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prices stay where they are now ( and i hope they do ), inflation should track back down to a moderate level before year end. what we should firmly avoid though is the vicious cycle of inflation to wages and in turn more inflation. if this happens, prices will permanently rise without any real improvements to the economy β purchasing power will decline, asset prices will erode, investment will suffer and growth will be even more difficult to achieve. how does one formulate monetary policy at a time like this when the economy is struggling to get up after a sizeable decline, inflation is rising and foreign reserves is still under pressure? if you were in our shoes, what would you do? wherever you turn, there will be conflict of objectives. you can therefore understand our dilemma. but the reserve bank β s mandate is clear and that is inflation and foreign reserves come first and growth later. if we cannot safeguard the first two, growth will virtually be impossible. we are now reviewing our entire monetary policy package which will take into account this difficult balancing act. remittances let me talk about remittances for a minute. remittances have generated a lot of interest in fiji recently. they had shot up since 2001 to a peak of $ 320 million in 2006 to become the second biggest foreign exchange earner next to tourism. but last year they declined by about 20 percent. we have identified four possible reasons for this big drop. first, the number of our security personnel in the middle east has tumbled significantly. second, families that were receiving remittances may have also migrated. thirdly, due to high transaction costs, many are resorting to sending money through the mail and friends and these are not captured in the official statistics. lastly, the exchange rate may also be a contributing factor as the us dollar has weakened against the fiji dollar. all these reasons however may still not fully account for the $ 64 million drop in remittances last year. there may be other technical reasons which we are examining. the reserve bank would really like to see lower remittances charges. these charges to do not appear to reflect the actual cost of remitting funds. the sender pays a lot of these charges which ultimately result in the receiver getting less fiji dollars. and then at some outlets here in fiji, the receiver gets slammed by another receiving charge. in some cases, the charges amount to 50 percent of the amount sent. comparison of the charges internationally shows that it cost
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sada reddy : e - money fiji project statement by mr sada reddy, governor of the reserve bank of fiji, at the launch of the e - money fiji project, suva, 9 june 2010. * * * distinguished guests, ladies and gentlemen, let me thank you for accepting our invitation to be part of the launch of the e - money project for fiji. introduction some of you may be wondering what e - money is about. well, for our purpose today, it is money which can be transferred electronically from one person to another, one company to another, or from a person to a company or from government to a person or company. a popular e - money device or instrument, now used in developing countries, is the mobile phone, commonly known as β mobile money β. ladies and gentlemen, one of the rbf β s missions is to develop an internationally reputable financial system. the extension of financial services to fiji β s population is a critical element of this mission. for this reason, we have been working towards the introduction of mobile money services in fiji since 2009. a national financial inclusion taskforce, comprising representatives of the public and private sector, was formed early this year to drive initiatives such as this e - money project. financial exclusion has been a problem for fiji. some recent studies indicate that access to financial services in fiji is approximately 35 β 40 percent. in other words, most of the poor and rural and maritime dwellers do not have adequate financial services. benefits of mobile money as proven in other parts of the world, mobile money is seen as the new way of providing financial services using mobile phone technology and network. it is a form of branchless banking. this means that you do not necessarily have to build a bank in the remote areas for banking transactions. basic banking transactions can also now be done through the mobile phone. there are other benefits. for example, a farmer in the interior of vitilevu, where there is mobile coverage, can sell his produce from the middle of his dalo plantation without having to travel to suva. the buyer collects the produce from the farmer after transferring funds into his mobile account, which the farmer can cash out at an established agent of the mobile phone company in their region. the cash in / cash out agents could include the village store, the post office, the supermarkets, the service station and other retail outlets. this will make life easier for our farmers, fisherman, handicraft makers, small and medium enterprises
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asset price misalignment, which may need to be addressed by policy. in addition, financial market indicators have the potential to reflect developments at critical stages of the transmission process. this is due to the fact that financial markets in general adjust faster than goods markets, and their prices are timelier and less prone to measurement error. today β s workshop will give us the chance to discuss these and many other issues. i am that sure my colleagues around the table would like to share their practical experiences so that we could have a better understanding of the financial market indicators suitable for emerging markets and how we as policy makers can best make use of them. let me now pass the chair to mr. eli remolona, head of economics for asia and pacific, bis.
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55 - 64 would have to substantially exceed its annual average of 1. 7 % between 1996 and 2002 to achieve the employment target for older workers of 50 % by 2010. making the lisbon agenda a success therefore requires particular efforts in the field of labour market reform to open up additional employment opportunities. at the same time, further structural reforms need to increase the prerequisites for innovation, research and development, particularly by providing educational attainment levels adequate for labour market needs. furthermore, a continuation of reforms in capital markets, a removal of barriers to competition particularly in the service sector as well as further liberalisation in electricity, postal services and transport as envisaged in the lisbon agenda is needed. i would like to conclude this part of my speech with three remarks : first, trust in the course of structural reform as fostered by the lisbon agenda and a better understanding of the economic benefits structural reforms entail are conducive to raising consumer confidence and private consumption. it is thus indispensible to maintain trust in this course, and to keep commitments also in periods with slower growth. second, numeric targets seem to me currently the central measure to benchmark progress with structural reforms. as numeric targets increase necessary pressure for underperforming countries, it should be considered to strengthen this instrument. third, as we all know, the implementation of changes in long - grown relationships is always a difficult task. when asked for their willingness for reform in general, a large part of the population would probably signal a high degree of approval. but as soon as a concrete measure would harm the personal status - quo, only a minority would agree. the main challenge for the lisbon agenda β s success is thus to persuade the people of the long - term benefits of structural reform and to remove the scepticism with respect to short - term costs. in this regard, also the ecb plays its part in its communication on the benefits of structural reforms. 3. the impact of structural reforms on the conduct of monetary policy let me now turn to the discussion of the implications that the implementation of the lisbon agenda may have for the conduct of monetary policy in the euro area. the ecb has always stressed the importance of a swift implementation of structural reform agendas across the euro area. this reflects above all the firm belief that structural reforms enhance the welfare of the european citizens. but structural reforms also tend to facilitate monetary policy and increase its effectiveness. a more flexible economic environment helps the labour and product markets
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digital transformation of mauritius. it is likely that such a transformation will increase the scope for criminals to exploit vulnerabilities of such systems and commit cyber - attacks and frauds. appropriate safeguards, controls and risk mitigating measures must therefore be implemented to identify, mitigate and manage the associated risks. earlier this year, in the height of the pandemic, the fatf encouraged financial institutions to make appropriate use of financial technology such as digital or contactless payments and digital onboarding to facilitate the delivery of banking and financial services in response to the pandemic while mitigating money - laundering and terrorist financing risks. the fatf further proposed a range of measures to enable financial institutions to use a riskbased approach to their customer due diligence, including rolling out responsible digital identity and other innovative solutions for identifying customers at onboarding and while conducting transactions. to this end, i β m pleased to inform you the bank has been very proactive and has already embarked on the process of developing a centralized e - kyc platform. this project will facilitate the verification of the identity and will help enhancing kyc control across various segments of activities in the country. the platform will equally have access the national infohighway for the validation of the kyc information. ladies and gentlemen, in light with emerging technology and new practices, reporting institutions must accelerate efforts to further expand and develop their aml / cft toolkit to deal with new and emerging risks i therefore take this opportunity to stress that your role as mlros is to continuously be kept abreast of the digital risks and developments. you can only expect your duties and 6 / 7 bis central bankers'speeches responsibilities to grow. this is why attending such workshops is fundamental. this workshop is part of a series of training and outreach programmes aimed at enhancing the skills of our licensees. targeted outreach programmes such as this one will promote clear understanding of money laundering and terrorism financing risk. our aim is to promote strong aml / cft measures which are imperative in protecting mauritius as a leading international financial centre, recognised for its socio - economic stability, good governance and strong institutions. the responsibility vested on us is a huge one, and first and foremost a collective one. the fight against money laundering and the terrorism financing must be a concern to us all. this fight may only be won if all relevant stakeholders work together in addressing the common cause. proper coordination and exchange of information among domestic and international authorities remains a critical point for
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these companies maintained secondary listings on the jse securities exchange south africa ( jse ), and their market capitalisation on the jse actually increased from r126 billion in 1997 to r471 billion in 2003. over this same period foreign financial institutions were encouraged to conduct business in south africa by the creation of a level playing field between local and foreign service providers. the regulatory authorities also actively encouraged the development of appropriate clearing, settlement, ownership - transfer and market information systems and insisted on proper intra - market and crossmarket risk management systems, including capital adequacy requirements for market participants. the operations of the financial markets in south africa were improved considerably to bring them in line with international standards. in 1996 bond trading was shifted from the jse to the bond exchange of south africa. this led to a substantial rise in the turnover in the secondary bond market from r2 trillion in 1995 to nearly r12 trillion in 2003. improvements to the jse included the electronic clearing and rolling contractual settlement, the dematerialisation of equity scrip and the implementation of an electronic trading system. the value of shares traded on the jse increased from r62 billion in 1994 to r752 billion in 2003. an important further development since 1994 has been the importance attached to the provision of access to finance and banking activities to small, medium and micro enterprises and underbanked communities. this challenge has been accepted with due recognition of the regulatory objective of achieving a high degree of economic efficiency and consumer protection in the economy. this requires an approach that introduces changes to achieve greater participation in banking while financial stability is maintained at the same time. developments in the regulatory framework of south africa β s financial markets during the past years have been aimed at addressing empowerment issues. for this purpose, the financial sector has developed a financial sector black economic empowerment charter to promote increased black ownership of and access to financial institutions. this charter, which was made public on 17 october 2003, sets out targets that will be pursued up to december 2014 regarding, among other things, investment in human resource development ; a procurement policy that favours accredited black economic empowerment companies ; improved delivery of and access to financial services to a greater segment of the low - income population ; the mobilisation of resources for empowerment financing ; increased direct black ownership at the holding company level ; the encouragement of shareholder activism in promoting the objectives of the charter ; and directing a percentage of after - tax operating profits to corporate social investment aimed at education, training and job
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, as well as economic analysts and civil society. this enables an understanding of the unique situation of botswana and the interaction with global and regional developments ; thus, structural evolution and trends, developmental aspirations and needs that inform policy priorities and key data trends. in turn, such exchange of information enables evaluation of prospects and policy options, going forward. third, the bank, as well as institutions such as the non - bank financial institutions regulatory authority and statistics botswana, benefit from targeted technical assistance and skills development provided by the imf from the headquarters in washington dc or through the regional technical assistance centres, such as afritac south based in mauritius, to which botswana is affiliated. this technical assistance enables improvements in areas such as legislation, macroeconomic policy frameworks and formulation, regulatory approaches, as well as structuring and governance of institutions as necessary. in addition to improving operational competencies, access to training and skills development also encompasses interaction with other practitioners globally to share experiences. distinguished guests, it is clear, therefore, that the imf facilitates access to resources that members can opt to tap into subject to evaluation and assessment of their needs. in this regard, sustained judicious and prudent management of resources and the economy, as is the case in botswana, enables a wider range of choices and options with respect to policies, prioritisation of resource allocation, as well as the timing of implementation to achieve the desired objectives. distinguished ladies and gentlemen, you will be aware that botswana desires to transit from upper middle income status to high income status, and globally this transition is judged to be challenging, as it requires substantial structural transformation and shifts in growth strategies and policies. for botswana, it is estimated that this requires annual gdp growth rates of 8 percent over a six year period to leap from the current per capita income of just under usd8 000 per annum to above usd12 000. as a country, in the recent years, we noted challenges of slower growth rates compared to when we graduated from low - income status, slower than desired rate of economic diversification, as well as relatively high level of unemployment. in this respect, it is expected that, going forward, our relationship with the imf will focus on drawing on their expertise and sharing of experience of other countries to support transformation policies and strategies to enable botswana to fulfil its aspirations for a high - income status on a sustainable basis. distinguished guests, ladies and gentlemen, i thank you for your kind attention.
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can never make sure of hiring or promoting the right person, and therefore one should plan on an easy change of personnel to get the best results. let me make a controversial statement on the platforms of the various political parties in terms of spending more and taxing less. we routinely run the general equilibrium model and the inflation targeting model as well as market implied models or mime, a technical word that is used for trying to find things out from people β s normal actions that could be captured in a data system. we also, of course, do single equation estimates as well as pure intuition from graphs and tables and such things. our staff is generally of the opinion that increased expenditure and tax reduction of moderate amounts will not destabilise the economy. this is predominantly because the economy is still very docile with a capacity utilisation stable for quite a while now at 58 %. cost push inflation from the exchange rate and the oil prices are now substantially absorbed or have been passed on, so cost push also is not presently much of a factor. the important thing though is how to make expenditure useful and constructive in the long run without too much leakage. the important thing is how to make tax cuts reasonable and directed towards the areas where people benefiting from the cuts could utilise it for a spate of new investment. if this were to happen the debt to gdp ratio might not increase significantly due to the resulting increase in gdp over the long term. with abundant liquidity and low interest rates, this is not just a time for a general tax cut for its own sake, but a program must be designed for it to be directed to where investment could best be made. in a way, this is not as easy as it seems, because generally we have been over investing and have great overcapacity. but it β s also not as hard as it might look. there are only a few areas that are really doing well, and benefits from the cuts could be directed there. the problem is how to make it fairly just, so that not only the good players that are already there benefit, but new players should be brought in to these all important areas. ladies and gentlemen, i have been giving you some of my thoughts on the economy. thoughts that are spotty and veer obviously somewhat to the financial aspects. the new government must be much more comprehensive. but since this is not a party platform but only some comments to make more apparent the effect of what might happen in
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july jan. july oct. household activity - related - 10 jan. jan. jan. oct. note : in the left - hand chart, figures are from the reference series in jcb consumption now, which take changes in the number of consumers into account. figures are the arithmetic averages of the corresponding age groups in five - year increments. the baseline is the average for the corresponding half of the month for 2016 through 2018. sources : nowcast inc. / jcb, co., ltd., " jcb consumption now " ; cabinet office. chart 4 i. economic developments global economy global growth rate ( imf forecasts in the world economic outlook ) cy 2022 : + 4. 9 % y / y % chg. cy 2021 : + 5. 9 % cy 2019 : + 2. 8 % - 3 - 4 - 5 longer delivery times - 1 - 2 average from 1980 through 2019 : + 3. 5 % s. a., di delivery delays index ( pmi ) cy 2020 : - 3. 1 % japan imf forecasts ( october 2021 weo ) - 6 cy 00 02 04 06 08 10 12 14 16 18 20 22 united states cy 19 euro area note : in the right - hand chart, delivery delay index = 100 - suppliers'delivery times index. figures for the united states and the euro area are for the respective manufacturing pmis. those for japan are for the au jibun bank japan manufacturing pmi. sources : imf ; ihs markit ( Β© and database right ihs markit ltd 2021. all rights reserved. ). chart 5 i. economic developments supply - side constraints confirmed new cases of covid - 19 in southeast asia 80 7 - day moving average, persons per 100, 000 population world semiconductor demand ( wsts ) 160 s. a., bil. dollars cy 2022 malaysia thailand vietnam cy 2021 world semiconductor shipments forecasts as of aug. 2021 trend from cy 2000 to cy 2017 cy 2020 jan. mar. may. may sept. sep. jul. july nov. cy00 note : in the right - hand chart, figures are based on staff calculations using world semiconductor trade statistics ( wsts ) data. source : haver. chart 6 ii. price developments commodity prices and prices of transactions among businesses international commodity prices monthly avg., cy 2015 = 100 producer prices in japan crude oil ( dubai ) y / y % chg. copper - 2 - 4 -
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november 15, 2021 bank of japan japan's economy and monetary policy speech at a meeting with business leaders in nagoya kuroda haruhiko governor of the bank of japan ( english translation based on the japanese original ) introduction it is my great pleasure to have the opportunity today to exchange views with a distinguished gathering of business leaders in the tokai region. i would like to take this chance to express my sincerest gratitude for your cooperation with activities of the bank of japan's nagoya branch. we had to exchange views online since the outbreak of the novel coronavirus ( covid - 19 ) last year, but today are able to hold an in - person meeting for the first time in a year and nine months, given the recent low level of confirmed cases. i am grateful to meet with you face - to - face at this gathering. although economic activity in japan had been considerably constrained by the successive waves of covid - 19 since last year, positive signs toward normalization of economic activity are at last starting to be seen due to the widespread vaccinations and a substantial decline in the number of confirmed cases of covid - 19. at the same time, however, the global resumption of economic activity has triggered a new issue of supply - side constraints, which have caused shortages in raw materials and parts. today, while elaborating on these points, i would like to explain the bank's view on japan's economic activity and prices based on the outlook for economic activity and prices ( outlook report ) released last month, as well as its thinking behind the recent conduct of monetary policy. i. economic developments let me start by talking about the current situation for japan's economy and its outlook ( chart 1 ). the economy has continued to pick up from the bottom hit in spring last year, but the recovery has been somewhat slower than initially expected. due to the spread of the delta variant in summer, private consumption was stagnant for a protracted period, mainly for face - to - face services. exports and production, which had been increasing firmly to date, have been somewhat weak recently due to delays in the procurement of parts that reflect the spread of covid - 19 in southeast asia. the outlook for japan's economy is that, for the time being, downward pressure stemming from vigilance against covid - 19 is likely to remain on services consumption, and exports and production are expected to remain in a temporary deceleration phase due to
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and act pre - emptively to avert risks to financial stability will also be further enhanced when the new central bank of malaysia act 2009 comes into force on 25 november 2009. this includes the expanded powers for the bank to undertake surveillance and prompt resolution on financial institutions including on non - regulated institutions that are systemically important. as we continue to refine our approaches, and develop a better understanding of market behaviours, financial institutions will also need to better integrate institutional risk assessments with macro - economic developments. international reforms have also focused on delivering fair outcomes for consumers. in relation to this, the bank will continue to ensure that financial innovations are developed to meet the real needs of consumers and businesses, and do not expose the system to excessive risks. ongoing efforts to strengthen avenues for consumer redress will continue through the establishment of a financial ombudsman and improved product transparency, particularly in the area of pricing, commissions, fees and charges so as to support more informed consumer decisions. timelines for some of these measures have already been announced. these reforms will be reinforced by strengthening further the current consumer protection framework to address mis - selling practices and facilitating a more effective enforcement of business conduct regulations. strengthening the domestic infrastructure for financial stability an important part of the efforts to strengthen the domestic infrastructure for financial stability is legislative reform. the bank is in the process of drafting a new legislation that will amalgamate existing legislations governing financial institutions and intermediaries in malaysia that are administered by the central bank. provisions in the current banking, insurance and takaful laws will be updated to support a more differentiated regulation and supervision according to risk. it will also reinforce the emphasis placed on effective board oversight and enable pre - emptive supervisory and enforcement actions by the bank. this will include the introduction of a broader and more flexible enforcement framework, with consideration to civil and administrative penalties to deal with different types of offences. proposed legislative changes also include the introduction of a more comprehensive insurance compensation system for the protection of policyholders. the draft legislation is expected to be completed in 2010. progressive liberalisation of the financial sector this year marks the ninth year into the implementation of the financial sector masterplan. following the release of the plan in 2001, more than 90 % of the recommendations in the plan have been implemented. collectively, these measures have contributed towards achieving a more efficient, effective, stable and resilient financial sector as was envisioned in the masterplan. this is evidenced by the significant transformation of the financial system
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. asia will be very much part of this new future that is emerging. as asiaaβ¬β’s importance as a growth centre in the world economy increases, three major trends can be expected to intensify going forward. first, domestic demand, supported by the large and fast - growing middle income and young population in the region, will increasingly have a greater role in driving economic growth in asia. this would contribute towards a greater balance between domestic and external sources of growth. second, the diversification of external markets will accelerate, towards greater economic inter - linkages with emerging economies in other parts of the world. part of this trend includes the creation of the asean economic community by 2015 in which asean will transform into a single market with free movement of goods and services. this will include the lifting of restrictions to the flow of capital in the region. and third, is the greater financial integration within asia that will result in an increased part of the savings in asia being reinvested in asia. the new spending patterns as incomes rise in the region will drive the modernisation of the retail sector across the region. financial services to the household sector will become increasingly important in this new environment. reforms to pensions and retirement benefit systems will be key to providing a more comprehensive social safety net, thus reducing the need for high precautionary savings and encouraging consumption. in addition, the large trade sector in asia and large capital investments required to move towards higher valueadded activity will also provide an expanding market for financial services. the more regionally integrated financial system will allow firms and investors increased options in the regional financial markets for financing and investment. these trends are being further supported by enhanced linkages in the payment systems to facilitate the intermediation of funds in the region. the economic transformation of malaysia will move us to the next level of development. malaysia has been a middle income country for almost three decades, having benefited considerably from rapid industrialisation and integration with the global economy. moving into the next stage of economic development, the domestic economy will change to a productive structure that is more innovation - driven and knowledge - intensive, with the services sector assuming an increasingly dominant role in the economy. in this next decade, the services sector is expected to account for about two thirds of the economy, with growth focused on higher value added activities. to support and drive this transformation, a new blueprint for the financial services sector is being developed by bank negara malaysia. the blueprint will chart the next phase of the
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, specific studies have been carried out on various topics, like unit non - response, measurement errors, underreporting and micro - macro reconciliation. this long experience has taught us that in sample surveys the adoption of best practices in the collection of survey data can significantly increase the reliability of estimates. moreover, if the move towards the standards is widespread, comparisons are also positively affected by the change, adding value to each statistical source. for a number of years the bank of italy has been promoting projects aimed at harmonizing shiw data with those obtained from other surveys, such as the luxembourg income study and the luxembourg wealth study. in recent years our survey has become part of the eurosystem's household finance and consumption survey ( hfcs ), coordinated by the european central bank. the hfcs includes harmonized surveys on household income and wealth from 18 euro - area countries, as well as poland and hungary. the network of participants has proved to be a very valuable forum for exchanging experiences in conducting surveys and fostering the adoption of uniform best practices. we hope the expertise acquired on these technical grounds can be useful for the present project. in fact, at the present time, survey data do not always share common standards regarding sampling, coverage, definition of variables or valuations and estimation methods as more standard statistics like national accounts do. this is particularly true in the developing countries, which often face peculiar difficulties in conducting sample surveys, due to a lack of population lists, logistic problems in territories, and so on. improving the availability of reliable data production is a valuable ingredient for promoting evidence - based policy making ; this is why, although it is a costly exercise, it is crucial for low and middle - income countries to invest in this field. the cooperation starting today will initially focus on training with the objectives of improving the quality and coherence of international training for statistical capacity building on microdata, and of supporting training activities in these fields based in low and middle - income countries. in particular, the project will implement a training program for statistical capacity building in household surveys, through some week - long training courses and workshops, to be held in the bank of italy β s premises, and with training sessions in various statistical training centres in africa. by adopting a training of trainers ( tot ) approach, the project will exploit a multiplier effect, spreading the ability to deal with sample surveys beyond the participants and reaching a large number of low and middle income countries. a further
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behavioural insights for conduct supervision introductory remarks by luigi federico signorini deputy governor of the bank of italy banca d β italia / finconet international seminar on financial consumer protection rome, 15 november 2019 it is my great pleasure to open the international seminar on financial consumer protection, jointly organized by finconet and the bank of italy. the theme of this seminar is the subject of much discussion and a driving force in the evolution of business conduct regulation and supervision. behavioural economics has provided important insights. we would be well advised to take them into account when framing regulations and performing supervisory tasks in the financial sector. understanding how people make economic choices is central to economics. economic models, however, will never be able to do justice to the full range of motivations, reasoning and impulses behind human behaviour. economics needs to simplify and select. at the same time, it needs to remain open - minded enough to see the pitfalls of simplifying assumptions. economic models have always been challenged over time, with new approaches subverting the conventional wisdom of the day ; as in all sound science, progress in economics has been driven by people challenging received wisdom, pointing out its flaws, and proposing corrections. yet it has always retained the basic concept that agents will respond to incentives and that in most circumstances the collective wisdom resulting from innumerable fallible individual choices is superior to comprehensive top - down planning, enlightened as the latter may be. adam smith did not have to invoke utility maximisation to conceive of the invisible hand, nor did ricardo to discover comparative advantage : two of the most counterintuitive, and most enduring, cornerstones of economics. ronald coase famously stated that β there is no reason to suppose that most human beings are engaged in maximising anything unless it be unhappiness, and even this with incomplete success β ; yet this ( half tongue - in - cheek ) assertion did not prevent him from formulating a theorem about the superiority of private contracts even with externalities, provided property rights are carefully laid down. 1 ΒΉ actually, as is well known, coase did not formulate a β coase theorem β, but he did lay down the theoretical foundations to what is known by that name. contemporary mainstream economics makes abundant use of formal models that specify what precise quantity is being maximised, and assume that agents make efficient use of whatever information is available. while such assumptions are extremely useful for developing insights into how the world
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scope and effectiveness of fiscal policy in the euro area, enable the smooth operation of the monetary and fiscal policy mix from a wider euro area perspective and help achieve common, long - run objectives, such as tackling climate change. in the current setting, it is more challenging to achieve the effective fiscal stabilisation of the monetary union as a whole than policy coordination between member states. first, the current rules do not envisage mechanisms for correcting national measures that are judged to be incompatible with the overall desired fiscal stance. second, having an appropriate monetary union - wide fiscal stance is no guarantee that individual fiscal policies will be adequate for national fiscal sustainability and cyclical stabilisation targets, as has been observed in recent years. a possible solution to this coordination problem could be to establish a central mechanism entrusted with setting the euro area β s overall fiscal policy stance and responding to tail events, with national authorities focusing on medium - term goals and placing debt sustainability as their primary objective ( see slide 7 ). this fiscal policy tool could be automatic, such as a common unemployment insurance scheme or a more general stabilising instrument dependent on the cyclical position. in any case, risk sharing must be accompanied by an incentive system that prevents negative cross - country externalities and moral hazard, something of utmost importance in a monetary union. furthermore, i believe that such a central instrument would also be suited to tackling global challenges, such as climate change or the process of digitalisation, and might be a better option than national β golden rules β. these rules exclude specific types of public expenses from deficit calculations, on the grounds that these could be growth - enhancing and thus need to be protected. this option is attracting much attention in current eu debates. in particular, it is argued that in the current context, with countries having to expend a great deal of effort in the fight against climate change, such investments should be excluded from the expenditure target or budget balance in order to safeguard them from eu fiscal rules. however, a golden rule would add an additional layer of complexity to an already intricate system ( see slide 7 ) and would require the definition of the types of spending to which it ought to apply. in my view, a far more efficient option would be the umbrella of a european financing instrument, which would make it easier to achieve the significant common investment needs required to meet the current net zero targets and stave off climate risk scenarios, regardless of the national fiscal space available. the third point i would
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. similarly, ensuring competition also requires that the national commission on markets and competition be equipped with sufficient human and technical resources. this is especially important in a context of accelerated technological change that can increase market power at some firms. go pinath et al. ( 2017 ) and garcia - santana et al. ( 2020 ). albrizio et al. ( 2023 ). bardhan ( 2002 ), mora - sanguinetti and perez - valls ( 2020 ), de lucio and mo ra - sanguinetti ( 2021 ), de lucio and mo rasanguinetti ( 2022 ), mo ra - sanguinetti ( 2022 ) and mo ra - sanguinetti et al. ( 2023 ). almunia and lo pez - ro driguez ( 2018 ). 3 human capital the level of human capital has proven a crucial factor in driving innovation and business growth. for example, r & d & i investment in european countries with a higher level of human capital ( based on the numeracy scores under the programme for the international assessment of adult competencies ) is on average 1 pp higher than in spain. this is not surprising, since the quality of the workforce and their technological and digital skills are essential foundations for the absorption of knowledge and the innovative capacity of any economy. despite a notable improvement in recent decades, the educational attainment level of employers, the self - employed and employees in spain is lower than the euro area average. according to eurostat data, in spain, 35. 5 % of the self - employed, 34 % of employers and 29. 6 % of employees had a low educational attainment level in 2023 q2. these figures are well above those observed in the euro area as a whole ( 20. 1 %, 19. 4 % and 18. 6 %, respectively ). the recent increase in interest in pursuing vocational training after secondary education is encouraging, but the new vocational training law, which established the dual model, poses a challenge. in particular, the new law is aimed squarely at increasing the proportion of in - company work experience, tasking firms with offering a significant number of apprenticeship opportunities. the success of this initiative will depend on effective collaboration between the business sector and educational institutions. turning to universities, the relatively low share of graduates in science, technology, engineering and mathematics continues to stand out. according to eurostat data for 2021, 24 % of spanish students in tertiary education are enrolled in a
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see this, one need not look any further than the key research leadership positions around the federal reserve system. the research director in philadelphia is an economist with expertise in banking. the research director in chicago is an economist with expertise in labor economics and industrial organization. the research director in new york is an economist with expertise in payments systems. i β ve described a federal reserve system in which each reserve bank has a broad - based group of economists. some listeners might ask : why not put all the economists in washington? or why not have each bank specialize in a different subfield of economics? i have a couple of answers to these questions. the first is grounded in the nature of monetary policymaking at the federal reserve. the essence of the federal reserve system is that each of the 12 reserve bank presidents brings a distinct perspective to monetary policy deliberations. but these perspectives need to be appropriately informed by economic analysis β and, as i β ve argued, that kind of support requires a broad range of skills to be effective. second, i view geographic diversity as a necessary ingredient to generating valuable intellectual diversity across the system. back in the 1970s, the minneapolis fed research department played a key role in fostering the β rational expectations revolution β that has helped transform the making of monetary policy around the world. would these economists have played this same role had they been working in washington β or anywhere else in the system, for that matter? i believe that the answer to this question is no. the ideas in the research department were generated by synergistic interactions between minneapolis fed economists and university of minnesota economists β synergies that owed a lot to the geographical proximity between the two institutions. i see those same intellectual synergies as critical to the minneapolis fed β s, and the system β s, thinking as we move forward. let me sum up. bis central bankers β speeches most of you know that many economists work in reserve banks. what i wanted to communicate to you today is that these economists have many different fields of specialization. this diversity is essential β reserve banks need that large variety of skills to fulfill our public policy missions. as a result, many kinds of economists can enjoy successful careers within the federal reserve. what it takes to be successful in our organization as an economist is extraordinary dedication to, and belief in, our public policy mission. bis central bankers β speeches
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to its two congressionally mandated objectives. we β ve seen that the fomc is undershooting its price stability objective, in that inflation is running well below the fomc β s goal of 2 percent and is expected to remain that low for several years. the undershooting is problematic because it suggests that the american economy is wasting available resources, especially its human resources. we β ve seen strong evidence of this underutilization in the performance of key labor market metrics. hence, the fomc is also underperforming with respect to its maximum employment objective. we need to do better as a committee β and i look forward to working with my colleagues to make that happen. thank you for listening. i β d be happy to take your questions. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches
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yves mersch : financial sector luxembourg - recent developments and financial stability introductory speech by mr yves mersch, governor of the central bank of luxembourg, at the alfi 2003 spring conference, luxembourg, 11 march 2003. * * * chairman, ladies and gentlemen, it is an honor and a pleasure for me to be invited to join the 2003 spring conference of the luxembourg investment fund association and to hold its introductory speech. my presentation comprises two main sections. the first section is devoted to recent developments in the financial sector, with a specific focus on luxembourg. the second section relates to financial stability issues. 1. recent developments in the financial sector the year 2002 has been, as you all know, a difficult year for the financial industry as a whole. weak economic and financial market conditions have translated into a deterioration in the profitability of the european banks. this deterioration appears to be the consequence of a combination of two major adverse developments in their operating environment. - first, the deterioration in the economic cycle and in the borrowers β credit quality, resulting in increased loan loss provisions. - second, the plunge in global and in particular in european stock markets, coupled with increased risk aversion and uncertainty in other financial markets, entailing reduced commissions and trading income from capital - market related businesses. the luxembourg financial sector, characterized by its high degree of openness, has not escaped from the impact of the depressed general environment. in the year 2002, the luxembourg banking sector has seen its net results deteriorating on an aggregated basis by 6 %, although the evolution is unequally spread among the individual financial institutions. while interest margins and commissions, which are their key sources of profitability, have declined in total by 7 % and 6 % respectively, a compensation of this negative trend has partly been achieved at the level of certain individual institutions through an increase in their one - off exceptional revenues and / or a release of previously created general provisions. the one - off exceptional revenues increased in total by 525 million euros, or 132 %, and are related for the major part to capital gains income through the sell - off of the stock - holdings by several banks in cedel, this in the context of the total acquisition of the luxembourg based embedded payment and securities settlement system by deutsche boerse ag. the level of provisions on a net aggregated basis has increased by 595 million euros, or 84 % compared to 2001. a closer look at the figures highlights that within this general increase, which is related in particular
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##em has conducted ( or plans to conduct ) more than 800 activities accounting for around 19. 000 working days in the accession countries. let me now say a word about the criteria. the criteria accession countries have to comply with are often thought to be constricted to the maastricht criteria, which are nominal criteria, but we ought not to forget that there is another second set of copenhagen criteria, by the number of three, which have been set up in 1993 already : 1. the first is a political criterion. it encompasses the stability of institutions guaranteeing democracy, the rule of law, human rights and, what is important in some of the new accession countries, the respect for protection of minorities as well. 2. the second copenhagen criterion is of economic nature. accession countries should demonstrate the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces which are the key rules in the european union. 3. finally, the third copenhagen criterion relates to the acquis communautaire. we must be convinced that it can be implemented, that means the ability to take on the existing obligations of membership including adherence to the aims of political, economic and monetary union. let me now elaborate on three issues that i consider of importance : convergence, currency regimes as well as policy mix. 1. convergence β’ nominal convergence is necessary but not sufficient. thus, real convergence has to be pursued in parallel. why also real convergence? because the maastricht treaty very clearly spells out that the criteria must be fulfilled in a sustainable way and not result from a point lending at one day in the year ; β’ real convergence is also the translation of the second copenhagen criteria, which very clearly says that you have to demonstrate your capacity to cope with competitive pressure and market forces. that is why real convergence is also important and has to be pursued in parallel. this process will allow a closing of the gap between accession and euro zone countries as it is stated in the objectives of the union as defined in article 2 of the treaty of the union and article 2 of the community treaty. the recent economic policies have shown that this parallel convergence is possible and has been pursued and achieved in many existing european union countries. on the nominal side, convergence to the bottom has occurred in long - term interest rates already in most accession countries, showing that financial markets pay some credibility to the current policy frameworks and consider the announced accession timetable as being credible. real convergence is proceeding further but
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hermann remsperger : stabilising the economy and the financial system β lessons and challenges for monetary policy and supervision keynote speech by professor dr hermann remsperger, member of the executive board of the deutsche bundesbank, at the 16th central banking seminar of the bank of korea on " global stagflation threat and monetary policy ", seoul, 21 october 2008. * i * * introduction governor lee, members of the governing board of the bank of korea, ladies and gentleman, it is a great honour for me to be invited to deliver the keynote speech at the 16th central banking seminar of the bank of korea on " global stagflation threat and monetary policy β. given the ongoing turmoil in the global financial system and the related risks for the world economy, the topic of this seminar is well chosen and timely. three closely interlinked developments are currently shaping events. the public focus is, of course, first and foremost on the financial crisis. starting from the united states in august 2007, the global financial system has been repeatedly shaken by new waves of heavy turbulence. these were driven by rapid and dramatic changes in market sentiment. investors and lenders have moved from trusting anybody to trusting nobody. a situation in which liquidity was simply assumed to be given has turned into a situation in which funding markets are frozen and dysfunctional. emergency measures have been taken by central banks and governments in many countries. these measures were often unprecedented in scale and unconventional in nature. with the financial storm intensifying in recent weeks, an increasing number of financial institutions in advanced economies have been encountering severe difficulties. what started as a liquidity crisis is turning out to be more and more of a solvency crisis. it represents a growing danger to the supply of credit and the proper functioning of the economies in advanced economies. moreover, the effects of the crisis are being increasingly felt in emerging markets, too. many of these economies are faced with capital outflows and reduced export demand. hence, we are confronted with a truly global challenge. this brings me to my second observation. surging commodity prices, until very recently, and the current financial market turmoil have resulted in a marked slowdown of global economic activity. with the financial crisis deepening, uncertainty about the outlook for the global economy is increasing, while growth risks are biased strongly to the downside. following a roughly 5 % increase in each of the past few years, the imf now expects global economic growth to slow to close
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conversely, the insights gained from regular contact with the banking industry in the practical conduct of refinancing operations and in payments are helpful to the banking supervisors. finally, i think that the international governance of the financial systems has to be subjected to critical scrutiny. if we are thinking about changes, i believe we should strengthen those institutional structures that did their job well during the financial market turbulence. for me, this means that, first and foremost, the fsf should continue to play a key role. its membership drawn from central banks, ministries of finance, supervisors, regulators and international institutions means that the holistic assessment of the financial system is one of the main strengths of the fsf. the international monetary fund should mobilise all its resources in the fsf, above all, with an in - depth analysis of the way the financial system interacts with the real economy. for the analysis of these interactions, the imf can draw on decades of experience in article iv consultations and a decade of financial sector assessments. v conclusions ladies and gentlemen, what are the key lessons and challenges that we should take on board from our journey through economic history, from the stagflation episode of the 1970s and early 1980s to the financial crisis of today? one simple but fundamental lesson consists in knowing the strengths, as well as the limitations, of the various areas of policy. the primary mandate of the central banks is to safeguard price stability. at the same time, they often also have the task of contributing to financial stability. price stability and financial stability are, in turn, necessary conditions for sustained growth and prosperity. regarding the primary mandate of central banks, three important lessons can be drawn from the past decades. first, anchoring inflation expectations at a low level is and remains of crucial significance. here, credibility is the key to success. second, monetary policy has to be symmetric. it is important to identify emerging financial imbalances at an early stage and, if necessary, respond accordingly. a broad - based monetary analysis turns out to be an important analytical device. third, in a world of growing real and financial integration, a sufficient degree of exchange rate flexibility can help ensure price stability when macroeconomic conditions differ at home and abroad. while many advanced economies have learned that lesson β sometimes the hard way β it still poses a challenge for some emerging market economies. this brings me, finally, to the challenges. it has become very clear to me that a lasting stabilisation of the financial system
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a significant degree of enlightened self - interest will be required. i will begin with a quick review of the current situation, and compare it with where many of us thought, or hoped, we would be today. i will also show you where we might have been if timely and aggressive corrective action had not been taken. β be thankful for what you have β might be the appropriate epitaph for the great recession β it could have been worse. this is followed by a discussion of the economic game plan that was laid out by the g - 20 leaders at a meeting convened by president obama in late 2009. this g - 20 framework for strong, sustainable and balanced growth was designed to deliver what the name suggests. 4 u. s. gdp fell by roughly 4 per cent from peak - to trough, while real economic activity in europe and japan fell by 6 and 8 per cent, respectively. this assumes, of course, that the previous trend rate of growth was sustainable. remark by glenn stevens, governor of the reserve bank of australia, at a recent private meeting. for details of the g - 20 framework for strong, sustainable, and balanced growth. bis central bankers β speeches the third part of my presentation assesses what has transpired since 2009 β identifying those policy commitments that were fulfilled and those that were not, highlighting, in particular, the major failings. the fourth and final part of my presentation reviews where we need to go from here. that is the uplifting part of what i will say today. it β s not good, but it could have been worse the u. s. economy, as i noted a moment ago, has passed the peak that it reached just prior to the crisis, but it is well below where it would have been were it not for the collapse. unemployment remains near 8 per cent, compared with an earlier ( and perhaps unsustainable ) trough of 4. 4 per cent just before the crisis, and is well above consensus estimates of the structural or natural rate of unemployment. excess capacity is judged to be in the range of 3 to 4 per cent of potential output. chart 2 shows the state of the u. s. economy over the past five years ( the solid red line ), and where the bank of canada projects it will be going over the next two years ( the dashed red line ). the upper and lower bounds of the grey area represent the fastest and slowest recoveries of the u. s. economy following all
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has gone global, are different than recoveries from β normal β recessions. some allowance has to be made for this. second, new shocks have hit the global economy since 2008. the earthquake in japan and the crisis in europe are the most obvious examples, although some would argue that the latter is simply an extension of the initial financial crisis. even allowing for these factors, however, there is a sense that we could have done better. what needs to be done? can we get back to where we want to be? in a word, yes. what is needed is very similar to what was first proposed and agreed in late 2009, but with some necessary modifications. the following list is not meant to be comprehensive but simply hits the highlights. first the united states must deal with its fiscal cliff. action is required to bring the budget into line. but something with a smoother profile over the next two to three years, coupled with a credible long - term track would be preferable to the aggressive tack now in play. second, europe must set itself right. certain things are required just to contain the crisis. these include activating the stabilization mechanism to help support sovereign debt re - financing and recapitalize banks, and the outright monetary transactions program, which will help eliminate the risk of euro redenomination and improve the monetary policy transmission mechanism in the euro area. bis central bankers β speeches of course, it will take several years to fully resolve the crisis in europe. key elements are further fiscal consolidation in many countries, repair of the broken banking systems, deep reform in labour and product markets, improved governance, and eventual completion of the banking, fiscal and political unions. third, surplus countries that are delaying necessary global adjustment by frustrating necessary exchange - rate changes should move more expeditiously toward market - determined rates. in addition, they should undertake the structural changes necessary to boost domestic demand, with particular emphasis on consumption. this would allow more of their citizens to realize the full rewards of their labours and improve general economic welfare. conclusion there is an old joke about a lost traveller who asks for directions and is told by a local, β i wouldn β t try to get there from here. β unfortunately, we have no choice about our point of departure. it would be easier if we were starting from a better place, but we aren β t. happily, the original road map established in 2009 remains broadly appropriate. 10 more may be required, since we have lost valuable time
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euros, including special purchases in late august, before the regular purchasing programme began. so far, these transactions have not weakened the krona, and it could be argued that the long - term effects could just as well be in the other direction. in closing, i wish to say this : if we succeed in restoring confidence in the icelandic economy, which is the cornerstone of the imf programme β and this includes lifting the capital controls and regaining access to foreign credit markets β we will be able to rise up from the depths. how quickly we can travel once we β ve reached the surface is another matter. it could be that we will have to content ourselves with less than before, but that is not a given. if we play our cards right, our small country β with its location and natural resources β can enjoy a wealth of possibilities. what we may never do again, however, is force our economy to grow faster than it is able to do β which has dire consequences for stability.
