60 ) cases have been referred to the special investigative team. 14. the task is enormous but we have confidence in our judicial system to bring those culpable to justice. the bank of ghana will continue to work with the receiver to ensure that bottlenecks in the receivership process cleared for the orderly winding down of the defunct banks. internal reforms 15. unfortunately, our predecessors in line with the governance challenges in the country at the time allowed the central bank operations intertwined with the political economy thereby committing considerable resources into non - core functions of the bank including building 5 - star guesthouses in takoradi and tamale as well as the bank hospital in cantonments. we have refocused the bank around its core central bank responsibilities, that is monetary policy and exchange rate management, price stability, financial stability, banking sector regulations, and supervision. a number of our staff are going through internal administrative process to establish culpability, if any, that contributed to the challenges resulting in the clean - up of the financial sector. once that process is completed, the public would be briefed of administrative actions that have been taken. in fact, yesterday one staff was dismissed for gross misconduct and conflict of interest involving the award of the sibton switch contract which was cancelled in august of 2017. the signal has been sent clearly to staff about the need to ensure discipline and professionalism in line with the new code of conduct that was launched in may this year. capacity building efforts 16. mr. chairman, we will continue with our regulatory reforms and efforts at strengthening the internal structures of the bank of ghana to prevent complicity of staff with third parties in the course of discharge of their supervisory duties. the strengthening of our regulatory and supervisory capacity will happen through improved systems, processes, accountability and training, all in a bid to better identify violations, detect early warning signals, enforce the law, and ensure that banks take prompt corrective actions to address emerging risks. our crisis management framework is also being strengthened to help us contain, manage, and resolve crises more promptly. we are bringing international best practices and standards to create a central bank that is fit for purpose
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vehicles in which they retained contractual and reputational liquidity exposures. these vehicles, like banks themselves, were funding longer - term assets with short - term liabilities, and, like banks, they were subject to a run when their lenders became concerned about the quality of the assets. some banks wound up using their own liquidity to support financing vehicles that were no longer able to fund themselves on anything like the same terms and conditions as before the market turmoil began. and as banks made good on the implicit or explicit liquidity insurance they sold, they found themselves with larger balance sheets and less - robust capital cushions than they anticipated. as the banks'capital and liquidity cushions unexpectedly eroded, they became quite cautious about extending credit, a dramatic change from the more complacent attitudes of previous years. concentration risk is another familiar risk that is appearing in a new form. banks have always had to worry about lending too much to one borrower, one industry, or one geographic region. but as smaller banks hold more of their balance sheet in types of loans that are difficult to securitize, concentration risks can develop. concentrations of commercial real estate exposures are currently quite high at some smaller banks. this has the potential to make the banking sector much more sensitive to a downturn in the commercial real estate market. the private sector needs to respond to protect their capital and liquidity, banks and other financial market participants are addressing the weaknesses revealed by market developments by becoming much more careful about the risks they are taking. this is a necessary process, but it has been a difficult one as well ; it is reducing the values of some assets and tightening credit cost and availability across a wide range of instruments and counterparties, despite considerable easing in the stance of monetary policy. it is this tightening that is accentuating the downside risks for the economy as a whole. and in some sectors, as lenders seek protection against perceived downside risks, it is probably going further than is necessary to foster financial stability in the long run. but we will end up with a safer, more robust financial system. for banks, a safer and more robust financial system will be characterized by improved risk management that incorporates the lessons from the recent turmoil. successful risk management looks comprehensively across business lines and is fully integrated into the decisionmaking of senior management. it identifies stresses and scenarios that might seem remote, but that could threaten safety and soundness. banks'own self - interest clearly provides a strong incentive to
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m r pridiyathorn devakula : maintaining stability with a nuanced approach speech by mr m r pridiyathorn devakula, governor of the bank of thailand, at the stock exchange of thailand, bangkok, 20 september 2004. * * * distinguished participants, ladies and gentlemen, let me begin by thanking the stock exchange of thailand for inviting me here to speak today. you have already heard from our minister of finance a comprehensive framework for sustainable growth in the next five years, with an integrated set of targets for various sectors and various dimensions of the economy. this is a welcome initiative and an important policy development. the bank of thailand β s role is to ensure economic and financial stability in order to support continued growth of the economy. from our experience, monetary policy alone is not enough to achieve desirable stability. we need to involve ourselves in two other areas, i. e. to guard against possible build - ups of financial imbalances and to further strengthen the financial sector. first of all, i will begin with our assessment of the current economic conditions to assure you that, in spite of the greater risks and challenges that have emerged this year, thailand β s growth momentum continues to remain firm, with economic and financial stability intact. key challenges have included increased external pressure from higher oil prices, rising global interest rates, and the potential impact of a slowdown of the chinese economy. we have also faced several challenges at home, which include two episodes of the avian flu and a decline in consumer and investor sentiment linked to the situation in the south. but despite these risks and challenges, the thai economy has managed quite well under the circumstances. the latest data showed real gdp to have grown by an impressive 6. 4 percent for the first half of this year, reflecting the resiliency of our economy, which is still growing at a respectable rate, in spite of many negative external developments. favourable conditions for the export of goods and services have allowed a continued surplus of our current account. this has been accompanied by corresponding reductions in external debt which fell from the peak of 112 billion us dollars in june 1997 to 50 billion us dollars in june of this year. meanwhile, international reserves of 44 billion us dollars in august also provide a level of protection that should help the economy comfortably absorb external shocks. it was mainly an account of the strength of this external position that thailand β s credit rating was upgraded by standard and poor β s last month. ladies and gentlemen, at this time,
