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the exchange than do buyers ( lenders ). faced with such an asymmetry, buyers will be cautious, and will tend to over - estimate ( price ) risk. if risk is over - priced, this may drive out the less - risky activities, causing buyers ( lenders ) to become more cautious still. such a process can result in less exchange than would otherwise be the case if the two sides to the exchange were more equally informed. hence, an important purpose of financial regulation is to address this information gap. the regulation may include insisting on a greater level of disclosure, or imposing certain standards on sellers ( borrowers ). financial regulation, like many other forms of regulation, thus generally entails a combination of disclosure requirements and standard setting. the existence of externalities and β free - rider β opportunities in some instances also means that risks may not be borne by the owner of the asset, and hence not priced or managed adequately. a result can be that under - investment in some risk management tasks may occur, such as, for example, ensuring the ongoing operational capacity of critical payment systems in a systemically important financial institution. structural factors can mean that identifying, pricing, allocating, and managing financial risks can be very difficult at times, if not impossible, thus necessitating various forms of prudential regulation, financial crisis management capabilities, and / or the public provision of certain financial services. for example, it is difficult to be able to identify all threats to financial stability ex ante. hence, some forms of risk are best managed by ensuring adequate capital buffers are in place to absorb losses without disruption to the system. the basel ii process of allocating capital buffers to various forms of financial risks in banks is an example of such an intervention. some forms of risk are also not adequately priced due to the lack of a market for the price discovery process to occur. likewise, both free - rider and externality aspects of certain payment system networks may mean that risks are not allocated accordingly and may be mismanaged. this may necessitate the public provision of certain services ( e. g. utility networks ) or prepositioned loss allocation mechanisms in the case of a bank failure. behavioural stresses the financial system can also be exposed to destabilising behaviours. these influences can be exacerbated by some of the structural weaknesses discussed already, especially for example, the phenomenon of contagious bank runs. recent developments in the field of behavioural | policy action recent policy developments over the past few years we have β re - invigorated β the bank's own financial stability role. this has been reflected in a number of ways. in november 2004, we commenced publishing a twice - yearly financial stability report, as a complement to our quarterly monetary policy statements. we have also introduced a local incorporation and an out - sourcing policy for registered banks. the former requires large banks to be incorporated in new zealand, rather than operate as a branch of a foreign bank ( as has been the case with westpac ). the latter requires banks to manage out - sourcing of core banking functions in a way that does not compromise their ability to maintain a core operational capability should a service provider become unable or unwilling to provide those functions. the local incorporation and outsourcing policies have been introduced mainly to improve the resilience of the new zealand banking system in a bank failure situation. that is a situation that we all hope falls into the " rare event " category, though we know from experience that bank failures can and do happen. and we know that there is a tendency for rare events to slip into the background, and in the case of those that could be very damaging, perhaps more than they should. one of the jobs of the reserve bank is to act as a counter to such tendencies. in parallel with progressing these issues, which affect mainly the large australian - owned banks, steps have been taken to strengthen the harmonisation and co - ordination of trans - tasman banking supervision. last year, the trans - tasman council on banking supervision was established, with a terms of reference which cover supervisory co - operation, preparedness for responding to crises that involve banks that are common to both countries, and whether legislative changes may be required to ensure apra and the rbnz support each other in their regulatory responsibilities, at least regulatory cost. the council recommended some legislative changes, for enactment in both australia and new zealand. dr cullen and the australian treasurer announced following their annual meeting that both governments will be promoting those legislative amendments. currently we are also involved in the government contingency planning for a possible influenza pandemic. besides making contingency plans to maintain our own operations, we have been working with the banks to ensure that business continuity planning is in place, and that key payments systems and cash distribution arrangements could be adequately maintained in the unlikely event that an influenza pandemic would impact on staff availability. we have been consulting with banks | 1 |
