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those seeking to adapt to the changes occurring in demand, from those spurious novelties that provide no significant improvements and which should be blocked as soon as possible. in other words, what is truly important should be separated from what is simply showy. in this respect, cryptoassets or cryptotokens are one of the most striking developments in this area, going by the extensive media coverage some of them β such as the bitcoin β are receiving. but this does not mean that they are the most important or even the most promising innovation. indeed, in my view, their current use poses more risks than benefits : they have a low level of acceptance as a means of payment, they are subject to extreme 3 / 6 volatility, they have numerous operating vulnerabilities and they have been related to fraudulent or illicit activities in many cases. i shall not, however, give an exhaustive list of the risks of crypto assets, since the position of the banco de espana in this connection is well - known. but i will draw attention to how important it is to disassociate cryptoassets or tokens from their underlying distributed ledger technology. distributed ledger technology offers interesting possibilities insofar as it allows, in short, a ledger book to be shared securely among various agents. although this technology is not yet sufficiently mature, it has the potential to generate efficiency gains and cost cuts in activities that require continuous reconciliations among various agents, either because such activities are relatively non - standardised, involve a high number of intermediaries or require complex processes. areas such as securities trading and post - trading, international settlements, collateral management, trade finance and the management of digital identities might benefit from the use of this technology once it ultimately matures. also, the programming of smart contracts on a distributed network might add further gains in efficiency, by providing for the automation of processes. this is so, especially, in the case of complex contracts that give rise to multiple transactions distributed over time or conditional upon one another. other innovations receiving less media attention than cryptotokens nevertheless appear to be more mature and are, in practice, exerting a notable impact on the way in which financial institutions in general, and banks in particular, provide their services. i am referring specifically to big data, artificial intelligence and what is known as cloud computing. big data offer clear potential for enhancing and personalising the supply of financial services. true, financial institutions have for | ; orange bars for latin america ; blue bars for developed. solid bars show change from december 2019's statistical cutoff ; hollow bars show changes with respect to max and min. ( 2 ) increase ( decrease ) indicates depreciation ( appreciation ). ( 3 ) multilateral exchange rate. source : bloomberg. figure 3 change in 5 - year cds and embi since december 2019 mp report ( * ) ( basis points ) 5 - year cds spread sudafrica mexico brasil colombia rusia indonesia chile peru espana portugal grecia italia francia australia reino unido china japon n. zelanda alemania ee. uu. rep. corea hungria noruega polonia - 100 embi spread sudafrica mexico india - 50 colombia indonesia hungria malasia chile brasil peru rusia polonia china - 100 ( * ) green bars stand for emerging economies ; orange bars for latin america ; blue bars for developed. solid bars show change from december 2019's statistical cutoff ; hollow bars show changes with respect to max and min. multilateral exchange rate. source : bloomberg. figure 4 2020 growth forecast in latest monetary policy reports ( * ) ( annual change, percent ) - 2 - 2 - 4 - 4 ee. uu. eurozona china a. latina ( * ) evolution of forecasts from mp reports of september 2018 to march 2020. source : central bank of chile. figure 5 commodity prices 2020 forecasts terms of trade ( usd / lb ; usd / barrel ) ( index, 2013 = 100 ) 3. 00 2. 75 2. 50 2. 25 2. 00 copper oil ( 1 ) evolution of the forecast between the mp reports of march 2019 and march 2020. ( 2 ) red diamonds show forecasts for the period 2020 - 2022 contained in the mp report of march 2020. source : central bank of chile. figure 6 how do you feel about the performance of your business over the next six months? very preoccupied slightly preoccupied not preoccupied unfolding of social conflict effects of covid - 19 global economic situation tightened lending standards how will your firm's number of employees evolve in 2020 with respect to today? will drop significantly will drop slightly will not change source : business survey, central bank of chile. will increase slightly figure 7 national unemployment rates and extended measures total employment ( contribution to annual change, percentage points ) self - employed salaried informal 3 total employment ( percent ) potential rate ( 4 ) unemploy ' | 0 |
. the framework for regulatory approval processes and the fitness and propriety test, relevant offences, and introducing the concept of conduct rules and statements of responsibilities ) are set out in legislation. but regulators were given considerable discretion in filling in the detail of the framework β including what functions required approval, the content of the conduct rules, and the detailed systems and controls requirements that apply to firms. ring - fencing. the act amended the pra β s objectives to incorporate ring - fencing, and set out the basic structural aspects of the regime ( in particular about the scope of the ring - fence ), while leaving much of the framework to be established via statutory instruments from the treasury. the statute also detailed matters related to ring - fenced banks β governance and policies which the pra should make rules about. the pra also implemented further details of the regime ( e. g. systems and controls requirements, capital requirements for ring - fenced banks, independence requirements, access to payment systems ) via rules. to be clear, i am not focused here on the question of whether or not the smcr or ring - fencing are a good thing, about which people will argue for decades. rather, i am focused on the legislative style which parliament adopted in order to introduce them β how this style compares to other models, and which model seems to fit best the principles set out above for a future financial services framework in the uk. see annex 1 the 2000 financial services and markets act ( fsma ) established the current domestic uk framework for financial regulation all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx to my mind, if we look across the four main legislative styles adopted by parliament in the last couple of decades β those for delivering fsma, smcr, ring - fencing and the eu model β the one that fits the principles best is the approach used for smcr : 1. robust prudential standards. it β s a tough regime which enables us to hold the top brass to account when things go wrong. 2. responsible openness based on international collaboration and standards. the approach taken works with the grain of the international financial system, and other countries have already borrowed heavily from it. 3. proportionality and sensitivity to business models, and promoting competition. the regime has left us room to tailor it so that it fits a small insurance company as well as it fits a huge bank. 4. dynamism and responsive | causes, or simply forecasts, sharply higher spending on consumer goods and new capital, it may indicate incipient inflationary pressures. policy tightening might therefore be called for - but to contain the incipient inflation not to arrest the stock - market boom per se. the second part of my prescription is for the fed to use its regulatory, supervisory, and lender - of - lastresort powers to protect and defend the financial system. in particular, alone and in concert with other agencies, the fed should ensure that financial institutions and markets are well prepared for the contingency of a large shock to asset prices. the fed and other regulators should insist that banks be well capitalized and well diversified and that they stress - test their portfolios against a wide range of scenarios. the fed can also contribute to reducing the probability of boom - and - bust cycles occurring in the first place, by supporting such objectives as more - transparent accounting and disclosure practices and working to improve the financial literacy and competence of investors. finally, if a sudden correction in asset prices does occur, the fed β s first responsibility is to do its part to ensure the integrity of the financial infrastructure - in particular, the payments system and the systems for settling trades of securities and other financial instruments. if necessary, the fed should provide ample liquidity until the immediate crisis has passed. the fed β s response to the 1987 stock market break is a good example of what i have in mind. i have expressed these two principles in rather simple terms ; they could be elaborated much further. taken together, they provide a strategy for policy that has a number of advantages : it keeps monetary policy focused on the appropriate goal variables, economic activity and inflation. it is transparent and easy to communicate to the public. it does not require that central bankers be systematically better than the market at valuing financial assets nor substitute policymakers β judgments of company prospects for those of investors. finally, and crucially, it is a robust strategy, in that - although it certainly does not eliminate all economic and financial instability - it protects the economy against truly disastrous outcomes, which history has shown are possible when monetary policy goes severely off the track. the opposing view : preemptive strikes against bubbles as i noted at the beginning, however, the framework just articulated is not universally accepted, particularly the aspect that precludes attempts to guide the course of asset prices. instead, a number of critics have argued that monetary policy should be more proactive in trying to | 0 |
##ence to exogenous shocks, of the type we are facing currently. i therefore welcome you all to the seminar and invite you to contribute to meaningful discussions which will further the development of our sme sector and redound to benefit our economy over the medium and long term. i thank you very much for your participation and i again thank the various sponsors, speakers and all those who have contributed to make this seminar possible. i wish you a most productive seminar. | ewart s williams : small and medium - sized enterprises in trinidad and tobago β challenges and priorities opening remarks by mr ewart s williams, governor of the central bank of trinidad and tobago, at the small and medium - sized enterprises seminar, port - of - spain, 24 november 2008. * * * good morning and welcome to this very important seminar on β developing viable small and medium - sized enterprises in trinidad and tobago : challenges and priorities β. the seminar is being jointly hosted by the central bank of trinidad and tobago ; the inter - american development bank ; the ministry of labour and small and microenterprise development ; the ministry of trade and industry ; and the ministry of planning, housing and the environment. i would like to thank the honourable prime minister for gracing us with his presence, which underscores the importance that the government places on small and medium - sized enterprises ( sme ) development. i would also like to take this opportunity to warmly welcome our guests from overseas β dr. erik terk from the estonian institute for future studies and mr. martin clemensson, the chief of small enterprise development at the international labour organisation. a special word of thanks to mr. iwan sewberath - misser, country representative at inter - american development bank, and to the various ministries who have lent much support to this event. there is no doubt that the importance of the sme sector to the supply side of the economy is much more widely appreciated now than it used to be. while there is a dearth of reliable statistics, it is certain that the sme sector is a major provider of employment and makes an important contribution to the country β s gdp. in recognition of its critical importance, the sme sector has moved up the policy agenda and in fact, the sector has been identified as having a critical role to play in the economic diversification effort as envisaged in the government β s 2020 vision. sme development is currently being implemented across a very broad front by the government, as well as by private - sector organizations. initial steps have been introduced to use the education system to encourage an entrepreneurial culture β the idea that starting a business is a viable career option. the government has established institutions to provide technical support, including training and advice as well as direct financial assistance to smes, fiscal incentives have been provided for sme development ( though, perhaps this is not sufficiently known ) and some private financial institutions have opened small business windows to service the sector | 1 |
, it is imperative that the growing customer base is offered fair and sustainable products and services. the increasing range and complexity of financial products and services can act as a barrier to comprehension and decision - making by consumers. clear, transparent, and consistent communication regarding products, services, follow - ups, service charges, etc. are, therefore, very essential for establishing trust and fostering enduring customer relationships. 1 / 5 bis - central bankers'speeches ( ii ) effective grievance redress the litmus test of the working of any institution or entity is the efficacy of its grievance redress mechanism. fragmentation and inefficiency in grievance redress mechanisms can hinder timely resolution of consumer complaints. multiple layers and lengthy resolution processes should, therefore, be avoided. as you would be aware, the reserve bank - integrated ombudsman scheme ( rb - ios, 2021 ) brought in several structural changes2 in the operations of the ombudsman scheme. under the rb - ios scheme, 2. 34 lakh grievances were received during the first full year of its operation ( 2022 - 23 ), followed by 2. 68 lakh grievances in the current financial year ( 2023 - 24 ) so far. the disposal rate in both the years has been about 98 %. the average turnaround time for closure across all categories of complaints has come down to 33 days for 2022 - 23 from 57 days prior to the introduction of the new scheme. our analysis of the grievances received at the offices of the rbi ombudsman reveal certain gaps in the systems and procedures in the regulated entities. we have brought such deficiencies to the notice of the individual banks and nbfcs. our effort is to work with the regulated entities and rectify such deficiencies. the reserve bank has also put in place an internal ombudsman ( io ) mechanism3 in regulated entities to strengthen their internal grievance redress mechanism. the functioning of io mechanism, however, needs considerable improvement. it has been observed that on a number of occasions, ios tend to endorse the decision of the regulated entities mechanically. in several cases, rejected complaints are not being referred to io. the very foundation of an internal dispute resolution system relies on its capacity to provide fair, impartial and judicious adjudication, and the observed trend raises concerns about the robustness of the existing framework. i would urge all of you to ensure the | . 2 2. 9 euro area 2. 4 1. 8 japan 1. 9 0. 9 4. 7 4. 6 china 6. 9 6. 6 asean - 5 5. 3 5. 2 latin america and the caribbean 1. 3 1. 1 world emerging market and developing economies projection 3. 5 3. 6 ( - 0. 2 ) ( - 0. 1 ) 2. 0 1. 7 ( - 0. 1 ) ( 0. 0 ) 2. 5 1. 8 ( 0. 0 ) ( 0. 0 ) 1. 6 1. 7 ( - 0. 3 ) 1. 1 ( 0. 2 ) ( 0. 0 ) 0. 5 ( 0. 2 ) 4. 5 4. 9 ( - 0. 2 ) ( 0. 0 ) 6. 2 6. 2 ( 0. 0 ) ( 0. 0 ) 5. 1 5. 2 ( - 0. 1 ) ( 0. 0 ) 2. 0 2. 5 ( - 0. 2 ) ( - 0. 2 ) note : the post - 2019 figures are based on january 2019 weo projections. figures in parentheses show the differences from the october 2018 projections. source : imf. chart 8 ii. price developments consumer prices y / y % chg. - 1 cpi ( all items less fresh food ) - 2 - 3 cy 85 cpi ( all items less fresh food and energy ) note : figures are adjusted for changes in the consumption tax rate. source : ministry of internal affairs and communications. chart 9 ii. price developments environment surrounding prices output prices di ( tankan ) di ( " rise " - " fall " ), % points large enterprises small enterprises - 10 - 20 - 30 - 40 - 50 cy 85 note : there is a discontinuity in the data in december 2003 due to a change in the survey framework. source : bank of japan. chart 10 ii. price developments reasons for a rise in inflation taking time supply side large room for firms to raise productivity technological progress in recent years high wage elasticity of labor supply mindset experience of prolonged low growth and deflation the pace of improvement in prices and inflation expectations has remained slow compared to the improvement in the output gap. 1. firms'cautious wage - and price - setting stance 2. sluggish increase in households'tolerance of price rises 3. intensifying competition iii. the bank's conduct of monetary policy chart 11 strengthening the framework for continuous powerful monetary easing | 0 |
the bank of italy sponsored a hackathon, a worldwide competition on applying big data, natural language processing and artificial intelligence techniques to green and sustainable finance, that was jointly organized with the bis innovation hub of singapore under the italian g20 presidency. in 2020, we created milano hub, a technological hub supporting the development of innovation and the digital transformation of the italian financial system. after the great success of the first two calls for proposals, we will launch a third one in the next months in the last few years, we have redesigned our recruitment and hiring process by seeking out new skillsets such as big data, machine learning and artificial intelligence. this is just the beginning. we need to rethink our processes and foster the adoption and development of the right skills. to achieve these goals, we have sponsored special data science training programmes in some italian universities. the new cohort of hires have already started their journey, which aims to create a flatter organizational structure. in 2020, the total amount of data created, captured, copied, and consumed globally was around 100 zettabytes ( an astounding value of 1023 bytes ), and it is expected to rapidly increase, reaching 180 zettabytes in 2025. 1 the mind - boggling amount of data that is now available to us, provided we are able to analyse it effectively, can give us a better picture of the economy at both the micro and the macro level. the bank of italy has constantly striven to be at the cutting edge in developing software and hardware platforms, enabling big data analytics2 for statistical and economic applications. one of the most significant takeaways from this workshop is recognizing that data is not just a resource : it is essential for effective decision - making in central banking. the quality, quantity, and timeliness of data can make all the difference in crafting policies that safeguard our economies and maintain financial stability. by harnessing the power of data science, central banks can enhance their capabilities, anticipate trends, and respond swiftly to emerging challenges. data taken from https : / / www. statista. com / statistics / 871513 / worldwide - data - created / on september 25 2023. see, for example, β big data processing : is there a framework suitable for economists and statisticians? β, 2017 ieee international conference on big data ( big data ), 2017, pp. 2804 - 2811, doi : 10. 1109 / bigdata | of an independent enforcer of eu rules. sanctions have been highly uncertain, as eu council members were supposed to fine each other via lengthy procedures involving discretionary steps that would lead to theoretically large, but actually unlikely, pecuniary sanctions. reforms such as the interest bearing deposits and the european semester aim at tackling the first problem. a greater automaticity in procedures, the reduction of eu funds and, possibly, the loss of voting rights would help in tackling the second problem. national fiscal rules and procedures can also help to pursue fiscal consolidation and anchor fiscal expectations. the 2009 reform of the german fiscal framework sets an important benchmark. 6 other countries may decide to assign a greater role to expenditure rules and to independent fiscal authorities. with respect to the proposals advanced to make the debt criterion operational, the commission β s suggestion of allowing excessive deficit procedures for insufficient debt reduction ( vis - a - vis an annual 1 / 20 reduction of the excess over the 60 per cent standard for the debt - to - gdp ratio over a three - year period ) has been praised for its automaticity as well as its simplicity. it has been argued that β the practical translation β of the debt principle is β elegant, but short - termist β, even if this β way of turning around the 60 % nonsense is undoubtedly clever β. there is no question, however, that a consistent and progressive reduction of the current high debt levels over the cycle is absolutely necessary ; they are a major constraint on our countries β adjustment possibilities, especially in the event of shocks that could have irreversible consequences ( due either to the unwillingness to pay or to the socio - political unfeasibility discussed by balcerowicz ). in this perspective, it seems beside the point at this stage ( and impossible given the letter of treaty ) to question the reference standard, as well as the speed of convergence, even if we may readily acknowledge that β business cycles usually extend over more than three years β. the debate on how to cope with the accumulation of public debt following the crisis has led β inter alia β to some proposals for european countries to pool their debt at least up to a certain level ( 60 per cent of gdp ) 9 or to pool in a fund operating in the market ( and possibly financed with a levy on financial transactions ) the share of their debt directly tied to rescuing the financial system ( a proposal not limited, in this case, to the eu ). 10 both types of proposal are | 0.5 |
risk of an managing failure ; and macro prudential tools to enhance lender and borrower resilience. building on these foundations and through delivering assertive, analytical, outcomesfocused, risk - based supervision, underpinned by a robust regulatory framework and the credible threat of enforcement, we will employ multi - year supervisory strategies by firm or by sector ( for lower impact firms ) to : address the remaining issues from the financial crisis with finality, including the high level of non - performing loans ; drive further improvements in the governance, culture, diversity and risk management of firms, so they are better able to demonstrate capability to identify, manage and mitigate the risks that they face ; drive enhancements in it risk management and operational resilience across all firms ; and enhance firms β ability to recover, progress resolution planning and our own financial crisis preparedness and management capability. we must and will look forward. for example, threats to operational resilience of individual firms and the system as a whole continue to increase and grow more complex. in a connected way, the opportunities and challenges presented by innovation continue to grow. i expect regulated firms to be actively considering and acting on these issues, and the central bank will be ensuring that you are, with the aim of ensuring that regulated financial services firms : have sufficient financial resources, including under a plausible but severe stress ; have sustainable business models over the long - term ; are well governed, have appropriate cultures, with effective risk management and control arrangements, and can recover if they get into difficulty, and if they cannot, are resolvable in an orderly manner without significant externalities or taxpayer costs. i also expect regulated firms to be looking forward, to be anticipating future significant risks and opportunities to ensure that they remain resilient over the long term. this is not sufficiently 3 / 9 bis central bankers'speeches evident. to take one example, climate change needs to move higher up the agenda of the irish financial services system. the effects of climate change could result in serious impacts for financial services firms, with climate related financial risks acting as a driver of other risks, including market, credit and operational risk. the physical risks that arise from events like storms, floods and droughts can result in damaged properties leading to lower asset values and creditworthiness. in addition, as society adjusts to a low - carbon model, the risks of being exposed to assets, which would no longer be able to recover their investment as intended, could lead | ed sibley : safety and soundness - strategic priorities for the next three years address by mr ed sibley, deputy governor ( prudential regulation ) of the central bank of ireland, to the banking & payments federation ireland ( bpfi ) risk management " future supervisory landscape ", dublin, 17 january 2019. * * * good morning ladies and gentlemen. i would like to thank the banking & payments federation ireland for the invitation to speak here today, at this conference on the β future supervisory landscape. β my role often requires that i take a somewhat pessimistic perspective, that i consider downside risks, and ask questions such as what can or is going wrong. however, i am an optimist at heart, particularly at this time of the year, when days are getting a little longer, plans are freshly minted, new year β s resolutions are not yet totally forgotten, and we have high hopes for the year ahead. so, with this in mind, together with the topic of the conference, my focus today is primarily on looking forward. having said that, i am also a keen student of history. β history carries good lessons to all who heed them β 1, and so in order to look forward we need to be cognisant of where we are today and the lessons from the past. in this context, it is worth remembering that financial crises recur. there is evidence, that this is somewhat attributable to the pro - cyclical approach to regulation, which research shows is often weakened in a highly damaging way at the top of the cycle at precisely the moment that it needs to be strongest. the effect of the β regulatory pendulum β has been a feature of financial booms and busts. it is important then that we do not let memories fade. we must recognise the important role of strong regulatory and supervisory frameworks in delivering a resilient financial system. 2 with all this in mind, i will focus on the central bank of ireland β s ( β central bank β ) strategic priorities for the next three years3, particularly in the context of the safety and soundness of the financial system. by covering our five strategic priorities with this prudential lens, i will note that there has been considerable progress in enhancing the resilience of the financial system, and the banking system in particular, but there is much more to be done to deliver a trustworthy financial system that is sustainably serving the needs of the economy and its | 1 |
time gross settlement ( rtgs ) service. we also deliver this through monitoring and mitigating systemic risk across the payment industry, defending the bank and financial sector against increasingly sophisticated cybercrime, conducting risk assessments and supervisory activity on those firms that use the bank β s payment infrastructure, as well as supervising the systemically important payment systems themselves. and we consider the benefits and risks to financial stability from the rapidly changing fintech industry. the bank enables diversity in payment types and providers through the policy and rules we set and the infrastructure we operate. an important catalyst is the renewal of rtgs, where we are making both policy and infrastructure changes to support not just a resilient payment system, but one that new players can enter and where innovation and competition can thrive. for those not familiar with rtgs, it is a critical piece of national infrastructure and the backbone of uk payments. well in excess of Β£600bn every working day is settled through rtgs, including from chaps, the bank - operated high - value payment system, and from the final settlement of the uk β s retail payment systems. the bank has established the rtgs renewal programme to develop a new service which will not only enhance resilience but will also be fit for the future and promote innovation. having defined the programme scope, with input from the payments industry, we are now running a competitive public procurement process to appoint a technology delivery partner. they will work with the bank on the design and build of the core settlement engine. in supplementing the skills and resources we have in - house, the procurement provides the opportunity to benefit from diverse views and to draw on world - class expertise and cutting - edge experience on how we design and build rtgs for the future. in renewing rtgs, we are seeking to achieve five key outcomes, all of which will support a safe and diverse payment landscape. despite being over 20 years old, the current rtgs service remains highly resilient. but we want to do more. the new service will be materially stronger and more resilient in an increasingly complex and sophisticated environment. it will be flexible to protect against the threats we understand today and the ones we will need to adapt to in the future. rtgs renewal will promote greater access to payment systems. we have already made policy changes to allow non - bank payment service providers direct access to payment systems and rtgs renewal will reduce all speeches are available online at www. bankofengland. co. | crucial in my own directorate but also for the bank as a whole. i am the executive sponsor of the bank β s disability network, a staff - led network whose objectives are to : raise awareness of the full spectrum of disabilities, be they visible or not ; and provide support by identifying and removing barriers for individuals with disabilities and enabling them to reach their full potential. the network celebrated its 10th anniversary last year, and during that time has seen physical changes to the building, including an external wheelchair lift ( no mean feat in a listed building ), hearing loops in key rooms, and accessible toilets. but it is also important to create an inclusive and supportive culture that works for everyone. the disability network is just one of ten staff networks, and it is only through fostering these initiatives, ideas and enthusiasm that we can attract and retain a truly diverse range of staff. so to conclude, diversity in payments does matter. it matters to the bank ; to the firms providing payment services ; and to the businesses and individuals that use payments every day. the bank is playing a leading role in facilitating and enabling that diversity through our policy - making, and through our current and renewed rtgs infrastructure, in order to promote a diverse, resilient and thriving financial system. https : / / www. bankofengland. co. uk / - / media / boe / files / speech / 2019 / gender - diversity - speech - by - joanna - place. pdf all speeches are available online at www. bankofengland. co. uk / news / speeches | 1 |
measures implemented to strengthen domestic frameworks. these include wide ranging measures to develop regional financial markets, to improve liquidity management across borders, to strengthen cooperation networks for the supervision of regionally - active financial institutions and to establish regional infrastructure to enhance the efficiency and lower the risks associated with cross - border payments and settlements. regional arrangements between central banks and supervisory authorities have also been significantly strengthened to actively share information on emerging risks to regional stability and where necessary to coordinate regional responses. an important part of this includes the ongoing work to enhance the frameworks for crisis management including the orderly resolution of financial institutions with significant cross - border operations. within the asean region, measures are currently being pursued to promote greater consistency in the adoption of regulatory and supervisory standards in anticipation of a larger role for asean banks in driving regional integration as part of the broader agenda to realise an asean economic community by 2015. collectively, these arrangements aim to ensure that the expansion of bis central bankers β speeches cross - border financial linkages takes place within a framework and process that adequately mitigates systemic risk across borders. fifth, central banks and regulatory authorities in most emerging economies in asia have the broader mandate that includes a focus on the development of the financial sector as a means not only to enhance the growth and development potential, but also to reinforce a strong foundation for financial stability. in malaysia, the development and reform of the financial sector in the decade that followed the asian financial crisis has not only developed the financial sector to better serve the malaysian economy, but it has also better positioned financial institutions to withstand the destabilising episodes emanating from external shocks. this has included strengthening financial intermediaries, not only in terms of scale but also in their financial positions, risk management and governance practices. this has contributed to more efficient financial intermediation while improving access to financing, particularly for small and medium scale businesses. efforts to develop a vibrant capital market have meanwhile opened up alternative channels for financing, while mitigating concentration risk in the financial system and enhancing its ability to absorb large and volatile cross - border capital flows. these factors will place asia on a firm foundation to achieve its growth and development goals. while public policy clearly has an important role, it is as important for the financial industry to align itself with the desired outcomes of sustainable growth within a longer term horizon. this will involve a number of important considerations for financial institutions, including the rethinking of business models in the light of a re - assessment of risk and return expectations | jessica chew cheng lian : launch of financial literacy month 2022 opening remarks by ms jessica chew cheng lian, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the launch of financial literacy month 2022, kuala lumpur, 1 october 2022. * * * 1. it is my great pleasure to welcome you to sasana kijang for the launch of the financial literacy month 2022. on behalf of the financial education network, i thank you for your presence here to join us in flagging off a month - long roadshow to help people across the country build greater confidence in financial matters. it is especially gratifying for our teams to be able to go on the road again, to meet and talk to people in person after what has been a difficult period for many. 2. this is the third year that the financial education network is holding a financial literacy month. and while we have lined up many activities and programmes over the coming month, i know that no one here believes financial education starts and stops within a month. i was reminded again of this as we are about to share the results of the most recent financial capability and inclusion demand side survey, or the fci survey, in short, that was conducted in 2021. this is a survey that we carry out once in every three years to track how the level of financial capability in our society β measured in terms of financial knowledge, behaviour and attitudes β is changing over time. 3. the good news is that malaysia's financial capability and literacy index score has improved since the last survey. but behind that index score are much more layered observations of our society's financial attitudes and behaviours. and they reveal that putting financial knowledge into the hands of individuals is just the start. helping people use that knowledge wisely and effectively in order to bring about lasting changes in behaviour is the race that all of us here are running together - to help as many people as possible reach the finish line of their financial goals. more details on the results of the 2021 fci survey will be available in the upcoming publication of bank negara malaysia's financial stability review which will happen in the coming week. 4. for those of you who may not be familiar with the financial education network, or fen, we are an inter - agency platform of eight partner institutions that are committed to raising the level of financial literacy in malaysia. in 2019, fen developed a five - year national strategy for financial literacy which is currently | 0.5 |
peter praet : it is urgent to agree on an ambitious timetable for completing the banking union contribution of mr peter praet, member of the executive board of the european central bank, for the magazine of the eurofi conference in malta ( 5 - 7 april 2017 ), 4 april 2017. * * * in less than half a decade, the eu moved from decentralized banking supervision and resolution to the single supervisory mechanism and the single resolution mechanism, based on the single rulebook. this is part of an overarching effort to create a sound institutional framework for financial integration in europe. there still are a number of legal, institutional and political problems to overcome before a european bank can operate in the banking union as it operates in its domestic market. several dimensions need to be taken into account in institutional design. first, private risksharing. the financial system is a private risk sharing device, but we have learned the lessons from the financial crisis in terms of budgetary costs, when excessive risk - taking by the private sector was eventually borne by the public sector. not to revert to the old world of implicit government guarantees for risky behaviour of financial institutions entails making banks equally liable across countries for the amount of risk they want to take into their respective balance sheet. the general principle of the new european rules such as the bank recovery and resolution directive is to absorb bank losses by bailing - in shareholders and uninsured creditors. the new rules contain sufficient flexibility to deal with exceptional situations where public money may be required to ensure financial stability. second, public risk sharing. a certain level of public risk sharing is necessary to create confidence in the overall financial system. even wellcapitalised banks can fall victim to runs and contagion. this is why central banks act as lender of last resort and fiscal backstops should be in place to ensure trust in the stability of the financial sector. in the banking union, both supervisory responsibility and the fiscal backstop need to be at european level, to underpin durably confidence in the area - wide financial system. just as necessary is the establishment of a european deposit insurance system ( edis ). the current situation, where supervision is common, but the consequences of potential bank failures are still predominantly national, should not last. in such an incomplete framework, national considerations inevitably continue to affect supervisory decisions. this is not without consequences for the incentives for banks to become more european. concrete examples include a lack of fungibility of liquidity | these include inadequate internal governance structures in banks, ineffective and costly debt recovery procedures in some member states and misaligned incentives that prevent a quick resolution of npls. to this end, the esrb has proposed 9 a series of measures to complement those already being taken at eu and euro area level. 10 in the short term, the esrb β s proposals focus on strengthening banks β npl management, including their prudent measurement and the valuation of the associated collateral. policymakers could aid this process by developing blueprints for asset management companies, accompanied by harmonised data templates across the eu. measures should also concentrate on insolvency regimes, debt recovery and servicing capacities with a view to improving recovery rates from npls. over a longer horizon, secondary markets β trading platforms should be further developed. and banks also need to be given adequate incentives, in particular in relation to accounting for impaired assets. from 1 january 2018 onwards, a new accounting standard for the classification and measurement of financial instruments, known as ifrs 911, becomes mandatory in eu. at the request of the european parliament, the esrb has recently published a report on the financial stability implications of ifrs 9, 12 which concludes that it is a major improvement, particularly regarding accounting for npls. the most important change introduced by ifrs 9 is the shift from an incurred loss approach to an expected credit loss approach for measuring impairment allowances. this means that banks will have to recognise impairments earlier, curtailing excessive forbearance towards npls and helping ensure that banking sector repair takes place in a timelier and more comprehensive manner in future downturns. a recent impact assessment, based on a sample of 54 banks across 20 member states published by the european banking authority, suggests that the introduction of ifrs 9 would lead to an increase of provisions of about 13 % on average. 13 the expected credit loss approach also means that banks will have to react in their accounting to new and forward - looking information as it is received. this means that impairment allowances may increase suddenly and significantly when economic conditions deteriorate, which could have certain pro - cyclical effects. 14 the esrb report considers a number of policies that could address such effects. for example, stress testing could be used as a means to gauge the variation in impairment allowances associated with adverse scenarios, in order to ensure that sufficient capital buffers are in place and to allow for remedial policy action if required. if banks can | 0.5 |
the former directors here know well, every program is a startup when it moves from one university to another. while we started with a detailed plan for all five years, we did not know how everything would turn out and had to be open to experimentation and innovation. after the first year, it became obvious that the program needed a systematic advising component. armed with this intensive training in economics, the students still needed help planning next steps back at their home institutions and for the future. the second year, we instituted a mandatory advising session with a faculty administrator on the last day of the program. the students completed a survey with their educational objectives for the next two to three years, and we commented on them. this became a critical and 1 / 3 bis - central bankers'speeches ongoing souvenir of the program. it has been heartwarming to see program alumni stick to these plans and execute them many years after leaving the aeasp. during the second year, we also realized how important machine learning was becoming to conducting research and to preparing for graduate study in economics. one august, after the program was over, we enrolled in a machine learning short course, learned more about the power of these tools, and incorporated it into the program the next summer. humility, agility, and being open to new ideas held us in good stead throughout the program in east lansing. second, outreach and recruiting efforts are very important. my own journey and that of many others are evidence that not everyone comes to the field of economics the same way. in our experience, it was helpful to find novel ways to broaden our reach. in addition to traditional outreach methods, we engaged social media, including going to where economists were - econtwitter - to introduce economics departments and interested students to the new program at msu, to provide general information, and to give updates on students, program activities, and alumni. there were several memorable social media events : two live social media sessions on different platforms, the instagram photo contest, and the " selfies with sue " [ dynarski ] sessions during our excursion to detroit and ann arbor. successful execution of a social - media strategy resulted in a more diverse applicant pool by type of educational institution and geographical location. third, anyone can be a mentor and influence the trajectory of a student or young scholar interested in economics. students spontaneously became peer mentors to each other, using time they could have used to do their own problem sets or study for | in our plans, will reinforce accommodation and make sure that inflation convergence develops strong foundations. but our mission is not yet accomplished. we need patience and persistence. we need to be patient, because inflation convergence needs more time to show through convincingly in the data. the euro area β s economic environment is improving, and the negative tail risks to inflation expectations, which were so visible at the start of our asset purchase program, have virtually disappeared. this strengthens our confidence that headline inflation will gradually move towards the governing council β s objective of below, but close to, 2 % over the medium term. but measured inflation remains exceedingly volatile and metrics of underlying price pressures continue to be subdued. the entire distribution of inflation expectations still needs to shift a fair distance to the right. we need to be persistent, because the baseline scenario for inflation going forward remains crucially contingent on very easy financing conditions which, to a large extent, depend on the current accommodative monetary policy stance. therefore, maintaining a steady hand continues to be critical to fostering a durable convergence of inflation toward our monetary policy aim. 1 see, for example, european commission, european economic forecast, spring 2017. 2 see, european commission, business and consumer survey results, june 2017. see the ecb β s euro area bank lending survey, april 2017, and the ecb β s survey on the access to finance of enterprises in the euro area, october 2016 to march 2017. for more details on the impact of the tltros, see β the targeted longer - term refinancing operations : an overview of the take - up and their impact on bank intermediation β, economic bulleting, issue 3, box 5, ecb, 2017. 5 see ecb ( 2017 ), β assessing labour market slack β, box 3, economic bulletin, issue 3. for further discussion, see β recent wage trends in the euro area β, economic bulletin, issue 3, box 2, ecb 2016. 3 / 3 bis central bankers'speeches | 0 |
philipp hildebrand : the swiss national bank β s view of international financial markets against the background of trends in the united states introductory remarks by philipp hildebrand, member of the governing board of the swiss national bank, at the end - of - year media news conference, zurich, 12 december 2003. * * * the past year was a turbulent one for the international financial markets, which were essentially influenced by trends in the us. during the first half of 2003, market developments were shaped by economic and deflation fears as well as by the war in iraq. in this environment, equity markets reached an annual low in march. in june, bond market yields fell to their lowest level. the second half of the year saw an economic recovery in the us, which is now spreading to other economic regions as well. capital markets long - term yields on swiss paper rose by approximately 60 basis points from their low in june to roughly 2. 7 %, approximately tracking yields in the euro area. in both cases, yields followed the us market very closely, albeit with modest fluctuations ( see graph 1 ). under the present economic conditions, the interest rate environment in switzerland is still viewed as attractive by consumers. the high level of new fixed - rate mortgages is an indication of this sentiment. the higher swiss yields reflect the improved economic outlook and not inflation expectations, which are modest given that there is still pronounced underutilisation of capacities. in contrast to capital market yields, money market yields were decidedly stable. the three - month libor remained almost constant at 0. 25 %. the global trend in capital market yields was chiefly determined by long - term yields in the us, which themselves were shaped by the recovery of the us economy. in the early summer, deflation fears had dragged the yield on ten - year us government bonds down to 3. 1 % - a level last reached at the end of the 1950s. in july and august, however, positive economic data pushed the yield right up to 4. 6 %. convexity hedging was one of the factors contributing to the unusual scale of the turnaround. as interest rates fell in the early summer, the refinancing of existing mortgages - which is possible in the us at any time - had triggered extensive buying of government bonds. us investors holding substantial mortgage portfolios had to make these purchases in order to keep the residual maturities of their portfolios constant. when interest rates rose, therefore, the correction was similarly swift | thomas jordan : comments on swiss monetary policy speech by mr thomas jordan, chairman of the governing board of the swiss national bank, at the 106th ordinary general meeting of shareholders of the swiss national bank, berne, 25 april 2014. * * * mr president of the bank council dear shareholders dear guests the swiss national bank ( snb ) has a mandate to ensure price stability, while taking due account of the development of the economy. the monetary policy decisions needed to fulfil this mandate have a direct impact on the size and composition of our balance sheet. as a result of the current size of our balance sheet and the nature of our investments, it can be assumed that the annual results will continue to fluctuate significantly in the foreseeable future. since summer 2007, the global economy has experienced a series of crises. at times, it was on the brink of the abyss, and the threat to the swiss economy was correspondingly great. in order to fulfil our statutory mandate, we have been obliged to resort to unconventional measures, rather than operating solely with the familiar monetary instruments. the most exceptional measure was certainly the introduction and enforcement of the minimum exchange rate against the euro. however, the creation of the stabilisation fund to take over illiquid assets from ubs was also a special measure. in 2013, this episode was successfully concluded. by contrast, the minimum exchange rate remains the snb β s key monetary policy instrument. this remains true even though we have not had to enforce the minimum exchange rate with foreign currency purchases since autumn 2012. in my comments today i will explain the reasons why we are maintaining the minimum exchange rate. i will begin with a brief look at global economic developments. then i will present our forecast for the global economy and the swiss economy. based on this, i will follow with an examination of the outlook for price stability. as you know, in our view, developments on the swiss mortgage and real estate markets represent a risk for financial stability. i will therefore use this opportunity to follow up with a brief presentation of our considerations on this topic. i will round up my remarks with two examples which illustrate the link between monetary policy decisions and our balance sheet. global economic developments in 2013 first, let me begin by reviewing the events of 2013. on the one hand, there was a certain feeling of renewed confidence last year. this can be mainly attributed to the ebbing of the european financial and debt crisis. the alleviation of the crisis | 0.5 |
##s. indeed, the united states, japan, sweden and norway already integrate owner - occupied housing into their reference inflation indices. if it were to be included in the hicp, it could raise measured inflation rates in the euro area by around 0. 2 to 0. 5 percentage points in some periods. taking that into consideration, core inflation would lift from its current 1. 3 % to its long - run trend, or even higher, thereby having a bearing on the monetary policy stance. the gap between perceptions and official measures of inflation can complicate the communication of policy decisions. if households believe that inflation is rampant then they will see little justification for unconventional measures, in particular negative interest rates. trust in the ecb fell markedly following the onset of the crisis. according to the eurobarometer poll, net trust averaged around 25 percentage points in the years before the crisis, but fell to a low of - 23 in spring 2014. this fall was in line with that experienced by other eu institutions such as the commission and the parliament. but while net trust in the ecb has recovered somewhat, and now stands at - 2 percentage points, trust in those other institutions has recovered more rapidly. whereas levels of net trust in the ecb and the commission were historically similar, net trust in the commission now stands 10 percentage points higher. even more noteworthy is the now quite marked divergence between support for the euro and trust in the ecb. prior to the crisis, net support for the euro and net trust in the ecb generally moved in line with one another, with the currency enjoying a level of support around 20 percentage points higher. support for the single currency weathered the crisis fairly well, and now stands at its highest ever level. but the gap between the two measures now stands at 60 percentage points, and has persisted ever since the introduction of unconventional measures, although other country - specific factors might also have played a role. this reduced trust can influence expectations and blunt the effectiveness of policy. indeed, the low - for - long policy seems to have had little impact on the aggregate saving rate, although the increase in consumption since the beginning of 2019 has lagged behind real income growth. the so - called reversal rate may kick in at different points across sectors, with households more sensitive to the imposition β or even the fear of the imposition β of negative rates and more likely than market participants to behave in a fashion that counteracts the intended aim of the policy. the difference in savings | benoit cΕure : unexpected events and the global safety net remarks by mr benoit cΕure, member of the executive board of the european central bank, at the imf - snb high - level conference on the international monetary system, zurich, 8 may 2012. * * * i wish to thank isabel vansteenkiste, roswitha hutter and andreas schonenberger for their contributions to these remarks. i remain solely responsible for the opinions contained herein. madam managing director, mr chairman of the governing board, ladies and gentlemen, i am honoured to speak at this third imf - snb high - level conference on the international monetary system. the recent global financial crisis, including the ongoing euro area sovereign debt crisis, has reemphasised the need for global and coordinated safety nets. following a decade that was largely free of crises, in the aftermath of lehman brothers collapse, liquidity has dried up globally and the crisis has spread to, and within, the euro area. the view that crisis resolution mechanisms were inadequate also prevailed during the asian crisis of the 1990s. this is one of the reasons why many emerging market economies have built up national foreign exchange reserves. 1. recent innovations to global financial safety nets the recent crisis has led to substantial progress in the global safety net, including the following improvements. the strengthening of the imf β s crisis prevention toolkit through a combination of increased firepower and more flexible and effective instruments : an increase in imf resources through bilateral loans in 2009 ; an expanded new arrangements to borrow in 2011 ; an increase in imf resources in 2012 ( during the last spring meetings firm commitments were made to increase the resources made available to the imf by over usd 430 billion, in addition to the quota increase under the 2010 reform ) ; the introduction of the flexible credit line and precautionary credit line ( the latter has more recently been replaced by the precautionary and liquidity line, as recommended by g - 20 leaders in cannes ) ; and an agreement to double the amount of imf quotas, thereby in effect doubling the fund β s permanent resource base. the creation and strengthening of the european financial safety nets : the european financial stability facility and, more recently, the european stability mechanism. the overall european firewall, including the amounts already committed under the greek loan facility and the european financial stability mechanism amounts to approximately eur 800 billion, more than usd 1 trillion, which is being mobilised to ensure the financial stability | 0.5 |