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david dodge : recent review of the canadian economy opening statement by mr david dodge, governor of the bank of canada, to the house of commons finance committee, ottawa, 19 april 2005. * * * good afternoon, mr. chairman and members of the committee. we appreciate the opportunity to meet with this committee twice a year, following the release of our monetary policy reports. these meetings help us keep members of parliament and, through you, all canadians informed about the bank β s views on the economy, and about the objective of monetary policy and the actions we take to achieve it. last thursday, we released our april monetary policy report. in the report, we said that the global economy has been unfolding largely as expected, and the outlook for the canadian economy is essentially unchanged from that in january β s monetary policy report update. the canadian economy continues to adjust to global economic developments. this was also an important theme last october when paul and i appeared before this committee. these developments include the realignment of currencies in response to global imbalances, the higher prices of both energy and non - energy commodities, and growing competition from emerging - market economies. in canada, we are seeing more evidence of sectoral adjustments to these global developments. many canadian commodity - producing sectors are expanding. however, firms in some other sectors that are exposed to international trade are facing pressure from the appreciation of the canadian dollar and from foreign competition. on balance, net exports have been a drag on the economy. but with robust domestic demand, some sectors - such as retail, wholesale, and housing - have been growing strongly. the bank expects canada β s economy to grow by about 2 1 / 2 per cent in 2005 and 3 1 / 4 per cent in 2006, with growth this year and next coming primarily from strength in domestic demand. to continue to support aggregate demand, we decided to leave the target for the overnight rate unchanged at 2. 5 per cent on 12 april. the bank continues to judge that the economy is operating slightly below its production capacity, and we expect that it will move back to full capacity in the second half of 2006. core inflation is projected to return to 2 per cent around the end of 2006. based on the scenario implied by oil - price futures, total cpi inflation is expected to remain slightly above 2 per cent this year, and to move slightly below 2 per cent in the second half of 2006. in line with this outlook for growth and inflation, a reduction of monetary stimulus
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european central bank : press conference β introductory statement introductory statement by mr jean - claude trichet, president of the european central bank, and mr vitor constancio, vice - president of the european central bank, frankfurt am main, 10 october 2010. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. we will now report on the outcome of today β s meeting. based on its regular economic and monetary analyses, the governing council continues to view the current key ecb interest rates as appropriate. it therefore decided to leave them unchanged. considering all the new information and analyses which have become available since our meeting on 2 september 2010, we continue to expect price developments to remain moderate over the policy - relevant medium - term horizon. recent economic data are consistent with our expectation that the recovery should proceed at a moderate pace in the second half of this year, with the underlying momentum remaining positive. at the same time, uncertainty is still prevailing. our monetary analysis confirms that inflationary pressures over the medium term remain contained, as suggested by weak money and credit growth. we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. inflation expectations remain firmly anchored in line with our aim of keeping inflation rates below, but close to, 2 % over the medium term. the firm anchoring of inflation expectations remains of the essence. overall, the current monetary policy stance remains accommodative. the stance, the provision of liquidity and the allotment modes will be adjusted as appropriate, taking into account the fact that all the non - standard measures taken during the period of acute financial market tensions are fully consistent with our mandate and, by construction, temporary in nature. accordingly, the governing council will continue to monitor all developments over the period ahead very closely. let me now explain our assessment in greater detail, starting with the economic analysis. euro area real gdp grew strongly on a quarterly basis, increasing by 1. 0 % in the second quarter of 2010, supported mainly by domestic demand, but partly reflecting temporary factors. recent statistical releases and survey evidence generally confirm our expectation of a moderation in the second half of this year in the euro area and elsewhere. nevertheless, the positive underlying momentum of the recovery in the euro area remains in place. the global recovery is expected to go on, and this should imply a continued positive impact on the demand for euro area exports. at the same time
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follow our current capital framework in the united states or to " opt in " to the advanced basel ii approaches. if you decide to opt in, you will have to meet the same qualification requirements as domestic organizations. the new basel ii rules are expected to take effect on january 1, 2008. to qualify by that date, both supervisors and bankers have substantial work to accomplish. currently, we are reviewing the submissions received from various banking organizations as part of a quantitative impact study, qis - 4, to assess the effects of basel ii rules on bank capital levels. this summer, the agencies will issue a notice of proposed rulemaking ( npr ) for basel ii. we will also issue for comment, amendments to the existing capital framework. thus, bankers will be able to compare the two alternatives and to evaluate which is appropriate for their u. s. operations. in the run - up to 2008, institutions subject to the new rules will be required to conduct a year of parallel calculations ; that is, institutions will have to perform a dress rehearsal, if you will, to demonstrate not only that the design of the basel ii systems is sound but also that the rules can be practically implemented. as you know, the federal banking agencies in the united states have stated that a small number of large, internationally active banking organizations will be required to follow the advanced approaches of calculating capital under basel ii. a year and a half ago, we proposed setting the threshold at $ 250 billion or more in total banking assets or $ 10 billion or more in foreign banking assets. the criteria in the forthcoming notice of proposed rulemaking are unlikely to differ materially from those levels. at the same time, u. s. regulators - especially those among us who spent the greater part of our careers as bankers - are very sensitive to the competitive implications of having two sets of rules for the banking industry. regulators recognize that basel i can be enhanced and that the basel ii standardized approach is not well suited to the needs of our domestic - focused community banking organizations. accordingly, we are now seriously considering making some targeted adjustments to our existing regulatory capital rules and looking for ways to enhance their risk sensitivity without increasing regulatory burden. the staffs of the agencies are drafting an advance notice of proposed rulemaking ( anpr ) suggesting possible changes to our existing capital rules. this advance notice will be published close to the publication of the basel ii notice of proposed rulemaking. finally, those institutions considering adoption of the advanced approaches at the earliest possible date should begin