policy rate increase, the inflation forecast would be significantly higher. global economic outlook i will now move on to the economic outlook. global economic growth has slowed considerably in recent months. at the same time, inflation in many countries is markedly above targets. in response, numerous central banks have further tightened their monetary policy. in our baseline scenario, we expect this challenging situation to persist for now. global economic growth is thus likely to remain weak in the coming quarters. in particular, the energy situation in europe, the loss of purchasing power due to inflation, and tighter financing conditions are having a dampening effect. inflation will remain elevated for the time being. however, the importance of temporary factors such as supply bottlenecks is likely to diminish over the medium term. the increasingly tighter monetary policy in many countries should also help inflation gradually return to more moderate levels. our scenario for the global economy is subject to significant risks. for example, the energy situation could worsen again. at the same time, high inflation could become embedded and require stronger monetary policy responses abroad. finally, the coronavirus pandemic continues to pose important downside risks to growth. swiss economic outlook in switzerland, gdp growth in the second quarter was lower than expected, at 1. 1 %. this was mainly due to weaker performance in manufacturing. the short - term outlook has deteriorated. by contrast, the situation on the labour market has remained positive. the further development of the economy is likely to be shaped by the economic slowdown abroad and the availability of energy in switzerland. to date, the prices of natural gas and electricity in particular have risen sharply. for this year, we anticipate gdp growth of around 2 %. this is roughly half a percentage point lower than at the last monetary policy assessment. the level of uncertainty associated with the forecast remains high. the biggest risks are a global economic downturn, a page 2 / 4 zurich, 22 september 2022 thomas jordan news conference worsening of the gas shortage in europe and a power shortage in switzerland. furthermore, a resurgence of the coronavirus pandemic cannot be ruled out. monetary policy tightening ladies and gentlemen, allow me to return to our monetary policy. i would like to explain today β s decision. last quarter, our conditional inflation forecast indicated that, without a further tightening of monetary policy, inflation would be above the range consistent with price stability at the end of the forecast horizon. this meant that further interest rate increases might be needed to stabilise | are improving. conditions in the euro area money markets are improving. the volumes in the interbank money market ( eonia ) have virtually doubled since summer, and are now back to the levels prevailing before august 2007. the overall reduction in central bank liquidity has brought the interbank ( eonia ) rate closer to the policy rate, which is an important step towards going back to our pre - crisis framework. euro area activity recovered in the second quarter of 2010 β¦ economic activity in the euro area is recovering. according to eurostat β s flash estimate, gdp grew by 0. 4 %, quarter on quarter, in the third quarter of 2010, after increasing by 1. 0 % in the second quarter. while no breakdown is available for the third quarter of 2010, all components contributed positively to quarterly gdp growth in the second quarter. in particular, domestic demand contributed quite strongly for the first time since the crisis, namely by 0. 5 percentage point. β¦ and surveys point to ongoing growth into the fourth quarter. looking beyond the third quarter, survey indicators, such as the purchasing managers β index ( pmi ) and european commission business surveys for the manufacturing and the services sectors, point to ongoing growth in october. consumer confidence increased in october and stood above its long - term average, pointing to a gradual recovery in euro area consumption. good prospects for households β income from the stabilisation in the labour markets β¦ the sentiment in the survey data finds its support in a number of encouraging developments, both in the household and in the non - financial corporations sector. on the household side, labour markets are stabilising, with employment levels remaining stable in the first and the second quarters of 2010, while hours worked increased by 0. 2 %, quarter on quarter, in both these quarters. the effect of the crisis on hours worked was far stronger than that on the number of persons employed. therefore, the upturn has also been stronger in terms of the hours worked. moreover, the unemployment rate has stabilised in the last few months and stood at 10. 0 % in the third quarter of 2010. overall, the stabilisation in the labour markets is creating good prospects for household income and, thereby, also for private consumption. indeed, the breakdown of households β income shows that the share of compensation of employees has increased recently, while the contribution of net social benefits has declined. β¦ and upward trend in production and new orders. as to non - financial corporations, we can observe an increasing improvement | 0 |
indeed, if anything, given the tremendous volumes and liquidity of credit derivatives in general and of cdss ( both single - names and indices - based ), it would be more market - price discovery - driven for banks and supervisors to rely on prices backed out from these. indeed, cdss price credit risks almost on real - time basis as much as us treasury, foreign exchange, stock and commodities, markets do. credit rating agencies, in comparison, are much more lagged. significantly, as if to redeem their lost credibility and reputation, all the three rating agencies viz., fitch, standard & poor's and moody's, have now started a new service which provide implied credit ratings backed out / derived from cdss spreads! in view of the foregoing, there is a very strong case for kick starting a full fledged cdss market in india. the popular refrain that the recent global financial crisis was caused or exacerbated by cdss is again a myth in that cdss which are simple plain - vanilla off - balance - sheet / non - fund based derivatives, were confused with the cdos ( collateralized debt obligations ) which are on - balance - sheet and funded securitized structured credit products. it was securitization / re - securitisation, involving cdos, that played a seminal role in the crisis and no way the cdss. in fact, it is also a myth that securitization through cdos was an originate - to - distribute model ; rather, really speaking, it was an originate - to - distribute - back - to - originators model! this is because almost all cdos originated came back to sit on the sivs / conduits sponsored by originating banks themselves! besides, for all the overdone fears about systemic risks from the so called unregulated otc cdss markets, remarkably orderly and non - disruptive auction - based settlement of cdss claims in respect of cdss written on lehman bros., icelandic banks, fannie mae and freddie mac incontrovertibly attested to the resilience of cdss markets! indeed, if anything, cdss can be an effective and neat answer, and substitute, for cdos / securitization as it is less messy, more transparent and easily monitorable. interestingly, the new york fed led initiative to improve the otc cdss markets seeks to replicate our ccil - model, where although otc | . so, i wanted to project the reserve bank as an institution concerned with the common people and not just financial markets and financial institutions. keeping in view the need for continuity with change as appropriate to evolving circumstances, we in the rbi pursued five broad policy directions. first, reforms in monetary management consistent with global developments ; second, alignment of bank regulation with global standards ; third, improving legal and institutional infrastructure to enable a modern financial system, in particular in the payments system ; fourth, harmonising as far as possible, developmental objectives with those of stability in consultation with government, and ; fifth, exploring ways in which the financial sector could better serve ordinary people. i emphasised the fifth aspect, that finance should serve ordinary people, as opposed to making the assumption that the development of the financial sector by itself will contribute to economic development and welfare. some initiatives, particularly those relating to financial inclusion in india since 2003, reflect this orientation towards the common people. financial inclusion, thus, was not designed as a programme in isolation, but as a part of the overall strategy in bis central bankers β speeches regard to the role of the central bank, as warranted by the indian context of inadequate access to essential financial services. i was acutely aware, having been a deputy governor for six years, that the needs of the common person were not served well enough by the financial sector, despite all the investment, innovation and strengthening of existing institutions in the financial system, particularly banks. so, while pursuing the reform agenda already set, and in parallel, i put the focus on serving the needs of ordinary people in their interactions with the banking system. in doing this, i realised that our efforts were addressed to meeting the needs of those who already had links to banks. what about the rest, who actually were far more in number than those with links to banks? so, the reform agenda provided for improvements in the way that the financial sector served ordinary people better and ensuring that it would reach out to all. my assessment of the common person β s requirements at that time was as follows : what do ordinary people in india, at this juncture want most from us, the central bank? first and foremost, a safe place to keep their cash especially for poor women who have to keep their earnings out of the reach of their drunken husbands. second, mechanisms for consumption - smoothing since 90 % of the population is employed in the unorganised sector with seasonal or uncertain income flows. third, remittances to families | 0.5 |
effect. low inflation, by contrast, protects the purchasing power of incomes and social pensions and savings, and provides a more conducive environment for investment and job creation by reducing uncertainty about future prices. any mandate given to a central bank should focus on what it can do and not on what we would like it to do. a socio - economic objective such as protecting the buying power of the money in the pockets of south african citizens is an important and attainable objective, and in the area of our core competency. apart from this objective, we also : ensure the availability of good - quality banknotes and coin ; ensure the effective functioning of the national payment system ; prudently manage the official gold and foreign exchange reserves of the country ; strive for a stable financial system ; and regulate and supervise the banking system. as we have seen from the global financial crisis, such crises have a devastating effect on the economy β and it takes many years to recover. it would be counterproductive to divert the sarb β s policies away from these important socio - economic objectives in order to try and achieve outcomes over which the sarb has little or no influence. the fact that we do not have an explicit employment or growth mandate does not imply that we have a narrow focus on inflation to the exclusion of these considerations. however, we must be clear about what a growth mandate means for central banks. monetary policy cannot determine the longer - run growth potential of the economy. this is the domain of other policies, as potential growth is determined by structural policies ( e. g. on education, infrastructure, and technology ). south africa β s high page - 7 - of 11 unemployment rate is largely structural. the contribution that monetary policy can make to long - run growth is through ensuring price stability, which is more conducive to longer - term investment and expenditure