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to a more sustainable economy are another of the fundamental challenges we face. fiscal policy should take the lead in attaining objectives in this field, both to deter the most environmentally harmful activities, through an internationally harmonised tax system, and to foment the public and private investment needed to develop cleaner technologies and alleviate the social costs of the transition. as to inequality, we began the current crisis with a higher level than was the case at the end of the previous upturn, and everything suggests that this crisis will entail a further increase. the employment protection and income support measures approved should contribute to lessening the vulnerability of the households most affected. also, many of the reforms intended to improve productivity or lower unemployment and job insecurity are vital for reducing inequalities. the minimum life income scheme could, in coordination with regional government arrangements, contribute to alleviating extreme poverty. in this connection it will be important, as provided for in the scheme β s founding legislation, to assess its application on an ongoing basis. also, and in particular, we must determine whether the eligibility requirements are effective for supporting the most vulnerable groups, and whether its design offers sufficient incentives for beneficiaries to join the labour market. an additional matter is the problem of the affordability of rental housing. international evidence shows that policies aimed at increasing supply are the most effective. some countries have opted to combine the introduction of public guarantees with tax incentives for the private - sector development of rental housing. it is also crucial to ensure legal security for owners. turning to european economic policies, despite the response during the crisis, there are structural shortcomings in euro area governance that need resolving. from the standpoint of crisis management, resolving these shortcomings would also be important, given that we cannot rule out the fact that the impact of the pandemic on the economy, and its persistence, may be greater than expected. we must persevere with a european response to this crisis. completing the banking union with the approval of a fully mutualised european deposit guarantee scheme would contribute decisively to ensuring financial stability in the euro area, both in the coming months and in the medium term. deepening the capital markets union project would likewise be crucial. and a further priority is to analyse the suitability of european bank resolution and winding - up regulations to a hypothetical systemic crisis, and to set in place a common procedure for the administrative winding - up of credit institutions. the crisis has also shown that monetary policy
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we started to collect the data in 2012, the results were poor, where only one in six applications were for female candidates. in our latest report for 2019, which will be published in the coming days the number is 26 % or over one in four applicants, and a two percentage point increase since 2018. 14 underneath the small increase, there are substantial differences in role holders across sectors. for example, over one in four senior role holders in the insurance sector are women, while it is only one in eight in asset management. beyond sectoral information, we can also see the gender balance, or imbalance in the type of roles that women apply for. the data continues to show a pronounced gender imbalance at board level and in revenue generating roles as opposed to second line of defence roles. for example, female applicants for head of investment roles stands at 13 % whereas female applicants for compliance and risk roles stands at 41 %. and while we are seeing some progress, there is still a long way to go. we are placing a spotlight on this issue and intend to keep it there. in 2018, as part of a major piece of supervisory work on the mortgage market, the central bank also published a report on the β behaviour and culture of the irish retails banks, β in which we also conducted diversity and inclusion assessments. 15 and next month we will publish the findings of a diversity and inclusion thematic assessment of the insurance industry along with best practice guidance for the wider industry. it is worth recalling why we, central banks and regulators are doing this. we want to ensure boards have a wide diversity of views. we also consider that lack of diversity is a leading indicator of elevated behaviour and culture risks. 16 of course diversity goes beyond gender, but it is also within gender, diversity of experiences, diversity of thought, diversity of perspectives. we want the firms we supervise to make good decisions, take considered risks and not succumb to groupthink. the firms we supervise now expect challenge from central bank supervisors when there is a lack of diversity at board and management levels. beyond our role as a regulator, within the central bank our strategic focus on diversity and inclusion is reflected in our vision and desired culture. 17 it is explicitly called out in the central bank of ireland β s strategic plan 2019 - 2021. thinking back to when i joined the central bank in 1996, the bank had no women on the senior management team and not a single female head of division. today, our senior leadership committee is
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important that this process of rationalisation does not compromise the risk management infrastructure and it / operational framework in the banking system. these would be short - term cost savings that sowed the seeds for later problems and painful expense, as we β ve seen in the past and indeed quite recently. so, the central bank will encourage bank management to stick to their cost - cutting agenda, but to do so with careful deliberation. they do need to maintain the capacity to deliver the needed services to the economy and the general public. culture while most of the challenges are financial in nature, there is one that is not but is nevertheless absolutely essential : we need to see a substantial, deeply rooted and sustained change in the culture that operates within the irish banking system. cultural change is evidently a complicated, laborious and time - consuming process and will need to touch on the number of dimensions, but at its essence we need to see a fundamental shift in attitudes to risk management and to the treatment of consumers. the financial crisis exposed a corrosive influence at the heart of the way the irish banks were run and that has had to be decisively tackled. the central bank has acted to initiate change in this area and has encouraged improved governance and standards of behaviour. we have introduced a corporate governance code, which is fully enforceable, designed to improve the rigour of oversight of bank management bis central bankers β speeches and to broaden the gene pool of bank boardrooms. a new fitness and probity regime is now in place to more rigorously police those who work in the financial services sector. some 71 of the 73 executive and non - executive directors who were in place at the time of the guarantee have now or will shortly depart the system. but the work of cultural change is by no means complete β indeed it still has a long way to go β and must necessarily be driven by the new boards of the irish banks. they need to set the tone at the top and clearly articulate their expectations of ethical conduct amongst their management team and their staff at large. they need to ensure that the ranks of senior and middle management are subject to renewal and refreshment, to bring some fresh blood into the mix without the baggage of the past and with the motivation to lead the process of change. new standards of behaviour need to be backed up when hard cases of individual conduct come to a head, and not avoided. recognition of the importance of good risk management, compliance and treating customers fairly needs to become embedded
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. looking ahead, given that it is hard to explain the relative weakness of the euro, it is reasonable to expect that it may in due course recover to more realistic levels ; and there has indeed been some welcome movement in that direction since the spring. whether that will continue is hard to judge, but it would be enormously helpful both to the balance of the uk economy as a whole and to the individual businesses most directly affected. the other major area of uncertainty we face is the encouraging and exciting, if somewhat tantalising, prospect that the uk may come to enjoy, or indeed may already be beginning to enjoy, some of the benefits evident in the us arising from the β new economy β. the advances we are seeing in information and computer technology, when combined with the greater flexibility and adaptability our economy has shown in recent years and the wider trading opportunities and greater competitiveness flowing from the globalisation of the world economy, are potentially very exciting because they represent scope for improvements in the supply side of the economy : they hold out the possibility that the economy might be able to grow faster than recent historical experience without jeopardising price stability. the dilemma is that, while the benefits these developments can bring are undoubted, if and when they manifest themselves in enhanced economic performance, the evidence of their doing so in the uk is, so far, piecemeal rather than conclusive. assessing whether these developments are in fact delivering concrete gains requires cool heads and careful judgment. my own view is one of pragmatic optimism. there are promising portents, but relatively little concrete evidence as yet, of the uk achieving the improvements in productivity that have so benefited the us economy in recent years. that does not mean that it will not happen here. but it does mean that we need to be both vigilant to avoid the pitfall of anticipating the gains before they arrive, and alert to capitalising on them if and when they begin to come through. overall, then, the prospect we face is an immensely encouraging one. we need to remain vigilant, but, provided we take no risks with the progress we have made in recent years in maintaining low inflation, the prospect is for continuing growth overall on a basis that can be sustained into the medium term. for the bank of england, our first, and continuing priority, has to be to continue to deliver the stable monetary framework - of interest rates directed at maintaining low inflation - as a platform on which commerce and industry throughout the
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the recovery and resolution of credit institutions and investment firms. the part involving the bnb was finalised at the end of last year and is due for submission to the national assembly with legal amendments likely to get adopted by the end of this quarter. the bnb governor also outlined the second work block in this direction, on which the bnb is currently working, i. e., the overall framework of determining the amount of funds to be contributed by banks to the single resolution fund and the amount and way of transferring funds from the bank resolution fund in bulgaria, which was set up in 2015, to the single resolution fund. the third work block covers the overall activity of planning and conducting resolution activities, including the distribution of responsibilities and tasks between the single resolution board and the bnb after our country joins the banking union. with regard to the expected effects on the economy and the business, the bnb governor highlighted that it was positive to reaffirm bulgaria β s strategic course, and that the process is already being filled with content and specific timeframe. the whole process stands as a positive counterbalance against the more general uncertainty from the global and european economic environment. 1 / 2 bis central bankers'speeches among the more direct positive effects from this first stage on the path to the euro area is the anticipated improvement of the country β s credit rating, as announced by the credit agencies, should the process run successfully in the short - term. that would improve the funding conditions in the country. at the same time, the effects of joining erm ii will not be tangible in regard to the macroeconomic policy and neither will our monetary regime change. the bnb governor made it clear that the only exit from the current regime would be the replacement of the lev with the euro at the currently fixed exchange rate. the whole process of accession β first to the banking union and erm ii, and next to the euro area β could not substitute for the good macroeconomic practices and business projects, mr. radev said. a country refusing to comply with this is sure to suffer serious economic and financial difficulties whether inside or outside the euro area. the two proven pillars of good macroeconomic policy in bulgaria are the fiscal stability and the monetary regime stability. should these conditions, together with the continuous improvement of institutions, be present, the preparatory process and subsequently the accession to the euro area would be a catalyst for the social and economic prosperity of our country. 2 / 2 bis central bankers'speeches
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vuca world, with rapid technological changes, we, as policymakers or central bankers, would need to adapt ourselves and ensure smooth transition into this new business - driven paradigm. we therefore welcome those who want to seize these opportunities in the gms. a solid platform of road, ports, power grids, and tourism infrastructures already exist in the gms. going forward, it is time to envision the gms that is integrated in other dimensions too, particularly finance. this is why i view that financial connectivity is an important element in the next chapter of the gms. as i mentioned, i see the gms as a fresh graduate. at 25 years old, a great future is awaiting. let us walk with her, help her unlock her potential, and lend her necessary supports to ensure her success and prosperity. i thank euromoney once again for organizing this conference. i wish you productive and engaging sessions today. thank you.
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economy. your excellencies, distinguished ladies and gentlemen, permit me at this juncture to mention other intervention programmes and schemes of the central bank of nigeria targeted at catalysing production and productivity in the real sector of our economy. these interventions include the n1. 0 trillion real sector facility ( rsf ), real sector support facility ( rssf ), anchor borrowers'programme ( abp ), commercial agriculture credit scheme ( cacs ), non - oil export stimulation facility ( nesf ), and textile sector intervention facility ( tsif ). specifically, these programmes and schemes have continued to receive resounding commendations, as they have proven to be effective in expanding credit and stimulating investments in the real sector. for instance, under the n1. 0 trillion real sector facility, the bank has released a total of n1. 40 trillion to 331 real sector projects in agriculture, manufacturing, mining, and services sectors. under its real sector support facility ( rssf ), the cbn has disbursed n166. 21 billion to 25 projects. in the agricultural sector, the bank's anchor borrowers'programme ( abp ) has disbursed n927. 94 billion to over 4. 5 million smallholder farmers for the cultivation of 21 commodities across the country. also, the bank has financed 666 large - scale agricultural projects with the potential of creating an estimated 70, 070 direct and indirect jobs under its commercial agriculture credit scheme ( cacs ). 2 / 4 bis - central bankers'speeches your excellencies, distinguished ladies and gentlemen, with the significant opportunities in the real sector, there remains sufficient room for additional investments in the various sub - sectors and i would like to urge potential investors to take advantage of the various cbn intervention programmes and schemes, as well as other financing options out there, to invest in key sectors of our economy given the potential gains that could be generated from them. let me assure all current and prospective operators in the industrial sector that the central bank of nigeria stands ready to continue to provide the needed support, financial and otherwise, to fast - track the development of our industrial sector. for those seeking to invest in new greenfield or existing brownfield projects, the bank will continue to provide all the needed support, both in naira and dollars specifically for the importation of plants and equipment to actualize these investments. it is pertinent to point out that the foreign exchange support will be solely for the
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from 1998 crisis as i just mentioned, indonesia is now structurally different with what was in a decade ago. this is as a result of more than ten years of consolidation and dynamic transition in almost all sectors. the extensive transformation measures became a continuing agenda with full commitment. in the last ten years, we have embarked upon a far - reaching transformation measures, especially in the area of improving our institutional capacity. during this process, the government has taken steps to improve our economic efficiency through policy reform packages covering key areas of concern, such as taxes, customs, legal frameworks, and the financial sector. so to speak, one of the most notable steps are the introduction of open capital account through promulgating law no. 24 of 1999 and increasing the investment flexibility by stipulating investment law no. 25 of 2007 to encourage offshore financing for the economy. the government and bank indonesia, as a central bank, are always committed to consistently undertake fiscal and monetary discipline, as well as strengthening domestic financial market resiliency. learning from the failure of 1998 crises, our policies were focused on enhancing policy transmission, improving financial market efficiency through prudential practices and financial market deepening. the government is also improving their capacity on fiscal budgeting by adopting a better debt and cash management. prudent fiscal policy can partly be observed by gradually reducing the debt to gdp ratio, in particular the foreign debt. the debt to gdp ratio has declined significantly within the last couple of years, from 77 % in 2000 to around 30 % recently. from a monetary policy perspective, bank indonesia has consistently pursued rupiah stability as mandated by the new bank indonesia law that was first introduced in 1999. in practice this has been manifested in an effort to focus on achieving the medium term ( three years ) inflation target set by the government and avoiding excessive exchange rate volatility consistent with the free exchange rate regime adopted since 1998. on this regard, bank indonesia has increased the transparency and clarity of its monetary policy stance by introducing β the bi rate β as a policy rate since june 2005. further improvement has also been undertaken in mid of 2008 by translating the bi rate as a short - term money market interest rate target ( known as puab overnight target ). thus, puab overnight has been used as an operational target in executing the monetary policy decision through bank indonesia β s domestic market operation. the main reason behind this enhancement is based on two reasons. first, the increasingly importance of agents β expectation in forming inflation along with the
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housing market. for the inflation target to be achieved on a sustained basis in 2016, the economy must reach and remain at full capacity. closing the output gap over this time frame is reliant on continued stimulative monetary policy and hinges critically on stronger exports and business investment. weighing these considerations within the bank β s risk - management framework, the monetary policy stance remains appropriate and the target for the overnight rate remains at 1 per cent. the bank is neutral with respect to the timing and direction of the next change to the policy rate, which will depend on how new information influences the outlook and assessment of risks. and now, with that, carolyn and i would be pleased to answer your questions. bis central bankers β speeches
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β funding costs and of a deterioration in credit risk quality. with regard to financing, the gradual reduction in, and increased cost of, eurosystem liquidity facilities and the developments seen in deposits ( with depositors seeking better remunerated financial instruments and having used up part of the savings buffers built up during the pandemic ) may accelerate the increase in banks β cost of funding. the continuation and / or heightening of the recent tensions in the global banking sector could also contribute to this increase. as for the future increase in credit risk, our estimates show that a market interest rate increase of 400 bp, somewhat larger than the gain of approximately 365 bp seen in the 3month euribor, could push up non - financial corporations β median gross debt burden ratio by between 2. 9 pp and 6. 8 pp9 and the share of corporate debt held by firms under high financial pressure10 by between 6. 5 pp and 8. 9 pp. in the case of households, it is estimated that a 400 bp rise in the 12 - month euribor ( slightly less than the 410 bp increase seen since the beginning of 2022 ) would raise the percentage of indebted households with a high net interest burden11 by 3. 5 pp. this increase would tend to be stronger for lower - income indebted households, which are also those most affected by the rise in inflation. in this regard, the reform in late 2022 of the code of good banking practice ( cgp ) focuses precisely on orderly debt restructuring for household segments with a high degree of socio - economic vulnerability. the banco de espana will assess its implementation as more data become available. how different banks and financial systems position themselves against these risks will determine how resilient they are. in this regard, amid such high uncertainty, including that surrounding the degree of monetary policy tightening, spanish banks must implement a prudent provisioning and capital policy. a policy that earmarks part of the short - term increase in earnings to bolster the sector β s resilience would thus put it in a better position to absorb any potential losses should the worst risk scenarios materialise. from a european standpoint, it should also be noted that a smoother - functioning euro area with improved governance would contribute hugely to making the european financial system less vulnerable. in particular, the creation of a fully mutualised european deposit insurance scheme would boost the confidence of citizens and the markets and contribute to increased risk - sharing in the
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have accumulated more debt as a result. further accumulation of debt might prove unsustainable for firms with a high level of indebtedness. here, public support in the form of temporary equity injections could be an option to explore, especially in the case of large companies where this option seems more feasible. the spanish government has already set up a public fund that can be used for that purpose. for other firms, direct grants could be considered. debt restructuring could be a beneficial option for both lenders and borrowers in the case of highly indebted firms with a viable business. to smooth this process, insolvency mechanisms should be improved to make them more efficient. in spain, these procedures tend to be very lengthy, taking an average of three - and - a - half years7, destroying company value in the process, and in many cases lead ultimately to the piecemeal liquidation of the firm. to prevent the congestion of courts, out - of - court settlements could be incentivised. and in the medium to longer term, resources devoted to specialised courts could be strengthened with the aim of speeding through the resolution of these processes. in the case of firms with no viable business model, an orderly exit from the market should be provided for. a prompt resolution of this process will benefit the structural adjustment of the economy and the reallocation of resources towards more productive firms. four, our goal should be to ensure that the present crisis neither gives rise to a widespread tightening of financial conditions nor causes serious damage to our financial system. in the context i have described of an uneven and uncertain recovery, we cannot rule out the possibility that the risks identified may materialise or that their impact and persistence may be greater than expected. in this sense, in the banking sphere, the response to the possible materialisation of these risks can only be at the european level, given the commitment to the banking union. in this response, the completion of banking union with the launch of a fully mutualized european garcia - posada, m. and r. vegas sanchez ( 2018 ) : β bankruptcy reforms in the midst of the great recession : the spanish experience β, international review of law and economics, 55, pp. 71 β 95. deposit insurance scheme would make a decisive contribution to ensuring financial stability in the euro area, in the coming months and in the medium term. it is also crucial to analyse how appropriate the european regulations for resolution and winding - up of credit institutions
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laundering monitoring and analysis center to detect, distinguish suspicious criminal information in time and cracking down seriously and strictly money laundering and terrorist financing activities, in particular, underground banking criminal activities. 4. continue to conduct anti - money laundering examination and expand examination scope to securities and insurance companies to encourage the β first protection line β function of financial institutions in anti - money laundering and terrorist financing. 5. strive to join the fatf as a full member and strengthen cooperation with other countries and regions within bilateral or multilateral frameworks based on equal and mutual beneficial principles in information exchange, training, investigation assistance, property seizure and criminal suspects extradition and repatriation. 5 / 5
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direct nationwide anti - money laundering efforts under the steering of the state council, stipulate important guidance and policies relevant to anti - money laundering and international cooperation policy measures, coordinate different departments and motivate the whole nation to conduct ant - money laundering. recently, the second meeting of the joint ministerial conference passed the preparation plan for fatf evaluation in principle, and relevant preparations have been already initiated in full scale. financial supervisory departments β anti - money laundering collaboration mechanism joined by cbrc, csrc, circ and the safe, targets to project, plan, collaborate financial institutions β efforts in anti - money laundering as well as the banking, securities, insurance and foreign exchange supervisory department β s anti - money laundering functions to reduce duplicate supervision and avoid blind area in supervision. till june 2005, 12 provinces, autonomous regions, municipalities 3 / 5 and cities with independent budget have already formed anti - money laundering collaboration mechanism among relevant agencies. iv. high attentions were paid to the role of financial institutions in anti - money laundering, and anti - money laundering supervision and funds monitoring have achieved evident results from april 2004 to december 2004, the pbc has conducted special examination on anti - money laundering by the commercial banks. according to the examination results, most commercial banks have established internal control system of anti - money laundering and fulfilled obligations related to clients β identity verification, transaction - record keeping and large - value and suspicious transaction reporting. the pbc also punished 72 main reporting banks of commercial banks involving total fines up to rmb 1. 7 million yuan due to their incomplete internal control systems of anti - money laundering or misreporting of suspicious transactions. the examination played active role in understanding commercial banks implementation of anti - money laundering regulations and enhanced commercial banks emphasis on anti - money laundering. at the same time, the examination accumulated precious experiences for supervision over non - banking financial institutions and other high risky areas in money laundering, such as real estate, precious metal and jewelry distribution, and cultural relic auction. in 2005, the pbc continued the special examination on commercial banks β anti - money laundering of the provincial level. in 2006, the pbc will expand anti - money laundering examination to securities companies and insurance companies. since the establishment of the china anti - money laundering monitoring and analysis center, it has networked with 17 commercial banks in data reporting. its cumulative number of suspicious activities reports in both rmb and foreign currencies posted 654, 400, amounting to rmb248.
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carbanak attack, which targeted the money processing services, atms and bank accounts of over 100 banks worldwide over a period of two years and may have led to up to $ 1bn being stolen. the risk / reward trade - off for cybercrime is very attractive. cybercriminals know there is a low likelihood of being detected, caught or prosecuted and many attack strategies can be executed cheaply. this has led to a substantial broadening of the attacker base. due to the proliferation of the cybercrime - as - a - service business model, the cybercrime industry is no longer just the domain of highly skilled it people. now a relatively low - skilled cybercriminal can cause significant damage. irrespective of size, cybercriminals can use a variety of approaches, some highly technological, such as exploiting previously undiscovered defects in computer software, some relying on human error, such as deception of employees or spear - phishing. it is this human element to which i now turn. employee risk : insider - threat and human error people can be the most vulnerable and unpredictable part of a firm β s tech infrastructure. there are two main types of employee driven cybersecurity risk : insider - threat and human error. disgruntled current and ex - employees can be a significant source of security risk due to their knowledge of firms β systems and data assets. they may have a strong personal motivation to damage the firm or hold it to ransom. while security or it staff might be the obvious cases, other examples include staff with access to valuable intellectual property, senior management or sales staff with client data. financial firms have long managed the risk of employee fraud through separation of duties, two - person authorisation and access limitations. similar controls around high - value data and systems are needed. bis central bankers β speeches for instance, firms have to ensure that access rights are reconfigured when an employee leaves or moves internally. firms should ensure that employees have at any moment only the access rights they need to carry on their job. accidental and / or non - malicious employee security breaches accounted for around 25 % of data breaches in 2013 and 2014. often the breach occurs for well - intentioned reasons such as an employee wanting to work on something from home and sending a document to their personal email or copying data onto a usb drive, or when employees use external systems or software. if an it system cannot give employees
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a critical factor since the very open nature of the irish economy makes it particularly vulnerable to shocks emanating from abroad. since last year β s financial stability report, the world economy has continued to withstand shocks and maintain momentum. the pace of global economic growth strengthened further in the first half of 2006, and global growth has remained strong in the third quarter. in the euro area, following a spell of weakness in the latter part of 2005, activity has gathered strength in 2006. asia has experienced extremely strong growth, led by china and india, while in japan, the economic recovery continues to strengthen. the us economy expanded very strongly in the first quarter of 2006, but growth has slowed fairly significantly there since then. risks to the irish economy i would like to refer briefly to the risks which could pose problems for the financial system if they were to materialise. the main downside risks from the domestic environment continue to be, first, the disproportionately large dependence of the economy on the construction sector, which has not yet shown any signs of output returning to levels that would be sustainable in the medium - term, and secondly, the increased pressure on ireland β s competitiveness. the risks arising from the global economy are perceived to have increased since the 2005 financial stability report, notwithstanding the fact that global growth prospects are now somewhat more favourable. the relevant risks include volatile energy prices, global imbalances, potential adverse financial market and exchange - rate developments, the risk of inflationary pressures re - emerging and the possible fallout from the sharp weakening in the us housing market. vulnerabilties in the financial system the overall assessment of this report is that risks and vulnerabilities in the financial system may be seen to have increased since the financial stability report 2005 was published about a year ago. at that time, the major systemic vulnerabilities identified for financial stability were those arising from strong credit growth and rising indebtedness levels. this year these vulnerabilities remain, and are now combined with developments arising from higher repayment burdens and continuing uncertainty with respect to the outlook for house prices. however, the overall conclusion is that the irish financial system continues to be in a good state of health to cope with such emerging issues. the banking system overall health the stability and health of the irish banking system remain robust when assessed by the usual indicators of financial health such as asset quality, profitability, solvency, liquidity and credit ratings. the central expectation, based
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restructuring their troubled financial systems. for example, in asia, where some of the most severe problems were encountered, governments have spent over $ 500 billion carving out problem loans and bolstering capital. β’ growth rates have improved with the restoration of domestic stability and recovery in external demand. indeed, aggregate growth currently is running at its highest rate since the onset of the crisis in 1997. β’ with these improvements, and generally accommodative external financial conditions, borrowing costs have fallen, capital market access was restored for many countries, and credit growth resumed. net credit growth to sovereigns has remained moderate, however, as much of the borrowing has gone to refinancing the existing stock of debt on more favorable terms. β’ the market for emerging market debt also has matured. there has been more differentiation in the response of spreads, both on the way down as credit fundamentals seemed to improve, and during the recent correction. this progress is indicative of a general increase in the sophistication and skill of economic policy makers in the emerging world, and in the quality of understanding of the benefits of macroeconomic stability and how to achieve it. many countries benefited from the advice and financial support from the imf and the multilateral development banks. but the most successful were those with policy makers who were ahead of the fund and the bank in diagnosing and addressing their problems, rather than being dragged reluctantly toward a more credible policy stance. these improvements have left the emerging markets as a group less vulnerable to financial crisis than they were in the mid - 1990s. the combination of deeper reserve cushions, stronger external positions, improved balance sheets, more flexible exchange rate regimes, and better inflation performance provide a very different setting from what existed the last time we faced a transition after a sustained period of benign financial conditions and low interest rates. these aggregate improvements mask substantial differences across countries and a number of areas of lingering vulnerability. let me highlight some, and then suggest some implications for how the fund might better position itself to deal with the challenges they present. β’ some of the most daunting challenges are in the fiscal and public debt area, where a number of emerging market economies across different regions face very high, and in some cases still growing public sector debt levels. average public debt burdens in the emerging world have risen to about 70 percent of gdp, and among countries rated single b and below, the mean rises above 80 percent. β’ the challenge of managing debt burdens of this size is mag
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with contingent access to fund resources. surveillance today does not provide a meaningful check on ex ante policies, and resources are only made available when the financial need is acute. access to supplemental resources from the fund on a precautionary or contingent basis could make a critical difference in preventing short - term liquidity crises from becoming full - scale solvency problems leading to default. of course, access to such contingent financing should be limited to countries whose policies were judged reasonably sustainable, and consistent with a reduction in balance sheet risks over time. with an enhanced surveillance framework designed to help keep policy on a stronger path that does reduce risk over time, and with contingent finance that could be mobilized quickly, the fund would be better positioned to contain the risk of deeper financial crisis. and more of the policy reform that is a necessary accompaniment to fund finance resources could be supported ex ante, rather than ex post. catalyzing better policies sooner is the best defense, though it will never be a perfect defense, against crises. facilitating restructurings we have seen some progress in the last few years in efforts to improve the framework for sovereign restructurings. in particular, collective action clauses have now become the market standard where emerging market governments issue debt under foreign law. it will take some time for the full stock of sovereign emerging market debt to include these provisions for restructuring by majority action, but this progress is nonetheless important. but there are also some experiences that overshadow these more encouraging developments, and expose a breakdown in the broad consensus that had formed the basis for the successful past strategies of collaboration among the official sector, borrowers, and private creditors. without commenting on the specifics of any particular case, let me offer a view of what i see as fundamental tenets of a credible approach by the international community to situations where a sovereign finds it necessary to restructure its obligations to private creditors : the imf should be willing to lend to a sovereign that is in default to its private creditors only when two conditions have been established : first, the country must commit to a credible medium - term adjustment program, one that offers the prospect of a successful restructuring and a reasonably early return to the capital markets. this has to be established up front for any restructuring effort to work. commitment to a credible adjustment path that offers the reasonable prospect of a return to financial viability and growth is the necessary foundation for engagement by the creditors in a restructuring process. without that, there is little basis for meaningful engagement. the science of
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securitisation market was also impaired. by consequence, all abs were demonized. the ecb together with the bank of england were early supporters of a better functioning securitisation market for transactions that comply with the concept of simple, transparent and standardised abs and duly take into account the lessons learnt of the crisis. an early intuition was that lack of transparency acted as an obstacle to the revitalisation of the securitisation market. the ecb has made a significant effort to ensure a high degree of transparency in securitisation by promoting the loan - level data initiative. sts regulation also requires a system of registration and supervision for abs data repositories established in the eu. β securitisation repositories β, as they are called, will be subject to the same 1 / 3 bis central bankers'speeches ongoing governance, technical and operational requirements as trade repositories under the emir framework. they will be expected to store not just loan - level data, but also all other information which the regulation requires, such as transaction documentation. the repositories will be registered, authorised and supervised by esma. the ecb will wholeheartedly support esma in completing its tasks. so far so good. what about results? it is duly noted, however, that the revival of the european securitisation market is still anaemic. market - placed issuance is at historic lows. the investor base has not recovered. the eu securitisation markets are impacted by bank deleveraging, unfavourable regulatory treatment and lower relative costs of funding of alternative instruments. admittedly, the sizeable eurosystem covered bond purchase programme and long term loan operations have also represented viable funding alternatives for banks. in this respect, some more patience is warranted. the sts regulation will only come into force in 2019 as various important technical standards still need to be finalised to provide further regulatory certainty which is important for securitisation market development. eba is for example mandated to develop guidelines to ensure a common and consistent understanding of the sts criteria throughout the union. as the ecb has argued in its opinion, this is important to ensure legal certainty and efficiency for those interpreting and applying the sts criteria. while these initiatives are helpful in principle, they do not exist in legislative isolation. we have to be mindful of potential negative spill - over effects by other pieces of legislation. let me highlight some areas of concern
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: first, on a more technical note, under the current european market infrastructure regulation ( emir ) securitisation special purpose entities ( sspes ) are classified as non - financial counterparties and accordingly, subject to certain conditions, are not required to comply with the clearing and margining obligation. however, according to the may proposal of the commission to amend the emir framework, securitisation entities are reclassified as financial counterparties instead of non - financial counterparties. therefore, these entities would potentially become subject to mandatory clearing and margining. this would mean that they have to provide collateral, with regards to their derivatives. this is surprising because securitisation derivatives already contain features to mitigate counterparty credit risk. moreover, the nature of the securitisation derivatives makes it difficult to comply with the margining or clearing obligation. how can an spv put down margining as it only has by definition control over its underlying portfolio? how can it post collateral? the sts regulation exempts sts sspes from the clearing obligation, provided that counterparty credit risk is adequately mitigated. further clarity on this is needed as many european securitisation transactions use derivatives for genuine hedging purposes. second, the revision of capital charges for sts securitisations in solvency ii is essential for the recovery of the investor base. an updated calibration should consider the difference in the risk profile and tolerance between insurance companies and banks and the capacity of the sts criteria to capture a lower risk profile in securitisations. the calibration should not incentivise insurance companies to seek investments in the underlying assets in question in an unsecuritised, rather than a more liquid securitised, format. third, the potential benefits of securitisation are twofold : it can be used as a way to fund an asset and as a means of transferring risk. it can free up bank capital, allowing banks to extend new credit to the real economy. likewise, the pricing of risks is more effective when securities are assessed by the market rather than being dormant on banks β balance sheets. all this may support the transmission of monetary policy, where the bank lending channel may otherwise be impaired. finally, it may lower borrowing firms β exposure to re - financing or liquidity risk, thereby increasing 2 / 3 bis central bankers'speeches banks β resilience and helping to contain systemic risk. for this potential benefit of securitisation to come
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we observe across institutions is that the configurations of such devices are seldom given sufficient importance and left to the vendors. vulnerabilities exist in hardware, middleware, software, os, applications, network devices, communication devices etc. it is, therefore, important to pay sufficient attention while procuring / implementing any new devices / solutions. cyber criminals are also increasingly exploiting the vulnerabilities in the smart phone software by infecting the operating systems with malware. the banks which are big on mobile banking as a service delivery tool must also look to guard against this emerging risk. 22. another area of concern is the patch management. oems release patches after known vulnerabilities are escalated to them and if the patches are not rolled out in time, we are practically leaving the door open for exploitation. user management leaves much to be desired - practice of shared passwords, no passwords, free administrator level access, dated authorized users list are quite common place. often, there is no robust process for creating new users, reviewing the list and deleting inactive users. then, there is the issue of implementing physical security. i have seen physical access control systems being in place but usage not insisted upon. further, the dependence on the vendors is increasing and many a times only the vendors know how the system is to be operated. customer information is stored at vendors β facility without adequate safeguards. another curious thing i note is that while the banks claim that they do not get skilled resources, the same vendor provides some critical services to multiple banks. this raises a question as to whether the banks know what they get from their outsourced vendors, including the quality of delivery. timely decision to scale up capacity is very important to ensure continued availability of services and business growth. people and processes need to be given adequate importance, for without capable hands even best of the systems is bound to fail. monitoring is paramount β whether the port that was opened for a specific purpose was closed in time, who analyses the important logs that are created religiously, how incidents are responded to, whether the security operations centre ( soc ) is integrated with inputs from various systems, whether the exceptions thrown out are escalated to appropriate levels etc. 23. the security culture at banks needs to change for the better. in a brick and mortar environment, if the safe is not having good locking system, or the walls are showing some cracks, roof is leaking, banks do notice. in a digital world,
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does not mean similarity in the basic nature of the academic discipline. the fundamental difference between physics and economics is that physics deals with the physical universe which is governed by immutable laws, beyond the pale of human behaviour. economics, in contrast, is a social science whose laws are influenced by human behaviour. simply put, i cannot change the mass of an electron no matter how i behave but i can change the price of a derivative by my behaviour. 13. the laws of physics are universal in space and time. the laws of economics are very much a function of the context. going back to the earlier example, the mass of an electron does not change whether we are in the world of newton or of einstein. but in the world of economics, how firms, households and governments behave is altered by the reigning economic ideology of the time. to give another example, there is nothing absolute, for example, about savings being equal to investment or supply equaling demand as maintained by classical economics but there is something absolute about energy lost being equal to energy gained as enunciated by classical physics. 14. in natural sciences, progress is a two way street. it can run from empirical findings to theory or the other way round. the famous michelson - morley experiment that found that the velocity of light is constant led to the theory of relativity β an example of progression from practice to theory. in the reverse direction, the ferocious search now under way for the higgs boson β the god particle β which has been predicted by quantum theory is an example of traversing from theory to practice. in economics, on the other hand, where the human dimension is paramount, the progression has necessarily to be one way, from empirical finding to theory. there is a joke that if something works in practice, economists run to see if it works in theory. actually, i don β t see the joke ; that is indeed the way it should be. 15. karl popper, by far the most influential philosopher of science of the twentieth century, propounded that a good theory is one that gives rise to falsifiable hypotheses. by this measure, einstein β s general theory was a good theory as it led to the hypothesis about the curvature of space under the force of gravity which indeed was verified by scientists from observations made during a solar eclipse from the west african islands of sao tome and principe. economics on the other hand cannot stand the scrutiny of the falsifiable hypothesis test
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however it is still too early to assess the impact of these developments on the outlook for prices. the governing council β s expectations for a gradual recovery in growth in the euro area have been confirmed by recent eurostat estimates. these show an improvement from negative growth in the last quarter of 2001 to moderately positive rates in the first quarter of this year. forecasts all point to a continued strengthening in demand. 5. supervision the bank β s extensive regulatory tasks were further increased in 2001 when we took over responsibility for more than 2000 insurance intermediaries. in consultation with the industry, and with consumer interests, we developed an effective regulatory system and tackled the re - authorisation process - no small task. following the losses incurred at the aib subsidiary, allfirst, we requested an independent verification of all financial institutions β controls and risk management procedures. this is an important exercise, which involves a lot of work for the institutions concerned and indeed for the bank ; however, i think it will be a very worthwhile exercise. we expect the overall review process will be extended over a number of months. as you know, we have also entered into a written agreement with aib and the federal reserve bank in the us to address the specific issues that arose from the events in allfirst. this was a first in international supervisory co - operation for both the fed and the central bank. a fundamental change arose from the publication in april this year of the bill on the structure of financial regulation. we expect its passage to implementation will be given priority by the incoming government. we are already working closely with the interim board of the irish financial services regulatory authority and its chairman, brian patterson. we want to ensure a smooth transition to the re - structured organisation. i am very encouraged by the progress made in the short time that we have been working together. 6. financial results it was a good year for our financial results with profits of β¬563 million. this was despite the exceptionally high costs we faced with the euro changeover. the successful management of our investment assets of β¬8. 7 billion played a significant role in this performance. the return on these assets was 6. 74 %, or 16 basis points above the benchmark set by merrill lynch. 7. financial stability responsibility for financial stability is a core central bank function. as was the case last year, the report contains a lengthy chapter on financial stability. the key messages from our report on financial stability are : β’ the irish banking system is stable,
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the figure has quadrupled in the past ten years, reflecting the growth in irish trade, the removal of exchange controls in the context of the single european market and the development of the international financial services centre. this covers only the deposit side of the picture. borrowing by irish residents from overseas banks has also grown rapidly in the past decade. it is now estimated to be of a similar order of magnitude to overseas deposits. access to credit abroad at competitive interest rates, growth in the multinational sector and the ifsc have contributed to this development. this is by no means a comprehensive picture. it does not incorporate cross - border flows in securities and other investments such as equities, for which we do not have specific information. the central bank is aware throughout every day of the broad quantities of funds moving in and out of irish pounds across the foreign exchange market. it does not have knowledge of the movement of funds on behalf of individual bank customers. conclusions before i conclude, may i refer again briefly to monetary policy. in the implementation of monetary policy the first objective of the central bank at all times is price stability. this will also be the first objective of the european central bank and this is made abundantly clear in the maastricht treaty. price stability is the best foundation for a growing economy and for continuing improvements in employment. this has been demonstrated consistently, not just in the irish situation but worldwide.
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the face of tight control on final goods prices. dampened prospects for profits in turn may lead to delays of planned investment. while this downside risk is substantial, there is also an upside. higher commodity prices strengthen farm income, which tends to benefit a large section of the thai workforce. ladies and gentlemen, the risks to global growth and global inflation have both increased in the near - term. at this point, we cannot be sure how the slowdown of global growth will affect global inflation this year. and even though, from an asset price perspective, there is a positive probability for a correction in oil and commodity prices going forward, we cannot be certain that such correction will be substantial enough to bring the inflation risk down. one thing is more or less certain, however : global financial interconnectedness almost all but ensures that we should expect higher financial volatility in the near term, as market players alternate between yield - seeking and risk - aversion investment strategies. the bank of thailand is closely monitoring the situation and assessing the impact on thailand β s financial and economic stability. given the pickup in domestic growth momentum and various risks the thai economy is likely to confront, the monetary policy committee expected thailand β s gdp to expand by 4. 5 - 6 per cent this year while inflation excluding raw food and energy should remain within target of 0 - 3. 5 per cent for the next 8 quarters. in the face of rising food and energy prices, headline inflation is expected to hover between 2. 8 - 4 per cent in 2008, but is expected to come down next year. i want to note however that the monetary policy committee β s new forecast will be given in april along with the latest inflation report. ladies and gentlemen, i have talked at length about the economic outlook and risks going forward. what then is the appropriate course for monetary and exchange rate policy that i think can help cushion the economy along the bumpy road ahead? monetary policy is aimed to ensure price stability so that the economy can continue to expand at its full potential. the definition of price stability that the monetary policy committee uses is in alignment with that of the public ; that is, we want to see low and stable inflation over time. at the moment, when our policy interest rate is the lowest in the region, monetary policy continues to be supportive of domestic demand growth. in the periods ahead, the challenge to monetary policy is likely to come from increased price pressure. with regard to our exchange rate policy, the bank
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caleb m fundanga : recent significant developments in the zambian economy speech by dr caleb m fundanga, governor of the bank of zambia, at the 2006 business and financial writers, media awards, lusaka, 24 january 2007. * * * β’ heads of diplomatic missions, permanent secretaries and senior government officials β’ heads of economic, financial and business organizations β’ heads of media institutions β’ economic, business and financial writers β’ the acca international assembly member and the branch president β’ acca country manager β’ distinguished invited guests, ladies and gentlemen i am delighted both as governor of the bank of zambia and as patron of the business and financial writers forum, to officiate at the 5th annual business and financial writers awards ceremony for the second consecutive time. i must say i am always delighted to interact with you my colleagues from the media because we are both stakeholders in the provision and dissemination of financial and economic information to the public. the purpose of this annual event is to recognise outstanding journalism effort demonstrated by economic, financial and business writers from various media institutions. in this room tonight are different organizations represented with a commonality, that is, we all wish to have accurate, timely, informative, creative, relevant and in - depth information. distinguished ladies and gentlemen, i am pleased as patron of the business and financial writer forum to continue working with you. i would like to begin my presentation this evening by sharing with you some of the recent significant developments in our economy : 1. positive and significant real gdp growth rates over the last 7 years. 2. continuous and significant drop in overall annual inflation rate to levels below 10 %. as at end 2006, overall annual inflation was 8. 2 % compared with 15. 9 % at end 2005. but i must hasten to add here that the impact of increases in petroleum products and anticipated millers upward adjustment of maize prices in line with fra maize prices pose significant threats to overall inflation. 3. a fall in commercial banks lending interest rates. in line with falling inflation and yield rates on government securities, the average commercial bank lending rate declined to 27. 8 % in december 2006 from 33. 9 % in december 2005. although the trend is in the right direction, the bank of zambia considers the levels of lending rates to be still too high and i urge commercial banks to reduce their lending rates further to stimulate growth. 4. in 2006, the exchange rate recorded depreciation. against the us dollar, the kwacha depreciated by 21. 1
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trend also needs to be complemented with similar evolution in the socio economic aspects of islamic finance such as waqf and zakat. a stronger zakat and waqf system would not only complete the equation for a comprehensive islamic financial system that supports a more equitable distribution of wealth to ensure fairness and equity, it will also become the user of the islamic financial services particularly in the management and investment of the zakat and waqf funds. in addition, access to islamic financial services to micro enterprises would bring such activities into the economic mainstream and improve their level of performance. conclusion as islamic finance advances forward to become an integral component of the international financial system, continuous efforts are needed to further develop the domestic financial system to meet the changing requirements of a highly dynamic and rapidly evolving environment. in our quest to build a viable and sustainable islamic financial system, the aim is to contribute to the channeling of capital flows to productive investments, create wealth and promote economic activities, that conforms to the principles and values of shariah. with this, the islamic financial system will ultimately bring benefit not just among muslims but with the rest of humanity, insyaallah. thank you.