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abdul rasheed ghaffour : opening remarks - world halal business conference 2021 opening remarks by mr abdul rasheed ghaffour, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the world halal business conference 2021, 9 september 2021. * * * assalamualaikum w. b. t and a very good afternoon to our distinguished guests and fellow audience. thank you to the halal development corporation ( hdc ) for inviting me to deliver the opening remarks today. i wish to congratulate hdc for organising this conference which i believe will be inspiring and enlightening. the timing of this event could not be better, echoing the pace of an ongoing global economic recovery. the theme of this conference, β halal β the catalyst for universal economic recovery β spells out the potential for this multi - trillion dollar industry to facilitate the rejuvenation of the global economy. within the global sphere, the prospect of the halal economy is huge. global consumption of halal goods and services is expected to grow at 3. 5 % annually to reach usd2. 4 trillion by 20241, largely driven by the fast - growing muslim population. another contributing factor is the rising trend on ethical consumerism that primarily considers the impact of consumption. this aligns with the practice of halalan - toyyiban that propagates good, pure, and wholesome elements in consumption. at a broader level, this is also relevant in addressing growing concerns on sustainability and climate change in halal production. these global trends on halal economy present an excellent narrative with enormous prospects for malaysia, given our forefront position in the global halal economy. ranked top in both islamic finance and islamic economy, these trends open up opportunities to marry both of these segments2. our domestic halal market is currently valued at approximately rm300 billion, contributing 7 % of the country β s gdp. this figure is projected to grow further to rm400 billion, to account for 11 % of gdp by 20303. we have observed the increasing prominence of islamic financial institutions in supporting the halal sector in recent years. although only 21. 9 % of malaysian halal - certified companies used islamic finance in 2018, the number of applications from this segment has doubled to 10, 800 in 2020, amounting to rm63 billion4. allow me to share some thoughts on three critical factors that contribute to this positive trend, which i believe will continue
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moving forward. first is the value proposition of islamic finance that extends the ability of islamic financial institutions to offer beyond bank - based credit intermediation. the universal scope of business under the islamic financial services act 2013 allows islamic financial institutions to mobilise different sources of funds towards delivering meaningful solutions. one example is the provision of value - added services to smes such as marketplace and advisory services in trade facilitation alongside supply chain finance capability. to date, five islamic banks are already offering such services through the hdc β s halal integrated platform. i understand that more are expected to join this digital platform later this year. another example is the investment account, an instrument which allows islamic banks to source risk - absorbent capital to fund high - growth halal business sectors such as pharmaceutical and cosmetics. the ability of islamic banks to structure investment account in accordance with the risk profile and characteristics of the underlying assets offers an attractive opportunity for customers to diversify their investment portfolio across various halal sub - sectors. second is the wide network of malaysian financial institutions in facilitating halal exports to tap into regional markets. increasing interest from asean countries which makes up 42 % of the global muslim population as well as demand from non - muslim dominated asian countries such 1 / 3 bis central bankers'speeches as japan, korea and vietnam provide a huge halal consumption base for domestic halal businesses to tap on. currently, three malaysian financial institutions have leveraged their extensive global network and strategic partnerships to assist halal exporters in gaining access to new markets. moving forward, malaysian financial institutions should take advantage of the strong government - to - government ( g2g ) ties and multilateral strategic cooperation in the halal sector between countries to offer islamic trade finance to halal industry players. the third factor is the ability of islamic financial institutions to facilitate businesses to transition towards more sustainable practices. the underlying concept of maqasid shariah which propagates for the attainment of benefits as well as preventing harm, resonates well with sustainability principles that call for a balanced, sustainable and inclusive economic growth. adopting sustainability practices is imperative to ensure the longevity of businesses. failure to take this into account may result in substantial financial loss to the halal industry given that our trade partners have started imposing expectations on sustainability as preconditions to transact. for example, malaysia β s top halal export markets ( e. g. china, singapore and japan ) are signatories to the net zero
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vulnerabilities that could result in substantial negative impacts on the economy, or economic vulnerabilities that could result in risks to financial stability. we work with other regulators to identify signs of increasing risks in the financial system and measures to address these risks. where appropriate, we provide advice to government on the potential implications for financial stability of policies. and we talk about the risks we are seeing to help inform other regulators, participants in the financial system, businesses and the general public of the potential risks that might have an impact on the economy. this last action β communicating the risks β is the key purpose of our six - monthly financial stability review ( the review ). while any individual financial institution, business or household might think the risks they are taking on are appropriate, they may not be adequately taking into account the risks that are arising at a systemic level from everyone's actions. the review attempts to bring this system - wide view. our most recent review was published in october last year and we are currently in the process of drafting the next one, which will come out in april. so, for the remainder of my talk, i am going to cover some of the key risks that we see at the moment. given the audience, i am going to focus on risks related to residential and commercial property. first, i will give an update on recent developments in these areas. then i will talk a little about recent concerns around tighter lending standards. and i will finish up with a few observations on the property market in western australia. household debt six months ago in the review, we noted that global economic and financial conditions were generally positive and that the australian economy was improving. at the same time, housing prices were declining. in this context, we highlighted a number of vulnerabilities β issues that, were a shock to occur or economic conditions take a turn for the worse, could manifest in a threat to financial stability. at that time, we highlighted two domestic vulnerabilities that are relevant to my talk today β the level of household debt, and the slowdown in housing and credit markets. six months on, these vulnerabilities remain. if anything, they are a little more heightened. the bank has highlighted the issue of household debt as a potential threat to financial stability many times over the past few years. although it does not capture all the important information about household indebtedness, the ratio of household debt to disposable income is one summary indicator. this