decisions. the higher and more volatile inflation is, the higher the riskiness of investment. monetary policy can, however, impact on the real economy over the economic cycle, i. e. on the extent to which growth fluctuates around potential output. the extremely moderate nature of the tightening cycle since 2014 is an illustration of our concerns for cyclical growth. while it is true that excessively tight monetary policy conditions can undermine growth and employment, the low and at times negative policy rate prevailing in south africa in recent years is indicative of an accommodative monetary policy stance. the bottom line is this : we cannot solve | key note address by ashraf mahmood wathra governor, state bank of pakistan world islamic finance forum ( wiff ) september 05, 2016 respectable senator muhammad ishaq dar, federal minister for finance, revenue, economic affairs, statistics, & privatization, justice ( r. ) muhammad taqi usmani, dr. ishrat hussain, chairman, dr. azmi omar, director general, islamic research & training institute, professor dr. abbas mirakhor, dr. farrukh iqbal, dean and director, center of excellence in islamic finance education - iba, distinguished guests, ladies & gentlemen assalam - o - alaikum it gives me immense pleasure to see global strategic players like international centre for education in islamic finance, the islamic research and training institute, international shari β ah research academy for islamic finance ( isra ) joining hands with the centre of excellence in islamic finance education, iba for organizing world islamic finance forum in the largest city of pakistan. this is a clear reflection of pakistan being a significant contributor towards the growth and development of islamic finance industry. i want to appreciate the page 1 of 6 organizers for providing this forum bringing together global thinkers and practitioners who can synthesize the work so far done and build on the core competencies of islamic finance for its sustainable growth. i wish all the best for the success of this global event and a very pleasant stay to the distinguished foreign delegates. ladies & gentlemen the ability of islamic finance to introduce greater discipline into the financial system owing to its inherent strengths indicates this system is relatively more stable and resilient. islamic banking is a growing reality which is expanding outside the traditional borders of muslim countries into western economies ; at present global islamic financial assets have reached us $ 1. 8 trillion in 2015 from us $ 150 billion in the 1990s and are expected to exceed us $ 6. 5 trillion by 2020. asia is expected to be the key driver in advancing the growth of the islamic finance industry ; according to islamic financial services board β s ( ifsb ) report, 2015, pakistan is among potential leaders of islamic finance. despite its impressive growth, islamic finance industry cannot be complacent as there still prevails huge untapped market. there are some challenges that the industry is facing in order to sustain its growth page 2 of 6 momentum. i would like to touch upon some of these challenges with respect to the theme of this event. enabling supervisory, regulatory and legal environment, a suitable accounting and | 0 |
. closer to home, australia β s prudential regulator launched their climate vulnerability assessment last year, with results set to be revealed later this year. when we began incorporating climate risks into our stress testing last year, we used a scenario considering the impacts of drought in the north island for large banks. we also conducted our first insurance stress test. it included a scenario with more severe and frequent weather events to gauge risks to insurers β capital. this year, our approach entailed undertaking a series of sensitivities examining risks that climate change posed to large bank β s systemically important loan exposures : residential mortgages and agriculture. banks are currently working on both components : an assessment of residential mortgage exposures to coastal and non - coastal flooding ; and an assessment of the agricultural sector β s exposure to emissions pricing and drought risk. this year β s exercises will build our own and industry capability and inform our climate scenario stress test next year. they will help firms meet the requirements of mandatory climate - related risk disclosure, and allow us to examine physical and transition risks to financial stability. we are working with banks to create a streamlined process as part of the new disclosure regime. currently, our climate stress testing focuses on new zealand β s largest banks, but over time we intend to build our support for other players in the financial system as they develop their own climate risk assessment capabilities. alongside industry, we are collectively learning through this stress - testing process. we believe this will help the financial system identify and manage climate - related risks. guidance note on climate change risk management the reserve bank is working on draft text of a guidance note on climate change risk management for our regulated entities. we aim to support regulated entities by helping to _ _ _ _ _ _ _ _ _ _ _ _ for evidence, please see results of the 2021 climate biennial exploratory scenario ( cbes ) | bank of england endorsement unclassified unclassified develop a common understanding of what is needed to identify and manage the risks arising from climate change, and sharing best practice. our planned guidance will be part of this support. the guidance will not impose new regulatory requirements. rather, it will be in line with the self - discipline pillar of our supervisory approach, which emphasises that responsibility for the sound and prudent management of a regulated entity rests with its board and senior management. the purpose of the guidance