has been pushed beyond the single digit level, and we must all therefore work hard to re - establish low levels of inflation as soon as possible. the ability to attract fdi inflows is also a function of the supporting infrastructure and the existence of a business environment that supports innovation, initiative, and hard work. in this regard africa must not relent on efforts to improve infrastructure development, and lower the cost of doing business. this is a process which is being actively pursued in zambia, where great strides have been made to reduce the number of business licenses required and to streamline licensing procedures, in addition to the establishment of an organisation, the zambia development agency, to spearhead and support fdi flows and domestically financed investment. we do see increased interest in cross border investments from within our region, particularly in the financial sector. with respect to the need to mobilize domestic savings, africa certainly needs to expand the reach of the financial sector and to make the financial sector more efficient. in zambia, the majority of the population does not have access to financial products. the bank of zambia has therefore made advancing financial inclusion as one of its strategic objectives. zambia has a very low population density and there are many areas that are currently not served by any financial institution. reaching these areas will require the application of technology and the concept of branchless banking. to facilitate such innovation, a robust regulatory regime governing the payment system has been implemented with the enactment of the national payment systems act in 2007. in this regard, zambia is learning a lot from the advances made in countries such as uganda and kenya, where cell phone technology has expanded the reach of financial services and products. on its part the zambian government is also taking concrete steps to enhance the application of information and communication technology across the broad spread of government services and the private sector. how can we build better and more resilient institutions that boost confidence in the benefits of a market economy and can act as strong anchors of inflation expectations? earlier in my remarks i did make reference to the fact that one of the greatest dangers facing african economies is the risks that the current crisis might trigger significant policy reversals that undermine important institutions such as the government as well as the central bank. it is important that in africa, the critical work of consolidating fiscal positions and improving the governance arrangements and financial management of public resources is sustained. in many ways, fiscal sector reform reflected in the curtailment of fiscal dominance, have been the central platform upon which | , where the majority of the poor live. with deteriorating fiscal positions in the donor government, there also remains a real risk of cuts in donor flows to the mdgs are to : eradicate extreme poverty and hunger ; achieve universal primary education ; promote gender equality and empower women ; reduce child mortality ; improve maternal health ; combat hiv / aids, malaria and other diseases ; ensure environmental sustainability ; and develop a global partnership for development. developing countries. in zambia for example, government revenues during the first half of 2009 were 25 % below the projections in the 2009 budget, largely reflecting lower trade taxes as well as lower donor inflows. for africa, as a whole, recent estimates by the imf are that budget deficits will drop from a surplus of 2. 8 % of gdp in 2008 to a deficit of 5. 4 % of gdp in 2009 β with fiscal outturns deteriorating across both oil and non - oil commodity exporters. the global financial and economic crisis has also impacted foreign direct investment ( fdi ) and credit flows in africa, with serious consequences on the ability of african economies to build their productive capacities. for many countries in ssa, fdi flows as well as commercial lines of credit have been an important source of finance for growth, particularly because of insufficient domestic savings and the shallowness of domestic capital markets. in zambia, for example, over the past 5 years fdi flows have averaged over us $ 900 million per annum, particularly in the mining, agriculture, manufacturing, construction, and tourism sectors. i believe this is an important part of the reason why zambia β s real gdp growth in 2009 is estimated at 4. 5 %, well above the 1. 5 % forecast for ssa. as indicated earlier, fdi flows to africa are projected to fall by 18 % in 2009, relative to 2008 inflows of us $ 30 million. in addition trade credits have been impaired as has the access of government β s to the international capital markets. efforts, for example, by several african countries to raise longterm financing in international markets through sovereign bond issues have either failed, been cancelled ( for example the ghana telecom bond issue for us $ 300 million ) or have been delayed ( for example the eurobond issues for kenya, nigeria, tanzania, and uganda ). my fourth point is related to the actual, as well as imagined, failures of the market mechanism at the heart of the advanced economies, and the inevitable institutional reforms that need to be undertaken | 1 |
radovan jelasic : macroeconomic policy in 2009 speech by mr radovan jelasic, governor of the national bank of serbia, at the second business roundtable with government representatives, organized by the ekonomist media group, belgrade, 27 october 2008. * * * in terms of political turbulences and uncertainties, this year can only be compared with the year 2000. the country was faced with the issue of territorial sovereignty, early parliamentary and local elections, and signing and deferral of ratification of the stabilization and association agreement with the european union. as regards the economy, however, no sooner had inflationary pressures subsided in the wake of a fall in prices of food and petroleum products, when a new, still greater challenge appeared on the scene. an unprecedented crisis broke out in the global financial markets and, whereas its negative consequences were soon felt in serbia as well, its end effects and duration are still impossible to forecast. but let me ask you a question : is anyone in this country aware that, despite all the above external and internal turbulences, inflation in serbia is within single - digit bounds, gdp growth is still robust, the exchange rate had, until recently, been β firmly β stable, real wages have been rising at double - digit rates for several years now, credits are available, etc.? or, let me ask another question which is more important both for myself, and, i am firmly convinced, for the future of this country β why do people take these results β for granted, β as something which will be sustained of itself, regardless of how we behave? why do they believe that we can keep on disregarding external and internal influences without bearing any consequences? and, especially when we all know that our doings were due to frequent elections. why must β bad times β return before people understand that present times were good, only we failed to make the best of them?! macroeconomic stability in serbia will continue to hinge on the following key factors : 1. movements in global money and capital markets leave no room for doubt : the situation is bad, and, for the time being, there is no light at the end of the tunnel. capital markets worldwide are swayed by unprecedented turbulences and money remains expensive despite Π° ) government interventions worth thousands of billions of euros and b ) policy rate cuts and cash injections by central banks. at the same time, the banking system faces a number of serious challenges, such as : Π° ) capital | away, to keep me company here and be my allies in the process of transition which is obviously not as easy as we thought it would be back in the year 2000. in late march this year the nbs organized a gathering in london of about one hundred serbs who are employed in the most prominent financial institutions of the uk capital. i must admit that it was only then that i fully realized where the really very best have gone. but, the times are a - changing, serbia is taking big strides towards the european union, standard of living is improving and there are ample professional challenges around. we have managed to persuade some of those young professionals to come back to serbia and work in the national bank. let me emphasize again that the doors of our bank, and the doors of my office are kept wide open to all who wish to work for serbia and not only make profit in serbia!!! | 0.5 |
gabriel makhlouf : trends and transitions - an irish perspective on global and european regulation remarks by mr gabriel makhlouf, governor of the central bank of ireland, to the european financial forum, virtual, 17 february 2022. * * * thank you for inviting me to address you today and welcome to everyone tuning in from around the world as well as those at home here in ireland. my main theme today is resilience. we have seen the benefits of resilience over the last two years and we will continue to focus on it. mark twain is reputed to have said that β history doesn β t repeat itself, but it rhymes β and i agree with that. we certainly cannot lose focus on the risks that have brought down financial systems in the past : misaligned incentives and excessive credit growth, leverage, and liquidity transformation. these risks are always there. and to paraphrase carmen reinhart and ken rogoff, these times are rarely different. 1 on the other hand, transformational change is in the air. our roles are changing as we adapt to significant economic transitions and at a pace that is only going to accelerate further. economic resilience through transitions in my first speech as governor in 2019 i spoke about β economic resilience β and what i considered some of the major transitions of our time. 2 economic resilience is in essence the ability of an economy to manage change, whether it is to withstand or recover from shocks or the more gradual evolution to a different state. of course back in 2019 i wasn β t talking about a global pandemic but about four particular economic transitions : climate change, technological change, change in the financial system, and the uk β s withdrawal from the eu. in many respects most of those transitions remain as important today as they did in 2019. they are also driving some of the key global and european trends in financial regulation. the economics of regulation economic theory tells us regulation is about protecting the essential needs of the public, whether constraining monopoly power, preventing distortions to competition, ensuring market integrity or simply correcting for market failure. 3 in short, regulation is about supporting positive outcomes. but all policy interventions have costs as well as benefits. and we need to balance these carefully as we develop regulation and policy more broadly. put simply, we want to ensure the financial system supports the effective and sustainable functioning of the economy. and, like the economy, regulation happens in cycles. financial crises are | the different categories ( for example the stress - loss rate on irish commercial development property non - nama for bank of ireland was 60 % ; for irish retail mortgages it was 5. 6 % ), and to a lesser extent across the banks. these were all well above the banks β own published estimates and far in excess of provisions taken. the limitations of stress - testing as an exercise across the globe are pretty well appreciated. both the choice of stress scenarios in terms of macroeconomic and other external factors, and the mapping from those factors to default probabilities and to loss - given - default are always subject to uncertainty. variances are high. this is all the more so when the economy moves outside of the previously experienced range. given the steepness of the decline in economic activity ( between the peak quarter in late 2007 and the trough in late 2009, real gdp fell by 11. 5 % ; gnp by 13. 9 % ) and employment and the steady decline in house prices both actual and forecast, there was very little in historical experience β either in ireland or in other advanced economies with large financial sectors β to guide those attempting to estimate the range of plausible outcomes for a bank lending portfolio which had clearly been inadequately underwritten. loan losses were certain to be beyond almost all previous experience not just in ireland, but in advanced economies : just how far beyond was clouded in uncertainty. 3 from loss rates to capital requirements the central bank β s march 2010 projection for non - nama loss rates, combined with the first tranche haircut grossed up to apply to all nama loans, were employed with projections of capital and income generation from the rest of the banks β activities over a three - year horizon, and a small buffer, to arrive at a needed capital amount by end - 2012 that would ensure that the bank would satisfy the central bank β s chosen core capital adequacy thresholds. these thresholds were higher than current international standards, reflecting evolving international discussions. they were set at 8 per cent core tier 1 on basel 2 basis in a base case for roi and uk separately : retail mortgages, retail other, investment property, development property, nonproperty commercial. for β capital markets β lending : investment property, commercial property, non - property. projecting macroeconomic variables following such a deep decline was already a challenge, but even if they could be known, attempting to map macro forecasts into loan - losses brought any existing models ( the banks had some | 0.5 |
confidence in the respective banking systems. concluding remarks let me conclude by focusing on the prospects. to a large extent, these prospects can be summarised in just a few words : progress towards eu membership. of course, countries in the region are at very different stages in their path towards eu membership, which is reflected in their different status as candidate and potential candidate countries. indeed, bulgaria and romania are expected to sign the accession treaty next year whereas other countries are still preparing negotiations on stabilisation and report by the ( ecofin ) council to the european council in nice on the exchange rate aspects of enlargement, brussels, 8 november 2000, council of the european union press release no. 13055 / 00. also reiterated in β policy position of the governing council of the european central bank on exchange rate issues relating to the acceding countries, β frankfurt, 18 december 2003, www. ecb. int. association agreements. moreover, there are not only economic, but also political criteria countries have to pass to transform the current eu perspective into real progress towards association or accession. let me also emphasise that the ecb and the eurosystem as a whole is a contributor to this process, not least through the provision of technical assistance. cooperation among central banks has involved twinning projects - led by some eurosystem national central banks in particular banque de france, banca d β italia and de nederlandsche bank - with the bulgarian national bank and the national bank of romania, as well as visits and training, all geared towards sharing information and know - how. it has taken place in a large number of areas, such as payment systems, supervision and financial stability, statistics, central bank operations, etc. looking ahead, such technical assistance will continue to intensify as countries progress towards aligning themselves with eu regulations and directives. also the joint vienna institute, co - sponsored by the oenb, has played a crucial role in offering training opportunities to staff of the central banks of the region. the recent enlargement to ten new member states, as well as the progress in the accession negotiations with bulgaria and romania and the decision to begin negotiations with croatia serve as powerful reminders that the enlargement of the eu remains an ongoing process. however, for all countries in the region, no matter how far they have already travelled on the road towards the eu, there is no time for complacency. clearly, the speed at which south eastern european countries | jean - claude trichet : south eastern european challenges and prospects keynote speech by mr jean - claude trichet, president of the european central bank, at the conference on european economic integration ( ceei ), vienna, 29 november 2004. * * * ladies and gentlemen, i am delighted to talk here in vienna to this distinguished audience at the conference on south eastern europe, the first of its kind organised by the osterreichische nationalbank. let me also warmly congratulate the oenb and governor liebscher for the initiative. when i think of the recent enlargement of the eu in central banking terms i cannot do so without thinking of the contribution of the oenb, which has been involved in enlargement issues from the very beginning. this was thanks to its long - standing expertise on central and eastern europe. with this event, the oenb clearly demonstrates once more that it is, inside the eurosystem, at the forefront of the analysis of european integration. the topic that we have for today - south eastern european challenges and prospects - is indeed a broad one. 1 challenges refer mainly to those that arise in the process of transition from a centrally planned to a market economy. in this respect, they are similar to the ones that those eight countries faced that joined the eu earlier in the year. but, as our friend and coparticipant in this conference governor nicholl of the central bank of bosnia and herzegovina puts it, for countries in the former yugoslavia there are also two other transitions with their own particular challenges : the transition from being part of a larger state to being independent democratic countries and the transition from war to peace. i do not intend to dwell on these issues but they are indeed important when thinking about south eastern europe. in setting the stage for the discussions today and tomorrow, i will focus my remarks on three aspects. i will first make some remarks on the economic and monetary performance of the region ; i will then touch upon the process of economic and financial integration into the eu and, lastly, i will briefly discuss the use of the euro in the region. as i will explain in more detail, economic and monetary performance has improved over the last years, although much remains to be done. economic links with the eu have been strengthening. these links are also based on a widespread use of the euro. economic and monetary performance in south eastern europe south eastern europe is a diverse and complex region, characterised by a relatively low level of | 1 |
governance now management for inviting me to this event and providing me an opportunity to share my thoughts with this intelligent audience. thanks! bis central bankers β speeches | s s mundra : banking sector reforms β a journey, not a destination special address by mr s s mundra, deputy governor of the reserve bank of india, at the india banking reforms conclave 2016, organized by governance now, mumbai, 24 august 2016. * * * dignitaries on the dais ; colleagues from the banking and financial sector ; members of the print and electronic media ; ladies and gentlemen! at the outset i thank the management of the governance now, one of the country β s leading publications shaping the public opinion on governance and public policy, for inviting me to deliver the inaugural address at this india banking reforms conclave 2016. i feel this conclave comes at a very important juncture for the economy and more particularly, for the banking sector. the title of my speech today is β banking sector reforms : a journey, not a destination. β why do i say so? it would be relevant here to peep into some history. though some of the issues cut across the banking industry, the emphasis here is predominantly on public sector banks ( psbs ). psbs came into existence with nationalization in the year 1969 / 1980. how was the banking scenario in the next couple of decades? β’ highly regulated credit flow ( selective credit control, credit authorization scheme, no consumption credit & so on ) β’ militant unionized atmosphere - resistance to technology β’ stiff branch authorization norms, loan melas, opaque income recognition & asset classification ( irac ) norms β¦. just to name a few. post - reform years ( after 1991 ) saw several far - reaching reforms in banking industry also. a few of these include : β’ deregulation of credit processes and interest rate structures β’ introduction of prudential irac norms β’ licensing of banks in the private sector / part divestment in psbs β’ migration to cbs β’ vrs ( year 2001 ) β’ gradual reduction in pre - emptions resultantly by the year 2008, banks β balance sheets were much stronger / growth was strong / npas had come down from the peak of around 12 % to slightly over 2 % then two developments took place : β’ global financial crisis β’ introduction of ppp model in infrastructure building banks were enthusiastic, rather major partners, in this newly opened field supported by accommodative fiscal and easy monetary policies. however, the process got plagued by : β’ weak governance, lax underwriting, high corporate leverage, several policy logjams β’ resultant consequences are well known bis central bankers β speeches | 1 |
production is expected to be virtually unchanged for the immediate future while downward pressures such as excessive labor input and debt persist. in addition, as for the outlook for the external environment, there still remains uncertainty about, among other things, the recovery of the u. s. economy. on the domestic side, given the fragility of the financial system, continued attention should be paid to developments in stock prices and longterm interest rates. on the price front, import prices and domestic corporate goods prices are declining, mainly reflecting crude oil prices that fell back in early spring. corporate services prices continue a year - on - year decrease of slightly over 1 percent ; the rate of decline expanded in april, as many firms reprice at the this report is based on data and information available at the time of the bank of japan monetary policy meeting held on august 7 and 8, 2003. the bank β s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on august 7 and 8, 2003 as the basis for monetary policy decisions. 1 / 3 beginning of a new fiscal year. the rate of decline in consumer prices remains virtually unchanged from april, when the rate diminished due mainly to the rise in medical treatment costs in line with the reform of the medical insurance system. looking at the conditions influencing price developments, import prices are expected to continue declining for the immediate future, but are likely to stop declining before long since crude oil prices have recently been firm after they fell back in early spring. on the other hand, turning to the domestic side, the supply - demand balance in the macroeconomy, ongoing technological innovations in machinery, and the streamlining of distribution channels will continue to exert downward pressure on prices. hence domestic corporate goods prices are likely to continue a gradual downtrend, although the pace of decline will slow with the halt in the decline in import prices gradually having effects. meanwhile, consumer prices are projected to continue falling at the current moderate pace on a yearon - year basis. as for the financial environment, the outstanding balance of current accounts at the bank of japan is moving at around 29 trillion yen, as the bank has been providing ample liquidity. under these circumstances, the overnight call rate continues to move at around zero percent. interest rates on term instruments remain steady at low levels. yields on long - term government bonds have been declining gradually partly because investors bought medium - and long - term bonds on dips, and are recently moving at | bank of japan β s august report of recent economic and financial developments1 bank of japan, 11 august 2003. * * * the bank β s view economic activity remains virtually flat. with regard to final demand, business fixed investment is on a gradual recovery trend, albeit showing some fluctuations. meanwhile, private consumption continues to be weak, housing investment remains sluggish, and public investment is declining. net exports are virtually flat. industrial production continues to be basically level in response to these developments in final demand. as for the employment situation, the number of employees including non - regular employees such as temporary workers has almost stopped falling, and the pace of decline in wages has also slowed. however, the increase in the overtime hours worked and new job offers has come to a halt, and the number of regular employees continues to decline. thus household income still seems to be on a gradual downtrend on average, and the employment and income situation of households overall remains severe. turning to the economic outlook, it is fairly possible that the growth rate of overseas economies, especially that of the u. s. economy, will accelerate in the second half of this year. however, as for the u. s. economy, although improvements have been observed in some recent economic indicators, careful examination is still required to judge to what extent business fixed investment and employment will increase following these developments. the pace of economic expansion in east asia still remains slow compared to what it was a while ago, although there seem to be signs of recovery. in this situation, both exports and industrial production are projected to remain virtually flat for the immediate future. with respect to domestic demand, public investment is projected to follow a declining trend, and private consumption is likely to remain weak for some time since the employment and income situation is unlikely to improve markedly. meanwhile, the uptrend of business fixed investment is expected to become established in the period ahead, mainly in large manufacturing firms, whose investment has been thus far significantly restrained despite the recovery in their profits. however, the pace of increase in overall business investment is likely to remain modest, as long as uncertainty regarding a recovery in exports and production remains. overall, with the anticipation that the growth rate of overseas economies will accelerate in the second half of this year, the uptrend in exports and production will resume gradually, which in turn will initiate the momentum for an economic recovery in japan. however, a self - sustaining recovery in domestic demand is unlikely to gain momentum for some time, since | 1 |
, and be ready to detect those shifts. it should be obvious that technological change, by increasing productivity, often reduces process lags. changes in rates of obsolescence or physical depreciation can change stock β flow lags. and as technology makes more information available more frequently, we might expect that learning lags could speed up. this particular implication is not guaranteed, though. sometimes more information just adds noise. i shall talk more about that in a moment. some lags, especially decision lags, depend on legal and social processes. so they can change, if those responsible for those processes desire it. a good example here is the streamlining of building approval processes in some jurisdictions over recent years. decision processes can also slow down, if more and more rigorous governance is being demanded, whether by external parties or the decision - makers themselves. whatever the reason for it, a change in the length of lags can have huge economic implications. for the hog cycle examples, price dynamics can change noticeably. and where a shorter lag comes from increased productivity and therefore lower cost, we can see marked changes in relative prices. 10 of 12 on lags there can also be big social implications from a change in lags. probably the best example is the enormous decline in the cost of recording and transmitting information over the centuries. ideas, good and bad, can now reach the whole world in seconds. in past centuries, each new copy of a text was done by hand and could take months. the result is more information to more people, not all of it better information. what it means for monetary policy i β ve already referenced the long and variable lags of monetary policy. i would like to draw out three more general implications of lags for monetary policy making. first, most forecasts leverage known process lags. for example, we use building approvals to help forecast residential construction. stock β flow lags are also important, but in my view these are often underappreciated in many forecasting models. second, the lags from monetary policy to macroeconomic effects are primarily learning lags. that is why they are variable, as well as long. people take time to realise that demand has increased enough that it β s worth hiring a new employee. likewise people take time to decide that demand has increased enough to be worth changing their prices. the time taken will depend on many factors. for example, the lags to changing prices are determined by things such as | is no right life in the wrong one β. 2. 3 financial market regulation in order to make the financial system more resilient to crisis, and thus to restore greater validity to the principles of competition and liability, changes will also need to be made to financial market regulation. a particularly severe problem which arose during the crisis was one i mentioned earlier, the β too - big - to - fail β problem : whenever banks become too large or interconnected to be would up without jeopardising financial stability, this undermines the liability principle and ultimately disrupts competition, and represents an invitation to act irresponsibly. that has to change! recent developments in the financial sector, such as increased indebtedness and the burgeoning growth of the shadow banking sector, require new rules as well. there must three primary objectives behind these new rules. first, banks have to become more resilient ; in other words, they have to acquire a higher quantity of higher - quality capital to protect themselves against potential losses. second, we need effective resolution mechanisms so that, in a worst - case scenario, banks can exit the market without endangering financial stability. third, we need to ensure that these rules cannot be circumvented by taking business elsewhere, such as, for instance, to the shadow banking sector. the rules of the game have to apply to all alike. i would like initially to discuss in more detail the objective of improved capital buffers. the new international rules, generally referred to as basel iii, have already taken us a great deal further in this respect. banks now have to hold more capital and higher - quality capital. however, there are some who believe the basel iii risk - based approach to be fundamentally wrong. the discussion is ultimately about whether capital adequacy rules should be simple or complex. thus far, capital rules have been complex rules : the capital to be held is determined according to the risk profile of each individual bank β s assets. critics such as university of bonn economist martin hell wig, however, assert that β material risks are not captured at all β by the risk weighting. and he adds that β banks use the risk weighting to expand their business to, in some cases, one hundred times their capital. β and yet the fundamental theory behind risk weighting is quite plausible : if the same percentage of capital is to be held for all assets across the board, this gives banks an incentive to invest particularly in | 0 |
from the riksbank, which is positive. but a larger number of institutions, and new types of institutions, becoming participants in rix could also lead to the risks of other problems increasing, such as operational problems, money laundering, financial problems and cyber threats. it is therefore important that the riksbank regularly oversees the participants in rix and has the power of authority to make strong demands of them. thus it is essential that the sveriges riksbank act provides sufficient flexibility in this respect. function as lender of last resort β emergency liquidity assistance a third important part of the central banks β responsibility for the efficiency and stability of the financial system is the task of providing emergency liquidity assistance. one usually says that the central banks are the lender of last resort. the need to have a β liquidity emergency service β is based on normal banks β operations being characterised by borrowing money at short maturities and then lending this money at longer maturities. this is the so - called maturity transformation that exposes the banks to liquidity risk. sometimes the banks β access to funding may suddenly decline, without it being possible β or socio - economically desirable β for them to reduce their lending at the same pace. this does not usually lead to any problems. a bank that needs more funding can normally borrow from other banks that have a surplus ( or it can issue its own bonds ). however, sometimes the liquidity problems are so serious that the banks cannot manage them on their own. if, for instance, confidence in a bank were weakened so that depositors feared they would not be able to get their money back, the bank might be subjected to a bank run that it is unable to manage on its own. there is also a risk that problems in one bank may spread to other banks, as the banks are interconnected. even banks that do not have any problems may be affected as a result of rumours spreading. if the banks also obtain a large share of their financing on the markets β as the swedish banks do β then a crisis of confidence in an individual bank or the entire banking sector, or the economy as a whole, could also lead to the funding 5 being withdrawn, especially if the foreign share of the funding was substantial. this could also lead to acute liquidity problems for one or more banks. in other words, in a crisis, liquid funds are often in short supply. the financial markets that offer funding often function less well than usual and the declining confidence between | 40 billion above the benchmark amount. in the following weekly operation on 16 october, the allotment exceeded the benchmark amount by eur 18 billion, and in yesterday β s tender we allotted more than eur 14 billion above the benchmark amount. indeed, the difference between the allotted and the benchmark amount is envisaged to decline gradually in the course of the maintenance period, taking into account the prevailing market conditions. and the ecb still aims at balanced liquidity conditions at the end of the maintenance period. besides, the ecb intends to steer liquidity towards more balanced conditions also during the maintenance period, in a way which is consistent with the objective to keep very short term rates close to the minimum bid rate. we have also stated our commitment to keep this policy in place for as long as needed. before turning to the current situation in the market, let me stress a very important point. through the liquidity operations just discussed, the ecb has contributed to the orderly functioning of the money market, which is one of its key responsibilities. it is worth emphasising, however, that the ecb β s primary mandate calls for its monetary policy to deliver price stability. the two responsibilities are clearly distinct and should not be mixed. this is our concept. only when kept separate, the fulfilment of both duties can reinforce each other. current situation let me now turn to the main issues that characterise the nature and dimension of the current tensions in some segments of the financial markets. the so - called benchmark amount is the amount of liquidity that is needed for the banking sector to fulfill their reserve requirements in a smooth fashion over the course of a maintenance period. usually, the ecb supplies roughly this amount in its weekly refinancing operations. although the ecb interventions have had a stabilising effect on the euro money market rates at the shorter end of the term structure and, more generally, the money market has recovered some of the lost ground, market participants continue to report limited trading activity, particularly in unsecured inter - bank term markets. compared to the situation prior to the emerging of tensions, unsecured deposit rates beyond one month are in some cases ( notably, three months ) still significantly higher and turnover remains lower, despite some improvement during the past few weeks. this situation reflects two main factors. β’ first, some banks β daily funding needs, especially in usd, have significantly increased at various points in time in the recent past | 0 |
, which is equally, if not more, controversial. i am referring to the proposal to introduce a deposit insurance scheme ( β dis β ) in hong kong. in a sense, this can be seen as the other side of the coin to deregulation. increased competition in a deregulated environment may give rise to increased risk and therefore it seems right that we should look again at the arrangements for dealing with banking failure, should it occur. let me hasten to add that we have no reason to believe that such a failure will occur. the banking system in hong kong remains profitable and robust, despite the challenges that it faces. our system of banking supervision is also generally reckoned to be effective. but banks can still get into difficulties because of risks that supervision may not be able eliminate. there is always the possibility of external shocks or unfounded rumours that may damage confidence in a bank. deposit insurance, like other forms of insurance, is there to deal with low probability events that have a major impact if they occur. to make an obvious analogy, you still take out fire insurance even if you do not expect your house to burn down. hong kong stands out as one of the few developed banking centres which does not have a dis. there is of course no reason why we should follow the rest of the world just for the sake of it. but we should at least keep our safety net arrangements under regular review to ensure that they are still appropriate to changing market circumstances. this is what we did last year when we engaged an external consultant to consider whether the existing deposit protection arrangements in hong kong were sufficient, and if not how they should be changed. the conclusion was that an explicit and limited form of deposit insurance should be introduced. we subsequently undertook a public consultation on this proposition and on the detailed design features of the proposed scheme. this consultation generated a heated, albeit civilised, debate. not surprisingly, some of the large banks vehemently opposed the scheme. opinion in the community as a whole was however generally supportive. in particular, the legislative council passed a motion by a wide margin urging the government β expeditiously to implement a dis, which is cost effective and easy for depositors to understand, for effectively protecting small depositors, and to formulate appropriate complementary measures aimed at reducing the risk of moral hazard. β the hkma has studied the responses received during the consultation and has submitted a report to the government on the outcome. we are seeking a decision in | circumstances. the second purpose is clarification. while concentrating on improving the strength and the size of the eu, accessibility and clarity might have been neglected over the years. the constitution shall put this back in order. it seeks to make the eu and its decision - making process more transparent and comprehensible for the citizens. so, europe is given itself a new constitution to consolidate existing achievements ; to codify key objectives and common values ; and to provide a stable and effective foundation for the future. the eu has embarked on a special method for drafting the new constitution. as you know, over the last one and a half years representatives from national and european institutions discussed in the convention what europe β s new constitution should look like. the ecb has followed these debates with great interest. it welcomes the draft constitution as presented by the convention in june. however, as central bankers, we had to learn a new lesson. for the first time since the setting up of the erm in 1979, a major reform of the eu takes place without monetary integration being in the limelight. the reason is simple : as far as monetary integration is concerned the eu has reached a β sustainable endpoint β. the maastricht treaty gave the eu a modern β monetary constitution β which does not need be changed. it is sound both in terms of the objectives set and the allocation of responsibilities between different actors and levels of government. the convention rightly recognised this. its draft constitution takes over the provisions relating to emu without changes in substance. the single monetary policy is, by its very nature, indivisible. thus, it is an exclusive competence of the union. the task of conducting monetary policy, as well as all other central banking tasks, has been assigned to an independent european central bank, which fulfils the task together with the national central banks of the euro area and with the clear primary objective of maintaining price stability. the draft constitution explicitly mentions the european system of central banks, the escb, in the first part of the constitution. thus, it acknowledges the federal nature of the monetary authority of the european union and its sui generis character. finally, the more specific provisions concerning monetary policy in the current treaty as well as the statute of the ecb and the escb will in their substance remain unchanged and form part of the constitutional texts of the union. i very much welcome that the fundamental features of the current set - up of emu have been preserved. after | 0 |
jean - claude trichet : a stability - oriented monetary policy as a necessary condition for long term growth speech by mr jean - claude trichet, president of the european central bank, at the unice competitiveness day, brussels, 9 december 2004. * * * ladies and gentlemen, it is a pleasure for me today to address such a distinguished audience, which best represents the european entrepreneurial capacity and dynamism. today i would like to discuss first the general role of policy institutions in a developed market economy. i shall then dwell more specifically on how the conduct of monetary and fiscal policy in the euro area contributes to foster high and sustainable output growth and job creation. finally, i shall stress the importance of structural reforms in labour and product markets in ensuring that our economy is endowed with the degree of flexibility that is needed for firms and workers to be able to withstand successfully the challenges that the contemporaneous, highly interrelated world economy poses to us. the determinants of sustainable long term growth the determination of the factors that increase the individuals β standard of living is the main issue that scholars have analysed since economics was born as a modern science more than 250 years ago. the evolution of the economic theory has greatly furthered and deepened our understanding of this issue. nevertheless, one core conclusion remains today as important as it was in the late eighteenth century : the amount of goods and services produced in any given economy grows at its highest possible rate when the rules of market economies are applied. we have learned that this prescription cannot possibly be translated into a pure laissez - faire doctrine, because when the production and the exchange of goods and services is carried out without a proper legal and institutional framework the potential of the economy would not be fully exploited. for this reason, societies need to equip themselves with the right framework, which enhances the collective welfare by clearly defining and ensuring property rights and ensuring the efficient supply of public goods. this means in particular that economic policy must ensure that individuals have the necessary incentive to earn their income by working and producing goods and services which other individuals need. it also means that enterprises must take their decisions on the basis of market signals without relying on subsidies or being protected from competition. this will foster the accumulation of human and physical capital and a high level of employment, which are the determinants of long term growth. to fulfil this objective, economic policy must create and maintain a β stable β macroeconomic environment, ensure an appropriate | consumption, saving and investment, they should also not have impediments in the form of unnecessary and excessive regulations. a sound monetary and fiscal policy framework has to be complemented by structural policies that make the economy more flexible and dynamic. since march 2000, when the european council launched the lisbon agenda, european national governments, parliaments and social partners have become increasingly aware of the importance of implementing a substantial, courageous and far - reaching agenda of structural reforms. the ecb, from its side, fully endorses the lisbon agenda and shares its objectives. we also agree with the main conclusion of the high level group chaired by wim kok that - in preparation of the mid - term review of the lisbon strategy - has stressed the advantages of sharpening the focus on the key issues in order to revamp the structural reform process in europe. indeed, in the last decade, euro area countries have made some tangible progress with their structural reform programs. competition in product markets due to, for example, a lower level of state aid and de - regulatory measures has increased, especially in network industries. this resulted in significant downward price effects in some sectors like telecommunication. the ecb is supporting strongly governments that are courageously embarking on reforms and does not underestimate the difficulty to implement them. in particular it has proven to be more difficult than previously expected for european governments and social partners to implement labour market reforms that could strengthen the positive employment trends recorded in the eu in the second half of the 1990s. breaking the reform deadlock is of the utmost importance, also in light of growing role played by new economies in the international market place that exposes european firms to new and challenging competitive pressures. it is not my intention today to provide suggestions to government, parliaments and social partners about specific policy actions, but it is clear to me that in the area of labour market reform, increasing flexibility and suppleness with a view to maximize job creation and to augment the capacity of outsiders, like unskilled youth, to enter the job market is of the essence. in another domain there is a number of countries where the lengthening of retirement age, allowing workers to work longer hours per week and the reduction of non - wage costs of labour - like labour income taxation and social security contributions - are necessary to increase labour supply and demand, thus raising the productive capacity of the economy. recent events involving a number of important euro area companies demonstrate that social partners are aware of the collective benefits induced | 1 |
published in just under four weeks time. in the intervening period we will be seeking answers to a range of questions to inform our assessment of how quickly inflation will return to target in the medium term. for me questions include : is there any evidence that the tight labour market is easing ; what is the revised outlook for demand in view of the government β s fiscal announcements ; are domestically generated inflation pressures consistent with returning inflation to the 2 per cent target ; and what do financial market developments tell us. the mpc was clear in its language in september that should the outlook suggest more persistent inflationary pressures, including from stronger demand, the committee would respond forcefully as necessary. in the context of the developments i β ve set out for you, today i think the central question for all nine of us on the mpc is how forceful do we need to be, to ensure inflation does return sustainably to the 2 % target in the medium term. these are very challenging times for the uk economy and millions of households and businesses are experiencing real hardship as a result of the cost of living crisis. on the mpc we are acutely conscious that for many our monetary policy actions are adding to the difficulties caused by the current situation. we know from past periods in our history the damage to households and businesses that would result if high inflation persisted. unlike earlier inflationary episodes, where we saw more persistence in inflation caused by ineffective policy and policy frameworks, this time we have a monetary policy framework which empowers us to take action. however difficult the consequences might be for the economy, the mpc must stay the course and set monetary policy to return inflation to achieve the 2 % target sustainably in the medium term, consistent with the remit given to us. with thanks to rupal patel for her assistance in preparing these remarks, and to my fellow mpc members and numerous bank colleagues, including callum ashworth, fabrizio cadamagnani, alan castle, grace greer, thomas jennings, josh martin, maggie illingworth, harry rigg, andrea rosen, may rostom, martin seneca, bradley speigner, boromeus wanengkirtyo for their many helpful contributions. 1. there is a huge literature on techniques for and applications of the identification of shocks. different categorisations have been used for a variety of policy purposes. for example whether shocks are common or idiosyncratic was a key consideration for hm treasury β s 2003 five tests assessment of whether | 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 | 1 |
to the most recent data, median expectations are close to 3 %, while average expectations have increased from 3 % a year ago to almost 5 % today. average long - term inflation expectations of professional forecasters, too, have started to gradually move away from our 2 % target. in july, they stood at 2. 2 %, a historical high. for both consumers and professional forecasters, we are also observing a marked increase in the right tail of the distribution β that is, the share of survey participants who expect inflation to stabilise at levels well above our 2 % target. [ 26 ] option prices in financial markets paint a similar picture. in the 1970s, such shifts in the right tail of the distribution preceded shifts in the mean. we broadly know why these shifts happen among consumers who are financially less literate. these consumers predominately form their expectations based on inflation experiences. but for the euro area, the ecb β s consumer expectations survey shows that people who are financially more literate and who see themselves as playing a relevant role in actual price and wage - setting have recently revised their medium - term inflation expectations to a larger extent than other survey participants. this is a source of concern. unlike for consumers who form their expectations based on their experience of inflation, the higher inflation expectations of financially literate people are unlikely to subside if and when inflation starts decelerating. this increases the probability of second - round effects. we cannot say for certain what is behind these upward revisions to inflation expectations. but two potential explanations come to mind. one is that higher medium - term inflation expectations may be the result of a perception that monetary policymakers have reacted too slowly to the current high inflation. a cardinal principle of optimal policy in a situation of above - target inflation is to raise nominal rates by more than the change in expected inflation β the taylor principle. if real short - term interest rates fail to increase, monetary policy will be ineffective in dealing with high inflation. in the united states, a systematic failure to uphold the taylor principle was one of the key factors contributing to the persistence of inflation in the 1970s. the second explanation is that higher inflation expectations may reflect more fundamental concerns, possibly related to fiscal and financial dominance, or to the recent review of central banks β monetary policy frameworks that focused more on the challenges of too - low inflation rather than too - high inflation. all these factors may have created perceptions of a higher tolerance for inflation and a stronger desire to stabilis | 2003 ), β making monetary policy in an uncertain world β, proceedings β economic policy symposium β jackson hole, federal reserve bank of kansas city. 21. for forecasting errors, see ecb ( 2022 ), β what explains recent errors in the inflation projections of eurosystem and ecb staff? β, economic bulletin, issue 3. for the costs of underestimating inflation persistence, or the non - accelerating inflation rate of unemployment, see primiceri, g. ( 2006 ), β why inflation rose and fell : policy - makers β beliefs and u. s. postwar stabilization policy β, the quarterly journal of economics, vol. 121, no 3, pp. 867 - 901. 22. walsh, c. ( 2003 ), β implications of a changing economic structure for the strategy of monetary policy β, proceedings β economic policy symposium β jackson hole, federal reserve bank of kansas city. see also walsh, c. ( 2022 ), β inflation surges and monetary policy β, imes discussion paper series, no 2022 - e - 12, bank of japan. 23. james, h. ( 2022 ), β all that is solid melts into inflation β, project syndicate, 5 july. 24. for the euro area, see eurobarometer 96, winter 2021 - 2022. 25. ecb ( 2022 ), β consumer expectations survey β. medium - term inflation refers to inflation three years ahead. 26. systematic data on firms β medium - term inflation expectations remain scarce. recent analysis, however, suggests that firms may use price changes observed along the supply chain to form their expectations. see albagli, e., grigoli, f. and luttini, e. ( 2022 ), β inflation expectations and the supply chain β, imf working papers, no 22 / 161, international monetary fund. 27. reis, r. ( 2022 ), β inflation expectations : rise and responses β, ecb forum on central banking, sintra, 29 june. 28. reis, r. ( 2021 ), β losing the inflation anchor β, brookings papers on economic activity, fall 2021. 29. there is abundant empirical evidence suggesting that inflation expectations are adaptive, meaning that the current long period of very high energy and food prices will shape people β s beliefs about the future. see, for example, burke, m. and manz, m. ( 2014 ), β | 1 |
and eventual surplus over time, as required by the government β s medium - term fiscal commitment. on the monetary side, the inflation targeting framework the reserve bank has been following for a decade and a half will guide adjustments to interest rates. these will be timely and ahead of a build - up of imbalances that would occur if interest rates were kept low for too long. these frameworks will, in other words, prompt the needed adjustments. it was the preparedness to make those adjustments in the past, guided by these very frameworks, that contained the build - up of imbalances in the upswing and which in turn earned us the scope to take bold measures to support demand when a recession loomed. a continuation of that approach into the future will serve us well. | strength in demand for resources has kept australian exports expanding. australia β s terms of trade, even though well off their peak, remain high by historical standards. confidence about the future for the resources sector is building quite strongly. finally, australia had ample scope for macroeconomic policy action to support demand as global economic conditions rapidly deteriorated, and that scope was used. the commonwealth budget was in surplus and there was no debt, which meant expansionary fiscal policy measures could be afforded. in addition, monetary policy could be eased significantly, without taking interest rates to zero or engaging in the highly unconventional policies that have been necessary in some other countries. i have maintained throughout that australia β s medium - term prospects remained good and that we should not lose confidence. more people seem to be taking that same view. measures of business and household confidence have shown a very substantial pick - up from the low points reached earlier this year. share prices have risen by almost half. house prices have risen rather than fallen, though commercial property prices have fallen. people are realising that, though things have been tough, the worst has not occurred and the future is looking brighter. earlier plans for drastic cuts to capital spending look like they are being reconsidered. economic growth forecasts are being revised up. a straightforward reading of the economic outcomes would suggest that the various policy measures have been effective in supporting demand. in due course, both fiscal and monetary support will need to be unwound as private demand increases. in the case of the fiscal measures, this was built into their design. the peak effect of these measures on the rate of growth of demand has probably already passed. the extent of support will tend to tail off further over the next year. in the case of monetary policy, the bank has already signalled that interest rates can be expected, at some point, to move off their current unusually low levels, as recovery proceeds. these adjustments back towards more normal settings for both types of macroeconomic policy are what should be expected during the recovery phase of a business cycle. our most recently released set of forecasts assumes they occur. such an outcome would mean that fiscal and monetary policy would be acting broadly consistently, as they did when they were moved in the expansionary direction when the economy was slowing. in both cases a degree of policy discipline will be needed. policy frameworks will be valuable in enforcing that discipline. on the fiscal side, the forward estimates provide an indication of the restraint needed to move the budget back towards balance | 1 |