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ratio is historically high ( graph 1 ). the household debt - to - income ratio rose from around 70 per cent at the beginning of the 1990s to around 160 per cent at the time of the gfc. the ratio steadied for a few years before starting to rise again around 2013 ( around the same time that housing price growth began to accelerate ) and is now around 190 per cent. https : / / www. rba. gov. au / speeches / 2019 / sp - ag - 2019 - 03 - 20. html 2 / 14 3 / 20 / 2019 property, debt and financial stability | speeches | rba graph 1 i have talked previously about some of the reasons why the debt - to - income ratio has risen so much over the past few decades. [ 3 ] in particular, a structural decline in the level of nominal interest rates and deregulation have eased credit constraints and increased loan serviceability. and as households have been able to borrow more, they have been able to pay more for housing. one important driver of high household debt in australia is, therefore, housing. there is very little debt related to nonhousing loans such as credit cards or car loans. just as housing costs have been an important driver of household debt, so has the ability to borrow more influenced the price of housing. over the past decade, housing prices in many parts of australia have risen but the rise has been particularly sharp in sydney and melbourne, which account for around 40 per cent of the housing stock ( graph 2 ). more recently, housing prices have fallen. since the peak in mid 2017, housing prices australia - wide have declined by around 7 per cent. the falls in sydney and melbourne have been larger. the question we are asking ourselves is, given the high levels of debt and falling housing prices, are there any significant implications for financial stability? https : / / www. rba. gov. au / speeches / 2019 / sp - ag - 2019 - 03 - 20. html 3 / 14 3 / 20 / 2019 property, debt and financial stability | speeches | rba graph 2 the answer would be no at this stage β the impacts are not large enough to result in widespread problems in the financial sector. this is not to downplay the financial stress that some households are experiencing. but most of the debt remains well secured against property, even with the decline in housing prices. total repayments as a share of income remain steady and a large number of indebted households
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from regulatory authorities. at the end of march 2005, major banks are expected to reduce their nonperforming loan ratios to about half autumn 2002 levels. at the same time, the industrial revitalization corporation of japan will cease its purchase of loan assets. from april 2005, fixed asset impairment accounting rules will be introduced. firms continue to strengthen their business structures and competitiveness. initiatives based on the private sector β s creativity and vitality will be the driving force for japan to achieve steady economic growth under global competition. together with firms, financial institutions also play an important role in supporting the japanese economy. dynamic expansion of the economy will not be possible if financial institutions remain dependent on regulatory authorities and generous safety nets. not only firms but also financial institutions will be confronted with frequent new entries to and withdrawals from the market, as well as consolidation and reorganization in their respective industries. this makes it all the more critical for financial institutions to demonstrate their firm intention to stand on their own feet, and enhance their credibility in the market. in this regard, let me point out some of the major tasks to be addressed in 2004. in order to achieve reform of the economic structure and a sound financial system more rapidly, financial institutions, especially major banks, must work harder with firms to revitalize the corporate sector, while expediting the disposal of nonperforming loans. it is true that some financial institutions have already established subsidiaries specializing in corporate revitalization. further efforts, however, are still required in areas such as the more effective use of the industrial revitalization corporation of japan and the resolution and collection corporation. in corporate revitalization, regional financial institutions basically face the same problems as major banks. there are more than a few borrower firms with competitive technology and expertise, which find it difficult to improve profitability because of the financial legacy of past borrowing. for this reason, the strategically important issues that many regional financial institutions address include the provision of detailed consultation services to borrower firms, the extension of greater assistance to borrower firms, and the prompt realization of business revival. we hope that their efforts will bear fruit. financial institutions also have an important role to play in helping the corporate sector to develop the new businesses that will underpin japan β s future economy, while at the same time supporting ailing business firms. regional financial institutions in particular are expected to play an active role in generating new businesses in their region. we observe the first shoots of new regional businesses in a variety
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to mitigate the inevitable recessionary effects of fiscal consolidation, the composition of such measures must favour the reduction of current public spending and of taxes, particularly in a context such as in europe where taxation is already high by international standards. there is no doubt that lasting growth is essential for reducing unemployment, particularly among young people. in some european countries youth unemployment has reached levels that damage people β s faith in prospects for a decent life and which risk giving rise to extreme and destructive forms of protest. output growth was essential for the success of the european social model. the extraordinary economic growth during the so - called β golden age β β namely the thirty years that followed the second world war β allowed a significant improvement in the material wealth of a large portion of the european population. at the same time, this wealth strengthened the growth process. at that time the foundations were laid in europe for modern welfare systems aimed at protecting individuals against the risk that unemployment, illness or old age could lead to a deterioration in their living standards. it is in part thanks to these instruments that the financial crisis and the recession have not had the same devastating social effects as the great depression. many years ago rudi dornbusch said, exaggerating rather, that europeans were so rich they could afford to pay everybody for not working. this is no longer the case, but we do not wish to lose the solidarity which inspired that model in such very different times. therefore, today we must adapt that model in line with the changes that demographic dynamics and the new environment of global competition demand. this must be done to reduce youth unemployment, increase consumption and preserve the very essence of welfare. another aspect of growth sustainability, in a european context, that i would like to draw your attention to today is that of income distribution. for almost twenty years there has been a trend towards a higher concentration of family income in europe to the detriment of the poorest households, as statistics published by eurostat show. a more equal share in the fruits of the production of national wealth helps foster a culture of saving and, therefore, of collective involvement. a sense of being an integral part of a country and of having a stake in its economic future strengthens social cohesion and encourages individual economic behaviour that leads, in the aggregate, to economic prosperity for all. there are a number of tools governments can use to achieve this aim, but first of all social cohesion must be sought by removing the barriers which limit individuals β opportunity to pursue their