will be to assist those responsible for running firms to better integrate climate risks into their core risk management | stephen s poloz : summary of the latest monetary policy report opening statement ( via video ) by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the monetary policy report, toronto, ontario, 16 april 2014. * * * good morning. tiff and i are pleased to join you today by videoconference. as you know, we are in toronto to attend the funeral this afternoon of canada β s former finance minister, jim flaherty. before we discuss the monetary policy report, i β d like to say a few words about him. what set jim flaherty apart was that while he was a formidable finance minister, he was first and foremost an ordinary man. you immediately connected to him after just a few minutes, and it was immediately clear that he was there for canada, 100 per cent. that β s what he did all day, every day. and to everything that he did, he brought a solid dose of common sense. people found that attractive and helpful, and his gut instincts were usually right. a lot of his legacy is right there for us. i β ll miss him tremendously, and canada is the poorer without him. let me turn now to the mpr, which the bank published this morning. before we take your questions, allow me to note its highlights. β’ inflation in canada remains low. core inflation is expected to stay well below our 2 per cent target this year and it will take close to two years for it to return to the target. total cpi inflation is expected to move closer to the target in the coming quarters due to temporary factors. β’ let me take a moment to explain this inflation forecast. core inflation is expected to remain below target due to the effects of economic slack and heightened retail competition. we expect these effects to persist until early 2016. β’ however, total cpi inflation will move up this year, before core, in response to higher consumer energy prices, as well as the lower canadian dollar. β’ we expect total cpi inflation will remain fairly close to target throughout the projection period. that β s because in 2015 and into early 2016, as the upward pressure from energy prices dissipates, the downward pressure from retail competition should gradually fade and excess capacity will be falling. this will cause core inflation to make its way gradually up to 2 per cent, catching up to total cpi inflation from below. β’ the global economic expansion is expected to strengthen over the next three years as | 0 |
johannes beermann : cash in times of turmoil welcome remarks by dr johannes beermann, member of the executive board of the deutsche bundesbank, at the fifth international cash conference 2021, virtual, 15 june 2021. * * * 1 introduction ladies and gentlemen, it is a great pleasure to welcome you all to this year β s international cash conference. connecting speakers across time zones and locations to discuss the future of cash via webcam β i believe that, in the eyes of some observers, this already reflects the β new normal β in a postcovid world. that said, i am sure many of us also have a sense that something is lacking today. deep dives between conference sessions, or even just random encounters β which can be especially important for young researchers eager to network β, are not quite the same when events like this take place digitally. however, there is light at the end of the tunnel, and it is getting brighter. current infection rates in germany allow for some limited face - to - face interaction. that is why i am particularly looking forward to debating the future of cash later this afternoon in person, and i would like to take this opportunity to welcome my fellow panellists, peter bofinger and franz seitz here in frankfurt. please also allow me to thank all my colleagues from cash management and communications who have helped organise this event. it is particularly encouraging to see that it has also been possible to include these β hybrid elements β at this year β s conference. i say β hybrid β because the majority of the sessions in the coming days will of course be held online. let me say a big thank you to all the speakers for their flexibility in connecting from various locations to make this year β s conference as fruitful as possible. and may i extend a particularly warm welcome to our keynote speakers over the coming days : fabio panetta, viviana zelizer and brett scott. i am impressed by the range of contributions that form the backbone of this year β s conference. research on aspects such as cash usage, the drivers of cash demand, and the implications for the cash cycle is arguably becoming increasingly relevant. as the title of this year β s conference suggests, cash is going through times of turmoil. what role can cash play in the post - covid world? to kick off the debate, i would like to share a few brief reflections upfront. first, i would like to look at the role of cash in the ongoing crisis. second, looking ahead, i | term scarring effects of the pandemic and ensure a robust growth 3 / 4 bis central bankers'speeches trajectory for the economy. thank you for your attention. 4 / 4 bis central bankers'speeches | 0 |