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2016, shariah - compliant trade finance accounted for 24. 1 % of total trade finance provided by the malaysian banking sector. however, our islamic finance industry only financed about 5 % of total exports in malaysia, again, signifying an untapped growth area with large potential. increasing bank financing for smes would also encourage more market based solutions to meet the funding needs of the halal sector participants, which are now largely reliant on government initiatives. there are however a number of challenges that may impede trade finance facilitation by islamic finance players. i would like to highlight two. first is β β process inefficiencies β β that can contribute to higher operational risks such as fraud. this can be mitigated through use of technology that reduces reliance on traditionally document - intensive and multi - tiered manual processes. in malaysia, i am happy to note that six islamic banks have embarked on digitalisation of trade finance processes β through an integrated web - based platform that offers trade finance and working capital management solutions. the second challenge is, β the need to improve connectivity between the islamic finance industry and the international trade community β to facilitate effective intermediation of trade finance needs. again, the use of technology can ease the application and submission of trade - related information and documents which can expedite the whole process. if these challenges are not addressed, industry players are at risk of becoming irrelevant in the trade finance space. this is due to increasing competition from fintech companies that are able to serve smes and the underserved market more effectively as compared to a traditional credit intermediating bank. tawreeq, for example, a uae - luxembourg fintech platform, β offers supply chain finance solutions including shariah - compliant trade finance securitisation β to smes and their corporate partners. how do we lessen the risk of being overtaken by such competitors? one way is for the islamic finance industry, to tap into the expertise of fintech companies β by exploring mutually beneficial partnerships β to develop innovative financial solutions for the international business community. in malaysia, the regulatory sandbox is supportive for industry players to explore innovative ideas and test prototype of technology solutions for trade finance. increasing trade flow of halal products β also offers large opportunities for takaful operators to develop innovative solutions for trade - related risks. a good example is trade credit takaful. this however, necessitates the development of requisite expertise within the
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in other markets in their area of expertise. thus, we have seen them expanding directly into overseas markets in transport, packaging, building supplies, shopping malls, property services, etc., mainly activities that cannot be serviced via exports, but require direct investment. i think this trend is to be applauded, and is a sign of the success of australian business rather than its inadequacy. although we are nowhere near as far down this path as, say, the netherlands or switzerland, their success shows that it is not only the major countries that can create viable international companies. so far, i have not mentioned the other catchphrase - the β branch economy β - the belief that the companies in the peripheral countries will be swallowed up by larger companies centred mainly in the united states ( and, to a lesser extent, europe ), leaving only branch operations behind. this is a more difficult concept to pin down, although i do not wish to dismiss it as a concern. there certainly are powerful forces towards centralisation that operate within economies, and between economies. these centripetal forces are primarily the result of improved technology, particularly in communications, media and transport. they are best analysed within the framework of β winner - take - all markets β rather than in the more conventional discussion on globalisation. if this is our concern, i. e. our best companies are falling into foreign hands, the thing we should mainly worry about would be a big rise in inward direct investment, but we have not seen this - we have seen r. h. frank and p. j. cook, β the winner take - all society β, the free press, n. y., 1995. a reasonably steady trend over recent years. again, if this is our concern, we should applaud the success of australian companies operating abroad, as shown by the recent strength of outward direct investment - although there will inevitably be tensions about where these companies will be listed and headquartered. it will take a long time before we can put these issues into perspective. we are still too heavily influenced by the events of recent years whereby everyone seemed to be comparing themselves unfavourably against the us economy, and finding that they were losing out in the investment community β s esteem. that situation is changing and, when the dust settles, i suppose some of the more extreme views about the magnetic pull of investment to the united states will recede. as explained, we have already seen this happening
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to get a sense of the magnitudes involved, suppose that we tried to finance projected entitlement spending entirely by revenue increases. in that case, the taxes collected by the federal government would have to rise from about 18 percent of gdp today to about 24 percent of gdp in 2030, an increase of one - third in the tax burden over the next twenty - five years, with more increases to follow. ( this calculation ignores the possible effects of higher tax rates on economic activity, an issue to which i will return later. ) alternatively, financing the projected increase in entitlement spending entirely by reducing outlays in other areas would require that spending for programs other than medicare and social security be cut by about half, relative to gdp, from its current value of 12 percent of gdp today to about 6 percent of gdp by 2030. in today β s terms, this action would be equivalent to a budget cut of approximately $ 700 billion in non - entitlement spending. besides tax increases, spending cuts, or reform of the major entitlement programs, the fourth possible fiscal response to population aging is to accommodate a portion of rising entitlement obligations through increases in the federal budget deficit. the economic costs and risks posed by large deficits have been frequently discussed and i will not repeat those points today. instead, i will only observe that, among the possible effects, increases in the deficit ( and, as a result, in the national debt ) would shift the burden of paying for government spending from the present to the future. consequently, the choices that fiscal policy makers make with respect to these programs will be a crucial determinant of the way the economic burden of an aging population is distributed between the current generation and the generations that will follow. a broader economic and generational perspective indeed, framing the issue in generational terms highlights the fact that the economic implications of the coming demographic transition go well beyond standard considerations of fiscal policy and government finance, important as those are. for reasons that i will explain in a moment, the aging of the population is likely to lead to lower average living standards than those that would have been experienced without this demographic change. how that burden of lower living standards is divided between the present and the future has important implications for both intergenerational fairness and economic efficiency. why will the coming demographic transition carry a cost in terms of long - run living standards? assuming it unfolds as expected, the projected aging of the population implies a decline over time
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june 2016 eurosystem staff macroeconomic projections for the euro area, which foresee annual hicp inflation at 0. 2 % in 2016, 1. 3 % in 2017 and 1. 6 % in 2018. in comparison with the march 2016 ecb staff macroeconomic projections, the outlook for hicp inflation has been revised slightly up for 2016, reflecting recent oil price increases, and has remained unchanged for 2017 and 2018. turning to the monetary analysis, broad money ( m3 ) continued to grow at a robust pace in april 2016, with its annual rate of growth standing at 4. 6 %, after 5. 0 % in march. as in previous months, annual growth in m3 is mainly supported by its most liquid components, with the narrow monetary aggregate m1 growing at an annual rate of 9. 7 % in april, after 10. 1 % in march. loan dynamics followed the path of gradual recovery observed since the beginning of 2014. the annual rate of change of loans to non - financial corporations ( adjusted for loan sales and securitisation ) stood at 1. 2 % in april 2016, compared with 1. 1 % in march. developments in loans to enterprises continue to reflect the lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and non - financial sector balance sheets. the annual growth rate of loans to households ( adjusted for loan sales and securitisation ) remained broadly stable at 1. 5 % in april, after 1. 6 % in march. the monetary policy measures in place since june 2014 have clearly improved borrowing conditions for firms and households, as well as credit flows across the euro area. the comprehensive package of new monetary policy measures adopted in march this year underpins the ongoing upturn in loan growth, thereby supporting the recovery of the real economy. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need to preserve an appropriate degree of monetary accommodation in order to secure a return of inflation rates towards levels that are below, but close to, 2 % without undue delay. monetary policy is focused on maintaining price stability over the medium term and its accommodative stance supports economic activity. as emphasised repeatedly by the governing council, and as again strongly echoed in both european and international policy discussions, in order to reap the full benefits from our monetary policy measures, other policy areas must contribute much more decisively, both at the national and at the european
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##ing in target. the scheme will apply whenever the same - day processing of payment orders within target cannot be completed. the reimbursement scheme is intended to compensate participants for certain higher costs they incur in having recourse to the standing facilities of the eurosystem as a result of a malfunctioning. in order to ensure a level playing field, the scheme also applies to participants in euro real - time gross settlement ( rtgs ) systems of non - participating national central banks. the legal framework for this reimbursement scheme is reflected in an amended β target guideline β which, in line with the ecb β s policy of enhanced transparency, will be published in the official journal of the european communities and made available on the ecb β s website shortly. second, the governing council addressed issues relating to cross - border retail payment services, which are of particular interest for euro area consumers. you may recall that the ecb published a report on this subject a year ago, calling on the banking industry to improve the unsatisfactory service level for cross - border credit transfers before january 2002. today, on the basis of a progress report, we have reviewed the advances of the banking industry against the objectives set by the eurosystem and we have identified the outstanding issues that need quickly to be addressed. a press release on this topic will be issued later on today. the progress report will be available on the ecb β s website shortly.
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financials of banks. the point i am trying to make is that if the rbi inspectors are able to identify these divergences in the limited time - frame that they are on - site, why the banks β auditors are not able to do so. i am not sure how many acbs actually ask their statutory auditors and internal auditors the reasons for their inability to identify such instances? is it a question of efficiency of the auditors or is there a much deeper issue β something to do with the transparency of the process itself? for a fair representation of accounts, it is also imperative that adequate provisions for post - retirement benefits like pension, gratuity, leave encashment, etc. ( wherever applicable ) are held. it is important that the acb asks the right questions to the management about various underlying assumptions that go into computation of the required provisions such as life expectancy, discount rate, expected return on investments, etc. i urge the acbs to ask uncomfortable questions. going forward, under a full - fledged rbs process, rbi β s dependence on auditors is only going to increase and a very competent acb will provide a great deal of supervisory comfort to us. role of audit committees in group companies 10. as a financial conglomerate, icici group pursues diverse business interests which subject it to the regulations of various domestic and overseas regulators. some of the critical roles that the audit committee of the boards are expected to play in terms of sebi β s corporate governance guidelines include : bis central bankers β speeches reviewing the annual financial statements and auditor β s reports before submission to the board for approval, with particular reference to major accounting entries involving estimates based on the exercise of judgment by management ( similar to what i had mentioned in the previous point ) reviewing the statement of uses / application of funds raised through an issue ( public issue, rights issue, preferential issue, etc. ) scrutiny of inter - corporate loans and investments reviewing the adequacy of internal audit function reviewing the functioning of the whistle blower mechanism ; approval of appointment of cfo review of the appointment, removal and terms of remuneration of the chief internal auditor the corporate governance guidelines of irda also envisage a similar role for the acbs of the insurance entities. 11. all financial conglomerates ( fcs ) tend to have complex group structures with significant interconnectedness amongst the group entities. such complexity generally masks the inherent risks and interconnectedness. the domestic financial
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found lacking in proper monitoring. had it not been so, many observations or rather, similar kind of observations would not be appearing in successive supervisory reports. i would like the acbs to appreciate that rbi findings are based, in many cases, on a sample check. but the banks β compliance should not be limited to the instances highlighted. the objective should be to rectify the systems and processes across the bank so that there is no recurrence. the emphasis should be on the nature of deficiency and not on the rectification of the number of deficiencies identified by the supervisor. a crucial underpinning of the risk - based approach is a focus on systems and processes in banks. it would be important for the top management of banks, and more specifically, the acb members to internalize these aspects quickly and to develop a deeper understanding of the entire rbs process. ( c ) frauds : this is another area which needs increased focus and greater sensitivity from the acb members. everyone acknowledges the importance of putting in place appropriate systems and processes as the first and foremost requirement for preventing such incidents. the systems and processes may be in place. but do they really work? we tend not to look at it until and unless something serious happens. how fast is the dissemination of information within the bank? how quickly internal communications reach the staff manning the front office in the branches? an evaluation of this may not shore up a bank β s bottom - line but would definitely save it a lot of embarrassment. in our recently concluded scrutiny into fixed deposit related frauds in some banks, it emerged that even the caution advices issued by rbi in respect of certain individuals had not percolated down to the branch officials quickly enough to enable appropriate preventive measures. does acb have a role here? i would say that acbs should take upon themselves to monitor the trend of frauds, assimilate key learnings and ensure that mitigation measures are put in place by the management. ( d ) review of quarterly / annual results : as i mentioned earlier, one of the key expectations of all stakeholders, including the regulators, from the acb is that they ensure the integrity of accounting system. in respect of banks, the acbs are expected to take a close look into the asset quality, instances of restructuring of advances, provisioning held, etc. during rbi inspections, our inspectors sometimes report significant divergences with regard to asset classifications and provisions held, which have substantial implications for the
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what should be thought of as a temporary rise in revenue and what can be assumed to be permanent ). it strikes me that in the popular discussion about fiscal policy, many participants talk past each other because they are looking at different time dimensions. it is not unreasonable to say that if the budget is perpetually in surplus, there is no debt to speak of and no other looming large unfunded liability, taxes should probably, over some long run horizon, be lower. this, it seems to me, is the economic case for structural reductions in taxes, which some observers articulate. others argue that such reductions should be delayed, for cyclical reasons, given that demand needs to slow to contain inflation. so there is a structural case for taxes to fall, and a cyclical case for them not to. it is no doubt difficult for any government to reconcile these two, equally valid, points of view, the more so if the same tension persists for a number of consecutive years. leaving that aside, let us give some thought to just how effective an instrument budgetary policy is likely to be. if inflationary pressures were just due to specific, narrow issues ( which, as is clear above, i doubt ), precise targeting of the sources of inflationary pressure via tax and spending measures could nonetheless be exceedingly difficult at a technical level, let alone politically. if it is accepted, on the other hand, that inflation is sufficiently general that overall demand has to slow, the amount of slowing has to be the same regardless of whether it comes via monetary policy or fiscal policy. it would be somewhat differently distributed across sectors and regions, as the impact of interest rate and exchange rate effects obviously would not overlap exactly with the tax or spending measures that would occur in their place. i would hazard a guess, though, that a good many people who are today paying higher interest rates would instead pay higher taxes in a world where fiscal policy was used more actively to manage the business cycle. we are unlikely, i submit, to witness a situation where income taxes are raised only for those without home loans, or only for those living in western australia and queensland, or those working in the mining sector. then there are the time lags in implementing fiscal measures. the budget occurs once a year, and has a very long and gruelling process in the lead up. i am not expecting to be stampeded by people in this room wishing to do that more often. the economy could conceivably
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economy. we cannot know because that alternative scenario cannot be run, but as everyone knows, the board has on occasion in the recent past considered larger movements. so the idea of larger changes is not absurd. yet it is hardly as though interest rate changes were so small that no one noticed. there are few issues reported at more length than interest rates ; no one could say they were unaware of what was happening. beginning with the march 2005 rate change, moreover, the extent of coverage in the media has been far more intense than it had been prior to then, and far more intense than is the case in other comparable countries. we could debate the reasons for that, but they do not matter for present purposes. on every one of those occasions, there was no shortage of dramatic media coverage, and no shortage of predictions of serious consequences for indebted households, the economy and so on. if we were looking for announcement effects, surely they should have been at work through this period. my own view is that monetary policy is most effective when actions are seen to be consistent with the factual evidence available on the economy, a sensible assessment about future risks, and a framework that has a clear medium term objective for policy. apart from that, we have to accept that the likely effect of any one move of 25 or even 50 basis points is, while uncertain, probably only modest. it is the combination of changes, and more particularly the level reached, that will do most of the work. a second version of the β ineffectiveness β argument holds that ( 1 ) the price rises are coming from factors beyond the control of any australian policy, and particularly from abroad, from which it follows that ( 2 ) monetary policy cannot do anything about them. for some people, it follows that it is therefore ( 3 ) futile, and unnecessarily disruptive, to try. i have already addressed the question of whether all the price rises can be put down to a few special factors, obviously not under our control. the fact is that the price rises are broader than that. but even if all the initial impetus for higher prices comes from events abroad, we still have to decide how we will respond to that shock. in the case of energy prices, while the world price of oil in us dollars certainly is completely outside our control, it is the australian dollar price of oil that actually matters for the australian motorist. that price is lower at present than it might have been, because of the rise in
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1. 2 - 1. 4 - 1. 6 - 1. 8 united states / 0 31 / 22 / 0 28 / 22 / 0 28 / 22 / 0 26 / 22 / 0 24 / 22 / 0 21 / 22 / 0 20 / 22 / 0 17 / 22 / 0 14 / 22 / 0 12 / 22 / 1 10 / 22 / 1 08 / 22 / 1 05 / 22 / 0 03 / 23 / 0 2 / euro area source : c. hoynck and l. rossi ( 2023 ), β the drivers of market - based inflation expectations in the euro area and in the us β, mimeo, bank of italy, rome. note : 5 - year inflation swap rates ; changes with respect to 3 january 2022. figure 12 inflation ( monthly data ; 3 - month annualised percentage changes ) us uk ez - 5 - 5 source : eurostat, uk office for national statistics and us bureau of labor statistics. note : ez denotes the euro area.
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the g20 will succeed. the euro area as a whole is sounder than other currency areas. public budgets and the external accounts are more balanced. but the attack on it now under way is not directed against the area as a whole. exploiting the opportunity offered by the unfinished state of the project, it isolates the weakest members. there is but one answer : the euro lives with all its members, large and small, strong and weak. if in the past it was an illusion to think that the currency alone could β make β europe, today the only course of action is to reinforce the construction of europe : in the political sphere, with a more active government of the union ; in budgetary discipline and in progress on structural reform, with a new stability and growth pact that is at once broader and more binding. two years ago i devoted a good part of my concluding remarks to the persistent gap between the north and south of italy. and it was with that examination that, in practice, the bank of italy began the celebration of italy β s 150 years of national unity. we are convinced that national unity must be honoured by strengthening it, ensuring its vitality and adapting it to a new era. this is not the first time in its history that italy has been faced with an arduous collective challenge. it has faced and overcome many in the past century and a half. let me mention two examples. the greatest challenge of all, in terms of structural reforms, arose when italy, immediately after national unity, prepared to participate in the life of europe with a population that was 75 per cent illiterate, against 30 per cent in the united kingdom and 10 per cent in sweden. national political leaders, administrators, teachers, north and south, joined together to fight the battle for literacy. in the end we did come up to the level of the rest of europe, and this was one of the factors behind the economic miracle after the second world war. in 1992 we were confronted with a much more severe budget crisis than those facing some european countries today. the government of the day presented a financial adjustment plan which, enjoying national consensus, gained credibility in the markets with no assistance either from international institutions or from other countries. the struggle was long drawn out : under a flexible exchange rate regime, three years on, spreads still exceeded 650 basis points. yet the battle was won, because the successive governments maintained fiscal discipline : stability had been incorporated into the country β s political culture. today
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conditional on resolute fiscal policy adjustments, guaranteed collectively by euro area member states. in addition to highlighting the main trade - offs between public debt sustainability and monetary policy, the great merit of professor gita gopinath β s presentation is to use a formal model to support her rigorous analysis. in particular, she shows how the degree of commitment to low inflation may change the level of sustainable public debt. this analysis is most welcome, not only because public debts are very high, but also because in several parts of the world inflation appears stubbornly low in spite of extremely aggressive monetary policies. the second session examines changes in financial intermediation. hyun shin will focus today on the surge of bond - financing in the global economy over the last few years and the pros and cons associated with a broader shift from bank to market financing. admittedly, our objective as regulators remains relatively simple : it should be primarily to ensure that financial institutions, infrastructures and markets properly do their job of smoothly and efficiently channelling savings into productive investments. yet our task is difficult as finance constantly evolves as a result of technological advances or as an answer to regulatory changes. this should prompt us to be both resolute and cautious in dealing with many questions such as whether there is an optimal mix of bank and market financing. the financial crisis has indeed revealed at least three major failures of our financial systems, be they bank or market oriented : excess leverage, excess complexity and excess opacity. corrective actions have been implemented in these three areas. first, over the past few years, basel iii and various national or regional initiatives have led to a sizeable recapitalization of the banking system and especially sifis [ systemically important financial institutions ]. in the euro area, the comprehensive assessment of the balance sheets of 130 major banks shows how much progress has been made. second, major reforms have been undertaken in order to facilitate the orderly resolution of large and complex financial institutions, thus providing better incentives ex ante to these large financial conglomerates. such progress can be seen both in europe, where the banking union is a major step forward, as well as abroad. last, the scope of regulation has been extended to products and markets that remained too opaque in spite of their systemic relevance, such as some major classes of otc derivatives. that said, much work still lies ahead to stimulate new intermediation mechanisms in order to diversify the funding of the economy when a single channel, such as
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have fallen again somewhat at both banks following an increase in the first quarter. second, credit suisse and ubs continued to deliver solid results in the second and third quarters thanks to their diversified income structures. while provisions for credit risks have increased compared to pre - crisis levels, they are significantly lower than those of their international peers. in addition, trading business and wealth management at both banks benefited from the rapid recovery in the financial markets. against this background, the capital situation at credit suisse and ubs has improved slightly since the first quarter. looking ahead, the two globally active swiss banks remain well placed to face the challenges posed by the difficult environment. an increase in provisions is likely in the coming quarters as a result of the expected deterioration in credit quality. under the baseline scenario, however, the snb estimates that the financial impact of the coronavirus pandemic on credit suisse and ubs will remain limited. furthermore, the snb β s scenario analysis shows that, thanks to their capital buffers, both banks could also cope with significantly worse developments in the economic environment than are assumed in the baseline scenario. at the same time, this analysis shows, however, that the estimated loss potential under stress scenarios at credit suisse and ubs continues to be substantial. moreover, uncertainty about the future course of the pandemic and thus about the financial impact on the two globally active banks remains high. both factors underline that the capital requirements under the current tbtf regulations are necessary to ensure adequate resilience at these two banks. domestically focused banks i shall now turn to the domestically focused banks. here too, there has been little change in the situation since the financial stability report was published in june. these banks β financial figures and risk indicators are still showing scarcely any effects of the coronavirus pandemic. although their profitability continued to decline in the first half of 2020, this development was driven by a further narrowing of the interest rate margin. there has been hardly any increase in value adjustments and write - downs. moreover, domestically focused banks are not reporting any significant rise in impaired loans at present. despite the page 2 / 4 zurich, 17 december 2020 fritz zurbrugg news conference economic downturn, mortgage lending volume and residential property prices have also continued to increase over the last six months. however, this does not mean that domestically focused banks will remain unaffected by the economic consequences of the pandemic. experience shows that there is typically a lag before the impacts
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we can succeed in reducing the cost of credit and also grow your business. there is no other opportune moment for all businesses including banks to realise that success is sweeter when all players prosper and success begets success. with these remarks, ladies and gentlemen, it now remains for me to wish all the businessmen and women in nakuru success in their endeavours towards prosperity of their businesses. successes of your businesses will directly contribute towards our desired economic growth of becoming a middle income country as envisaged in vision 2030. thank you and god bless you all.
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period, the number of bank branches in nakuru has increased from 18 in 2006 to 27 in 2009 but even more in its hinterland. this increase explains the prevailing business potential in nakuru town and its environs. the increase in the number of banks in nakuru is in line with central bank β s desire of promoting financial inclusion. as per the financial access survey of june 2009, only 23 percent of the kenyan population aged above 18 years is banked. this state of affairs is not acceptable and we expect the level to increase significantly by the year 2012 given the various efforts central bank and its partners have put in. these include : the licensing of deposit taking microfinance institutions, whose focus is the lower end of the market, which is concentrated in the rural and peri - urban areas. the licensing of credit reference bureaus, which provides an opportunity for individuals and businesses to rely on their information capital as an alternative form of collateral unlike the traditional physical collateral, to secure credit facilities from banks. approval for banks to engage third parties to provide certain banking services. we believe that this will further increase the outreach of banks to most corners of the country. flexible space for banks to roll out very incentivised products using the available technological platforms. currency centres to reduce costs of doing business. ladies and gentlemen : the increase in the number of banks in nakuru is an indication that the town is in the process of developing the requisite infrastructure necessary to support the activities of the banks. banks have probably been attracted to nakuru by its uniqueness of being both an agricultural, tourism and industrial town. institutions of higher learning have also not been left behind in realizing the potential of nakuru to create adequate employment opportunities for their graduates. partnerships between businesses and such institutions of learning is one of the surest ways of developing relevant professionals to contribute to the town β s growth. nakuru is thus ready for a vibrant business centre and to serve its hinterland. ladies and gentlemen : allow me now to move on to my second point which is the upcoming currency centre in nakuru. the cash based nature of our economy cannot be overemphasized. the central bank has therefore been reviewing the currency management mechanism to ensure availability of β clean money β at a reasonable cost to kenyans. the bank, in conjunction with the kenya bankers association ( kba ) has embarked on the establishment of currency centres. these centres are expected to reduce the operational costs incurred by banks in moving cash to
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economic growth is likely to remain firm. the impact of the earthquake on overseas economies generally appears to be limited. led mainly by robust domestic demand, emerging and commodity - exporting economies have continued relatively high growth and are driving global growth. however, in many of these economies, concerns about inflation have been mounting due to the earlier rise in international commodity prices, prompting their central banks to lean toward monetary tightening by, for example, raising policy rates and reserve requirement ratios. china β s economy currently continues to grow at a rate of around 9. 0 β 10. 0 percent, while inflation runs at a rate of about 5. 0 β 6. 0 percent, exceeding the government β s inflation target of 4 percent. against this background, the people β s bank of china recently implemented the fifth increase so far this year of the reserve requirement ratio and strengthened liquidity controls, including setting a ceiling on aggregate credit newly extended by banks, and is strengthening its stance to curb inflation. these measures may dampen economic growth to some extent, but given that china is enjoying a virtuous cycle of growth in exports, production, income, and spending, the economy, on the whole, is likely to continue to grow at a relatively high rate. the u. s. economy has been recovering and is likely to remain on a recovery trend. the seasonally adjusted annualized quarter - on - quarter growth rate of real gdp in the january β march quarter of 2011 was 1. 8 percent. although this is lower than the 3. 1 percent recorded in the preceding quarter, it confirms that, mainly thanks to exports and private consumption, the u. s. economy continues to recover. however, balance - sheet adjustments in the heavily indebted household sector remain a major drag on the economy, the prolonged sluggishness in the housing market persists, and the unemployment rate, which stood at 9. 0 percent in april, is still high. although private - sector employment has continued to trend up, the improvement still lacks the momentum to make up for the approximately 8 million jobs lost since the lehman shock. while the federal reserve has announced that it will end purchases of an additional 600 billion u. s. dollars of treasury securities by the end of june 2011, as scheduled, it also emphasized that it will continue to maintain an accommodative monetary policy stance for an extended period in a situation where the u. s. economy lacks vigor as a whole. european economies as a whole have been
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recovering moderately, albeit with some differences in growth by country. while peripheral countries in the euro area are registering low growth, large core economies, such as germany and france, are enjoying steady growth supported by increases in exports, particularly to the emerging economies, and private consumption. as for the outlook, the pace of economic growth in europe as a whole is likely to remain moderate, given that countries in the euro area are implementing austerity bis central bankers β speeches programs as part of their fiscal consolidation measures and because of the uncertainties regarding how the debt problems in countries such as greece will develop. in this environment, the european central bank ( ecb ) in april raised its policy rates for the first time since the lehman shock owing mainly to increases in international commodity prices. however, given the major risk factor presented by problems involving the credit risk of government bonds issued by peripheral countries in the euro area, the outlook for european economies, particularly greece, remains highly uncertain. while the issue of fiscal consolidation in europe and the united states has been gaining attention, let me touch upon the fiscal status of japan. although japan has the highest ratio of public debt to gdp among major industrialized countries, yields on japanese government bonds ( jgbs ) have remained stable at low levels. one likely explanation is that jgbs continue to command market confidence, despite japan β s grave fiscal situation. fiscal consolidation is not a task that can be achieved over a short period of time. it is therefore important for japan to steadily work on measures aimed at fiscal consolidation while market confidence regarding the creditworthiness of jgbs remains in place. b. japan β s economy following a v - shaped recovery after the lehman shock, japan β s economy had been on a moderate recovery trend, but the situation changed completely with the earthquake on march 11. the economy is currently facing strong downward pressure, mainly on the production side. although the preliminary results for the industrial production index for april show a small increase of 1. 0 percent from march β mainly due to progress in the restoration of supply chains β the level of production remains at only around 85 percent of that in february, that is, just before the earthquake. automobile production in particular dropped sharply, and the number of passenger cars produced in april marked a year - on - year decline of 60. 2 percent. in these circumstances, real exports have continued to decline, registering a 6. 9 percent fall in april from the previous month, due largely to the substantial decline in automobile
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us realise how essential europe really is. bis central bankers β speeches
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the euro area economy has steadily recovered. we have now seen 22 consecutive quarters of economic growth. there are 9. 6 million more people in employment in the euro area than there were in the second quarter of 2013 ( when the number of people in work fell to its lowest point during the crisis ). the unemployment rate has declined to 7. 9 %, its lowest level since october 2008. and the employment rate of people aged 15 - 74 has risen from 54 % in 1999 to 59 % in the second quarter of 2018, the highest rate ever recorded in the euro area. the main motor of the recovery has been the domestic economy, driven by a strengthening in domestic demand and improving labour markets. that underlying strength of the economy has underpinned our confidence that inflation would converge towards our inflation aim in a sustained manner. as such, since 2017 we have gradually reduced the monthly pace of net asset purchases. we decided to end our net purchases in december last year, confident that the sustained convergence of inflation to our aim would proceed. at the same time, recent economic developments have been weaker than expected and uncertainties, notably related to global factors, remain prominent. so there is no room for complacency. a significant amount of monetary policy stimulus is still needed to support the further build - up of domestic price pressures and headline inflation developments over the medium term. our forward guidance on the key ecb interest rates, reinforced by the reinvestments of the sizeable stock of assets we have acquired, continues to provide the necessary degree of monetary accommodation for the sustained convergence of inflation to our aim. lessons for monetary policy and the monetary union so what have we learned from this experience? the ecb β s monetary framework rests on three elements : a clear mandate to achieve price stability ; independence over the instruments we can use to achieve our mandate ; and a strong accountability framework. the importance of each of these elements has been reinforced by the crisis. 2 / 4 bis central bankers'speeches first, we have seen that a well - defined mandate is vital for our credibility with the public, because it guarantees that the ecb will always act in the interest of the whole euro area, and will not be swayed by interest groups. second, we have seen that instrument independence is key to an effective monetary policy, since it allows the central bank to act quickly and flexibly to shocks, especially in exceptional times. indeed, a well - equipped toolbox, comprising both standard and non - standard instruments,
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probably have depreciated by more than it actually did, demand would have grown faster and inflation moved much higher. this would have had serious consequences for indebted households and businesses, as well as causing turmoil in the labour market and, ultimately, even more instability in the economy. other central banks have periodically needed a very tight monetary stance to bring inflation under control. for example after 1980, roughly a quarter of a century ago, the us federal funds rate was significantly higher for a while than iceland β s current policy rate. this proved necessary in order to rein in inflation that was also higher then than in iceland today. this policy was successful and the us has not faced a serious challenge from inflation since. ideas for an economic panacea have also been aired, typically involving the adoption of the euro. the central bank has already stated its view that adopting the euro would be imprudent except by joining the eu. even though iceland were to decide to apply for eu membership, it would not be able to enter into the monetary union until several years later, after fulfilling all the accompanying conditions which include criteria for inflation, interest rates and exchange rate stability. experience shows that no concessions are made from these conditions. it is also important to remember that membership of a larger currency area does not eliminate the need for sensible economic policy. what changes is that monetary policy independence is lost. decisions on consumer prices and unit labour costs relative to abroad would be transferred to the respective markets. this would make fiscal and wage flexibility even more vital in order to tackle cyclical fluctuations. in the current adjustment of the economy, the exchange rate of the krona has played a key role. without a flexible exchange rate, the crucial instruments for tackling prevailing economic conditions would have been tight fiscal restraint, cuts in public spending and / or higher taxes, to help ensure that sharp rises in wages and prices did not excessively weaken the competitive position of iceland β s trading sectors. exchange rate volatility in the recent term was fuelled by the overheating of the economy, which is now cooling once more. the crucial factor for near - term exchange rate developments is to restore economic stability in iceland with inflation on target, and to secure it in the longer run with prudent economic policies. it is doubtful whether claims that economic policy would necessarily become more prudent, if iceland switched to the currency of a larger currency area, are justifiable.