can maintain an admirable degree of price stability even when financial stability is under a lot of strain. do these two points mean that financial stability and monetary policy are not connected after all? no. they are very closely related. independence of monetary policy one of the lasting lessons learned in the last decades is the value of the independence of monetary policy. the independence of central banks has been essential keeping inflation expectations as well anchored as they have been in this crisis despite all the turmoil in the financial markets. independence has also made it easier for central banks to act quickly when it has been necessary in order to maintain financial stability. it is especially important to avoid two threats to independence : fiscal dominance and financial dominance. fiscal dominance is the older concept of the two. it would arise if the government financing constraint would become an overriding influence on monetary policy. the idea of fiscal dominance was formalized by tom sargent and neil wallace in 1981, but of course the worry that deficit financing may cause inflation has much longer roots in monetary thought. 1 the idea that tight monetary policy may become impossible without accompanying fiscal adjustment was also well understood when the blueprints for the emu were being prepared. this is why the maastricht treaty had its fiscal policy clauses and also why the stability and growth pact was concluded. also the prohibition of direct central bank credit to the sargent, t. j., and wallace, n. : some unpleasant monetarist arithmetic. the federal reserve bank of minneapolis quarterly review, 1981. bis central bankers β speeches government and the institutional independence of the central banks are in effect protections against fiscal dominance. now we know, of course, that the fiscal framework as put in place before the start of the emu was not strong enough to prevent fiscal problems from emerging. some have argued that fiscal dominance has taken hold in the in the big industrialized countries during the crisis when the central banks have used government bond purchases in order to stabilize the markets ( as the ecb ) or to produce additional monetary stimulus when the interest rate instrument has already been used to the maximum ( like the federal reserve and the bank of japan ). as to the euro area, for me there is now no evidence of fiscal dominance. fiscal dominance implies that monetary policy would break its price stability objective for the sake of maintaining the solvency of the government sector. this is not the case. price stability has not and will not be abandoned. we have well known fiscal problems in some of the euro area countries. | of these assets at the fed reached 2. 1 trillion dollars. in the second round, it bought another 600 bln usd. similar non - standard measures have been taken by the bank of england and bank of japan. the unconventional measures of the ecb in response to the crisis have been somewhat different. ecb β s tools focused on supporting liquidity and funding for the banking system. the ecb introduced the fixed rate and full allotment principle to all refinancing operations in october 2008. it extended collateral eligibility to less liquid assets. between 2009 and 2011, the longer - term refinancing operations ( ltros ) were extended to maturities of up to rajan, r. ( 2013 ), a step in the dark : unconventional monetary policy after the crisis. andrew crockett memorial lecture, bis, 23 june 2013. bis central bankers β speeches 3 years. the ecb also started a purchase program of covered bonds which are a key source of funding credit for private banks in many euro area countries. 2 most importantly, the ecb did not initiate purchases of government bonds. however, in 2010 β 2012 the ecb operated the securities market programme ( smp ), which amounted to sterilized interventions on public and private bond markets ( in practice only public ). this was done to to facilitate monetary policy transmission in countries that faced severe sovereign debt problems. the culmination of the eurozone crisis in mid - 2012 was tamed by the creation of the ecb β s omt ( outright monetary transactions ) program. i quote president draghi β s promise that β within [ its ] mandate, the ecb is ready to do whatever it takes to preserve the euro β. 3 omt is a conditional promise to buy in the secondary market without limit government bonds of selected euro area countries. omt has worked and remarkably, there has so far not been any need to activate the program. international spillovers liquidity support operations by central banks at different stages, explicit state guarantees to banks and expansionary policies succeeded in stopping the recession, which changed the course of developments in comparison to the 1930 β s. these unconventional policy measures were not implemented in a group of economically disconnected islands, but in a globalized world with synchronized financial cycles and few borders for capital. 4 it is therefore important to ask what the consequences of these new forms of monetary policy for other countries are and how strong are the potential spillovers. one new line of theoretical research points | 0.5 |
, they would be happy to discover their countries would see more than seventy consecutive years of peace. i believe the european union has played a large role in ensuring such long - lasting peace. it seems that robert schuman was right to predict that the european coal and steel community would make war both unthinkable and materially impossible. and peace on the european continent has also meant the spread of democracy. when the treaty of rome was signed, only 12 of the current eu member states were democracies. today all 28 of them are. and with democracy came freedom. with the charter of fundamental rights, the eu enshrined all personal, civic, political, economic and social rights within one document. the charter also established the right to data protection, guarantees on bioethics and transparent administration. i am sure you recognise how topical these issues are today. and i hope you appreciate the unprecedented protections that eu citizens enjoy. peace, democracy and freedom in turn brought prosperity. of course, we still face challenges on this front. some eu countries today face difficult economic conditions, largely a legacy of the great recession. employment levels still vary significantly across the union. and high levels of 1 / 3 bis central bankers'speeches inequality exist within countries too. oecd data show that in many european countries, a small minority owns a disproportionately large share of the wealth. income inequality is also higher than it was a generation ago. but let us not forget the shared economic benefits of the union. the average gdp per capita of eu countries has almost doubled in the past 20 years alone. and our future prosperity is also a function of today β s education, research and innovation. some of the best universities in the world are located in the eu. over the past 30 years, around 9 million people have benefited from the erasmus programme. the eu also supports research across the union. horizon 2020 is the largest multinational research programme in existence, providing around β¬77 billion in funding over seven years. all of these historic steps have been achieved in the spirit of unity in diversity. but there is no denying the fact that such unity is hard to manage. resolving the challenges ahead will involve negotiations between all member states. and each of them has slightly different priorities and views. moving forward will take time and effort. but if we want this effort to be meaningful, we must reflect on the long - term goals. as far as i am concerned, one goal should be to strengthen | theodore mitrakos : overview of the greek economy and financial sector speech by mr theodore mitrakos, deputy governor of the bank of greece, at the 37th meeting of the central banks governors'club, session iii " country presentations - recent economic and financial developments ", belek - antalya, turkey, 3 april 2017. * * * it is a great pleasure for me to be here with you today and have the opportunity to update you on economic and financial developments, and more importantly to share my thoughts on the growth prospects of the greek economy. allow me first to give you a brief overview of the performance of the greek economy and financial sector over the last few years. following the global financial crisis of 2007 β 2008, the greek economy has entered a deep and prolonged recession. the sovereign debt crisis in greece turned soon into a banking crisis : banks were gradually excluded from the interbank market, suffered significant deposit outflows and losses to the value of their assets as the sovereign debt was downgraded by rating agencies. what started as a liquidity crisis for banks, turned into a solvency crisis following the greek debt restructuring ( the so - called private sector involvement β psi ) and debt buyback in 2012. greek banks suffered losses in the order of β¬38 billion, which wiped out their entire capital base. furthermore, the cumulative decline in real gdp by more than a quarter from its pre - crisis level and the surge in unemployment impacted negatively the financial condition of households and businesses and therefore the ability of borrowers to service their debt obligations. as a result, non - performing loans increased by around eight times from 5. 5 % in 2008 to 45. 1 % in june 2016. against this backdrop, greece has implemented a brave programme of economic adjustment that has eliminated fiscal and external deficits and improved competitiveness that, between 2009 and 2016, resulted in the shrinkage of the general government deficit by approximately 14 percentage points of gdp and to the improvement of the primary balance, adjusted for the effect of the business cycle, by about 17 percentage points of potential gdp. this achievement represents one of the largest fiscal adjustments ever undertaken worldwide. significant improvement was also recorded on external adjustment, where the current account improved by about 15 percentage points of gdp compared to 2008, being in balance in the last two years. in addition, bold reforms in the labour and product markets helped towards the restoration of competitiveness, helping the share of exports in gdp to increase from 19 % in 2009 to 30 % | 0 |
treatment of provisions and the valuation of financial instruments must keep pace with changes in the relevant accounting standards. the members of the committee believe that market discipline, and hence financial stability, is strengthened when accounting and disclosure requirements reflect sound risk management principles and are consistent with the control practices that banks adopt. consequently, we recognise our responsibility to participate actively in the development of national and international accounting standards. where the development of international standards is concerned, the committee and its member organisations devote considerable resources and staff time to sharing our perspectives as supervisors with those who make the rules. but the discussions between supervisors and accountants cannot be a one - way street. as supervisors on the basel committee have developed standards for the disclosure of components of capital, for loans, and for other topics of mutual concern, we have sought out the views of representatives of the accounting profession. this dialogue will continue. i should add that we are currently seeking new opportunities for discussion on issues of mutual concern with accounting standards - setting bodies and private sector accounting professionals. conclusion by the end of this conference, i think that we will all have a better sense of our many worthy accomplishments to date in refining the measures and management of credit exposures. at the same time, we will no doubt develop a better understanding of the significant work ahead β in terms of developing more sensitive capital requirements, but also in terms of advancing our ability to control the risks we face. with regard to the new accord itself, the issues and themes you will discuss at this conference suggest that we β ve moved beyond a discussion of the principles behind the rules to a focus on preparing for their implementation. this seems appropriate, since we expect that, given the very good progress that we have noted in banks preparing to adopt the new accord, supervisors and the industry will be ready to implement the new rules by the end of 2006. indeed, banks that wish to be among the first to adopt an advanced approach to credit risk should already have begun to gather and process the data that is key to the irb approach. adopting a more risk - sensitive treatment of credit risk will require significant work by all of us. what we learn about the factors driving losses from default, and how we can better measure and reduce our exposure to losses, means much more to all of us than simply a more favourable capital requirement. instead, our efforts on credit risk, combined with advances on the operational and market risk fronts, will advance our understanding of the many risks banks face and improve our ability to navigate them successfully. | , or β aig, β precisely to share experiences and encourage shared approaches. this group, which is chaired by nick le pan, the canadian superintendent of financial institutions, has already been long at work comparing notes on practical matters. we expect these discussions to help supervisors apply the new accord more consistently at home, thereby providing a more level playing field across countries as well. based on the aig β s work to date, the committee published a paper last august on the β high level principles for the cross - border implementation of the new accord. β in this paper, we reiterate our view that the traditional allocation of responsibilities to home and host supervisors will continue. cooperation will be critical for effective supervision under the new accord, especially considering the need for an internationally active bank to receive the approval to adopt, and then validate, advanced approaches to credit and operational risk at home and in host jurisdictions. similarly, supervisors will need to find practical ways to cooperate in the evaluations of capital adequacy under pillar 2 and ongoing reviews of compliance with the minimum operational requirements of the new accord. at the same time, pillar 3 - market discipline β draws on the power of markets to help ensure that banks do not hold unrealistically low amounts of capital for credit or operational risk. more generally, by emphasising principles in the rules β that internal measurement tools must be credible, that they must adequately capture risk, that they must be used by banks in the daily management of their operations and not just for regulatory capital purposes β enhanced disclosure and transparency may actually result in more consistency in the application of advanced approaches than detailed quantitative criteria. future work : full credit risk modelling the committee will spend the next few months considering these and other themes carefully and finding ways to balance the complexity of the new accord against the need for appropriate sensitivity to risk ; to ensure that the assumptions supporting the rules are appropriately conservative, but not excessively so ; and to apply the rules consistently to protect and promote competition in the global banking market. but when the ink dries on the new accord, rest assured that the basel committee will not be adjourning. just from the comment letters we received, we can already identify a wide range of issues ahead to continue to find new ways to advance risk management, to promote greater transparency, and to strengthen the stability of the financial sector. i β d like to conclude by mentioning just two of the potential items on our agenda for future work once the new accord is implemented. | 1 |
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 | tiff macklem : opening statement - symposium on indigenous economies opening statement ( delivered virtually ) by mr tiff macklem, governor of the bank of canada, before the symposium on indigenous economies, ottawa, ontario, 29 november 2021. * * * hello and welcome. i want to extend my deepest thanks to elder commanda for offering her blessing to launch this important event. i hope we draw on the spirit of reflection embodied in this blessing throughout this symposium and beyond. i also want to thank sarah, ngarimu and suzette for their meaningful land acknowledgements. these acknowledgements are a vital part of our collective efforts toward reconciliation. they reflect much more than a historical accounting of the original occupants of this land. they commemorate not only indigenous peoples β rich contributions to our countries, but also their kinship to mother earth and her life - sustaining gifts. and importantly, land acknowledgements help us all reflect on the history that brought us to reside here. why we β re here this is one of the main goals of the central bank network for indigenous inclusion β to recognize the shared history of colonialism in our countries, and to work together to acknowledge and address some historical wrongs. this symposium is key to our common objectives. and i want to thank two people who have been key to making it all happen. first, i want to thank manny jules, chief commissioner of the first nations tax commission and founder of the tulo centre of indigenous economics. he has been the inspiration behind much of the bank β s work in this sphere, and a leader in helping to bring this event to fruition. i β d also like to express my gratitude to the reserve bank of new zealand and governor adrian orr for being an inspiration to us in how you β re building closer partnerships with maori. we all have a lot to learn from our combined experiences, and we look forward to collaborating more on this in the future. over the next two days, we β ll take a historical look at indigenous economies, and we β ll consider various aspects of present - day economies. this includes access to capital, resource development, and indigenous businesses and labour markets. we β ll also talk about the impacts that policies throughout history have had on current - day inequalities. i expect we will have moments of hope and moments of inspiration. we will also have uncomfortable moments of coming to terms with shameful parts of our history. our nations have all travelled different paths in our colonial histories. and each country represented | 0 |
vitor constancio : implications of the single supervisory mechanism ( ssm ) on the european system of financial supervision ( esfs ) speech by mr vitor constancio, vice - president of the european central bank, at a public hearing on financial supervision in the eu, brussels, 24 may 2013. * * * ladies and gentlemen, thank you very much for inviting me to open this session on the implications of the single supervisory mechanism ( ssm ) on the european system of financial supervision ( esfs ). at present, the only answer that can really be given on this issue is, β it depends β. while the ssm will in principle be just another supervisor around the table, its impact on the esfs will clearly depend on how many member states eventually decide to join. in our view, the more member states take part, the better it will be for the functioning of the esfs and the single market more generally. first, having as many as possible countries in the ssm will reduce the scope for coordination failures. this will in turn facilitate the coordination function of the european banking authority. second, a larger ssm is the best way to safeguard the single market in financial services. the more membership overlaps between the eu and the ssm, the more consistent will be the application of supervisory and regulatory practices. third, broad ssm membership could diminish the distortions to the single financial market caused by the divergent fiscal positions of sovereigns, as member states that are part of the ssm will also have access to the single resolution mechanism ( srm ). this presupposes, however, that the srm is set up with strong powers, which i consider essential. at this stage, we expect several non - euro area member states to join the ssm. the negotiations on the ssm regulation have satisfactorily addressed most of their concerns. however, some countries seem to require that more clarity on the functioning of the srm is provided before they reach their final decision, in particular on the issue of a common fiscal backstop and how β out β member states could contribute to or benefit from it. in my view, this should not be an obstacle to a positive decision because any participant country in the ssm will also participate in the srm and benefit from it. from the ecb β s perspective, it is essential that the srm comprises a single resolution authority and single fund financed by ex - ante and risk | yves mersch : the overhaul of the architecture of the euro area and the return of investor confidence speech by mr yves mersch, member of the executive board of the european central bank, at the cfa institute european investment conference β beyond austerity β opportunities for european investors in the global market β, london, 15 november 2013. * * * introduction it is a great pleasure to join you at the sixth annual european investment conference and to have this opportunity to talk to investment professionals. i would like to discuss the return of confidence in the euro that we have observed over the past year. in particular, i would like to show that recent financial market developments confirm the credibility of the reform actions taken at european and national level. we can clearly see that investor confidence is slowly returning, that the persistent euro area financial market fragmentation is decreasing and that contagion is receding. this does not mean that the euro area and its member countries can rest on their laurels, as some efforts are still needed to bring an end to the crisis and to put economic and monetary union ( emu ) on a stronger footing. building a stronger emu before looking at these encouraging market developments, let me briefly recall the causes of the euro area crisis and the policy actions taken at european and national level to address the economic imbalances and financial vulnerabilities. as the crisis has shown us : the original design of the euro has been incomplete. it became clear that the euro area lacked certain institutional elements which are essential to federations with a single currency. three of these shortcomings were particularly acute and contributed to the euro area sovereign debt crisis : first, the maastricht treaty was a child of its time. it reflected the ambient overreliance on the disciplinary effects of markets. fiscal policies remained at national level. the stability and growth pact provided rules to mitigate this situation but their implementation by the council of ministers often lacked traction and facilitated fiscal indiscipline. second, macroeconomic imbalances often precede fiscal disequilibria. but the treaty only provided for a vague coordination of economic policies which on top were not determinedly pushed by the commission. third, europe lacked a coherent approach to financial sector policies. regulatory frameworks and financial policies remained insufficiently harmonised and centralised, neglecting the increasing level of financial integration in the euro area. in this respect, there was no level playing field for european banks and, in particular, there was no institutional framework | 0.5 |
the bank β s continued massive purchases of long - term jgbs as well as by lowering short - term interest rates through applying a negative interest rate to part of the current account balances held by financial institutions at the bank. this results in further lowering real interest rates and enhances the transmission of policy effects i just mentioned. bis central bankers β speeches the policy has already exerted the intended effects on interest rates. following the introduction of the negative interest rate policy, a large part of the jgb yield curve has declined substantially, with rates up to a maturity of over 10 years having turned negative. lending rates, including interest rates on housing loans, clearly have declined. issuance rates on cp and corporate bonds also have declined to a considerable degree. in the march tankan, financial institutions β lending attitudes as perceived by firms improved further following the introduction of the negative interest rate policy, and those for all industries and enterprises were at a level last seen in the late 1980s. firms β perception of borrowing costs is that these have declined notably ( chart 5 ). going forward, these policy effects on interest rates are likely to steadily spread to both the real economy and the price front. however, it will take some time for the monetary policy effects to spread. in addition, global financial markets β partly due to uncertainties regarding the outlook for emerging and commodity - exporting economies β remain volatile, and this has become a headwind that has restrained the effects of accommodative financial conditions on economic activity and prices from being exerted. as i noted earlier, the projection of the cpi in the april outlook report is lower than that in the previous report, mainly reflecting the downward revision of projections for real gdp growth and wage increases. nevertheless, the bank did not take additional monetary easing measures at the april mpm because, due to the reasons i just mentioned, the bank judged it appropriate to examine the extent of the penetration of policy effects. to avoid any misunderstanding, i would like to clarify that there has been no change in the bank β s commitment to achieving the price stability target of 2 percent at the earliest possible time. transforming people β s deflationary mindset and raising inflation expectations through this commitment is itself the aim of overcoming deflation, and at the same time the starting point of the effects of qqe and β qqe with a negative interest rate. β firms β and households β inflation perceptions have changed markedly under this commitment. while the bank at the april mp | bank of japan β s october report of recent economic and financial developments1 bank of japan, 15 october 2002 * the bank β s view * * japan β s economy has stabilized as a whole, but clear signs of recovery have not yet been observed partly due to large uncertainty regarding the global economy. with regard to final demand, while the decline in business fixed investment is coming to a halt, private consumption continues to be weak. moreover, housing investment remains sluggish and public investment is declining. meanwhile, exports continue to increase, albeit at a slower pace. industrial production, despite some deceleration, continues to rise in response to these developments in final demand and adequate reduction of excess inventory stocks. against this background, corporate profits are recovering and business sentiment continues to improve as a whole. however, the pace of improvement in business sentiment has become gradual and the improvement for the immediate future is also expected to be small partly due to large uncertainty regarding the global economy. as for the employment situation, the overtime hours worked continue to increase and new job offers remain firm. nevertheless, as firms are still maintaining their stance on reducing personnel expenses, household income continues to decrease noticeably with a plunge in summer bonuses. thus, the employment and income situation of households overall remains severe. turning to the economic outlook, the uptrend in exports is expected to continue against the background of the moderate recovery in overseas economies, but the deceleration in the pace of increase is projected to continue toward the year - end with the impetus from overseas restocking coming to a halt. thus, while industrial production is also expected to follow a moderate uptrend, the pace is likely to continue decelerating for the time being. with respect to domestic demand, public investment is projected to follow a declining trend and private consumption is likely to remain weak for some time due to the severe employment and income situation. judging from leading indicators and the recovery in corporate profits, it will gradually become certain that the decline in business fixed investment has come to a stop. however, a distinct recovery in business fixed investment in the immediate future is unlikely due to, among other things, large uncertainty regarding overseas economies. once the outlook for the increase in exports and production becomes more certain, domestic private demand will react to it positively. overall, it can be envisaged that japan β s economy will gradually form foundations for recovery as overseas economies continue the moderate recovery. however, it will take a while for the economy to show clear signs of recovery | 0 |
be perceived by some market participants as a " deadline, " thereby creating unnecessary speculation about the bank's policy conduct. as i have explained, monetary policy should be conducted by taking into consideration various uncertainties, and therefore it is undesirable to attract excessive attention merely to specific timing or a numerical value. based on these points, i have judged that deleting the description of the projection in the outlook report is unavoidable. i believe that providing a detailed and articulate explanation on the mechanism of price rises and on the assessment of risks will lead to more appropriate communication with market participants. today, i have expressed my views on changes in the supply capacity of japan's economy and how monetary policy should be conducted in response to these changes. the bank will persistently pursue monetary easing measures and provide its utmost support for the sound development of the national economy by ensuring price stability. under such circumstances, i hope to see continued proactive initiatives and efforts by firms and the government. | a negative interest rate. β qqe evolved into a flexible and powerful policy framework that enables the bank to make full use of the three dimensions of policy measures : quantity, quality, and interest rates. today, with this backdrop in mind, i will focus on the two key issues in considering how to ensure a resilient monetary policy framework : ( 1 ) the role of anchoring inflation expectations and ( 2 ) the transmission channels of a negative interest rate policy. i. re - anchoring inflation expectations a. crude oil prices and inflation expectations as many of us well recognized, crude oil prices declined significantly from the summer of 2014. in terms of the inflation forecast, the decline in crude oil prices is generally taken to be temporary. crude oil futures markets were not broadly anticipating a further decline in crude oil prices over the next year. consequently, long - term inflation expectations were unchanged, as evidenced by fairly stable developments in 6 - to 10 - year u. s. inflation forecasts collected by the survey of professional forecasters ( chart 2 ). in contrast, a bis central bankers β speeches puzzling decline in long - term inflation forecasts was observed in japan. even considering the technical difference in the details of the data, it is hard to deny that the recent weakening in long - term inflation expectations in japan was partly caused by the declines in crude oil prices from 2014. the headline consumer price index ( cpi ) inflation started to fall more or less in reflection of the declines in crude oil prices, which were largely common to advanced economies after 2014. however, a marked difference was observed in terms of the pace of recovery in the underlying trend of the cpi inflation between the united states and japan. in the united states, the cpi inflation excluding energy rebounded toward 2 percent fairly quickly, while the comparable cpi inflation indicator in japan has remained relatively low so far : positive but significantly below 2 percent. it could be said that inflation dynamics in japan are less resilient than those in the united states against significant external shocks, including large swings in crude oil prices. as mentioned earlier, oil price fluctuations should not produce persistent effects on long - term inflation expectations, in that they are typically perceived to be just temporary. this could be the case for the united states while something different must be factored in to understand the case for japan. an interpretation of different inflation dynamics between the united states and japan could be that long - term inflation expectations are yet to be anchored around the 2 percent target in japan | 0.5 |
##lationary gap in japan β s economy, which is already suffering from lack of demand, might become wider. we can certainly understand the background to such concern. indeed, looking at examples of structural reform overseas, there seem to be many cases where there was a deflationary impact in the short term. and, in contrast with the us and uk, the economy cannot expect to receive additional β dividends β such as a substantial decline in long - term interest rates accompanying fiscal consolidation, since in japan there is little room for any further decline in interest rates. however, the bond market is not the only market which assesses structural reform. if the stock market favorably evaluates specific efforts toward the resolution of structural problems, there might be positive effects on the economy from this channel even in the short run. moreover, it should be noted that, in the case of japan, delay in effecting structural reform has made the problem of weak demand all the more serious. in this context, i would like to refer to the fact that private consumption has been very slow to increase. of course, various factors might be behind this, one being uncertainty with respect to pensions and the tax burden in the future because of the rapidly aging population. therefore, in order to stimulate private consumption, it is essential to reduce future uncertainty as much as possible. according to textbook keynesian economics, the expansion of fiscal expenditure financed by the issuance of government bonds will stimulate an economy unless taxpayers hold back consumption reflecting expectations of a future increase in the tax burden. however, if public investment generated by a fiscal deficit is inefficient, production capacity of the economy as a whole will not increase and the β wealth β which generates future income and consumption will not accumulate. and, if such investment clearly suggests an increase in the future tax burden and delay in structural adjustment, then it would have an adverse impact on current consumption. from this viewpoint, once it became clear that the content of fiscal expenditure was going to be shifted from less efficient to more efficient objectives, resulting prospects of an increase in future β wealth β might have a favorable effect on the economy. compared with a situation where there is little room to mobilize conventional monetary policy instruments, room for effecting policies which focus more on the β quality β of fiscal expenditure seems to be significantly large, as mentioned in the β basic plan β. nevertheless, what i have just said does not mean that i am optimistic enough to consider that the promotion of structural reform will | at a great speed. up until yesterday we used physical databases, and today we use blockchain technology. from atms we switched to user service based on artificial intelligence. transactions which took days, are now implemented in real time. all of this is saving time as the most precious resource. and it is a huge potential for the coming period. dear colleagues, in the end, i would summarise, in a slightly different way, the challenges, but also the opportunities. a popular topic, which is discussed almost fatalistically, is the " green agenda ". however, climate challenges are not new, only the awareness that we have lost precious time has increased. threats to the environment simmered in both the 19th and 20th centuries. however, history has destined us to solve them strategically, which involves the banking industry and central banks, and there is no substitute for regional cooperation! digitalisation has been talked about almost fatalistically lately. there is no doubt that digitalisation brings enormous potential for progress. however, new technologies also bring us new risks such as cyber security, data protection or the concentration of market participants. and as responsible market regulators, we have to take care of that. policy - making in the era of fake news is also a challenge as fake news can make difficult the process of managing expectations which are an important channel of policy transmission. challenges arise also when individuals think that policies can be run via social media, individuals whom i call " advisors without skin in the game ". it is our duty to continue making decisions based on data and in - depth analyses, aware at the same time of the importance of the words we use. today, transparency is one the important features of central bank's work, and we want our decisions to be understood and we want to serve citizens in the way they deserve. what lies ahead is the period of building up our knowledge base by continuous reviewing of the effects of our policies and actions, as well as the increasing use of artificial intelligence that must be managed by man as the one who has created it. these are important lessons for the future. still, investment in people, cooperation and diversification remains the best investment in the future! i have always believed that the greatest value is to be a friend to a friend. and i don't want anyone convincing me that friendships don't exist and that that there are only alliances based on interest. isn't our interest cooperation and survival? it is. we shall exist | 0 |
peter pang : hong kong β s retail bond issues opening remarks by mr peter pang, deputy chief executive of the hong kong monetary authority, at the signing ceremony for the retail bond issue under hkmc β s retail bond issuance programme, hong kong, 18 july 2005. * * * good afternoon ladies and gentlemen, on behalf of the hong kong mortgage corporation, i welcome you all to this signing ceremony for the retail bond to be offered to the public tomorrow. i am pleased to note that since the introduction of the current offering mechanism through placing banks in october 2001, hkmc retail bonds have been warmly welcomed by retail investors. so far, we have issued seven retail bonds for a total amount of hk $ 10. 4 billion. the success of the mortgage corporation β s debt issues has been attributed to its high credit ratings ( which are the same as those of the hong kong sar government ) and to the wide range of notes, which can meet the different investment needs of retail investors. the upcoming issue has both hong kong dollar and us dollar denominated notes. this is the first time that the hkmc issues us dollar notes. apart from diversifying its funding sources, the hkmc β s issuance of usd retail bonds also serves to provide an additional investment channel for retail investors in hong kong. the minimum subscription amount for our usd bonds is only us $ 5, 000, setting a reasonable threshold to make our debt accessible to a large segment of retail investors. this move by the hkmc to issue usd denominated bonds fits very well into the efforts by the hong kong monetary authority to promote the development of a safe and efficient financial infrastructure for hong kong, based on a multi - currency, multi - dimensional platform. in hong kong β s banking system, we have around hk $ 2 trillion in hk dollar deposits. our banks also have the equivalent of over hk $ 1. 8 trillion in foreign currency deposits. about 70 % or us $ 164 billion are us dollar deposits. the loan - to - deposit ratio for hong kong dollar deposits is 87 % ; the equivalent for us dollar is only around 26 %. we reckon that a significant portion of the sizable us dollar deposits is held by retail investors and some would wish to diversify and look for investment products to increase their return. one could of course look for opportunities overseas but, as an international financial centre, hong kong should also try to provide more such investment products locally. in the past there have been very few local issues of us | randal k quarles : goodbye to all that - the end of libor speech by mr randal k quarles, vice chair for supervision of the board of governors of the federal reserve system, at the structured finance association conference, las vegas, nevada, 5 october 2021. * * * now that business travel has started to pick back up as we emerge from the covid event, a prosaic but insistent problem has reappeared : what to read on a long plane flight. like most of you, i try to get some work done β but, also like most of you, out of an amalgam of security concerns and indolence, i often don β t succeed. something must improve the hours, but kant is a little heavy, p. g. wodehouse a little light, and t. s. eliot looks like you β re just showing off. so, over the last few weeks, i β ve been re - reading joan didion while making my way from point a to point b : slouching toward bethlehem, the white album, and where i was from. as it turns out, joan didion is a particularly apt author to be reading on the way to this conference β not because the conference is being held in las vegas, although her four - page summation of this β most extreme and allegorical of american settlements β is a classic. but rather, because a nearly constant theme of her writing is change : how hard it is to recognize that things have changed ; how hard it is to come to terms with it once recognized ; how insistent people can be that surely, they will be ok. and given that introduction, i β m sure you have now guessed what i intend to talk to you about today : libor, the benchmark formerly known as the london interbank offered rate. libor was the principal benchmark used to set interest rates for a vast number of commercial loans, mortgages, securities, derivatives, and other products. for a number of years β certainly at least since july of 2017, and really for several years before β it has been clear that libor would end, but some believed it was not clear exactly when libor would end. and, as a result, many market participants have continued to use libor as if that end date would surely be in some indefinitely distant future, as if libor would remain available forever. earlier this year, however, things changed, and changed significantly. two things | 0 |
to move towards a form of democratically legitimate fiscal union, which would make it possible to provide monetary policy with full protection against the risk of a member state defaulting. but this is not where we are at present. what we are trying to do is protect ourselves and respect the boundary between what is technical and what is political by referring to a political framework, in this case the decisions of the eurogroup ( the group of euro area finance ministers ). the new greek government wants to change the content of the structural reforms, which is perfectly legitimate because that β s what it was elected to do. but this creates a transition period while the contract between the country and the rest of europe is being redefined. that transition creates uncertainty, and during this time the country is no longer able to obtain funding on the markets. on 20 february the eurogroup agreed on a discussion framework, and it is up to this body to decide whether to release some of the funds from the european assistance programme and think about a possible further programme. we have been working within this exact bis central bankers β speeches framework. it is not up to the ecb or the bank of greece to finance the greek government and we will make sure that this does not happen. not only because it would be illegal β the treaty explicitly prohibits a central bank from financing a government β but also because the opposite decision, i. e. to finance a government while a political agreement is being reached, would amount to a circumvention of the eurogroup β s decision. the latter, which represents the democratically elected governments, has decided not to grant a bridging loan to the greek government : what right then would the ecb, which does not hold a political mandate, have to do so? we are well aware that we will always be caught between a rock and a hard place : our decisions, whatever they may be, can always be interpreted politically by one side or another. however, the eurosystem is completely fulfilling the role it has as a central bank, which is to finance the greek economy. week after week the liquidity provided to greek banks has been increased. just one figure : last december the loans granted by the eurosystem to the greek banks amounted to β¬45 billion. now, in mid - april, they are at β¬110 billion, well over twice as much. so we are doing our job as a central bank for greece but it is not our role to get involved in a | questions have a huge impact in terms of potential growth as well as financial stability ( the climate risks can be covered more or less well by different types of financial instrument ) and, ultimately, price stability. monetary policy is linked to the general price level but it cannot ignore the structure of relative prices. we can see clearly today that one of the most important questions we are facing is the fall in the oil price. these questions, such as the consequences of a european energy policy or of different energy policies within each euro area country, different energy mixes, between the use of nuclear power or renewable energy... all these choices have an impact on the structure of relative prices and on convergence or divergence at the heart of the euro area. we have to understand better how this issue will change the way the economy works so we can adapt our monetary policy accordingly. it is not for the ecb to encourage particular investment decisions which are carbon - saving to a greater or lesser degree or which form part of this or that policy. to do so would be to cross the line between monetary and economic policy and give way to the fascination i mentioned earlier. and yet we can see clearly that there are very deep political disagreements which the ecb cannot settle, on the energy mix, the terms of the ecological transition, etc. however, everything we are doing at the moment forms part of an approach aimed at rekindling investment. compared with the traditional policies of central banks, which are geared to the short term, qe is an extension of the intervention horizon of monetary policy. for instance, the average term of the securities purchased as part of qe is nearly nine years. so monetary policy is having more impact than before on the financing conditions for long - term investments. this is particularly crucial for financing investments linked to the energy transition. in short, we are creating favourable conditions for long - term investment, and it is up to the governments and the european institutions to take advantage of these conditions. bis central bankers β speeches | 1 |
##ration in money and credit growth, and a precipitous fall in output. despite our humble performance as economists in forecasting this specific sequence of events, no one can credibly claim that what actually materialised was the most likely among a range of possible scenarios. i think it is fair to say that in order to contain risks to price stability β whether to the up or the downside β there was a pressing need to head off these excesses, instead of dealing with them after the fact. irrespective of the conjunctural assessment, of how these excesses might eventually unwind and of whether or not this process might affect the financial system, such a response was clearly needed. being agnostic about monetary developments would not have been appropriate. to conclude : the improvement in our tools has been evolutionary, rather than revolutionary. a high degree of continuity has been maintained, as our results support the monetary policy strategy. progress has been achieved through the pursuit of our enhancement agenda, but open questions remain. because of the current financial stability issues, we have been applauded for the monetary analysis, but we are again called to limit its scope. previously we were asked to plug monetary information into an inflation forecast. now we are being asked to plug it into the emerging framework for macro - prudential analysis. as a by - product, monetary analysis may both help and be helped by the analysis of bank balance sheets for macro - prudential purposes. however, we do not want to limit monetary analysis to this end. we need to maintain a comprehensive view of the transmission of money to the economy and to focus on pursuing price stability, in line with our mandate. | - absorbed without posing any risks to price stability. another scenario sees such trends as harbingers of changes in spending on goods and services, thereby affecting price developments. yet another scenario could be that increased money holdings may be associated with increased purchases of assets and higher asset prices. if sustained, wealth effects would ultimately exert upward pressure on consumer prices. if this is not sustainable, a subsequent bust is likely to create downside risks to price stability. only in this latter sub - case would we be confronted with financial stability issues too. but in all cases, the long - run relationship between money and prices is preserved. enhancing monetary analysis let me turn to the more central questions. recognising the distinctive role that money plays in the economy does not tell us how we should conduct monetary analysis. in the light of our analysis, how does the transmission from money to prices work and how precisely is it supposed to inform the policy - maker? i cannot provide you with a static toolkit to answer these questions. as in any other field in economics, we have continuously refined and updated the tools in the face of constant structural change. in spring 2007 the governing council endorsed the pursuit of an agenda to enhance the ecb β s monetary analysis. why did we start this? how did we come to organise it? finally, what have we achieved over the past three years? 1. reasons for enhancing monetary analysis looking back, i must say that the timing was most opportune. m3 had persistently been growing, far in excess of the reference value, and had actually started to increase by doubledigit rates compared with a year earlier. what was going on? did this reflect an underlying trend? how would this end? these developments seemed to expose a number of shortcomings in our analysis. the expert β s judgement was that between 2001 and 2003 portfolio shifts into m3 owing to heightened economic and financial uncertainty had pushed m3 headline growth above its underlying trend. but this was not fully reflected in our modelling tools. over the past decade as a whole we have experienced a continual process of financial innovation and structural change. we have constantly needed to adapt, refine and update our tools. in addition, these tools could not describe the multifaceted way in which monetary trends may transmit to the economy. until then, we had relied mostly on partial equilibrium, reduced - form models. they served us well in forecasting, but failed to capture structural or behavioural interpretations of monetary trends. this would | 1 |
economy. in order to fulfil its mission, it drafts and implements independently the monetary policy and monitors and regulates the financial market activity in general and that of the banking system in particular. also, the bank of albania is an important and active actor in the country β s efforts for european integration. let me further make a brief presentation of bank of albania β s work throughout 2008. bank of albania β s monetary policy and operations the bank of albania β s monetary policy is drafted and implemented exclusively in view of fulfilling its primary objective, i. e., achieving and maintaining price stability. inflationary pressures present during the first half of the year and the shaking of agents β confidence dictated the pursuit of a prudent monetary policy during 2008. the key interest rate was held unchanged throughout the period, aiming at a better balancing of the demand and supply ratio, and contributing to subduing of inflation expectations in the economy. along with the strengthening of some banking supervision prudential measures for credit risk management, this policy has brought about a more balanced credit growth and has transmitted proper encouragement for consumption and savings. the international confidence crisis in early fourth quarter of 2008 encouraged deposit withdrawals from commercial banks in albania, highlighting lack of liquidity in the banking system. it was reflected in raised interest rates, slowed banking activity in the money market. the bank of albania intervened in the monetary market by injecting liquidity, in order to cover the banking system needs for liquidity. the dynamics of 2008 events required the usage of all open market instruments and modification of some of them. the bank of albania has injected liquidity of a weekly, monthly and quarterly term. it has increased securities basis that may be used as collateral and has reduced the upper limit of interest rate corridor of its operations. also, in order to better satisfy the banks β needs for liquidity, the bank of albania changed the main auction type, from fixed - amount auctions into fixed - price auctions. also, the bank of albania has induced more flexibility to banks for short - term liquidity management, by raising the quantity of the daily required reserve usage. all these operations have served for settling down the liquidity situation and attenuating its impact on interest rate rise. they have also prevented balance sheets of commercial banks from contraction and have been reflected in enlargement of bank of albania β s balance sheet. banking regulation and supervision year 2008 coincided with an upward prudence of supervisory policies of the bank of albania. the | ardian fullani : the albanian economy and the banking sector in 2010 speech by mr ardian fullani, governor of the bank of albania, at the reception of the albanian association of banks, with bankers and representatives of banks operating in albania, tirana, 17 december 2010. * * * dear bank executive managers, dear participants, it is always a pleasure to meet once the year - end approaches to make a summary of events that characterized the albanian economy and the banking sector over the course of 2010. the albanian economy is forecast to grow in 2010 slightly higher than in 2009. industry and services provided the largest contribution to the positive economic growth, yielding as well a relative improvement in the balance of payments β current account. lek β s exchange rate was more stable compared with the preceding year, whilst consumer prices fluctuated within the bank of albania β s target of 3 %. fiscal policy engaged in a process of fiscal consolidation during the present year, which we consider as critical in order to preserve the budget deficit and domestic debt levels and keep the level of interest payments in check. developments in the financial system attest to the full recovery of public confidence in the banking system. as at end of the third quarter of 2010, total banking sector assets accounted for 81. 7 % of gdp, up 12. 2 % y - o - y versus merely 0. 9 % in the same period in 2009. deposit growth and higher capital account provided the major positive contribution to the expansion of banking sector activity. deposits have grown by 18 % y - o - y, out of which more than 2 / 3 of this figure represents foreign currency - denominated deposit growth. banking sector treasury and interbank operations declined versus the same period in 2009. liabilities to non - residents have dropped by 32 % y - o - y. concerning the composition of banking sector assets, we note that lending has grown by 8 % on a yearly basis. the annual growth rate of lending has been constantly downward in the last couple of years. banking sector and interbank operations have grown by about 25 % on a yearly basis. banking sector investments in non - resident assets increased by 53 % y - o - y. net profit was positive and substantially higher than in the same period in 2009. return on assets and equity stood at 0. 6 % and 6 %, respectively. capitalization and liquidity figures were at adequate levels. capital adequacy ratio was estimated at 15. 7 %, while liquid assets accounted for | 0.5 |
michelle w bowman : opening remarks β " monetary policy β s impact on workers and their communities " opening remarks by ms michelle w bowman, member of the board of governors of the federal reserve system, at " monetary policy β s impact on workers and their communities ", a fed listens event, sponsored by the federal reserve bank of chicago, chicago, illinois, 17 october 2019. * * * thank you, president evans, for hosting this event today, and to our moderator and participants for taking part in this valuable discussion. today β s event is the last in our series of fed listens events held across the country to learn about how americans think about monetary policy and how they think about the federal reserve. in keeping with the purpose of fed listens, i would like to spend most of our time in conversation. but i do want to offer a few thoughts about why the fed is reaching out to seek a broad range of views, and what we are hoping to accomplish through this initiative. fed listens is a new comprehensive outreach to the public on monetary policy. for many decades there was a sense at the board that the public wasn β t interested or even willing to dive into the complexities of monetary policy. that view has changed in a fundamental way, especially in the aftermath of the financial crisis when it was urgently important that the public understand what we were doing. so we began explaining as accessibly and as clearly as we could what we were doing and why. now we are listening carefully. since i became a board member almost a year ago, it has become clear to me that people are not only willing to engage on complex economic issues, but they also want to know that their concerns are being taken into consideration on issues that affect their financial well - being. the fed β s movement toward greater transparency and public engagement is well underway, and advancing that effort is one of my top priorities. at the same time, we recognize that the clear communication of our policies actually helps us achieve our goals. when we communicate our views on the economic outlook and our expectations for where interest rates may be heading, consumers and businesses take that information into account when making decisions on spending, investment, and hiring. for that reason, our policy communications are an important part of the fed β s toolkit for influencing the direction of the economy. fed listens is a natural outcome of this commitment to public engagement. we have heard from many people from different parts of the country and from different sectors of the economy | grant spencer : banking regulation - where to from here? speech by mr grant spencer, deputy governor of the reserve bank of new zealand, to kanganews new zealand debt capital markets summit, auckland, 2 august 2017. * * * background i began my present job as head of financial stability at the reserve bank in april 2007. that month saw the first straw in the wind of the us sub - prime crisis β the failure of a real estate trust called β new century financial β. over the next three years the reserve bank was kept very busy attempting to protect the new zealand banking system and economy from the ravages of the global financial crisis ( gfc ). in the aftermath of the gfc from 2010 onwards, we saw a step up in banking regulation globally, epitomised by the g20 - sponsored basel iii reforms, financial stability board initiatives, and the dodd - frank act in the usa. the reforms sought to reduce risk - taking by banks, increase capital and liquidity buffers, and improve resolution regimes so that government bail - outs could be more avoidable in the future. while the australian and new zealand banks were less directly affected by the gfc than their northern hemisphere counterparts, they were severely tested, particularly when shut out of international funding markets for several months following lehman brothers β collapse. it was inevitable and appropriate that the tightening of banking regulation would be felt in this part of the world. the new zealand banking system is highly integrated with international markets and needs to maintain a strong reputation if it is to continue its lead role in intermediating new zealand β s financial dealings with the rest of the world. as the post - gfc reforms rolled out internationally, the reserve bank endeavoured to tailor the reforms to suit the specific characteristics of the new zealand financial system and our regulatory philosophy. we did not adopt certain policies such as the leverage ratio and compensation policies, but in broad terms have adopted most of the components of basel iii. that said, some of these policies may be better suited to the major banking systems of the us and europe, than to new zealand β s relatively vanilla banking system. this raises the question of how closely we need to follow international standards in order to realise the undoubted benefits of international recognition. we are currently reviewing our regulatory experience over the post - gfc period and thinking how we might shape the new zealand framework going forward. two particular catalysts in this regard are the recent imf financial sector assessment program ( fsap | 0 |