##ing that additional reforms are needed. fout! onbekende naam voor documenteigenschap. figure 6 : contribution of mid to marginal costs of housing investment. graph taken from ec ( 2014 ) tax reforms in the eu 2014 link. why macroprudential policy and taxation are both substitutes and complements taxation in most countries favors owner occupied housing. in some cases very explicitly so, via mortgage interest relief, as you can see in figure 6. in other cases, because housing wealth is taxed much less than other sources of wealth. tax systems therefore generally contribute to cyclicality instead of containing it. macroprudential policy is therefore often partly in place to offset the negative elements of the taxsystem. this is the most clear when the tax system induces a debt - bias, as it does in various countries that still offer mortgage interest deduction. however, in fact it also holds when the tax system favors investment in housing over other sources of wealth. in most countries, the idea that homeownership is the preferred tenure for all households, is still deeply embedded in society. from an economic perspective the case for homeownership over renting is much less clear. the often mentioned pros, like better maintenance of properties, and cons, like less labor mobility and more debt - are at best in balance. from a fiscal perspective i therefore believe that countries should strive to move to a tax system that is more or less neutral towards homeownership. not only does this benefit financial and macroeconomic stability via structurally lower debt and real estate prices. it also creates a level playing field for private rental housing. currently, the supply of housing in this segment of the market is often suboptimal. in my country this segment still dominated the housing market in the post - war years, but now only makes up a small fraction of the total housing stock. so yes, i believe that proper real estate taxation and macroprudential policy are to some extent substitutes. but fiscal incentives are not the only source that can amplify residential real estate cycles. the feedback loop of adaptive expectations of house price growth remains another source of risk. exuberance leads to more exuberance, panic to more panic, also when taxation does a better job than it does today. macroprudential tools such as dsti - and ltv - limits can structurally limit this mechanism and at the same time protect households from over indebted | . you can see this in figure 1. est deu ltu hun lva svn cze pol svk ita aut grc jpn usa bel fra fin prt gbr can swe aus nld nor dnk figure 1 : household debt as a percentage of net annual disposable income. oecd data from world war ii onwards, housing policy in many countries became very much geared towards promoting homeownership. this worked via both favorable tax treatment of housing, and the deepening of mortgage markets. homeownership rates have in almost all countries been steadily on the rise. the dutch case is by no means an exception. in this keynote i would like to share the long experience that my country has with tax relief on mortgage interest. or, as i will refer to it today : mortgage interest deduction. but also our experience with the new macroprudential tools that were introduced after the global financial crisis. i believe the dutch case is an interesting example of the distortive power of mortgage interest deduction. and it clearly illustrates why macroprudential policy is especially needed in such an environment. first, i would like to look back at over a century of mortgage interest deduction in the netherlands, up until the global financial crisis. second, i will take some time to discuss what measures were introduced in the wake of that crisis. third, i will discuss in a broader context how i believe macroprudential policy and real estate taxation should ideally work together in stabilizing housing fout! onbekende naam voor documenteigenschap. markets. it is in this third part especially that i hope we can combine all insights, thoughts and experiences. the dutch experience up until the global financial crisis in the netherlands mortgage interest deduction was introduced already in 1893, by our minister of finance at that time : nicolaas pierson. he overhauled the tax system and shifted the tax base from mostly indirect taxation towards sources of income. in this new system, a house was seen as a source of income. rents or imputed rents were therefore taxed, and costs like interest payments could be deducted. already back then, on a net basis most homeowners and landlords with a mortgage loan received a subsidy, since the rental income was taxed relatively lightly. however, the effects of mortgage interest deduction in the early decades were still relatively contained. because homeownership rates were | 1 |
supervision moving forward. first, to strengthen financial sector legislation through the modernisation and consolidation of existing regulatory / oversight laws under bank negara malaysia β s purview. the enhanced legislation ensures that bank negara malaysia is entrusted with the necessary mandate and power to maintain financial stability and to conduct effective supervision of financial institutions. second, complement existing micro - prudential rules with macro - prudential instruments to address system - wide risks with the aim of ensuring greater resilience of individual institutions, and the financial system as a whole. third, enhance comprehensive cross - border crisis management and financial stability surveillance arrangements. this can be done via channels such as the emeap monetary and financial stability financial committee, which was established in 2007 to enhance regional collaboration and cooperation in the area of macromonitoring and crisis management. efforts are also directed to strengthen financial safety nets within the region ( e. g. cross - border collateral arrangements, currency swap arrangements ). we are quite confident these arrangements will further strengthen the resilience of regional financial systems and economies. these measures will become increasingly important in the light of our effort to increase the integration of financial systems within the region. fourth, establish a holistic framework for consolidated supervision. all the activities of financial conglomerates are within appropriate risk levels and not overly complex, and the large groups are not a source and channels for amplifying contagion effects. supervisory cooperation initiatives at the regional level will also be directed at enhancing existing or introducing additional platforms ( e. g. creation of supervisory colleges ) for discussing issues related to the supervision and resolution of cross - border financial institutions. fifth, promote fair and transparent market conduct practices by financial institutions through heightened market conduct surveillance and transparency requirements, while also raising the level of financial capability of consumers through education and awareness programmes. how malaysia survived the global financial crisis let me conclude by outlining why we had not been adversely affected by the recent financial crisis. banking system maintained strong financial and capital buffers at end 2008 during the peak of the crisis as evidenced by : strong capital position with rwcr of 12. 