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brought into full play in the building of a credit information system. credit information system building is a system engineering involving many aspects, and credit extension institutions play a key role in building the system. at present, priorities should be placed in the following aspects. first, great importance should be attached to the quality of data and related working mechanism should be improved as soon as possible. relevant institutions should, according to the pbc decree no 3 ( 2005 ), strictly follow the criteria of individual credit information database issued by the pbc and report credit information to the database in a accurate, complete and timely manner to ensure the quality of data in the database, which is key to the success of credit information system building. enterprise and individual credit information databases serve as a platform for banking institutions to share information. as our foreign colleagues often say β rubbish in, rubbish out β, you get what have inputted in the database. we hope that the heads of financial institutions and other credit extension institutions highly value this issue, and take concrete steps to improve the quality of data. second, efforts should be made to resolve disputes properly and establish a flexible and highly efficient dispute resolution mechanism. dispute resolution is important to the building and operation of individual credit information database. on the one hand, it helps us to detect mistakes in the database and enhance the quality of the database. moreover, whether there is an efficient dispute resolution mechanism have a direct bearing on rights protection of parties involved and the public image of the databases and banking institutions. since the databases were put into use, they have received extensive attention and support form the general public and media, which is a good start for credit information development. however, we should be fully aware that, without an efficient dispute resolution mechanism, public support to and recognition of the databases and banking system will be definitely weakened, resulting in unnecessary troubles. thirdly, credit officers should be well trained to make full use of the information provided by the enterprise and individual credit information database. first, credit officers should be trained to properly understand the information of credit report. second, credit officers should be trained to make enquiry with the database in line with the requirements and receive written authorization from the applicant for enquiry in case of application examination. third, credit officers should be trained to turn down loan applications in a proper manner, to avoid misleading the public to regard the enterprise and individual credit information database as a system of black lists. fourthly, wider use of the enterprise and individual credit information database should
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mohd adhari belal din : cybersecurity β safeguarding the future for innovative financial inclusion remarks by mr mohd adhari belal din, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the " cybersecurity : safeguarding the future for innovative financial inclusion ", kuala lumpur, 1 august 2017. * * * it is my privilege to welcome you to this landmark event β a very important policy forum for policymakers and regulators to discuss on the significance of cybersecurity in safeguarding the future for innovative financial inclusion. intersection of financial inclusion and cybersecurity as digital financial services expands in reach, scope and scale, cybersecurity matters a great deal for policymakers and regulators with financial inclusion mandates. the fast - changing digital landscape has brought the financially excluded and underserved populations into the formal financial system, bringing about a positive impact on economic growth and stability. however the rapid paced innovation of digital financial services also opens up opportunities and incentives for cyber - attacks, which challenges the fundamental principles of information risk and cybersecurity management. leaders must understand the risks associated with digital innovation, and balance the imperative to protect their organisations and consumers with the need to adopt innovative technology approaches. the likelihood for cyber - attacks and fraud is exacerbated by those who are inexperienced with formal financial services and unfamiliar with consumer rights. low financial and technology literacy amongst consumers could translate to greater vulnerabilities and exposures. more worryingly, we have seen major cyberattacks occurring globally which caused disruptions to essential financial services and destroy savings or financial assets that the underbanked depend on. financial institutions are not only prime targets for cyberattacks but bear tremendous fiduciary and legal, regulatory, and compliance responsibility to protect customer data and privacy. safeguarding trust in the formal financial system is now particularly important for the newly included grassroots. in financial services, the push for digital innovation, disruptive technologies, delivery of more personalized customer experiences, and seamless access to consumers for more inclusion continuously introduces new threats. forrester research calls this dynamic an β epic β battle between privacy and digital innovation, and predicted that by 2020 financial services and insurance companies expect to generate the biggest portion of their total sales from digital products, services, or items sold online. alongside this drive toward digital business, many organisations rely on legacy it systems that are expensive to maintain and susceptible to more vulnerabilities,
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greatly compounding the cybersecurity challenge. importance of cybersecurity the current chairman, president and ceo of ibm, ginni rometty had described cybercrime as β the greatest threat to every profession, every industry, every company in the world. β while cybersecurity used to be considered an issue primarily for the it folks, these days it is an agenda item for the entire c - suite. what has really changed? it is not just the frequency of media reports on cybersecurity breaches. if anything, these are merely symptomatic of a larger shift underway. cyber - attacks are fueled by increasingly sophisticated technologies along with relatively new trends in mobility usage, social media, and rapidly expanding connectivity, all in the hands of organized online criminal networks. 1 / 3 bis central bankers'speeches the first six months of 2017 have seen an inordinate number of cyber - attacks and they were not just the standard corporate breaches. already there has been viral, state - sponsored ransomware, leaks of spy tools from us intelligence agencies, targeted denial - of - service attacks and full - on campaign hacking. unfortunately, this is likely a prelude of more cyber - attacks to come. let me share with you some key statistics on cybersecurity : the global cost of cybercrime will reach usd2 trillion by 2019, a threefold increase from the 2015 estimate of usd500 billion. last year, cybersecurity researchers estimate that criminals made over usd1 billion through ransomware, with victims ranging from the chief executives of fortune 500 companies to mom - and - pop businesses and private individuals. 1 in 131 emails contained malware in 2016, the highest rate in 5 years. 76 % of organisations worldwide reported being victim of a phishing attack in 2016 only 38 percent of global organizations claim they are prepared to handle a sophisticated cyberattack. global spending to combat cybercrime will top usd80 billion this year, with organisations increasingly focusing on detection and response. i shall deliberate more on this shift of focus. shift cybersecurity focus to detection and response traditionally, the main focus of cybersecurity traditionally has been on prevention. however, organisations which have been taking preventative approaches to combat cybersecurity threats are coming to realise that this strategy have not always been successful in blocking malicious attacks. a paradigm shift is required to move from the β old ways β of trying to prevent every threat. organisations need to emphasize on detecting and
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to our economies and, basically, life itself. think of pollination, which is crucial for farmers, and for our food supply in general. to give you an idea of the magnitude of the exposures, let me give you some numbers. more than 500 billion euro in investments by dutch financial institutions are highly dependent on one or more of the services we find in our natural environment. also, the global carbon footprint financed by dutch financial institutions is at least 82 megatonnes. this is equivalent to the emissions caused if all the inhabitants of new york city would fly to london and back. ten times. this carbon footprint can lead to increased credit and market risk, among other things, as a result of the transition to a carbon - neutral economy. 1 / 4 bis - central bankers'speeches this is exposure, not risk. but still, these exposures could develop into a substantial amount of risk. because business models that are reliant on sectors and markets which are particularly vulnerable to climate - and nature - related risks may not be future - proof anymore. simply because transition risks may impact the current - day business models. for example, the dutch agricultural industry will likely need to shrink in order to meet long term bio - diversity requirements. hence, banks that are heavily involved in financing the agricultural industry today, must prepare for a changing demand for credit from this sector, in the future. in addition to physical risk and transition risk, financial institutions also face potential reputational and legal risk. these risks follow from an increased awareness in society of the effects of climate change and nature degradation. for instance, if a bank promises to be more green and to reduce its investments in fossil fuel sectors, but does not live up to its commitment, its reputation could be harmed. people will react and activist measures or changes in consumption patterns could follow. their goal being, ultimately, to drive banks towards a more environmentally friendly business model. it is clear that people have become more and more aware of the importance of climate change and environmental degradation and their consequences for daily life. people are prepared to take action. and they are prepared to take legal steps as well. therefore, banks may also be exposed to increasing litigation risk. if a bank, as a signatory to a climate commitment, does not live up to what it promises, not only could its reputation be harmed, it could also be subject to litigation, for example by ngos. actions against greenwashing are a good example. environmental organisations, policymakers
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to understand it, we have to quantify it. so we accumulate essential data to monitor developments in order to take effective decisions. we do that as a national central bank but especially tandem with the ecb and fsb. for example, statisticians from central banks in the euro area have recently been working hard with the ecb to generate sustainability data. data that indicate the carbon footprint of the financial sector's investments, which can be used to gauge the degree of exposure of the sector to transition risks. data that indicate'physical risks'due to climate change through loans and investments. data that indicate the extent to which financial institutions have invested in bonds aimed at promoting sustainability, the socalled green bonds. of course, these data are not yet complete, but they are urgently needed. today, not tomorrow. because we need to know as much as we can to take on our role as long - term economic advisers. not only for the financial institutions we supervise and advise, but as policy advisers for our governments. nationally and internationally. 2 / 4 bis - central bankers'speeches because they have to take the lead in the transition that must take place. they have to develop and enforce a clear climate policy. they have to take the responsibility to enable and inspire the sustainable choices we must all make. tough, major choices will have to be made : between intensive farming and nature, between fossil fuels and green energy, between heavy industry and air quality. we can help to make that happen. in our role as forward thinkers. especially because'forward'means to me : independent and for the long term, not under the influence of voters, not just until the next elections. that is an important role we have to invest in : to be that angel or devil, or the jiminy cricket on the shoulder of our politicians, whispering in their ears β or pulling themto make sure that sustainable choices are not only made, but are successfully stimulated and implemented. and that takes us to our third role : a leader by example. as an organisation we can and must set an example, we must make our own sustainable choices. for instance in our payment systems, in our monetary operations and of course in our own investments as a central bank. that is our responsibility as a central bank. that is why i am proud that dnb was the first central bank to sign the principles for responsible investment in 2019. this marked the start of our journey towards the integration of responsible investment in our own -
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can return to this beautiful historical setting sans souci. in the meantime, i am most grateful for your support. thank you once again for this award and your kind words tonight and thank you very much for your attention. bis central bankers β speeches
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they would previously have never heard of. certainly, there is an unwelcome side to this related to the potential for reviving outdated national stereotypes. but there is also a positive side insofar as it leads citizens in the euro area to develop a sense of belonging together and to care about decisions in other regions. one way to strengthen this trend would be to exchange more media between countries. and here i would like to invite your contribution. could you consider, for example, publishing what we might call β imported pages β from foreign newspapers? this would allow citizens to get a better sense of how issues are seen in other countries ; it would increase cultural sensitivity ; and it could generate europe - wide debates that divide along policy lines rather than national lines. over time, such debate would help to put european decision - making on a more legitimate footing. β imported pages β are but one idea, a starting point. it is with your dedication and creativity that more such ideas can be developed. it is a privilege to be part of the european project, for citizens and journalists alike. but it is also comes with responsibilities, for citizens and journalists alike. ultimately, a genuine european public space is essential for supporting the long - term vision of the euro area. citizens need to be in basic agreement that, within a monetary union, certain economic models are no longer possible. they must understand that there are limits to national discretion in economic policies that affect the area as a whole. in other words, there needs to be a new consensus on economic policies that will reinvigorate the european social model and make it fit for the 21st century. this is a discussion we must begin today. setting emu on a path towards stability is essential so that we can move permanently beyond the crisis. it will send a clear signal to citizens and financial markets that the euro area is committed to staying the course. and it will remove any grounds for doubting the euro β s future. there are many reasons to be optimistic that europe will find this path. the pattern over recent decades has always been to move forward towards a stronger and more united europe. when we have faced challenges, we have invariably found solutions. those who have predicted the worst have turned out to be mistaken. what β s more, the solutions we need do not require extreme approaches or impossible choices. they require a structured and achievable path towards completing emu. this is fully within our reach today. i am confident that one day i
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for next year β at 7. 4 percent β is close to the high end of the government β s projection. inflation is manageable at 2. 5 percent in the first nine months of the year, and is seen to settle between 1. 75 β 3. 75 this year, and 2. 0 to 4. 0 percent next year and in 2022. favorable inflation provides an enabling environment for growth. 1 / 5 bis central bankers'speeches this gives room for the bsp to further ease monetary policy, in case needed. exports and imports will rebound from negative territory this year to 5. 0 - percent and 8 - percent growth, respectively, next year. fdis will rise to usd 7. 0 billion next year. overseas filipino remittances will rebound from a contraction of 2 percent this year β an improvement from our previous forecast of 5 percent contraction β to a growth of 4 percent next year. year - to - date, remittances dropped by only 2. 6 percent as of august. our overall external position will stay healthy. the balance of payments will post a surplus of usd 8. 1 billion this year and usd 3. 4 billion next year. the current account will also remain in surplus, at usd 6. 0 billion this year and usd 3. 1 billion next year. meanwhile, the gross international reserves will continue to hit new highs of usd 100 billion this year and usd 102 billion next year. our recovery prospects are supported by a whole - of - government approach to addressing the crisis. the national government has rolled out massive relief and mitigating measures, and boosted the country β s healthcare capacity. congress immediately passed critical bills to support the government β s covid response. for our part, the bangko sentral ng pilipinas ( bsp ) has been quick and decisive in responding to the crisis. our actions were meant to, first, boost market confidence and cushion economic activity ; second, provide liquidity to complement government programs ; third, sustain financial stability ; and fourth, support continuous delivery of financial services. in total, the bsp has already injected p1. 9 trillion ( about usd 39. 2 billion ) β equivalent to 9. 6 percent of gdp β into the financial system. besides cuts in the policy rate and the reserve requirement, we have implemented an extraordinary measure, but within the scope of our mandate. last october 1, the monetary board decided to provide a short - term provisional advances to the national government in the
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amount of p540 billion β approximately us $ 11. 1 billion. this is came after the initial p300 billion or us $ 6. 2 billion advances was fully settled last month. we also purchased government securities in the secondary market. this has helped keep investors confident about the liquidity situation in the domestic capital market. our targeted measures have benefited the vulnerable sectors. for example, loans to micro, small, and medium enterprises ( msmes ) β which account for over 60 percent of employment β now count as part of banks β compliance to the reserve requirement. as such, we have seen a quantum jump in loans to msmes. 2 / 5 bis central bankers'speeches the suspension of fees on registration of digital payment services β plus the moral suasion for banks to waive fees on electronic fund transfers ( a call that has been overwhelmingly responded to ) β have aided digital financial transactions of the public amid quarantine. the increase in the single borrower β s limit and the limit on real estate loans are seen encouraging banks to lend, in support of economic recovery and growth. our latest move is put a cap on credit card charges. this will help ensure that consumers will not be burdened by higher interest rates on credit card consumption, especially during this difficult time. the bsp has done a lot. but our toolkit is far from exhausted. we are prepared to do more, if and when necessary. having said this, the bsp is mindful of the need for careful disengagement of our covid response measures. we recognize that doing so either too late or too early may have serious repercussions on the economy. moving on to the performance of the banking system. our banking system entered the crisis with sufficient buffers, which will help it remain stable amid the crisis. the capital adequacy ratio ( car ) of banks stood at 15. 3 percent on solo basis and 15. 9 percent on consolidated basis as of end - march, well above the 10 percent minimum requirement of the bsp and the 8 percent prescribed by basel. this shows banks have ample capacity to absorb shocks. bank β s liquidity coverage ratio ( lcr ) stood at 171. 4 percent as of end - march, well above the regulatory minimum of 100 percent. also, the net stable funding ratio of universal and commercial banks, which stood at 129. 1 percent as of end - march, indicates stable funding to serve customers in the short to medium term
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total dividends declared and distributed to shareholders amounted to around $ 57 million ; β’ the market capitalization, which represents the total value of stock listed on the exchange, reached a peak of $ 1. 2 billion in 2008 ; β’ the number of listed companies on the exchange has increased from 4 companies in 1996 to 16 in 2009 ; β’ the average value of trades per annum has increased from about $ 93, 000 for the first 5 years of the trading post to around $ 17. 1 million1 in the past 5 years ; β’ public companies have managed to raised around f $ 113 million using the stock exchange. considering the general level of fiji β s macro economic developments, these developments in the stock exchange are quite encouraging. challenges in the capital markets despite these achievements, i believe that we still have a long way to go in terms of developing a more vibrant capital market. fiji is generally regarded as having a relatively well developed financial sector among the pacific island countries. most of the basic fundamentals are in place, upon which we can built a more vibrant capital market. however, the range of investments and financing options available are very limited. the potential benefits of further mobilizing capital markets in fiji are significant, as you know - but so too, are the challenges. a number of challenges confront us in the development of the capital market in fiji. let me mention a few : 1. listing of more public companies and privatization of state enterprises to improve liquidity at the stock exchange - i believe that concerted efforts have been undertaken by both the spse and the cmda over the years to identify and recruit potential issuers of securities in the market. however, most companies remain reluctant to tap into the opportunities in the market. we need to find out why companies choose to remain private, or what β s hindering them to go public and list ; 2. development of new financial products β as i mentioned earlier, we need to make available more investments and financing instruments for both companies and potential investors, and provide financing options for government and municipal authorities ; 3. an efficient legal and regulatory framework is also an important element in promoting market integrity and investor confidence ; 4. a supportive macro - economic policy and financial environment is also critical for the capital market to grow as the economy grows ; 5. investor education is also important to raise the level of financial literacy both in the capital markets and financial sector generally. these are enormous challenges, which need to be addressed urgently if our capital market is to realize its
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for short - term economic gains. as global experiences overwhelmingly show, the price that we will ultimately pay will be extremely painful. we can grow sustainably if we let growth be export - driven. i have suggested that we embark on a national export drive. like what the tourism industry has done, we can set targets for our traditional exports and even new exports. we can then mobilise the necessary resources and efforts to reach those targets. this cannot be the drive of government only. to be successful, it has to be a collective drive of the government, the private sector, industry organisations and even trade unions. we in the reserve bank are examining several ways that we could help promote exports. first, the forward exchange cover is still available for imports associated with exports, not only of goods, but also services. second, we are re - assessing the credit export facility that we offer through the commercial banks to see if it can be more attractive to small exporters. third, we are studying the provisioning of export credit guarantee with the help of the adb. lastly, we intend to convene a conference of interested groups on exports in the new year following on from our successful inaugural symposium two months ago. there are some emerging areas of exports that we need to harness. anaconda 2, shot in fiji and released recently, is, i hope, a leading wedge of what fiji can offer in the audio - visual industry. i believe that there is potential for growth in the information and technology industry. we have seen an increase in back - office services. we are fortunate to have invested in the southern cross submarine cable, which offers more than enough capacity to cater for the growth in the it related initiatives. before leaving this issue, i just want to emphasise the important role of fiscal policy in creating the enabling environment for growth and stability. fiscal policy has a greater and faster impact on the economy, and the role of government in promoting sustainable economic development is extremely vital. government has reduced the fiscal deficit to 3. 5 percent of gdp this year and further reduction is planned in the medium term. such a fiscal stance will strongly support the long - term sustainability of the economy and keep debt at a moderate level. raising the level of growth maintaining macroeconomic stability does not necessarily mean that we should be contented with lower levels of growth. we can and we must raise the long - term potential growth rate of the economy while maintaining stability. the only way to raise the potential of the
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β t countries quicker to implement reforms? market discipline is indeed important. but the crisis has again shown that markets can rush from exuberant optimism to extreme pessimism, often reacting late and abruptly too. you say that crisis countries have benefited from the ecb β s support programmes. but what good are they to a country such as the netherlands? the euro area countries are strongly interdependent. the fragility of your neighbours also affects you. people in the netherlands, or in germany, should not forget that. and the netherlands, too, would have been very severely hit if the ecb had not intervened in 2012 when the euro was under threat. but one size cannot always fit all. in some countries, financial conditions were very poor ; in other countries, monetary stimulus may not have been as necessary. but our mandate is to contribute to the price stability of the entire euro area. that is also in the netherlands β national interest. but the ecb β s low interest rate policy also has a destabilising effect. the european insurance and occupational pensions authority ( eiopa ) warned last week that the capital position of dutch pension funds was under pressure from low interest rates. bis central bankers β speeches a far more serious destabilising factor, for society as a whole, would be an economic depression. long - term interest rates have been declining for around 20 years. after all, the low interest rates reflect economic fundamentals such as demographic factors and productivity and cannot be solely attributed to the policy of the central bank which mainly needs to make sure that inflation expectations are well anchored. monetary policy always has a redistributive impact, which can be adjusted by the state if need be. a frequently - heard complaint in germany is that savers are worse off. those who also have every right to complain are those who lose their job because the economy is too weak owing to inadequate policies. can the ecb afford to run counter to the ideas on monetary policy in the largest country in the euro area, germany? we look at the whole euro area and we are not here to represent particular countries. we are aware of the objections in some countries. of course you have to take them into account and properly explain that we are acting in order to respect our mandate. that is admittedly rather difficult. at the meeting in january, ecb president mario draghi hinted at even more monetary stimulus. why do we need even more? he said that the ec
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in constantly changing circumstances. today i would like to discuss with you our recent experience of decision - making in an uncertain world. i will outline how the crisis developed and then describe how we at the european central bank ( ecb ) responded β the kinds of information we draw on, the tools we use and the principles on which we base our decisions. i will close with some brief reflections on dealing with uncertainty. ii. uncertainty and the crisis the origins of the crisis lay in changes in the economic and financial environment over the past two decades. during that time, there was a marked decline in the volatility of such aggregate economic indicators as total household consumption and total business bis central bankers β speeches production. this led to a widespread perception that we were living in very benign economic conditions. at the same time, some developed countries underwent a process of financial deregulation and innovation aimed at improving efficiency. new financial products were developed with the promise of enabling financial institutions to manage the risks in their lending activities more effectively. as a result, larger segments of the population obtained mortgage financing, and credit generally was more easily available. but the promised benefits of financial risk management turned out to be illusory. risk did not disappear, indeed in many cases it was magnified. and the process of deregulation led to a huge increase in private indebtedness and an accumulation of financial imbalances. at the global level, a number of developed economies were able to finance increased household consumption by borrowing from fast - growing emerging economies that had an abundance of savings. these sustained global imbalances contributed to lower interest rates, which further encouraged the process of credit creation in countries that were receiving capital inflows. it was clear to many careful observers that this process eventually should come to a halt. with the considerable benefit of hindsight, warning signals of the subsequent financial distress in the data for 2006 β 07 are clearly evident. in the name of my colleague central bankers, i gave myself a clear warning in january 2007 on the likelihood of a major market correction due to a significant under - assessment and under - pricing of risks in the financial markets. but the specifics of how a crisis might be triggered and the course of its subsequent propagation proved hard to predict in real time. ultimately, the crisis was ignited in august 2007 by unprecedented tensions in the interbank market, in which financial institutions lend to and borrow from one another. following the bankruptcy of lehman brothers in september 2008, the financial market tensions
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bernanke stood out was that he used qe far more aggressively than the boj ever did, introducing innovations as he went along. qe became β credit easing β when private assets were bought to stabilize financial markets, followed by another unconventional move β β operation twist β β to intervene directly at the long end of the yield curve with offsetting interventions at the short - end. the latest version of qe, as we all know, is an open ended commitment to purchase mortgage backed securities at the rate of $ 40 billion per month for as long as the β labour market does not improve substantially β. qe, in all its variations, was able to halt the downward deflationary spiral by making up for the declining velocity of money caused by deleveraging. it kept sovereign borrowing rates bis central bankers β speeches low in the face of a market revolt. it helped clean up the balance sheets of stressed financial institutions through cheap funding. the recovery from the great recession was relatively quick ; at least that was how it seemed through the β green shoots β of 2010. now, of course, we are no longer so sure. the limitations of macroeconomic techniques honed through deconstructing the great depression, the inflationary seventies and the great moderation are there for all to see. quite understandably, therefore, qe has its critics. it may be relevant to recall some of the criticism. criticism of qe the main criticism has been that qe is being continued beyond its usefulness. what the us economy requires now is a fiscal stimulus, and further qe is no substitute for a fiscal stimulus. it would only stoke inflationary pressures down the line. a second criticism, in fact a corollary to the first one, has been the argument that stretching monetary policy to unconventional levels has obliterated the firewall between fiscal and monetary policies, with monetary policy increasingly becoming an extension of fiscal policy, thereby renewing concerns about the fiscal dominance of monetary policy. third, whereas fiscal stimulus leads to higher taxes down the line, the combination of zerobound interest rates and qe is an immediate tax on savers, who in effect finance the stimulus. this tax on savings should induce people to consume and invest more, and save less. but with impaired balance sheets, they are possibly saving even more. given this outcome, some have questioned the circumstances under which and the extent to which qe can trigger a virtuous cycle of demand for and supply of credit to
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. that is, of course, if it is high - quality public investment which is well - targeted and can enhance the potential output. this is why a consistent and speedy implementation of the next generation eu package will be so important for europe in the near - term horizon. at the heart of the package is the recovery and resilience facility ( rrf ). by supporting member states β reforms and public investment, the rrf will provide an anti - cyclical fiscal impulse in the immediate term β much needed across many parts of europe. and i do believe that, given the current circumstances, it can catalyse private sector investment. however, there is a risk that the european money will not be disbursed quickly enough because of administrative obstacles or because the rrf plans put forward by member states may simply lack ambition. lithuania has a good track record regarding the absorption rates of european funds β we currently rank ninth in terms of the 2014 β 2020 financial perspective. but we cannot grow complacent. 1 / 3 bis central bankers'speeches lithuania should take full advantage of the rrf funding and put forward a high - quality plan for the commission in april. by this, i mean a plan that is based on a rigorous cost - benefit analysis and is in line with the european priorities. the bank of lithuania stands ready to mobilise its expert capacities to help ensure that the plan advances a serious investment and reform agenda. this leads me directly to the long - term perspective. according to the latest data, lithuania β s gdp decreased by 1. 3 % in 2020, beating the previous forecasts made both by the bank of lithuania and international institutions. and this is despite the ongoing second lockdown. in this light, the rrf is important to lithuania not so much as an immediate relief measure, but as a tool for long - term economic transformation over the upcoming years and even decades. indeed, we need to think strategically of the post - pandemic world. at least three major forces will be shaping our future β shifts in supply chains, digitalisation and climate change. our investment strategies will have to accommodate these trends. first, the pandemic has, at least partly, provided an impulse to reverse globalisation. vulnerabilities related to global value chains have been exposed. countries and regions have declared their intensions to repatriate the production of strategically important goods. it is crucial that lithuania, which has not yet achieved full economic convergence with
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opening remarks to finance and expenditure committee. adrian orr, rbnz governor 24 november 2022 ref # x954866 v1. 8 tena koutou katoa it is good to be with you this morning to present our november monetary policy statement. i β m joined by assistant governor / general manager of economics, financial markets and banking, karen silk, and our chief economist paul conway, and i acknowledge our other monetary policy committee ( mpc ) colleagues some of whom are with us today or watching online. today we are here to outline our most recent monetary policy statement and the reasoning for our ocr decision. to provide the best context possible for the committee β s decision i will refer briefly to the reserve bank β s recently published review of our monetary policy actions over the five years endedseptember 2022. 1 the review β undertaken in conjunction with the board of te putea matua and peer reviewed by two independent international experts β is a legislative requirement. it is also a timely requirement from the committee β s perspective. over the period reviewed, the global and new zealand economy has experienced historically significant economic shocks, in large part due to the covid - 19 pandemic and exacerbated by russia β s invasion of ukraine. policymakers, including the reserve bank β s monetary policy committee, are currently dealing with the significant and ongoing implications of these shocks. our monetary policy statement is our most recent analysis of the economic implications for the new zealand economy. on behalf of the committee, we are sorry that new zealanders are being buffeted by significant shocks and inflation is above target. as we β ve said before, inflation is no one β s friend and causes economic costs. 2 we also want to reaffirm the committee β s determination and confidence we will return annual inflation to within our 1 to 3 percent target range. the review highlights several lessons that we are adopting, and we are continuously learning as things evolve. _ _ _ _ _ _ _ _ _ _ _ _ https : / / www. rbnz. govt. nz / monetary - policy / about - monetary - policy / rafimp https : / / www. rbnz. govt. nz / hub / news / 2022 / 07 / monetary - policy - review as our chief economist paul conway explained when we released the review with the benefit of 100 percent hindsight : the committee would have had to lift the ocr to around 7 per cent in early 2020 to have
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achieved annual cpi inflation within our 1 - 3 percent target range now. such a policy shift would have been inconsistent with the committee β s remit and led to many other severe and persistent economic challenges. the committee could have commenced its tightening cycle earlier in 2021 than it did, in order to better contain core ( domestic demand - led ) inflation pressure. however, the subsequent rise in international food and energy prices would still have led to headline cpi inflation exceeding 6 per cent now. chart 1 : cpi inflation split between β core β and β headline β source : stats nz. the blue bars represent ex - food and energy inflation, an internationally comparable measure of core inflation. these examples are not excuses for inflation not being at 2 percent. they highlight the extent of the economic shocks that buffeted the economy, and the importance of being forward - looking when setting policy, with flexibility in achieving our targets. the lags between our monetary policy actions and inflation outcomes remain long and highly variable. other central banks are in the same boat, and we are learning the lessons together. in an absolute sense, actual and expected inflation is too high and needs to be reduced. however new zealand is in a strong macroeconomic position relative to most oecd nations. chart 2 β international inflation and unemployment rates note : the data are sourced from the oecd database. the latest available data points have been used ; inflation data for 2022q3 for all countries, and unemployment data for 2022q3 for all countries except switzerland for which 2022q2 data is used. turkey has been omitted since it is an outlier with an exceptionally high inflation rate of 81 %. we are in the lowest quartile for both inflation and unemployment in the oecd. we have a stable and well - functioning financial system that is resilient to a wide range of interest rate and employment shocks. 3 and, as outlined in our statement released yesterday, we have resilient household, public, and business sector balance sheets in aggregate. now turning to the monetary policy statement. the monetary policy committee yesterday increased the official cash rate ( ocr ) from 3. 5 percent to 4. 25 percent. the committee agreed that the ocr needs to reach a higher level, and sooner than previously indicated, to ensure inflation returns to within its target range over the medium - term. core consumer price inflation is too high, employment is beyond its maximum sustainable level, and near - term inflation expectations have risen. _
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centralised in one particular database. that way we know at any point in time, the detail exposures of any companies and individuals. the other important point to note is that we did not narrow the application of measures to specific geographical locations and house type or price in order to avoid circumvention or abuse as developers and lenders can easily build or finance houses at the edge of a restricted zone or price range, or even create a new house type ( e. g. small office home office ( soho ) ). in this case, we need to conduct a bit more research before we implement any macroprudential policies. the caps on financing tenure, together with requirements to comply with responsible financing practices ( including adoption of prudent debt service ratio ( dsr ) threshold and bis central bankers β speeches definition of income and debt obligations for computation of dsr ), were not limited only to banks. the caps were also imposed on non - regulated entities in order to avoid regulatory arbitrage or shifting of risks to these non - bank lenders. third, preserving appropriate discretion for authorities to act is important, with respect to the timing, mix and calibration of measures. we do not adopt a rule - based approach to the implementation of macroprudential measures. the reason is that, it can avoid a β self - fulfilling prophecy β if the formula for determining the timing, quantum and criteria for the deployment of macroprudential policies are made public or applied in mechanistic way β unintended consequences could arise or systemic risk could suddenly build up right before the effective date as economic agents try to β beat the clock β by getting ahead of the implementation. this approach provides us with greater flexibility to use an optimal mix of macroprudential and other measures under varying circumstances β this is different from the uk where legal constraints limit the choice of macroprudential instruments that can be used, or compared to turkey which uses quantitative triggers for the new reserve requirement framework. however, discretion needs to be accompanied with political willingness to act when required β this has to be demonstrated over time and supported by a matured, effective governance and accountability framework. in malaysia, we ensured that the key administrators in the government fully understand the objective of the macroprudential measures to keep the household indebtedness and the housing speculation in check, prior to the implementation. fourth, pre - emptive implementation is key to create space for measures to be implemented progressively and inc
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as a policy priority will be passed down to the future generations of central bankers. it would help if there is a clear mandate and accountability so that resources can be allocated and mobilised. bis central bankers β speeches setting a national target has shown to galvanise real tangible policy changes on the ground. during the global policy forum in kuala lumpur last year, the 121 members of afi have adopted the sasana accord to set quantifiable and measurable financial inclusion indicators as national targets. it is also encouraging to know that 28 oic members have direct membership in afi, while 4 others are indirectly affiliated through regional central banks. further, financial inclusion solutions typically involve cross - disciplinary collaboration. policymakers could consider a national coordination mechanism, for example, in the case of tanzania and mexico to effectively identify policy priorities and allocate the right resources in implementing the policies. third, data and technology are key enablers of innovative policy solutions robust data collection and gap analysis help policymakers to connect with realities on the ground and identify real needs for intervention. data also facilitates monitoring and impact assessment to determine if a particular policy is achieving its intended outcome. technology plays a critical role as it provides low cost, scalable channels to deliver financial inclusion solutions. it is particularly effective in overcoming geographical barriers to financial inclusion. the malaysia β s experience in agent banking shows how data and technology enable innovative policy solutions. it also helps to make an informed decision on resource allocation. in 2011, the bank conducted the financial inclusion demand side survey to complement supply side data collected from financial institutions. data highlighted that there was a lack in the provision of access points, as only 46 % of 837 sub - districts with a population of more than 2, 000 have at least one financial access point. the cost of building brick - and - mortar branches to outreach to rural users is high. hence, the bank developed the agent banking initiative to leverage on technology and deliver financial services to the rural groups in a low cost and scalable manner. it saves cost and the impact is enormous. under the agent banking initiative, licensed financial institutions provide financial services to customers through third - party agents, such as retail outlets and post offices. agents perform banking transactions such as deposit and withdrawal of funds in a safe manner using real time terminal technology i. e. point - of - sale ( pos ). putting in place a mechanism to monitor performance is crucial to determine whether policy initiatives are effective. just to give a flavour of what we have
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crippling sudden stops. the more difficult question is this : how will countries adjust to the ever - changing global circumstances, and what does this mean for their growth and development trajectories? let me set out some challenges / difficulties. first, a number of countries are running sizeable deficits on their fiscal and current accounts. countries with larger deficits have tended to experience more currency depreciation this year, which speaks to their vulnerability to changing global financing conditions β especially higher interest rates. reducing this vulnerability will require deficit reduction, as well as changes in the composition of spending that benefit longrun growth and therefore improve countries β future capacity to repay debt. this adjustment process is likely to be difficult, both for political economy reasons and because macroeconomic adjustment can hurt short - term growth, specifically via reduced demand or through import compression. rebalancing is therefore inevitable β¦. 1 this point was made in the latest international monetary fund world economic outlook, chapter 3. see https : / / www. imf. org / en / publications / weo / issues / 2018 / 09 / 24 / world - economic - outlook - october2018 # chapter % 203. page 2 of 8 second, there are pockets of prominent emerging market countries where growth has stalled. looking back over the past two decades, the 2000s were an era of unprecedented growth for emerging markets. the share of economies converging on rich - country living standards also reached new highs, demonstrating that this was more than simply β a china story β or β an india story β β important though those countries are. this record of success survived the global financial crisis, but only by a few years. from approximately 2013, emerging markets began to slow steadily, and some experienced protracted recessions. outside of asia, the emerging market story is now largely about subdued growth, and some countries are talking about lost decades. we need to find a way back to growth. the third problem follows when politics catch up with economics. in advanced economies and emerging markets alike, dissatisfaction with economic outcomes has generated political developments that would have been very unlikely, if not unthinkable, even half a decade ago. sometimes these reactions have made things worse, or threaten to do so, creating a vicious circle of bad economic decisions and further political disaffection. these problems β macroeconomic disequilibria, stalled growth and political feedback loops β add up to a difficult set of circumstances for the emerging markets. today, i
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an address by lesetja kganyago, governor of the south african reserve bank, at the south africa tomorrow conference, new york, 1 november 2018 south africa β s adjustment path good morning, ladies and gentlemen. thank you for the opportunity to share a few thoughts with you today. last year, we had a goldilocks global economy. inflation started picking up in the advanced economies, and in emerging markets, it was generally in line with targets. growth was stronger, but without much evidence of overheating. growth was also widely shared β most economies were accelerating. the world economy felt just right. as you know, at the end of the goldilocks story a family of bears comes home. our goldilocks tale has taken the same direction. the synchronisation of global growth has broken down this year, with the united states ( us ) surging ahead while other countries slow down. with unemployment at very low levels, the federal reserve has been raising rates, just as they told us they would. the combination of stronger us growth and higher rates has appreciated the dollar. this combination of factors has posed challenges for emerging markets. it has interrupted capital flows and prompted wide - scale currency depreciation. countries with substantial stocks of foreign - currency debt have seen their balance sheets deteriorate. inflation pressures have generally intensified. unlike goldilocks, however, most of us in emerging markets weren β t caught napping when the bears showed up. we had frameworks in place to handle such challenges. in particular, most of us could rely on flexible exchange rates to absorb the initial page 1 of 8 shock. this works best when countries have avoided contracting excessive foreigncurrency debt, as in the south african case. in these circumstances, the best thing one can do is to leave the foreign exchange markets to find its equilibrium. it is well understood that currency depreciation creates inflationary pressures. but many emerging market countries have strong central banks who can deal with this problem. given the credibility accumulated by these institutions, inflation expectations have stayed anchored in most emerging markets. 1 emerging markets have also been buffered by substantial stocks of foreign exchange reserves. it is clear that most countries are vastly better positioned than they were during the 1997 / 98 crisis. certainly, a few countries have been sorely tested by events this year, and the international monetary fund has been called into action. most emerging markets, however, should be able to get through without experiencing financial crises or
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due to the following reasons : the rate increase - - from 8 percent to 10 percent - is smaller than that of the previous hike ; a reduced tax rate will be applied to some items ; permanent measures such as those concerning the provision of free education will be implemented ; and a variety of measures are to be taken so as to smooth out the effects of the front - loaded increase in demand and its fallback. however, the effects of the previous tax hike, which many economists had expected to be limited, have proved significant and lasting. there is a possibility that a decline in demand, such as the one seen after the previous hike, naturally would contain inflation. the third hurdle is price declines associated with the scheduled consumption tax hike. measures concerning the provision of free education will be implemented alongside the hike. the bank estimates that the price rises brought about by the hike and the effect of prices being pushed down due to the provision of free education will together push up the year - on - year rate of change in the cpi for all items less fresh food for fiscal 2019 and 2020, by 0. 2 and 0. 1 percentage point, respectively. in addition, i would like to mention another factor that is not directly related to the consumption tax hike. it is the planned reduction in charges for mobile phone services recently announced by some of the major mobile network operators in japan. although many of the details are uncertain and it depends on the prerequisites for such details, many analyses seem to suggest that it would push down the year - on - year rate of change in the cpi for all items less fresh food by 0. 1 to 0. 3 percentage point. 20 assuming that these estimations are correct, achievement of the 2 percent price stability target inevitably would be delayed, in accordance with the degree of reduction. regardless of these setbacks, i am not too pessimistic. the provision of free education and a reduction in mobile phone - related prices are no different from tax cuts, and people's real income increases by an amount equivalent to the degree of price declines. although it likely will take time for an increase in real income to induce an increase in actual demand, this will not hamper the achievement of the 2 percent price stability target itself. this also could be said about other price declines, including those in crude oil prices. nevertheless, there is a risk that the current sluggishness in observed prices will spill over to inflation expectations, further delaying inflation. to prepare for uncertain
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on the contrary, they express considerable criticism and dissatisfaction. this is because deposits are growing faster than loans, which makes it difficult for some banks to invest these funds. of course, deposits will rise as lending increases as a result of the money multiplier mechanism, but this mechanism see naoya kato and takuji kawamoto, " corporate profits and business fixed investment : why are firms so cautious about investment? " bank of japan review, no. 16 - e - 2, april 2016, https : / / www. boj. or. jp / en / research / wps _ rev / rev _ 2016 / data / rev16e02. pdf. ; and aoki daiju and shikano tatsushi, " shotoku ga nobitemo shishutsu ga nobinai no wa naze ka, " chap. 4 in abenomikusu no shinka, ed. harada yutaka and masujima minoru ( tokyo : chuokeizai - sha, 2018 ). 14 see, for example, " mienu'deguchi,'fukusayo zodai : ginkokai ni takamaru fuman - - mainasu kinri 3 nen, " jiji press, february 15, 2019, https : / / www. jiji. com / jc / article? k = 2019021500887 & g = eco. 15 bank of japan, financial institutions accounts. alone does not lead to an increase in deposits twice as large as the increase in loans. in my opinion, if banks are struggling to invest funds, it might be better if they tried not to accumulate deposits. in this context, news reports suggest that regional financial institutions are struggling to attract personnel and that staff members are retiring early. 16 while this is reported as though it is troublesome, it consequently could lead to a reduction in the number of personnel assigned to collecting more deposits than needed and in that of branches. i think that this would increase the productivity of the banking sector, and thus of japan's economy as a whole. i am aware, of course, of the criticism that the decline in the number of bank branches would reduce convenience for users, and thus banks should not close branches. 17 however, banks would decide to close such branches because they only have few customers in the first place. i agree with the argument that having a deposit account should be regarded as a basic human
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was developed by rbi and formally handed over by the reserve bank governor to the chief secretary, government of karnataka on september 22, 2009 during the outreach programme organized in doddabelavangala village in bengaluru rural district. i am happy to inform you that the textbooks incorporating the content provided by rbi have since been printed and made available by the government of karnataka. 4. another significant decision taken during the meeting of the respected governor with the hon β ble chief minister of karnataka on may 14, 2009 was that steps would be taken to make financial literacy part of non - formal education. as a follow up to this decision, state - wide quiz competitions covering the schools, and pu colleges in all the blocks and districts of the state, were held in association with government of karnataka, slbc and the lead banks. the literature developed by rbi under β raju and money kumar β series and other material prepared on features of genuine currency notes, etc. were used for conduct of the quiz competitions in both english and kannada. rbi, bangalore, printed around 8. 80 lakh booklets for distribution to the targeted schools / colleges through the lead district managers and deputy directors of the education department. the block and district level quiz competitions culminated in the state level quiz competitions. i am pleased to inform this august audience that distinguished dignitaries sitting on the dais will give away the prizes to the winners of the state level quiz competition. 5. finally, i would like to say a few words about electronic benefit transfer ( ebt ) scheme which is formally being launched today by chief secretary, shri s. v. ranganath. this was a sequel to governor β s meeting with senior officials of the state government, commercial banks and financial institutions represented in karnataka on may 14, 2009, where it was decided that all issues relating to implementation shall be resolved to facilitate its implementation in the state. accordingly, steps were taken to implement the scheme as a pilot in bellary, chitradurga and gulbarga districts under β one district - multiple banks β model for routing payments through β no frills β accounts, or other bank accounts, under mahatma gandhi rural employment guarantee programme and social security pensions schemes. such account - holders will be issued biometric smart cards with individual ids. later on, the government of karnataka identified three other districts viz. chamarajanagar, mandya and dharwad for implementation of the scheme under β one district - one bank β model. this entire initiative is
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while there are also others that are ordained by dictates of regulation and supervision. a case in point is the preparedness of banks for the risk based supervision ( rbs ) process that was launched in the current supervisory cycle commencing from april 2013. there has been a measured approach behind bringing in roughly 30 banks under the rbs ambit. the reasons are manifold and range from technological preparedness, adequacy of risk management techniques and skills and extent of human resource development in banks. the very fact that a certain segment of the banking sector still remains uncovered is an indication of the fact that those waiting to be brought under the fold have to augment their initiatives to better the skill - sets of their employees by way of an active training intervention in appropriate areas including hrd. training programmes, necessarily, will have to be followed up by a rigorous exercise of β impact evaluation β involving analysis of employee behavior, perceptible changes in operational and behavioural efficiency, observing emerging business practices a little more closely etc. perhaps, the biggest barrier to training initiatives is resistance to change. the most prominent example in this regard was the initial reluctance that banks in india displayed, when computerisation of work processes was introduced in mid - eighties. the ultimate objective of any training that targets the management of change is the ease with which the change is accepted leading to self - actualization for the employee and tangible benefits for the banks. towards self - actualization and feedback generation : in an effort to nudge employees to take the next step towards self - actualization and furthering the business interests of banks, some very important steps needed are ( i ) establishing a β connect β with the target employees ; ( ii ) expectation setting and preparing the trainees ; ( iii ) setting context and clarifying goals ; ( iv ) ensuring comfort, boosting morale and confidence ; ( iv ) forging bonds between the senior and junior level employees to drive the change and last but not the least ( v ) performance review. unless there is an objective analysis of results derived from any training program, there is no effective feedback that can trigger betterment in training processes and / or alteration of the training initiative itself. thus, training has to be invariably accompanied or rather summarised by a feedback that is reliable, easy to generate, objective and certainly not influenced. how serious are training initiatives in banks? i have reasons to believe that training initiatives receive the utmost attention and is not looked upon as a functional adjunct that is mandatory
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##adisticas historicas, β documento de trabajo # 187, instituto de economia, pontificia universidad catolica de chile. bravo - ortega, c. and j. de gregorio ( 2006 ), β the relative richness of the poor? natural resources, human capital and economic growth, β in d. lederman and w. maloney ( eds. ), neither curse nor destiny : natural resources and development, stanford university press. cerny, a. and r. k. filer ( 2006 ), β natural resources : are they really a curse? β cerge - ei working papers # 321, center for economic research and graduate education β economic institute, prague. de gregorio, j. ( 2006 ), β bonanza del cobre : impacto macroeconomico y desafios de politica, β estudios publicos nΒ° 103 : 17 - 42. gavin, m. and r. perotti ( 1997 ), β fiscal policy in latin america, β in b. s. bernanke and j. rotemberg ( eds. ). nber macroeconomics annual 1997. cambridge, ma, us : mit press. mehlum, h., k. moene, and r. torvik ( 2005 ), β institutions and the resource curse, β the economic journal 116 ( 508 ) : 1 - 20. sachs, j. d. and a. m. warner ( 1995 ), β natural resource abundance and economic growth, β nber working paper # 5398. sachs, j. d. and a. m. warner ( 1997 ), β sources of slow growth in african economies, β journal of african economies 6 ( 3 ) : 335 - 76. sachs, j. d. and a. m. warner ( 2001 ), β the curse of natural resources, β european economic review 45 ( 4 - 6 ) : 827 - 38.
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##balances have also put a burden on central government finances and increased uncertainty. this has in itself prolonged and intensified the crisis. japan is a well - known example of what can follow in the tracks of a serious financial crisis if confidence cannot be recreated in economic policy and future growth potential. the consequences of financial imbalances have proved particularly serious in countries with a fixed exchange rate, partly because interest rates need to be kept high when confidence in the fixed exchange rate policy declines, and partly because there has often been a large foreign currency debt. when the fixed exchange rate has to be abandoned and the country's own currency is weakened, the burden of debt increases. should the central bank then concern itself with asset prices? following the dramatic 1990s in the usa ( and sweden ), with soaring prices on shares and property, many people began to think that perhaps the central banks should keep an eye on asset prices and react to these, even if there were no sign of rising inflation. overrated share prices and / or property prices lead sooner or later to an adjustment in asset prices. if this adjustment is dramatic, the effect could be an economic downturn, with rising unemployment and a slowdown in prices. the extreme valuing of certain shares in the it and telecom sectors on the american stock exchange, nasdaq, should perhaps have warranted more stringent monetary policy a few years ago, according to the international debate on monetary policy. one argument put forward as to why the central banks should not merely look to forecasts regarding consumer prices when making decisions on monetary policy, but should also monitor the development of asset prices, is that ownership of shares is much more widespread now. thus, changes in asset prices probably have much greater significance for household expenditure now than they did before. deregulation, liberalisation and globalisation have increased the importance of the capital markets for economic developments and made them more volatile. assets with market prices now comprise a much greater share of households'balance sheets than before. this is thus claimed to be a good reason for monetary policy to take into account developments in asset prices. in the worst case, falls on the stock exchange that correct overvaluations can lead to financial instability, if share prices have been driven by pledged shares and if the market participants are in some cases unable to pay back their loans. this can result in panic sales, exaggerated falls in prices and credit institutes facing difficulties as a result of exposure to households and institutions that have become insolvent.