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fehmi mehmeti : the financial sector is liquid and supports the economy in kosovo speech by mr fehmi mehmeti, governor of the central bank of the republic of kosovo, at the conference with the head of the imf mission for kosovo, mr gabriel di bella, pristina, 4 november 2022. * * * dear di bella - head of the imf mission for kosovo dear media first of all, allow me to thank the international monetary fund for the continuous support it has provided to kosovo, and in particular to the central bank of the republic of kosovo, in carrying out its duties in maintaining and preserving a stable and continuously growing financial system. during the meetings held with representatives of the international monetary fund, we informed them about the latest developments and data of the financial system in kosovo. the financial system in kosovo has continued to be liquid and well capitalized, where double - digit growth has been recorded in all indicators being one of the important factors in the economic growth and development of the country. in total, the means of the financial system in the country, on 31 august, 2022, have reached the total value of 9. 3 billion euros, with an annual increase of 10 percent. in the meantime, the means of the banking sector have continued the growth trend even during 2022, reaching the value of around 6. 4 billion euros in august 2022, which represents an annual increase of 11. 1 percent. in august 2022, the total value of deposits is worth 5. 2 billion euros, which represents an annual increase of 11. 8 percent, while the growth of deposits continued during the month of september, with a rate of 12. 7 percent. the banking sector continues to be stable, increasing lending activity and playing a very important role in crediting the country's economy during this year as well. the value of the credit portfolio of the banking sector at the end of august 2022 was in the amount of 4. 2 billion euros, with an annual increase of 18. 6 percent, while the average loan interest rate was 6. 0 percent. non - performing loans have continued with the downward trend and today the rate of non - performing loans is at the level of 2. 1 %, which is a significantly better indicator compared to countries in the region or even beyond. the banking sector continues to be well capitalized and liquid. the capital adequacy indicator for the banking sector stands at 16. 1 percent, which is significantly above
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the regulatory requirements of 12 percent, while the liquidity indicator is 35. 7 percent, similarly, higher than the regulatory requirement of 25 percent. we also have positive results in the insurance sector and other sectors. 1 / 2 bis - central bankers'speeches the central bank of the republic of kosovo is certain that it will continue to have the support of the international monetary fund and we will continue the successful cooperation with the international monetary fund. once again, allow me to thank the representatives of the international monetary fund for the contribution and continuous support of kosovo and the central bank. thank you. 2 / 2 bis - central bankers'speeches
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recognising that post - crisis structural reforms have lowered natural rates of unemployment, by broadening measures of labour market slack to include involuntary underemployment, and by acknowledging that weak wages are one consequence of sustained poor productivity growth. more broadly, the recent high correlations of headline inflation rates have been driven by very large global shocks including the financial crisis and the commodity super cycle. core inflation rates have actually exhibited little co - movement but rather have varied with ( divergent ) underlying economic conditions ( chart 3b ). 785 - 823. consistent with this, analysis by bank staff found that uk businesses with weaker balance sheets increased their margins by more at the height of the crisis than those with healthier balance sheets. for example, as documented by the bank for international settlements ( bis ) in their 87th annual report, 2017. see also draghi, m ( 2017 ), β accompanying the economic recovery β, introductory speech at the ecb forum on central banking 2017 and danninger, s ( 2016 ) β what β s up with u. s. wage growth and job mobility β, imf working paper 16 / 122. for example, as suggested by claude borio, β how much do we really know about inflation? β, presentation on the bis 87 th annual report, 25 june 2017. see, for example, the boxes on pages 18 - 20 of the february 2017 inflation report and page 29 of the may 2014 inflation report. the solutions to these puzzles are also likely to involve some factors unrelated to globalisation. for example, one explanation put forward for missing dis - inflation is that companies facing liquidity constraints maintained prices at higher levels than they would otherwise have done in order to preserve cash flows and remain in operation ( see gilchrist, s, schoenle, r, sim, j and zakrajsek, e ( 2017 ), ibid ). consistent with this, analysis by bank staff found that uk businesses with weaker balance sheets increased their margins by more at the height of the crisis than those with healthier balance sheets ). all speeches are available online at www. bankofengland. co. uk / speeches chart 3b : core inflation rates exhibited little co - movement post - crisis see notes and sources to chart 3a. central banks have ( thus far ) been able to maintain their monetary sovereignty, achieving their mandates by offsetting the secular disinflationary forces from global integration. none of this,
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decrease the responsiveness of inflation to domestic slack, flattening the phillips curve slope ( 3 ). monetary policy must take all these effects into account and, on balance, run the domestic economy with tighter spare capacity in order to accommodate them. iii. global influences on the stance of monetary policy just as global factors affect the relationship between domestic slack and inflation, they influence the monetary policy setting needed to achieve the inflation target. in particular, global integration affects the transmission mechanism of domestic monetary policy, the degree of spillovers from foreign monetary policies, and the equilibrium rate of interest itself. if and when global integration stops progressing, this shift down in the phillips curve would reverse. all speeches are available online at www. bankofengland. co. uk / speeches for the past thirty years, a number of profound forces in the world economy has pushed down on the level of world real interest rates by as much as 450 basis points ( charts 7 and 8 ). these forces include the lower relative price of capital ( in part as a consequence of the de - materialising of investment ), higher costs of financial intermediation ( due to financial reforms ), lower public investment and greater private deleveraging. two other factors β demographics and the distribution of income β merit particular attention. chart 7 : global long run real interest rates have fallen over the past 30 years source : rachel, l and smith, t ( 2015 ), ibid. rachel, l and smith, t ( 2015 ), β secular drivers of the global real interest rate β, bank of england working paper no. 571. it is sometimes claimed that the equilibrium real rate depends on the ( expected ) rate of growth, but this is an oversimplification. the entire distribution of growth rates matters : not only the mean, but also the volatility, asymmetry and fatness of the tails. see β real interest rates and risk β, speech by gertjan vlieghe at the society of business economists β annual conference, 15 september 2017. for a discussion of the wider implications of these forces, see β debt, demographics and the distribution of income : new challenges for monetary policy β, speech given by gertjan vlieghe at the london school of economics, 18 january 2016. all speeches are available online at www. bankofengland. co. uk / speeches chart 8 : secular drivers pushing down long - run equilibrium real interest rate bank research estimates that the increased retirement