multi - dealer systems. all speeches are available online at www. bankofengland. co. uk / news / speeches chart 4 : multi - dealer fx platforms β buyside market share source : euromoney fx surveys. some implications of fragmentation : the good, the bad and the ugly is fragmentation here for good? some suspect it will eventually hit the buffers, as the declining marginal benefits of ever - greater product diversity, and the growing cost of navigating it, become more evident. but others argue that it could accelerate further, as technology costs continue to fall, helping market users seek out more obscure venues where they might have an edge. 5 whatever happens, for today β s market participants, fragmentation is a fact. and that means β just like lola β they can experience a markedly broad range of outcomes. that has important implications for all three of the characteristics β informational efficiency, resilience and fairness β i talked about a moment ago. central banks are watching those issues closely. 6 but today i want to focus on the effectiveness of the fx market in delivering the services needed by its users β using three storylines of my own. our first fictional fx market user has never had it so good. with the resources and knowledge to connect to dozens of competing platforms and liquidity providers, analyse rich data sets in real time to work out the best way to deal, and using an array of algorithms ( perhaps even arranged in an β algorithm wheel β ) to execute at speed with minimal price impact, she gets an exceptional service from fx markets. i say β she β quite deliberately here too β because, as i discussed back in june in a different speech, 7 technological innovation means embracing diversity β of people, ideas, and working practices β is no longer a choice, it β s a business necessity. for heavily - traded currency pairs, our hypothetical fx trader is getting bid / ask spreads that are a fraction of a basis point for a $ 1m trade, rising to a few basis points for a large trade. and she β s taking see for instance https : / / www. bis. org / publ / mktc10. htm and https : / / www. marketfactory. com / whitepaper - why - does - fragmentationcontinue - to - increase - increasing - entropy - in - currency - markets / see for instance my predecessor β s speech on fast markets at https : / / www. bankofengland. co. uk | comes from viewing these metrics at different spatial resolutions β regional, local authority, postcode even. this allows a β micro - to - macro β jigsaw of the economy to be pieced together, as with other complex systems. patterns in these systems often self - replicate at different resolutions ; they are β fractal β. 7 one interesting question is whether economic systems also exhibit self - replicating patterns. if so, this has implications for how we understand and model them. we consider these questions using a sequence of maps. many of these maps are not new. for example, philip mccann from the university β s productivity insights network ( pin ) has published an excellent book setting out a range of fascinating regional facts and maps. so too have others. 8 these maps provide useful context when testing the tip o β neill hypothesis and when modelling and managing the economy. to provide the clearest visual guide, these maps are scaled by economic rather than geographic size β so - called cartograms. 9 each region is initially scaled to have the same geographic area and then rescaled in line with economic differences. this means some areas shrink ( such as scotland ) while others expand ( such as london ) even without differences between them. this helps when visualising local differences. ( a ) differences between regions to fix ideas, charts 1a and 1b plot a map and an accompanying cartogram of population by region in the uk and, by way of comparison, germany. it uses a resolution one - level below the national β administrative β regions β in england and each of scotland, wales and northern ireland. comparing the map and cartogram suggests the uk has a significant demographic skew towards london and the south - east. germany has nothing like the same skew, with the cartogram and map little different. 10 a key focus of work among economic geographers is the importance of agglomeration effects β that is, increasing returns to economic scale at the spatial level. 11 if those effects are powerful, and if workers are one of their most important sources, we would expect cartograms to have similar properties when looked at by population, income ( per head ) and wealth ( per household ). more should not only be merrier but wealthier. for example, case and deaton ( 2017 ). for example, viscek, shlesinger and matsushita ( 1994 ). mccann ( 2016 ), centre for cities ( 2019 ), what works | 0.5 |
banking supervision is now carried out by the single supervisory mechanism, composed of the ecb and the national competent authorities. this has unified the basis on which supervision is carried out. the largest and most significant banks are now supervised directly from frankfurt, in close partnership with the national authorities. the euro area has also set up the single resolution mechanism to ensure the orderly resolution of failing banks, while at the same time reducing the impact on the taxpayer. conclusion this account of how policymakers and researchers have interacted in the past ten years shows 5 / 7 bis central bankers'speeches how indebted the former are to the latter. from my point of view, one can draw five lessons for policymakers. first, sudden shocks often make visible the flaws in our policy frameworks and challenge the explanatory power of existing theories in ways that have been previously overlooked. but analysis conducted by researchers and embraced by policymakers remains essential in designing the policy response. second, a policy response that has its foundation in rigorous research is less prone to being impaired by political compromise and easier to explain to the general public. third, keynes is often quoted as saying, β when the facts change, i change my mind. what do you do, sir? β well, for policymakers, it is not that simple, and research helps us to decide whether a change in the facts deserves a policy response or, as we say, we should look through it. fourth, when the world changes as it did ten years ago, policies, especially monetary policy, need to be adjusted. such an adjustment, never easy, requires unprejudiced, honest assessment of the new realities with clear eyes, unencumbered by the defence of previously held paradigms that have lost any explanatory power. fifth, we must be aware of the gaps that still remain in our knowledge. our mainstream macroeconomic models still have little to say, for instance, about the non - linear propagation of shocks, the distributional impacts of policies, or how endogenous firm entry and exit can affect economic performance. 15 policy actions undertaken in the last ten years in monetary policy and in regulation and supervision have made the world more resilient. but we should continue preparing for new challenges. the changes that we have discussed, profound as they are, often hinge on one fundamental idea. a natural question to ask is whether such an idea sprang out as a response to a specific policy problem or was rather conceived previously in | in contrast, non - banks would argue that common regulatory standards should apply to all relevant service providers in order to ensure a competitive level playing - field. in the end, the question is whether the approach to regulation should be based on functions or institutions. finally, the globalisation of finance has resulted in the expansion of cross - border financial linkages. an implication of globalisation is that financial distress is more likely to have farreaching cross - border effects. this is a natural consequence of the tighter cross - border linkages that have formed. such effects are almost guaranteed if distress were to involve one of the global players that operate across so many countries and underpin the smooth performance of so many markets. in fact, over 30 years ago, even the failure of a small bank active in fx transactions was sufficient to have significant cross - border ramifications β so significant as to act as a catalyst for the establishment of the basel committee on banking supervision. the knock - on effects of distress at one of the current large global players would presumably be much bigger. conclusions let me briefly conclude, ladies and gentlemen. central banking and payment systems are inextricably linked. central banks all around the world are involved in payment systems and market infrastructures in many different ways owing to their roles and responsibilities in relation to monetary policy and financial stability. indeed, payment systems disruptions would not only affect financial stability, but may potentially also have an impact on monetary policy implementation. central banks have found ways of safeguarding price stability, while at the same time ensuring the smooth functioning of the payment system, by drawing a clear line between providing intraday liquidity for payment system purposes and providing credit for monetary policy implementation. moreover, the sufficient availability of collateral is important today as a contribution of central banks to financial stability. the roles of central banks in the field of payment systems are changing in a number of ways as a result of progressing globalisation, increasing complexity, and the emergence of new players and services : β’ the approach of central banks to analysing financial stability is changing. a comprehensive view of the key sources of risk and vulnerabilities facing the payment systems and market infrastructures cannot be formed without taking due account of developments at the global level, such as the emergence of cross - border payment systems and offshore centres. issues and questions relating to the location of payment systems and market infrastructures are also gaining in importance for central banks. β’ central banks have started interacting and cooperating with new interlo | 0.5 |
that, in turn, undermines the credibility of monetary policy. if the central bank moves into that kind of territory, it could become ensnared by its own policy and forfeit some of its credibility. why were you unable to convince the other governing council members with those arguments? most of my colleagues were evidently convinced that these concerns, while justified, could be addressed by designing the programme appropriately. they certainly did take my arguments and concerns on board β even though my overall assessment of the programme still ultimately differs from theirs. ecb president mario draghi has cited disruptions in monetary policy transmission as the reason for setting up the new programme. that does indeed seem to be a problem ; the ecb β s most recent interest rate cut failed to reach some euro - area countries. do you also believe that there are disruptions in the monetary policy transmission mechanism? bis central bankers β speeches we have been hearing that argument ever since the first government bond programme was launched in 2010, and yet we are still talking about disruptions in the transmission mechanism today. so my question is : faced with structural problems such as a lack of competitiveness and a loss of confidence in some countries β public finances, are government bond purchases really the right tool for repairing the monetary policy transmission mechanism? but you agree with the diagnosis? our monetary stimuli are still being transmitted, but our monetary policy is not currently reaching all euro - area countries in equal measure. that fact is connected, not least, with the lack of credit demand in some countries and the deleveraging process in their banking systems. yet these adjustments are all appropriate and necessary to enable these economies to stand on their own two feet again. do government bond risk premiums actually reflect the fundamentals at all any more or are they partly down to the irrationality of the markets? ideas about what is a fair interest rate level based on the fundamentals differ very widely and have a large subjective component. however, i wouldn β t say that the markets β actions are completely irrational at present ; they are based on concerns that the reforms in some countries could grind to a halt. these reforms and, above all, the question of whether they will actually be pursued in the future have a major impact on the growth outlook and thus also on credit risk. so it would be best for the ecb to do nothing, to simply wait for the storm to pass? not making government bond purchases certainly wouldn β t imply that the eurosystem was merely waiting for the | uk have been both highly professional and stability - oriented in the past. i strongly hope that supervisors here will be able to keep up this good work and turn a blind eye to demands for deregulation and lax supervision. the current regulatory and supervisory standards we have set together are an important lesson from the financial crisis and it would be a mistake to roll them back. i am convinced that in the long run, well - capitalised and strictly supervised financial systems are the most successful ones. to be clear, my call to refrain from using regulation or supervision for the sake of increasing one β s competitiveness is equally addressed to the eu. there might be a certain temptation to use brexit as a chance to strengthen financial centres across the rest of europe, for example by offering discounts with respect to licensing procedures. this is not a route we should take, and i am confident that the strong role and far - reaching competences of the ssm, including the ecb β s responsibility in licensing, will forestall such ideas becoming reality. while i am serious about my warning of lax rules and supervision, i am cautiously optimistic that we can prevent this scenario from materialising. and this is because i know my colleagues in london very well, and i know that they share my views on this issue. our cooperation with the uk prudential regulation authority has been exemplary in the past, and we will invest all our efforts in continuing this partnership in the future. now, more than ever, we should also harness our relationship to work together closely during brexit. information sharing needs to be an important part of this. for example, when european authorities examine the risk models of banks wishing to establish a subsidiary on the continent, we would benefit from knowing what the pra found in their previous assessment. this includes at what time the pra last examined the model, under what assumptions, and to what verdict it came. conversely, we are open to sharing all necessary information that the pra might need to process applications by eu banks to operate in the uk. the guiding principle of our cooperation should be to ensure a smooth transition to a post - brexit world. as supervisors with the necessary distance from political haggling, we can make a substantial contribution by providing pragmatic and efficient solutions. in parallel, i believe that european and uk supervisors should fathom out how we can put our future cooperation on a more formal footing. 6 closing remarks ladies and gentlemen, let me summar | 0.5 |
and liquidity constraints, particularly in dollars, have prompted certain groups to deleverage. it has undertaken an in - depth analysis and published studies on developments in household credit as well as the reallocation of households β financial investments, particularly between bank savings products and insurance savings products. ii ) 2011 β and this is my second point β was a year that saw the reinforcement of the methods used in prudential supervision. it was above all the year in which the process of merging banking and insurance supervision was completed. having been set up in the midst of the crisis that we are going through, the acp continually reviews the methods it uses to deal with new challenges. on the one hand, the traditional activities of on - and off - site inspections have been enhanced by taking the best procedures and practices from each of the two sectors, leading to improved quality and comparability in the assessment of the situation of the different institutions being inspected. during the year, the acp thus developed a more cross - functional mode of operating, thereby responding to the intention that led the government to merge the former authorities in 2010. the acp β s college has set out priorities for the supervision of each of the two sectors in a coordinated manner, and the acp has set up an autonomous and cross - functional research directorate. on the other hand, in line with international and european initiatives, the acp β s supervisory methods are complemented by the β stress test β approach to ever more complex scenarios and by the monitoring of the systemic nature of certain institutions. organised by the european authorities ( the eba for banks and the eiopa for insurance companies ) and the basel committee respectively and implemented concretely in france by the acp, these approaches supplement the individual supervision of banks and facilitate the macroprudential supervision of the financial system. the acp β s supervision methods have also fully taken on board its remit with respect to consumer protection, which is an essential condition for maintaining consumer confidence in the french financial sector. the acp β s mandate is to promote, in coordination with the amf β the report of our joint unit will be presented to you shortly β the sound conduct of market players β commercial practices bis central bankers β speeches without hampering responsible financial innovation that is suited to each category of customers. in 2011, the acp thus took a whole range of measures, of which i will only mention the main ones. the acp has put in place a system for monitoring | shared between paris, frankfurt and other financial centres within the zone. to answer your question about the specificities of paris, we have several assets to play an important role. first, the paris marketplace has a very strong position in equity markets within the euro area. second, in the fixed income sector, paris is by far the most important centre in two areas β the market for short term paper, where it has a share of about 36 % of the euro market, and the corporate bond market, where its share is about the same. finally, we have in paris the world β s second largest asset management industry after new york. we may not have the entire panoply of banking strengths, but we have a number of very strong niches which will continue to make paris a strong hub, which can and should continue to play an important role in the european financial services sector. euroweek : at the same time, would you like to see the big french banks continue to be active on the global stage, where their experience has been mixed? they didn β t do very well in southern europe, did they? noyer : there was a time when there was a feeling in the market that we were going to move towards a return to more national banking system, which meant that international diversification was basically a weakness. things have changed quite a lot and i don β t think anyone would argue that the move by bnp paribas to acquire fortis during the crisis was not a clever one. the french banks weren β t alone in believing that because we were supposed to have a single market in europe, it was natural for banks to expand to neighbouring countries β just as it is natural for banks originally set up in scotland to expand to england. so it was natural for french banks to see the eurozone and future euro area members in central and eastern europe as their backyard. yes, we had the greek problem, which was painful and costly for credit agricole. but this was really an extreme case and hopefully we β ll never see similar accidents again in our banking industry. as we move out of the financial crisis, i believe that having activities in several countries across the eurozone will soon re - establish itself as a normal diversified business model that is regarded as a strength rather than a weakness. bis central bankers β speeches | 0.5 |
issues we need to address as regulators. thinking outside the box as a researcher is often a response to the problems we face as regulators. i am sure that the discussion fostered by this eba policy workshop will provide a valuable contribution to our work, and i thank you all for your attention. see basel committee on banking supervision, β global systemically important banks : revised assessment methodology and the higher loss absorbency requirement β, 2018. the slides for the paper presented during the 2024 eba policy research workshop are available here. see c. scotti, welcome address at the 4th banca d β italia, bocconi university and cepr conference on β financial stability and regulation β, 2024. designed by the printing and publishing division of the bank of italy | benign in the period ahead than during the pre - pandemic period. the fiscal and monetary dimension of the response to pandemic and war three factors are likely to have determined the fiscal and monetary response of different countries to the pandemic : i ) fiscal and monetary space at the outset, ii ) the severity of the outbreak and iii ) structural factors that affected the economic impact of the outbreak and restrictions imposed to contain it. on the first two accounts, iceland was in a relatively good position. modest public debt gave the government significant fiscal space, and the outbreak and restrictive measures were moderate. the structure of the economy, on the other hand, with tourism - related services being the largest sector, created a large potential demand for fiscal accommodation to compensate affected firms and households, as discussed above. as in other countries, both fiscal and monetary policy were applied to respond to the pandemic with substantial easing, and the size of the fiscal measures taken were close to the average in oecd countries. fiscal measures in response to the pandemic iceland β s monetary space was also substantial, with domestic interest rates being significantly above zero at the outset of the pandemic. however, the size of iceland β s monetary space should not be overestimated. the combination of relatively illiquid currency markets, fairly strong exchange rate pass - through to prices and a long history of monetary instability limit how much the interest rate differential visa - vis abroad can narrow without a risk to inflation. nevertheless, the central bank of iceland β s policy rate was reduced to a historical low, greatly softening the blow to the domestic economy, especially the construction sector. as it turned out, the economy recovered very strongly as covid restrictions were lifted and the central bank needed to withdraw the monetary stimulus and start raising interest rates earlier and at a faster pace than most advanced countries. from accommodative to tightening policy reversing the stance of fiscal policy has been a more gradual process. as temporary support measures have expired, the fiscal stimulus has gradually petered out and, with the economy expanding faster than previously forecast, public finances have also recovered faster than expected. the accelerated pace of the economy provides an opportunity to reach a structurally adjusted fiscal balance at an earlier stage than expected. however, although the current fiscal policy framework may be relatively transparent and predictable, it does not seem to provide a sufficiently strong incentive to take advantage of unexpected fiscal windfalls in a counter - cyclical fashion. consequently, monetary | 0 |
jean - claude trichet : the need for structural reforms in europe speech by mr jean - claude trichet, president of the european central bank, on the occasion of the jean monnet lecture of the lisbon council β s board of economists, brussels, 4 june 2007. * * * i would first like to thank the organisers for inviting me in the occasion of this jean monnet lecture of the lisbon council β s board of economists. it is both a privilege and a pleasure for me to be here today, to share with such a distinguished audience my views on the need to further structural reforms in europe. opening a lecture series named jean monnet, is even more than that for me. jean monnet was at the very heart of the foundation of european union. the reading of his memoirs is profoundly inspiring. today perhaps he would say again β i am only changing the tense of his verbs β : β ceux qui ne voulaient rien entreprendre parce qu β ils n β etaient pas assures que les choses iraient comme ils l β avaient arrete par avance se condamnaient a l β immobilite. personne ne pouvait dire la forme qu β aurait l β europe ou nous allions vivre demain car le changement qui nait du changement est imprevisible Β» ; Β« those who did not want to start anything because they were not ensured that things would go exactly as they had planned were condemning themselves to remain immobile. nobody could say what europe would be tomorrow because future changes that are triggered by today β s changes are unpredictable β. the setting up of the single currency has been a remarkable success, acknowledged in europe as well as across the entire world. however, to fully exploit the benefits of the euro, europe needs to face important challenges that require major policy measures. in 2006, real gdp in the euro area grew by 2. 8 %, which is the highest rate since 2000. along with the recent economic recovery, hourly labour productivity growth has accelerated and employment growth remained positive. these positive developments are very encouraging, but this is no time for complacency. europe still has some way to go, if it wants to cope with globalization and meet the challenges of rapid technological changes and ageing population. this is true at the level of europe as a whole as well as at the level of each particular economy. economic research | europe β s long term growth performance has also been constrained by the low rate of increase of its population and the ageing of its society. since the mid 1990 β s, population in the euro area has been growing at a rate of just 0. 4 % compared to 1. 1 % in the us. this aggregate result should however not see oliner and sichel ( 2002 ), β information technology and productivity : where are we now and where are we going? β, federal reserve board. see also jorgenson, d., m. s. ho and k. stiroh ( 2002 ), β information technology, education, and the sources of economic growth across u. s. industries β, mimeo. see pilat, d., f. lee and b. van ark ( 2002 ), β production and use of ict : a sectoral perspective on productivity growth in the oecd area β, oecd economic studies no 35. see gomezsalvador, musso, stocker and turunen ( 2006 ), β labour productivity developments in the euro area β, ecb occasional paper series no 53. european commission. it is important to mention a number of caveats related to the measurement of labour productivity in the service sectors. indeed, data on hourly labour productivity and ict, especially in the service sectors, are surrounded by considerable uncertainty and caution is therefore required when interpreting the results. in addition there are alternative explanations that may explain the labour productivity growth acceleration in the us in some services sectors such as higher entry rate, organisational changes and restructuring in the us, increasing efficiency and therefore accelerating tfp growth. see c. denis, k. mc morrow, w. roger and r. veugelers β the lisbon strategy and the eu β s structural productivity problem β european commission 2005. oecd. euklems database. cover the important role immigration has had in supporting economic growth in some euro area countries. however, what is worrisome is that at the same time, the gap in population growth has been even larger with regard to growth in the working age population [ the working age population grew on average by 0. 3 % in the euro area over the period 1996 - 2006 compared to 1. 4 % in the us ], which manifests that europe has a more acute problem of population ageing. i will deal with some of the policy implications of ageing later on in my presentation. the need for further structural reforms in | 1 |
29. 04. 2022 presentation of the action plan against financial fraud * ministry of economic affairs and digital transformation pablo hernandez de cos governor * ienglish translation of the original speech in spanish. first deputy prime minister, state secretary for security, chair of the national securities market commission, authorities, ladies and gentlemen, good morning. the protocol we sign here today stands as a milestone in our efforts to enhance and reinforce action against potentially fraudulent offers of financial products and services. it comes at a particularly opportune time, with several factors giving rise to an increase in financial fraud, most notably growing digitalisation. moreover, it is an excellent example of how a problem for citizens can be addressed far more effectively through collaboration between different stakeholders, be they public or private. in the case of the banco de espana, apart from the evident microprudential and macroprudential concern for the security and resilience of the supervised entities β it systems, the impact that fraudulent use of technology may have on the citizens and firms that use banking or credit services has been a concern of ours for some time. such fraud can also come at a high reputational cost to the financial system, the proper functioning of which depends on mutual trust between supply and demand. there are many examples of fraud that undermines said trust, such as identity theft when opening payment accounts, in β know your customer β procedures or to arrange and draw loans and credit ; payment fraud, mainly in card transactions, transfers and remittances ; and fraudulent offers of financial operations or services by unauthorised or unregistered operators, which are typically a prelude to actual fraud. more recently, though, new technologies and business models have paved the way for platforms and operators that, engaging in regulatory arbitrage, offer payment, credit or investment services without sufficient safeguards and transparency. here i would specifically mention operators in the crypto - asset arena, which promise handsome rewards via apps, websites and apparently innocuous advertising, and sometimes even embed such offers in traditional payment service chains, making them harder to identify. unfortunately, these practices do not distinguish between social groups, levels of financial literacy or risk profiles, and ultimately take a far greater toll on the more vulnerable groups, in particular young people and even teenagers, which is of particular concern. against this background, and notwithstanding any action that might be taken by the public prosecution service, the courts or law enforcement authorities in relation to criminal offences, our role | as supervisors is primarily a preventive one. this means oversight of advertising, ensuring that the registry of operators is fit for purpose and, very importantly, raising awareness of the risks among potential users and fostering their financial and digital education. one prime example of this preventive work is the recent joint statements from the cnmv and the banco de espana warning the general public of the risks in relation to crypto - assets. another example, specific to financial education, is the set of actions envisaged under the national financial education plan. we support this preventive work by exercising our corrective powers, wherever regulations and jurisdiction so allow, and by advocating legislative initiatives with regulators and legislators to remedy any shortcomings that we identify. the main strength of this protocol is that it deepens the cooperation needed to efficiently and effectively carry out our functions. this collaboration will also help to delimit each signatory β s respective field of action. close cooperation between supervisors is particularly important in this domain, since we are often confronted with schemes that do not fit easily within a single regulatory field or sphere of competence. the idea is to avoid any grey areas where potential criminals can commit financial fraud. not only are financial supervisors involved in the protocol, but so too are players as important and diverse as the public prosecution service, law enforcement authorities and associations representing notaries, registrars, the financial sector and the media. this, we are certain, will be a critical advantage in our efforts to combat financial fraud in both the preventive and corrective dimension. a warm welcome, then, to this initiative, which will have the banco de espana β s full support. | 1 |
at some point in time. depreciation of the currency may in turn further fuel inflation and offset the impact of economic stimuli through negative balance sheet effects on consumption and investment. structural policies the second building block is structural policy. the sustainability of nominal convergence is to a large extent conditional on a sufficient degree of structural, or real, convergence. a broad indicator of the degree of real convergence with the euro area is the catching - up of per capita incomes and price levels of new members with those of the euro area. convergence in real per capita gdp levels has to be fostered by far - reaching structural and institutional changes aimed at enhancing the growth potential of the economy. such reforms typically aim at strengthening the flexibility of adjustment mechanisms in the economy and improving the business environment. when goods and labour markets are rigid, inflation and inflation expectations may remain high even in the presence of monetary regimes committed to the achievement of price stability. both governments and social partners share responsibility for ensuring that wage determination takes sufficient account of labour market conditions and does not jeopardise competitiveness and employment. active labour market policies should tackle persistent bottlenecks, such as skill mismatches. finally, protection of vested interests in the product markets and lack of mobility and adaptability in the labour markets undermine job creation, in particular for young and less qualified workers, as well as for all those who face problems entering the labour market. lowering barriers to entry will increase competition, particularly in those domestic service sectors that are sheltered from international competition, and thus support price stability. economic growth led by the private sector needs to be fostered by a stable and business - friendly policy environment. in this respect, governments should strive for transparency and predictability of the policy regime, a low compliance burden, and effective governance in applying the rule of law. fiscal policy it is also crucial that the achievement of price stability is supported by sound fiscal positions, the third building block of convergence. irresponsible fiscal policies can jeopardise credibility, as higher inflation becomes desirable to reduce the real value of government debt. fiscal policies should be sustainable and oriented to the medium term. they should further aim at mitigating undesirable trend growth differentials through β high quality β expenditure and tax policies. in particular, high and inefficient public expenditure can put a brake on economic activity by imposing a high tax burden on the economy and channelling resources into unproductive uses. financial policies the fourth building block is financial policy. | and approved the building of 500, 000 housing units in all regions of the kingdom over the coming five years with allocations of rls 250 billion. the limit of housing loans extended by the real estate development fund was increased from rls 300, 000 to rls 500, 000 which will hopefully provide more houses for citizens and constrain the inflationary pressures stemming from the increase in house rents. you also ordered setting a minimum wage of rls 3, 000 for all saudi government employees, allocated a monthly amount of rls 2, 000 for job seekers, and raised capital of the saudi credit and saving bank by rls 30 billion. the number of family members covered by the social security was increased from 8 to 15 with an allocation of rls one billion for that purpose. the government subsidies for charity associations rose by 50 percent to rls 450 million annually, and needy families β sons and daughters were supported to join bis central bankers β speeches universities through allotting them a portion of seats, facilitating their admission requirements, and exempting them from some tuition fees. this package of honorable royal decrees will enhance the standard of living of the least - income segment of population and promote its ability of saving and, thereby, raise its future productivity and income, and reduce poverty, to which you always attach considerable attention. in the health care arena, you ordered supporting the ministry of health with rls 16 billion in order to carry out the expansion of a number of hospitals and health centers. you increased the maximum limit of the ministry of finance β s financing program of private hospitals from rls 50 million to rls 200 million. this would hopefully enhance health care services in the kingdom. under your wise leadership and continuous guidance, the supreme economic council continued to accomplish a number of development steps aimed at restructuring and reorganizing the economy and streamlining regulations and legislation in order to promote the rise of the level and competitiveness of the economy, achieve the optimum operation of the production factors and provide an attractive environment for domestic and foreign investment. as a result, the investment environment has improved. according to the β doing business report 2012 β issued by the world bank, the kingdom ranked twelfth among 183 world countries in terms of ease of business performance. the executive board of the international monetary fund noted that the kingdom was well posed to encounter the global financial crisis. however, the sound supervisory and regulatory frameworks significantly contributed to strengthening the capacity of the financial sector to withstand the crisis. the board stressed that | 0 |
lars nyberg : will cash replace cards? speech by mr lars nyberg, deputy governor of the sveriges riksbank, at the cards and cash payments forum, stockholm, 3 may 2011. * * * i would like to thank bjorn segendorff for his contributions to this speech. since the latter half of the 19th century, the theory of evolution has gained general acceptance. it is considered to be self - evident that better - adapted species will outcompete those that are less - well adapted. environmental changes may even lead to some species becoming extinct. there are no longer any sabre - toothed tigers or mammoths because the ice age is over. a new species may also be superior to another species in a crucial way. this is why we no longer see neanderthals walking the streets. nevertheless, some other amazingly old species are still with us. crocodiles have been around for 85 million years and the coelacanth, if i am correctly informed, can be traced back 400 million years! an evolutionary process, although of a slightly different kind, is now also taking place on the payment market. rapid technological development is changing the world around us. new payment methods are arising. bank cards and credit cards have become a natural part of our everyday lives, as has internet banking. in sweden, cheques have been outcompeted and are hardly used at all. the number of paper - based giro payments is falling rapidly and it also appears that the use of cash is declining. the value of the banknotes and coins in circulation has fallen from 9. 6 % of gdp in 1950 to 2. 9 % in 2010. so, the question is : should cash be compared with the extinct neanderthals or the surviving crocodiles? but why is this of interest to the riksbank? well, a first obvious answer is because it is the riksbank that issues banknotes and coins. another, and more complicated, answer is because one of the tasks of the riksbank is to promote a safe and efficient payment system. this may sound a little high - flown, but it means, among other things, that we should promote the development of safe and efficient payments. this is why we have a natural interest in cards and cash. hence, we are interested in the evolution of the market for payments, and that is why i am standing before you today. what i intend to talk about today is why i believe that cash will continue | produce a large number of payments than a small number of payments due to the benefits provided by economies of scale. however, it takes some time before a new system can reap these benefits. the costs for building, manning and maintaining such a technical system are rather high and it is only when the system is in place that costs begin to fall. then the cost of processing an additional payment is almost zero. the average cost of making a payment thus falls as the number of payments increases. the price per transaction that the producer can charge without running at a loss is therefore low. already established payment services that handle large volumes of payments therefore have a cost advantage. the larger the volume the established service has, the greater is its advantage. the situation for a new service is exactly the opposite. at least initially, a new service will have a small number of payments to distribute the fixed costs between. in order not to price itself out of the market, the new service will have to run at a loss until it has achieved a sufficiently high volume. a new service thus has a significant cost disadvantage compared with an established service. second, a new system has to compete against the so - called network effects. the classic example of a network effect is telephony. being the first person to have a telephone offers no advantages. if two people have telephones they can at least call each other, which has a value. for every new telephone owner that is linked to the telephone network the benefit of having a telephone to those who are already connected increases as the number of people that can be reached has now increased. this reasoning about telephony can easily be applied to payment services where everyone wants to be able to send payments to and receive payment from everyone else, for example a service for payments between private individuals ( p2p ). the reasoning becomes more complicated when we talk about payments from consumers to companies ( p2b ). payment service markets with two distinct sets of customers for payment services and payment flows in only one direction are usually called two - sided markets. the market for point - of - sale payments ( pos ) is one such two - sided market. the payments on this market go from the private customer to the company and not the other way. the card market is only attractive to merchants if there are a sufficiently large number of consumers with cards. similarly, it is only attractive for consumers to have cards if it is possible to use bis central bankers β speeches them in a sufficiently large number | 1 |
##ecd average of 7. 2 %. the occupational pension funds have grown very fast in the last few decades, through mandatory contributions from all wages and salaries, low operational costs, and long spells of good returns. around the turn of the century, they were the third - largest in eu and efta countries in terms of assets as a share of gdp, at around 80 %, after switzerland and the netherlands. shortly before the international financial crisis struck, iceland had overtaken even these countries. the funds were bound to grow much more, as they were far from reaching maturity in the sense that most of those receiving pensions had not accumulated rights based on their lifetime earnings. the clearest measure of this was the fact that the pension burden, or pensions as a share of contributions, was still below 50 %. at that time, it was estimated that, at maturity, the funds would amount to 1Β½ times gdp. they came close to that just before the financial crisis, but this was not β real β, as i will come to later. it is noteworthy that the funds do not obey simple classifications. some of the funds have an employment guarantee and would be characterised as defined - benefit funds, where the employer bears the investment risk, but in iceland only the government, municipalities and banks can guarantee pension funds. but the rest are not pure defined contribution funds. the investment risk is borne collectively by the members, and there is some scope for smoothing changes in benefits and for some risk - sharing among generations. this can matter when you have a once - in - a - lifetime shock to returns, as we experienced during the international financial crisis. the third pillar of the pension system entered the stage rather late here in iceland. it was only in 1998 that legislation on tax incentives for voluntary private pension saving was adopted, but these incentives were subsequently increased. voluntary private pensions saving then increased by leaps and bounds, reaching 10 % of gdp in 2002 and 15 % of gdp in 2007. this saving has proven to be an important cushion during the current crisis, as early repayment was temporarily allowed. so far, these early repayments have amounted to 2Β½ % of gdp. this is akin to a fiscal stimulus and has supported private consumption this year and last. let me now say a few words about the economic and financial effects of the pension system that we have built up here in iceland. the first thing to note is that it is always those who are economically active today who support today β s pension | negative implications for financial stability. and as is discussed in the aforementioned central bank report, such exchange rate volatility can sometimes be a source of economic volatility. furthermore, as examples have shown, lack of fiscal discipline together with overly loose financial regulation and lax supervision can undermine independent monetary policy with either a floating or a fixed exchange rate, even if the latter takes the form of a currency board. the β capital flow problem β, as we could call it, lies in capital inflow surges based on excessive optimism and underpricing of risk β capital inflows that then stop and reverse, with fire and brimstone and severe repercussions for economic and financial stability. experience shows that this problem is not limited to countries with a floating exchange rate β quite the contrary, in fact. countries with a pegged exchange rate have suffered severely from just such a scenario, as have countries within the euro area. this problem was a key player in the crises in greece and spain, to give two examples. as a consequence, there is no less need for so - called macroprudential tools in countries with a pegged exchange rate or countries in a currency union than there is in countries with independent monetary policy and a floating currency. some view foreign exchange reserves as the cost of pursuing independent monetary policy. this is not entirely correct because any country with its own currency must hold foreign exchange reserves, and it is easy to demonstrate that the reserves must be larger under a pegged exchange rate than under a floating exchange rate. i could continue to beat the drum on simplifications and magic solutions. the main thing, though, is that selecting a currency and monetary policy regime is not as simple as it is sometimes made out to be. and it is not merely a question of which policy is best if implemented perfectly β because implementation is never perfect. mistakes are made, and then it matters how robust the systems are in the face of such mistakes, and what scope there is to correct them without overstraining the systems. monetary bulletin 2016 / 4, p. 12 - 14. http : / / www. cb. is / publications / publications / publication / 2016 / 11 / 16 / monetary - bulletin - 2016 - 4 / conclusion in view of the discussion of monetary policy that has taken place recently β not least during the run - up to the parliamentary elections β i consider it necessary to engage in continued thoughtful discussion of what type of monetary policy framework will be most appropriate | 0.5 |
situation is that the balance sheets of financial institutions have increasingly come to include instruments denominated in foreign currencies. the need for currencies outside an issuing country β s markets arises primarily from the global role played by key international currencies, such as the dollar and the euro. for example, over the past decade, international loans and deposits have grown tremendously, as has the issuance of international debt securities β that is, bonds, notes, and money market instruments sold outside the borders of the borrower β s country and sometimes denominated in foreign currencies. these developments have posed new challenges for conventional central bank liquidity and lender - of - last - resort policies. for example, injecting euros or sterling into national money markets may not be sufficient to restore market function in these economies when funding shortages are in dollars. indeed, a significant feature of the recent financial market stress is the strong demand for dollar funding not only in the united states, but also abroad. many financial institutions outside the united states, especially in europe, had substantially increased their dollar investments in recent years, including loans to nonbanks and purchases of asset - backed securities issued by u. s. residents. 1 also, the continued prominent role of the dollar in international trade, foreign direct investment, and financial transactions contributes to dollar funding needs abroad. while some financial institutions outside the united states have relied on dollars acquired through their u. s. affiliates, many others relied on interbank and other wholesale markets to obtain dollars. as such, the recent sharp deterioration in conditions in funding markets left some participants outside the united states without adequate access to short - term dollar financing. the emergence of dollar funding shortages around the globe has required a more internationally coordinated approach among central banks to the lender - of - last - resort function. the principal tool we have used is the currency swap line, which allows each collaborating central bank to draw down balances denominated in its foreign partner β s currency. the federal reserve has now established temporary swap lines with more than a dozen other central banks. 2 many of these central banks have drawn on these lines and, using a variety of methods and facilities, have allocated these funds to meet the needs of see patrick mcguire and goetz von peter ( 2008 ), β international banking activity amidst the turmoil, β bis quarterly review, june ; also see ecb ( 2008 ), β the international role of the euro β july. the ecb report noted | to best bis central bankers β speeches achieve this. the bot β s inflation targeting framework has served us very well since its adoption over 10 years ago. apart from serving as an anchor for macroeconomic stability, the bot can also undertake steps, or act as a catalyst for the necessary changes, that will serve to enhance thailand β s competitiveness and augment economic adaptability. most directly, the bot can strive to enhance the effectiveness of the financial sector in serving as intermediaries of capital. our current strategy is to broadly deliver tangible improvements in four key dimensions. first, encourage financial innovation and the expansion of available financial instruments. second, broaden the choice available to firms and households in terms of financial services. third, reduce the cost of these financial services. and finally, improve access to them. to this end, the bot has embarked on a multi - pronged approach that involves a number of strategic plans. chief and foremost is the second financial master plan. this plan, which takes into account major global developments such as regional integration and global regulatory reform, will further this vision of a modern and inclusive financial sector landscape. at the same time, we are pursuing ways to improve financial system infrastructure, including through upgrades to the payment systems to promote more efficient settlement of private sector transactions. complementing these efforts is our development of the capital account liberalization master plan aimed at facilitating and encouraging more outward investment by thai residents in foreign assets. apart from the sizeable diversification gains to be had, a more streamlined capital account and foreign exchange regulatory regime will help to boost financial market development and reduce costs for the private sector. finally, in recognition of the fact that the full benefits of improvements in financial services cannot be realized without adequate readiness on the part of consumers, we have recently launched the financial consumer protection center to provide financial education to the public. in all this, it must be stressed that the bot can only do so much. effective upgrading of thailand β s competitiveness and lifting our level of productivity requires strong commitment from all segments of the economy. a common vision among all stakeholders is necessary, especially when it comes to implementing tough structural reforms. the bot will strive to be an active participant in pushing forward the national agenda on reforms, particularly on issues that involve the public sector, to upgrade the efficiency of our economy. let me end by thanking the german business community for the substantial contribution that you have made to our economy and i very much hope to see the mutually beneficial relationship between our countries continue | 0 |
a financial environment that is transitioning towards greater deregulation and towards more market - based rules, it is important that the islamic financial institutions inculcate a high level of confidence among consumers not only on the shariah - compliance aspects of the islamic financial products offered, but also on their business operations. concerted efforts by the industry to develop standardized documentation and features of islamic financial contracts would enhance the level of public understanding of the different types and concepts of islamic financial products. islamic financial institutions also need to provide consumers with the information that accurately represents the unique features, risks and returns associated with the islamic products and services. enhanced financial literacy on islamic financial products will facilitate the process for consumers to make well - informed and effective decisions on their financial transactions, with a clear understanding and appreciation of the unique characteristics and features of islamic finance and its real economic value. indeed, the strengthening of the range of islamic products and services needs to be accompanied by an improved market understanding of the islamic financial products. this requires well trained staff who are equipped with the required skills and knowledge in islamic finance that are able to provide quality advice to the customers. correct terminologies need to be used with an ability to highlight the distinguishing features of the products and services. this is particularly important in a dual financial environment where both conventional and islamic financial system are operating in parallel. the regulatory framework governing market practices by the islamic financial institutions can also be strengthened further to ensure its continued soundness. this will involve the implementation of the prudential standards that have been issued by the islamic financial services board, the ifsb. greater transparency through the observance of minimum disclosure requirements needs to be adopted by the industry. good business practices need to be embedded in all aspects of islamic financial operations, not only as part of good governance and corporate social responsibility, but also as part of brand building. market efficiency in conducting islamic business activities can also be enhanced further to ensure its sustained competitiveness as an intermediation process. as we are advancing into the third phase of the financial sector master plan, where the environment will become increasingly more liberalised and dynamic, we now have to look beyond the 2010 strategies. a key feature of the new environment is increased competition. the benefit of this trend will be to the consumers and businesses in terms of better prices, better range of products and services that are of a higher quality. this in turn would contribute to the overall performance of the economy. to be at the leading edge of competition, continuous | surprising for eurosceptics. from 1999 until the outbreak of the crisis, the euro area created 15 million jobs, twice the figure in the us, and cut its unemployment level by two points, to 7. 6 %. per capita income increased almost 14 % in just one decade, and productivity by 7 %. our savings rate is consistently more than double that of the us or britain, our contribution to global imbalances nil, with our external accounts being almost in balance, and our public finances, despite the difficulties, show a deficit standing at around 4 % of gdp in 2011, less than half that of the us. not surprisingly, seven out of ten residents of the euro area with an opinion, according to the latest eurobarometer, think that the euro has been a good thing. and the euro is also viewed worldwide as the most successful symbol of europe β s integration, which started half a century ago. so, we do not have to resort to mark twain to conclude that the rumours about the death of the euro may be somewhat exaggerated. however, it is undeniable, and this is the great paradox, that europe now finds itself in the focus of global financial stress due to the sovereign debt crisis. but this is not a euro crisis. it cannot be when the reaction of governments to the crisis has been to consistently renew their commitment to integration. it is a crisis of market confidence in the willingness and ability of some countries to comply with the demands of the euro β and a crisis of the design of the institutional foundations of the single currency. let me briefly explain the reasons for this institutional fragility. 3. the institutional weakness of the euro from its very conception, like all the big steps in the history of european integration, the euro has been an ambitious and unique project. it combined a centralised monetary policy with decentralised but coordinated economic policies. paraphrasing tommaso padoa - schioppa, we decided to give ourselves a currency that doesn β t belong to any single nation - state. the advent of the euro was only an episode β surely the most significant in history β of the construction of a post - westphalian order of shared sovereignties. one of the key lessons that we have learned from the crisis is that the design of the euro was incomplete. indeed, the euro area lacks certain institutional elements which we associate with federations and which act as shock - absorbers, countering the negative effects of shocks and | 0 |