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african financial sector. the bank has also made satisfactory progress with its own business continuity planning to ensure that the head office and branch activities would continue functioning in the event of any disruption. the attacks of 11 september 2001 have also contributed to increased international economic uncertainty, which has in turn resulted in lower economic growth in developed economies. the monetary policy focus in developed economies shifted from containing inflation to avoiding unnecessarily and undesirably low inflation. this has brought new terminology to the vocabulary of central bankers and economists. 3. domestic developments although 1998 is a mere five years ago, so much has changed in south africa in the interim that a brief reflection on that year is called for. by 1998, our democracy was only four years old and south africa was still re - integrating into the international arena. however, it was already obvious then that the country β s sound macro - economic policies were delivering the desired results. after a period of double - digit inflation covering the largest part of the 1970s and 1980s, inflation was in single - digits in 1995. it has averaged around 7, 8 per cent per annum over the last decade. the national government was also achieving success with its sound approach to fiscal policy. while the deficit before borrowing reached a high turning point of 7, 3 per cent of the gross domestic product ( gdp ) in the 1992 / 93 fiscal year, it equaled 3, 7 per cent of gdp for the 1997 / 98 fiscal year and declined further to 2, 8 per cent of gdp in the 1998 / 99 fiscal year. owing to the reduction in its deficit before borrowing, it was clear by 1998 that the national government had managed to slow down the growth in government debt to sustainable levels. not only had government proven by 1998 that it could avoid a debt trap, but it had also successfully reprioritised expenditure and consolidated the fiscus. the introduction on 9 march 1998 of the repurchase system of accommodation and liquidity provision to banks marked a significant change in the country β s accommodation system with the repo rate replacing the previous bank rate. in the five years since its introduction, changes have been made to the repo system to improve the transmission mechanism of monetary policy. the most important of these changes was introduced with effect from 5 september 2001, the date from which the sarb introduced a fixed repo rate to eliminate any ambiguity from monetary policy signals, which might have arisen under the previous flexible repurchase rate system. in 1998 we also experienced the
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to work with borrowers to restructure troubled commercial real estate ( cre ) loans in a prudent manner, and reminded examiners that β absent other adverse factors β a loan should not be classified as impaired based solely on a decline in collateral value. 2 we continue to work with the large banks that participated in the supervisory capital assessment program ( popularly known as the stress tests ) to ensure that they have sufficient capital to support lending, even as many of these institutions repay their government capital. the outlook in my view, the outlook for economic activity depends importantly on our ability to build on the progress to date in improving the operation of financial markets and restoring the flow of credit to households and businesses. although household wealth has received a boost from the gains in the stock market over the last nine months and from the stabilization in house prices, household balance sheets remain weak. in 2009, household income received some temporary support from the tax cuts and see board of governors of the federal reserve system, federal deposit insurance corporation, office of the comptroller of the currency, and office of thrift supervision ( 2008 ), β interagency statement on meeting the needs of creditworthy borrowers, β joint press release, november 12. see board of governors of the federal reserve system ( 2009 ), β federal reserve adopts policy statement supporting prudent commercial real estate ( cre ) loan workouts, β press release, october 30. transfer payments enacted with the fiscal stimulus package and from the extensions of unemployment insurance. over the coming year, households should begin to see gains in income associated with an improvement in the labor market, and the drag on spending from past declines in real net worth should ease. as their income and balance sheets improve, consumers should have better access to credit. favorable trends in income and employment should also bolster consumer confidence, although one risk i see to the outlook for household spending is the possibility of a rise in the personal saving rate as consumers choose to shore up their balance sheets rather than spend. while good in the long run, increased saving means consumers are providing less of a short - run boost to the economy. the outlook for homebuilding will depend critically on the continuation of the uptrend in the demand for housing that began in early 2009. i anticipate that low mortgage rates and house prices that are still very low compared with the recent past will continue to provide important support for demand. and a shift in expectations from falling house prices to modest appreciation should encourage
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you manage the euro transition smoothly and without any problems and that euro brings a positive change into in your lives.
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two main building blocks. first, a balance sheet assessment, which is a point - in - time evaluation of the asset side of banks β balance sheets. second, a forward - looking assessment of individual banks β capital positions and provisioning levels in the form of a stress test. this stress test, and future stress tests undertaken as part of the ssm β s regular supervisory functions, will be conducted in close cooperation with the eba, in particular regarding the design and timing of the exercises. european systemic risk board as regards interactions with the european systemic risk board ( esrb ), the activities of the ssm will have a clear systemic dimension and so cooperation between the ssm and esrb will be essential. in particular, while macro - prudential powers will rest also with national authorities, the ecb will be able to use macro - prudential instruments, either at the request of national authorities or by deciding to adopt stricter measures than the ones adopted at national level. this implies an increased coordination function in the macro - prudential areas for countries within the ssm that will naturally create some overlap with the macro - prudential role of the esrb for the wider eu. however, i expect the macro - prudential functions of both institutions to be complementary. the esrb will play its role in adopting recommendations to help coordinating macroprudential decisions as provided for in eu regulation ( namely crr ), in particular with the countries that do not join the ssm. in addition, while the ssm will exclusively focus on banking systems, the esrb has an additional macro - prudential function regarding the nonbank parts of the financial sector, and as such will be well placed to address cross - sectoral issues. interplay with the other esas finally, let me be very brief regarding the ssm β s interaction with esma and eiopa. although the supervision of markets and the insurance sector will remain with the national authorities, bis central bankers β speeches esma and eiopa will play important roles in the coordination of information sharing between the ssm and the national authorities. in particular, cooperation with eiopa on the bank - led conglomerates will have to be very close given that the ssm is expected to take over their supplementary supervision. memoranda of understanding regulating these interactions will be prepared in the coming months. conclusion to conclude, it is unavoidable that the existence of the ssm will alter the functioning
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an important consideration. thank you for your attention. [ 1 ] i would like to thank sandor gardo and benjamin hartung for their contributions to this speech. [ 2 ] the financial stability risks associated with a tightening nexus between sovereigns, banks and corporates in the wake of the covid - 19 pandemic are analysed in the ecb β s latest financial stability review ( november 2020 ). a related framework is also briefly discussed in the imf β s global financial stability report ( october 2013 ). [ 3 ] there is a rich literature on the impact of the sovereign - bank nexus on financial stability and economic growth, including : acharya, v., drechsler, i. and schnabl, p. ( 2014 ), β a pyrrhic victory? bank bailouts and sovereign credit risk β, journal of finance, vol. 69, no. 6, pp. 2689 β 2739 ; altavilla, c., pagano, m. and simonelli, s. ( 2016 ), β bank exposures and sovereign stress transmission β, ecb working paper no. 1969 ; becker, b., and ivashina, v. ( 2018 ), β financial repression in the european sovereign debt crisis β, review of finance, vol. 22, no. 1, pp. 83 β 115 ; bocola, l. ( 2016 ), β the pass - through of sovereign risk β, journal of political economy, vol. 124, no. 4, pp. 879 β 926 ; bolton, p., and jeanne, o. ( 2011 ), β sovereign default risk and bank fragility in financially integrated economies β, imf economic review, vol. 59, no. 2, pp. 162 β 94 ; farhi, e. and tirole, j. ( 2014 ), β deadly embrace : sovereign and financial balance sheets doom loops β, working paper 164191, harvard university ; gennaioli, n., martin, a. and rossi, s. ( 2014 ), " banks, government bonds, and default : what do the data say? β, imf working paper 14 / 120, international monetary fund ; popov, a., and van horen, n. ( 2015 ), β exporting sovereign stress : evidence from syndicated bank lending during the euro area sovereign debt crisis β, review of finance, vol. 19, no
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as defined in the excessive deficit procedure under the maastricht treaty. in addition to rising debt levels, the interlinkages between sovereigns, banks and firms resulting from the broad - based fiscal support have grown. on the one hand, the sensitivity of public finances to future corporate and financial sector developments has increased, beyond the traditional impact of automatic stabilisers during a recession, such as lower tax revenues and higher social security expenses. on the other hand, banks and corporates have become more dependent on government support. only recently, possibly in view of the potential phasing out of fiscal support measures, changes in banks β risk perceptions have resulted in tighter credit standards for firms, according to our latest bank lending survey ( chart 5 ). chart 5 https : / / www. ecb. europa. eu / press / key / date / 2021 / html / ecb. sp210128 ~ 8f5dc86601. en. html 5 / 13 29 / 01 / 2021 the sovereign - bank - corporate nexus β virtuous or vicious? bank lending to euro area non - financial corporations and bank credit standards annual percentage changes ; weighted index sources : ecb ( bsi statistics, bank lending survey ) and ecb calculations. the sovereign - bank - corporate nexus β this time is different but the nature of these interdependencies differs fundamentally from previous crises. most notably, this time, the crisis did not originate in the financial sector, as in the global financial crisis [ 6 ], but in the real economy, and public support was granted to firms, not banks. moreover, the pandemic has not raised concerns of moral hazard. while the global financial crisis resulted in the mutualisation of risks that should have been borne by the ultimate risk - takers, government support during the pandemic has protected the economy in the face of an exogenous shock that was not caused by excessive risk - taking. in the pandemic crisis, broad - based fiscal support has been both necessary and proportionate to mitigate the economic and social costs of the containment measures for large parts of society. at the same time, with the banking union still incomplete, the pandemic has once again exposed old vulnerabilities. for example, by absorbing some of the newly issued sovereign debt, banks have increased their exposures to the general government in many euro area countries, reinforcing the links between sovereigns and banks ( chart 6 ).
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capital buffer for trading activities and leaving the separation of activities conditional on supervisory approval of a recovery and resolution plan, rather than a mandatory separation of banking activities. both basic alternatives and their motivation are presented in the report. 2. second, effective and realistic recovery and resolution plans must be drawn up and maintained by the banks, as proposed in the commission β s bank recovery and resolution directive. the resolution authority should request a wider separation than the considered mandatory separation above if this is deemed necessary to ensure resolvability and operational continuity of critical functions. 3. the use of designated bail - in instruments is strongly supported by the group. the position of bail - in instruments within the hierarchy of debt commitments in a bank β s balance sheet must be clear so that investors know the eventual treatment in case of resolution. banks should build up a sufficiently large layer of β bail - inable β debt. such debt ( or an equivalent amount of equity ) would increase the overall loss - absorptive capacity, decrease risk - taking incentives, and improve transparency and the pricing of risk. 4. the group proposes to apply more robust risk weights in the determination of minimum capital standards and more consistent treatment of risk in internal models. once the basel committee has concluded its review of the trading book, the commission should assess whether the results would be sufficient to cover the risks of both deposit banks and trading entities in europe. also, the treatment of real estate lending within the capital requirements framework should be reconsidered, as well as maximum loan - to - value ( and / or loan - to2 bis central bankers β speeches income ) ratios included in the instruments available for micro - and macro - prudential supervision. 5. finally, the group considers that it is necessary to augment existing corporate governance reforms by specific measures to 1 ) strengthen boards and management ; 2 ) promote the risk management function ; 3 ) rein in compensation for bank management and staff ; 4 ) improve risk disclosure, and 5 ) strengthen sanctioning powers. bis central bankers β speeches
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that purpose, they will still want low cost trading and settlement mechanisms that minimise their exposure to counterparty risk and the impact on their balance sheets. so there are perhaps some tensions between the various forces at work here. to take another example, economies of scale in trading, clearing and settlement suggest that to minimise costs firms should encourage consolidation and integration of these activities within a market. yet the major firms have, understandably, been very reluctant to allow the dominance of a single supplier. for example, ebs ( electronic broking system ) was set up by the major banks to offer an alternative system for foreign exchange trading. ladies and gentlemen, let me finish by saying that it is difficult to draw firm conclusions about the future structure of the financial services industry. if it was, strategic decision making would be easier than it seems to be. but financial service businesses based in the uk start from a strong position, and are well placed to thrive in an environment that will evolve at an increasing pace, become even more competitive, and place an even greater premium on innovation. the bank of england will monitor and analyse the developments very carefully β both because we want uk financial services to thrive, and because in the pursuit of our financial stability responsibilities we need to be able to spot potential problems as quickly as possible.
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depends a lot on global developments. if necessary, we stand ready to use all of the instruments at our disposal. that includes the key interest rates and the size, composition and duration of our securities purchases. we will take a decision on this in march. how will the ecb ever manage to move away again from its expansionary monetary policy? technically speaking, it β s not hard to do. the us central bank is currently demonstrating how it β s done. what is more important is that our environment β and by that i mean government policies β should support us sufficiently in generating more growth. if this does not happen, we will have to keep rates low for a very long time. so it β s not just up to us whether the low interest rate phase can be brought to an end, it also depends on the pace of reform in euro area countries. but the refugee crisis means that we β re also facing a new challenge right now. is this going to affect economic developments? it is a huge challenge, not only in germany, but for europe as a whole. but the refugee crisis is also a great opportunity for europe if the refugees can be successfully integrated into the labour market. the more europe stands together in the refugee crisis, the greater is the likelihood that it can be overcome. as a european citizen, i believe that we are now at a historic moment when the eu must demonstrate that it is able to reach a european solution. bis central bankers β speeches is that realistic? europe has already overcome similar situations, for example during the debt crisis. in this case, given that we are talking about millions of people who are fleeing to europe, i personally believe that the eu has a moral obligation to find a joint european solution. the european project is not first and foremost a financial project. europe always was, and will continue to be, about bringing people together, not about dividing them. the euro area countries cannot even agree on whether or not there should be a common limit on payments in cash. what would you advocate? this is a matter for the eu finance ministers to decide on, not the ecb. there are countries in europe where cash is very important, and there are others where cash plays a lesser role. but the ecb is responsible for withdrawing the β¬500 note. we have direct responsibility for this because of course we print the banknote. the ecb β s governing council is currently considering very carefully the question of whether or not to withdraw the β¬500 note
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benoit cΕure : interview in rheinische post interview with mr benoit cΕure, member of the executive board of the european central bank, in rheinische post, conducted by ms birgit marschall and mr georg winters and published on 13 february 2016. * * * share prices are sharply down on the world β s stock markets. why? there are several compounding factors, each calling for different answers. first, it β s a global phenomenon. investors are generally anxious about a slowdown in growth worldwide, especially in the emerging markets, and above all in china. second, there β s great uncertainty about the global effects of the low oil price. initially, it was thought the low price would be good for global growth, but now some negative effects can be seen, particularly in emerging markets. third, market participants are questioning how profitable banks are and whether they have successful business models for the future. how affected are europe β s banks? they are in a much better position today than they were at the height of the debt crisis in 2011 and 2012. thanks to the banking union they are now much more resilient. they have very significantly built up their capital and liquidity. one challenge they face is their low profitability, which is also related to the current level of economic growth. also, some banks have a high level of non - performing loans on their books, as a legacy of the crisis. none of these challenges are new : they have been clearly identified, they require forceful action and they will be solved over time. what about germany β s banks? deutsche bank and commerzbank have lost a lot of trust. i can β t talk about individual banks. generally speaking, european banks are in a transitional phase and are rethinking their business models, also concerning technological developments. they also face a new regulatory environment. we have had a new framework for the resolution of banks only since the beginning of january. together with the single supervision, this system will make them stronger and better protect taxpayers, but banks and investors are still learning about it. is a new financial crisis more likely? no. today in the euro area we have economic growth of between 1 % and 1. 5 % and accelerating, while a few years ago it was negative. this growth is helping the banking sector to recover. provided we stay on this path i β m optimistic that the crisis will not return. low interest rates and rising share prices normally go together
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forget that adjustments will always be necessary to safeguard prosperity. this is especially true for the european crisis states. bis central bankers β speeches but more is required to ensure that monetary union can once again function properly as a whole. from now on, it must not be possible for the problems of individual countries or banks to jeopardise the entire system. an operational framework which reinforces the principle of liability and reduces mutual dependencies brings us a good deal closer to achieving this goal. i would like to thank you for your attention today β but, then, this is something i have always been pleased to receive in darmstadt. i am now very much looking forward to our discussion! bis central bankers β speeches
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monetary policy? maybe you are imagining a multi - layered risk scenario starting to unfold? you are probably thinking of the risks associated with inflation and the reversal of interest rates. and also the risks arising from economic developments. given the economic outlook i described, some enterprises could be facing rougher seas going forward. furthermore, they are also confronted with higher production costs due to inflation. and higher interest rates are driving up their financing costs. this increases 3 / 4 bis - central bankers'speeches the risk that enterprises will no longer be able to service their debt as reliably as they have over the past few years. and alongside cyclical risks, operational risks also remain. risks from the digital sphere, from levels of sickness among staff, from potential power outages, to name just three possible scenarios. these operational risks will be on the agenda of this symposium this afternoon. we must not lose sight of these, either. they must be managed just as prudently as cyclical risks. this is demanded by supervisors, and rightly so, to strengthen the resilience of banks. but resilience also requires a sound capital base. banks proved to have this in the past stress tests. this is good news. because our economy needs strong banks to meet its huge need for investment. advancing digitalisation needs financing. and so, too, does the transition to a carbon - neutral economy with a stable, secure energy supply. banks have a key role to play here. they are currently fulfilling their financing function prudently. the most recent bank lending survey found that the responding german banks had considerably tightened their lending policies in the third quarter. this is also a response to the increased credit risk perceived by banks. however, thus far, there has been no evidence of the supply of credit being restricted in general. instead, lending to nonfinancial corporations was strongly expanded once again. it is important that banks continue to strengthen their capital base and prudently manage their risks in order to remain resilient. this will enable them to effectively fulfil their vital financing role in the economy in future, too. even in uncertain times. 5 conclusion ladies and gentlemen, times are uncertain. interacting with others is hugely important here, especially with regard to the individual aspects of uncertainty. i hope that you have fruitful and inspiring interactions on all of the aspects that are vital for the business models of german banks at present. i trust that you will conclude today with a greater and more
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, it seems that we were heard. the fras declined and reflected a high probability that the repo rate would be reduced before the end of the year, but expected the rate cut to come later. but it is again important to stress that this was not a commitment to lower interest rates. rather, it was a signal that should the circumstances arise, we would be prepared to act. the reason for the signal was that we believed that the probability of this scenario unfolding was not negligible. and our concerns about the global economy were expressed strongly in our statement. at the subsequent meeting, we felt that the inflation and growth dynamics had changed sufficiently to justify further monetary accommodation. since then, there has been much speculation as to whether the interest rate reduction was the beginning of a new interest rate cycle or whether this was a one - off move. at the beginning of an interest rate cycle, it is easy to forecast and signal the direction and timing of the next move. but the turning points are always more difficult to call. we view the recent move as part of the easing cycle that began in the wake of the crisis. we had previously thought that we were at the bottom of the interest rate cycle, but events unfolded in an unexpected way. further easing, however, cannot be taken for granted and will be contingent on changing global conditions, further inflation and growth developments. i should emphasise that it is also important for the markets to pick up the signals from the changing fundamentals in the economy. if the fundamentals or circumstances change all of a sudden, this may lead to a change in policy. but our reaction should only be a surprise to the market if the market has not interpreted correctly how the initial surprise will impact on bank thinking. of course, if we act in an inconsistent way, then we would create further uncertainty. that would not be our intention. but there may be times when our signals may have been misinterpreted, and it may then be necessary to correct that misconception. the central bank must have credibility and act in a consistent manner in response to various shocks, as far as is possible. and part of successful communication would be that markets, analysts and bis central bankers β speeches yourselves would expect us to respond to significantly changed circumstances, and would not be surprised when we did so. however, central bank communication is not the only source contributing to market expectations of monetary policy. herve hannoun of the bank for international settlements, for example
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note, which will co - circulate with the current note, and is of equal value. we count on your support to help ensure an informed public, so that we protect the integrity of our currency. thank you for inviting me tonight, and for enabling an ongoing conversation in the very challenging times we live in. references ahamed, l. 2009. lords of finance : the bankers who broke the world. penguin books. akerlof, g. and r. shiller. 2009. animal spirits : how human psychology drives the economy, and why it matters for global capitalism. princeton university press. aron, j. and j. muellbauer. 2009. the development of transparent and effective monetary and exchange rate policy. in south african economic policy under democracy, ed. j. aron, b. kahn and g. kingdon, oxford university press. blinder, a. 2004. the quiet revolution : central banking goes modern. yale university press. fromm, e. 1976. to have or to be? harper and row. goodhart, c. 2012. longer term forecasts are a step backwards. financial times, 1 february. hannoun, h. 2012. monetary policy in the crisis : testing the limits of monetary policy. speech to the 47th seacen governors β conference, seoul, 13 β 14 february, bank for international settlements. issing, o. 2012. central banks β paradise lost. cfs working paper no. 2012 / 06, centre for financial studies. reid, m. and s. du plessis. ( 2010 ). loud and clear? can we hear when the reserve bank speaks? south african journal of economics 78 ( 3 ). bis central bankers β speeches
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speech is timely given so much interest shown by both domestic and international investors in the malaysian economy. both the prime minister and governor will offer invaluable insights into strategic orientation of important policies that will chart the malaysian economy going forward. therefore, these are the main events not to be missed. of course you should not miss other speakers too! they will touch on various topics according to their areas of expertise. more importantly, you will get to hear investment opportunities in malaysia with a special focus on conventional and islamic financial institutions products. for selected topis, there will be workshops for in depth discussions with panel members who are prominent speakers from industries as well as regulatory bodies. it will be interesting to find out what will transpire in the workshops that await you. ladies and gentlemen, this investors conference is also a gathering of investors, bankers, fund managers, regulators and industry leaders from malaysia and the world over. this is an excellent opportunity for you to capitalize on their presence by networking with them. i am sure you have a lot to gain from their experiences and first - hand knowledge in their own fields. furthermore, for information on investment opportunities in malaysia, there are 15 exhibition booths from major financial institutions and regulators set up in this convention centre specifically for you. please make a point to visit the exhibition booths, which showcase financial products and services in malaysia. i am sure these booths have informative brochures to give out and are more than happy to answer any queries you may have. there will be a very special event at the end of the second day. tan sri dato'seri dr. zeti akhtar aziz, governor of bank negara malaysia will launch two new indices - the citigroup malaysian government bond index and dow jones - rhb islamic malaysia index. the launching of these indices marks yet another milestone in the development of the malaysian capital market. as you are well aware, credible and transparent indices are very significant market infrastructure to raise the awareness and interest of investors. this will bode well for our aspiration to broaden and deepen the bond market in malaysia. ladies and gentlemen, i would like to remind you that both the day one and day two programs promise to be eventful. i know the very conducive environment for shopping at the kuala lumpur city center or klcc can be very tempting for some of us. but please resist that temptation for a while and wait until the conference is over. then please, by
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. the central bank of kenya through its capacity building arm β the kenya school of monetary studies ( ksms ) intends to develop a certified agricultural finance program in collaboration with compete β usaid. this program will be suitable for agricultural officers as well as credit officers. this is important in developing the critical mass of human capital that fully understands agribusiness, such as agribusiness cycles, risk management practices, farm cash - flows and finance and insurance. this will support farmers and also develop a strong drive to lift the policy paradigm in this area. but the wider scope of monetary policy support is not in doubt. finally, distinguished guests, ladies and gentlemen, i would like to conclude my brief remarks by wishing all of you fruitful deliberations this morning. thank you very much for your kind attention.
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micro bank recognises the challenges that financial institutions in our country face, when it comes to providing relevant products and services to citizens, particularly those in rural or remote regions. and has made the commitment to introduce fintech innovations to address those challenges. 2 / 3 bis - central bankers'speeches opening the kerema branch is another way women's micro bank has made a commitment to encouraging people to access financial services. i understand that the kerema branch will enable the people of the district, particularly the women, to take advantage of services such as the sme credit guarantee scheme, financial literacy training, as well as basic services, including deposit - taking and loans. the branch will provide a practical and desirable alternative to the risks of holding cash, informal money lending and money scams, all of which stop people from building a comfortable standard of living. today's official opening gives members of the community the opportunity to take significant steps forward towards building their financial security and financial independence. thank you again for inviting me to be part of this important milestone, which also marks women's micro bank's 10 years of official operation as a licensed micro bank. on behalf of the band of png board, management and staff of the bank of papua new guinea, my congratulations to women's micro bank / mama bank on the official opening of your fifth branch, here in this very special location of kerema town. 3 / 3 bis - central bankers'speeches
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elizabeth genia : speech - official opening of mama bank speech by ms elizabeth genia, governor of the bank of papua new guinea, at the official opening of mama bank, kerema branch, 7 may 2024. * * * prime minister hon james marape vice minister mining and member for kerema hon thomas opa members of the provincial assembly and ward members officials and people of kerema and gulf good afternoon β meapot lareva, or meuri lareva i was not only delighted to receive vice minister opa's invitation to take part in the official opening of the women's micro bank branch, here in kerema town, but was also excited to come to kerema town & gulf province for the first time. my mother was part orokolo and part abau and today i stand before you also as a proud orokolo and a gulf woman. my grandfather's name was maimai mahero from pokavavu or hopaiku village in orokolo. the fact of the matter is that i grew up in my grandfather's rubber block in cape rodney. today, i am grateful to governor for gulf hon. chris haiveta and my cousin brother tony ila a former member of parliament and a pangu party stalwart who have made sure we maintained our orokolo and gulf links and heritage. as governor of the bank of papua new guinea, i see reports about developments and achievements in the financial sector. but being able to see and experience personally just how those developments and achievements are making a real difference to our nation makes those reports come alive. so thank you for giving me that opportunity. today's official opening of its fifth branch celebrates another achievement in a long line of achievements we have seen from women's micro bank. i am sure your highly esteemed founder, the late janet sape, would have been extremely proud of the organisation affectionately - known as mama bank β now one of the top 50 companies for women in apec countries, and well - regarded as a financial services innovator. ten years ago, almost to the day, women's micro bank received its micro banking business licence from bpng, the fourth micro bank to be licensed, and the first womenfocused micro bank in png and the pacific region. since then, mama bank has become a key driver of financial inclusion. financial inclusion was originally a bpng - led initiative
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national strategy for financial literacy. i know that over the course of these webinars, we will learn much more about the priorities, approaches and strategies to advance sustainable finance development across the region. as we absorb the many valuable lessons and experiences shared towards this common goal, i am reminded of winston churchill who said, β it is no use saying we are doing our best. we have got to succeed in doing what is necessary β. in the end this is what counts. policymakers and the financial industry have a responsibility to do what it takes to succeed in making sure that finance works for sustainable development. let me end here and thank you very much for this opportunity to offer some remarks today. 3 / 3 bis central bankers'speeches
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fall, oil companies invested about as much as all businesses in the mainland economy combined. total oil - sector demand 4 amounted to more than 13 percent of mainland gdp in 2014. this is well above current government spending of oil and gas revenues, and also more than the estimate of the permanent income. graph : demand from the oil and gas sector and government spending of oil / gas revenues it has been estimated that one in nine jobs in the norwegian economy was related to oil sector demand in 2014. 5 the step - wise development of oil and gas reserves in the north sea has helped to create a supply industry that has become world leading in special areas. the downturn following the oil price decline in 2014 has highlighted the oil - dependence of the norwegian economy. as oil - sector demand plummeted, the blow to the economy was cushioned by a substantial increase in government spending. this room for manoeuvre in fiscal policy was provided by the significant savings in preceding years. without it, the recent downturn could have become much more painful. intergenerational concerns graph : old - age dependency ratio allow me to move on to another argument for relatively high saving : the intergenerational challenges facing the norwegian economy. like many other countries, we must cope with the challenges associated with an ageing population. as we have developed a more extensive welfare state than many other countries, the impact on public finances is significant. the pension system is basically pay - as - you - go and health care is also funded by the government. an ageing population will therefore weigh quite heavily on public finances. in the 1990s and 2000s the demographic trend was different. during those years, the share of the population 67 years or older actually declined, mirroring low birth rates between the two world wars. since around 2010 the long - term trend towards a higher old - age dependency ratio has resumed. public pension costs have shot up as baby boomers have retired. the burden on the health and long - term care system is rather light at the moment. but this will change in the coming years. with the alternative strategy of spending the permanent income, we would have spent more of the oil wealth in the 1990s and 2000s, when demographic costs for the government were low. the present fiscal rule, on the contrary, allows increased spending of oil revenue also in a period where age - related costs are expected to grow much faster. 4 / 6 bis central bankers'speeches uncertainty a third concern related to wealth management is uncertainty
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lee hsien loong : remaking singapore's financial sector speech by mr lee hsien loong, deputy prime minister of singapore and chairman of the monetary authority of singapore, at a mas staff seminar, singapore, 29 october 2002. * i. * * introduction we are gathering in an uncertain environment. on the economic front, asia β s key export markets β the us, eu and japan β remain weak, blighting south east asia β s prospects for recovery. in northeast asia, china β s vitality and transformation continues to dominate investor interest. after september 11, security has become the top concern worldwide. the bomb blasts in bali and the recent hostage taking in moscow are sobering reminders that the war on international terrorism has just begun. all these developments have implications for singapore β s growth prospects and our aspirations to become a world - class financial centre. certainly, these are challenging times. but if we could suspend the present for a moment, let us cast our minds back to 1997, when we embarked on this journey to remake our financial sector. ii. reflecting on the last 5 years five years ago, the global financial landscape was undergoing dramatic changes. financial markets were becoming more integrated, with freer and faster flows of information and capital. globalisation was boosting liquidity and facilitating growth. but it was also transmitting market disturbances with greater speed and virulence, and complicating the conduct of monetary and exchange rate policies. globalisation, coupled with deregulation, technological change, and borderless competition, was revolutionising the way financial institutions competed and did business. there was a wave of mergers and acquisitions, as institutions sought to diversify risks, reduce costs, and exploit synergies. financial centres faced similar pressures. as technology eroded time - zone advantages, institutions consolidated their activities within fewer financial centres. we believed that consolidation was imminent in our time zone. if there were to be only a few financial centres left in asia, we wanted to make sure that singapore was one of them. so we launched a fundamental rethink of our approach to supervising and developing the financial sector. creating a more conducive regulatory environment our new approach could be broadly summarised in four main thrusts. first, we sought to create a more conducive regulatory environment to foster dynamism and innovation, while maintaining the safety and soundness of our financial sector. mas shifted its emphasis from regulation to risk - focused supervision, so that we could
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time. green bonds are also gaining traction, with local and foreign issuers issuing over s $ 2 billion of green bonds here. the life insurance industry is doing well, with net premiums growing by 16 % p. a. over 2016 and 2017. growth was boosted by asian consumers demanding more savings and investment products in search of yield. non - life insurance business is, however, facing structural challenges and weak growth. net non - life premiums grew by just 2 % p. a. over 2016 and 17. 7 / 11 bis central bankers'speeches business conditions have been challenging globally, due to excess capacity and downward pressure on premiums. but singapore remains attractive as the premier reinsurance hub in asia. global reinsurance players such as swiss re and munich re have recently set up their regional headquarters here. and we are making a push into alternative risk solutions such as risk pools and insurancelinked securities or ils. foreign exchange trading declined last year although we remain the third largest fx centre globally. singapore β s average daily fx trading volume grew by 20. 5 % in 2016 but declined by 6. 7 % in 2017. this was mainly due to lower volatility in key currencies such as the japanese yen ; and some temporary trading desk turnover which has since been filled. we are making headway in our strategy to position singapore as an e - trading hub for fx, facilitating better price discovery during asian hours and better execution for players in the region. xtx markets, a global fx liquidity provider, has announced its plans to set up its pricing and trading engine in singapore. we are working with other key banks and e - trading platforms in the pipeline. jobs and skills let me move on to the second pillar of the itm β jobs and skills. more finance professionals are going for training and development. some 27, 000 financial industry professionals have benefited from skillsfuture programmes during 2016 - 2017. there remains, however, a shortfall of specialised talent in it β which we are addressing in two ways : mas, imda, the institute of banking and finance and institutes of higher learning are working together to deepen the local it talent pool at the entry level. ibf is engaging financial institutions on developing local it talent through company - led training and professional conversion programmes ( pcps ). we have ramped up efforts to reskill and redeploy banking professionals into emerging roles. job roles are changing as banks pivot towards digital banking models over
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directors. the bank of russia will make decisions on its further moves depending on the path of economic development and the trends of inflation and inflation expectations. baseline scenario i would like to remind you that the bank of russia updates its medium - term baseline forecast four times a year in the course of the board of directors β core meetings on the key rate. the forecast presented in the draft guidelines was released earlier following the meeting held on 23 july 2021, but this draft extends the forecast horizon to 2024. the key assumptions of the baseline scenario are as follows : ( 1 ) a gradual improvement of the pandemic situation worldwide owing to the progress of the vaccination, the development of the herd immunity, and the absence of new, more dangerous coronavirus strains ; ( 2 ) the continuing recovery of the global economy ; ( 3 ) debottlenecking the supply chain ; ( 4 ) phasing - out of stimulus measures in major economies beginning from 2021 h2 and timely normalisation of their monetary policies to prevent persistently rising inflationary pressure. after the accelerated recovery, the russian economy will slow down to its potential growth rate in 2022. taking into consideration the structural measures implemented by the government to boost the potential growth pace, it will probably edge up to 2 β 3 % a year over the forecast horizon. annual inflation will go down gradually from 2021 h2 as a result of the weakening impact of temporary factors and the effect of the earlier monetary policy decisions made by the bank of russia. given the actual price growth rate in 2021 h1, we expect that inflation will reach 5. 7 β 6. 2 % as of the end of the year. next year, inflation will slow down to 4. 0 β 4. 5 % and will stay close to the bank of russia β s 4 % target further on. the key rate will average 6 β 7 % p. a. next year and then return to its long - term neutral range estimated by the bank of russia at 5 β 6 % p. a. alternative scenarios nevertheless, there is still significant uncertainty about how the situation might be unfolding 2 / 4 bis central bankers'speeches in the future. seeking to pursue a robust monetary policy, the bank of russia considers three alternatives in its guidelines in addition to the baseline scenario. i would like to emphasise that the alternative scenarios are less probable than the baseline one. this year, the logic behind the alternative scenarios is based on the key possible factors in the external environment.
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to its pre - pandemic growth path. the number of vacant jobs is at its peaks. high demand for labour resources is demonstrated by companies in construction and transport, a whole range of manufacturing enterprises, and in trade. these are the industries that started to bounce back earlier and were recovering faster and where demand exceeds prepandemic levels. a further expansion of output is possible through a restoration of the inflow of labour migrants, but β first of all β through an increase in labour productivity. this all means that after the rebound of the economy completes, it will develop more smoothly, at a more gradual pace, as compared to the recovery growth of output observed over the last 12 months. in a situation when companies experience a shortage of workers or components, monetary policy measures promoting demand will not increase output or consumption. for instance, if the demand for cars rises even more, this will not boost their output, when there are no parts, but will only increase the queues for them and speed up price growth. 1 / 3 bis central bankers'speeches as regards inflation, it is above the forecast rate, and inflation expectations remain high. in august, annual inflation was 6. 7 %. according to the steady indicators of inflation measuring the inflation rate without volatile components, inflationary pressure continued to considerably exceed our target in both august and early september. indeed, inflation is impacted by multiple factors that do not depend on our monetary policy. the most important of them are world commodity prices, the country β s fruit and vegetable harvest, and bottlenecks in global supply chains ( container shipments, microcircuit manufacture, etc. ). it has been stated recently that these factors should be completely ignored if monetary policy cannot influence them. this opinion leaves out one essential circumstance, namely, the fact that all these factors impact inflation expectations which, in turn, influence consumers β sentiment and behaviour. hence, they drive inflation across a wide range of products. higher inflation expectations boost demand and increase the extent of the pass - through of higher costs to consumers. as a result, companies have the opportunity to almost completely pass costs to prices and thereby maintain or even increase their profits, which in turn discourages them to take efforts in order to reduce costs and improve labour productivity. monetary policy should prevent the inflationary spiral from getting out of control. therefore, it should respond to transitory factors to the extent they transform into steady factors through higher inflation expectations. this is especially relevant when households β inflation expectations and
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, including the housing sector, financial markets, and the labor market. monetary and fiscal authorities responded in myriad ways to help the economy and our nation recover. but we should resist the temptation to implement programs with the goal of recreating the past. the unemployment rate has slowly recovered and is now 6. 3 percent from its peak of 10 percent in october 2009. some are skeptical, though, because the decline in the unemployment rate reflects not only increases in employment but declines in labor force participation. many interpret such declines in the participation rate as representing discouraged workers who have stopped looking for work. yet, labor force participation rates can also decline for demographic reasons. indeed, we have seen steadily declining participation rates since 2000, and we can account for about three - quarters of this decline in participation since the start of the recession in december 2007 because of increased retirements and movements into disability. demographic trends, driven largely by an aging baby boomer generation, are altering the age distribution of our population. more specifically, we are getting older, and the size of the working age population is shrinking relative to those over 65. it is widely recognized that this fundamental shift will require major changes in the structure of social security and medicare programs. yet even as we solve such fiscal challenges associated with an aging population, we have to face up to the changing skills that employers are seeking. we are seeing a mismatch of skills in the workforce and the jobs that are being created. many employers i have spoken to around the country talk about the fact that while they are hiring new workers, they are hiring a new type of worker : a worker who is more technologically sophisticated and productive. going forward our educational system needs to be upgraded to prepare young people for this changing labor market. we are simply not keeping pace. more specifically, business leaders i have met talk repeatedly about having trouble finding qualified candidates in the areas of science, technology, engineering, and math, or so - called bis central bankers β speeches stem jobs. as you know, the increasing needs for stem - trained workers is one of the trends that will drive labor demand and productivity growth in our future. the department of commerce estimates that stem employment grew at three times the rate of non - stem employment in the previous decade and is projected to grow at twice the rate of non - stem jobs through 2018. sadly, we are not doing an adequate job of preparing our workforce for these jobs. manufacturing is one sector in which firms have implemented new production technologies and are
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standards of living are rising, in large part because of the widening embrace of competitive free markets, especially by populous and growing china and india. since the autumn of 2001, global gross domestic product per capita has grown more than 8 percent. and growth in developing asia, where so many of the world β s poor reside, has been considerably faster. open and free markets are the antithesis of violence. they rest not only on voluntary exchange but also on a necessary condition of voluntary exchange : trust in the word of those with whom we do business. to be sure, all market economies require a rule of law to function - - laws of contracts, protection of property rights, and a general protection of citizens from arbitrary actions of the state. yet, if even a small fraction of legally binding transactions required adjudication, our court systems would be swamped and immobilized. in practice, in virtually all our transactions, whether with customers or with colleagues, we rely on the word of those with whom we do business. if we could not do so, goods and services could not be exchanged efficiently. the trillions of dollars of assets that are priced and traded daily in our financial markets before legal confirmation illustrates the critical role of trust. even when the law is followed to the letter, appeals to legal authority guide only a few of the day - to - day decisions required of business and financial managers. the rest are governed by whatever personal code of values that market participants bring to the table. commerce is inhibited if we cannot trust the reliability of counterparties'commitments. indeed, the willingness to rely on the word of a stranger is integral to any sophisticated economy. this necessary condition for commerce was particularly evident in freewheeling nineteenth - century america, where reputation and trust became valued assets. throughout much of that century, laissezfaire reigned in the united states as elsewhere, and caveat emptor was the prevailing prescription for guarding against wide - open trading practices. a reputation for honest dealing was thus particularly valued. even those inclined to be less than scrupulous in their private dealings had to adhere to a more ethical standard in their market transactions, or they risked being driven out of business. to be sure, the history of world business is strewn with fisks, goulds, and numerous others treading on, or over, the edge of legality. but they were a distinct minority. if the situation had been otherwise, nineteenth - century market economies would never have achieved
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christian noyer : no moral hazard β the banks are doing their job comment by mr christian noyer, governor of the bank of france, in the financial times, 18 september 2007. * * * in recent weeks, central banks in europe and the us have acted repeatedly to provide liquidity to interbank money markets. these interventions have raised some questions. concerns were expressed that monetary authorities were bailing out speculators, thus creating the same kind of moral hazard that may have led to excesses in the past. there were also concerns as to whether the integrity of monetary policy would be compromised. these are valid questions. on numerous occasions, in the past, we pointed out the potential dangers that mispricing of credit risk posed for financial stability. we may be now seeing some of the consequences. excessive risks were taken, and losses will have to be accepted. it is important that monetary and financial authorities take no action that would prevent this process from running its course, let alone be seeing to be condoning past or future excesses. however, the logic behind recent interventions is different. put very simply, financial turbulence and uncertainty have suddenly triggered an upward shift in the demand for central bank money. faced with such a shift, whose direction is apparent but amplitude uncertain, the choice, for monetary authorities, is clear : either accommodate, and provide temporary liquidity ; or not, in which case, interest rates would have to rise to restore balance in the interbank market. standard economic theory dictates that, in such circumstances, exogenous changes in money demand should indeed be accommodated. in a seminal article going back to 1970 1, william poole showed that, when there is uncertainty about money demand, the optimal response is to stabilize the interest rate, thus letting money supply adjust. since short - term interest rates are, for all central banks, the main policy tool, an increase in interbank rates over and above the official rate would indeed be tantamount to a shift in monetary policy. in contrast, liquidity provision by central banks has ensured that the overall policy stance has remained unchanged. a clear distinction has been β and will be β maintained between temporary liquidity provision, on the one hand, and medium term oriented monetary policy, on the other. should liquidity be provided at a penalty rate, as some have argued, to avoid moral hazard? the answer is clearly positive if and when liquidity assistance is targeted at specific institutions. but there is no reason, for central
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banks, to significantly depart from prevailing policy rates if their main objective is to respond to an exogenous and general increase in demand for central bank balances. in the future, monetary policy may have to be adjusted, not for the purpose of easing financial tensions, but according to its own objective and in view of the state of the economy. as regards the euro area, the governing council has judged that, in the current uncertain environment, it was appropriate to gather additional information before drawing conclusions for monetary policy, although the overall stance is β still on the accommodative side β and β¦ β the medium - term outlook for price stability remains subject to upside risks β. looking further ahead, difficulties in the subprime mortgage markets combined with the generalized securitization of loans will lead to losses whose localization in the financial system remains undetermined. this information problem is currently creating uncertainty and optimal choice of monetary policy instruments in a simple stochastic macro model ; the quarterly journal of economics vol. 84, no. 2 ( may, 1970 ) turmoil. however, things should be put in perspective. available data indicate that, unless the economy unexpectedly deteriorates, those losses will remain small in comparison to total available capital in the financial system and should be easily absorbed. of course, conditions remain fragile in many segments of the capital markets. perverse dynamics may always develop. by acting to restore balance and stability in the interbank market, central banks are just doing their job.