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favourable in 2010 due to the rebound of copper prices on the international market as well as the expected increase in copper production as some mines increase production to full capacity and the resumption of production at some mines. the rebound in the international price of copper in the second half of 2009 and the return of foreign portfolio flows resulted in an appreciation of the exchange rate of the kwacha by 4 % at the end of the year. however, fiscal performance in 2009 was weak, mainly due to the global economic crisis, which reduced domestic revenues. despite this, government remained within the programmed domestic financing for the year. december - 2009 inflation revised to 12. 0 % in the budget speech for 2010 presented to parliament on october 9, 2009. distinguished members, the financial sector has remained resilient despite the effects of the recent global financial crisis. currently, the zambian financial sector is characterized by high liquidity levels, reflecting tighter lending standards in the wake of the lessons from the global financial crisis leading to marked decline in private sector lending. as a result, the demand for the relatively risk free government securities has increased causing a decline in yield rates on government securities. the decline in government securities yield rates and relatively low inflation experienced since the beginning of the year should contribute to a decline in banks lending rates and thus stimulate borrowing by the private sector. i am aware that the high interest rates in the country pose a very big challenge for our manufacturers to borrow for recapitalisation and expansion of their businesses. access to finance is essential for the economy to grow and therefore it is necessary that we find ways that could reduce the cost of borrowing to allow key sectors to expand. ladies and gentlemen, i wish to reiterate that the economic fundamentals point to a reduction in lending rates. in a liberalised financial market environment, the central bank contributes to the reduction in lending rates by reducing inflation. the government also contributes by implementing prudent fiscal policy, thus limiting the incidence of crowding out of the private sector by the government. as a result, yield rates on government securities fall. as inflation and yield rates on government securities decline, lending rates are also expected to decline in the medium to long term as the two provide the relevant opportunity cost of lending to the private sector. another factor that commercial banks take into consideration in determining lending rates is the default risk arising from the poor credit culture in the economy in general. in resolving the problem of poor credit culture, the central bank through the financial sector development
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##sparities are identified, however, national supervisors of outlier banks should be called upon to explain the results to their fellow supervisors, as well as steps they are taking to address situations in which differences may arise from systematic underestimation of risk or manipulation of capital ratios to achieve desired outcomes. any of these options would require the basel committee, international supervisors, and banking organizations to work together to address confidentiality concerns, as well as other jurisdictional issues. some options will surely prove more feasible than others. while we do not prejudge which will prove to be most effective, we do maintain that something of this sort is necessary in order to assure that the benefits for financial stability promised by see, for example, nout wellink ( 2011 ), β basel iii : a roadmap to better banking regulation and supervision, β remarks delivered at the fsi high - level meeting on the new framework to strengthen financial stability and regulatory priorities, st. petersburg, russia, may ; and stefan walter ( 2011 ), β basel iii : stronger banks and a more resilient financial system, β remarks delivered at the financial stability institute conference on basel iii, basel, april. bis central bankers β speeches international capital standards are in fact being realized, as well as to prevent some banks from enjoying competitive advantage through lax application of these standards. at the same time, any of these options will give banking supervisors from the countries represented on the basel committee an opportunity to work together to address the many issues of implementation, interpretation, and evasion that will surely arise under basel iii. thank you for your attention. i would be pleased to answer any questions you might have. bis central bankers β speeches
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njuguna ndung β u : taming of inflation and food security opening remarks by prof njuguna ndung β u, governor of the central bank of kenya and chairman of the monetary policy committee, during the monetary policy committee seminar on β taming inflation and food security β, the kenya school of monetary studies, nairobi, 14 august 2009. * * * permanent secretaries : ministry of finance ; ministry of planning, national development and vision 2030 ; ministry of agriculture ; ministry of trade ; ministry of special programmes ; representatives of our development partners ; chairmen and heads of government parastatals ; representatives of the private sector ; distinguished guests ; ladies and gentlemen ; it gives me great pleasure to be with you today during this important seminar on β taming inflation and food security β. let me take this opportunity from the onset to warmly welcome you all to the kenya school of monetary studies ( ksms ). as you may all be aware, the bank β s principal objective is to formulate and implement monetary policy directed at achieving and maintaining stability in the general level of prices, as well as supporting the economic policy of the government including its objectives of growth and employment. price stability is an important signal to the economy and provides a stable planning horizon to predict future prices and perhaps returns. most coordination failures occur due to the inability to forecast future prices or calculate, for example, return on investment. this seminar comes at a time when the country is just recovering from the effects of high inflation arising from supply side factors caused by several shocks. these shocks have an international as well as domestic dimension. they include volatile oil prices, commodity prices and drought conditions which continue to pose a challenge to the achievement of the bank β s core mandate of price stability. given these outcomes β that shocks tend to affect domestic prices upwards and domestic output downwards, simultaneously β we have to rethink the appropriate measure of inflation and how to target or contain it. but also, appropriately computing and reporting inflation becomes very critical β the information processed from the reported numbers on inflation leads directly to cost of living adjustment ( cola ) requests even at cbk! usually, the cbk must have some inflation target. but also this has to be consistent with inflation experience or profile for the general public as well as create the required consistency of the monetary framework and economic growth profile. this workshop should help in defining the appropriate inflation indicator. the emphasis that seems to converge is to come up with a single measure of inflation that can