any lcbo adopts the advanced approach β and i believe some intend to β it seems likely the market will pressure all the large banks to adopt it or be judged as having something to hide or having standards not quite up to snuff. there will also be direct economic incentives to adopt irb approaches. the effective average risk weight for a bank as a whole should decline with the more sophisticated approaches depending on the extent of capital arbitrage already accomplished. if true, such banks would achieve lower total regulatory capital charges and, consequently, a higher reported risk - weighted capital ratio. at the same time, given the different risk profiles at individual banks, capital requirements almost certainly would vary more widely under the new risk - based capital ratios than under today's measure. however, banks would then presumably respond to changes in their risk - based capital ratios. for example, a bank with a relatively low risk portfolio would find that its risk - weighted capital ratio increased because its risk - weighted exposures had declined. it would, as a result, presumably reduce its capital, or increase its leverage, or even increase its risk exposure. a bank with a higher level of risk - weighted exposures resulting in diminished risk - based capital ratios would presumably do the opposite : raise more capital, or reduce its leverage, or reduce its risk exposures. at the end of this adjustment process, we might again β for either competitive reasons or because of the incentives from the prompt - corrective - action structure β have a relatively tight configuration of risk - weighted capital ratios, especially at lcbos, but riskier banks would be holding more absolute capital to support their risks. indeed, that is the whole purpose of the exercise. in contemplating your own bank β s effort to prepare for adoption of the irb approach, i would suggest that a pivotal step is warehousing your own institution β s credit - loss experience. to be candid, the scarcity of data on losses has been a major stumbling block in the development of the irb approach. let me urge all of you to follow the example of some of you and move quickly in this direction. data storage is extraordinarily cheap these days, but we all know that extracting and organizing the right data from existing systems is very expensive and often painful. nonetheless, the contribution of better data to sound risk management will undoubtedly prove to be extremely valuable. as you develop your own plans, let me emphasize that supervisors will be looking for a committed and | primarily focus on vulnerabilities and the buildup of risks that can accrue over time potentially affecting the resiliency of the financial system. the financial stability report is worth a read. and while i will not recite the many findings of that report today, i will highlight a few of the risks discussed in the report. it is important to keep in mind that the report provides only a snapshot of the current financial stability vulnerabilities and risks. because the report treats cyberattacks and geopolitical events as shocks, it touches on them only in a cursory way, even though these are important financial stability risks. instead, the report focuses on key vulnerabilities that are more easily monitored and provides insights into the financial stability outlook as it relates to these factors. while the framing of the financial stability report β in terms of shocks and vulnerabilities β can be a useful, structured approach to consider this topic, there are many ways to think about financial stability. often the boundary between shocks and vulnerabilities is a permeable one, and the buildup of risk can become so severe that it becomes a shock. the federal reserve plays an important β but limited and non - exclusive β role in proactively addressing financial stability risks and responding to them once they manifest as stress across the system. as i think about the tools we use to address financial stability concerns β and the tradeoffs we are often forced to make when exercising these powers β it is helpful to consider the lessons regulators have learned over time. while the end goal is the same β ensuring resiliency see board of governors of the federal reserve system, financial stability report ( washington : board of governors, april, 2024 ), https : / / www. federalreserve. gov / publications / files / financial - stability - report - 20240419. pdf. - 3in the financial system to promote financial stability β there are a number of tools that can be used to address the unique characteristics of vulnerabilities and shocks. the federal reserve β s financial stability monitoring does not operate in a vacuum. to the contrary, our other statutory authorities β including monetary policy or promoting safety and soundness in the banking system β can complement or conflict with the goal of promoting financial stability. many of these authorities interact with banking activities and institutions that are subject to our supervisory or regulatory authority. in light of this, i will begin by discussing how the use | 0.5 |
that β s for banks to prepare for themselves. 2 / 3 bis central bankers'speeches but if they repay, that would tighten financial conditions? well, that β s part of many business decisions that banks are taking. our job is to look at the outcome in terms of financial conditions and to see if it β s proper in terms of the monetary conditions that we want to see. so it β s one issue. but it β s only one argument among many others. are you talking to the banks to have an idea of what they β ll do so that you can prepare yourself also for the balance sheet? yes, we are, of course. and we are talking to our supervisory colleagues because that β s what they do : talk to banks. benoit cΕure, how much does the personality of the president actually influence the decision of the governing council? well, that β s an interesting question. the governing council is a collegial body ; the president has to be in a position to filter information out of the diversity of the governing council and to build consensus, which the presidents so far have been able to do and have done very well. it is important to be in a position to build consensus. how can you see the dynamics of the council changing once president draghi leaves? i don β t see the dynamic of the council changing very much. we have a diversity of individuals and that β s why we have a governing council. it β s right because we need to filter out the diversity of views in europe. that β s what the governing council is there for. benoit cΕure, you said that you will continue to work for europe and you don β t exclude any possibility. if you were offered the top job β president of the ecb β would you accept? yes, who wouldn β t? but it β s really not for me to decide, it β s not for me to reflect on. i want to continue to be useful. there are many opportunities. i have a job at the ecb until the end of the year, so it β s really not for me to have that discussion. benoit cΕure, thank you so much for joining us right here at of course davos, world economic forum 2019. 3 / 3 bis central bankers'speeches | christine lagarde : ecb press conference - introductory statement introductory statement by ms christine lagarde, president of the european central bank, and mr luis de guindos, vice - president of the european central bank, frankfurt am main, 27 october 2022. * * * 1 / 1 bis - central bankers'speeches | 0 |
is good for you is bad news for me ; β’ my understanding is that your agricultural sector is currently recovering from the ravages of recent hurricanes ; but, this crisis should spur you to move beyond recovery, towards not only agricultural self - sufficiency, but towards making grenada one of the regional food - baskets. you have a ready market in trinidad and tobago, where food shortages and in particular, insufficient supplies of fruits and vegetables are contributing to an over 30 per cent increase in food prices ; β’ the crisis presents an opportunity for you to strengthen your skills bank by luring back skilled grenadians and west indians, who could be the first to suffer from the labour market problems in the us, uk and other places. there are highly qualified caribbean people out there who just want the nudge to come back home and the unemployment and uncertainty in the us and uk may be just enough to tip the balance, to provide that nudge. β’ and some of these returning nationals may be able to bring not only skills but capital, as well, in the form of direct investment. interest rates are much higher in the caribbean than in the industrialized world, rates of return on capital are higher here than they are currently in the us and it β s our job to go out and showcase our advantages to the caribbean diaspora ; to entice them to set up businesses back home. this is the right time and we should not lose the opportunity once again. ladies and gentlemen, in my many years of working with the imf i have been exposed to many economies, both developed and developing, both large and small. i have seen economies waste resources and i have seen economies do miracles with little. i can tell you that by developing country standards, the oecs economies are very well endowed. as a region we have abundant sun, sand and good weather ( most of the time ) ; our most attractive art, music and culture ; proximity to the united states, fairly good educational resources, and fluency in the english language, which has become the language of trade and business. i know also, the frustrations that caribbean governments have faced in their quest for economic transformation. oft - times globalization has not worked to our advantage. i am acquainted with the loss of preferences in europe for our agricultural commodities ; our efforts at light manufacturing, which floundered in the face of technological advances, increases in labour costs and the advent of china as the world β s manufacturer ; and when the | effective consumer protection produces a complementary benefit for consumers by making more capital available to meet their needs. similarly, systematic efforts to keep borrowers who may have trouble meeting their loan obligations in their homes on a sustainable basis, by providing more certainty to the market, can have the complementary benefit of ensuring the flow of capital for potential borrowers. with these principles in mind, i will discuss current initiatives to mitigate foreclosures. then i will spend most of my time discussing the board's recent initiative in proposing new regulations that apply to all mortgage lenders, not just federally supervised banks, that are designed to prevent abuse, unfairness, and deception in residential mortgage lending. the expansive scope of this proposal is essential to ensure that consumer protections convey board staff calculation based on data from first american loanperformance. board staff calculation based on data from the mortgage bankers association. board staff calculation based on data from first american loanperformance. across the mortgage market, regardless of whether a borrower receives a loan from a bank, an independent mortgage company, or through a mortgage broker. preventing unnecessary foreclosures given the high cost of foreclosures to lenders and investors and the disruption and distress that foreclosure can cause to consumers, their families, and their communities, it is in everyone's interest to avoid foreclosures whenever other viable options exist. with large numbers of borrowers facing potential repayment problems, it is in the interest of borrowers and investors alike for the industry to develop prudent loan modification programs and other assistance to help borrowers on a systematic and sustainable basis. as you know, there are various initiatives underway to help borrowers struggling with their mortgages. neighborworks america and the homeownership preservation foundation offer financial counseling services through the homeowners hope hotline. the hope now alliance, a broad - based coalition of government sponsored enterprises, industry trade associations, counseling agencies, and mortgage servicers, is making efforts to find ways to help borrowers through loan modification plans. the federal housing administration has established the fhasecure plan to provide qualified borrowers who are delinquent because of an interest rate reset and who have some equity in the home the opportunity to refinance into an fha - insured mortgage. i have been an active proponent of such streamlined systematic approaches to reduce transactions costs and to help mitigate foreclosure risk, and i strongly encourage market participants to adopt and to implement | 0 |
requires. it is clear that under such conditions monetary control may be affected. Β· the instruments of absorption available to the bank of israel to neutralize the injection deriving from the purchase of foreign currency are in the form of the banks β deposits in the bank. the banks already deposit about a fifth of their unindexed sources in the bank of israel as a result of the problematic defense of the lower limit of the band in the years 1995 β 97. a recurrence of such an episode would increase the banks β dependence on the bank of israel, a complete contradiction of the successful policy of deregulation pursued in the first half of the 1990s. such increased dependence may raise questions concerning the banks β stability. Β· under such circumstances the bank of israel would again have to choose how to deal with the losses inherent in such an activity. it could transfer them to the banks by paying them a similar rate of interest on their nis deposits in the bank of israel to the rate it receives on its foreign - currency investments. the banks would of course pass this on to their customers by cutting the interest they pay their depositors and raising the interest they charge borrowers. and then there would be complaints about the high banking spread. alternatively, the bank of israel could record the losses in its books, as it did on the previous occasion. in the final analysis this cost is of course borne by the taxpayer, and i believe that the last thing the government wants to do is to raise the tax burden in such a roundabout way. we should bear in mind that we cannot evaluate in advance the importance of such a course of action. we know that on the last occasion, the bank of israel purchased $ 16. 5 billion. an increase of only $ 1 billion in the money supply would currently mean a rise of about 4 percent, whereas an annual increase of 10 percent is considered too fast. the simplest solution is to abolish the exchange - rate band. if the bank of israel has to defend it, the end result would be its abolition in any case, but after incurring a high and unnecessary price. it is preferable to take such a step on our own initiative, and not under pressure from the market. 3. the ceiling on treasury bills issues by law treasury bills are an instrument for carrying out monetary policy, but we cannot fully use them for this purpose because the creator of the tool also limited its quantity. in other words : yes, you have an inflation target. | the twin peaks model. this model separates the two functions of financial supervision : i. supervision of financial institutions β risk management ( prudential supervision ) ; ii. supervision of conduct of business, covering such subjects as transparency and full disclosure by institutions, fair relations between them and their customers, and consumer protection. in the netherlands, the supervision of financial institutions β risk management is the responsibility of the central bank, while supervision of business conduct is performed by a separate authority. another model is the irish one, where the central bank supervises both financial institutions β risk management and their business conduct. in australia, in contrast, the central bank is not responsible for either supervision of risk management by financial institutions or their business conduct. if the bank of israel is given the responsibility for the supervision of financial institutions, it would be advisable to adopt the functional supervision approach, in other words, to separate the two supervisory functions β the supervision of financial institutions β risk management and the supervision of their business conduct. later, after some years β experience, the situation can be reviewed, and the question considered of whether supervision of business conduct should be transferred from the bank of israel to a new authority that would be established specifically for that purpose. to conclude : financial supervision is one of the most important issues affecting the functioning and development of the financial markets and the economy as a whole. in israel the issue assumed even greater import with the implementation of the recommendations of the bachar committee, and at this time it has come to the fore again in light of the implications of the global financial crisis. after examining the question very closely, and taking into consideration the conclusions being drawn in the major financial institutions around the world, we recommend that the supervision of banks be merged with the supervision of insurance, provident funds and pension funds, within the bank of israel. it is advisable to switch then to the functional supervision approach, i. e., to distinguish between the supervision of risk management in financial institutions and supervision of their business conduct. at a later stage, after some years, we can examine the question of whether the supervision of business conduct should be transferred from the bank of israel to another authority. | 0.5 |
from these decades is that bringing inflation back down again after it becomes ingrained in people β s expectations is very costly and almost certainly involves a recession. this next graph shows the inflation and unemployment rates during the disinflation episodes in australia and the united states after the period of high inflation ( graph 2 ). in both cases, bringing inflation back down required high interest rates and was associated with a deep recession and a rise in the unemployment rate of at least 5 percentage points. the high unemployment then persisted for years and left deep scars in the labour market and damaged our communities. it was very costly. r e s e r v e b a n k o f au s t r a l i a graph 2 disinflationary episodes * % united states % australia inflation unemployment * shading indicates labour market downturns, from trough to peak in unemployment rate. sources : abs ; rba ; refinitiv this experience lies behind the determination of the world β s central banks to ensure that the current period of high inflation is only temporary. the evidence shows that economies work better with low inflation and that once inflation becomes entrenched, it is very costly to stamp it out. it is for these reasons that the reserve bank board is resolute in its determination to return inflation to target and we will do what is necessary to achieve that. our central forecast is that inflation will peak later this year at around 8 per cent, and then decline gradually over the next couple of years to be a little above 3 per cent by the end of 2024 ( graph 3 ). graph 3 headline inflation * year - ended % % 70 per cent interval 90 per cent interval - 2 - 2 * confidence intervals reflect rba forecast errors since 1993. sources : abs ; rba there are a number of factors that lie behind this expected decline in inflation. the first is that the covid disruptions to supply are being resolved : delivery times and shipping costs have declined and the pressure on goods prices is abating. the second is that commodity prices have stabilised and, in many cases, have declined to be back around their levels at the beginning of the year ; in time, the effect of this will be evident in consumer prices. and third, the increase in interest rates here and around the world will result in slower growth in aggregate demand. in time, this means less pressure on capacity and lower inflation. as always, there is uncertainty around this outlook. we can β t rule out | - off in decision - making. 10. therefore, we will study the benefits and challenges of different architectures for the distribution of general purpose cbdcs through commercial banks / payment service providers in our upcoming general purpose cbdc project, called project aurum. specifically we will look into 2 architectural models, namely the hybrid cbdc and private cbdc - backed stablecoins. in parallel, we are working with the people β s bank of china on a technical pilot testing of using e - cny for cross - border retail payments in hong kong. we are extremely excited about these initiatives on cbdcs on multiple fronts, and i would be very happy to share more findings with you all as we make further progress. improving financial intermediation by using commercial data 11. another big area in fintech is the use of data. it is now already a cliche to say data is the new oil in the digital era. but it is a reality that those who possess the most data and the ability to harvest useful information from them can profit tremendously. as of now such competence resides mostly in big internet platform companies. however, many data subjects have no way to make better use of their own digital footprints, or data about themselves currently scattered in various different platforms, for their own benefit. 12. for example, smes are facing the long - standing problem of having limited access to finance. conventional credit scoring approaches are not particularly favorable to smes because they often lack auditable operating data, which large corporates have. this disadvantage hinders not only the growth of sme businesses, but also the stability of our job markets and economic growth. worse still, the blow of the pandemic has put the survival of many smes at stake, and their need for financing is stronger than ever. so is there a way to better empower data subjects to make better use of their own data for their own benefit? 13. with this objective in mind, we are expanding our financial infrastructure to enable data to take the centre stage. our recently launched initiative, the commercial data interchange ( cdi ), is a centralized platform which allows data owners to share their digital footprints voluntarily with banks through data providers in an efficient and secure manner. with a more substantial body of up - to - date and authenticated data shared by smes ( such as monthly or even daily trading and turnover statistics ), banks could use data analytics to perform more accurate credit assessments, and then provide more tailored services | 0 |
christian noyer : it was vital to break the adverse feedback loop between bank and sovereign risk interview with mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, in les echos, 17 september 2012. * * * do the ecb β s announcement to purchase sovereign debt and the german constitutional court β s approval of the european stability mechanism mark a turning point in the crisis? these announcements were welcomed by the markets and the outlook now appears much clearer. the european stability mechanism is a key factor for strengthening the cohesion of the euro area and demonstrates that the euro is here to stay and irreversible. it will help ailing economies return to competitiveness and growth. the governing council β s decision to purchase, subject to appropriate conditions, government debt is reassuring for at least three reasons : purchases are potentially unlimited, which should end speculation about the possible collapse of the euro area ; the strict conditionality will oblige countries to pursue their fiscal consolidation efforts ; lastly, these purchases fall squarely within the ecb β s mandate as they are conducted in the secondary market and aim to ensure the proper transmission of the policy stance to the real economy. the ecb has played its role. what must governments now do? euro area member states need to restore their credibility and they are already making efforts to do so. some have had to implement austerity plans and others, less drastically, are undertaking structural reforms and continuing to reduce their government deficits. this is the case of france. even if these efforts appear moderate compared to those of other countries, they are necessary for our market credibility. brussels has presented its proposals for a european bank supervisory mechanism ; are they in line with your expectations? yes, they are. the developments of the financial crisis have brought to light one of the euro area β s fragilities : the link between bank and sovereign risk. following the collapse of lehman brothers, governments bailed out their banking systems and, in doing so, established a nexus between sovereign debt and local banking systems, which interferes with monetary policy transmission. when the euro area sovereign debt crisis erupted, bank refinancing conditions became correlated with sovereign risk, with the consequences that we have witnessed for ailing countries. the large amount of liquidity provided by the eurosystem has reduced this impact, but funding costs have remained very high in some countries. it was therefore essential to decouple sovereign risk from bank | these balance sheets to work β. and, as a result, in the formulation of monetary policy, β quantities β β the amounts of assets and liabilities β have come to play an increasing role as compared to β prices β β the level of interest rates. this, of course, is a component and a consequence of unconventional monetary policies. traditional channels, β through interest rates - have become ineffective : first of all because economies have hit the zero lower bound ; and in some case, like in the euro area, because transmission β through credit β has been clogged. the expansion of balance sheets results from attempts to overcome those limits and allow monetary policies to fulfill their mandates via large scale of assets purchases. 2. is it the size of the balance sheet or the means of its increase that matter? the causes and consequences of changes in balance sheets size are rather diverse. broadly speaking, both liabilities and assets of central banks matter. an expansion of liabilities occurs when, as the eurosystem did in many instances, the central bank increases liquidity provision to the banking sector, with the explicit objective of easing pressures on funding, reducing its costs, and ultimately, influence lending behavior. expansion of liabilities may be bis central bankers β speeches more passive though when setting an exchange rate floor such as in the case of the snb. looking, now, at the asset side, asset purchases bring down risk premia, they trigger portfolio rebalancing, flatten the yield curve, increase risk taking in the private sector and shift expectations in a more positive territory. as you all know, the eurosytem has now embarked into a major purchase program, the pspp, that follows other programs of smaller sizes for asset - backed securities ( abspp ) and covered bonds ( cbpp3 ). there are many technical discussions. some people would argue that the stocks of assets held by central banks matter more than the flows of purchases. others would contend that the composition and size of purchases are the real levers. the issue boils down to whether an expansion in the monetary basis is enough to trigger credit expansion or whether the latter is correlated to banks willingness to expand credit and more importantly to the appetite of economic agents to borrow. based on how monetary policies have been conducted for the past several decades, banks have always had the ability to expand credit at a given level of interest rate irrespective of the size of the central bank β s balance sheet. being at the zlb | 0.5 |
to the slow economic performance and the perceived uncertainties about the future. its prospect in the medium run remains unclear. private investments remain at low levels, in the presence of partial utilisation of production capacities, uncertainties about foreign and domestic demand, and tightened lending terms by the financial sector. public sector demand was also low during the third quarter and did not, therefore, contribute to higher aggregate demand. as at end - october, the budget deficit for this year was about 19. 0 % lower than a year earlier. the fiscal policy applied during the three first quarters of the year materialised in the annual fall of public spending for this period, whereas income growth was low and budget deficit was in check. on the other hand, the fourth quarter of 2012 and year 2013 are expected to be characterised by upward fiscal spending and budget deficit. this fiscal policy increases the macroeconomic stimulus in the short run ; however, it should be sensitive to the need for medium and long - term stability of the public debt. bis central bankers β speeches foreign demand was the main driver of economic activity in the third quarter of the year. latest foreign trade data confirm the same trend for the successive period. thus, in october, the trade deficit continued the corrective trend, narrowing down to 10. 3 % in annual terms. its performance has reflected mainly the good performance of exports, which maintained positive rates of their annual growth, 12. 0 % in this month. imports have also contributed to narrowing the trade deficit, contacting 2. 3 % in annual terms, in this month. the analysis of monetary indicators points to low monetary pressures on prices. higher money supply, the m3 aggregate, continued to decelerate in october, settling at 6. 2 %. in particular, lending to the private sector slowed down significantly. annual credit growth for the private sector was 2. 4 % in october, reaching its all - time low. to a large extent, it is influenced by the low demand of households and business for loans, as reflected by the performance of consumption and private investments. on the other hand, the banking system continues to apply additional prudence with regard to lending, albeit it is under good liquidity and capital conditions. financial markets are characterised by downward liquidity risk premiums. interest rates in the inter - bank market fell even further in november, reflecting the ample liquidity and eased monetary conditions. in the primary market, government security yields continued to fall. moreover, the interest rate on deposits and | ardian fullani : effects of the exchange rate regime speech by mr ardian fullani, governor of the bank of albania, at the lecture of the governor of the central bank of the republic of turkey, mr durmus yilmaz, entitled " current global financial crisis and recent developments in the turkish economy and monetary policy ", istanbul, 24 september 2009. * * * ladies and gentlemen, it is my great pleasure to give the greeting speech in this joint meeting, in which our dear and honourable friend, the governor of the central bank of the republic of turkey, mr. durmus yilmaz, will address very important theoretical and practical issues related to the most recent global developments, sharing at the same time his experience in turkey. the global financial crisis hit all the advanced economies severely. it certainly affected the emerging economies of south - east europe, our two countries are part of. the contraction of global economic growth, the decline in foreign trade, the higher risk premiums, the interrupted functioning of the credit system and the rush to get liquidity affected our economies as well. these economies remain closely related to the euro area economy through a number of trade and financial channels. the response of fiscal and monetary policies to this crisis is of prime importance ; this aspect will be thoroughly elaborated by our dear friend. however, i would like to briefly address an aspect of macroeconomic and institutional framework, which has been an important determinant of the extent and magnitude of the national authorities β response to the crises : the exchange rate regime. a quick glance at the current developments in the region and broader allows us to draw the conclusion that the countries adopting a fixed exchange rate regime have been affected by the global crisis proportionally higher. moreover, they have been more constrained in terms of responding to the crisis. by contrast, countries adopting a free floating exchange rate regime have been affected by the crisis more mildly and smoothly, and they have preserved higher independence in their economic policies for the mitigation of crisis effects. obviously, this is not occasional : the free floating exchange rate regime is an important political, economic and institutional investment of emerging countries. their sacrifices in terms of building reliable monetary and fiscal policies, enhancing public confidence in the respective currencies and national financial institutions are rewarded with the flexibility this regime provides to macroeconomic policies in coping with the crises. exchange rate volatility mechanism is precisely a mechanism that allows the economy to absorb various shocks. the free floating exchange rate regime, devoted | 0.5 |
new risk - based capital ratios and more - extensive information about credit quality of their portfolios and their risk measurement and management practices. other disclosures include : corporate structure, market risk disclosures for standardized and internal models approaches, disclosure for operational risk measurement, interest rate risk and foreign exchange risk. such disclosures are expected to encourage banks to be more transparent to financial markets which should then promote market discipline. uganda β s preparedness the key element that countries should consider before moving on to basel ii is whether a good baseline supervisory system is in place. that is, whether the basel committee β s basic core principles, including its preconditions β have been complied with. for uganda, the answer to this is in the affirmative. yes, we have a good baseline supervisory system in place. the major milestone that enabled uganda to move towards full compliance with the basel core principles was the enactment of the new financial institutions act ( fia, 2004 ). in addition bank of uganda fully shifted to the risk based supervision approach since january 2003. the fia, 2004 allows bou to prescribe higher on - going capital requirements for a specific financial institution if the supervisory review process reveals existing risks that warrant such increases which is in line with pillar 2. the fia, 2004 also outlines some disclosures including a prescription for the form and content of the annual accounts which provides a good ground for pillar 3 under the new capital accord. many aspects and possible effects of basel ii have been debated at various levels, including its potential effects on banks β costs and on the competitive positions. such costs include : revamping the it systems and or acquisition of new systems, training costs for staff and additional staffing needs, insufficient historical data, time consuming transitions, internal models and risk quantification costs and disclosure overload. as to whether these associated costs will be transferred to the beneficiaries of financial services remains a subject for research and discussion within the sector. thank you! | this requires increased domestic savings rates. because private savings rates are very difficult to influence in the short term through public policy, the burden of raising domestic savings rates will initially fall on the public sector. public savings must rise which means that public consumption, and especially spending on public administration, which is not usually very productive, must be curtailed. intra - regional trade to achieve sustained export growth over the long term, african exporters will have to diversify away from the slow growing traditional export markets in advanced economies. regional trade offers promising prospects for diversification. although africa β s intra - regional exports have expanded more than four - fold since the turn of the century, they still comprise only 9. 6 percent of the continent β s total exports, which is much lower than the corresponding share in other developing regions such as latin america ; hence there should be considerable scope for expanding intra - regional trade over the long term. regional economic integration is a goal of many countries in africa, including those in east africa which have established the east african community ( eac ) and a broader group of countries which are members of the common market for eastern and southern africa ( comesa ). the eac has implemented a customs union, removing tariffs on intra - eac trade and imposing a common external tariff. however, non tariff barriers ( ntbs ) to intra - regional trade remain pervasive in the region, some of which have been retained for protectionist reasons, despite the fact that the removal of all ntbs that are applied in a manner which restricts trade is an objective of the eac customs union protocol. ntbs include restrictions pertaining to the β rules of origin β of imports, sanitary and phyto - sanitary measures and technical barriers to trade involving the application of product standards and regulations in a discretionary manner. a forthcoming world bank report, which examines how to harness the potential of regional trade and integration, found that uganda and kenya impose significantly more ntbs on their imports than many other ssa countries. 2 ntbs are a particularly serious obstacle to the expansion of food exports within africa, with the consequence that agricultural development is stymied and the continent is becoming ever more dependent on food imports from outside africa. hence the removal of ntbs should be a priority for african governments. agricultural development and food trade africa β s trade balance in agricultural products has deteriorated alarmingly over the last three decades. in the 1980s, africa had a small trade surplus with the rest of the world in agricultural | 0.5 |
christine lagarde : hearing at the committee on economic and monetary affairs of the european parliament introductory statement ( by videoconference ) by ms christine lagarde, president of the european central bank, at the econ committee of the european parliament, frankfurt am main, 28 september 2020. * * * madam chair, honourable members of the economic and monetary affairs committee, ladies and gentlemen, thank you very much for giving me the opportunity to speak to you today and to have a frank and timely discussion about the ecb β s monetary policy, as befits the topics you have chosen for this hearing. after a few words on the euro area economic outlook, i will focus my remarks today on the ecb β s monetary policy and in particular on the role of asset purchases, before sharing some reflections on the ecb β s accountability arrangements. the euro area economic outlook the impact of the coronavirus ( covid - 19 ) pandemic is still being felt across the euro area. businesses are facing difficulties, people are losing their jobs, and prospects about the future remain uncertain. while euro area economic activity rebounded in the third quarter, the recovery remains incomplete, uncertain and uneven. consumer spending has resumed significantly, but consumers remain cautious owing to anxiety about their job and income prospects. 1 similarly, business investment has been picking up, but weaker demand and elevated uncertainty continue to weigh on firms β investment plans. in this context, job retention schemes and national guarantees on bank loans remain critically important factors in reducing uncertainty and softening the impact of the pandemic. the latest ecb staff projections foresee annual real gdp growth at β 8. 0 % in 2020, 5. 0 % in 2021 and 3. 2 % in 2022. euro area real gdp is only expected to recover to pre - crisis levels in late 2022. 2 the strength of the recovery remains, however, highly dependent on the evolution of the covid - 19 pandemic and the success of containment policies. the public health crisis will continue to weigh on economic activity and poses downside risks to the economic outlook. the sharp drop in economic activity earlier this year has weakened price pressures. annual headline inflation in the euro area stood at β 0. 2 % in august and is expected to remain negative over the coming months, reflecting the effects of earlier declines in energy prices, a stronger euro, and a temporary reduction in the value - added tax rate in germany. ecb staff project annual inflation to gradually increase | tfp growth was the subject of academic debate before the crisis, this was generally seen as a euro area problem, in particular vis - a - vis the united states. 7 the general mood among observers was that the catching - up economies were progressing relatively well, bourles et al ( 2010 ), β do product market reforms in upstream sectors curb productivity growth? panel data evidence for oecd countries β, nber working paper 16520, november 2010. see financial integration in europe, european central bank, april 2008. for a detailed exposition of this argument see rajan, r. and l. zingales ( 2002 ), β banks and markets : the changing character of european finance β, in v. gaspar ( ed. ), the transformation of the european financial system, october 2002. see for example havik et al ( 2008 ), β the eu - us total factor productivity gap : an industry perspective β, dg ecfin economic papers 339, september 2008. bis central bankers β speeches or at least not markedly worse than others. for example, the european commission β s emu @ 10 report stated that β three of the four cohesion countries ( spain, ireland and greece ) have shown a satisfactory development overall, while only the fourth ( portugal ) has disappointed. β 8 this leads me to my second question : if this convergence was in fact cyclical rather than structural, why was it not identified earlier? my tentative answer would be that observers β assessments were influenced by the financial cycle, a theme that has echoed in hyman minsky β s work. 9 in retrospect, it seems now that the early years of the euro were the peak of a much longer financial upswing. this led observers to overestimate the sustainability of consumption and investment, and to underestimate the risks of rising private debt levels β and this was true on both sides of the atlantic. one explanation for this is that, as the upward phase of the financial cycle can be very prolonged β according to estimates by bis scholars, the typical duration of the financial cycle is around 16 years10 β perceptions of risk and value adjusted upwards. historical relationships between asset prices, debt ratios and underlying productivity levels were deemed no longer to hold. hence, developments that merely reflected the longer financial cycle were falsely believed to be structural. another explanation is that observers overestimated future productive capacity due to the effect of the financial cycle on real - time potential growth estimates. 11 this in turn | 0 |
the issue has also been recognised at international level. the basel committee has therefore announced the release of a set of measures for consultation. these measures mainly provide for the revision of the standardised approaches for rwa calculation, the introduction of an rwa floor based on the standardised approaches, as well as greater transparency. the floor is aimed at ensuring that the requirements for banks using the model - based approach remain sufficiently prudent. in this regard, let us also recall that finma β together with the big banks and with the support of the snb β has conducted a comparison of rwa calculated with the model - based approach and the standardised approach. the snb suggests that banks consider the possibility of publishing the results of this analysis in appropriate form. in any case, the snb remains convinced that banks which use the model - based approach for calculating their rwa must continue to improve their transparency with regard to their risks. considerable bis central bankers β speeches progress has been made already, especially in terms of disclosing changes in rwa broken down by cause. publishing a parallel calculation of rwa based on the standardised approach would greatly contribute to building trust and market discipline. enhanced transparency is likely to be a key component of the measures that the basel committee will put in consultation. domestically focused commercial banks i would now like to turn to the situation of the domestically focused banks. risks facing these banks are still primarily connected with the mortgage and real estate markets. these risks have largely remained unchanged at a high level over the past six months. in the last half year, the momentum in the mortgage market slowed, with annual growth in mortgage lending slightly less high than in the previous quarters. the mortgage volume continued to rise more steeply than gdp, but the difference between the two growth rates has become smaller. furthermore, real estate prices continued to rise but, as in 2013, momentum remained below the levels observed until 2012. developments still varied widely from one region to the other. whereas real estate prices in some regions hardly increased or even decreased, other regions continued to register significant price rises. however, it is still too early for an all - clear. first, the imbalances that have built up since the beginning of the low - interest - rate phase remain at a high level. second, mortgage interest rates have again dropped to historically low levels in the past few months. and third, there are no broad - based indications of a change in the banks β risk appetite. mortgage lending growth | amando m tetangco, jr : banking sector developments in the philippines speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the ilf moa signing ceremony, manila, 25 march 2008. * * * members of the monetary board, undersecretary roberto tan, bap president ramon sy, mr. paul favila, fellow bankers, special guests, good morning. i am glad we now have this memorandum of agreement for the enhanced intraday liquidity facility. this moa will help the philippine banking sector adapt and respond better and faster to increasingly dynamic and challenging developments in the financial markets. congratulations are therefore in order to all those involved in the process that has led to this moa signing today. let us give everyone a well - deserved round of applause. indeed, operational adjustments in the ilf provide participants greater flexibility in the use of their securities. for instance, instead of earmarking the securities for ilf use for the whole week, participants can now make daily changes in their securities pool. in addition, availments will be made only when the need arises. furthermore, availment costs have been reduced to encourage more participation to the ilf. ladies and gentlemen. these are challenging times and now, more than ever, we need to close ranks to address the issues that concern the banking sector in a coordinated and comprehensive manner. on our side at the bangko sentral, we assure you that our lines of communication are kept open at all times for discussions and consultations. i expect the same from your end, particularly when it concerns programs that will benefit the financial system in particular and our economy in general. i will be the first to say that we have done a lot to strengthen our banking sector. this has been validated and repeatedly acknowledged here and overseas. however, we should continue our reform agenda to keep in step with global developments. let us choose innovation, over stagnation. united, we can make further improvements in our banking sector as well as our payment and settlements system to make it stronger, more efficient, and consistently aligned with worldclass standards. mabuhay ang philippine banking sector! maraming salamat sa inyong lahat. | 0 |
bank indonesia β s annual meeting 2020 bank indonesia β s annual meeting 2020 bank indonesia β s annual meeting 2020 bank indonesia β s annual meeting 2020 table of content global economic performance and prospects : recovery underway, financial market uncertainty eases national economic performance and prospects : recovery process underway, stability maintained bank indonesia policy mix 2020 : strengthening stability, supporting national economic recovery β’ rupiah exchange rate stabilization policy β’ monetary policy stimulus β’ monetary policy mix and macroprudential policy β’ implementation of law no. 2 of 2020 : supporting state finances and financial system stability β’ digitalization of payment systems : accelerating national digital economic and financial integration β’ money market deepening : effectiveness of policy transmission and financing β’ empowerment of sharia economy and finance, and msmes β’ strengthening international policy β’ transformation of bank indonesia synergize to build optimism for economic recovery : one prerequisite, five principal strategies bank indonesia policy mix for 2021 : supporting optimism for national economic recovery β’ monetary policy direction β’ macroprudential policy direction β’ payment system policy direction β’ acceleration of money market deepening β’ msmes policy and sharia economy and finance β’ international policy moving forward with optimism bank indonesia β s annual meeting 2020 synergize to build optimism for economic recovery speech of the governor of bank indonesia bank indonesia β s annual meeting jakarta, 3 december 2020 his excellency, β’ the president of the republic of indonesia, joko widodo. honourable guests, β’ leaders and members of the house of representatives and house of regional representatives of the republic of indonesia ; β’ leaders of state institutions ; β’ ministers of indonesia onward cabinet ( kabinet indonesia maju ), β’ chairman and members of the board of the financial services authority ( ojk ) and deposit insurance corporations ( lps ) β’ former governors and board members of bank indonesia ; β’ provincial governors from all across indonesia ; β’ leaders of the banking industry, corporate sector and national media ; β’ awardees of 2020 bank indonesia award ; β’ distinguished ladies and gentlemen, bank indonesia β s annual meeting 2020 assalamualaikum warahmatullahi wabarakatuh, greetings to everyone, shalom, om swastyastu, namo buddhaya, salam kebajikan. first of all, let us express our gratitude to the almighty god, because only with his grace and blessings today we could gather at this bank indonesia annual meeting of 2020. with all humility, we would like to extend our gratitude mr. president who has been pleased to | set up within the existing rbi infrastructure. the reserve bank, being a statutory corporation, can do only those activities which are permitted by the reserve bank of india act, 1934 or other legislations. in addition to its core central banking functions, the reserve bank also performs certain promotional functions. however, this promotional activity is limited to β financial institution β only 10. since no financing activity is contemplated for the proposed pcr, it might be difficult to label pcr as a β financial institution β. this takes it out of the purview of a promotion under the reserve bank of india act, 1934. another option is to promote an organization for a matter incidental to the functions of the reserve bank 11 β as part of the reserve bank of india act, 1934 or banking regulation act, 1949 or any other enactment. collection of information, including credit information, from its regulated entities is an important aspect of the regulatory and supervisory functions of the reserve bank. one can find many provisions in different enactments which enable the reserve bank to collect such information. if the scope of collection of information for pcr can be deemed to be reasonably incidental to the expressly permitted activities of the reserve bank, a subsidiary or a department for the purpose of setting up and hosting the pcr would be justified. otherwise, the reserve bank of india act, 1934 can be suitably amended conferring the reserve bank powers to conduct the business of pcr. such a specific conferment of power, with clear enumeration of the functions of pcr, would remove the limitations of incidental powers mentioned above. 2. confidentiality constraints : an important issue in connection with the setting up of pcr is the overriding of confidentiality provisions in many enactments, which directly or indirectly bar sharing of information, including credit information, except in manner specifically permitted. as the pcr will have to get information from different sources, the inability of the sources to share such information can be a constraint. to this end, the pcr will have a consent - based architecture. the notice and choice framework to secure an individual β s consent is fundamental to data processing practices in a digital economy. it is based on the act of an individual providing consent for certain actions pertaining to his / her data. it is essential that users provide consent to an entity sharing data ( the data provider ) before they share data with an entity requesting access ( the data consumer ). the consent based architecture of the pcr will strengthen privacy | 0 |
##ify their investments, is hence becoming increasingly diverse and competition for german pfandbriefe is intensifying. the market for corporate bonds has been growing strongly in europe but not as strongly as predicted by optimistic forecasts. in the longer term, however, financing via bonds is likely to become a worthwhile alternative for enterprises. the market for corporate bonds might receive an additional boost from the persistent wave of mergers in europe. financing of corporate mergers is often only possible through borrowed funds which are likely to be increasingly financed by the issue of corporate bonds. finally, investors who are looking for new yield and diversification opportunities will possibly step up demand for higher - yielding bonds. there are hence signs that, from a spread point of view, corporate bonds might become the most important investment category competing for investors in the future european bond market alongside government bonds, pfandbriefe and bank bonds. other products, such as asset backed securities or high - yield junk bonds, are also likely to gain in importance. the german pfandbrief market offering high creditworthiness and liquidity as well as high - yield premiums compared with government bonds has good prospects of becoming the most important spread market in the euro area. the example of the us agency market has shown that high market liquidity, representation of the entire yield curve and the transparency of the issuing policy are crucial factors for a successful positioning in the spread market ranking. the german mortgage banks have already successfully tapped this potential over the past few years by a corresponding expansion of their product range and a commensurate marketing strategy. 5. up to the end of last year β as i have already mentioned β the german capital market and its most important products, the federal government bonds and the jumbo pfandbriefe benefited crucially from the stability of the d - mark. in the same way, the development of the european capital market will hinge on the stability of the euro and on international investors β confidence in the stability policy of the european central bank. to a certain extent, monetary policy and the capital markets are mutually dependent : the capital market needs a stable currency, since monetary stability is the foundation on which the capital markets can flourish. it encourages savings and makes a crucial contribution to long - term capital formation. it improves the real performance of financial assets and thus makes a flight into material assets superfluous. conversely, efficient, highly competitive and stable financial markets are of great importance for the implementation of monetary policy. it is | mr haferkamp focuses on european capital markets in the first year of emu keynote address given by mr dieter haferkamp, member of the directorate of the deutsche bundesbank, at the conference on β the pfandbrief : global perspectives for europe β s biggest bond market β in london on 28 september 1999. * * * 1. i am delighted to have been given this opportunity to speak at this now almost traditional pfandbrief conference. keynote speakers at a euromoney conference have the privilege of choosing their own topic. i am not a β pfandbrief β specialist. as a representative of the central bank of a country participating in monetary union, i feel more at home making some comments on the monetary and capital market policy environment, which is likely to have a major impact on the development of the european bond markets and thus also on the fate of the pfandbrief. in many ways, the liberalisation of investment services in the european economic area, the creation of electronic markets and the internationalisation of financial portfolios did away with the segmentation of europe β s capital markets even in the years prior to monetary union. but then, overnight, the start of european monetary union brought about major structural changes which forced all the market participants to undergo the appropriate processes of adjustment. this applies also, and especially, to the market for pfandbriefe. the german pfandbrief goes back more than 200 years. however, only during the past few years have the international capital markets discovered it. the pfandbrief β s success story is attributable to two factors. the pfandbrief has an excellent credit quality, and it firmly embodies the principle of investor protection. admittedly, neither of these advantages would have sufficed by themselves for the pfandbrief to hold its own in intensified european and global competition. it was only the efforts made by german mortgage banks to market these bonds internationally which enabled this traditional german product to achieve a breakthrough in the markets. the most important milestone in these efforts was undoubtedly the introduction of jumbo bonds in may 1995. with the characteristics of the jumbos the pfandbrief was also equipped with the liquidity which globally operating investors expect of today β s capital market instruments. and allow me, as a representative of the german central bank, to add that the stability of the d - mark, which was the most | 1 |