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is in part because the headwinds facing the economy are likely to take some time to die down. these headwinds include public balance sheet repair, a highly indebted private sector likely to be particularly sensitive to interest rates, as well as the drag from a 12 % appreciation of sterling over the past year and the persistent muted demand from our main export markets. over the medium term, several dynamics are likely to keep rates lower than in the past. uk rates could be restrained by continued imbalances between global saving and investment, together with potentially lower rates of global productivity growth. the mpc can also be expected to accommodate with lower risk - free rates the higher spreads that are likely to result from new regulatory requirements. all of these factors likely mean that, even when spare capacity is used up, bank rate will need to be materially lower than in the past in order to keep the economy operating at its potential and inflation at its target. the bank is well aware that a prolonged period of historically low interest rates could encourage other risks to develop. in the uk, the biggest risks are associated with the housing market, which is why last month the bank β s financial policy committee ( fpc ) took graduated and proportionate actions. the bank β s role is not to control house prices. nor can the bank do anything to address the severe structural problems across the uk caused by a chronic lack of new housing supply. our job is to mitigate the risks to the broader economy that arise from these underlying challenges. it is the prospects for household indebtedness that concern us. uk households start from a vulnerable position, with debt at 140 % of disposable income and the share of riskier mortgage lending rising markedly over the past year. housing debt can represent a major risk because mortgages are both the largest asset of uk banks and the largest liability of uk households. bis central bankers β speeches the fpc does not believe that household indebtedness poses an imminent threat to stability. underwriting standards are more responsible than in the past. but we have seen time and again how quickly responsible can turn to reckless, creating risks that ultimately derail the economy. allow me to explain why this matters to everyone from land β s end to john o β groats, even those who do not own homes. history shows that the british people do everything they can to pay their mortgages. that means cutting back deeply on expenditures when the unexpected happens. if a lot of
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relatively more intrusive supervisory oversight. it also involves having wide - ranging policy tools, including macro - prudential policies, to mitigate and manage the risks emanating from excesses in the financial system. as the experience in the advanced economies has shown, the source of imbalances can arise in a number in segments of the economy, including from the household, the financial and the public sectors. this underscores the importance of prudence ; to ensure that growth is underpinned by sustainability and not excesses. a further lesson is to build buffers during the good times to better position us to withstand future shocks. equally important for policy in the emerging economies is to put in place the necessary foundations for long - term growth. this involves few areas of significance. the first is to create a competitive environment that allows for greater economic flexibility. this includes reforms for a sequenced and gradual removal of distortions prevailing in the economy, lowering the costs of doing business, and to streamline the involvement of the public sector in businesses. the second is to accord importance to investments in modern infrastructure, and to enhance technological readiness that will enable the economy to prepare for the changing economic and financial landscape. another area of significance is to ensure balanced and inclusive development. indeed, in the emerging economies, this is becoming increasingly urgent as the benefits of rapid development have not been evenly distributed, and income inequality has risen further even in the developed economies. going forward, economic empowerment will increasingly bis central bankers β speeches depend on access to technology, high quality education, healthcare and social security systems. equally important is greater financial inclusion. without policy intervention, the trend towards greater inequality could potentially intensify. in malaysia, many of the necessary policy strategies for long - term growth in these areas of significance are already at various stages of implementation, with considerable progress being made in certain areas. as the technological gap between the emerging and the advanced economies converges, it will become increasingly critical for an emerging economy such as malaysia to transition from growth based on capital accumulation, to growth based on productivity improvements. in addition, the rising global inter - connectedness characterised by the emergence of highly intricate networks such as the increase of global manufacturing supply chains, increases the susceptibility of industries to both cascading failures, as well as to the rapid re - orientation of business competitiveness through disruptive innovations such as in the mobile computing industry or the possible rise of additive manufacturing. to advance forward in this direction
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the bank itself may own only 5 % of an investee company, but the insurance fund of the insurance company may own another 15 %, giving a total stake of 20 %. this is not satisfactory, because it presents the same problems of contagion, non - transparency and dilution of management focus as the bank itself investing directly in these companies. mas will study the appropriate investment limits of insurance funds for both bank - related and independent insurers. the limits set should protect the interests of policyholders through adequate diversification, and ensure that the investments do not amount to controlling stakes. these measures will be developed in consultation with the industry, and are expected to be finalised by the end of the year. whatever the precise portfolio investment limits for the insurance funds, mas will take the governance and deployment of these insurance funds into consideration, when assessing whether the banking group has de facto control of an investee company, and thus whether an investment meets the portfolio investment criteria for the banking group. time frame and potential impact the separation of the financial and non - financial activities will be a major change for the banking groups. there will be significant corporate restructuring and divestment of assets. we must do this in an orderly manner, over a reasonable period. there is no reason to force a fire sale, which would weaken the banks and diminish confidence, and would be against the interests of shareholders and depositors. local banks will be given three years to complete the restructuring and comply with the new requirements. the three years will commence from the passage of the relevant legislation, which should take place by the end of the year. mas will work with the banks on a phasing and schedule, so that the restructuring and divestments can take place in an orderly manner and be completed within the three - year deadline. tax treatment for divestment the divestment of non - permitted assets will have significant tax implications. in order to avoid uncertainty as to how iras will treat these transactions, and to minimise the tax impact on the banks of changes which have been mandated by mas, the government has decided on a set of one - off administrative concessions to facilitate this exercise. all gains arising from disposals of shares and real properties which have been held for more than 10 years will be treated as non - taxable capital gains. for assets held for less than 10 years, iras would look at the facts of individual cases to decide whether capital or income treatment is appropriate. the
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on specific matters, including those arising out of inspection, are to be placed in the public domain. such proactive disclosures by the regulator are expected to have a salutary effect on the functioning of the banking system. in addition to the above, any penal action taken against any foreign bank branches in india are also shared with the home country regulator with a view to enhance the quality of consolidated supervision. these initiatives will be an important supplement to the pillar 3 disclosures prescribed under basel ii, which in our opinion will further the cause of a stable banking system. the way forward on the way forward it has to be recognised that implementation of basel ii will make considerable demands on scarce resources in terms of both economic resources and human resources. banks must take on the challenges and convert these into opportunities. here i would like to quote ms. susan schmidt bies, member of the board of governors of the us federal reserve system : β banking will remain a highly dynamic industry. supervisors will have to be especially attentive to changing best practices and ensure that basel ii does not inhibit adoption of new banking practices and financial instruments β β maintaining financial stability in global banking and financial markets continues to be an important objective of regulators, bankers, and other market participants, particularly because of the negative impact that financial instability has on economies as a whole. basel ii, in my view, will help improve financial stability β¦ even though minimum regulatory capital ratios are likely to be more volatile under basel ii, this reflects greater risk sensitivity. β some of the issues which emerging economies in particular would need to address on the way ahead are higher capital requirements, improved it architectures, data issues, consolidation, capacity building, external ratings, use of national discretion, validating the concept of economic capital and corporate governance. 4 / 7 higher capital requirements β the basel document prescribes the minimum capital requirements and banks need to be encouraged to hold more capital than the minimum. as a part of their strategy, banks are expected to operate at levels above the minimum to take care of the fluctuations in capital requirements in response to the fluctuations in the quality of risk exposures. further, it will be necessary to ensure that all elements of expected losses should be fully met by provisioning and that capital is available exclusively to support unexpected losses. higher capital requirements could pose difficulties if there are state owned banks. this may require consideration of options such as preference shares and other innovative tier - i instruments, hybrid tier - ii capital instruments and tier - iii capital
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marzunisham omar : supporting the robust growth of islamic finance in malaysia welcoming remarks by mr marzunisham omar, assistant governor of the central bank of malaysia ( bank negara malaysia ), at malaysia country showcase - ifsb summit 2017, kuala lumpur, 22 october 2017. * * * welcome to malaysia country showcase. i would like to express my sincere appreciation to all of you for being here today. i hope that today β s showcase will enhance your understanding of the critical role that professional ancillary services and talent development institutions play in supporting the robust growth of islamic finance in malaysia. indeed, these professional services, which include shariah consultancy, legal, accounting and talent development, are an integral part that make up malaysia β s vibrant islamic finance system. with islamic finance fast gaining a strong foothold in many countries, malaysia hopes to be able to contribute to this dynamic phase of islamic finance development by providing an array of reliable, high quality professional services ; one that is backed by decades of experience. today, malaysia has a competitive islamic finance that forms part of the mainstream financial system. islamic banking assets now account for 28 % of malaysia β s total banking assets, while more than half of our bond market comprises sukuk. we have a diverse range of islamic financial institutions, both domestic and foreign, which provide competitive, innovative products to meet the varied and unique needs of individuals and businesses. what we have today was not built overnight. the islamic finance journey in malaysia has been long and its beginnings were humble. it is the product of three decades β work in building strong foundations for the sector to thrive and grow. in reflecting on our journey of developing a vibrant islamic financial system, imperatives in three areas stand out β infrastructure ; players ; and talent. allow me to briefly elaborate on these three areas. first, infrastructure. similar to developing a conventional financial system, having a robust regulatory and supervisory regime is critical for the development of a strong, resilient and inclusive islamic financial system. what is unique about islamic finance is the need for a clear shariah governance framework to ensure shariah compliance. in malaysia, the islamic financial services act 2013 sets out a regulatory framework for end - to - end shariah compliance. bank negara malaysia is vested with comprehensive legal powers under this act to regulate and supervise the islamic financial system. complementary to this is the role of the shariah advisory council in ensuring greater certainty in shariah. while our sharia
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berhad β. saya dengan sukacitanya merasmikan pelancaran terima kasih.
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been raised over the sustainability of ecology and, more fundamentally, the socio - economic well - being of the people. 12. today, effort has been made to maintain the balance between the ecology and growth. for instance, environmental protection and sustainable development have been included as an integral part of thailand β s national development plan since 1997. however, the goal of ensuing environmental sustainability cannot be easily established. and i hope that today β s conference will also examine the environmental sustainability while focusing on growth and inclusiveness. 13. lastly, on the stability of financial system, the lessons that can be appropriately derived from thailand β s experiences are on external imbalances and the effects on financial institutions. the 1997 financial crisis was originated from large capital inflows. between 1992 and 1996, thai economy had attracted massive volumes of capital inflow of more than 355 billion bahts from abroad. at that time, the volatile international capital flows went into our financial system and increased the system β s vulnerability. the crisis then erupted when there was a sudden and large capital outflow, which during 1997 β 1999 amounted to some 389 billion bahts. what followed is the closing down of numerous financial institutions as well as the economic slump. 14. in hindsight, we have learned that international capital flows work both ways. on one hand, they support long - term income growth through saving and investment. on the other hand, they increase vulnerabilities in the financial system. we must, therefore, keep in mind that foreign capital can be the β achilles heel β to the financial system. in this regards, high - frequency monitoring data and shock - absorptive policy framework are essential. 15. we have been improving our financial system from the lesson of the 1997 crisis. legal and regulatory reforms have been made to ensure the stability of financial system. today, we may say that our effort has paid off as our financial system is now resilient and in a good position to support growth. this is especially evident during the bis central bankers β speeches 2008 financial crisis where the resiliencies of our financial system as well as the framework of our monetary policy were put to test. nevertheless, there is no fixed formula for the success among policy makers. the best policy mix is timely, contextual selection of market tools, and coordination across agencies. ministers, governors, ladies and gentlemen, 16. i expect that our dialogue today will contribute to the traditional - and - beyond insight and information on how to achieve
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prasarn trairatvorakul : economic transformation and inclusive growth in frontier economies welcome and opening remarks by dr prasarn trairatvorakul, governor of the bank of thailand, at the conference on β economic transformation and inclusive growth in frontier economies β, jointly organized by the international monetary fund ( imf ) and the japan international cooperation agency ( jica ), bangkok, 28 january 2013. * * * ministers and central bank governors, distinguished guests, ladies and gentlemen, 1. it gives me great pleasure and honor to welcome each and every one of you to thailand, and more specifically, to the conference on β economic transformation and inclusive growth in frontier economies β. this event is the second in a series of conference jointly organized by the international monetary fund ( imf ) and the japan international cooperation agency ( jica ). 2. the topic of the conference is timely and relevant to current developments in the region. frontier economies are new and becoming large markets. they all have the potential to grow into tomorrow β s emerging economies. in recent years, we witness faster economic growth in frontier economies than larger emerging economies. we have seen frontier economies integrate into the regional and global economy. 3. frontier economies are full of potential. however, continued efforts on strengthening policy frameworks are still needed. this is to ensure long term economic growth and sustain robust economy. and i believe that today β s conference will contribute to these efforts as we will share and learn the appropriate lessons of others. one can leap jump the process, without repeating the mistakes. our discussion will revolve around the critical decisions on policy considerations for economic development and the way forward. 4. sharing lessons about economic development leads naturally into a discussion about the development experiences of thailand. thailand β s rapid growth between the late 1970s and 1997 was the result of the structural transformation. we moved from primary production to industrial production, mostly manufacturing and high - value agricultural products. the combination of ( 1 ) processed agricultural products, ( 2 ) import substitution industrialization, and ( 3 ) export promotion was the principal feature of economic development. 5. moving up global production chains elevated thailand β s per capita income of $ 100 in the early 1960s to nearly $ 3, 000 after 1997. more importantly, the process has resulted in the dramatic fall in poverty and improved the living conditions of the thai people. the rate of poverty had been reduced from 57 per cent in early 1960s to around 24 per cent in 1981 and to 8
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( iv ) supportive and stable policies. besides full foreign ownership, investors can repatriate their capital, dividends and profits and there is no restriction on the level of royalty payments. foreign investors are eligible for low import duties between 5 and 10 % on plant and equipment and a first year tax allowance on profits of between 50 and 90 % of the cost of plant and equipment. measures have also been taken to introduce an intellectual property rights regime compatible with the wto. rules governing fdi have been significantly liberalized. furthermore, the investment climate has improved as a result of policy initiatives such as the streamlining of procedures required to start a business and the measures taken to minimize the time that businesses spend dealing with government inspections. to facilitate foreign portfolio investment, special rupee convertible account ( scra ) has been established to allow remittances and non - residents to bring money in and out of pakistan. the amount accumulated in this account can be used for purchasing as well as trading shares quoted in the stock exchange as well as other approved securities. foreign exchange regime has also been liberalized and exchange controls have been lifted. business processes are being rationalized and simplified. reforms, both of incentive and administrative regime, have helped pakistan to improve its ranking in the survey conducted by the world bank on β doing business in 2007. β pakistan now ranks 51 in the time to import ( which has reduced from 39 days to 19 days ) as trade logistics and customs procedures were streamlined and scores well on the indicators related to starting a business ( 54th out of 175 ) and protecting investors ( 19th out of 175 ). v. growth sustainability and prospects pakistan β s real gdp growth rate has risen in recent years, averaging 7. 4 % in the preceding three years. this is well above the long - term ( 50 years ) average growth rate of 5 percent. the strong growth momentum has stressed the productive capacity of the economy as evident in macroeconomic indicators such as rising inflationary pressures and a widening external current account deficit. these developments naturally raise questions regarding economy β s potential to sustain this momentum. the current growth momentum in the range of 7 % can indeed be maintained, though this requires : careful calibration of macroeconomic management and removing bottlenecks that are impeding growth and economic diversification. with declining poverty 1 and growing employment opportunities, viability of pakistani market is further enhanced as domestic private consumption has been supported by improved incomes and remittances. to ensure sustainable economic growth, pakistan
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strengthen the banking sector and securities markets. directed credit and credit ceilings, administered and subsidized interest rates have gradually given way to market - based allocation of credit and determination of prices. india has become a leader in outsourcing of information technology enabled services. low wages, large english speaking technical manpower, availability of venture capital and networking with the u. s. firms have brought about a major expansion in i. t. exports. pharmaceuticals, health care, biotechnology, research and development are also beginning to attract attention from multinational companies. indian firms are also beginning to acquire firms abroad and are integrating themselves in the global economy. however, other countries in the region are still way behind and have a lot of catching up to do. services sectors account for 60 percent of the output of developed countries and many services are becoming mobile across border due to breakthrough in technology and communication. thus the outsourcing of services is a sensible strategy. these improvements in macroeconomic fundamentals have led to up gradation of credit worthiness of india and more recently pakistan. both the countries have established access to international bond market at fine pricing. it will, therefore, be fair to surmise that economic fundamentals have improved to a very large extent in all the south asian countries in the last decade or so. broad political consensus on the content and direction of economic policies and their credible and consistent pursuit should provide some signal to the markets that the south asian economies can be relied upon in the exchange of goods and services and inflow of capital. agenda for the future. however, the challenges ahead and tasks for economic managers in the region are simply daunting. sri lanka and india have almost one quarter of their population living below the poverty line. the estimates for bangladesh are in the mid 40 percent, while pakistan has one - third of its population living below the poverty line. unemployment rates are quite high and human development indicators are dismally low. moreover, these task have to be pursued in the context of a more volatile economic environment - both domestic, as well as, international. capital inflows and outflows have much greater potential to destabilize markets, exchange rate and interest rates. technological, communication and media revolution especially the satellite television and cable channels have raised the expectations of the common man through the demonstration effect of conspicuous consumption by powerful and affluent classes. these expectations are placing enormous pressures on the ruling classes for providing access to basic necessities of life to the majority of the population
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, the bsp and industry stakeholders launched the national retail payment system ( nrps ), a policy and regulatory framework for the carrying out of retail payment activities through the bsp supervised financial institutions. through the nrps, the bsp endeavors to create a safe, reliable, affordable, interoperable, and efficient retail payments system in the country. under the nrps, bsp also encourages the use of electronic payments or modern financial technologies to enhance the speed, convenience and affordability of financial transactions. this method of electronic payments will be at the forefront as the country transitions into the β new economy. β as of may 31, 2020, pesonet has 58 participating institutions while instapay has 45. both are expected to have more participating institutions in the coming years. the bsp is also encouraging the wide adoption of the national qr code standard as well as the use of online payment facilities for government transactions. the launching of the egov pay facility to digitize government collections and disbursements will lead to more efficient government collection, better audit, and enhanced transparency. it also aims to eventually plug revenue leaks. egov pay will be expanded to enable ordinary citizens to digitally pay government tax, fees and charges. the bsp plays a supportive role in the promotion of inclusive economic and social development objectives of the government through its advocacy programs aimed at promoting financial inclusion. the national strategy for financial inclusion provides the national vision for financial inclusion and a platform for public and private sector coordination to ensure synergy of efforts in achieving shared objectives. meanwhile, the range of microfinance loans offered by banks has broadened from regular microloans to microcredit for agriculture, housing and business, as well as micro - insurance in 3 / 6 bis central bankers'speeches line with the growing needs and strengthened capacities of banks β clients. as of end - 2019, a total of 154 banks with microfinance operations had been serving more than 2. 4 million micro - entrepreneurs. the total value of microfinance loans extended as of end - 2019 amounted to php27. 3 billion, 20. 7 percent higher than its level in 2018 at php22. 6 billion. meanwhile, credit surety fund ( csf ) program is a credit enhancement scheme that allows micro, small and medium enterprises, which are members of cooperatives, to borrow from banks using the csf surety cover as security for the loan in lieu of conventional collateral. from its inception in 2008 until end -
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frank elderson : the ngfs glasgow declaration β from a coalition of the willing to a coalition of the committed keynote speech by mr frank elderson, member of the executive board of the european central bank, at the cop26 finance day presidency event on β a financial system for net zero β, frankfurt am main, glasgow, 3 november 2021. * * * our collective journey started in paris almost four years ago, when eight central banks and supervisors from an already diverse background decided to join forces. our aim was to rise to the climate challenge and work together to develop the tools we need as central banks and supervisors to foster and accelerate the greening of the global financial system. as a coalition of the willing, we have been working together in the network for greening the financial system ( ngfs ), which i am proud to chair. over time, others have joined us in our efforts. and i am delighted to announce here today that our network is welcoming the supervisory authorities of turkey and jersey and the central banks of jordan, the dominican republic and peru. this means that the ngfs β and i am also very proud of what i am about to announce right now β now brings together a total of 100 central banks and supervisors. our network is both enriched by its diversity and strengthened by the shared determination of its members to address climate change and environmental issues within and because of their mandates. since our call for action report of april 20191, we have developed and shared practical tools and knowledge, most notably in the fields of prudential supervision, climate scenario analysis, responsible investment, the inclusion of climate - related considerations in monetary policy frameworks, data gaps, and building awareness and intellectual capacity. based on our collaborative work, ngfs members have taken very concrete actions towards greening the financial system. the examples provided by the previous panellists are a very telling illustration of this dynamic, and many others in our network could share similar experiences. but i have not just come here to announce that our network now brings together 100 members. i am also extremely pleased to announce that today the ngfs is publishing its glasgow declaration entitled β committed to action β, in which we reiterate our willingness to contribute to the global response required to meet the objectives of the paris agreement. and we make concrete commitments on what we will work on and deliver in the coming years, covering all the core activities of our network of central banks and supervisors. looking ahead, we will deepen, amplify and strengthen
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service housing loans. second, the level of gearing in the united states housing market is noticeably higher than in australia. this may reflect the fact that australian households are more active in paying down their loans after buying a home, possibly because owner - occupied mortgage interest rates are not tax deductible here as they are in the united states. the faster pay - down of mortgage debt in australia reduces the risk of borrowers subsequently getting into financial difficulty. overall, the experience of the last few years suggests that the australian household sector as a whole appears to have the financial capacity to sustain a relatively high ratio of housing prices to income. that capacity may not, however, be evenly distributed through the population. many 50 β 60 year olds, having benefited from the prolonged economic expansion over almost 20 years and the accumulation of superannuation savings, are in a strong financial position. this has encouraged a change in financial behaviour, with many households in this group being more inclined to stay geared up later in life, using the funds to upgrade or expand dwelling investments. it is likely that this changed behaviour has been a significant factor in the housing developments we have seen over the past 10 β 15 years. in contrast, the typical first - home owner cohort β those under 35 years of age β has experienced a noticeable decline in home ownership over the past 10 β 15 years ( graph 9 ). it may be that this is being driven by demographic factors β such as the fact that young people are staying in education longer and delaying the formation of new households β but it may also be financially driven. graph 9 home ownership rates in australia % % total under 35 years source : abs survey of income and housing ( sih ) a particular problem for first - home owners is that the rise in the ratio of house prices to income has substantially increased the deposit needed to get into the market. on plausible assumptions, the deposit needed by first - home owners may now be around one and a quarter years β income, almost twice what it was 15 years ago. at one stage, lenders were responding to this by lowering the deposit requirement, but this carried the risk of buyers subsequently getting into difficulty. also, various governments have sought to provide concessions to first - home owners through grants or tax relief. however, while these measures assist the first wave of buyers who are able to take advantage of them, the benefits diminish over time to the extent that these concessions become capitalised into higher house prices. conclusion i am conscious
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philip lowe : low inflation in a world of monetary stimulus speech by mr philip lowe, deputy governor of the reserve bank of australia, to the goldman sachs annual global macro economic conference, sydney, 5 march 2015. * * * i would like to thank marion kohler for excellent assistance in the preparation of these remarks. accompanying charts can be found at the end of the speech. i would like to thank goldman sachs for the invitation to speak today. it is a pleasure to be here and be part of your annual macro economic conference. it is perhaps stating the obvious to say that an important part of the macroeconomic environment is monetary policy. the actions of central banks have material effects on financial markets and can shape macroeconomic outcomes. indeed, over recent decades it became widely accepted that monetary policy was the primary macroeconomic stabilisation tool and that monetary policy could effectively manage the business cycle. from today β s perspective, the picture looks a little different. in many ways, the current global monetary environment is quite extraordinary. there has been unprecedented money creation by the world β s major central banks. policy interest rates are negative across much of europe. long - term government bonds yields in most advanced economies are the lowest in recorded history. lending rates for many private sector borrowers are the lowest ever. and some banks in europe are now charging customers to accept deposits. in earlier eras, one could have predicted with some confidence that this type of monetary stimulus would have created a boom in economic activity and subsequently a substantial lift in inflation. yet, today, many parts of the world continue to operate with considerable spare capacity, inflation rates are low almost everywhere and inflation expectations have generally declined, not increased. so this afternoon, i would like to talk a little about these very unusual times. i will begin by showing a few graphs that summarise the current global monetary environment. i would then like to explore some of the possible reasons why we are in this environment before addressing some of the implications of all this for australia. the current global monetary environment so first, to the facts. since the global financial crisis, we have seen an extraordinary increase in the size of central bank balance sheets. this first graph shows the size of the combined balance sheet of the us federal reserve, the bank of japan and the european central bank ( graph 1 ). this combined balance sheet has increased from the equivalent of us $ 3Β½ trillion in early 2007 to almost us $ 10 trillion today, and a further substantial rise is in prospect.
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zeti akhtar aziz : opening of bank negara malaysia beijing representative office and initiatives to promote bilateral trade and investment remarks by dr zeti akhtar aziz, governor of the central bank of malaysia ( bank negara malaysia ), at the opening of the bnm beijing representative office, beijing, 18 november 2013. * * * it is my great pleasure to welcome you to this official opening of bank negara malaysia β s beijing representative office. the opening of this representative office today is an occasion of unprecedented significance for us. this beijing office is bank negara malaysia β s very first presence in asia. this is a reflection of the growing importance of china in the global economy and the international financial system and the very significant and longstanding financial and economic ties between malaysia and china. this momentous occasion also marks the dawn of a new chapter as our bilateral relations transitions and evolves reflecting the significant changes taking place in our respective economies and financial systems. for many decades now, the foundation underpinning the strength and dynamism of our relationship is our ability to continually harness the complementarities that exists between our economies. while bilateral trade has consistently been expanding at double digit growth rates over the recent two decades, the breadth and depth of our relations have also evolved and expanded into greater financial linkages. in parallel to our growing economic ties, our financial institutions have also ventured into each financial systems, further strengthening our financial and economic connectivity. currently, two of china β s biggest banks, namely bank of china and icbc have operations in malaysia while malaysia β s two largest banks, maybank and cimb have established their presence in china. our beijing representative office, being inaugurated today, also signifies an important milestone in the cooperation between the people β s bank of china and bank negara malaysia. our two central banks have long cooperated in many areas of common interest in particular in the area of financial cooperation. in july of 2005, our currencies transitioned into a more flexible exchange rate regime at the very same moment. this enabled malaysia to transition to this new regime effectively and efficiently. bank negara malaysia has for more than a decade also participated in the fixed income market in china. we were among the first central banks in the world to be awarded the qualified foreign institutional investor ( qfii ) license to invest in china β s fixed income onshore financial markets and to be granted access to the china interbank bond market. our close central bank cooperation is also reinforced through the
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policy coordination, with adequate representation and participation of developing countries. the weaknesses in addressing these global imbalances are now clearly revealed, as well as the flaws in the regulatory environment of some advanced economies. the current weak global economy has also highlighted the gaps in global economic governance, and the absence of sufficient institutional capacity to manage coordinated global responses to simultaneous global crises. it is incumbent on all countries not only to strengthen their respective policy environments domestically to prevent future meltdowns, but work needs to commence collectively to create a global financial architecture that can respond to crises of this nature in the future. in addition, policy actions are needed for improving the economic infrastructure and creating an environment conducive to investment, and for strengthening the macroeconomic framework and sheltering the poor from the adverse consequences of the crisis. while remaining committed to prudent policies, greater flexibility will be required to soften the impact of exogenous shocks, even as we consolidate the gains of better macro - economic frameworks. a need for change of the bretton woods institutions there is a widely held perception that the bretton wood institutions have become instruments in the hands of the major economies to control smaller member countries and indeed sometimes even larger emerging market countries. over the last ten years the imf and the world bank have come under consistent criticism amidst the ever larger calls for them to change. a year ago the crockett committee reviewed the income model of the fund and made some significant recommendations to ensure the sustainability of imf resources. some of the recommendations made by the committee to the imf board are now being implemented and others will be implemented once endorsed by national legislatures. the imf has also created a new committee under the chairmanship mr trevor manuel, the minister of finance in south africa to review its governance structures and to look at how to improve the effectiveness of the institution. the committee is due to report back to the imfc at its next meeting in april 2009. the imf and the world bank found themselves completely on the sidelines in recent weeks in coming up with recommendations on how to address the current financial meltdown. while it is completely understandable that as countries are expected to come up with their own action plans to get economic conditions on even keel, it should be incumbent upon the bretton woods institutions, and in particular the fund to provide overarching advice on how to stabilise the global economy, as a global public good. however, it would appear that it has been easier for the
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the edict clearly ignored the economic law of supply and demand and ultimately proved to be unenforceable in the long run. despite this, there were many similar attempts to control prices later through history. the lesson here is that price controls may be effective on a very narrow set of products and services and on a short - term basis, as price controls over a longer run distort market signals and lead to inefficient allocation of goods and services. interestingly enough, this lesson continues to be relevant even nowadays. only a year or two ago, quite some countries introduced various forms of price controls in response to the global energy and food price shocks. that was probably the most pragmatic and feasible short - run policy measure at that moment. there are still some leftovers of price controls around, but we have to make sure not to overuse them. in addition, we used monetary policy, which did its part of the job, and it is still delivering. all in all, inflationary pressures have been abating, and in case we do not face some new shocks, inflation should gradually come down, and hopefully in a sustainable manner, to our medium - term target. 2 / 3 bis - central bankers'speeches we know how important it is that monetary and fiscal policies play hand in hand in order to achieve that objective. we also know how important role monetary authority's credibility plays in this regard. and we should never ever forget that credibility built over many decades can be wiped - out literally overnight. this is just one of the topics we will touch upon later today in our first panel. but before that, let me pass the floor to our co - organizers, or may i say, co - hosts, for their introductory remarks - first, my dear colleague mr. pablo hernandez de cos, governor of banco de espana. thank you, and i wish you a pleasant stay in split and fruitful discussions today. 1 https : / / www. britannica. com / biography / diocletian / domestic - reforms 2 https : / / mises. org / library / edict - diocletian - case - study - price - controls - and - inflation 3 https : / / www. britannica. com / biography / diocletian / domestic - reforms 3 / 3 bis - central bankers'speeches
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particular, balance sheet policies have been stimulative by swapping central bank money for assets with duration and credit risk. but over time, if monetary policy continues to withdraw long - dated safe collateral from the market, there is a risk that it has a countervailing effect β i. e. that it exacerbates safe asset hoarding at the long end of the yield curve. as various academics have documented 2, this could eventually put further downward pressure on real equilibrium rates. central banks have responded to this by re - lending their portfolios of securities. but this is only a temporary fix. the first best solution would clearly be for fiscal issuers to generate more safe assets under the conditions outlined above. if this does not happen, central banks may have to use their own balance sheets to satisfy safe asset demand, also at longer maturities. a third complication is that extended use of unconventional measures could come with rising side effects, for instance on financial stability, financial intermediation and international the real neutral rate points to the level of real interest rate where monetary policy is neither stimulating nor restraining economic growth. see caballero, r. j., e. farhi and p - o. gourinchas, 2015, β global imbalances and currency wars at the zlb β nber working paper no 21670, october 2015. and caballero, r. j. and e. farhi ( 2015 ), β the safety trap β, nber working paper no 19927, february 2015. bis central bankers β speeches spillovers. thus far, the benefits of such measures have clearly outweighed their costs, but we cannot rule out a situation where the side effects are such that the negative consequences prevail. when discussing negative interest rates, i have called that tipping point the β economic β lower bound, in contrast to the β physical β lower bound, where largescale substitution with cash materialises, a point which has clearly not been reached. 3 this could mean a more frequent use of micro - and macroprudential measures to oppose the adverse financial stability effects of very low rates, also in countries affected by international spillovers. it could further accelerate shifts towards non - bank forms of intermediation with the consequences i described above. and it may mean moving towards a regime of greater international cooperation and policy alignment to avoid a situation where the effective lower bound leads to competitive devaluations. conclusion let me conclude.
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deepak mohanty : economic and financial developments in mizoram speech by mr deepak mohanty, executive director of the reserve bank of india, at the aizawl club, mizoram, 19 december 2013. * * * the assistance provided by p. k. nayak, s. suraj and s. nath is acknowledged. i am happy to be in this picturesque state of mizoram, the land of rolling hills, valleys, rivers and lakes. the state has a strategic location as it shares much of its border with bangladesh and myanmar. it covers 0. 6 per cent of the national geographic area and accounts for 0. 1 per cent of national population. with second highest literacy rate in the country, the state has great potential for economic development. access to finance is an important prerequisite for economic development. in the recent years the reserve bank of india ( rbi ) has pursued the objective of financial inclusion with renewed vigour. some progress has been achieved but there are miles to go. governor dr. raghuram g. rajan has emphasised financial inclusion as one of the five pillars of the rbi β s financial development plank : β β¦ to expand access to finance to small and medium enterprises, the unorganised sector, the poor, and remote and underserved areas of the country, though technology, new business practices and new organisational structure. β 1 financial inclusion poses additional challenges in the north - eastern states given the relatively low level of banking penetration and inadequate infrastructure. against this background, i briefly delineate the economic and financial structure of the state, highlight our financial inclusion initiatives and conclude with some thoughts on policy challenges on the way forward. economic structure india experienced accelerated gdp growth rate in the 2000s. obviously, this growth experience was shared by many states. in line with the national economy, mizoram also experienced pick up in its growth. even as the growth momentum at the national level was dented following the onset of global financial crisis in 2007 β 08, the performance of mizoram β s economy was better even in the post - crisis period. consequently, the share of mizoram β s gross state domestic product ( gsdp ) in the all - india gdp rose from 0. 08 per cent in 2006 β 07 to 0. 10 per cent during 2011 β 12 ( chart 1 ). β the five pillars of rbi β s financial sector policies β, speech by governor raghuram g. rajan
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, japan, china and taiwan. 15. estimates suggest that about 90 per cent of india β s waste is currently disposed off by open dumping and landfilling. presently, the country has more than 36, 000 hazardous waste generating industries, producing approximately 6 million tonnes of hazardous wastes per annum. around 50 per cent of this can be recycled, which is not being done. this leads to hazardous materials getting disposed off into the environment and causing grave danger to living beings. it is also estimated that approximately 55 million tonnes of municipal solid wastes are generated in urban areas of india annually, which otherwise could be a valuable potential source for power generation for an energy deficient country. 16. in order to prevent wastages of this kind, governments and developmental agencies should work together to help change people β s mindset on waste and discourage wasteful practices by food producers, supermarkets, industrial units and consumers. incentives could be provided to encourage adoption and implementation of such policies. the union budget 2013 β 14 has announced that cities and municipalities would be encouraged to take up waste - to - energy projects in public - private partnership ( ppp ) mode. such municipalities implementing waste - to - energy projects will be supported through different instruments such as viability gap funding, repayable grants and low cost capital. sustainable usage of natural resources 17. apart from reducing waste, in order to ensure sustainable development, we also need to use our natural resources judiciously and in an environment - friendly manner. particular attention is required to be paid to conservation of energy, given that any development process is bound to be energy intensive. as rightly pointed out by the un secretary general, ban ki - moon, sustainable energy is the golden thread that links economic growth, social equity and a healthier environment. with global economic development, global energy demand is expected to double between now and 2050, energy prices are projected to rise and remain volatile, making imports a costly proposition for india. for a power deficient nation like india, need of the hour is to explore newer means, particularly, more environment friendly and endogenous ones rather than depending solely on coal and oil, where our dependence on imports is high. in this context, natural gas is a good option where domestic potential is huge given our huge reserves. our attempt should be to further exploit the huge potential from this environment friendly source. india has also shown commitment towards generation of 22, 000 mw of solar energy by 2020. several parts uk β s institution of mechanical
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bank of japan β s august report of recent economic and financial developments bank of japan communication, xx / 8 / 98. the bank β s view1 japan β s economic conditions continue to deteriorate. with respect to final demand, public investment seems to have bottomed out. net exports have resumed to increase mainly due to a decline in imports. however, business fixed investment has been decreasing significantly, and housing investment has weakened further. private consumption has not yet shown a resumption. against this background of weak final demand, substantial production cutbacks continue. as a result, inventories have decreased somewhat, but the level is still high. with the decline in expenditure and production, corporate profits continue to decrease, and employee income remains below the previous year β s level. in addition, the ratio of job offers to applications has dropped to a historically low level, and the unemployment rate has increased further. as a whole, employment and income conditions have worsened. although the above indicates a continued negative interactions of production, income, and expenditure, a further deterioration in the economy is expected to cease gradually from the effects of the comprehensive economic stimulus package including additional public works and the special income tax reduction. given the current considerably low level of economic activities, however, the positive influence of the package on private demand will likely be limited, and the economy β s immediate transition to a self - sustained recovery is hardly expected. in these circumstances, the relevant bills have been submitted to the diet to rebuild the stability of the financial system. moreover, the new administration is planning to launch new economic stimulus measures, including additional public investment in the supplementary budget for fiscal 1998 and the reduction in personal income taxes and corporate taxes. the materialization of these policies along with their effects on corporate and household sentiment should be carefully monitored. with regard to prices, wholesale prices are on a downtrend, and consumer prices ( excluding the effects of institutional changes2 ) remain below the previous year β s level. with respect to the factors affecting the outlook, the downward pressure on domestic prices induced by the decline in import prices is weakening. in addition, the expansion in the output gap in the economy is expected to slow in line with the implementation of the comprehensive economic stimulus package. nevertheless, reflecting the present large output gap, the downward pressure from domestic factors is unlikely to weaken considerably, and hence, prices are likely to be weak for some time. as for financial markets, yields on long - term government bonds and stock prices rose toward mid
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papers on economic activity, vol. 2, pp. 1 - 40. stock, james, and mark watson ( 2007 ). " why has u. s. inflation become harder to forecast? " journal of money, credit, and banking, vol. 39 ( february ), pp. 3 - 34.