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be easily explained, analyzed and related to economic outcomes. but of course different economic constituencies will understand this in terms of how it affects them. alternatively we may want to focus on measures that will say exactly what they mean. these include : a ) food inflation. b ) β core β inflation β ( define what is core ). c ) inflation ( takes care of all the above ) β national inflation indicator. d ) for cbk, we would prefer a non - tradable goods price index to compute our inflation index that responds or is affected by monetary policy directly and also links to the exchange rate and the issues of competitiveness. for your information, ladies and gentleman, many countries are currently publishing statistics on tradable and nontradable inflation as part of their dissemination of inflation data. this allows central banks to easily compute the profile of real exchange rate. e ) finally, we want an inflation index that comes close to measuring or reflecting the cost of living. the question is, how can this be done and at least cost by knbs and how other players in this process can partner. but why do we want several indicators of inflation to be developed? at the outset, money or the demand side is just one factor or driving force on inflation. the other one is on the supply side. monetary policy becomes passive when supply side factors drive the domestic prices and so inflation. this means that several indicators can also bring in a wealth of information to be processed. the experience ; the achievement of the inflation target has been constrained by increased volatility in food prices and other exogenous shocks. in particular, the overall month - onmonth inflation increased from 9. 67 percent in january 2007 to 11. 1 percent in june 2007, and to 31. 5 percent in may 2008 before declining gradually to 17. 79 percent in july 2009. on the other hand, cbk underlying inflation declined from 5. 15 percent in january 2007 to 4. 90 percent in june 2007 before rising to 7. 90 percent in july 2009. the issues and questions raised by such volatility in one measure of inflation thus attract policy debate and action. it is important to note that the rising overall inflation rate during the period was attributed mainly to food prices which account for 50. 5 percent of the overall consumer price index basket. the rising food prices have been attributed mainly to drought, supply constraints and lack of cultivation by farmers in kenya β s grain basket in the rift valley who were displaced following the
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2009. a collapse in the gold price or heavy currency losses by the snb, however, would increase the risk that the profit distribution would have to be adjusted before 2017. the snb has been pointing out this risk for some considerable time, regardless of the current plan to strengthen its provisions. the snb stabfund it is just over a year since the package of measures to support ubs was announced. over that period, the risks in the snb stabfund have been significantly reduced. two key indicators are in the spotlight : the amount of the snb β s loan to the stabfund, and the snb β s overall risk exposure, including non - funded assets. the stabfund took over assets of usd 38. 6 billion as of 30 september 2008. of that total, usd 8. 8 billion consisted of contingent liabilities that did not need to be funded at the time. the remainder was funded with the equity capital paid in by ubs ( 10 % of total assets, i. e. usd 3. 9 billion ) and the debt capital advanced by the snb, which thus initially amounted to usd 25. 8 billion. risk exposure for the snb, i. e. the total portfolio less the equity capital, was thus equal to usd 34. 7 billion as at end - september 2008. the snb β s loan to the stabfund stood at usd 20. 8 billion at end - october 2009, a reduction of usd 5 billion β almost one - fifth β on the initial figure. the funds to repay the loan came from repayments and earnings on the assets, and from proceeds of asset sales. the stabfund came to the market for the first time in june 2009. the market β s more positive performance made it possible for occasional sales to a total value of usd 1. 5 billion to be conducted by the end of october 2009. contingent liabilities declined by usd 4. 7 billion, mainly as credit default swaps ( cds ) expired or were prematurely terminated. at the end of november 2009, non - funded assets totalled usd 4. 1 billion. total risk exposure fell by usd 10. 2 billion to usd 24. 5 billion. changes in the snb β s risk exposure with respect to the stabfund are summarised in table 1. one effect of the recovery in the financial markets that began this spring was to trigger rises in the market values of most of the investment categories held in the stab
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##rdise the stability of the financial system. finally, the national bank law provides for powers on the part of the national bank to impose minimum requirements on systemically important financial market infrastructures as a third tier of oversight. detailed implementation provisions for oversight will be laid down in an ordinance to be issued by the national bank. in early november 2003, the national bank submitted a consultation draft of this ordinance to interested parties. the draft itself can be found on our website. i would now like briefly to address three central points connected with oversight : which systems should be overseen by the national bank? what minimum requirements should the operators of these systems fulfil? and finally : how will collaboration with other regulatory and supervisory authorities especially the swiss federal banking commission ( fbc ) - be structured? oversight focuses on systems which might constitute a threat to the stability of the swiss financial system. the question of the systems to which this applies cannot be answered in precise terms. the ordinance lists a number of criteria that we will consider when assessing the systemic importance of an infrastructure. in addition to the type, number and monetary volume of the transactions that are cleared or settled via a system, the outcome of the assessment will depend, for example, on the other financial market infrastructures with which a system is linked, and whether or not the clearing and settlement of transactions can be diverted temporarily to another system in the event of a failure in the first system. the latter option alleviates the problem somewhat. given these and other criteria, it can be assumed that the group of systems overseen by the national bank will be composed first and foremost of those payment and securities settlement systems that are part of what is known as the swiss value chain. these are the interbank payment system swiss interbank clearing ( sic ), the secom securities settlement system and x - clear, the central counterparty. in addition, however, the multi - currency payment system continuous linked settlement ( cls ), which is used to settle foreign exchange transactions, may also be classified as systemically important. closer investigation will reveal whether or not this group will be expanded to include yet more systems, such as that operated by postfinance. the national bank β s main points of reference in respect of the minimum requirements that the operators of these systems must fulfil are two internationally recognised standards : the β core principles for systemically important payment systems β and the β recommendations for securities settlement systems β. like the two standards just mentioned, the national bank β s minimum