k c chakrabarty : social banking and finance β opportunities in inclusion session keynote address by dr k c chakrabarty, deputy governor of the reserve bank of india, at the 2nd ft - yes bank international banking summit, mumbai, 15 october 2012. * * * assistance provided by shri r. k. jain and shri bipin nair in preparation of this address is gratefully acknowledged. mr james crabtree, mumbai correspondent, financial times and moderator for the session, my fellow panellists mr y. m. deosthalee, cmd l & t finance ; mr ajai kumar, cmd corporation bank ; mr m. v. tanksale, cmd central bank of india ; mr r. v. verma, cmd national housing bank ; mr ajay desai, chief financial inclusion officer, yes bank and mr leonardo rubattu, general manager, iccrea banca ; other important people sitting in the audience specially dr rana kapoor, founder, md and ceo, yes bank and mr james lamont, managing editor, financial times ; delegates to the conference ; members of the print and electronic media, ladies and gentlemen. it is, indeed, a matter of great pleasure and privilege for me to be present here today at the 2nd ft - yes bank international banking summit 2012 and share some of my thoughts with you on the topic for the session : β social banking and finance β opportunities in inclusion β. the topic is very relevant, particularly in the light of the prevailing global economic crisis, which was, in part, attributed to the financial system losing its social orientation and growing into an exclusive universe, disconnected from the real sector. social banking and financial inclusion present a significant challenge and a unique opportunity to build a broad based and stable financial system, subservient and contributing to growth in the real sector and overall economic prosperity of the masses. it is also very germane to the overall theme of the conference on β realigning the global banking system β as inclusiveness and social orientation needs to be the key pillar around which the post - crisis global financial architecture is developed. i, therefore, congratulate financial times and yes bank for including this theme in the conference and look forward to a useful brainstorming session ahead. what is social banking? before delving into the nuances of social banking, let me briefly dwell on what is social business, or more specifically, social banking. in my opinion, any activity which is viewed by society as | of banking technology and the realization that poor are bankable, the coverage of unbanked population into the financial system is expected to improve. financial inclusion, along with government β s developmental programmes, is expected to result in overall financial and economic development in the country. as in the case of most developing countries, extending the banking services to unbanked groups is expected to be the key driver for inclusive growth. developing innovative delivery channels would be the key to our financial inclusion initiatives. there are several success stories globally where market players have worked out innovative models, often harnessing on technology, to overcome financial exclusion barriers. mobile phone services for instance, have been harnessed by several jurisdictions such as kenya, through their m - pesa model, for providing access to financial services to people. the fact that there is a huge mass of people with mobile phones, but no bank accounts highlights the potential available through this channel. similarly, use of microfinance, banking agents, etc by various jurisdictions has resulted in impressive gains from a financial inclusion perspective. in india, the policy framework is already in place. however, an efficient business model and delivery platform for provision of services by financial service providers is still evolving. banks, in collaboration with other stakeholders and civil society, are working towards stabilizing and scaling up their models for social banking. as mentioned previously, we are pursuing bank - led model which leverages on technology to expand coverage and minimise cost of providing service. we are technology neutral and banks can select any technology bis central bankers β speeches option. we encourage banks to develop models which can operate in a viable and sustainable manner. conclusion in the wake of the financial crisis and growing disenchantment among the general public, reflected in the β occupy wall street β and similar protest movements worldwide, the consequent reform measures have focussed on promulgating laws which seek to exercise greater control over the investment practices of banks and to limit speculation. what appears as a more promising approach in the long run is to develop socially, morally and ethically responsible banking practices oriented towards all stakeholders, even while pursuing profit motives. social banking model can emerge as a very sustainable model that can emancipate the global financial system from some of the ills that plague it at the present moment. the impetus for social banking can come from two approaches β one of them being through legal and regulatory requirements. this approach could, however, result in social banking being pursued only from a compliance perspective. the other | 1 |
76 occasions amounting to ` 122. 9 crore on various commercial banks operating in india. however, fear of fines and penalties will not be enough to keep up with the evolving nature of regulations. but a financial management system with built - in control makes compliance an everyday practice that enables the organisation to operate at greater efficiency. in addition, sound governance creates conducive environment for the values of compliance, integrity, trust, and respect for the law ; to thrive in the organisation β s culture. as a result, a bank can empower its entire organization to operate with responsibility while maintaining the flexibility necessary to stay ahead of ever - evolving regulations and business challenges. compliance culture β indian scenario reserve bank of india had introduced a system of β compliance officer β in banks way back in august 1992, based on recommendations by the committee on frauds and malpractices in banks ( ghosh committee ). the role of compliance officers came into sharper focus since 1995 when the general manager in charge of audit and inspection was made responsible for the compliance functions, with a requirement for periodic reporting or certification on compliance functions directly to the cmd. however, it was gradually recognized that the circumference of compliance functions in banks needed to be not only enlarged, but also clearly defined, especially in a scenario where successive annual financial inspection reports prepared by the banking supervisor highlighted a host of compliance deficiencies. rbi β s recognition for the need and importance of compliance functions received a further impetus after basel committee on banking supervision ( bcbs ) issued the high level paper on compliance risk and compliance function in banks in april 2005. these principles formed the basis for our https : / / in. reuters. com / article / banks - regulator - fines / u - s - eu - fines - on - banks - misconduct - to - top - 400 - billion - by2020 - report - idinkcn1c210d work on issuing rigors for compliance functions in banks, in the year 2007. subsequent to the financial crisis, the focus on compliance has gone up significantly, especially in the area of conduct, kyc / aml, suitability and appropriateness of banking products offered to a specific customer. in this context, and acknowledging the benefits offered by a good compliance culture and costs of poor conduct, the compliance culture of indian banks needs to be strengthened. during the course of the supervisory process, the reserve bank has observed various lacunae in the compliance culture of indian banks. some | sound corporate governance and compliance culture will permit the supervisor to place more reliance on the bank β s internal processes. in this regard, supervisory experience underscores the importance of having appropriate levels of authority, responsibility, accountability, and checks and balances within each bank, including those of the board of directors, senior management and the assurance functions by way of risk, compliance and internal audit. i am hopeful that deliberations over the past two days on emerging trends in banking, changes in global regulatory landscape, the new bankruptcy regime in india and technological innovations affecting the way banks do business would prepare banks to not only cope up with the emerging challenges, but also help banks to use the opportunity provided by the new paradigm to further the agenda of inclusive and compliance oriented banking in the country. references 1. bank of international settlements, β compliance and the compliance function in banks β, bis 2. bank of international settlements, β corporate governance principles for banks β guidelines β, bis 3. flanner, mark. j, β market discipline in bank supervision β, chapter 15 of the oxford handbook of banking, first edition, oup 4. hagendorff, jens, β corporate governance in banking β, chapter 6 of the oxford handbook of banking, second edition, oup 5. mundra, s. s., β re - emphasizing the role of compliance function in banks β, speech delivered at the cafral conference of chief compliance officers in rbi, mumbai 6. chakrabarthy, k. c., β compliance function in banks β back to the basics β, speech delivered at the launch of certificate programmes on compliance function and training, mumbai 7. padmanabhan, g., β emerging issues in cyber security in the financial sector β, speech delivered at the sri chithira thirunal memorial lecture series organised by the state bank of travancore, thiruvananthapuram | 1 |
emerging risks in the banking sector, to exchange information on standards and best practices on new or increasingly relevant topics, and to work on a minimum convergence of supervisory practices. and if i am informed correctly, many of the topics i will mention can be found in the 2019 work programme of the bcbs. first and foremost, the bcbs should monitor how the new basel rules are implemented in national laws and ensure it has a thorough overview of how these are then translated into supervisory practices. it should also foster an intensive exchange of information about the risks and vulnerabilities we see in today β s and, in particular, tomorrow β s macroeconomic environment. these discussions should also cover the approaches supervisors could use to analyse, assess and react to these upcoming risks via pillar 2, or other instruments. after all, a us supervisor β s challenge today may be a european supervisor β s concern tomorrow. i believe that supervisors from around the world would benefit from sharing views and experiences. the one thing we have to keep in mind is this : good supervision is a positive - sum game β everyone wins. the bcbs could and should be a hub for exchanging supervisory knowledge, tools and approaches regarding cyber risk. and finally, the bcbs could be of great help for supervisors regarding operational, legal and reputational risks in banks which are linked to conduct risks or anti - money laundering. the same is true for green finance or climate - related risk. here, too, a structured exchange of information about different tools and methods would help to strengthen supervision globally. 2 / 2 bis central bankers'speeches | often proved to be incompatible with fixed exchange rate regimes. at the same time, domestic macro policies have too often conflicted with the objective of external stability. the result has been the periodic emergence of domestic and external imbalances, which not infrequently unwound in a disruptive manner. let me give you just a few examples. a first period that characterises the evolution of the international monetary system is that of the classical gold standard from the second half of the 19th century to the outbreak of world war i. at first sight, this appears to have been a period of considerable stability and prosperity. countries enjoyed low average long - term inflation and steady growth of economic activity. exchange rates were fixed via parities to gold and the money supply was thus tied to gold reserves. therefore, any balance of payments disequilibria would trigger changes in bis central bankers β speeches monetary conditions and thus external balance was easily restored through the adjustment of prices and production. the drawback of this mechanism, however, was that it induced significant volatility within the domestic economy, as prices and production fluctuated considerably in the shorter term. thus the gold standard, while delivering external and internal balance over the long run, came with substantial welfare costs in the short run. in order to accommodate adverse shocks, some countries in exceptional periods temporarily abandoned the gold standard but subsequently resumed convertibility. this was also the case during world war i. the attempt, however, to return to a gold standard after the war ultimately failed. states had allowed for massive inflation given the need to finance the war, but then reintroduced gold parities partly at pre - war rates. this led to substantial misalignment of exchange rates. in addition, the process of democratisation made it increasingly difficult for the authorities to subordinate domestic policies to the stability of the exchange rate. thus, the interwar gold bullion standard suffered from a structural lack of credibility and trust in the sustainability of the fixed exchange rate regimes that were in place. eventually, the international monetary system collapsed, triggering competitive devaluations, barriers to international trade and capital controls in the midst of the great depression. the bretton woods agreement that framed the international monetary order after world war ii was influenced by these failures and therefore included some corrective elements : exchange rates could be adjusted where needed and capital controls would limit speculative flows. at the same time, the international monetary fund ( imf ) was established in order to finance exceptional balance of payments | 0.5 |
next five years. this phenomenon contributes to sustain high quotes. as a by - product, it affects food prices overall due to its impact on the cost of producing meat and dairy products. consequently, we are experiencing higher food prices worldwide. the impact on inflation is particularly large in developing countries, where foodstuff usually has a higher weight in the consumption basket ( and, consequently, a higher weight in cpi ). additionally, in these countries, cereals dominate the daily diet ( according to fao, cereals represent 52 % of the diet in developing economies compared to only 31 % in the developed world ). however, emerging market economies β both foods exporters such as argentina and many other countries in latin america and consumers, including many asian countries β are also facing sustained increases in food prices. therefore, the twin surpluses ( fiscal and external ) have been a trademark of the argentine economy over the last years and are expected to remain so. as opposed to what happens in other emerging markets, being able to show a positive cash flow that comes from the real side of the economy together with a flexible exchange rate regime and a solid central bank gives the country a paramount position to face external turbulences. nevertheless, on the fiscal side, the consolidated primary balance reached an outstanding 5. 3 % in 2004 to decline about two percentage points to current levels. going forward, a commitment to increase the primary surplus is essential to keep a sustainable growth towards equilibrium. so, the need to preserve and deepen these surpluses is a priority. mainly, because we are still going through a transition phase typical of post - crisis periods. and, these transition stages β where key macroeconomic variables converge to their long - term values β take time and raise enormous challenges. for instance, it took long to countries such as chile to fully stabilize their economies and achieve sustained growth. our neighbor put in place a gradualist approach during the normalization period. it involved four common elements that have been of utmost importance : consolidating fiscal solvency, reestablishing external sustainability, restructuring liabilities, and rebuilding the financial system. once all these aspects were addressed, progress in the consolidation of a full - fledged inflation targeting regime was achieved. thus, for several years, chile lived with higher inflation, while patiently building credibility and institutions. so, the experience of other emerging economies shows that flexibility and gradualism in both policy design and implementation are the adequate approach during this phase of their history. in argentina, despite | various services provided by the rbi regulated entities like banks, nbfcs and payment system operators. the existing ombudsman schemes are being integrated into a single scheme which will offer the benefit of a single platform to customers for getting speedy resolution of their grievances. this integrated scheme will reinforce confidence and trust in the financial system. 6. the launching of these two citizen centric initiatives today will provide further impetus to our journey towards a more inclusive and responsive financial system. i once again extend a warm welcome to all the dignitaries, participants and viewers. thank you. 1 / 1 bis central bankers'speeches | 0 |
nina stoyanova : opening of β fintech summit β conference statement by ms nina stoyanova, deputy governor and head of the banking department of the bulgarian national bank, at the opening of the β fintech summit β conference, organised by capital newspaper, video conference, 30 march 2021. * * * i would like to welcome you to the annual fintech summit organised by capital weekly. until a few years ago the term β fintech β was mainly associated with small innovative companies that by using digital technologies were trying to redefine the provision of financial services and find their own place on the market. today and even more after the watershed year of 2020, we can assert that technologies and innovations have become an intrinsic feature of the financial sector and a trigger for its rapid developing. recent trends show expanding cooperation and technical exchange between banks and fintech companies, which is to the benefit of clients, and results in better, faster and more secure services. the coronavirus crisis and expected recovery act as an impetus for further modernisation and digitalisation in response to consumers β demand and changes in society. in this context, the ambitions for accelerated reforms were also confirmed by the european commission in the β eu digital finance strategy β and the β eu retail payments strategy β published in september 2020. almost half a year after their launch, we can already note the first concrete steps in the implementation of the goals set in these strategies. first and foremost, i would like to focus on instant payments introduced in response to the dynamic development of communications, digital services and e - commerce. instant payments outline the forthcoming changes in payment infrastructure both in the eu and in the country. their advantage is the possibility for synchronisation between dispatching of goods and receipt of payment. transferred funds are immediately available, which enhances the security and trust in business relations and in the payment process. in the eu retail payments strategy, instant payments are called β the new normal β. the commission aims at full uptake of instant payments in the eu by the end of 2021. in bulgaria the project of instant payments in the national currency ( bgn ) is already at an advanced stage. it has been developed by the bisera6 retail payment system operatorborica ad with the assistance of the bnb as the operator of the national rtgs system rings. recently, the necessary amendments have been made to the legal framework and the payment systems. technical and functional changes were implemented in the bnb - operated rings system that ensure a possibility | dimitar radev : the bulgarian banking sector β opportunities and challenges publication by mr dimitar radev, governor of the bulgarian national bank, in the bulletin of the association of banks in bulgaria, issue 69, january 2022. * * * it is a tradition to start a calendar year by reviewing the achievements of the banking sector in the previous year and outlining the opportunities and challenges in the new one. in 2021 the covid crisis continued to put the banking sector to a serious test. unlike the stress tests in 2016 and 2019, the results of this test were not hypothetical, but provided a real assessment of the state of the sector and its capacity to operate under highly adverse conditions. this assessment can be summarised as follows : not only were bulgarian banks not weakened during the pandemic, but they enter 2022 with performance better than, or at worst consistent with, that at the start of the pandemic, including in terms of capital, liquidity, asset quality and profitability. according to the latest data for 2021, the overall capital adequacy ratio is 22. 4 % and the liquidity coverage ratio is 325. 4 %, i. e. above the eu average. at the same time, the gross amount of non - performing loans and advances continued to decline, and profits approached their historically high levels of 2019. the short explanation for these results is that the banking sector was well prepared to operate in a complex and challenging macroeconomic environment, as has been the environment over the past two years. this has allowed the banking sector to have a different focus from the one it had during the global financial crisis in 2008 or during the local problems in the sector in 2014. in these previous episodes, the banking sector was mainly engaged in solving problems within the sector. in the covid crisis over the recent two years, the banking sector was not concerned with its own problems, but mainly with alleviating the effects of the crisis on businesses and households and subsequently with the recovery and speed - up of the economy. in this sense, the covid crisis legitimised an important qualitative change in the position of the banking sector β from a source of problems in the past to an important factor in their resolution in recent years. significantly, the banking sector absorbed and implemented successfully and without shocks the anti - crisis package of measures approved by the bnb, amounting to about 9 % of the gdp, as well as a private moratorium | 0.5 |
/ 2017071pap. pdf. case, anne and angus deaton ( 2015 ). β rising morbidity and mortality in midlife among white non - hispanic americans in the 21st century, β proceedings of the national academy of sciences, vol. 112 ( december ), pp. 15078 - 83. - - - - - - - - ( 2017 ). β mortality and morbidity in the 21st century, β brookings papers on economic activity, spring, pp. 397 - 452, https : / / www. brookings. edu / wpcontent / uploads / 2017 / 08 / casetextsp17bpea. pdf. council of economic advisors ( 2014 ). β the labor force participation rate since 2007 : causes and policy implications. β washington : council of economic advisors, executive office of the president of the united states, https : / / obamawhitehouse. archives. gov / sites / default / files / docs / labor _ force _ particip ation _ report. pdf. - - - - - - - - ( 2016 ). β the long - term decline in prime - age male labor force participation. β washington : council of economic advisors, executive office of the president of the united states, https : / / obamawhitehouse. archives. gov / sites / default / files / page / files / 20160620 _ pri meage _ male _ lfp _ cea. pdf. economic innovation group ( 2016 ). the new map of economic growth and recovery. washington : eig, may, http : / / eig. org / wpcontent / uploads / 2016 / 05 / recoverygrowthreport. pdf. - 18 fryer, jr., roland g. ( 2011 ). β racial inequality in the 21st century : the declining significance of discrimination, β in david card and orley ashenfelter, eds., handbook of labor economics, vol. 4b. amsterdam : north holland, pp. 855 - 971. ganong, peter, and daniel w. shoag ( 2017 ). β why has regional income convergence in the u. s. declined? β national bureau of economic research working paper no. 23609. goetz, stephen, mark partridge, and heather stephens ( 2017 ). β the economic status of rural america in the trump era, β mpra paper | zeti akhtar aziz : global policy perspectives speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the federal reserve bank of kansas city economic symposium : overall panel on β global policy perspectives β, jackson hole, united states, 1 september 2012. * * * it is my honour to be invited to speak on this closing panel, to discuss global policy perspectives at this year β s economic symposium, in this magnificent environment at jackson hole. my remarks will focus on global policies from the perspective of a policy - maker from an emerging economy, to discuss the evolving new frontiers of global policies, the global policy spillovers in particular to emerging economies, and on the policy priorities in emerging asia in this environment. the global economic and financial landscape has changed tremendously over this recent two decades. yet the underlying motivation and progress in policy - making have not reflected these changes. the disparity between policy and the new landscape has become increasingly more evident since the 2008 global financial crisis. policy - makers have thus been challenged in preventing the build - up of the risks and imbalances prior to the crisis, arresting and containing the crisis once it had erupted, and then managing its aftermath. at the national level, these changes are well known. driven largely by innovation and advances in technology, we now have more highly complex and more inter - connected financial systems with financial activity that has broadened to beyond the traditional financial intermediaries. more profound are the fundamental changes associated with the globalisation of finance, which has resulted in a more connected and inter - dependent world. since the onset of the crisis, the policy response at the national level has been extensive and on an unprecedented scale, aimed to restore the functioning of the financial system and to arrest the steep deterioration in economic activity. monetary policy was eased substantially, with interest rates brought down swiftly to historical lows. the cumulative fiscal expansion during the period 2007 β 2009, amounted to close to an average of four percent of gdp. meanwhile, financial sector policies gave priority to stabilising financial markets and restoring credit flows. while an economic depression has been averted, monetary accommodation has continued with large scale financial market interventions to support the recovery. fiscal policy, however, shifted to address fiscal sustainability and the increased public indebtedness, following the massive stimulus and support to the financial sector. the challenge is to achieve this consolidation, while ensuring that the economic recovery and market confidence are not undermined. on the wide - | 0 |
keeping missions and humanitarian aid ( β¬0. 3 billion ). finally, β¬0. 2 billion is made available for short - term substitution of school personnel and around β¬0. 3 billion for changes to the domestic stability pact. additional provisions inserted when the decree was ratified have no final effect on net borrowing. the amendments that increase the deficit ( the easing of the constraints imposed by the domestic stability pact, the extension of the irap relief on labour costs to banks, financial companies and insurance companies, and the attenuation of the rules on sector studies ) are offset by new tax measures ( changes in the deductibility of expenses for company cars ) and by a reduction in current and capital spending. at the end of september, the forecasting and planning report further updated the projections for the public finances on a current legislation basis : revenue was revised upwards by more than β¬6 billion, while expenditure was reduced by nearly β¬3 billion. a decree law approved together with the forecasting and planning report allocated the improvement largely to finance a one - off measure for persons with low incomes who are unable to exploit all the income tax reliefs ( β¬1. 9 billion, accounted for in the official estimate as a reduction in revenue ) and a net increase in expenditure of β¬5. 4 billion. the technical note appended to decree law 159 of 1 october 2007 estimates that the measure entails an expenditure increase of β¬5. 9 billion β most of which for the advance payment of charges pertaining to 2008 β and expenditure savings of β¬0. 5 billion. the additional current expenditure amounts to β¬2. 1 billion, excluding the indirect effects on revenue, and the additional capital expenditure to β¬3. 8 billion. the decree β s effects in subsequent years will be negligible. measures to support the weakest households include the start of a public housing construction programme ( β¬0. 6 billion ), which will also be used for the modernization of existing dwellings. a further β¬0. 1 billion is allocated for the purchase of property to be leased for social housing. additional resources are granted for the 2006 - 07 public employment labour contracts ; adjusted for the indirect impact on revenue, the measure will cost around β¬0. 5 billion. some current transfers to the state railways ( β¬1. 0 billion ) and the national road agency ( β¬0. 2 billion ) are also brought forward. a further β¬1. 5 billion is allocated for other capital expenditure, mainly on the metropolitan transport systems of rome, | asset management, attenuates the pressure of competition, increases the risk of conflicts of interest, and ultimately limits the growth of the sector and the protection of investors. intermediaries, and especially banks, must make asset management companies independent and permit competition in the distribution of products, so as to reduce the costs borne by investors. as in other fields, market initiatives are to be preferred to legislative measures ; in their absence legislation or regulation will be inevitable. the competitiveness of italian funds also requires a review of their tax treatment. it is important that the current revision of the mechanism for taxing financial income take account of the need for a reasonable degree of uniformity across countries as regards how and when taxes are levied and their level. there is room for increased competition and efficiency in the field of payment services as well. technology now makes it possible to open the market to new participants, such as mobile phone operators and providers of other services. within the sphere of its regulatory responsibilities the bank of italy will introduce the measures needed to permit such developments, while simultaneously ensuring the security of transactions. at european level the creation of a single payments area will require legislative harmonization. the proposals under discussion envisage a new category of specialized european intermediaries that will be able to combine payment transactions with other commercial activities ; supervision will be based on the principle of proportionality and prudential requirements related to the risks. this is a development to be encouraged. the integration of markets and the growing role of transnational intermediaries require the harmonization at european level of the rules governing supervision and a strengthening of cooperation among national authorities. this year will see another review of the lamfalussy process, including its extension to banking and insurance. convergence of supervisory practices is essential for the efficiency of the european capital market. there are still important differences, such as those in the treatment of hybrid instruments in computing regulatory capital, that must be analyzed and removed. the bank of italy will liberalize and simplify the procedures for opening new branches, thereby increasing banks β independence in shaping their distribution strategies. what is required of the supervisory authority is not so much rigid regulation as the ability to intervene promptly to facilitate and orientate solutions found independently by the market. in applying the highest standards of risk management, the activity of the bank of italy and that of banks pursue largely similar objectives. prudential rules reinforce, do not replace, the practices of sound bank management. sometimes situations arise in which individual intermedia | 0.5 |
the mining sector rose from around 2 per cent of gdp in the early 2000s, where it had been for much of the previous five decades to peak at around 9 per cent of gdp in 2012 / 13. or, to put that in dollar terms, investment spending in the mining sector in 2006 / 07 totalled $ 41 billion and rose to a peak of $ 136 billion in 2012 / 13. the reasons for the huge rise in investment spending in the mining sector have been well documented. in the case of iron ore and coal, it was a response to the large rise in commodity prices through the 2000s, predominantly driven by the emergence and strong resource - intensive growth of china. investment spending to increase capacity in the iron ore and coal industries accounts for around 40 per cent of the spending over the past decade ( graph 3 ). a larger share has been spent in the liquefied natural gas ( lng ) sector, which is not only a china story, with a large part of lng exports also destined for japan and korea. graph 3 many of these investment decisions, particularly in iron ore and coal, took place well before commodity prices peaked. these projects are large with very long lead times ; lng projects often take more than five years to complete. the investment decisions were predicated on prices much lower than those subsequently seen through the height of the commodity price boom. prices for iron ore and coal in australian dollar terms today still compare favourably with the level assumed when commissioning these projects. http : / / www. rba. gov. au / speeches / 2017 / sp - dg - 2017 - 11 - 13. html 3 / 13 13 / 11 / 2017 business investment in australia | speeches | rba since the peak in 2012 / 13, investment spending in the resource sector has declined as projects have been completed. as they have been completed, production has been ramped up and we are now seeing the benefits of that with large increases in resource exports. since 2007, iron ore export volumes have more than doubled and coal export volumes have increased by 70 per cent ( graph 4 ). the bank's assessment is that the vast bulk of the increase in production for these commodities is now behind us, with only a project or two still to be completed. lng is in a much earlier stage of the process. lng exports have risen by 75 per cent over the past couple of years and our expectation is that, over the next couple of years, exports are likely to increase | , or partnering with businessmen in projects that take advantage of the economy. in this context, therefore it becomes yet another duty of board members to also oversee that projects endorsed by the financial institution are not the kinds that facilitate the exploitation of society. it is my belief that any protection of the interests of the organizations cannot be done without the protection of the interests of society as well. the organisation can only survive if its customers are satisfied with its workings, and if the society accepts its actions. ladies and gentlemen, allow me to end my remarks by quoting a teaching from a very senior monk who is well versed in buddhist economic philosophy. he said that in order for an organisation ( corporation ) to grow sustainably, it must not exploit its employees, it must not take advantage of its customers, and it must not exploit society in which it thrives in. in so doing, the organization must ensure that it can also reward itself with a fair return so that the fruits of its labours can be fairly shared by every party concerned. thank you for your attention. | 0 |
attitudes to spending and leverage. to say there have been some pretty powerful, and disparate, forces at work is something of an understatement, even for a central banker. at present, while growth in australia β s group of trading partners is about average, and is higher than the rate of growth for the world economy as a whole, the nature of that growth is shifting. the growth in chinese demand for iron ore, for example, has weakened at the same time that supply has been greatly increased, much of it from australia. iron ore prices are therefore falling and contributing to a fall in australia β s terms of trade. as the terms of trade fall, and national income grows more slowly than it would have otherwise, adjustment is occurring in several ways : see < http : / / www. rba. gov. au / publications / fsr / 2015 / mar / html / contents. html >. bis central bankers β speeches β’ incomes of those directly exposed to the resources sector, be it as employees, owners or service providers, are reduced. β’ nominal wages generally are lower than otherwise. β’ the australian dollar has declined and will very likely fall further yet, over time. this is one of the main ways that the lower national income is β transmitted β to the population : purchasing power over foreign goods and services is reduced. at the same time, australians receive some price incentives to substitute towards domestically produced goods and services. and the purchasing power of foreigners over the value added by australian labour and capital is higher than otherwise. β’ saving by households, which rose when the terms of trade rose, is tending to decline as the terms of trade fall. this is a natural response to lower income growth and is being reinforced by easier monetary policy, which has reduced the return on safe financial assets. that said, the fact that many households already carry a considerable debt burden means that the extent to which they will be prepared to reduce saving to fund consumption may be less than it once was. more on this in a moment. β’ as part of the same adjustment, government saving is increasing more slowly ( more accurately, government dis - saving is lessening more slowly ) than otherwise. this is more or less automatic to the extent that lower commodity prices directly reduce state and federal government revenues. more generally, the more reluctant households are to lower their saving and increase their spending the harder the government may find it to increase its saving. macroeconomic policy is supporting the adjustment. on the fiscal | known as β the economies of scale β. there are many reasons behind this. we can mention the inheritance of the communist system and the separation of land after its collapse. as it was stated above, the lack of a normal land market also due to ownership problems, naturally plays an important role in establishing larger farms and, consequently, more competitive ones. these problems also affect the agricultural sector - bank relationship and the lending activity at home. the recent data show that lending to the agricultural sector accounts for 1. 25 % of total lending to businesses, on average. it is a considerably low figure, which should raise our concern, considering that this sector contributes by one / fifth to the gross domestic product. i believe that there are two reasons driving the banking system to be reluctant to finance different projects in this sector. first, risk classification and categorisation for credit to agricultural sector is a commitment different from the other activities. the lack of formalisation, even for matters such as regular maintenance of information and statistics bis central bankers β speeches about ownership, and financial statistics, damage the farmers β credibility from the early steps of lending. i find that there is room for prudential intervention by public institutions, not to condemn farmers, but to better prepare them and assist them in formalising their business. in light of this, the bank of albania has in the past years initiated a campaign to improve the financial education of the albanian people. the recent results of our questionnaires indicate that the albanian urban population shows increasing and a more complete knowledge related to various financial problems they encounter. but the results on rural areas reveal that the education level remains considerably lower. second, the albanian agricultural sector suffers from the lack of information and evaluation. as i noted above, one of the reasons why banks hesitate to increase their lending is the lack of complete information on farms and their products. further, the quality certification standards for albanian products remain low. one of the main reasons restricting higher exports and, consequently, higher production, is the lack of certification in accordance with the highest standards for all the albanian agricultural products. this type of certification does not only prove the elementary food security required by the european markets, but also establishes a starting point for competition in the market. the presence of these standards at a reliable level would lead to the improvement of all market mechanisms, by helping bank lending in proportion to the quality of products. in the framework of concerns facing the agricultural sector, the bank of albania has increased its interest in micro | 0 |
in housing markets ; for example, the financial policy 2 / 8 bis central bankers'speeches committee of the bank of england has the authority to tighten ltv or dti limits when threats to financial stability emerge from the u. k. housing market. stricter ltv or dti limits find some measure of success. one study conducted across 119 countries from 2000 to 2013 suggests that lower ltv limits lead to slower credit growth. 16 in addition, evidence from a range of studies suggests that decreases in the ltv ratio lead to a slowing of the rate of house price appreciation. 17 however, some other research suggests that the effectiveness of ltv limits is not significant or somewhat temporary. 18 other macroprudential policies focus on lenders. first and foremost, tightening bank capital regulation enhances loss - absorbing capacity, strengthening financial system resilience. in addition, bank capital requirements for mortgages that increase when house prices rise may be used to lean against mortgage credit growth and house price appreciation. 19 these policies are intended to make bank mortgage lending more expensive, leading borrowers to reduce their demand for credit, which tends to push house prices down. estimates of the effects of such changes vary widely : after consideration of a range of estimates from the literature, an increase of 50 percentage points in the risk weights on mortgages would result in a house price decrease from as low as 0. 6 percent to as high as 4. 0 percent. 20 these policies are more effective if borrowers are fairly sensitive to a rise in interest rates and if migration of intermediation outside the banking sector to nonbanks is limited. of course, regulatory reforms and in some countries, macroprudential policies are still being implemented, and analysis is currently under way to monitor the effects. so far, research suggests that macroprudential tightening is associated with slower bank credit growth, slower housing credit growth, and less house price appreciation. borrower, lender, and securitizationfocused macroprudential policies are likely all useful in strengthening financial stability. loan modification in a crisis even though macroprudential policies reduce the incidence and severity of housing related crises, they may still occur. when house prices drop, households with mortgages may find themselves underwater, with the amount of their loan in excess of their home β s current price. as atif mian and amir sufi have pointed out, this deterioration in household balance sheets can lead to a substantial drop in consumption and employment. | ##isis, u. s. agency mortgage - backed securities ( mbs ) were viewed by investors as having an implicit government guarantee, despite the gses β representations to the contrary. because of the perceived guarantee, investors did not fully internalize the consequence of defaults, and so risk was mispriced in the agency mbs market. this mispricing can be notable, and is attributable not only to the improved liquidity, but also to implicit government guarantees. 9 taken together, the government guarantee and resulting lower mortgage rates likely boosted both mortgage credit extended and the rise in house prices in the run - up to the crisis. another factor boosting credit availability and house price appreciation before the crisis was extensive securitization. 10 in the united states, securitization through both public and private entities weakened the housing finance system by contributing to lax lending standards, rendering the mid - 2000 house price bust more severe. 11 although the causes are somewhat obscure, it does seem that securitization weakened the link between the mortgage loan and the lender, resulting in risks that were not sufficiently calculated or internalized by institutions along the intermediation chain. for example, even without government involvement, in spain, securitization grew rapidly in the early 2000s and accounted for about 45 percent of mortgage loans in 2007. 12 observers suggest that spain β s broad securitization practices led to lax lending standards and financial instability. 13 yet, as the irish experience suggests, housing finance systems are vulnerable even if they do not rely on securitization. although securitization in ireland amounted to only about 10 percent of outstanding mortgages in 2007, lax lending standards and light regulatory oversight contributed to the housing boom and bust in ireland. 14 macroprudential policies to summarize, murky government guarantees, lax lending terms, and securitization were some of the key factors that made the housing crisis so severe. since then, to damp the house pricecredit cycle that can lead to a housing crisis, countries worldwide have worked to create or expand existing macroprudential policies that would, in principle, limit credit growth and the rate of house price appreciation. 15 most macroprudential policies focus on borrowers. loan - to - value ( ltv ) and debt - to - income ( dti ) ratio limits aim to prevent borrowers from taking on excessive debt. the limits can also be adjusted in response to conditions | 1 |
system. attaining this twofold objective would allow the benefits of integration to be reaped, while managing the associated spillover risks. more β e β in emu the financial and economic crisis over the last three years has exposed the main supervisory and regulatory failures both at national and global levels. in europe, it has also revealed how financial integration has increased the likelihood, scope and pace of contagion across the european financial sector. the institutional framework for managing the euro area economy and financial system has proved to be inadequate. to be more specific, the monetary part of emu has worked well. price stability β the primary objective of the single monetary policy β has been maintained, before, during and after the crisis. but the economic dimension has been insufficient. as i just said, we need more β e β in emu, with a view to creating an economic area that is more closely, deeply and irreversibly integrated. bis central bankers β speeches the origins of the recent economic crisis lay largely in the financial sector. a more resilient financial sector is key to building a euro area framework that will be more robust and effective in facing future shocks. deepening and broadening financial integration in europe is an essential β although neglected β component of the economic dimension of economic and monetary union. stronger integration will not only ensure a more efficient allocation of resources across the eu, but also enhance the shock - absorbing capacity of the financial system and the economy as a whole, thanks to increased opportunities for risk - sharing, and improved market and funding liquidity. research using data from the united states has demonstrated the important role played by financial markets and capital flows in absorbing the impact of idiosyncratic regional shocks. 1 the risk - sharing across regions resulting from an integrated financial system in the us has a far greater smoothing effect on regional consumption patterns than that achieved via explicit fiscal transfers through the federal government β s budget. this shows that it is an integrated financial sector, rather than the federal budget, which plays the most important role in ensuring that regional disturbances do not disrupt the functioning of the american economy as a whole. research undertaken by ecb staff confirms that greater banking integration within the eu has increased consumption risk - sharing. 2 but there is clearly some way to go before the level of integration β and thus the extent of risk - sharing β seen in the united states is achieved. these results have important implications for the current debate on further european integration. there is a lot of talk about the | average between 1990 and 1998, respectively ), cost and price pressures remained contained in ireland ( 1. 4 % and 2. 3 %, respectively ). competitiveness was hurt in portugal, resulting in a rising current account deficit ( to 8. 9 % of gdp in 1999 ), while competitiveness was relatively well preserved in ireland and the current account position broadly neutral ( 0. 3 % of gdp in 1999 ). thus, the longer - term track record before joining monetary union regarding low inflationary pressures and a balanced current account was impressive in ireland. this shows that even very rapid catching - up does not need to be associated with high inflation or large imbalances. after the euro changeover β between 2000 and 2003 β a sharp downward adjustment occurred in portugal as consumption and investment slowed considerably. competitiveness problems and the need to improve the fiscal position added to the downturn. annual real gdp growth in portugal in the period 1999 β 2006 averaged 1. 7 %. in ireland, real output growth continued instead at a strong pace ( at 6. 5 % on average ) in this period and the fiscal balance was in slight surplus. following the slowdown in activity, ulc growth and inflation pressures diminished in portugal ( to 3. 1 % and 3. 0 % on average, respectively ), while they gradually picked up in ireland ( 3. 2 % and 3. 5 %, respectively, on average ) in the period 1999 β 2006. since 1999, the portuguese economy has not succeeded in improving its competitiveness and its sizeable current account deficit remains. in principle, one could imagine that stronger productivity growth should contribute to containing unit labour costs, making ireland more competitive than portugal. this is true, but not in the most obvious sense. if one computes unit labour costs in ireland and portugal, in part, this might reflect the fact that the statistical data for real g dp are different from real g np in the irish case. therefore, the increase in real domestic product has not necessarily entirely benefited the irish people to the same extent. however, the quantitative importance of this discrepancy is low. we are therefore left with the task of understanding the causes of this divergence in economic performance. numbers are approximately the same. however, export performance has been much stronger in ireland than in portugal, which has resulted in a trade surplus in the balance of payments ( against a large deficit in portugal ). the large profit outflows in the factor income account in ireland negatively | 0.5 |
considerably below 2 percent during the years of deflation β through monetary policy. looking at the situation in japan, the year - on - year rate of change in the cpi had been in negative territory or slightly above zero since the second half of the 1990s up until before the introduction of qqe. in other words, over the business cycle, it has been at around 0 percent on average. amid protracted deflation over this long period, medium - to long - term inflation expectations declined, and consequently, a sense that prices would not increase became entrenched. under these circumstances, firms β incentives to launch new initiatives through investing in business facilities and in research and development became reduced, because the holding of cash or deposits became a relatively better investment strategy. thus, japan β s economy was deprived of vitality and this generated a vicious cycle in which the low vitality made it more difficult to overcome deflation. in order to escape from such a situation, it has become necessary to pursue a policy that quickly and drastically changes firms β and households β mindset that prices will not increase. to that end, what was introduced as a bis central bankers β speeches prescription was qqe. this policy aims at creating an economic situation where prices increase at around 2 percent on average, as is the case with the united states and europe, by raising people β s medium - to long - term inflation expectations to around 2 percent and re - anchoring these expectations at that level. the mechanism of qqe is expected to be as follows : first, inflation expectations will be raised through a clear commitment and through a large - scale monetary easing to underpin the commitment ; second, concurrently, downward pressure will be put on nominal interest rates through massive purchases of government bonds, thereby decreasing real interest rates and stimulating private demand such as business fixed investment. namely, to start this mechanism, the bank aimed at first igniting inflation expectations. raising inflation expectations by changing people β s deflationary mindset is itself an aim of overcoming deflation, and at the same time the key to implementing the mechanism of qqe. considering the unique situation facing japan and the prescription for it, importance is attached to a β time frame β during which the target should be achieved, compared with the target for price stability in other countries. if the bank had simply stated that it would achieve 2 percent inflation at some point in the future and that it therefore expects firms and households to change their actions, would those entities, | from china and commodity - exporting economies as a whole have continued to lose pace, but their pace of growth is likely to pick up gradually as the recovery in advanced economies exerts positive effects. taking the above into consideration, japan β s exports are expected to increase moderately, as overseas economies continue to see moderate recovery, mainly advanced economies. that said, due attention needs to be paid to various uncertainties such as the outcome of the debt problem in europe, including the developments in greece, developments in the emerging and commodity - exporting economies facing structural issues or political instability, and geopolitical risks. against the backdrop of the pick - up in exports and resilience in private consumption as a whole, about which i will discuss in more detail next, production has been picking up due to the progress in inventory adjustments. corporate profits have continued to improve, with the ratio of current profits to sales for major firms exceeding the level prior to the global financial crisis ( chart 4 ). in that situation, firms have maintained their positive stance in their business plans, and fixed investment is planned to be increased steadily following last fiscal year. some firms have increased their share of domestic investment for this fiscal year, and it has been noticeable in media reports recently that firms that relocated production sites overseas amid the phase of the appreciation of the yen have started to attach importance to domestic production. going forward, against the backdrop of a moderate recovery trend in the economy, an increase in exports, and the decline in crude oil prices, corporate profits are likely to continue improving and business fixed investment is projected to continue on a moderate increasing trend. household sector : developments in wages and private consumption turning to the household sector, firms β positive stance has led to a tightening in labor market conditions and, accordingly, an improvement in the employment and income situation. with regard to firms β views on employment, even amid the sluggish economic recovery until last summer, the degree of labor shortage has risen further ( chart 5 ). in this situation, total cash earnings have risen moderately, albeit with fluctuations since last spring. last year, the yearon - year rate of increase in scheduled cash earnings was positive, reflecting the revival of an increase in base pay at many firms, which had been lost for many years. this winter β s bonuses also increased solidly. on the back of the rises in total cash earnings and the number of employees, employee income has been rising moderately. private consumption as a whole has remained resilient against | 1 |
: expenditures have been below target due to delays in implementing some projects. there may also be some diversion of expenditure to cater for famine relief and other recurrent expenditures. however, with respect to revenue, the government is on target despite the fact that the benchmark was on the basis of a more optimistic growth path. current figures from the kenya revenue authority ( kra ) on the last quarter show tax revenues overshooting their target. β’ export risks : global growth is expected to decline from 2. 5 percent in 2008 to 1 percent in 2009. although demand for some of kenya β s exports is expected to remain robust, recent trade statistics indicate a slowdown in export volume growth. international commodity prices are also expected to decline. however, the impact of the global crisis on kenya β s exports may come from reduced aid flows to regional trading partners. β’ remittances : remittance receipts through formal channels increased from us dollars574 million in 2007 to us dollars630 million in 2008 despite reductions beginning may 2008. the decline could persist with reduction in incomes in source countries. remittances are predominantly used for smoothing consumption and for investment in real estate. but they are also pro - cyclical and tend to follow events in the economy. so their trend may not reveal much. β’ liquidity risks : while global banks are not lending to each other, local banks are. however, government access to global financial markets may be constrained by weakening of these markets. the postponement of the sovereign bond is a pointer to this. the latest upgrade by fitch rating agency for kenya is improving the country ratings and once global financial markets are stable, kenya β s entry will be significant. but more significant will be the target enabling projects targeted to be financed by this bond issue. β’ on the domestic banking sector, the expectation was that due to the global crisis and the political crisis in 2008, the banking system β s net non - performing loans ( npls ) would rise. however, net npls as a share of total loans have come down from 2. 9 in march 2008 to 2. 2 in november 2009. this is due to improved provisioning and a decline in net npls portfolio. the cbk is tracking these risks to assess their likely impact on macroeconomic stability. nevertheless, the economy is expected to weather first round effects of the global crisis. this will be supported by productivity growth from improved business climate and improved policy frameworks. in 2009, we expect a modest | remarks by tiff macklem governor of the bank of canada calgary chamber of commerce september 7, 2023 calgary, alberta economic progress report : target in sight, but we β re not there yet introduction good afternoon. it β s a pleasure to be here. i want to thank the calgary chamber of commerce and the bank of canada β s calgary office for setting up such an impressive event. i look forward to meeting with and hearing from many of you while i β m in alberta. monetary policy is working to bring inflation down β and we are encouraged by the progress we β ve made so far. consumer price index ( cpi ) inflation was 3. 3 % in july, roughly in line with what we expected in our july monetary policy report. our 2 % target is now in sight. but we are not there yet and we are concerned progress has slowed. monetary policy still has work to do to restore price stability for canadians, and we are committed to staying the course. in my time with you here, i will begin by discussing our recent monetary policy decisions. then i want to dig into the inflation data to give you a sense of what we β re seeing and what we β re looking for on the path to price stability. i also want to outline the progress we β ve seen in rebalancing demand and supply in the economy. how these evolve will be critical to our policy decisions going forward. finally, i want to answer a question we are getting more frequently from canadians : why are we so focused on the 2 % target? isn β t being close to 3 % good enough? the short answer is no β and i β ll explain why we β re committed to getting all the way back to 2 %. our recent monetary policy decisions at both our june and july monetary policy decisions, we increased our policy rate, bringing it to 5 %. these were difficult decisions. but they reflected the accumulated evidence that excess demand in the economy and underlying inflationary pressures were both proving more persistent. and it was our judgment that more restrictive monetary policy was needed to restore price stability for canadians. i would like to thank don coletti and mikael khan for their help in preparing this speech. not for publication before september 7, 2023 1 : 55 pm eastern time - 2the data since mid - july are providing clearer evidence that higher interest rates are moderating spending and rebalancing demand and supply in the economy. however, we remain concerned that overall inflationary pressures are persist | 0 |