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not of a monetary nature. at the member state level, fiscal consolidation policies and structural reforms were needed and are being implemented to better accommodate domestic behaviour to the patterns of stability required within a monetary union. as for euro area governance, a deep process of reform has been undertaken. the stability and growth pact has been strengthened to preserve fiscal stability ; and a new procedure β the macroeconomic imbalance procedure β has been established to prevent the accumulation of other non - fiscal imbalances. also, the european stability mechanism and the banking union process have filled in two serious gaps. now, to conclude, i shall try and respond to the questions to this panel about germany β s role in the european debt crisis and whether germany is a reluctant hegemon. indeed, germany has played a key role in the response by the european monetary union to its financial and fiscal crisis and to the dangers this crisis has entailed for the union and the euro. in early 2012, many analysts and politicians considered it very possible that certain bis central bankers β speeches countries might exit the monetary union, thereby triggering an extremely serious crisis. many believed the european monetary union was running an almost terminal risk, at least in its formulation under the maastricht treaty. to germany, then. its economy and its government have been fundamental in facing and overcoming these risks. without a german political stance in defence of the monetary union and the euro, the single currency would surely not have survived. obviously, germany has not acted alone, but as the euro area β s leading economy, its role has been crucial. i do not believe germany may be said to have exercised this role reluctantly. in germany, as in other euro are countries, there were and are forces in disagreement with the monetary union, analysts and economic agents who considered the break - up of the euro as likely. but what counts is what the german government β s position was and its support, at key moments, to save the monetary union and the euro, its support to the programmes for stressed countries and the banking union process. rather, we can say that the new hegemon is the culture of monetary and fiscal stability that has gained in strength over the course of the crisis. the strengthening of the institutions and of the rules to ensure fiscal stability is essential for maintaining the stability of the monetary union and of the euro. this is because, as we all know, the source of the monetary union crisis lay basically in certain countries β fiscal performance, even more so than
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in the banking crisis which has also affected β to differing degrees of intensity β virtually all the euro area members. bis central bankers β speeches
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set out the uk β s approach to cryptoassets and distributed ledger technology in financial services4 ; examining challenges in cross - border payments with colleagues from the bank of canada and monetary authority of singapore 5 ; exploring how as set out by mark carney in his 2018 mansion house speech, β new economy, new finance, new bank β, available at https : / / www. bankofengland. co. uk / speech / 2018 / mark - carney - speech - at - the - lord - mayors - bankers - and - merchants - dinner - mansion - house. β a platform for innovation β, available at https : / / www. bankofengland. co. uk / speech / 2019 / mark - carney - speech - at - innovate - financeglobal - summit - 2019. i set out our ambitions for the fintech hub in my speech β open to fintech β, available at https : / / www. bankofengland. co. uk / speech / 2018 / dave - ramsden - speech - hmts - international - fintech - conference. see https : / / www. gov. uk / government / publications / cryptoassets - taskforce see https : / / www. bankofengland. co. uk / news / 2018 / november / boe - boc - mas - joint - report - digital - transformation - in - cross - border - payments all speeches are available online at www. bankofengland. co. uk / speeches financial services might evolve over the next decade as part of the bank β s future of finance project6 ; and analysing everything from the potential role of bigtechs in financial services to the implications of open banking and psd2. but instead of looking back, i want to stay faithful to the spirit of today β s session and look forward to the contributions the bank can make to the future of finance. fintech is one of the bank β s seven strategic priorities for 2019. in particular i β ll discuss three key areas of fintech hub focus in 2019 : payments ; unbundling ; and artificial intelligence. 7 payments the first area i β ll focus on is payments. while the bank is not nearly as old as the guildhall, this year we are celebrating 325 years as the uk β s central bank ; that includes 325 years of providing foundational payments services. payments have become increasingly digital in recent years, and there are now
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co. uk / / media / boe / files / payments / a - blueprint - for - a - new - rtgs - service - for - the - uk. all speeches are available online at www. bankofengland. co. uk / speeches second, as well as renewing rtgs, we, alongside pay. uk, are moving uk payment systems onto the iso 20022 messaging standard. 10 that should bring many benefits, including better interoperability between payment systems, lower entry costs and the possibility of innovative data services to users. we are also working closely with our international peers to promote the harmonisation of iso20022 globally, which could increase efficiencies and facilitate easier and so cheaper cross - border payments. and third, as the governor highlighted yesterday, we are opening up direct rtgs access to a broader range of firms. five non - bank payment service providers now hold accounts in rtgs, and have seen benefits including faster transaction times and lower reduced individual transaction costs, and around twenty further firms are exploring the possibility of joining. unbundling the evolution of payment systems is just one example of unbundling, the second area that i β m going to focus on today. emerging business models can unbundle traditional financial services activities into individual core functions such as settling payments, performing maturity transformation and allocating capital. we are already seeing the benefits of unbundling β established and challenger banks alike are deploying sophisticated mobile apps that allow consumers to manage their finances, initiate payments and help with budgeting. insurance startups are responding to the growth of the gig economy by offering highly personalised / tailored insurance products that combine traditional home and / or motor insurance with business coverage for temporary use. but while fintech could help increase competition in financial services, some of these new solutions might also lead to the migration of activity outside the perimeter of prudential regulation. so it is important that we analyse the implications of any such migrations for financial stability as well as the impact on, and strategic response of, the banks and insurers that we supervise through the pra. this will be an important area of work for the fintech hub, working with supervisory colleagues in the pra, in the coming months. ai the third area i β ll touch on, artificial intelligence, is an example of how a general - purpose technology is reshaping our world, with the potential to revolutionise the nature of both work and commerce. this
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extent upon judgement, given the uncertainties β’ about what is currently happening to demand, given the lags and contradictions in the data and the fact that they are in many cases subject to later revision ; β’ about the strength and persistence of the underlying forces driving demand looking ahead ; and β’ about the sensitivity of the various components of demand to changes in the level of interest rates. it can β t be said too often that the operation of monetary policy is an art rather than a precise science, although practising that art needs to be β and is β informed by as much science as we can bring to bear. for what it is worth, at the time of our last forecast in november, our central projection β on the assumption of 6 % interest rates β was for output growth of around 2Β½ % over the next couple of years, with rpix inflation remaining modestly below target this year but rising to 2Β½ % in 2002. there was, of course, a good deal of uncertainty around that central projection, as there always is, for the reasons that i β ve tried to explain. but on the basis of that forecast the short answer to the question : can our steady economic progress be maintained, over the next couple of years anyway, is a cautious β yes β. since that forecast was completed things have gone in different directions. the prospect for external demand has somewhat weakened and so too has the oil price. there are mixed messages relating to tightness in the labour market, but earnings growth has so far remained reasonably well contained - as it must continue to do. on the domestic demand side, private consumption growth has remained stronger than we had supposed, while the growth in private investment has been weaker ; meanwhile it is not clear that underlying public sector demand has β at least yet β picked up as rapidly as planned. the exchange rate has fallen, and so, too, have market interest rates. i would not venture to suggest how these β and all the other developments we look at β will influence our next forecast in february ; and it would be pointless to anticipate possible future policy decisions. i would be surprised if they radically altered the broad prospect of relatively steady progress over the next two years. but i can assure you of one thing : if the prospect β or the balance of risks around it β were to change significantly β either in the context of our february forecast or subsequently β we will promptly react to that change. despite the fact that we left interest rates on hold
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compensation ( 5y2y forward swap ) sources : barclays live and bank calculations. the monetary policy response let me conclude by setting out how in response to these developments the mpc is setting monetary policy to ensure that cpi inflation will return to the 2 % target in the medium term. monetary policy is also acting to ensure that longer - term inflation expectations are anchored at the 2 % target. the mpc started to tighten monetary policy in december 2021, raising bank rate from 0. 1 % to 0. 25 %. so much has happened since but it is worth recalling that last december was less than three months after the end of the furlough scheme here in the uk and was when the rapid emergence of the omicron variant was a major concern. it was also three months before the fed started to tighten policy in the us and almost seven months before the ecb began the tightening cycle in the euro area. bank rate has been increased at every mpc meeting since december 2021 and was increased by 0. 5 % at both the august and september meetings, to its current level of 2. 25 % [ 9 ]. along with two of my mpc colleagues i voted for a larger 0. 75 % increase in bank rate, to 2. 5 % at the september 2022 meeting. at the time the three of us highlighted that the recent data outturns had already registered more persistent inflationary pressures and that mediumterm measures of inflation expectations remained high. we welcomed the reduction of the near - term peak in inflation which will result from the energy price guarantee but noted that the additional support it is providing to households will add to demand pressure. my september vote was informed by three particular aspects of what i β ve set out for you today. first the greater certainty we have about household spending, because of the greater support to demand being provided by the energy price guarantee. second the trends i β ve observed in domestically generated inflation, including in labour costs, in firms β pricing and in the broadening out in inflationary pressures with services price inflation now contributing more to overall cpi inflation. and third, higher medium - term inflation expectations and the risk that a more inflationary mentality takes hold throughout the economy. in my view a faster policy tightening at the last mpc meeting would have helped to bring inflation back to the 2 % target sustainably in the medium term and would reduce the risks of a more extended and costly tightening later. our november decision and latest forecasts will be
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event of a crisis, the market value of longer maturities would doubtless fall sharply. short - term foreign creditors, on the other hand, are able to exit without loss when their instruments mature. if the preponderance of a country s liabilities were short term, the entire burden of a crisis would fall on the emerging market economy in the form of a run on reserves. some emerging countries may argue that they have difficulty selling long - term maturities. if that is indeed the case, their economies are being exposed to too high a risk generally. for too long emerging market economies have managed their external liabilities so as to minimise the current borrowing cost. this shortsighted approach ignores the insurance imbedded in long - term debt, insurance that is often well worth the price. the essential function of an external balance - sheet rule should be to make sure that actions of the government do not contribute to volatility in the foreign exchange market. consequently it makes sense to apply the rule to all of the government s foreign assets and all sovereign liabilities denominated in, or indexed to, foreign currencies. forward foreign exchange transactions should be recognised, as liabilities, while such things as contingent credit lines, if they are truly available on demand, should be counted as foreign currency assets. in addition, key contingent liabilities should be included. this means that the foreign currency assets and liabilities of financial intermediaries that have access to the safety net - - e. g. banks - - probably ought to be included in the scope of the analysis. it is important to note that adherence to such a rule is no guarantee that all financial crises can be avoided. if the confidence of domestic residents is undermined, they can generate demands for foreign exchange that would not be captured in this analysis. but controlling the structure of external assets and liabilities could make a significant contribution to stability. the adoption of any rule is not a substitute for appropriate macroeconomic, exchange rate, and financial sector policies. indeed, the endeavour to substitute such a regime for the more difficult fundamentals of sound policy will surely fail. countries that choose to follow this simple rule may reduce their vulnerability to financial crises. at a minimum this framework can highlight signs of vulnerability. for example, korea s short - term debts, including those of korean banks, were more than three times its foreign exchange reserves in december of 1996. an external balance - sheet rule could generate substantial benefits for the international community
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fact, in the vast majority of cases, the public does not mistrust the opinion of experts. almost no one β regardless of educational attainment or political or religious persuasion β differs with the assessments of experts regarding the best way to build an airplane. the issue typically arises in connection with certain topics, such as global warming or the risk - benefit ratio of vaccines, which are more easily influenced by interests, values and cultural identities. 34 economics and finance are more exposed to this risk than other fields. whether they come from our brain, our community β s values, social media, or even the scientific community itself, prejudices are multiplicative β in the sense, first, that failing to remove even just one can nullify the whole communication effort ; second, that even when they are conceptually independent, they tend to interact and reinforce one another. what can we do? despite evidence that it is not always impossible to change ( erroneous ) epistemological beliefs, including through short - term educational measures, 35 there still remain β a host of interdependent complexities for science communication, many of which we are only beginning to understand empirically β. 36 the conclusion that the science of science communication has reached so far is that there cannot be a popularising or educational solution that fits all topics and all audiences ; that if we ignore the existence of cognitive obstacles, rely on a one - way style of communication and do not ask ourselves what the target audience β s knowledge, opinions and prejudices are, we are bound to fail. 37 the interdependency of channels can work in the communicator β s favour, too. when the person or institution that sends a message is perceived as independent, authoritative and credible, the β drag β of impeding factors decreases. one hopes that central banks will often fit the bill in most people β s eyes. this is, i believe, one important reason why they are natural candidates for taking on an educational role. does digitalisation help or hinder financial education? the digitalisation of finance creates both benefits and risks for consumers. 38 innovation allows the financial and payments industry to offer new products ( and thus serve a broader range of needs ), to lower costs, and to improve accessibility. one scarcely remembers that to carry out the simplest banking operations, like checking the balance of one β s account or making a money transfer, there was once no alternative to taking the time to go to a physical bank branch
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measured growth for this year, the bank now projects that the economy will grow by 2. 2 per cent in 2012. going forward, we expect growth of 2. 3 per cent in 2013 and 2. 4 per cent in 2014. β’ core inflation has been lower than expected in recent months. this reflects somewhat softer prices across a wide range of goods and services. core inflation is bis central bankers β speeches expected to increase gradually over coming quarters, reaching 2 per cent by the middle of 2013 as the economy gradually absorbs the current small degree of slack, the growth of labour compensation remains moderate and inflation expectations stay well - anchored. β’ total cpi inflation has fallen noticeably below the 2 per cent target, as expected. it is projected to return to target by the end of 2013, somewhat later than previously anticipated. β’ the inflation outlook in canada is subject to significant risks. the bank β s projection assumes that authorities in europe are able to contain the ongoing crisis, and that the u. s. fiscal cliff will be avoided. β the three main upside risks relate to the possibility of higher global inflationary pressures, stronger canadian exports and renewed momentum in canadian residential investment. β the three main downside risks relate to the european crisis, weaker demand for canadian exports and the possibility that growth in canadian household spending could be weaker. β’ overall, the bank judges that the risks to canada β s inflation outlook are roughly balanced over the projection period. β’ reflecting all of these factors, on 23 october, the bank maintained the target for the overnight rate at 1 per cent. over time, some modest withdrawal of monetary policy stimulus will likely be required, consistent with achieving the 2 per cent inflation target. the timing and degree of any such withdrawal will be weighed carefully against global and domestic developments, including the evolution of imbalances in the household sector. with that, tiff and i would be pleased to take your questions. bis central bankers β speeches
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mark carney : opening statement before the house of commons standing committee on finance opening statement by mr mark carney, governor of the bank of canada and chairman of the financial stability board, before the house of commons standing committee on finance, ottawa, ontario, 30 october 2012. * * * good afternoon. tiff and i are pleased to be here with you today to discuss the october monetary policy report, which the bank published last week. β’ the global economy has unfolded broadly as the bank projected in its july mpr. growth has slowed in all major regions. the economic expansion in the united states is progressing at a gradual pace. europe is in recession and recent indicators point to a continued contraction. β’ in china and other major emerging economies, growth has slowed somewhat more than expected. however, there are signs of stabilization around current growth rates. β’ notwithstanding the slowdown in global economic activity, prices for oil and other commodities produced in canada have, on average, increased in recent months. global financial conditions have improved, supported by aggressive policy actions of major central banks. sentiment, though, remains fragile. β’ in canada, while global headwinds continue to restrain economic activity, domestic factors are supporting a moderate expansion. following the recent period of belowpotential growth, the economy is expected to pick up and return to full capacity by the end of 2013. β’ the bank continues to project that the expansion will be driven mainly by growth in consumption and business investment, reflecting in part very stimulative domestic financial conditions. β’ housing activity is expected to decline from historically high levels. the household debt burden is expected to rise further before stabilizing by the end of the projection horizon. β’ there are upside and downside risks around the evolution of household imbalances. residential investment could regain momentum, thereby reinforcing existing imbalances. conversely, continuing high household debt levels could lead to a sharper - than - expected deceleration in household spending. in this context, canadian authorities are co - operating closely to monitor the financial situation of the household sector, and are responding appropriately. β’ canadian exports are projected to pick up gradually, but remain below their prerecession peak until the first half of 2014, reflecting weak foreign demand and ongoing competitiveness challenges. these challenges include the persistent strength of the canadian dollar, which is being influenced by safe haven flows and spillovers from global monetary policy. β’ after taking into account revisions to the national accounts, which had the effect of raising
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in our arsenal. then we would have location - based measures. let me tell you that i β m still a bit sceptical about focusing only on real estate prices. why? firstly, we must keep in mind that we have a mandate to ensure the stability of the entire financial system. secondly, stability in the real estate sector is not sufficient enough for financial stability in general. yes, trends in the real estate sector are extremely important. for prudential policy they are important to the extent that they relate to developments in credit, balance sheets of financial institutions and, the financial system as a whole. but at the same time β the real estate sector is not the only one to keep an eye on. imbalances in other asset markets, vulnerabilities in the banking sector β these also demand our equal attention. let us look at the expansion of credit which is most likely the culprit of β speeding β prices. some colleagues distinguish between β productive β and β non - productive β credit, because not every credit contributes equally to economic growth. a loan to finance a business is much more productive than a mortgage to buy an old apartment. non - productive credit instead of fuelling the economy might be felt as a heavy load. so should macroprudential policies be active in steering credit structure towards some desirable levels? for example, imposing different risk weights on different types of credit? what measures do we already have in order to start implementing such policy? today we will hear about prudential policy experiences in different countries. and i β m excited to open the floor to needed and well - targeted discussions. 2 / 3 bis central bankers'speeches i wish you an interesting day and fruitful exchange of views. and now i gladly pass the microphone to our keynote speaker, our good friend governor ingves. please, stefan, the floor is yours. 3 / 3 bis central bankers'speeches
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price growth was very steep : within 4 years real prices almost tripled. back then we didn β t have macroprudential policy and, when the shock hit our financial system, we experienced the deepest fall in real estate prices ever seen in our country. we lost around one third of the market value of residential real estate. unemployment tripled. and gdp contracted by 15 per cent. we experienced one of the deepest economic recessions in the eu. thankfully, it was also one of the shortest ; although we achieved the recovery through great pains. 1 / 3 bis central bankers'speeches or if we were to look towards the other shore of the baltic sea and recall sweden three decades ago, where, by the beginning of the β 90s, real estate values and stock prices had more than doubled. soon after β the price bubble blew up. half of the property value was lost. and β that left the swedes to deal with very painful consequences for their economy. dear stefan, maybe later you will share your thoughts on how to prevent history from repeating itsel? from our side i can firmly say that after muddling through the turmoil, we learned our lesson. we took actions. the bank of lithuania now has the mandate to shape macroprudential policy. this is a big responsibility and i am confident that we are delivering on the mandate of financial stability. we have a number of well - targeted measures, which, i believe, are doing their job. had these tools been in place before 2008, the cycle would have been smoother. and the negative consequences for our economy wouldn β t have been so dramatic. however, despite actions taken and ammunition obtained, my colleagues at the bank of lithuania encourage asking ourselves whether we could do more. and i do agree with them β in - depth analysis and discussions are very welcome. when doing more, it seems obvious to intervene somewhere at the start of the cycle. and if, for example, easy money is needed to invigorate real economy, then we could maybe do something about a probable speculative bubble. something like setting the speed limit on real estate price growth and then using prudential policy measures to steer the real estate sector when needed. but maybe we should target real estate imbalances instead? if, for instance, we witnessed that housing prices increase much faster in the big cities than they do outside, it would make sense to consider these imbalances as well. we could adjust and use measures, which are already
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is the new oil β fuelling a new industrial revolution. while the transformational potential is similar, there are differences from oil which mean that the nature of that revolution will be very different. unlike oil, data are β non - rivalrous β, meaning more than one person can use the same piece of data at once. once in the public domain it also becomes by definition β non - excludable β, meaning you can β t control who does and doesn β t have access. taken together these two features mean publicly accessible data are a public good. 4 in addition datasets can produce additional insights quite distinct from the question they were originally created to answer β they generate positive externalities. and the analytical value produced by combining two datasets can be more than the sum of its parts β there are economies of scope in data. for more on this see mark carney β s recent speech at the university of toronto β s machine learning and the market for intelligence conference : carney, m ( 2018 ), β ai and the global economy β, slides available at https : / / www. bankofengland. co. uk / / media / boe / files / speech / 2018 / ai - and - the - global - economy - mark - carney - slides. pdf. i set out the bank β s approach to fintech in a speech at the treasury β s international fintech conference in london earlier this year : ramsden, d ( 2018 ), β open to fintech β, available at https : / / www. bankofengland. co. uk / - / media / boe / files / speech / 2018 / the - bank - ofengland - open - to - fintech - speech - by - dave - ramsden. pdf indeed β ai and data β is one of the four β grand challenges β identified in the government β s industrial strategy. details available at https : / / www. gov. uk / government / topical - events / the - uks - industrial - strategy. there is a longer discussion on this in hm treasury ( 2018 ), β the economic value of data β, available at https : / / www. gov. uk / government / publications / the - economic - value - of - data - discussion - paper all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx but like oil, data must be
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reduce lending rates and maintain the flow of credit to the productive sectors. but government borrowing had resulted in firming up of yields, notwithstanding the substantial excess liquidity, militating against the low interest rate regime that we want. the huge government borrowing programme demanded active liquidity management by the reserve bank, and we responded by way of open market operations ( omo ). for the first time we put out the programme for the omo along with the programme for borrowing so as to reduce uncertainty and infuse confidence in the market. this year again, the reserve bank will have to manage the delicate balance between government borrowing and maintaining ample liquidity to meet the demand for private credit as it picks up in the months ahead. we will follow the same open, transparent and consultative process as we did last year. going forward, we need to tread the balance between short term compulsions and medium term sustainability with care and good judgement. in the short term, the countercyclical public spending was necessary ; the important point here is to spend that money quickly, effectively and to create durable assets. on the monetary side, the increased fiscal deficit is going to pose more than a proportionate challenge. creation of high power money in the face of large fiscal deficits, even if there is no direct primary financing, is not costless ; it can sow the seeds of the next inflationary cycle. the challenge for the reserve bank is to maintain a comfortable liquidity situation while at the same time anchoring inflation expectations. the current monetary and fiscal stance is, however, not the steady state. the reserve bank needs to roll back the special monetary accommodation. for this to happen, there are two necessary conditions. first, the government will have to show a firm and credible commitment to fiscal responsibility by fleshing out the road map for fiscal consolidation. second, there will have to be more definite signs of recovery. the reserve bank will maintain an accommodative stance until demand conditions improve and credit flow takes hold, but reversing the expansionary policies is definitely on the agenda on the way forward. having explained the indian context in some detail, let me now return to the global scene. the seventy odd years since the great depression saw a famous rivalry between fiscal and monetary policies for influence. the crisis has shown that both are required, and that indeed both are critical for macroeconomic stabilization. it is unlikely that we will revert to status quo ante once the crisis has passed. on
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? when you look at the four criteria that mario draghi has set as the metrics against which we assess the sustained adjustment it β s clear that some conditions are not yet met. for instance we need to be sufficiently confident that the rise is durable and will not reverse, which is the second criterion. when you look at measures of core inflation there has been an increase in april but the jury is still out as to how much of it is related to seasonal effects and particularly to easter and so it β s too early to conclude that there would be a sizeable upward 3 / 6 bis central bankers'speeches adjustment in core inflation. the third criterion was that we want to be reassured that the upward path in inflation can be maintained even in conditions in which monetary policy becomes less accommodative. and this also is not there. the future path of inflation remains dependent on a very substantial degree of monetary accommodation. so when you look at the four criteria, the conditions are not yet met. so are the other two ticked? the first crierion is that the path of inflation is expected to reach levels below but close to 2 percent within the medium term horizon. i would say broadly yes. by and large yes, based on current staff forecasts. but it also depends on what you call the medium term. the fourth criterion is about euro area inflation, and not the inflation of any individual country, which goes without saying. so the question is more about sustainability and not being reliant on our monetary support, and these are criteria 2 and 3. so we β re not there yet. we β re not yet at a stage where this strong demand for labour would translate into higher nominal wages. but at some point we β ll reach that point and then wages will start rising. there are good reasons to think we β ll get there. we β ve been in this initial stage of the recovery, where it has been a lot about part - time jobs and temporary contracts. of the net employment created since the crisis, around one third has been for workers under temporary contracts and around one quarter part - time. and undoubtedly the objective of these workers is to work more, not to get pay rises. but time will come when full - time and permanent jobs are created, and then wages will rise. taking it all together is this a cyclical upswing or a structural recovery? so far it β s entirely cyclical. in my view, the single most important issue for european
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the downside : 2 percent is our goal. second, the framework statement discusses the challenges in providing a similar fixed goal for employment. it quite rightly emphasizes that monetary policy is not a prime determinant of maximum employment, even in the long run. the committee β s policy stance is based on an ever - evolving assessment of the maximum level of employment in both the medium and the long term. my own assessment of the long - run unemployment rate, consistent with 2 percent bis central bankers β speeches inflation, is currently 5 percent β and that assessment has fallen greatly over the past 18 months. finally, the framework statement describes how the committee weighs the two mandates β promoting maximum employment and promoting price stability β against one another. importantly, it stresses that, from the point of view of monetary policy, the two mandates are typically complementary. as i noted earlier, monetary policy pushes employment and inflation in the same direction. but, as it turns out, most shocks that push employment down also tend to push inflation down over the medium run. hence, monetary stimulus designed to raise employment will also help the fomc pursue its inflation objective. i think that this point is often underemphasized in popular discussions of monetary policy. the statement notes that there may be cases in which the mandates are not complementary β meaning that inflation is expected to be above target when the unemployment rate is expected to be unduly high. the framework statement explains that, in these circumstances, the fomc will use a balanced approach to the two mandates when formulating monetary policy. in earlier speeches, i β ve discussed this language in some detail. in my view, this language implies that the fomc is willing to allow inflation to run above 2 percent for some time to facilitate a faster decline in the unemployment rate. possible improvements in the fomc β s framework statement the framework statement was adopted by the fomc in january 2012. it has been reaffirmed, with only minor wording changes, in january 2013 and again in january 2014. however, the minutes for the january 2014 meeting note that fomc participants saw the coming year as an appropriate time to consider whether the statement could be improved in any way. i concur : the time is right to consider sharpening the fomc β s statement of its objectives in several ways. the minutes note two possible changes along these lines. i β d like to explain, and express support for, both of these. first
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to make the path wider by setting out a comprehensive strategy designed to redirect the public finances to more productive uses and to increase the efficiency of general government, especially in spending programmes aimed at accumulating both material and immaterial public capital and at supporting business activity and innovation. it is in any case essential that the fiscal objectives are and appear to be strongly and credibly oriented towards financial stability, and that the reforms are effectively geared towards sustained β and inclusive β economic growth. tables and figures table 1 β macroeconomic impact of an increase ( 1 % of gdp ) in public investment expenditure financed through deficit spending according to the bank of italy β s quarterly econometric model years a. baseline scenario real gdp 0. 9 1. 1 1. 2 1. 2 1. 1 gdp deflator 0. 1 0. 4 0. 8 1. 3 1. 6 deficit - to - gdp / ratio 0. 7 0. 5 0. 5 0. 5 0. 6 debt - to - gdp ratio - 0. 5 - 0. 6 - 0. 7 - 0. 7 - 0. 4 b. reduced efficiency of investment expenditure real gdp 0. 5 0. 7 0. 8 0. 8 0. 8 gdp deflator 0. 0 0. 2 0. 5 0. 7 1. 0 deficit - to - gdp / ratio 0. 8 0. 6 0. 6 0. 6 0. 6 debt - to - gdp ratio 0. 1 0. 3 0. 4 0. 6 1. 0 c. increase in borrowing costs ( * ) real gdp 0. 9 0. 9 0. 8 0. 8 0. 7 gdp deflator 0. 1 0. 3 0. 7 1. 0 1. 2 deficit - to - gdp / ratio 0. 8 0. 6 0. 8 0. 9 1. 1 debt - to - gdp ratio - 0. 4 - 0. 1 0. 3 0. 9 2. 0 ( 1 ) percentage changes compared with the baseline scenario. ( 2 ) absolute changes compared with the baseline scenario ( percentage points of gdp ). ( * ) permanent increase of 10 basis points in the yields on short - term government securities and of 50 basis points in the yields on medium - term government securities. source : f. busetti, c. giorgiantonio, g. ivaldi, s. mocetti, a. notarpietro and p. tommas
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one considers only the planning phase ). over the last few years average completion times have risen. the increase has related solely to the tendering and execution phases, while the length of the planning phase has remained fairly stable. but there are wide regional variations : it is estimated that the length of time required in sicily, molise and basilicata to complete the same project is more than 30 per cent higher than that required in lombardy and emilia romagna. 14 this means that, over and above addressing a the audit was carried out on the high - speed lines of six european countries and analysed more than 5, 000 km of infrastructure on ten high - speed rail lines covering around 50 per cent of the existing lines in europe. see european court of auditors, a european high - speed rail network : not a reality but an ineffective patchwork, special report, 19, luxembourg, 2018. for a discussion of this topic and the associated references see : i. visco, β efficient spending on infrastructure β, address by the governor of the bank of italy before the chamber of deputies, 19 june 2012 ( only in italian ) ; banca d β italia, β infrastructure in italy : endowment, planning, construction β, f. balassone and p. casadio, eds., seminari e convegni ( workshops and conferences ), 7, 2011 ; and banca d β italia, β the efficiency of infrastructure spending β, f. balassone, ed., seminari e convegni ( workshops and conferences ), 10, 2012. see the agency for territorial cohesion β s report on public works completion times, rapporto sui tempi di attuazione delle opere pubbliche ( only in italian ), 13 july 2018. scarcity of resources or the limitations of the applicable legislation, it is critical that we identify and spread best practices. according to data from the national anti - corruption authority on contracts awarded by italian municipalities between 2009 and 2014, for equal contract amounts, the tendering and execution phases were shorter for negotiated procedures than they were for competitive ones ( by about one year ). there is, however, evidence that although there are benefits in terms of cutting times, recourse to more discretional procedures by β less qualified β contracting entities is associated with a decrease in the average productivity of the firms that are awarded contracts. 15 overall, given these considerations, the short to medium term macroeconomic impact of an increase in
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are typically quite set in their payment habits. furthermore, like all networks, there are positive externalities the more participants there are. that is, as more financial institutions offer fast payments and the reach of the system grows, it provides greater value to both individuals and businesses. if none of my family and friends can receive payments through the npp i am less likely to sign up for an alias and use it. but the more people i can pay using the system ( and the more people i can receive money from ) the higher value i get from the system. 4 / 6 bis central bankers'speeches third, as noted earlier, the system has been set up to encourage the development of commercial β overlays β using the real - time payment capability to deliver value - added services to consumers and businesses. aside from the additional osko services in prospect, possible overlays might include services for superannuation, e - invoicing and motor vehicle sales. i am sure there are many innovative minds turning to the possibilities. this brings me to an issue that has caused some concern among potential new players in this space β access to the npp. they observe that the system has been built by the financial institutions and is governed by a board made up of those institutions, including the four major banks. they worry that these institutions will either make participation very difficult or costly or, alternatively, will have the inside running on developing and launching commercial overlay services. i think there are a few reasons to be optimistic that access will not be an issue. to begin with, as i noted earlier, the npp is a utility. it is aiming to cover costs, not make a profit. further, given that many of its costs are fixed, it is in the interests of npp australia ( nppa ) to get as many payments through the system as possible to lower the per - transaction cost. the structure of the board and the constitution also provide some protection. the board is comprised of eight participant financial institutions ( the four major banks plus four elected representatives of smaller institutions ), two independent non - executive directors ( of which one is chair ) plus a director representing the reserve bank. each director has one vote and the constitution notes that an objective of nppa is to promote the public interest, including through fair access. but it is also worth noting that the npp at its core is an infrastructure that facilitates clearing of payment messages between financial institutions and settlement of those obligations across accounts at the reserve bank
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the outlook, and in fact, a weighty downside. with regard to other macroeconomic and financial conditions, however, 2022 and 2013 are studies in contrast. aes are struggling with inflation at multi - decadal / record highs this year. in several emes too, inflation is way above targets, prompting them to be first movers in raising policy rates, with aes following this time around. in terms of financial conditions, it is sobering to keep in mind that the us taper involved winding down a us $ 85 billion monthly purchase programme in a span of ten months in 2014. in contrast, a us $ 120 billion monthly purchase programme is being wound up in four months by march 2022. before the commencement of the 2014 taper, the fed had expanded its balance sheet by around us $ 3. 1 trillion over a period of 64 months. in response to the pandemic, the fed β s balance sheet has expanded by us $ 3. 1 trillion in nine months from march to november 2020. it expanded another us $ 1. 3 trillion in the ensuing eleven months up to october 2021 and continued to grow till early march. 2 / 7 bis central bankers'speeches then, there is an elephant in the room in 2022, which is making the biggest inter - temporal difference. financial markets reacted to the first missiles and air strikes on february 25 with a bloodbath across the world. equity and currency markets tanked, and stampedes to safety lifted the prices of us treasuries, gold and the us dollar as also some safe house currencies like the yen. these are externalities or spillovers which have been seen before, however. in fact, equity markets recovered towards the close of trading on the same day and through the next, although they sank again when fresh sanctions, including sw ift exclusion, were announced on february 27. there are some spillovers which we have not seen before. commodity prices have been surging in a synchronized manner. energy prices, in particular, are shattering what were widely regarded as glass ceilings. international crude prices crossed us $ 100 for the first time since 2014. with new rounds of sanctions, us $ 125 β 150 levels could be tested. natural gas futures surged 50 β 70 per cent in europe. benchmark prices of nickel, copper, aluminium and palladium are at their highest levels in a decade. wheat and corn futures are at multi - year highs. the world is also
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could enjoy greater policy space than countries with open capital account and flexible exchange rate ), ( c ) spillover management that may involve some sacrifice of domestic policy goals could be feasible only when every country pursues spillover - sensitive national policies, and the global governance structure would need to ensure that, using a mix of both persuasion and multilateral enforcement, and most importantly ( d ) global safety nets should be strong enough with easier access norms to encourage countries to voluntarily adopt the multilateral norms. bis central bankers β speeches
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third industrial revolution. he presents a vision of medical services which may performed on a remote basis ( an example of radiological examinations in india ) as well as rendering many educational services via electronic ways of communication. formerly, the natural resources of an economy were of prior importance ; nowadays, the perspectives of an economy depend to a greater degree on the human factor. this factor is decisive, especially in new branches of the economy, related to the services sector. thanks to the development of new information and communication technologies, there has been an increase in trade in services, which - until recently - have been considered nontradable. the importance of the services sector in the economy should be stressed, as this sector constitutes a 70 - percent share of the gdp in the developed economies. the whole accounting departments or customer support call centres outsourced are only some of the services that take advantage of new technologies. some of those innovations have already become a permanent element of our reality : the possibility to purchase an airline ticket via the internet, creation of inventory control systems in it companies, a possibility to gather and process information on consumer behaviour. the aforementioned solutions embody the new forms of labour organisation and the development of new products and services, which are becoming increasingly common. research by van ark 29 indicates that the results of a comparison of the growth in labour productivity in the services sector in the usa and the eu - 15 in the past 10 years are in favour of the usa. the advantage of the usa has resulted primarily from a higher labour productivity in retail and wholesale trade and in the financial services. among the causes for the lower increase in labour productivity in the eu countries one should mention lower innovative capabilities of the european companies and a lack of reforms that could have forced the sector to take advantage of its potential. there are still regulation barriers to business activity in europe, which make it impossible to move freely across country borders 30. new information transfer technologies create a possibility of central processing of information, which is why limiting of the capability to take advantage of this process results in lower economies of scale. moreover, the development of road transport still faces regulatory barriers. finally, cultural differences, which are a natural barrier in business activity, should be mentioned. while indicating the vital role of services in building a competitive edge of the american economy, we should also relate to eu solutions in the form of the so - called services directive, which has been recently adopted by the european parliament. the basic objective of the directive, in its version proposed by
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transactions as we strive towards seamless global inter - linkages. standardised documentation and practices for a number of products have already been adopted between jurisdictions through bilateral and multilateral agreements. this has facilitated issuance of financial market instruments, contributing towards enhanced liquidity in islamic financial markets and greater inter - market linkages. greater understanding and clarity on shariah matters, will also contribute towards convergence and harmonisation of such interpretations across jurisdictions and thus contribute towards the development of islamic financial products and services. realising cross - border potentials and bridging economies with its international outreach and ability to provide comprehensive financial solutions, islamic finance beckons us with a new frontier that presents new opportunities. as we enter into a more uncertain global environment, it also promptsus to revisit strategies to enhance the resilience of islamic finance. the theme of this year β s global islamic finance forum 2012, β internationalisation of islamic finance : bridging economies β focuses on the international prospects surrounding the islamic finance industry and its tremendous potential role in strengthening cross - border economic linkages. more than 500 participants from over 50 countries across the continents gather today in this forum to explore this prospect. in its featured plenary and multi - track programmes which include the regulators forum, the international shariah scholars forum, the global islamic liquidity management conference and the global islamic finance taxation forum, a new highlight is the bridging economies forum that aims to discuss the islamic finance prospects and opportunities across regions, and to explore possible market linkages that can be generated through islamic finance. several important signings of mous will also be taking place during this forum, highlighting increased commitment and international cooperation. let me now conclude with an extension of our appreciation to the panel of distinguished speakers for their contribution to giff 2012. i would also like to once again, express our gratitude to the honourable deputy prime minister of the republic of turkey, his excellency mr. ali babacan for being with us today to speak at this event. bis central bankers β speeches
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- year 1. 0 10 - year 5 - year 0. 8 transaction volume in jgb markets 6 - months backward moving average " high " - " low ", % points improve - 10 0. 6 0. 4 market functioning ( bond market survey ) transaction volume in jgb markets cy 2016 - 2017 average - 20 - 30 - 40 0. 2 0. 0 cy13 14 15 16 17 18 19 20 21 cy 13 14 15 16 17 18 19 20 21 notes : 1. in the left - hand chart, figures are maximum minus minimum values in jgb yields within the past 6 months. 2. in the middle chart, figures are the gross amount of outright purchases by banks, investors, and bond dealers. sources : bloomberg ; japan securities dealers association ; bank of japan. - 50 - 60 cy15 chart 11 ii. motivation and thinking behind the assessment flexible purchases of etfs and j - reits 2. 0 tril. yen bil. yen 50 covid - 19 etfs ( left scale ) 1. 6 j - reits ( right scale ) 1. 2 0. 8 0. 4 0. 0 jan. mar. may. may jul. july sep. sept. nov. jan. source : bank of japan. 11β
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common. let us now look at how households save. households save either in the form of fixed investment, mainly their own homes, or in the form of financial investments. this chart shows how households distribute their total wealth. the value of housing wealth is very uncertain. by our estimates, households β total housing wealth was around nok 2000 billion at the end of 2004. housing wealth accounted for a little more than half of total gross household wealth at this time. the picture was about the same in the mid - 1990s. if we look more closely at household financial wealth, we find that it is spread over various assets, with insurance claims the most important at the end of 2004. by paying premiums into various insurance schemes, mainly life and pension insurance, households earn the right to future disbursements from the insurance companies. these premiums accounted for more than a third of household financial wealth at the end of 2004. the investment instruments perhaps most commonly referred to, securities and bank deposits, accounted for less than a quarter of total wealth. household gross financial wealth must be seen in the context of the debt accumulated by households as a group. even when this is taken into account, the household sector as a whole has positive net financial wealth. as a share of disposable income, household net financial wealth increased from the end of the 1980s to the mid - 1990s. in relation to disposable income, debt was reduced, while household wealth increased. from the end of the 1990s, household debt and wealth have risen in tandem. net wealth has remained fairly stable at around 50 per cent of disposable income. the rise in household debt must be seen in the context of the strong rise in house prices. from oil to financial wealth household saving is part of the country β s total saving. as a nation, we can save by investing in fixed assets in norway or by making financial investments abroad. domestic fixed 2 / 7 investment provides a return in the form of higher production capacity in the future. building up financial assets abroad allows us to pay for more imports in the years ahead. in the past few years, there has been a sharp increase in norway β s saving, as conventionally measured in the national accounts. as a share of gdp, norway β s saving after the turn of this century has been almost double the average for the 1980s and 1990s. the explanation for these figures lies in the government petroleum fund. norway β s petroleum resources are in principle part of our
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ardian fullani : financial stability issues and cooperation at a regional level speech by mr ardian fullani, governor of the bank of albania, at the bank of albania β s 6th international conference, β regional financial markets and financial stability β a concept between national sovereignty and globalisation β, tirana, 31 october 2006. * * * dear participants, ladies and gentlemen, when we thought about the topic of this annual conference, there was no doubt about the need to dedicate it to financial stability issues and the cooperation at a regional level. the current time seem to be appropriate because of the developments in the national financial markets and economic developments, as well as in the speed with which the region is moving ahead in adopting best international standards in good governance, market openness and integration, technological improvements and multilateral cooperation. in my speech today, i will touch upon similarities and differences, but also uncertainties and risks that our financial markets are experiencing in the path toward modernisation and integration in the global financial markets, and will try to address the importance of regional cooperation in better facing these challenges. i will conclude with some thoughts about practical regional cooperation, which i am sharing with you, hoping to generate further discussions. at a regional level, our countries are experiencing nowadays a higher growth rate of the financial markets, compared to that of the economic growth. as a consequence, the weight of the financial sector in the national economies, strictly from a quantitative perspective, is growing. at the same time, expansion is accompanied with changes in the market ability to better accommodate market participants needs for funding, diversification and risk appetite. undoubtedly, institutional participants in the financial markets find themselves with a larger number of possibilities for business developments and financial specialization. in addition, general public interest in using financial market products and services has increased dramatically based on the benefit they perceive from improved efficiency in everyday life activities. these developments highlight the importance of financial markets for our economic well - being, from a qualitative perspective. let β s also recall that economic improvements trigger and support changes in social and cultural aspects of our life, bringing our nations closer to international values and principles, and to each other. as expected, because of the historical background, our countries have differed in the speed and in the depth, with which they have moved along the transition phase in the last decade. while we had many similarities in adopting the first basic and urgent reforms including price liberalization, enterprise restructuring and privatization in some economic areas, we were more distinctive in
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gent sejko : effectively using remittances sent by albanians abroad address by mr gent sejko, governor of the bank of albania, at the high - level meeting on the remittances from the albanian diaspora, tirana, 11 december 2017. * * * dear minister majko, dear guests, welcome to the premises of the bank of albania! i would like first to thank the minister of state for the diaspora, mr pandeli majko, for his initiative for higher attention to drawing in and effectively using the remittances sent by albanians abroad. today β s meeting is the first in a series of common steps to be taken by albanian institutions, in an effort to give its due place to the financial contribution by albanian emigrants to the welfare of their families at home. this contribution is also vital for the sustainable and long - term development of the albanian economy. the bank of albania has always considered the remittances as a very important contributing factor for the economy of albania and beyond. in this light, the bank of albania measures and analyses the available statistics, and conducts non - quantitative assessments related to the geographical distribution of the sources of remittances, at the national and international level. the assessment of factors contributing to the level of remittances and the cyclical volatility of their flows over the years remains at the focus of our work. for albania, remittances represent a steady and considerable source of inflows, which surpass foreign direct investments, being thus a substantial source of financing economic growth in albania. in this regard, the bank of albania considers remittances as an important source of income in the economy and a contributor to the balance of payments. from a narrower perspective, remittances are estimated to have a significant impact on albanian households, for reducing the poverty and improving the quality of life. even in the case of albania, the studies performed by the bank of albania and the world bank show that the income from remittances are allocated mainly for consumption, medication, and education, as well as for savings and investments, the latter mainly for residential properties. in addition to the above, the bank of albania treats remittances also from the perspective of their inflow channels in the albanian economy. recent studies show that the formal transfer channels dominate, mainly through money transfer financial institutions, and less through banks. in the meantime, remittances in cash remain at