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home mortgages sparked concerns about the performance of a range of securities with exposure to those mortgages, and investors quickly pulled back. with secondary markets under significant strain, a number of large originators announced substantial changes to their subprime - mortgage programs, and the volume of newly issued securities backed by subprime mortgages fell precipitously and stayed low. the same forces also damped investors'willingness to fund other types of nonconforming mortgages ( that is, loans that do not qualify for sale to fannie mae and freddie mac ). the issuance of securities backed by mortgages in so - called " alt - a " pools β which consist of loans to borrowers who typically have higher credit scores than subprime borrowers but whose applications may have other risky attributes β declined markedly. prime jumbo home - purchase loans continued to be originated, but the spread of rates on such loans over those on conforming loans was considerably higher than earlier in the year, and banks reportedly tightened lending standards and other loan terms, as well. in terms of the macroeconomic outlook, this substantial tightening in mortgage markets seemed likely to increase the odds of a deeper and more long - lasting contraction in the housing market. the mounting losses from securities backed by subprime mortgages led investors to lose confidence in structured finance products more generally β investors apparently had relied heavily on credit - rating firms to determine the quality of these often - complex instruments rather than perform their own independent evaluations. once losses began to mount, the earlier lack of due diligence by investors brought them to the realization that they had an insufficient amount of information about these products, and the normal price - discovery mechanism began to break down. 1 the concerns about structured credit products led to severe problems in markets for asset - backed commercial paper ( abcp ), where spreads spiked and programs had difficulty issuing paper with maturities longer than a few days. the largest banks began to worry about difficult - to - forecast expansions of their balance sheets β they recognized that they might have to provide backup funding to commercial paper programs that were no longer able to over their paper, and they faced substantial challenges syndicating the leveraged loans they had underwritten. as a result, banks became very protective of their liquidity, and interbank funding markets came under considerable pressure. moreover, the extent to which banks were protecting their liquidity randall s. kroszner ( 2007 ), " recent events in financial markets
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as regulators use all the tools at our disposal, implement new and innovative ways to communicate, share information and ensure that we develop apace with the market and its needs, because without doing so we cannot create and sustain an effective cross - border financial integration. south african reserve bank. bank supervision department annual report 2012. association of african central banks. 2012. roundtable on regional banks in africa : β safeguarding and leveraging a new force for financial sector development in africa β. bis central bankers β speeches i look forward to further informative discussions on the topic, such that we all may learn from past mistakes, successes and achievements whilst also continuously striving to address the challenges in unison with one another. thank you. bis central bankers β speeches
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sector bonds, in particular bank bonds, is high, as they enjoy a more favourable tax regime than deposits. full advantage is not being taken of the portfolio diversification that professional managers can provide. banks continue to play a crucial role, both because the level of direct intermediation is still high and because the major banking groups include management companies that control almost the entire investment fund market. this market therefore contributes decisively to the size and profitability of banks, which accordingly have a strategic interest in increasing its competitiveness. management companies distribute their products almost exclusively through the networks of the group they belong to. this vertically integrated model enabled the italian investment fund industry to grow rapidly, households to rely on relationships of trust with their banks when turning to asset management services, and banks to diversify their sources of income. asset management offers italian banks considerable scope for expanding their business, increasing their profits and improving their stock market ratios. however, in a fast - changing competitive environment, this will require appropriate strategies for both products and customer relations. the reliance on a captive market and the small size of most asset managers are not conducive to innovation or economies of scale, which are crucial to competitiveness and profitability in this sector. foreign competitors are gaining ground in the italian market, especially as regards innovative products ; more than 85 per cent of the exchange traded funds listed by borsa italiana are managed by foreign groups. the independence of asset managers whether it is the result of decisions regarding their ownership or of strict corporate governance rules is essential not only for their growth but also to resolve the conflicts of interest inherent in their relationships with their parent banks. 5. financial regulation the large proportion of savings not entrusted to professional investors, the scale of households β investment in financial products and the growing complexity of the financial instruments available require the authorities to refine supervisory regulations and practices constantly. the law on the protection of savings recently approved by parliament strengthens some of the safeguards for investors. the division of responsibilities between the bank of italy and consob has always been based on the distinction between safeguarding the stability of intermediaries on the one hand and protecting investors and supervising markets on the other. this distinction, essential for effective action and the clear attribution of responsibilities, requires cooperation among the authorities in drawing up rules, in verifying intermediaries β compliance and in promoting investors β financial education. the bank of italy stands ready to continue this cooperation. regulation of the markets cannot eliminate risks for investors,
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field for financial markets quickly re - emerge in the deliberations of the heads of state and government and finance ministers of the european union. 7. closing remarks italy continues to benefit little from the favourable developments in world trade and international finance. in 2005 gdp stagnated, exports continued to lose market share, the budget deficit widened. since the 1990s the economy has been as if bogged down. cyclical indicators and the short - and medium - term predictions of the main forecasting institutions now point to a pick - up in italian gdp, but with growth still less than the potential, which is already lower than in the other major countries. the growth gap reflects italian industry β s difficulty in competing. this is rooted in the lack of improvement in productivity. in other countries the revolution in production sparked by information and communications technology has produced its full effects : firms have adapted their human and organizational capital to the new technologies. italy has been slow to seize the opportunities of this revolution. the gap is widest in total factor productivity. new players are coming onto the stage, formidable in asia but also present in latin america and central and eastern europe. this has imparted an extraordinary impulse to world trade. it is a great opportunity for growth but also a major challenge, in the face of which italy has stumbled. with the end of the illusory remedy of competitive devaluations, productivity growth is the only possible way to achieve prosperity, to create a solid, sustainable foundation for wage increases, and to ensure the development of the country, for ourselves and for future generations. the structural lags of the italian economy are not the signs of inevitable decline. they are manifestations of problems that are profound and serious but that can be overcome. we need to devise lasting solutions and explain them clearly to the public. this week the european central bank raised its key rates by a quarter of a point. the time available for the adjustment of the public finances and a return to growth is running out. savings, one of the strengths of our economy and our society, are an essential ingredient for growth. it is up to the financial system, markets and intermediaries, to channel them towards the most productive uses, acting in a fully competitive environment and in compliance with the rules. this is your β and our β responsibility.
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