##ages with other jurisdictions and international systems. but it has to be said that, so far, these facilities have been serving domestic needs far more than regional needs. this is, i think, a reflection of the rather moderate level of financial system integration in the region. to take banking as an illustration, there may well be quite considerable integration across the borders of immediate neighbours : between hong kong and mainland china, for example, or between new zealand and australia. but, for the region as a whole, this kind of integration is less striking than the presence of banks from the developed markets. for example, the number of us and european banks in hong kong roughly equals that of banks from the region. similar observations may be made about the equity markets. in declining order, we now come to monetary integration. there have, in fact, been some recent efforts at monetary co - operation. these began in 1995 with the collection of emeap bilateral swap facilities that provide us dollar liquidity secured against us treasury securities. in 1997 the idea of an asian monetary fund was aired, but it came to nothing. then, in 1999, came the collection of asean + 3 bilateral swap arrangements under the chiang mai initiative. these cannot be said to amount to efforts towards monetary integration. and, in fact, while ideas may have been thrown around from time to time, there has not really been any formal discussion among asian authorities that i am aware of towards monetary union. why is this the case? i think it is mainly because the obstacles to union appear to be so daunting, and that the special considerations that apply to the asian case throw up so many difficult questions. these " special considerations " are big matters, and they can be conveniently divided into three broad categories : economic, technical and political. let me give a brief outline. the economic issues concern the viability of an asian monetary union. this would involve the replacement of regional currencies with a single one, implying a single monetary policy for participant states. a key concern, therefore, is whether it would work. or whether the pressures would be so intense as to make an asian monetary union unworkable from the outset. at the heart of this question is the degree of real economic convergence between potential members. using the maastricht criteria as a reference point for the degree of nominal convergence among asian economies suggests that asia is far from ready to cope with a single monetary policy. in 2003 only six asian economies were able to keep their | dollar retail bonds, and the most recent one appears to have been issued as far back as in september 2003. today β s hkmc us dollar bond issuance would help to meet part of such investment demand. perhaps in times to come there will be more foreign currency bond issuance in hong kong. this bond issuance would add to the diversity of financial intermediation channels and complement the hkma β s effort to promote the development of a multi - currency, multi - dimensional financial system in hong kong. finally, i am pleased to see many old friends of the hkmc supporting this new issue. i would like to thank the hsbc and bank of china ( hong kong ) for underwriting a portion of the bond issue as well as placing the notes. taking this opportunity, i would also like to thank the other placing banks, namely, bank of america ( asia ), bank of communications, bank of east asia, chiyu bank, citic ka wah bank, dah sing bank, dbs bank, hang seng bank, fubon bank ( hong kong ), liu chong hing bank, nanyang commercial bank, shanghai commercial bank, standard chartered bank ( hong kong ), wing hang bank and wing lung bank, for their participation in this bond issue. with their extensive branch networks, and sophisticated telephone banking and the internet banking facility, i look forward to another successful retail bond issue by the hkmc. thank you. | 0.5 |
to household consumption expenditure. since that meeting, there have been a number of data releases that have heightened speculation about further reductions in the repo rate. in particular, the february retail sales came in well below consensus, and some of the manufacturing sector releases also disappointed. i should, however, warn against jumping to conclusions, particularly on the basis of one month β s data that is open to various interpretations. it is important to look at the reasons for the latest repurchase rate reduction. our statement emphasised that despite clear signs that the economy had emerged from the recession, the pace of recovery was still below potential. we saw the improvement in consumption expenditure in particular as being tenuous. it does not however follow that one bad retail sales number automatically leads to a need for further easing. the latest data were a confirmation of the fragile nature of consumption expenditure growth, rather than necessarily being a downside surprise requiring further stimulus. i am sure that the general view of the mpc which prevailed at the time would therefore be unchanged in the light of recent data : that is, that the relatively low growth in consumption expenditure, together with other factors, provided a window of opportunity to reduce rates without jeopardising the inflation target. however, the scope for further easing is limited, and the repurchase rate is likely to remain stable for some time. i must emphasise that this is not an unconditional commitment. it is dependent on there being no major developments that change the inflation outlook, or significant changes in the risks to the outlook. such occurrences would include markedly lower than expected output or expenditure trends, or a sustained further appreciation of the rand exchange rate, which overall would lead to a significant decline in the long term inflation forecast. conclusion monetary policy always has to be implemented in a forward - looking manner, given the lags between a policy change and its full impact on the economy. we will continue to examine the data in a forward - looking manner and, taking all factors into account, will decide accordingly. at this stage inflation appears to be consistently within the inflation target range and the domestic economy appears to be on a recovery path. however, significant risks to the domestic and global outlook remain and we will maintain our vigilance. we will continue to try to contribute to long - term economic growth through our endeavours to achieve our mandate and through our commitment to price stability. thank you. | , bedding down the appropriate legal framework, accounting and auditing standards as well as a reliable system of credit information on individual borrowers. turning to inflation prospects, there had been no indication during the first half of last year of any impending upward movement in inflation. south africa, in line with most of its trading partners, had experienced a slowdown in economic growth during the first half of 2001, but both fiscal and current account performance was strong and inflation was falling. there had been sustained fiscal rectitude and very strong revenue growth with the resultant favourable budget deficit to gdp outcome for fiscal 2001 / 02. as a result of improved macroeconomic performance and prospects in general, south africa earned investment grade status on its external sovereign debt from moody's in november 2001 while default risk spreads on south africa's external sovereign debt narrowed by some 130 basis points during the course of the year. given the fact that we are in an inflation - targeting framework, the reserve bank therefore does not have any intermediate targets or guidelines as was the case before the year 2000. the four measured and timely increases in short - term interest rates so far this year to counter the inflation spiral were entirely appropriate but inflation expectations have nevertheless continued to harden somewhat. the presence of some excess capacity in the economy should however help limit price pressures, but much also depends on movements in unit labour costs. it is still too early to assess the eventual second round inflation outcomes of recent unit labour cost developments in south africa although it is apparent that the 2002 inflation target might not be attained. the findings of the most recent survey of inflationary expectations reflect the changed expectations of respondents. the indexation of wages in a number of important pay settlements also raises concerns about the eventual second - round effects of recent large price increases and the bank will, as always, vigilantly monitor the situation in the months ahead. i emphasised in a recent speech that interest rate decisions by the mpc are conditioned by prevailing demand pressures, currency and labour cost movements and other indicators of inflationary conditions. in view of the relatively long transmission lags between interest rate changes and inflation, it is important that corrective measures are timeous and measured without seriously jeopardising the economy's growth performance. flexible inflation targeting implies that the bank should avoid severe corrective action to bring inflation in 2003 or any of the subsequent years to within the target range at significant cost to the real economy. at the same time, however, the bank must ensure that any | 0.5 |
. these unusual extensions of our lending facilities have raised concerns about the federal reserve taking on credit risk. while those concerns are understandable, i want to emphasize that we have taken a variety of steps to minimize credit risk in setting up the various nontraditional and temporary credit facilities that we have made available to a number of new borrowers. for almost all the loans we have made, we look first to sound borrowers for repayment and then to underlying collateral. moreover, we lend less than the value of the collateral, with the size of the " haircuts " depending on the riskiness of the collateral and on the availability of market prices for the collateral. some of our lending programs involve nonrecourse loans that look primarily to the collateral rather than to the borrower for repayment. in these instances, we typically have taken only the highest - quality collateral, and, in many cases, we have coordinated with the treasury to have other sources available to absorb any losses that might nonetheless occur. an example of a program that relies importantly on monetary - fiscal coordination is the term asset - backed securities loan facility, whereby protection against credit risk takes the form of capital provided by the treasury, using funds appropriated by the congress for the troubled asset relief program. to be sure, loans or credit protection offered in association with government help to stabilize individual systemically important institutions likely have higher credit risk than our more general liquidity facilities. but even in these few cases, which occurred under emergency conditions, we have taken steps to protect the federal reserve from credit losses and have asked the treasury to take these loans off our balance sheet. to reduce the risk of future problems here, a new regulatory regime should be developed that will allow the u. s. government to address effectively at an early stage the potential failure of any systemically critical financial institution. finally, there is the question of whether the federal reserve has become involved in the inherently fiscal function of allocating credit to specific sectors of the economy. because of the lack of liquidity, risk - taking, and arbitrage in markets, we have been forced to counter tight financial conditions through interventions in particular markets, which can have differential effects. but our actions have been aimed at increasing credit flows for the entire economy, and they have been effective in that regard. for example, our large - scale asset purchases of agency securities and agency - guaranteed mbs have helped mortgage markets, but they also appear to have put downward pressure on other long - term | allowed a rapid and near - complete opening of the domestic economy. the recent short lockdowns have not been as disruptive for the economy as the earlier, longer ones. and while the border closure has posed challenges in some parts of the economy, so far it has not materially impeded the recovery. policy support has also been key to this positive surprise. additional monetary and fiscal policy support over the course of the past year, beyond the initial responses, boosted the outlook beyond what was originally envisaged. three lessons different economies have had very different experiences as the pandemic has evolved. but 3 common themes have emerged, from which we can draw lessons : in a big shift, people adapt when the crisis is over, people bounce back and when policy supports, people respond. in a big shift, people adapt throughout the history of our species, humans have adapted to many different environments and a range of challenges. when circumstances change, we adapt. we can see this adaptability in the economic response to subsequent waves of the pandemic. even though lockdowns were in many cases at least as stringent as the first time around, the drag on activity was usually smaller. this was the pattern in victoria's second lockdown, and even more starkly in the winter lockdowns in the northern hemisphere late last year and early this year. conditioned to the extreme effects of the lockdowns in march and april last year, many forecasters β including us β overestimated how damaging subsequent ones would be. output did decline in many advanced economies in the december quarter of last year or the march quarter of this year. but in almost all cases, the outcome was not as bad as forecasters expected ( graph 1 ). graph 1 distribution of gdp growth surprises * q4 2020 and q1 2021 no no - 0. 5 0. 0 0. 5 1. 0 1. 5 2. 0 2. 5 3. 0 3. 5 4. 0 4. 5 5. 0 5. 5 percentage point surprise * actual compared with consensus forecasts around a fortnight prior ; based on 2 quarterly observations for a sample of 20 economies including australia and its major trading partners sources : ceic data ; consensus economics ; rba ; refinitiv one way people adapted was finding ways to operate effectively while in lockdown. i'm sure you all remember the rush in march last year to get everyone who could working from home. not all firms and not all | 0 |
in 2023 and then return to around 2 per cent in 2024. the latest forecasts from the leading international institutions and private analysts, as well as those inferred from the prices of financial assets indexed to consumer prices, confirm that long - term expectations remain broadly in line with the european central bank β s ( ecb ) definition of monetary stability. nevertheless, in the current environment of high inflation, a gradual normalization of monetary policy, which had been calibrated to contain deflationary and recessionary pressures during the most serious phase of the pandemic crisis, is needed. the risk that, in the long run, exceptionally high price increases will eventually impact expectations or trigger a price - wage spiral should be countered, although wage growth, despite having strengthened, remains moderate for the time being. the ecb governing council therefore decided to end its net asset purchases from the end of last week. in addition, it announced its intention to raise the key interest rates by 25 basis points at the meeting on 21 july ; an even larger increase could be appropriate in september if the medium - term inflation outlook does not improve. the pace of the subsequent gradual but sustained process of interest rate increases will depend on the new economic and financial data and on how they will affect the prospects for prices. partly because of the unjustified perception of a particularly aggressive monetary policy stance, the first half of june was characterized by a sharp upward revision of expectations for key interest rate rises and by an abrupt increase in long - term interest rates, which play a key role in the economic activity of firms and households. tensions have overwhelmed the markets for public and private bonds and spread to the equity market. the considerable widening of yield spreads between the government bonds of euro - area countries perceived as being more vulnerable and german bonds points to growing risks of market fragmentation along national borders. given these trends, at an extraordinary meeting on 15 june, the governing council decided that reinvestments under the pandemic emergency purchase programme ( pepp ) would be conducted flexibly, and announced the acceleration of work to create a new tool designed to counter fragmentation. these measures aim to ensure as homogeneous a transmission of monetary policy as possible across euro - area countries, ensuring the smooth normalization needed to bring inflation back into line with the price stability objective. the announcement of the council β s decisions contributed to a sudden and significant reduction in public bond spreads ; the peak of around 250 basis points reached in the spread between italian and german | christine lagarde : ecb press conference - introductory statement introductory statement by ms christine lagarde, president of the european central bank, and mr luis de guindos, vice - president of the european central bank, frankfurt am main, 22 july 2021. * * * good afternoon, the vice - president and i welcome you to our press conference. at today β s meeting, the governing council focused on two main topics : first, the implications of our strategy review for our forward guidance on the key ecb interest rates ; and, second, our assessment of the economy and our pandemic measures. in our recent strategy review, we agreed a symmetric inflation target of two per cent over the medium term. our policy rates have been close to their lower bound for some time and the medium - term outlook for inflation is still well below our target. in these conditions, the governing council today revised its forward guidance on interest rates. we did so to underline our commitment to maintain a persistently accommodative monetary policy stance to meet our inflation target. in support of our symmetric two per cent inflation target and in line with our monetary policy strategy, the governing council expects the key ecb interest rates to remain at their present or lower levels until we see inflation reaching two per cent well ahead of the end of our projection horizon and durably for the rest of the projection horizon, and we judge that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at two per cent over the medium term. this may also imply a transitory period in which inflation is moderately above target. let me turn to the assessment of the economic outlook and our pandemic measures. the recovery in the euro area economy is on track. more and more people are getting vaccinated, and lockdown restrictions have been eased in most euro area countries. but the pandemic continues to cast a shadow, especially as the delta variant constitutes a growing source of uncertainty. inflation has picked up, although this increase is expected to be mostly temporary. the outlook for inflation over the medium term remains subdued. we need to preserve favourable financing conditions for all sectors of the economy over the pandemic period. this is essential for the current rebound to turn into a lasting expansion and to offset the negative impact of the pandemic on inflation. therefore, having confirmed our june assessment of financing conditions and the inflation outlook, we continue to expect purchases under the pandemic emergency purchase | 0 |
potential growth rate rising through an improvement in productivity as a wide range of entities continue with initiatives concerning structural reforms and growth strategies. take recent developments for instance ; namely, the output gap being positive and labor market conditions remaining considerably tight, as evidenced by the existing labor shortage. such underlying developments seem to have given rise to changes in employment practices, including increased mobility in the labor market brought about by the efficient allocation of excess labor resources from sectors with low productivity to those with high productivity. alongside this, progress in working - style reforms and other initiatives suggests a deepening awareness among both workers and managers of the need to raise productivity. pursuing structural reforms and growth strategies is not an easy task and a fairly extensive process. nonetheless, it is safe to say that the necessary conditions for a rise in productivity, which will bring about a boost in japan β s growth potential, gradually are being fulfilled. i believe these developments will play a role in underpinning the virtuous cycle from income to spending. specifically, a rise in productivity will act as a starting point of such cycle, stimulating price rises through increases in wages and private consumption. effects of monetary policy are not directly transmitted to economic entities β namely, individual firms and households β and thus may take time to materialize in the form of backing up their efforts. however, they should be able to support various initiatives as the bank β s conduct of monetary policy stimulates aggregate demand and suitably tight supply - demand conditions are maintained. therefore, with a view to achieving its price stability target and realizing sustainable economic growth in a coordinated manner, the bank needs to persistently continue with its powerful monetary easing and consistently provide support for the initiatives of a wide range of economic entities. 5 / 5 bis central bankers'speeches | possible time. to this end, the bank has been pursuing powerful monetary easing, considering developments in economic activity and prices, as well as financial conditions, under the framework of quantitative and qualitative monetary easing ( qqe ) with yield curve control. the bank, under this framework, has been conducting yield curve control, in which it controls shortand long - term interest rates. specifically, at present, according to the guideline for market operations, the bank sets the short - term policy interest rate at minus 0. 1 percent and purchases japanese government bonds ( jgbs ) so that 10 - year jgb yields will remain at around 0 percent. by conducting this operation, short - and long - term interest rates have been stable at low levels, and i consider that the highly accommodative financial conditions, brought about by yield curve control, have stimulated firms β and households β spending activities. meanwhile, prices have continued to show relatively weak developments compared to the economic expansion and labor market tightening, with policy board members β forecasts presented in the april 2019 outlook report indicating that it likely would still take time to achieve the price stability target. as part of its efforts to do so, at the monetary policy meeting ( mpm ) held on april 24 and 25, the bank decided to clarify forward guidance for policy rates. specifically, the description of the existing guidance was partially revised, thereby making clear that the bank would β maintain the current extremely low levels of short - and long - term interest rates for an extended period of time, at least through around spring 2020, taking into account uncertainties regarding economic activity and prices including developments in overseas economies and the effects of the scheduled consumption tax hike. β by doing so, the bank clarified its unchanged policy stance to persistently continue with the current powerful monetary easing. what i would like to call attention to here is that the current extremely low levels of short - and long - term interest rates will be maintained β for an extended period of time β and that the inclusion of β at least β in the description regarding the time frame of the guidance indicates a fair possibility that the current low interest rates will be maintained beyond β around spring 2020. β in other words, β for an extended period of time β does not denote β through around spring 2020 " ; rather, it implies an open - ended period even beyond that. the bank also decided at the april mpm to implement measures contributing to the continuation of powerful monetary easing. specifically, the bank | 1 |
movements, monetary and real markets, bank profits and failures ; institutional changes and power struggles ; practical debates, among financiers, within the central bank, in congress and in public opinion, reconstructed precisely and passionately ; individual characters ; and fascinating hypotheses on what might have happened if a given public figure had not died prematurely or if a given dispatch had been sent one day earlier. all this makes for compelling reading ( at least in some parts : i shall not claim that the reader β s attention never lets up for the almost one thousand pages of the book ). in the end though, what is the epistemological status of the conclusions that may be drawn from a huge mass of data and observations that is reasoned, but not super - systematic and untramelled by rigorous quantitative scrutiny? i do not have a clear - cut answer. i will only say, and this is nothing new, that the book makes one ponder the comparative virtues of an approach of this kind compared with the one that is not only dominant by far today, but is also considered indispensable to reach conclusions β be they positive or normative β that may be called scientific. formalised theory and rigorous econometric methods force us to formulate hypotheses in a precise and coherent way and make it possible to test them against popper β s falsification principle. however, the price to pay, in the realm of economic science, is a β flattening β or hyper - simplification of reality as well as ( on the part of the least aware among us ) a certain disregard for the concrete history of facts. this may create an illusion as to the general validity of the results obtained and can even blind us with respect to the evidence presented. on may conclude, rather obviously, that both approaches are useful and necessary, and both may be fruitful in great hands but perhaps barren in the hands of others. however, since econometrics has made huge strides in the meantime, and can now make use of more complex and flexible models than were previously available, i may perhaps add, as a valediction, that the quantitative evidence to which i have alluded during this presentation deserves a little more attention β both qualitative and econometric β than it has received in the recent past. in any case, what is needed is an open mind, a focus on concrete facts, and perhaps a touch of eclecticism, the latter being something | fehmi mehmeti : the financial system proved capable of withstanding the crises caused by the pandemic and the war in ukraine speech by mr fehmi mehmeti, governor of the central bank of the republic of kosovo, at the year - end press conference with journalists, pristina, 22 december 2022. * * * dear representatives of the media, dear citizens, first of all, let me thank you for your presence at this year - end conference and for the continuous and effective cooperation that we have cultivated over the years with the aim of informing the public as fairly as possible about the cbk's activity, as well as economic and financial developments in the country. communication with the media continues to be an extremely important part of cbk's activity. through your fair reporting, we have managed to keep the public well informed about developments in the country's financial system and economy. therefore, i would like to take this opportunity to express my high appreciation for the professionalism shown during this year as well. despite all the difficulties we have faced, i am happy that the central bank of the republic of kosovo has managed to implement its objectives this year as well, ensuring a stable financial system, which in recent years has managed to cope with success the crises caused by the covid 19 pandemic and now the russian aggression in ukraine, but also to be one of the main pillars of support for businesses and individuals, and with this also for the country's economy. now, allow me to present before you a summary of the developments that characterized the country's economy and financial system during this year, based on the latest data available to us for the respective sector. the economy of kosovo started the year 2022 with a very good perspective, since we were leaving behind a very successful year, where according to the estimates of the statistics agency of kosovo, the real growth rate of the gross domestic product in 2021 was 10. 75 percent. however, during 2022, change of global dynamics as a result of the war in ukraine, which were accompanied by increase of inflation, changing monetary policies and increase of interest rates, and slowdown of global trade growth as a result of supply chain disruptions, was also reflected in the economic activity in kosovo. according to cbk's estimates, gdp in 2022 is expected to record a slowed growth of 3 to 4 percent, mainly due to the contraction of domestic demand and increase in imports, while exports have had a | 0 |
assistance chatbots use natural language processing to provide general explanations, chatbots powered by genai are able to provide a personalised response that is more tailored to the user's situation. genai therefore has the potential to accelerate the adoption of new technologies, and hence the pace of innovation and the transformation of processes : for example, the ability to 1 / 4 bis - central bankers'speeches make computer queries in natural language, and generate code on command, will raise the question of the monopoly of'professional'programmers. more generally, genai could boost productivity : the ai commission, chaired by anne bouverot and philippe aghion, estimated the additional growth that the deployment of ai could generate in france by 2034 at around 1 % per year. supervisors obviously have no intention of remaining on the sidelines of these major transformations, and are already making use of ai technologies to improve their efficiency when performing their duties. other projects already developed at the acpr include the early detection of anomalies in institutions'reporting, or our lucia tool, which analyses large volumes of banking transactions and enables us to assess the performance of the aml / cft models deployed in banks. very recently, with the help of our innovation centre, le lab, the acpr organised a'suptech tech sprint ', a hackathon designed to explore what genai can bring to the various supervisory activities. the three - day event revealed the potential of large language models ( llms ) for supervision, with 8 prototypes jointly developed by external data scientists and acpr staff. 4 projects will be further developed as part of our strategic plan and, i hope, new tools will be created to help the supervisor in many of its activities. this tech sprint also enabled us to lay the groundwork for a longer - term review of the way in which we want to develop supervisory activities : in particular, part of analysis will always have to be carried out by human supervisors, as our main challenge is to maintain a very high degree of reliability in our processes. 2 / because the use of ai is not risk - free, and this is my second point : ai can, in fact, increase risks, not only for individual institutions but also for the financial sector as a whole. firstly, at the microprudential level, i. e. for each individual institution, the use of ai can generate risks for the soundness of the institution and its customers. a poorly calibrated pricing model can | risks for financial stability, implying a new form of vigilance for central bankers in particular. i will elaborate a bit more on this later on. ii. terabytes of data are available and more will be coming soon. central banks will collect more and more granular data. this is a clear opportunity for better forecasting and even nowcasting. but to reap all the benefits, central banks have to be up to the technological challenge, which is huge. they have also to face a much larger competition in the new data era, with a view to maintaining trust in public information. they have therefore to become big data players and not only observers. this requires significant efforts. let me illustrate this in five avenues to adapt to the digital evolution. a ) the big data era implies large changes in the it infrastructure and a strong determination to address novel technical challenges and to build a forward - looking data management and analysis scheme. at the banque de france, we are building a data lake that covers all the new data functionalities, from data collection to machine learning. b ) central banks should also organise themselves to answer the legitimate request from academics to have access to a wide range of granular data, in a modern and researcher - friendly way. at the banque de france, we opened just one year ago a data room which gives access to 600 million of anonymized series, and it has already attracted more than 30 research teams. harvesting big data capacities is only beginning and central banks should be in the race. c ) data quality should be maintained at the same time. there should not be with central banks input / output process any β garbage in, garbage out β. managing huge volumes of data, carrying out machine or deep learning requires investing in human and automatic data technology, in training and hiring data analysts and scientists. indeed, big data requires novel and significant human resources, and this has to be anticipated and properly managed. d ) the appetite for real time intelligence, the β short - termism β that can be inflated by the big data revolution, entails risks that β bad data chase good ones β, thereby impeding the understanding of economic and financial developments by the general public and the media. we must do our best to kill fake news, and there is also economic fake news. but, in a society of communication more than of information, delivering data of good quality, which will always be a trademark of central banks, can hardly be the only answer. | 0.5 |
- border trade in goods and services large amounts are often paid in cash. the swiss, like the germans, have a preference for cash payments. the demand for euro notes in the uk can largely be explained by tourism. many immigrants from the middle east who live in the uk withdraw large amounts of cash in euro there, which they then spend in the euro area. it β s a similar story with switzerland. russia is another important market for euro cash. the euro, like the us dollar, is traditionally used as a stable store of value there. the demand for euro correlates with the euro / dollar exchange rate : the stronger the euro, the greater the demand for it. while particularly in the wake of the financial crisis in 2008 there were stronger outflows of notes going to eastern eu countries, a β dehoarding β of stocks has begun. every year net return flows have been noted. the return flows from turkey however result in large part from local tourism. in addition, it is likely that considerable amounts in the pockets of turkish migrant workers end up in their home country, from where they are repatriated via the banking system. in some non - euro area countries, kosovo and montenegro, euro cash is even legal tender and is therefore regularly used in daily transactions. this unilateral β euroisation β, which has not been coordinated with the eu, is to all extents and purposes a euro adoption β through the back door β. this is not compatible with an orderly institutional approach to europe and the euro. unlike the euro countries or small states such as san marino, these countries make no commitments as a quid pro quo for introducing the euro. i would now like to consider the use of euro banknotes in regions outside europe. above all, the united arab emirates and china are major international transshipment centres for goods. for example, african retailers and consumers make purchases in dubai. they value the euro as a stable, internationally accepted means of payment. transactions are settled in cash, because cash has the advantage of settling the invoice immediately, and no information about the creditworthiness of the contracting party needs to be obtained. around one - third of all return flows of euro banknotes are from asia and the middle east. in north, central and south america, the euro tends to play a minor role ; the us dollar dominates there. demand for euro banknotes is largely linked to how foreign users assess the stability of the euro as a currency against | emmanuel tumusiime - mutebile : increasing information sharing through mous remarks by prof emmanuel tumusiime - mutebile, governor of the bank of uganda, at the uganda law society - financial sector consultative meeting for increasing information sharing through mous ( memorandums of understanding ), kampala, 22 march 2010. * * * distinguished guests, ladies and gentlemen good morning i am greatly honoured to deliver the opening remarks at this consultative meeting. i would like to thank all of you for responding positively to the invitation to this consultative meeting whose main objective is to promote institutional networking and information sharing with strategic partners to improve market efficiency. the presence of the various financial sector experts in this consultative forum is testimony that you are committed to finding durable solutions to the impediments that still exist in the financial markets. more specifically, this meeting is intended to identify the gaps that exist in the current arrangements for cooperation, to explore the scope of services and any other information that stakeholders need to share, and to generate proposals on the best legal frameworks for information sharing. some institutions may already be having adhoc arrangements for information sharing and cooperation but these arrangements may not be optimal and this forum should provide avenues for formalizing and strengthening existing arrangements. at the bank of uganda ( bou ), we consider information sharing as a key ingredient in the process of financial markets development. in this regard, the bou duly supports institutional efforts to formalize information sharing through mous. i am happy to note that at national level, all the financial markets regulators namely, capital markets authority, uganda insurance commission and the bank of uganda have an mou for sharing information on regulatory matters. in the design of the financial markets development plan ( fmdp ), specific initiatives were included on information sharing and networking using a top down approach from regulators to the regulated entities. this will not only ensure integration of service delivery in the financial sector but will also result into a majority of the population accessing financial services and products. the more we increase financial integration, the more we shall reach a greater population and the more we shall promote the development of financial markets. it is important for us to move in this direction in order to adequately to prepare ourselves to participate in the greater regional market and remain competitive. our expectation is that we should see more integration of the financial sector, enhanced networking, stronger linkages, higher level transparency and enhanced cooperation. all this should ultimately result in increased efficiency and reduction in costs of doing business | 0 |
jean - claude trichet : announcement of basel ii opening remarks of mr jean - claude trichet, president of the european central bank and chairman of the g10 governors and heads of supervision, at the press conference announcing the publication of basel ii, bank for international settlements, basel, 26 june 2004. * * * on behalf of the g10 central bank governors and heads of bank supervisory agencies, i am pleased to announce that we endorsed the publication of the revised framework for capital adequacy known as β basel ii β at our meeting today. this work, which was conducted by the basel committee on banking supervision, represents a landmark achievement. in particular, its comprehensive approach to risk management and bank supervision ensures that capital regulation will remain a cornerstone of safety and soundness for banking in the twenty - first century. in the same vein, basel ii will enhance banks β safety and soundness, thereby strengthening the stability of the financial system as a whole. that, in turn, will improve the ability of the financial sector to serve as a source of sustainable growth for the broader economy. i am pleased to offer this revised framework to the international community. today marks the culmination of nearly six years of challenging work. during those years, the basel committee sought to develop significantly more risk - sensitive capital requirements that are conceptually sound. at the same time, the committee wanted to be sensitive to the characteristics of markets and supervisory systems in numerous countries. for such an effort to be successful, the committee undertook a careful review of the existing rules and of the recent advances achieved in the industry. it consulted widely and publicly with industry representatives, other public authorities, and outside observers. the governors and heads of supervision believe that the committee β s efforts and dedication have been fruitful and invaluable, and we appreciate the dedication that all committee members demonstrated. basel ii builds on the solid foundation set out by the 1988 basel capital accord. indeed, the new framework will preserve key elements of the existing capital rules. this includes retaining the definition of eligible capital components ; maintaining the general requirement that banks should hold total capital equivalent to at least 8 % of their risk - weighted assets ; and continuing the basic structure of the capital requirements for market risk that are outlined in the committee β s 1996 market risk amendment. the new framework marks a substantial step forward in creating incentives for banks to improve the quality of their risk management. one of the most significant innovations of the new framework is that it will allow banks to make | christine lagarde : ecb press conference - introductory statement introductory statement by ms christine lagarde, president of the european central bank, and mr luis de guindos, vice - president of the european central bank, frankfurt am main, 7 march 2024. * * * good afternoon, the vice - president and i welcome you to our press conference. the governing council today decided to keep the three key ecb interest rates unchanged. since our last meeting in january, inflation has declined further. in the latest ecb staff projections, inflation has been revised down, in particular for 2024 which mainly reflects a lower contribution from energy prices. staff now project inflation to average 2. 3 per cent in 2024, 2. 0 per cent in 2025 and 1. 9 per cent in 2026. the projections for inflation excluding energy and food have also been revised down and average 2. 6 per cent for 2024, 2. 1 per cent for 2025 and 2. 0 per cent for 2026. although most measures of underlying inflation have eased further, domestic price pressures remain high, in part owing to strong growth in wages. financing conditions are restrictive and our past interest rate increases continue to weigh on demand, which is helping push down inflation. staff have revised down their growth projection for 2024 to 0. 6 per cent, with economic activity expected to remain subdued in the near term. thereafter, staff expect the economy to pick up and to grow at 1. 5 per cent in 2025 and 1. 6 per cent in 2026, supported initially by consumption and later also by investment. we are determined to ensure that inflation returns to our two per cent medium - term target in a timely manner. based on our current assessment, we consider that the key ecb interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal. our future decisions will ensure that our policy rates will be set at sufficiently restrictive levels for as long as necessary. we will continue to follow a data - dependent approach to determining the appropriate level and duration of restriction. in particular, our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. the decisions taken today are set out in a press release available on our website. i will now outline in more detail how we see the economy and inflation developing and will then explain our assessment | 0.5 |
two - year reference period the bulgarian lev did not exhibit any deviation from its central rate due to its currency board arrangement, while the croatian kuna displayed a low degree of volatility and traded close to its central rate. third, all countries, with the exception of croatia, need to adjust their legal framework to comply with the requirements under union law. they must address issues relating to central bank independence and the prohibition on monetary financing. moreover, let me reiterate what i said here in 2020 when i presented our previous ecb convergence report. in the interest of the euro area as a whole and of each euro area accession country, convergence has to be reached on a lasting basis, and not just at a given point in time. this requires ongoing attention, also through our economic governance mechanisms and sound financial sector supervision. in order to achieve a high level of sustainable convergence, our convergence report emphasises the need for lasting policy adjustments in many of the countries under review. specifically, we emphasise that the next generation eu ( ngeu ) package represents a unique opportunity to accelerate the process of euro area convergence, with swift and effective implementation being crucial for its success. the state of economic and legal convergence in croatia let me now focus on croatia, which is the only country that fulfils all economic and legal requirements for adopting the euro and has expressed the wish to do so on 1 january 2023. with regard to price stability, the 12 - month average rate of hicp inflation in croatia was 4. 7 %, which is below the reference value of 4. 9 %. in terms of fiscal sustainability, croatia β s general government budget balance was just below the 3 % deficit reference value in 2021, while its debt ratio was above the 60 % reference value but on a downward trajectory. since the inclusion of the croatian kuna in erm ii, its deviations from the agreed central rate have been significantly smaller than the standard fluctuation band of erm ii. long - term interest rates stood at 0. 8 % on average and thus remained below the 2. 6 % reference value for the interest rate convergence criterion. from a legal perspective, croatian law is compatible with the treaties and the statute of the european system of central banks and of the european central bank. what is key is the amendment to the law on croatia β s central bank, which prohibits the croatian government from seeking to influence the members of its decision - making bodies. with the entry into force of the close cooperation | framework on 1 october 2020, the ecb gained responsibility for directly supervising eight significant institutions and for overseeing 15 less significant institutions in croatia. [ 8 ] the convergence in banking supervision ensures the application of uniform supervisory standards and thus contributes to safeguarding financial stability. moreover, the agreement on croatia β s participation in erm ii was based on several policy commitments which i discussed with you two years ago. although the anti - money laundering ( aml ) commitments have been fulfilled formally, there are still several shortcomings in this respect which must be addressed, as identified in the recent moneyval report. [ 10 ] this is also key from a prudential perspective. we therefore urge the croatian government to deliver on its commitment to fully implement a new aml action plan by 2023, when the first year of moneyval β s enhanced follow - up procedure ends. finally, our assessment stresses that, in view of the subdued growth potential, it is crucial to strengthen croatia β s institutional capacity to ensure effective and efficient implementation of the structural reforms that can lift its growth path. conclusion let me conclude. the convergence assessments by the commission and the ecb are paving the way for another euro area enlargement. two decades after the introduction of the single currency, euro area membership remains an attractive prospect. the euro area is facing challenges on many fronts which are mainly of a global nature, like the russian invasion of ukraine and persistent supply chain disruptions. but the size of our economic and monetary union gives us the economic firepower and policy autonomy to respond to these adverse external shocks. and the euro buttresses our supply chains, increasing their resilience. supply chain integration in europe is better than in any other continent, and continues to increase. we appreciate that countries make every effort to prepare themselves for adopting the euro. and they do so under challenging economic conditions. i am convinced that the recent eu initiatives such as the recovery and resilience facility and the repowereu plan will help our economies stay on the path towards reforms and investment. croatia β s progress demonstrates its commitment to adopting the euro. most importantly, it is another step towards economic and monetary integration in europe. it further underpins our collective economic strength and our sovereignty. 1. ecb convergence report 2022 2. article 140 of the treaty on the functioning of the european union. 3. denmark has notified the council of the european union ( eu council ) of its intention not to participate in stage three of economic and monetary union | 1 |
. as regards instruments, we have used both : β’ the β standard β instrument par excellence : interest rates. the ecb β s monetary policy has been very accommodative for several years, with key interest rates currently at historically low levels and negative real interest rates in large parts of the euro area. β’ a broad range of β non - standard β instruments that can be grouped into two categories : i ) liquidity - providing instruments ( with the fixed rate full allotment policy, the expansion of eligible collateral, and the extension of maturities up to three years with the vltros ) and ii ) instruments making it possible to intervene directly on the most dysfunctional market segments ( the cbpp and smp ). this diversification and broadening of the eurosystem β s interventions has naturally raised questions about the ultimate goals pursued, the methods used and the possible risks incurred. in this critical period, we were convinced of the need to build a solid, robust and clearly defined foundation for our actions. in particular : β’ we have always acted and will continue to act within the framework of the mandate assigned to us by the treaty : our priority objective is to maintain price stability, defined as an inflation rate below, but close to 2 % over the medium term. fears concerning the possible inflationary effects of our policies are therefore completely unfounded. β’ moreover, we have always acted, and will continue to act, totally independently from the political authorities. it has always been perfectly clear that the responses to the real roots of the crisis can only be provided by the governments themselves and that monetary policy can never durably mitigate political shortcomings. thus fears regarding the financing of euro area states are also groundless. focus on omts i would like to conclude by presenting in greater detail the most recent ecb measure, known as outright monetary transactions ( omts ). to understand the logic and power of this instrument, we need to make a brief excursion into monetary policy theory ( before lunch β¦ sorry! but it β s not that complicated ). as you know, central bank monetary policy impulses are transmitted to the real economy via several different channels. in the euro area, with bank loans accounting for three quarters of the economy β s total financing, the β credit channel β is by far the most significant vector. in normal times, if the ecb lowers its key rates, the banks β financing costs decrease, allowing them to pass these lower costs on to the | various valuation adjustments while valuing their derivatives portfolios like β ( i ) incurred cva losses, ( ii ) closeout costs, ( iii ) operational risks, ( iv ) early termination, investing and funding costs, and ( v ) future administrative costs and where appropriate, model risk. 7 ) rbi has indicated that the capital requirement under ima would be a function of three components : ( i ) normal var measure ( for general market risk and specific risk ) ( ii ) stressed var measure ( for general market risk and specific risk ) ( iii ) incremental risk charge ( irc ) ( for positions subject to interest rate specific - risk capital charge ). general market risk and specific risk can be modelled together or separately for normal var measure and stressed var measure. in other words, a bank could calculate either a combined var measure for the bis central bankers β speeches two risk categories ( general market risk and specific risk ) or separate var measures for each of them. for example, the most extensive approach to model equity risk would be having risk factors corresponding to the volatility of individual equity issues. in such a case, bank would have modelled both general market risk and specific risk together. however, in cases where a bank calculates a combined var measure, it should be able to isolate the var for each component so as to enable its backtesting and use in the day - to - day risk management. in addition, in the case of interest rate - sensitive positions, which have credit risk, the banks will also have to compute incremental risk charge for default and migration risks, which are generally not captured by the var model. to start with, banks in india are required to model general market risk and use the present standardised measurement method for specific risk. 8 ) on measurement of market risks, var methodology has proved to be the main method of assessing the overall market risk of trading positions over a short horizon, such as a 10 day period, and under β normal β market conditions. the mechanics of var has been variously described at one end of spectrum as β a benchmark for managing financial risk β and at the other end of the spectrum as an β intellectual fraud β along with various shades of opinions in between the two extremes. in effect, the methodology allows us to capture in a single number the multiple components of market risk such as curve risk, basis risk and volatility risk. however, each time there is a turmoil in the worlds markets, the limitations of | 0 |