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of growth per capita and job creation that compares positively with other large advanced economies. it is also remarkable that there is convincing evidence that the euro area and the united states have similar features in terms of diversity of the economies that are part of these vast continents : member countries on this side of the atlantic and the states on the other side. this is documented, in particular, as regards asymmetric inflation, asymmetric growth developments and even in terms of somewhat persistent asymmetric gains and losses of competitiveness. as i have said, none of this should make us complacent. the sovereign debt crises in three smaller euro area countries underline the urgency of a far - reaching overhaul of the fiscal and macroeconomic surveillance institutions in europe. here the governments of the member states are called on to create the institutions that are commensurate with full economic and monetary union. bis central bankers β speeches
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upside risks to the outlook for price stability over the medium term. again, the sharp increase in oil and other commodities has had a major impact on overall inflation. in these circumstances, the central bank must prevent increases in the prices of raw materials from being incorporated into the long - term inflation expectations, which could trigger second - round effects on wages and prices. it is against this background that the governing council decided in april to raise interest rates. i stressed, in reporting this decision, that it had been taken unanimously. the action of the governing council is motivated by a common goal. that decision in april confirmed that the separation principle is strictly applied and that our non - conventional measures do not restrict in any way our ability to toughen the monetary policy stance when facing inflationary pressures. thus, when the governing council decided in april that it was time to raise interest rates, in parallel, at the same time, it decided to keep, in the second quarter, the provision of unlimited fixed - rate liquidity for a period of three months. contributing to economic performance price stability is the best contribution that central banks can make to sustainable economic growth and job creation. i think there is widespread agreement on this among central bankers and academic researchers. in the short run, however, some academic research suggests that there might be a significant trade - off between low inflation volatility and low output volatility. if prices are stable, economic adjustment has to occur through the real economy channel. it may therefore be difficult to achieve these two goals at the same time. the chart shows that the euro area scores relatively well on both dimensions. this is puzzling, given that the euro area has quite rigid product and labour markets, at least compared with the united states. the higher degree of price and wage rigidity in the euro area would suggest that output volatility should be significantly larger in the euro area than in the more flexible us economy. this would be particularly true during a period when the economy is subject to supply - side shocks, which are simultaneously exerting inflationary and recessionary influences. yet surprisingly, and despite the negative supply - side shocks that had been hitting the euro area economy over the years up to 2007, the data suggested that both inflation volatility and output volatility in the euro area were lower than elsewhere. output volatility in the euro area is much higher when the crisis is included in the sample. but, remarkably, the euro area still scores well on both dimensions
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this sample of the population votes in equal numbers for this year's menu and for that available five years ago, one can conclude that prices have been stable over the five - year period. if the majority vote is for the earlier menu of goods and services, one can conclude that prices have risen, or that the utility value of the $ 1, 000 has decreased. if the majority vote is for the recent menu, one can conclude the reverse - - that true prices have actually declined. i have seen no rigorous polling evidence on this question. but for years in teaching college macroeconomics courses, and recently at the fed, i have conducted such a poll among my audiences. all audiences have reported that their understanding of what inflation is all about was much improved by this thought experiment. generally, college students have voted for the current menu even in times when the aggregate rate of price increase averaged 3 percent or more, implying that they felt that true prices had actually declined. college students may be unusually influenced by fads that do not truly improve goods ( narrow or wide ties, etc. ), and the implicit bias in measured price indexes may well be overstated by collegiate polls. since coming to the fed, i have had the opportunity to talk to and poll many banker groups about inflation, and as one would expect, they are generally more inclined to vote for the earlier menu of goods than were my college students, at any given rate of inflation. but these days, when measured rates of inflation are running at 1. 5 percent to 2 percent, even bankers consistently vote for the current menu of goods by fairly wide margins. if even bankers feel that the implicit measurement bias in price indexes exceeds 2 percent, that may be a phenomenon worth noting. the upshot of this highly anecdotal test is that i have long suspected that true price stability might really be achieved in the vicinity of measured inflation rates of 2 percent or even more. it would be desirable to ground this type of information more firmly in modern - day techniques of data collection. ideally, consumer survey groups would run polls of currency utility and make periodic reports, the way they already do for indicators of consumer confidence and spending plans. short of that, there is one econometric calculation that provides some support to my informal voting results. nordhaus ( 1998 ) compared real incomes as measured by the cpi with survey research center data in which people were asked how their financial condition changed over the past year. he fitted a regression to
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. the best confirmation of the correctness of our approach is the results achieved β the demonstrated resilience to external shocks unprecedented in recent history and favourable macroeconomic prospects for our economy. this is also recognised by relevant international institutions, including the imf, which assesses that we are recording impressive results and that we have earned trust. inflation in serbia returned within the 3Β±1. 5 % target band without any major tradeoffs in terms of economic activity. this is indicated by economic growth that will, in cumulative terms, exceed the pre - crisis level by more than 18 %. in addition, this year again, and probably in the medium run too, serbia's economic growth will be one of the strongest in europe. 2 / 4 bis - central bankers'speeches financial sector stability has been preserved and the npl ratio now stands at the lowest level on record ( 2. 7 % ). public finances are sustainable, and the country's external position strengthened. the country's fx reserves are at record levels both in terms of their volume and structure. at over eur 28 bn, they cover more than 7 months'worth of the country's imports of goods and services. fdi inflow is also record high. it reached eur 4. 6 bn last year and is forecast to reach a similar level this year as well. for all these reasons, for the first time in its history serbia has been assigned investment grade rating by standard & poor's, which brings us closer to developed economies. another confirmation of the growth and development of our economy is the new threeyear policy coordination instrument, which i expect the imf will approve to serbia in the coming several days. this instrument is granted exclusively to countries with sound economic policies and good prospects, which is the imf's assessment of serbia. his is also in line with our expectations for the future period. more specifically : inflation will continue to move within the target band. we expect economic growth to accelerate additionally to the range of 4 β 5 %, with the central projection of 4. 5 % and a good structure of growth. owing to the maintained investment confidence and favourable financing conditions, fixed fund investment will continue to provide significant support to economic growth. the investment potential comes from corporate profitability in the previous years, as well as from fdis, which represent an important source of transfer of new technologies and productivity growth. an additional impetus will come from the implementation of government capital investments planned by the " leap
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the april 2018 outlook report, the real gdp growth rate is projected to be 1. 6 percent for fiscal 2018, and 0. 8 percent each for fiscal 2019 and 2020. let me explain the outlook in detail by major component. first, business fixed investment is likely to continue increasing. this is because, in a situation where extremely stimulative financial conditions are maintained, fixed investment will be positively affected by an improvement in corporate profits, the materialization of the effects of projects conducted under the fiscal investment and loan program as well as the effects of investment - enhancing tax incentives, and a moderate improvement in growth expectations. specifically, an increase is likely to be seen in investment such as, ( 1 ) that intended for domestic capacity expansion in line with the economic expansion ; ( 2 ) that related to the 2020 olympic games and urban redevelopment projects ; ( 3 ) that aiming at improving efficiency and saving labor in order to deal with, for example, the labor shortage ; and ( 4 ) in research and development for growth areas. private consumption is expected to follow a moderate increasing trend, due mainly to an increase in employee income as well as replacement demand for durable goods, and housing investment is expected to remain more or less flat. exports will likely continue their increasing trend for the time being, as those of capital goods and it - related goods, in which japan has a comparative advantage, are likely to be firm. thereafter, they are expected to continue their moderate increasing trend, due mainly to the improvement in overseas economies. industrial production will likely continue to increase firmly for the time being, and thereafter is projected to continue on a moderate increasing trend. the year - on - year rate of change in the cpi ( all items less fresh food ) is likely to increase toward 2 percent. this is because, although upward pressure of energy prices is likely to wane moderately, firms are likely to gradually shift their stance toward raising wages and prices with the improvement in the output gap, and inflation expectations are expected to gradually rise. looking at the medians of the policy board members'forecasts in the april 2018 outlook report, the year - on - year rate of change in the cpi ( all items less fresh food ) is projected to be 1. 3 percent for fiscal 2018 and - - on a basis excluding the effects of the scheduled consumption tax hike - - 1. 8 percent each for fiscal 2019 and 2020. developments in prices since the release of the april 2018 outlook report have been slightly weak relative to what had
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percent, which, if we make a direct comparison, is the level seen in japan at the beginning of 1995. an increasing number of people are now interested in deflation. looking back at developments over the last decade, i have been struck anew by how immensely important it is for the central bank to gain reliable insights into the outlook for the economy. at the same time, we clearly cannot be too surprised at the fact that, with the passage of time, changes have taken place in the debate surrounding monetary policy. we at the central bank must continue to make efforts to gain new insights and learn from new ideas, while not allowing ourselves to fall captive to whatever mindset is dominant at a particular point in time. i feel acutely the importance of further interaction with the academic world, because cutting - edge research on financial and economic theory is fundamental to our efforts. since i assumed the office of governor in march this year, and indeed before, i have had the opportunity to listen to a wide range of advice, and have learnt much from opinions voiced about the bank and forwarded to me not only from members of the society but also from other academics both at home and abroad. at the same time, i am afraid that i must admit to feeling a certain degree of frustration, in the light of my long years of experience as a central banker, as i listen to some of the opinions. i cannot help but feel that there is still significant progress to be made in establishing a creative process whereby the bank first provides academics with sufficient information about the issues it is facing, and then works together with them based on the same information in its search for fresh policy solutions. we are fortunate to have among the current nine members of the policy board three members who have spent a number of years in senior academic positions. in addition, there are an increasing number of former bank staff currently working at academic institutions and devoting their efforts to bridging the gap between theory and practical policy. with their help, we expect to be able to extend our links with the academic world, thus not only gaining the benefit of academics β advice but also contributing to their research by sharing our practical experiences. this has been a somewhat protracted introduction. my aim today, however, is to share with you, as frankly as possible, my own current thinking with regard to the conduct of monetary policy, which i hope will be of interest to you. i hope also that my remarks will play a part in further strengthening the constructive
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on by the pandemic from those of ui benefits. all of these factors are likely to diminish by autumn with the return to fully in - person school, continued progress on vaccinations, and the expiration of supplemental ui benefits in early september β or earlier, in many states. for all these reasons, the supply β demand mismatches in the labor market are likely to be temporary, and i expect to see further progress on employment in coming months. that said, today employment remains far from our goal. jobs are down by over 8 million relative to their pre - pandemic level, and the shortfall is over 10 million jobs if we take into account the secular job growth that would have occurred over the past year research indicates that the additional income provided to the unemployed through the cares act likely had little labor - supply - induced effect on the unemployment rate in early to mid - 2020 and likely only a small effect on the job - finding rate in early 2021. for more information, see nicolas petrosky - nadeau and robert g. valletta ( 2021 ), β ui generosity and job acceptance : effects of the 2020 cares act, β working paper series 2021 - 13 ( san francisco : federal reserve bank of san francisco, may ), https : / / doi. org / 10. 24148 / wp2021 - 13, and the citations within. in normal circumstances. as of april, the overall prime - age employment - to - population ( epop ) ratio is 76. 9 percent, more than 3 percentage points below its pre - pandemic level. the shortfall in the prime - age epop ratio is around 5 percentage points for black and hispanic workers relative to their october 2019 peaks. policy although continued vigilance is warranted, the inflation and employment data thus far appear to reflect a temporary misalignment of supply and demand that should fade over time as the demand surge normalizes, reopening is completed, and supply adapts to the post - pandemic new normal. under our guidance, adjustments in the path of monetary policy are transparently tied to realized progress on our maximum - employment and 2 percent average - inflation goals. jobs are down by between 8 and 10 million compared with the level we would have seen in the absence of the pandemic. and it will be important to see sustained progress on inflation given the preceding multiple year trend of inflation below 2 percent. while we are far from our
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as a critical factor in defining competitive advantage and success. ladies and gentlemen, significant market developments continue to exert their influence in shaping both the global and the domestic economy. these developments include the increased pace of globalisation, the emergence of new technologies and the increasing importance assigned to the value of knowledge as a determining factor in a country's performance. as competition intensifies, and rapid and dynamic changes take place in the financial environment, the areas of comparative advantage will change. in recognition of these trends, malaysia has allocated significant resources and attention to human capital development to strengthen the intellectual capacity of our nation. indeed, human intellectual capital plays a pivotal role in driving future performance and competitiveness. in the financial services sector, the financial landscape will continue to evolve with the proliferation of financial products and services in line with the rapidly changing requirements of the economy and expectations of businesses and consumers. these trends are particularly evident in the insurance industry. indeed, over recent decade, the insurance industry has seen significant progress and expansion. assets of the insurance industry have now reached over rm100 billion and annual premiums generated by the industry are in excess of rm23 billion a year. the market penetration, that is, the number of policies in force as a ratio of the total population, has more than tripled to 38. 7 % from over a decade ago. at the same time, this growth has been underpinned by a transformation of the industry in terms of the distribution systems, product diversity, sophistication of business models and practices, and the state of the art technological advances. with this track record and the structural changes in the environment that are occurring, the prospects for continued growth will remain strong going forward. importantly, the insurance industry continues to play an important socio - economic role within the economy. it is a signifant institutional investor in the capital market, with over rm49 billion invested in corporate and debt securities. in addition to providing basic insurance protection to individuals and corporations, insurance products have also contributed significantly towards expanding the breadth of financial planning options for individuals. this includes solutions that provide for individuals to finance their retirement needs, medical expenses and children's education, as well as solutions that enhance their investment income. all of you are therefore part of a key industry that forms an integral component of our social and economic fabric. professionals in the insurance industry can therefore expect to play an important role in this environment of increasing complexity in financial services that is accompanied by the increasingly sophisticated demands by businesses
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a h e m wellink : the impact of new technologies on the implementation of monetary policy speech by dr a h e m wellink, president of the nederlandsche bank, at a symposium of the banque de france on β new technologies and monetary policy β, paris, 30 november 2001. * * * when thinking about new technologies, information and communications technology ( ict ) is probably the first thing that comes up in most people β s mind. and, there are those who see an acceleration in the diffusion of ict as being equivalent to the concept of the β new economy β. for the purposes of this conference, i would prefer to take a wider perspective, in which the new economy is seen as the interaction of several mutually reinforcing factors. these include advances in ict, financial innovation and liberalisation, the globalisation of trade, improved functioning of markets and enhanced macroeconomic management. the interplay of these factors has the potential to raise the speed limits of the economy. that is, the new economy can operate at higher growth rates than in the past without generating additional inflation. therefore, both the initial hype surrounding the new economy with some pronouncing the demise of the business cycle, as well as the elimination of the new economy all together in response to current economic circumstances, seem to be misguided. the jury is still out on the question whether we can detect a new economy in europe. without wanting to prejudge the outcome, i would argue that there is no intrinsic economic reason to expect the new economy not to materialise. so, assuming that it will take root, indeed what does this new economy imply for the monetary policymaker? i have a couple of general observations to make. first, the new economy influences the transmission of monetary impulses through the economy. it can be argued that in the new economy it will take less time for a monetary policy impulse to have an impact on inflation and output, while the impact of a given impulse will be smaller. since there is a separate panel discussion devoted to this topic, i will leave it at that and move on to the second observation. that is, policy makers do not bring about the new economy. it is the result of private sector behaviour, driven by innovative entrepeneurship or, more fashionably, β creative destruction β. policy in general can only be conducive to the new economy. in a market - based economy, private sector decisions are guided by the alloca
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that external shocks, like the ones we are experiencing today, might take time to fully materialise. we learned this from the two oil crises in the 1970s. the oil shocks in 1973 and 1979 led to an increase in banking provisions that only peaked in 1983. and those provisions were even higher than the provisions during the great financial crisis. 2 / 4 bis - central bankers'speeches so when and how the current inflationary shocks will have fully rippled through our economy is highly unpredictable. this will also depend on the fiscal and monetary policy response, and whether or not the geopolitical situation deteriorates further. so now that we find ourselves beyond our models'perimeter and without a straightforward scenario at hand, how do we go forward? what can guide our decisions? i suggest three " lines of defence " : first, in order to enhance banks'resilience, the implementation of basel iii in europe should continue without delay and with as little deviation as possible. one of the cornerstones of the basel iii reform is the introduction of the output floor, which is designed to reduce model risk. in this specific case, model risk is the risk that a bank's internal models incorrectly estimate the bank's capital requirements. for banks, the output floor will put a limit on the reliance on stochastic scenarios and increase their resilience. on this matter, i fully support the strong plea from the ecb and the eba to faithfully implement basel iii. 2 second, for banks to be able to determine their course of action and assess and mitigate risks, they need a thorough understanding of their exposures and of how the current challenges might impact their portfolios and financial positions. this starts with good data of high quality and extensive insight into their customers'financial positions β not only at the start of a contract, but also throughout. that is why we put pressure on banks to improve their data quality, and to properly aggregate and report on their data. third, whatever scenario banks eventually follow, it is crucial to maintain a healthy capital position. as i briefly illustrated with the oil crises, many of the risks of the current circumstances may only materialise down the road. the economic and financial situation in which banks took on risks on their balance sheets in the past years has fundamentally and abruptly changed. this makes it very unlikely that the scenarios used then still align with the world of today. this is why we are asking banks to be prudent with dividend payouts and share
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barry whiteside : overview of the fijian economy address by mr barry whiteside, governor of the reserve bank of fiji, at the opening of credit corporation ( fiji ) limited β s new building, nadi, 4 october 2013. * * * the chairman of the credit corporation board, mr garth mcilwain board of directors managing director, mr peter dixon management and staff distinguished guests ladies and gentlemen introductory comments good morning and bula vinaka. i thank peter for the kind invitation to open this new credit corporation ( fiji ) limited building, which i am told will now house the institution β s nadi branch. these occasions are exciting for us as they are evidence of the increased confidence and optimism shown by our business community in the fijian economy. we are progressing as a nation, and in this regard are grateful to institutions like credit corporation for their commitment and for building their presence in fiji. please allow me to provide a brief update on how our economy is progressing. the fiji economy we are fortunate that the fijian economy has not been seriously impacted by the current global slowdown. our economy this year is forecast to grow by 3. 2 percent, up from the 2. 2 percent growth last year. consumption activity has been upbeat and is a reflection of a combination of factors including lower personal income taxes and higher inward remittances. inflation is expected to be around 3. 0 percent by the year - end and our foreign reserves were recorded at $ 1. 83 billion as at 03 september 2013, sufficient to pay for 5. 2 months of retained imports of goods and services. investment is forecast to be around 28 percent of gdp this year, above the government target of 25 percent. we however still need to work on some real challenges and in this regard, the current accommodative monetary policy stance will be maintained. we are mindful that consumption and investment led growth cannot be sustained for too long as they have heavy import content. for this reason, policies aimed at export diversification and promotion, and import substitution remain paramount. new lending as an indicator of economic activity, has increased significantly in the last 8 months. lending institutions like credit corporation are experiencing great competition as they work on retaining customers in a period of high liquidity and falling interest rates, but at the same time ensuring they meet their growth targets. financial institutions therefore remain the backbone of our financial system and their expansion is an indicator of increased confidence in our economy. this new development by credit corporation is definitely
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##evu / naitasiri, namosi / serua, nadroga / nadi, bua / macuata, cakaudrove and fly - in fly - out operations to taveuni and kadavu. apart from various deposits products, the rural program also includes small and micro loans to communities in rural and outlying areas. the government and the reserve bank have supported this initiative of anz from the beginning and are pleased to see that more and more rural areas are being serviced through anz rural banking. we encourage various businesses and government agencies, including nltb, to use these services when they wish to make payments such as royalties, land rent etc. financial literacy programs organised by the united nations development program ( undp ) have been conducted in conjunction with anz rural banking in these rural areas as well since october 2004. atms atms provide a very convenient way of doing banking. customers can access their bank accounts to make cash withdrawals or credit card cash advances and check their account balances as well as topping up their mobile balances. with more and more atms being installed around the country, the need to go to a bank for cash has reduced dramatically. i am told that people in fiji use atms more than in many other countries. this is seen from the frequency of use of each atm in the country. as of today, there are 151 atms in fiji. of that total, anz has 70 atms or 46 percent of the total. this is an excellent achievement for anz in fiji! the location of this atm in nasese is going to service a rapidly growing part of suva. we hope that this will lessen the queues at the atms in suva. fijiclear while we are on the topic of access to money, i would like to take this opportunity to say a few words about fijiclear. fiji β s electronic payment system is called fijiclear. this system went live on 30 august 2007 and was launched on 16 october 2007. fijiclear allows people to make and receive payments electronically on the same day through a commercial bank anywhere in fiji. fijiclear has been in operation for almost a year but for some reason many of our people are not using this very easy and efficient payment system. there are a number of benefits of using fijiclear. to the payee i. e. the person receiving money, the benefits include : β’ funds are credited into the account
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spend the rest of my time discussing a few of the things that make life interesting for those trying to communicate clearly and effectively about monetary policy. more specifically, i am going to touch on three factors that strike me as particularly relevant for our efforts in this area : the fact that the market is not a single person, the fact that the committee is not a single person either, and the delicate interplay between the committee and the market. the market is not a single person this point was very nicely made by hyun shin in his remarks at the federal reserve bank of kansas city β s symposium at jackson hole last summer. shin wrote : the β market β is not a person. market prices are outcomes of the interaction of many actors, and not the beliefs of any one actor.... but most discussions of see marvin goodfriend ( 1986 ), β monetary mystique : secrecy and central banking, β journal of monetary economics, vol. 17 ( january ), pp. 63 β 92. bis central bankers β speeches central bank forward guidance treat the market as if it were an individual that you can sit down and reason with.... by doing so, i believe we are in danger of committing a category mistake where we anthropomorphize the β market β as a rational individual with beliefs. 2 let me give you a particular example that illustrates the wisdom of shin β s observation. in early may 2013, long - term treasury yields were in the neighborhood of 1. 60 percent. two months later, shortly after our june 2013 fomc meeting, they were around 2. 70 percent. clearly, a significant chunk of the move came in response to comments made during this interval by chairman bernanke about the future of our asset purchase program. for example, in his june 19 press conference, he said : if the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year. and if the subsequent data remain broadly aligned with our current expectations for the economy, we would continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around midyear. 3 perhaps it is not surprising that news about the future course of the asset purchase program would have a strong effect on markets. but here is the striking fact : according to the survey of primary dealers conducted by the new york fed, there was hardly any change over this
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global pattern of savings and consumption. domestic savings in the united states could rise - both government and household savings rates can be expected to head up. and foreign consumption could increase, as economies and markets continue to expand. it is worth noting that in north america, household consumption is running well over 60 per cent of gdp. as we look ahead, and take into account the aging population, it is important that savings rates increase in north america. at the same time, household consumption in emerging asia is only about 40 per cent of that region β s gdp. as asian incomes rise, there is great potential for household consumption in that region to increase. so these are natural forces that will be working towards the adjustment of these imbalances. the second channel for adjustment will undoubtedly involve changes in real exchange rates ; that is, the relative value of currencies taking into account the effects of inflation. changes in real exchange rates could come about either through movements in relative inflation rates, or movements in nominal exchange rates, or some combination of the two. with respect to nominal exchange rates, the big issue is the need for some effective depreciation of the u. s. dollar against the currencies of emerging asia. a key element here is china β s fixed exchange rate, and how successful the chinese authorities will be in meeting their stated goal of moving to a floating currency. in all likelihood, both of these channels of adjustment will play some part in facilitating the correction of global imbalances. as these adjustments take place, two things will be critical to ensuring that real incomes continue to rise worldwide. first, global trade flows must continue unimpeded. that is why we must push for continued progress at the doha round of trade negotiations under the world trade organization. it is also why we must fight against any outbreak of protectionism. second, all economies must take steps to enhance their flexibility so that the adjustment doesn β t have to take place through loss of real incomes. here in canada, we have to continue to increase the flexibility of our markets for goods and services, for capital, and crucially, for labour. at the same time, all of us leaders of corporations and public sector institutions must work to enhance the productivity of our workplaces. that leads me to the issues that we have to consider here in ontario. the remainder of my remarks today will deal with these issues. adjustments in ontario now, as i mentioned, i was not able to participate in your earlier discussions about
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used in accordance with the house rules, which hang on the door. when you go in, you know what is expected of you. the quantitative easing programme has had an immediate effect on bonds, shares β¦ some fear that a bubble is forming, that risks are not being assessed correctly when granting loans β¦ there is an element of truth about everything that is said regarding a measure which is as unconventional as this one. but sometimes you have to take risks and use such measures, which may have unfortunate consequences. there are, however, tools to address those ( banking supervision, resolution, taxes β¦ ) and the european architecture is also being strengthened further. qe has been an appropriate response to an extraordinarily risky situation that we had not seen for several generations. how do you see the situation in spain? its growth forecasts are among the highest in the eu, but does it serve as an example when levels of unemployment and indebtedness are so high? there are many models : ireland is one, and spain too β¦ employment is a lagging indicator. moreover, unemployment figures, especially youth unemployment, have already fallen to levels below those at the time that the bank bailout was requested. indeed, they are above 2008 levels, but i can still recall the levels of 20 years ago, so it β s all relative. they have always been higher than in the rest of the eu, even during the boom years. but i believe the mentality in spain has changed. the ability to acknowledge the reality and to adapt to it shows that it is a mature democracy. that is the type of mortar we need for a monetary union. spain feels particularly underrepresented in the eu since you took, in 2012, the rotating seat on the ecb β s executive board, which it had occupied since the institution β s creation. do you think that, given its demographic and economic weight, the situation should be corrected? passports should play a minor role in european representation, especially in supranational institutions like the ecb. quotas are inappropriate. when we enter the ecb β s governing council meeting room, we leave our passports in the cloakroom. the only conditions laid down by the treaty are competence and reputation. that β s quite different however in intergovernmental institutions where appointments are the result of allocation. bis central bankers β speeches de guindos in the eurogroup? the ecb does not vote. where i do agree is that making the presidency
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effect into effects due to aggregate demand, credit risk, funding costs and the business cycle, the real interest rate that firms have to pay for credit stands out as the factor explaining the largest share of the cross - country variation in credit constraints. such an analysis based on our survey on sme finance indeed suggests that for each 100 basis points by which lending rates decline, access to finance for euro area smes will improve by about 9 %. emerging case studies also support the view that, by weighing on bank balance sheets, the sovereign debt crisis has led banks to tighten credit supply. for example, micro evidence from bank lending to smes in italy suggests that since the start of tensions in sovereign debt markets, lending by banks exposed to sovereign debt has grown by 3 percentage points less than lending by unexposed banks, and that the interest rate they charge has been between 15 and 20 basis points higher. these effects are stronger for banks relying on domestic interbank funding. 8 the bank lending survey by the ecb is another source of information on realised bank lending standards to smes. according to the survey, after a period of rapid tightening, lending standards across the euro area had stabilised by the end of 2009 and the beginning of 2010. however, starting in the second quarter of 2010 credit standards started tightening popov, a., and van horen, n., 2012. the impact of sovereign debt exposure on bank lending : evidence from the european debt crisis. ecb mimeo. for evidence from the u. s., see ivashina, v., and b. becker, 2011, cyclicality of credit supply : firm level evidence, harvard business school working paper 10 - 107. for evidence from the euro area, see de fiore, f., and h. uhlig, 2011, bank finance versus bond finance, journal of money, credit, and banking 43, 1399 β 1421. a credit - constrained firm is a firm which a ) is rejected when applying for a loan, b ) receives less than 75 % of the desired loan amount, or c ) is discouraged from applying because it believes its loan application will be rejected. bofondi, m., carpinelli, l., and e. sette, 2012. credit supply during a sovereign crisis. bank of italy mimeo. bis central bankers β speeches again, and in december 2011 overall euro area lending standards to smes were twice as restrictive as two years earlier.
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in ways which are not in the interests of their principals and when the latter lack the means to properly monitor and control the actions of the former. three main types of principal agent problems can occur in the management of firms : between managers and owners, between controlling and non - controlling shareholders and between a firm and its creditors. proper corporate governance structures are a means to mitigate principal agent problems and thus ensure that a firm can be managed efficiently for the mutual benefit of all of its stakeholders. because the operations of a large complex firm involve a host of non - controlling stakeholders, without effective corporate governance structures to mitigate principal agent problems, modern business would not be possible. one of the most important components of effective corporate governance structures are accurate and reliable financial reports. other key aspects are a clear legal framework which delineates the rights and obligations of all of the different stakeholders and which can be enforced effectively in the courts, and appropriate management and oversight structures within the firm, with clear responsibilities for the firm β s board of directors. financial reports provide a window into the operations of a firm which can give all of its stakeholders the information that they need to conduct transactions with confidence that they are not being taken advantage of in any way. for example, without accurate financial reports, minority shareholders cannot be certain that the firm in which they have invested their wealth is being managed in the best interests of all shareholders and not just those who control the firm β s management. financial reports are essential to enable a firm β s board of directors to evaluate the managers they have appointed. they are an essential tool for a firm β s board of directors, which is why a firm β s internal auditor usually reports directly to the board and not to the management, so that the board can be confident in the veracity of the financial reports. the requirements of modern firms for credit cannot be accommodated satisfactorily by lenders unless the latter have confidence that a firm can service its debts from its future revenues as a going concern, but such confidence is only possible if lenders have access to reliable financial information with which to evaluate the firm β s business prospects. for those firms seeking to mobilise capital by issuing equity or corporate bonds on the capital market, a history of financial reports is a prerequisite, because the institutional investors who are the main customers for corporate stocks and bonds rely heavily on financial reports to evaluate prospective investments. to maximise the benefit of financial reports for all stakeholders, it is essential that they be
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equity placements or by selling shares on the stock market. but to mobilise equity capital from outside sources, the existing proprietor or proprietors must be prepared to share ownership of the firm with new, probably minority shareholders. for their part, new investors will only purchase equity in a firm if they are confident that they will, as non - controlling shareholders, be treated equitably by those who control the firm. some smes try to avoid bringing in outside shareholders to fund their expansion by relying on debt finance instead of equity. but this often leads to the failure of the firm. the maturity of debt finance is often much shorter than the payback period of capital investments. thinly capitalised firms often have to devote a large share of their revenues to servicing their debt and so are very vulnerable to adverse shocks to their revenues or to the costs of debt servicing. a second fundamental change which firms must make if they are to expand successfully is the separation of ownership and management. as a firm grows larger, its management becomes more complex and demanding of professional and technical expertise. as such, a professional manager or management team becomes essential. this means that the micro - management of the firm by a sole proprietor is no longer a tenable business practise. the proprietor or proprietors of the firm must be prepared to step back from its everyday management and instead focus on playing an oversight role as board directors of the firm. these two types of changes which are essential for firm expansion β the diversification of share ownership and the separation of ownership and management β require fundamental changes in the governance of a firm. the type of informal, non - transparent governance which characterises small firms managed by a sole proprietor is no longer adequate for larger and more complex firms with multiple shareholders and professional managers. the governance structures of the latter must be much more formal and transparent, so that all of the different types of stakeholders in a firm can be confident that their own legitimate interests are properly taken into account in the management of the firm. one of the reasons why formal and transparent corporate governance structures are necessary in larger firms is that complex organisations are often vulnerable to what economists call β principal agent problems β. an agent is someone endowed with executive authority by a principal to serve the interests of the latter. for example a chief executive officer is appointed by the shareholders of a firm to serve their interests ; in this case the ceo is the agent and the shareholders the principals. principal agent problems usually arise when agents have incentives to act
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slowdown of the economy, and the associated reduction in inflation risks, for it to act promptly. the private sector also needs to adjust its expectations accordingly. a consequence of the above is that in countries where the private sector, in particular the participants in the goods and labour markets, are less flexible in adjusting their pricing and wage behaviour in the face of exogenous shocks, the central bank will be slower in easing monetary policy when confronted with a slowdown. this might explain some of the differences between monetary policy in the us and the euro area. in the former, where markets are more flexible, the federal reserve may be able to cut interest rates in response to the economic slowdown at an earlier stage, because that slowdown is expected to bring about a rapid adjustment in pricing behaviour and expectations. in the euro area, however, price and wages tend to follow the cycle with a lag, and tend to keep rising for some time even after the slowdown starts. see peersman and smets ( 2001 ). see boivin, giannoni and mojon ( 2009 ). let us consider the most recent example of the start of the easing cycle in the fall of 2008. the euro area economy was projected to slow down in the second half of 2008 already for some time. for instance, in the ecb 2008 spring forecast, the euro area gdp growth was projected to fall from 2. 7 % in 2007 to 1. 8 % in 2008 and 1. 5 % in 2009. however, in spite of the projected slowdown, inflationary pressures continued to rise until the summer of 2008. headline inflation rose to 4 %, on account of strong commodity price pressures. long - term inflation expectations derived from inflation - linked bonds increased in the course of the spring, from levels slightly above 2 % to levels above 2. 5 % in june 2008. shorter term forecasts from consensus, the ecb β s survey of professional forecasters ( spf ) and other private sector forecasts, as well as forecasts from international organisations, pointed to an inflation rate above 2 % in 2009. growth in compensation per employee also continued to increase in the second and third quarter of 2008 at a rate above 3 %, in spite of the expected economic slowdown. under these circumstances, a premature interest rate cut would have signalled a passive acceptance of such behaviour, which would have translated into a further misalignment of price and wage expectations with respect to the underlying fundamentals.
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new zealand and south africa. in europe, strong public intervention is not envisaged for the time being. it is up to the epc and individual card schemes to create the business rules which are needed for a smooth functioning of sepa for cards. sepa for cards β technical standards business rules are only half the battle for a sepa for cards, as technical standards are needed too. last december the epc published an updated version of the sepa cards standardisation volume. this β book of requirements β, as it is now called, builds on the sepa cards framework. the objective of the document is to lay the foundations for the harmonisation of standards in sepa. it provides the basis for the sepa standards that are needed so that β any sepa card could technically work at any sepa terminal β. the ecb welcomes the epc β s commitment to ensure that the book of requirements continues to develop in close dialogue with stakeholders in the sepa cards market, who are represented in the epc cards stakeholders group established last year. the evolution of the book of requirements will also facilitate and guide the market adoption of the detailed standards that various market initiatives have developed or are developing. this is an important step towards interoperability, security and market access. without it, there is a risk that technical fragmentation would remain or even be reintroduced in europe β something that none of us wants. another prerequisite for sepa for cards is a certification framework that inspires trust, ensures an appropriate and equivalent level of security for cards and terminals, and provides processing relates to the authorisation of card transactions, as well as their subsequent clearing and settlement. β one - stop shopping β for manufacturers of cards and terminals. card scheme providers have made significant progress over the past year, and are cooperating in the common approval scheme ( cas ) initiative, and i am looking forward to seeing a clear epc position, especially on governance aspects, in this field. governance is in fact one of the key components in the sepa for cards project : setting requirements and promoting standards is important, without a doubt. but, from a european perspective, it is strategically necessary for europe to take a more coordinated approach towards global standard - setting bodies, such as iso or emvco, and that europe starts to speak with one voice. giving the epc, acting on behalf of the european payments industry, a say in these bodies would be a very good way to achieve this aim.
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of emerging markets. as the old saying goes, the only constant is change. but the speed of that change is not constant. the pace of change tends to pick up around major transitions before settling down again when some sort of equilibrium is reached. the great moderation was a period of relatively steady change during which world output grew steadily and inflation was low and stable. the global financial crisis created a major upheaval that led to the great recession. the subsequent recovery has been remarkably drawn out and almost 10 years on, you could say that we have been living through a great transition. i would like to highlight three pivotal transitional forces that have shaped our economic and political landscape. first, after decades of rapid expansion, world trade has slowed down considerably. during 2012 to 2015, world trade volumes grew at around 3 percent per annum, much less than the pre - crisis average of 7 percent for 1987 - 2007. cyclical factors have certainly been at work, but the slower pace of growth relative to world gdp points to deeper structural forces at work. chief among these is the waning impact from the integration of china and central and eastern european countries into the world economy, as well as the diminished room for further international fragmentation of production through global - value - chain trades. more speculatively, rising protectionism may have also dampened trade in recent years. nevertheless, the level of trade integration across the world is as high as it has ever been. second, economies the world over have seen a rising contribution of the service sector to growth. a key driver of this transformation has been technological innovation, especially in digital communication. for the world as a whole, the share of services as a proportion of gdp is now as high as 70 percent. this shift has not been confined to advanced economies but can also be seen in emerging markets. in china, for example, the service sector has grown to more than half of gdp in 2015, much of it driven by a surge in e - commerce and the expansion in logistical services required to support it. moreover, as the cost of digital technology declines, a wider range of services are becoming more tradable including design, marketing, business processes, and education. thus not only has the service sector become more important within a country, the share of international trade in services has also increased markedly. the third, and perhaps most unsettling transitional force, is the ultra - accommodative monetary policy stance adopted by major advanced economies. what started out as extraordinary
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incentives for homeowners with underwater mortgages. homeowners who try to obtain a modification of the terms of their mortgages are all too frequently subject to delay and disappointment, while those who simply stop paying their mortgages have found that they can often stay in their homes rent free for a time before the foreclosure process moves ahead. moreover, many homeowners believe, reportedly on the basis of communications from servicers, that the only way they can qualify for modifications is by stopping their mortgage payments and thus becoming delinquent. quite apart from the impact upon families who lose their homes, the dominance of foreclosures over modifications raises macroeconomic concerns. the number of foreclosures initiated on residential properties has soared from about 1 million in 2006, the year that house prices peaked, to 2. 8 million last year. over the first three quarters of this year, we have seen a further 2 million foreclosure filings, and an additional 2. 3 million homes were in foreclosure at the end of september. all told, we expect about 2. 5 million foreclosure filings this year and next year and about 2. 4 million more in 2012. while our outlook is for filings to decline in coming years, they will remain high by historical standards. currently, more than 4. 5 million mortgage loans are 90 days or more past due or in foreclosure. these numbers compare to just 520, 000 permanent loan modifications executed under the treasury department β s home affordable modification program ( hamp ) and an additional 1. 6 million proprietary loan modifications by servicers participating in the hope now alliance program. 2 the federal reserve believes that in most cases the best way to assist struggling borrowers is a mortgage modification allowing them to retain their home with an affordable mortgage payment. in a housing market where values have declined so much, following a period in which all actors relied upon rising house prices to sustain mortgage practices, foreclosures simply do not make sense as a preferred response. foreclosures are costly to all parties and more broadly to our economy. lenders and investors incur financial losses arising from the litigation expenses associated with the foreclosure process and the loss on the defaulted mortgage when the foreclosed property sells at a liquidation price that is substantially less than the loan balance. local governments must contend with lower property tax revenue and the ramifications of neglected properties that may threaten public safety. additionally
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. as part of this process is the support provided by an enhanced surveillance mechanism. a further implication of a more networked economy is i n the area of payments, clearing and settlement systems, in which the benefits are derived from the economies of scale and the positive network externalities of increased participation. inevitably, payment networks could become more interconnected and a single and large payment network could emerge. it then becomes essential to be in a position to manage the risks that may emanate from places beyond national boundaries. there has to be then a high level of preparedness against any disruption in the flow of information, funds and securities becomes vital. ladies and gentlemen, the policy response how have these developments changed the way bank negara malaysia operates? in malaysia, efforts are currently being taken on several fronts to meet the challenges arising from these trends. these range from structural enhancements to the macro surveillance systems, to strengthening of the robustness and capacity of financial players, in addition to promoting greater understanding of the intricacies of the interconnectivity, and the nature and speed of contagion risks within the overall system. on the regulatory front, closer regulatory oversight is particularly important in ensuring the strength of the risk management framework of large and complex financial institutions that are active in crossborder transactions. towards this end, bank negara malaysia is enhancing its prudential framework for the management of operational risks among such financial institutions, with the introduction of sound practices. the bank's prudential framework has also been refined and enhanced to ensure that financial institutions address the risk management implications of new financial products, including credit derivatives, credit default swaps, credit linked notes and collateralised debt obligations. in addition, the introduction of the payment system act in 2003 provided bank negara malaysia with a broader scope on the oversight function over payment systems and instruments that are operated or issued by banks or non - banks, given that advances in ict have increased the participation of nonbanking institutions in the payments system. the bank has therefore put in place a specific legislative authority to institute more comprehensive and effective mechanisms for achieving effective oversight of the payments system in a networked environment. bank negara malaysia also maintains very close contacts with its counterparts in other jurisdictions to keep abreast of developments in the financial markets. strengthened surveillance and information sharing on a real - time basis has become key. cooperation among the asian central banks is very strong, and there are various avenues for increased interface for collaboration at all levels in
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the regional central banks. to maintain effective surveillance, importance is also placed on regular engagement with the financial market participants, the industry and the public. an emerging dimension in the changing environment is to strengthen central bank communications. the aim is to enhance market understanding and awareness of the benefits as well as the potential risks and the policy initiatives in a network economy. the regular publication of the bank's monetary policy statement is to appraise markets of the direction of monetary policy. other measures include outreach programmes on investor and consumer education to enhance financial literacy. finally, bank negara malaysia has also put in place business continuity plans as part of its contingency programme to deal with all eventualities and threats to financial stability, in particular, those emanating from a more networked financial system. similar contingency plans have also been introduced in the domestic financial industry, where regular test - runs are conducted to ensure the integrity of all the back - up systems. going forward, central bank cooperation continues to be enhanced to strengthen risk management capabilities in the asian network economy. measures to enhance national surveillance is complemented by cooperation on regional surveillance mechanisms to provide comprehensive oversight over the entire regional network. closer cooperation with the respective regulators is also important to promote greater understanding of the nature of the risks involved and to facilitate the development of appropriate circuit breakers and mechanisms to contain the risks in the network. in addition to the establishment of business continuity plans to help to mitigate risks arising from outside the financial network, the harmonisation of regulatory and financial standards would facilitate the containment process. these cooperative efforts to harmonise standards are to support financial infrastructure development in facilitating the flow of funds and settlement requirements across borders. conclusion datuk seri panglima andrew sheng's lecture today will explore the behaviour of markets as networks, and the implications of such network behavior on monetary and financial stability in the asian network economy. going forward, it can be expected that the asian networked economy will become increasingly more entrenched. while this will open up new opportunities for enhanced efficiency and productivity gains in asia, a better understanding of the risks inherent in networks will better prepare the regional economies to address these risks. this will be a shared responsibility within and among the regional economies. closer regional cooperation, strategic alliances and smart partnerships will be important key responses for enhancing the prospects for higher growth and development in asia. thank you.
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