6 % and core capital ratio of 10. 6 %. ample liquidity with total interbank placements of more than rm150 billion with bnm that can be unwound to release rm liquidity to the system at any time. low exposures to foreign currency ( fx ) denominated assets. banks β leverage position remains manageable and lower than foreign institutions abroad. | muhammad bin ibrahim : the lessons of managing risks during the global financial crisis β the malaysian banks β experience opening remarks by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the asian institute of finance ( aif ) and institut bank - bank malaysia ( ibbm ) risk roundtable forum 2010, kuala lumpur, 12 october 2010. * * * my opening remarks will consist of three parts. part i, i will make comments on global financial reform and regulatory priorities. part ii, i will share some regulatory initiative embarked upon by bnm. part iii, i will conclude by giving you an assessment of the banking industry during the recent financial crisis and why it had remained resilient. global financial reform and regulatory priorities the global financial reform initiative to strengthen the financial sector is consistent with our priorities to enhance prudential regulation and supervisory framework in malaysia. efforts to further improve risk management and corporate governance, strengthening the role of supervisors in the oversight of financial institutions and improve market discipline are not new to malaysia. we have been doing this well before the global financial crisis and these initiatives will continue into the future. for example stress testing on banking institutions was introduced many years ago. in carrying out our regulatory responsibility, we will continue to ensure an effective balance between maintaining prescriptive rules and allowing some degree of flexibility under a more principle - based approach to regulation. our principled based approach to regulation will be supported by effective supervisory oversight. therefore, we do not foresee a significant shift in our current approach to regulation following the proposed global financial reforms. in fact, this reinforces our thinking that the approach we are taking is appropriate for our system. bank negara malaysia has been engaging the banking industry to better understand the impact that the proposed reforms have on malaysia β s economy and financial system. this will allow us to develop implementation strategies for malaysia after taking into account specific characteristics of the domestic financial system, including compensating tools and arrangements within the financial system that mitigate risks to financial stability. an important point to consider is that, the implementation process does not result in any unintended consequences. this is where engagement with the banking industry is of utmost importance. we used inputs from the industry and share the inputs at regional and international - level regulatory fora, thus providing an emerging market perspective to the recommended proposals. malaysian financial reform, regulatory framework and conduct of supervisors some key regulatory initiatives by bank negara malaysia to further enhance its prudential regulatory framework and conduct of | 1 |
employment is below its maximum level, as is clearly the the analysis of how alternative strategies that succeed in reducing the frequency and / or severity of elb recessions can induce longer run beneficial effects on economic inequality is presented in feiveson and others ( 2020 ). italics added for emphasis. the 2012 statement noted that the committee would mitigate β deviations β of employment from the committee β s assessments of its maximum level, suggesting that the committee would actively seek to lower employment if it assessed that employment was above the committee β s estimate of its maximum level. in practice, the committee has not conducted policy in this way, but rather has supported continued gains in the labor market. in addition, because real - time estimates are highly uncertain, we no longer refer to estimates of the natural rate of unemployment from the sep in our consensus statement. another reason for dropping this reference is that the unemployment rate does not adequately capture the full range of experience in the labor market. the sep will continue to report fomc participants β estimates of the longer - run level of the unemployment rate, as such information remains a useful, albeit highly incomplete, input into our policy deliberations. - 12 case now, we will actively seek to minimize that shortfall by using our tools to support economic growth and job creation. we have also made important changes with regard to the price - stability side of our mandate. our longer - run goal continues to be an inflation rate of 2 percent. our statement emphasizes that our actions to achieve both sides of our dual mandate will be most effective if longer - term inflation expectations remain well anchored at 2 percent. however, if inflation runs below 2 percent following economic downturns but never moves above 2 percent even when the economy is strong, then, over time, inflation will average less than 2 percent. households and businesses will come to expect this result, meaning that inflation expectations would tend to move below our inflation goal and pull realized inflation down. to prevent this outcome and the adverse dynamics that could ensue, our new statement indicates that we will seek to achieve inflation that averages 2 percent over time. therefore, following periods when inflation has been running below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time. in seeking to achieve inflation that averages 2 percent over time, we are not tying ourselves to a particular mathematical formula that defines the average. thus, our approach could be viewed as a flexible form of average inflation targeting. 