of fixed - income securities, which are predominantly used for market making, declined sharply after the lehman brothers failure, from about $ 1. 3 trillion to about $ 800 billion, and have since fallen further to about $ 700 billion. the recent decline might be due in part to regulations, such as the volcker rule and the supplementary leverage ratio, aimed at making the financial system safer and sounder, as well as to changes firms may have made on their own, perhaps in reaction to the experience of the financial crisis. regardless of the causes of the change, market participants have expressed a concern that the decline in inventories reflects in part a reduced willingness or capacity of the primary dealers to make markets - - which may in turn lead to lower liquidity. however, whether markets are in fact less liquid depends on both the degree to which the decrease in primary dealers β inventories affects their willingness to provide liquidity and the extent to which nonbank firms such as hedge funds and insurance companies fill any lost marketmaking capacity. 4 2. decline in trade size and turnover market participants also often cite the decline in average trade size and turnover - - the volume of trades relative to the total amount of bonds outstanding - - as bessembinder, jacobsen, maxwell, and venkataraman ( 2016 ) find that bank dealers are less willing to provide liquidity now than in the recent past, while nonbank dealers are more willing. duffie ( 2012 ) argues that the negative effect the volcker rule may have on market liquidity in the short run may disappear in the long run as nonbanks step in to provide liquidity. duffie ( 2012 ) also mentions that the migration of liquidity provision from banks to nonbanks, which are not regulated, may have potentially important adverse consequences for financial stability. - 3evidence of reduced liquidity. figure 2 shows that average trade size in the corporate bond market has indeed declined since 2006 but has been relatively stable in the past four years. nevertheless, this decrease may reflect a number of factors, including changes in technology or the types and preferences of institutions engaged in trades, so it may not indicate a reduction in market liquidity. certainly, the length of this trend, roughly a decade, seems on its face more consistent with a secular trend such as technological change. turnover in the corporate bond market has declined as well, though this evidence is also not a definitive sign of reduced market liquidity. the decline in turnover is not | 18. 2 23. 0 indonesia 13. 2 17. 3 south korea 29. 0 28. 0 malaysia 24. 1 32. 2 mexico 26. 5 26. 9 thailand 10. 3 19. 0 turkey 34. 9 24. 5 source : kalpana kochhar, utsav kumar, raghuram ioannis tokatlidis ( 2006 ),'india's pattern of what follows? ', journal of monetary economics, vol. 53. rajan, arvind development : subramanian and what happened, growth in bank credit the upturn in economic activity is mirrored in the sustained growth in demand for bank credit. bank credit has increased sharply from 30 per cent of gdp at end - march 2000 to 48 per cent by end - march 2006 ( chart 5 ). non - food credit extended by scheduled commercial banks ( scbs ) recorded an average annual growth of 26. 1 per cent between 2002 - 03 and 2005 - 06, notably higher than that of 14. 5 per cent recorded during the preceding four - year period ( 1998 - 99 to 2001 - 02 ) as well as the longrun average of 17. 8 per cent ( 1970 - 2006 ). the stagnation in credit flow observed during the late 1990s, in retrospect, was partly caused by reduction in demand on account of increase in real interest rates, turn down in the business cycle, and the significant business restructuring that occurred during that period. apart from the revival of economic activity, the sharp growth in bank credit in the recent years can be attributed to factors such as financial deepening from a low base, structural shifts in supply elasticities, rising efficiency of credit markets and policy initiatives to improve flow of credit to sectors like the agriculture and small scale units. increasingly, retail credit led by demand for housing as well as other retail loans is emerging as a major driver of growth in bank credit. this is reflected in the sharp increase in the share of housing credit in overall credit extended by scbs from 2. 4 per cent at end - march 1990 to 11. 0 per cent at end - march 2005. growth in retail credit has also emanated from increased use of credit cards, loans for consumer durables and demand for education loans. the share of non - housing retail credit in total bank credit has increased from four per cent at end - march 1990 to around 11 per cent at end - march 2005. thus, the share of total retail credit in bank credit has | 0 |
β, temi di discussione, 700, banca d β italia, january. reinhart, c., m. k. rogoff and m. s. savastano ( 2003 ), β debt intolerance β, brookings papers on economic activity, 1. savona, p. ( 2010 ), β un parcheggio per i debiti pubblici del mondo β, il messaggero, 18 febbraio. visco, v. ( 2010 ), β come salvarsi dalla deflazione β, il corriere della sera, 13 luglio. wyplosz, c. ( 2010 ), β eurozone reform : not yet fiscal discipline but a good start β, vox, 4 october. | monetary policy but all available measures. iv. concluding remarks i would like to conclude this speech by briefly touching on the economy of gunma prefecture. the pick - up in the prefecture β s economic activity has come to a pause, and its economy remains more or less unchanged, owing to the prolonged deceleration in overseas economies. compared with other prefectures in japan, however, economic conditions in the prefecture are favorable on the whole, led by a healthy transportation equipment industry. as for the outlook, gunma prefecture β s economy is likely to pick up moderately again as overseas economies start recovering and as exports increase. the prefecture enjoys a strong industrial foundation, with regional characteristics such as a very low vulnerability to natural disasters including earthquakes, bountiful water resources, and good access to the tokyo metropolitan area. due mainly to vigorous promotion by the prefectural government and cities of the advantages of gunma prefecture as a convenient site for corporate back - up facilities, the number and area size of new factories in the prefecture have reached the highest levels in japan for the past several years. furthermore, gunma prefecture has great potential in the area of tourism. the prefecture enjoys ample resources including rich natural surroundings such as the famous oze marsh, historic and cultural assets such as the tomioka silk mill β which has applied to join the world heritage list β and the major hot spring resorts of kusatsu, minakami, ikaho, and shima. regional efforts have been made to attract more tourists to the prefecture from all over japan and abroad. i hope that these and other efforts will promote even further the development of tourism in gunma prefecture. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | 0 |
monetary and financial stability is pursued in emerging market economies is quite distinct from that in developed economies. for emerging markets, there are two stylized facts that are unique to its policy setting. the first is the greater income and consumption volatility that have been observed in emerging markets, both in terms of the level and in terms of growth relative to developed economies. and the second is the fact that economic agents in the views expressed in this paper are those of the authors and do not necessarily represent those of the bank of thailand or bank of thailand policy. i would like to thank piti disyatat, ashvin ahuja, sarawan angklomkliew, jaturong jantarangs, nawaporn maharagkaga, don nakornthab, kobsak pootrakool, mathinee subhaswadikul and supradit tangprasert of the bank of thailand for their substantial contribution to the drafting the original paper. emerging markets face greater limitations in the ability to smooth consumption in response to shocks. the empirical evidence from two recent studies are summarized in table 1. as documented by aguiar and gopinath in 2007, consumption is around 40 percent more volatile than income at business cycle frequencies for emerging markets, while the ratio is less than one for developed economies. the same is true when comparing relative volatility in growth rates of consumption and income. a study by kose, prasad, and terrones in 2005 also shows greater income and consumption volatility in emerging markets relative to developed economies. such heightened volatility in macroeconomic outcomes undoubtedly has adverse implications for welfare. and the fact that consumption is so volatile β in itself as well as in relation to income β suggests the existence of serious limitations in the ability of economic agents in emerging markets to smooth consumption in response to shocks. a central proposition of our studies is that a large part of the explanation for higher macroeconomic volatility in emerging markets rests with key differences in the nature of shocks hitting emerging market economies, as well as the way in which the economic system of emerging markets propagate the shocks. figure 1 captures our basic arguments, and depicts how observed macroeconomic outcomes are the result of the interaction between the nature of shocks and the structural features of the economic system. firstly, the nature of shocks that emerging market economies experience is quite different from that of developed economies. a particularly pertinent example in this context is capital flow | bandid nijathaworn : the pursuit of monetary and financial stability in emerging market economies 1 speech by dr bandid nijathaworn, deputy governor of the bank of thailand, at a public lecture at the centre for banking studies of the central bank of sri lanka, colombo, 23 july 2008. * * * ladies and gentlemen, i am delighted to be here today in colombo, and am honoured by the invitation that has been extended to me by the centre for banking studies of the central bank of sri lanka to give this evening β s public lecture. the bank of thailand and the central bank of sri lanka has a long history of mutual friendship and cooperation. so, i am deeply touched by the invitation, and am privileged to join the long list of eminent speakers and scholars who have previously participated in this prestigious lecture series. the topic of my lecture this evening is the pursuit of monetary and financial stability in emerging market economies. the lecture is drawn from the research done at the bank of thailand on the same topic. the research paper was first presented last year at a seminar at the bank of england, and the lecture today is an updated version of that paper. what the research attempts to do is to examine the challenge faced by emerging market economies in the pursuit of monetary and financial stability. the key hypothesis of the research is that the context in which monetary and financial stability is pursued in emerging market economies is different to that of developed economies, and so the challenge and the implications for policy are different. my lecture this evening is organized into two parts. in the first part, i will talk about the unique context of emerging market economies compared to developed economies in the attainment of monetary and financial stability, and discuss the underlying cause of the difference. in the second part, i will highlight the key implications of these differences for the pursuance of monetary and financial stability in emerging market economies, both in the context of shortterm stabilization challenge and the longer - term structural challenge in implementing structural reforms. the lecture will be brief, so that we will have time for a q and a session afterward. 1. first, the unique context of emerging market economies. as a general statement, one can begin with the notion that the attainment of monetary and financial stability is something that policymakers everywhere place at the forefront of their agendas. and, monetary and financial stability are desirable because they are prerequisites for welfare - enhancing macroeconomic outcomes. along this line, the context in which | 1 |
develop a 24 / 7 settlement system. 9 the u. s. treasury echoed this theme in a recent report. 10 over the past year, we have undertaken an assessment of what the federal reserve could do to modernize its infrastructure to support interbank settlement of faster payments. that assessment found that 24 / 7 payment - by - payment interbank settlement in real - time - - what we refer to as real - time gross settlement ( rtgs ) - - offers clear benefits in minimizing risk and maximizing efficiency. a 24 / 7 economy with 24 / 7 real - time payments needs 24 / 7 real - time settlement, and rtgs is the way to achieve this. that is where we believe that the federal reserve and the private sector together need to make investments for the future. in this regard, the u. s. retail payment system lags behind some other countries : the reserve bank of australia and the european central bank have already implemented or are on the cusp of implementing rtgs systems to support private - sector faster payment services. faster payments task force, final report part two : a call to action, july 2017, https : / / fasterpaymentstaskforce. org /. u. s. department of the treasury, a financial system that creates economic opportunities : nonbank financials, fintech, and innovation ( washington : department of the treasury, july 2018 ), https : / / home. treasury. gov / sites / default / files / 2018 - 07 / a - financial - system - that - creates - economic - opportunities - - nonbank - financi.... pdf. the federal reserve and payment system stakeholders have an opportunity to upgrade america β s payment system to meet the needs of households, businesses, and banks in the app economy. today, we are publishing a federal register notice that seeks public comment on potential steps the federal reserve could take to support the vision of rtgs of faster payments. the reserve banks could develop a service for rtgs that is available on a 24 / 7 basis to provide payment - by - payment interbank settlement in real time and at any time, on any day, including weekends and holidays. the reserve banks currently provide payment services to more than 11, 000 banks across the country. a 24 / 7 rtgs service provided by the reserve banks could significantly improve the prospect that banks of all sizes will have equitable access to a real - time interbank settlement infrastructure for faster payments in the | european central bank : press conference on the chosen design for the new ecb premises introductory statements by mr jean - claude trichet, president of the european central bank, and mr lucas papademos, vice president of the european central bank, to the press conference on the chosen design of the international urban planning and architectural design competition for the new ecb premises, frankfurt, 20 january 2005. * * * ladies and gentlemen, we have invited you today for the presentation of the chosen design proposal in the international urban planning and architectural design competition for the new ecb premises. in our introductory remarks we would like to do the following : first, to briefly recall the main steps that have led to the outcome of the competition. second, to present the chosen design proposal in some detail. and third, to explain what happens next. afterwards, we will be happy to answer further questions, as will the chosen architect when it comes to technical questions on the design proposal. the decision of the governing council / the conclusion of the competition last thursday, on 13 january 2005, β the governing council chose the design for the ecb β s new premises out of the 3 revised design proposals of the 3 prize winners of the international urban planning and architectural design competition. after extensive discussion and a careful evaluation, the governing council concluded that the revised design concept of coop himmelb ( l ) au best meets the functional and technical requirements specified by the ecb, and has features that reflect the ecb β s values and transforms them into architectural language. β [ quotation of the press release ] on 13 february 2004 an international jury consisting of architects, eurosystem representatives and a representative of the city of frankfurt chose three winning designs in accordance with the following criteria, as laid down in the competition rules out of the 12 design concepts submitted in the second phase of the competition : 1. overall town - planning, architecture and landscape ; 2. compliance with the main features of the functional and spatial programme, including modularity ; 3. feasible approach to an energy / environmental concept and compliance with the main features of the ecb β s technical requirements ; 4. compliance with the relevant rules, in particular in the field of building law and environmental law. the first prize was awarded to coop himmelb ( l ) au, vienna ; the second prize to asp schweger assoziierte, berlin ; and the third prize to 54f architekten + ingenieure, darmstadt, in | 0 |
, creating a system to measure development capacity, providing options to intervene when development capacity falls short of what is required and improvements around the financing and provision of infrastructure. in respect of the latter, the recent government initiative to establish a housing infrastructure fund will help to relieve an important constraint. the government has also recently released its proposed national policy statement ( nps ) on urban development capacity which requires councils to ensure sufficient land supply to meet projected housing and business development needs. councils will be required to monitor developments around housing affordability, building and resource consents and the value of land on urban boundaries. they will be required to ensure price competition, coordinate infrastructure development and streamline consenting processes. the nps appears consistent with recommendations made by the productivity commission and should facilitate a greater supply of housing - ready land over time. a major supply - side milestone will be the outcome of the auckland unitary plan ( aup ) independent hearings panel, which is expected to make final recommendations to the auckland council by 22 july. the panel β s recommendations and the auckland council β s response to those recommendations will be crucial in setting the future path towards reducing the housing market imbalance. as a means of gaining further traction on the supply side, the reserve bank supports the idea of a framework for establishing urban development authorities ( udas ). these would be crown or local body entities, with powers to assemble and acquire land, accelerate planning and consent processes and oversee coordination of all the parties involved in housing development. such entities could also potentially undertake the funding and development of infrastructure. udas have been used in various forms in a number of countries including australia, the uk and the us to facilitate major housing developments in designated areas. however, by their nature, the role and powers of udas would be contentious and their creation would have to be carefully managed. while boosting the capacity for development and housing supply is paramount, it is also important to explore policies that will keep the demand for housing more in line with supply capacity. two areas for on - going consideration include tax and migration policy. on the tax front, the implementation of the bright line test for housing investors introduced in october last year has helped curb short - term speculative activity in the housing market. consideration might be given to further reducing the tax advantage of investing in residential housing. like taxation of investor - owned housing, migration policy is a complex and controversial issue. however, we cannot ignore that the 160, 000 net inflow of permanent and long - term migrants over | 4 ). feldstein, m. ( 2017 ). underestimating the real growth of gdp, personal income, and productivity. journal of economic perspectives, 31 ( 2 ), 145 - 64. lisack, n., sajedi, r., & thwaites, g. ( 2017 ). demographic trends and the real interest rate. bank of england working paper no. 701. nolan, p., pomeroy, r., & zheng, g. ( 2019 ). productivity by the numbers : 2019. new zealand productivity commission. poloz, s. ( 2019 ) toward 2021 : the power β and limitations β of policy. remarks at the chamber of commerce of metropolitan montreal, quebec. powell, j. ( 2019 ) challenges for monetary policy. remarks at symposium sponsored by the federal reserve bank of kansas city jackson hole, wyoming. rice, a., vehbi, t., & wong, b. ( 2018 ). measuring uncertainty and its impact on the new zealand economy. reserve bank of new zealand analytical note series, an2018 / 01. rogoff, k. ( 2019 ). is this the beginning of the end of central bank independence? g30 occasional paper 95. vlieghe, g. ( 2019 ). monetary policy : adapting to a changed world. speech given at the 2019 mmf monetary and financial policy conference. bloomberg, london. | 0.5 |
an upward interest rate adjustment lies with us. the dutch success up to now has not been achieved overnight. it is the upshot of a long and consistent road which wim duisenberg has done a great deal to shape. iii wim duisenberg comes from friesland. what is puzzling is how he comes by the name of duisen - berg. as you know, friesland is so flat that you only need to stand on a newspaper to be able to overlook the entire countryside. frisians are supposed to be very attached to their native locality, which is by no means the same thing as being β provincial β. and they are said to be, above all, indomitable, which the uninitiated sometimes interpret as β self - willed β. but that doesn β t matter. as you will know, such a characterisation is not entirely unknown for a westphalian, either. that is hardly surprising. after all, our birth - places are only 120 kilometres apart. there were signs of wim duisenberg β s international vocation at an early age. as a student he was particularly interested in international economic relations. he wrote his doctoral dissertation on the topic : β the economic consequences of disarmament β. and he worked for the international monetary fund for five years. but then he responded to the call of his homeland. there was nowhere he was not needed. economic research needed him. he became a professor of macroeconomics in amsterdam. the government needed him. he became the minister of finance at an early age. actually, that β s a contradiction in terms. youth, after all, tends to be idealistic and impetuous, whereas age tends rather to be distrustful and wary. and a finance minister needs to be highly distrustful and wary. the banking industry needed him. he joined a commercial bank. and finally the central bank needed him. he became its governor, which elicited from him the following comment : β it β s the best job... the pity is that there β s only one such job per country. β well, being central bank governor in the netherlands is a longer - term occupation. anyway, i don β t know any other country that has had only three governors in the past fifty years. his spell as governor did not begin very auspiciously. against his advice, the guilder was devalued against the d - mark as part of the major realignment within | overvalued exchange rate. with ltcm, there was similar excessive leverage and reliance on short - term financing arrangements. going forward, international organizations and national authorities will have to invest more resources in monitoring markets for signs of stress. while there is not a single indicator of banking or balance - of - payment crises, the tracking of financial market prices in many markets and financial flows across borders should help to identify trouble spots. where appropriate, national authorities should consider broadening the information they collect. complementary to these efforts, national authorities can take steps to facilitate transparency within markets. the key to avoiding excessive leverage is the market discipline that should be provided by market participants β creditors and counterparties. but market discipline works well only if counterparties share sufficient information to allow reliable assessments of their risk profiles. supervisors need to ensure that, before establishing credit relationships, regulated entities have a clear picture of a counterparty β s risk profile and have ensured that information relevant to that relationship will be available on a sufficiently timely and ongoing basis. public disclosure also has an important role to play, and authorities should make sure that appropriate requirements are in place. to be sure, public disclosure is unlikely to be sufficiently timely or detailed to meet the needs of creditors. still, it is essential to protect retail depositors and investors, and it provides a standardized framework from which customized bilateral disclosures can be drawn and elaborated. lastly, industrial countries have the responsibility to assist in the training of supervisors in emerging market economies, an area in which, i am pleased to say, we in the federal reserve system have been active for a while. we cannot afford not to take this responsibility, and in this regard, virtue is more than its own reward. we benefit in such technical assistance by strengthening our contacts with supervisors abroad, which is important when examining internationally active institutions based here at home, and by reducing the potential for adverse shocks from abroad. issues for further consideration as i noted, one of the contributing factors to asian financial distress was the ill - considered buildup of short - term foreign currency borrowing by banks in these nations from banks in industrial countries. some have attributed such behavior to the effects of an inappropriately low capital charge in the basel accord for short - term interbank credit extensions. they argue that the experience requires an increase in capital charges in order to effectively control the quantity of interbank loans. i do believe that we, in fact, should question the treatment of interbank credit by the accord. credit risk, in my | 0 |
inflation dynamics, in line with our forward guidance, before they warrant a more fundamental reassessment of the medium - term inflation outlook. such patience may lead to inflation outcomes being moderately above our aim for a temporary period of time. this will be a necessary and proportionate requirement to set the conditions to escape low inflation. 1 for a discussion of the march 2021 staff projections, see lane, p. r. ( 2021 ), β inflation dynamics during a pandemic β, ecb blog post, frankfurt am main, 1 april. 2 changes in consumption weights imply some volatility in the inflation profile in 2021 but, on average over the year, they are expected to have only a small downward impact on hicp inflation. 3 pandemic - related upside potential to inflation may interact with the unwinding of previous and current structural disinflationary forces, such as a potential retreat from globalisation and an ageing society. see goodhart, c. and pradhan, m. ( 2020 ), the great demographic reversal : ageing societies, waning inequality, and an inflation revival, palgrave macmillan, london ; haldane, a. ( 2021 ), β inflation : a tiger by the tail? β, a pre - recorded speech given online. 4 see ecb ( 2017 ), β what can recent developments in producer prices tell us about pipeline pressures? β, economic bulletin, box, issue 3. 5 bobeica, e., ciccarelli, m. and vansteenkiste, i. ( 2019 ), β the link between labor cost and price inflation in the euro area β, working paper series, no 2235, ecb, february. 6 as containment measures are still in place, additional excess savings are likely to have accumulated in, and to rise beyond, the second quarter. 7 see european commission ( 2021 ), β special topic : will consumers save the eu recovery? β insights from the commission β s consumer survey β in european business cycle indicators, european commission technical papers, no 047, april ; and fisher, j. d., johnson, d. s., smeeding, t m. and thompson, j. p. ( 2020 ), β estimating the marginal propensity to consume using the distributions of income, consumption, and wealth β, journal of macroeconomics, vol. 65. 8 see batini et al. ( 2021 ), β building back | and the euro area ( right chart slide 11 ). upside surprises to inflation have coincided with a broader underprediction by market analysts of the euro area economy β s ability to sustain demand and profits in the presence of social distancing measures, showing up in a rare persistence of positive surprises ( slide 12 ). looking ahead, further upside potential will, to a large extent, depend on the price elasticity of demand and hence the pricing power of firms. after a long period of weak profits, many firms in the services sector may see the marked pickup in demand as an opportunity to recoup foregone profits. many services prices today remain below the levels that would likely have prevailed in the absence of the pandemic. transport prices, for example, fell throughout most of last year, which was an unprecedented phenomenon ( left chart slide 13 ). efforts to repair impaired balance sheets may upend the elasticities underpinning the predictions of our models. price level normalisation may go hand - in hand with a stronger and faster pass - through of higher input prices to final consumer prices. 4 / 9 bis central bankers'speeches in the past, there have often been substantial lags in the pass - through of pipeline pressure. ecb staff analysis finds, for example, that it usually takes one year or more for cost - push shocks in intermediate goods prices to pass through to hicp inflation ( right chart slide 13 ). 4 surveys, however, signal that a historically large share of companies is raising output prices today ( left chart slide 14 ). many firms also expect prices to continue to rise in the near term. two factors might cause firms to frontload and strengthen the pass - through to consumer prices at present. one relates to firms β state - contingent pricing behaviour. empirical evidence suggests that firms are more likely to pass through cost - push shocks in an environment of rising demand. 5 consumers being willing to accept higher prices in light of substantial excess savings might reinforce this channel. ecb staff estimates that the stock of accumulated excess savings amounted to β¬540 billion in the first quarter of this year, or 7. 4 % of annual disposable income in 2019. 6 the other factor relates to non - linearity. research by goldman sachs finds that, when cost pressures are within the historical norm, the pass - through of input costs to output prices is typically low and short - lived in the manufacturing sector ( right chart slide 14 ). but at times of significant | 1 |
in our decision - making what should constitute responsible and efficient management of private and public matters : accumulating buffers in good times so they can be used in hard times. and this applies not only to lenders, but also to borrowers and, above all, to those responsible for managing economic policies, including myself. contributing transparency and rigour to the establishment of this culture of stability is part of the mission entrusted to the banco de espana as an independent institution at the service of the community. thank you for your attention. 17 / 17 | much during demand slowdowns as it did not, for example, right after the financial crisis, so that an expansive fiscal policy together with accommodative monetary policy can achieve macroeconomic stability more effectively. macroprudential policy is crucial as well. in a low - growth low - inflation environment, financial imbalances are likely to build up as the monetary policy tends to mainly aim at economic recovery. to secure financial stability οΌ another important goal of monetary policy οΌ it is indispensable to coordinate monetary policy with macroprudential policy. honored guests, ladies and gentlemen! due to the recent changes in economic structures and financial environment, our monetary policy is facing new challenges never experienced before. i look forward to seeing here οΌ through the active exchange of your views for two days οΌ many policy options proposed to help overcome the challenges that monetary policy is facing. and i hope that all of us, at the end of the conference, will have gained some profound insights about how central banks will continue to evolve into the future. thank you. 2 / 2 bis central bankers'speeches | 0 |
with respect to the eurosystem β s own collateral eligibility criteria and the calibration of its risk control framework. as the work carried out by the fsb has shown, the actual set of information to adequately gauge systemic and firm - level risks arising from securities financing transactions is as a matter of fact rather straightforward. assuming a specific home - currency for the transactions covered, six transaction specific information items are essential : ( 1 ) the counterparty of the transaction, ( 2 ) the principal amount, ( 3 ) the interest rate or lending fee, ( 4 ) information on underlying collateral ( including type, issuer, maturity, currency and valuation of the collateral ), ( 5 ) information on the applied haircut as well as ( 6 ) the tenor or maturity of the transaction. i would add to these also information about re - use of securities. the workshop today intends to assess the grounds designing an infrastructure and data collection set - up ensuring confidentiality, efficiency in the data transmission, but also looking for potential synergies, and ensuring through the publication of different levels of data aggregation to relevant stakeholders that this exercise can be beneficial to regulators or supervisors as well as market participants. the involvement of all relevant stakeholders from the very beginning should allow that synergies can be explored and benefits reaped. turning now to the second of my initial questions, how could these data be better collected? i have earlier this year, in a conference organized by the european commission, 2 launched a proposal to create a eu central database on repos, as a joint effort by public authorities and the financial industry. i am counting on this workshop to launch the practical discussion about the main issues and the challenges to be addressed and, most importantly, the possible solutions for this proposal to become reality. when i first launched my proposal last april i noted that due to its role in macro - prudential financial stability and the closeness of repo to monetary policy, the ecb would be well placed to centralise the data gathering for the euro repo market. this remains true, but today i would like to emphasise that the ecb see constancio, v ( 2012 ) β shadow banking β the ecb perspective β speech by vitor constancio, vice - president of the ecb, towards better regulation of the shadow banking system, european commission conference, brussels, 27 april 2012 bis central bankers β speeches organised this workshop by taking a wider perspective on the subject and acting just a catalyst. | andrew bailey : governance and the role of boards speech by mr andrew bailey, deputy governor of prudential regulation and chief executive officer of the prudential regulation authority at the bank of england, at the westminster business forum, london, 3 november 2015. * * * it is a pleasure to be speaking at the westminster business forum again. i am going to use my time this morning to set out some thoughts on how at the pra we are thinking about the role of governance and boards in the prudential supervision of deposit takers, insurers and major investment firms. we work very closely with boards, more so than in past approaches to prudential regulation, and i find it a very important, constructive and informative engagement. there is a lot of focus at present on the senior managers and certification regime which will be implemented by next march, and on the proposal before parliament to change one element of the test, namely the presumption of responsibility. this morning i am going to focus on the substance that underpins the regime. also, i am not for the most part going to comment on the issue of diversity in board membership, but not because i think it is unimportant, far from it. the best place to start is the objectives given by parliament to the pra, namely the safety and soundness of firms that we supervise, the protection of insurance policyholders and our secondary objective in respect of competition, best described as requiring us to act in respect of the implications for competition of our own actions and inactions but only to the extent that we are not undermining our primary objectives. at the heart of what we do in the pra is risk assessment. understanding how firms take and manage risk, the controls they have and the quality of risk management, is at the heart of the job of a prudential supervisor. that β s what we do every day, and the standards of this work have been raised extensively since the crisis, which was very necessary. i never tire of saying that the pra is a judgement - based supervisor, by which i mean the application of judgement against a framework of rules and regulation. as mark carney said recently in the context of the european union, from which the largest part of our framework of rules and regulations comes : - β ensuring the bank of england has the instruments necessary to achieve its financial stability objective will depend on the eu continuing to have regulations of the highest standards, which strike the appropriate balance | 0 |
www. imf. org / - / media / files / publications / wp / 2020 / english / wpiea2020110 - print - pdf finckenstein, v. ( 2021 ). how international aid can do more harm than good : the case of lebanon. lse ideas strategic update www. lse. ac. uk / ideas / assets / documents / updates / lse - ideas - how - international - aid - can - do - more - harm - than - good. pdf seth, m. ( 2017 ). south korea's economic development, 1948 β 1996. oxford research encyclopedia of asian history https : / / doi. org / 10. 1093 / acrefore / 9780190277727. 013. 271 1 for example, seth ( 2017 ) reviews a slow post - war recovery in south korea despite an unprecedented foreign aid. while finckenstein ( 2021 ) discusses how foreign aid might have been harmful for lebanon. 7 / 7 bis - central bankers'speeches | international financial support and measures to mobilize internal resources should help the government finance the budget deficit without resorting to monetary financing the war is grinding on. the russian aggression continues to put significant pressure on public finances. given the need for large expenses on defense capability, budget expenditures for 2024 have been raised considerably. the draft state budget for 2025 envisages that expenditures will remain high β the budget deficit will exceed 19 % of gdp. the budget expenditures are planned to be financed on account of further increases in budget revenues, financial support from international partners, and more domestic borrowing though selling domestic government debt securities, made possible thanks to efforts of the government with the nbu's assistance. this will enable the country to mobilize necessary resources and avoid returning to monetary financing over the forecast horizon. the course of the full - scale war continues to be the key risk to inflation dynamics and economic development the time needed for inflation to return to the 5 % target and the sustainability of ukraine's economic development will strongly depend on the nature and duration of the war. the russian aggression continues to generate the following risks : the emergence of additional budget needs, mainly those to maintain defense capabilities the likelihood of an additional hike in taxes, which β depending on its parameters β might spur the pressure on prices further damage to infrastructure, especially energy and port infrastructure, which will limit economic activity and put supply - side pressures on prices a deepening of adverse migration trends and further widening of labor shortages on the domestic labor market. the uncertainty also persists over the volumes of international partners'further support for ukraine. among other things, this is due to many countries being focused on their internal election cycles and russia making sabotage attempts in other countries and at the level of international institutions. at the same time, a number of positive scenarios might also materialize in relation to large inflows of funds to ukraine coming from frozen russian assets. these scenarios may also be related to a further expansion of export opportunities, the acceleration of european integration processes, and a faster pace of repairs in the energy sector. 2 / 3 bis - central bankers'speeches taking into account the balance of risks, the need to bring inflation back to its 5 % target in the coming years, and to ensure the sustainability of the fx market, the nbu board decided to keep the key policy rate at 13 % in recent months, interest rates on hryvnia instruments have been declining, reflecting the impact of previous monetary easing measures. however, the | 0.5 |
of our policy regime, which allows for timely adjustments in the real exchange rate and interest rates, letting the economy grow near its potential, smooth the capital account β s adjustments and maintain the credibility of the inflation target. this marks a difference with our economic history. bis central bankers β speeches over the years, the central bank has given proof of its commitment with price stability and the inflation target. it has operated with consistency in order to build credibility and trust, which gives us the necessary flexibility for monetary policy and the real exchange rate to work as buffers of the business cycle whenever advisable. in the past, when our economy β s fundamentals were not as strong, and the exchange rate regime was rigid and poorly suited to confront external shocks, when faced by a drop in the terms of trade or stringent financial conditions, in order to stop a currency depreciation the bank had to sell international reserves and raise the interest rate to reduce capital outflows. monetary policy, far from cushioning the external cycles, made them worse, generating economic costs and financial risks. more often than not, these experiences ended badly. overall, as usual, the present scenario has varied risks, most of them coming from emerging economies, because of both their importance in commodity prices and the behavior of world financial markets. despite the strong fundamentals of the chilean economy, we are not immune. we are a small, open economy, so external developments can and do affect us. now, allow me to describe in detail the macroeconomic scenario we believe to be the most likely one in the coming quarters, and associated risks. macroeconomic scenario our baseline scenario assumes that in 2014 the emerging markets will grow below their averages of recent years. china is a case in point, whose growth forecast has been steadily revised downward during the past several months and is now even below the officially defined target of 7. 5 percent per year ( figure 4 ). other latin american economies, including brazil, mexico and peru, have also revised downward their respective projections. this owes to a number of factors. on one hand, the weaker fiscal and monetary impulse in brazil, poor growth in mexico and a slowdown in investment and exports in peru. on the other hand, argentina and venezuela are making substantial corrections to their growth outlooks for the year, of the order of 3 percentage points down ( figure 5 ). all this contrasts with the developed world, where growth forecasts for the year have been revised upward, although with different nu | rodrigo vergara : the central bank of chile and the external crisis presentation by mr rodrigo vergara, governor of the central bank of chile, at a special session held by the honorable senate to β analyze and evaluate the economic policy measures that have become indispensable to confront the severe symptoms of international recession and with the purpose of becoming familiar with the contingency plan announced by the supreme government β, santiago de chile, 31 january 2012. * * * mr. president of the senate, senator guido girardi, honorable senators. thank you for your invitation to discuss the international economic situation and the measures that can be adopted in our country to address an external crisis. these instances are important for communicating the vision of the central bank of chile ( cbc ) on these issues. in the past several years, the advanced economies have gone through a severe crisis. the causes and consequences of the great recession of 2008 β 2009 have not yet been resolved and we are again enduring periods of external stress that put to the test the strength of our economy and its fundamentals. this forces us to carefully evaluate the current environment, its implications on the performance of our economy, and the measures we can implement if deemed necessary. during the past year, the biggest tensions have originated in the frail fiscal and financial conditions of some economies in the eurozone. this situation has persisted for a long time and no definitive solution is foreseen in the near term. progress has been made in several areas, but the problems β complexities and the political difficulties to deal with them are huge. this, coupled with the delicate position of consumers and firms, has translated in deteriorating economic expectations in the region, anticipating a recession during this year. the situation in the united states, while less severe than that in europe, is also complex, especially because of the slow recovery and little room for fiscal and monetary policies to stimulate the economy. the emerging world, chile included, will undergo a period of slower growth than in the past few years. market consensus forecasts, last week β s imf projections, and also those in our december 2011 β s monetary policy report point in the same direction ( table 1 ). most recently, the information coming from the u. s. shows a somewhat better performance than was forecast some weeks back, but does not modify medium - term problems and risks affecting its economy. in fact, last week the federal reserve extended from mid - 2013 to end - 2014 the period during which it would hold | 0.5 |
intend to take action to support the level of the usd? among others, this is what the ecb β s opponent nicolas sarkozy is calling for. what do you think of his calls to see the euro depreciate? it is a very important issue, where i call on all partners in europe, in the executive branches, to be highly responsible and to demonstrate verbal discipline. let me repeat the position of the ecb, as well as the position of the euro area as a whole : exchange rates should reflect economic fundamentals and excess volatility and disorderly movements in exchange rates are undesirable for economic growth. in emerging economies with large and growing current account surpluses, especially china, it is desirable that their effective exchange rates move so that necessary adjustments occur. concerning the dollar, i have noted with great attention that the us authorities have reaffirmed that a strong dollar is in the interest of the us economy. concerning the yen, as stated by the japanese authorities, the japanese economy is on a sustainable recovery path. these developments should be recognized by market participants and incorporated in their assessment of risks. markets should be aware of the risks of one - way bets. - will the ecb interest rates be changed in the near future? i have nothing to add or withdraw from what i have said in my last press conference after the meeting of the ecb governing council in vienna on 4 october. - with what main difficulties are you, as a person in charge of the euro area, confronted with? as far as i understand, it is difficult to avoid imbalances in the euro area, which unites countries that are at very different stages of development. it is true that there are differences among euro area countries, but i would not say that these differences are bigger than those between the different states of the usa, and certainly also not bigger than the differences in economic landscape between certain parts of the russian federation. from that standpoint there is no particular difficulty in implementing the single monetary policy at the level of our very vast economy, for the euro area as a whole, which is of the size of the usa. that being said, we call for the implementation of structural reforms in order to fully achieve the single european market and to improve the flexibility of all markets of goods and services, of the labour market and of the financial market in the euro area. - a number of countries ( including lithuania and the czech republic ) postpone the euro adoption. how | , and all the measures taken to foster the proper functioning of the euro area economy. however, remaining tensions in some euro area sovereign debt markets and their impact on credit conditions, as well as the process of balance sheet adjustment in the financial and non - financial sectors and high unemployment, are expected to continue to dampen the underlying growth momentum. as we said previously, this economic outlook continues to be subject to downside risks, relating in particular to an intensification of tensions in euro area debt markets and their potential spillover to the euro area real economy, as well as to further increases in commodity prices. euro area annual hicp inflation was 2. 6 % in april 2012, according to eurostat β s flash estimate, after 2. 7 % in the previous four months. inflation is likely to stay above 2 % in 2012, mainly owing to increases in energy prices, as well as to rises in indirect taxes. on the basis of current futures prices for commodities, annual inflation rates should fall below 2 % again in early 2013. in this context, we will pay particular attention to any signs of pass - through from higher energy prices to wages, profits and general price - setting. however, looking ahead, in an environment of modest growth in the euro area and well - anchored long - term inflation expectations, underlying price pressures should remain limited. bis central bankers β speeches risks to the outlook for hicp inflation rates in the coming years are still seen to be broadly balanced. upside risks pertain to higher than expected commodity prices and indirect tax increases, while downside risks relate to weaker than expected developments in economic activity. the monetary analysis indicates that the underlying pace of monetary expansion has remained subdued, with somewhat higher growth rates in the past few months. the annual growth rate of m3 was 3. 2 % in march 2012, compared with 2. 8 % in february. since january we have observed a strengthening in the deposit base of banks. the annual growth rates of loans to non - financial corporations and loans to households ( adjusted for loan sales and securitisation ) stood at 0. 5 % and 1. 7 % respectively in march, both slightly lower than in february. the volume of mfi loans to non - financial corporations and households remained practically unchanged compared with the previous month. money and credit data up to march confirm a broad stabilisation of financial conditions and thereby, as intended by our measures, the avoidance of an abrupt and disorderly adjustment in the balance sheets of credit institutions | 0.5 |
total capital. the supervisory board of eesti pank thus resolved to raise the central bank β s capital adequacy ratio to the average level of euro area central banks in the long term. in order to bring the ratio into line with eesti pank β s participation in the eurosystem, the capital adequacy ratio must be raised. this means that the central bank β s equity must be raised from 0. 37 billion euros to approximately 1. 3 billion euros. eesti pank β s equity currently stands at 0. 07 % of the eurosystem β s total equity, while eesti pank β s participation in the eurosystem stands at 0. 26 %. [ quo vadis, euro area? ] 1. it is not only the central banks that can contribute to a successful exit from the crisis β the governments of member states must, as soon as possible, implement the measures taken and agreements made by the european council and the euro area heads of state and government. closer cooperation in the field of economic policy, along with clear - cut, functional rules, serve the interests of all members. 2. even though budget adjustments may curb economic growth in the immediate future, they will help ensure the sustainability of public finances and lower the risk premia of sovereign bonds. we must reverse the growth in debt burden and establish a framework which would support market confidence in the sustainability of public finance management in euro area countries. this is the common interest of all euro area member states. 3. alongside crisis management measures, we must lay emphasis on ensuring stability in the long perspective. to ensure an outlook for growth, we must implement structural reforms to enhance economic flexibility, competitiveness and employment. 4. the key task of the eurosystem central banks, including eesti pank, is to ensure general price stability in the euro area. this should be the principle goal of monetary policy and the main mission of the central bank in its efforts to facilitate economic growth and create jobs. bis central bankers β speeches [ concerning estonia ] 1. unlike several other euro area countries, estonia had no need to engage in local crisis management in 2011. 2. the estonian economy showed notable adjustment ability against the backdrop of the uncertain environment. our annual economic growth ( 7. 6 % ) was the fastest in the euro area. moreover, the economic developments were far more balanced than before the crisis : the current account was in a moderate surplus and domestic price pressures remained subdued. unfortunately | deviations were corrected by the economy. otherwise, it would have started pressuring the credibility of the fixed exchange rate. while in the previous monetary system, more fretful analysts might have speculated that the economy would be adjusted through devaluation β the weakening of the currency β s value β which would have allowed inflation to remain higher, luckily this is not an option in the monetary union. there is a greater concern upon making long - term economic decisions in the monetary union : whether the euro area β s central banks ( that is, the eurosystem as a whole ) are able to keep the pan - european average inflation rate at a suitable level. this means that in the medium term, the inflation rate has to remain below but close to 2 %. while in austria or slovenia, or in estonia for that matter, inflation may temporarily differ from that of the euro area, we have to look at the whole picture when making decisions. the ability of the euro area to keep inflation close to 2 % over the entire past decade has inspired confidence. the average inflation rate has remained slightly below 2 % throughout the history of the single currency and annual inflation has mostly ranged within 1. 5 β 2. 5 %. however, we must not be distracted by our success. the euro area β s inflation indicator was over 2 % at the beginning of this year, and, most recently 2. 4 %. this is worrying. bis central bankers β speeches the more detailed picture is, of course, more diverse and future monetary policy measures will also have to take that diversity into account. on the one hand, the european economy is just recovering from a deep economic recession. unemployment is higher than usual, the relatively high debt burden is inhibiting borrowing activity in many countries and the majority of the recent price hike stems from global factors, such as the price growth of energy and food on the global market. the prices of other goods and services, on the other hand, have been posting quite modest growth rates. therefore, the inflation expectations of entrepreneurs and consumers have remained close to the historical average. if the price hike of commodities stops, the increase in the euro area β s prices could remain below 2 % already next year. however, looking at the data from another angle, we can find proof to arguments which insist that the current euro - area interest rate level is not suitable for guaranteeing the low inflation rate that corresponds to the price stability goal. although the general public focuses on the debt crisis of certain | 0.5 |
evolving as new economic data are published and analysed. the recent discussion of uk monetary policy β and the absence of unanimity in mpc votes β should be understood in that light. in today β s talk, i aim to flesh out the framework established in the mpc β s recent forecasts and reports for assessing how to identify and follow this narrow path. [ 6 ] these forecasts and reports represent the β best collective judgement β of the mpc as a whole. but i will also take this opportunity to flag where i differ from that β best collective judgement β. in particular, i β d like to emphasise from the outset my preference for a β steady - handed β approach to monetary policy β one which focuses on the slower moving and more persistent trends in the data rather than responding to each individual data release. as i have discussed in a number of previous talks, [ 7 ] i am sceptical that we know enough : about the state of the economy ; ( 2 ) about key features of the economy β s structure and behaviour ; ( 3 ) about the intrinsic properties of inflation dynamics ; or ( 4 ) about the monetary policy transmission mechanism, to be able to use monetary policy to β fine tune β economic and price developments. and i worry that attempts to implement any such fine tuning will introduce more volatility into inflation and the broader economic system, rather than support the stabilisation at target that we seek. of course, there are occasions β especially in the face of financial disturbances and market dysfunction β when central banks may need to step in to offer support quickly and sizeably to support financial stability and monetary policy transmission. we have seen examples of this of late, not least during the β dash - for - cash β episode at the outset of the covid pandemic in march 2020. and large macroeconomic shocks may require large monetary policy responses. again, recent experience offers some examples. but, in my view, as a general rule monetary policy responses to macroeconomic developments need to be measured and persistent if they are to be effective. such an approach ensures that changes in bank rate are transmitted along the yield curve to the longer - term rates more relevant to spending and pricing decisions, while also allowing learning about the impact of policy decisions ahead of making irretrievable mistakes in one direction or the other. viewed through this lens, the decision to raise bank rate by 25bp earlier in the month should be seen as part of a broader transition | β s agents β reports from corporate contacts, further second round effects were included in the may projection. chart 5 : unemployment continues to fall but inactivity remains higher than prepandemic ( a ) sources : ons and bank calculations. ( a ) data from the lfs. employment includes employees and self - employed. changes do not sum to 0 as the population is estimated to have increased during the period. chart 6 : indicators of pay growth are elevated sources : hmrc, ons and bank calculations a tight labour market is accompanied by resilience in business confidence. in line with evidence from the bank β s decision maker panel survey, this may reflect business - to - business pricing power within supply chains still suffering from supply disruptions. after all, within a single supply chain, one firm β s sourcing problem is another firm β s resilient demand. supporting this view, the banks β agents report that a further strengthening of margins is likely, especially in firms that are not directly facing consumer demand. chart 7 : pmis suggest business confidence is resilient ( a ) sources : s & p global / cips. ( a ) a reading of above 50 indicates positive change on the previous month while a reading below 50 indicates negative change. data for april 2022 are flash estimates. chart 8 : banks β agents report further strengthening in margins is likely ( a ) question : β to what extent have you already passed through higher costs to prices? β the influence of monetary policy on the back of this assessment, the current momentum in uk headline inflation developments is substantial. but, given lags in the transmission of monetary policy to price developments, high inflation today does not, of itself, justify tighter policy today. rather monetary policy has to be forward looking, calibrating the policy stance to be appropriate at a horizon of 18 months to two years, once the transmission lags unwind. and that is where the mpc β s may forecast gets more complicated. rises in international goods and energy prices pose a particular challenge to uk monetary policy. not only do they exert a strong direct influence over inflation as i β ve discussed, but β since the uk is a net importer of food, energy and goods β they also imply a squeeze on the real incomes of uk households. simply put, the price of what the uk is selling has fallen relative to what the uk is buying, leaving uk residents worse off. so the mpc forecasts that, as | 1 |
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