26 our decisions | would like to call for extending our scope progressively but with ambition. first, climate change, on which we must proceed as swiftly as possible ; second, biodiversity, which is at an intermediary stage ; third, other economically material nature - related risks, including air and water pollution, land use, etc. to the extent they are not already covered as we work on climate and biodiversity. i can only wish for a holistic approach someday ; but we certainly cannot wait until we know everything on all nature - related risks before we act on climate. page 6 sur 13 b. what we don β t know yet drawing a parallel with the progress made on climate, we face two significant challenges ahead for biodiversity issues : metrics and scenarios ( β ipcc type β ) and macroeconomics and finance ( β ngfs type β ). 1. biodiversity metrics and scenarios biodiversity β and even more so nature β is complex and multidimensional : for example, biodiversity measurement cannot be reduced to a single metric like the concentration of greenhouse gas in the atmosphere and the associated rise in temperature for climate change. we still lack understanding on, and especially awareness of, this phenomenon. thankfully, the ipbes, which we could describe as the ipcc equivalent for biodiversity, is advancing knowledge and raising awareness about biodiversity. it provides landmark assessments of biodiversity loss and ecosystem services, including work on scenarios that we could explore further as we aim for improved risk assessment by the financial sector, just like we did with ipcc scenarios. when attempting to assess risks, we are indeed confronted with numerous conceptual challenges that require adapted tools : the diversity of drivers and impacts ; uncertainty over the time horizon ( which may be relatively short for biodiversity - related risks ), the importance of tail risks and non - linearities associated with tipping points ; the limited substitutability of ecosystem services ( for instance, forests provide flood protection services that can only partially be replaced by costly infrastructure, while ignoring many other services provided by forests ), interdependencies between phenomena ( climate change, biodiversity, land use pollution and fresh water use, as mentioned earlier ), etc. a particular issue relates to the need for data and metrics, which is targeted by several initiatives. these include the global biodiversity score ( gbs ), developed by cdc biodiversite using the globio model of the netherlands environmental assessment agency ( pbl ) β hence a good example of fruitful french - dutch cooperation. this tool assess | 0 |
and related services, while keeping the responsibility for customer onboarding. in parallel, the digital euro would reduce european dependence on the international card payment schemes, that currently process outside the eu most of european retail payments. moreover, since geopolitical developments make us more vulnerable to power outages and cyberattacks, designing the digital euro as a fall - back option such that it relies on infrastructure rails other to those of non - european card - based payments, would enhance the resilience of the european payment ecosystem. the ecb has completed the consultation phase that was launched in october 2021 and lasted two years. based on the outcome of this phase, at the governing council of the ecb we agreed to design the digital euro, such that it would be widely accessible to citizens and businesses through distribution by supervised intermediaries. as from the 1st november 2023, at the governing council of the ecb we approved the launch of the preparation phase, during which we will develop and test technical solutions and business arrangements for our digital currency, as well as finalise the rulebook and select providers that could develop a digital euro platform and infrastructure. the ecb's project has benefited so far from the expertise of european policymakers, and the rapport with market participants, civil society and the general public. the eurosystem will continue this journey with stakeholders and will adjust the digital euro design upon finalisation of the legislative negotiations that are running in parallel. ladies and gentlemen, what i have briefly summarised is a very challenging and ambitious project and objective. however, i am optimistic that it will ultimately bear fruits and benefits, as our european track record has shown that what seems incredulous now, is tomorrow's new norm. let me now turn to our domestic space and say a few words regarding the digital initiatives that we undertook at the central bank of cyprus. in our commitment to advancing the digitalization of the financial sector and fostering an effective financial ecosystem to bolster the economy, as well as to further encourage, promote and support domestic financial innovation, at the central bank of cyprus we recently undertook two important initiatives : the first one is the implementation of a remote electronic digital on - boarding platform for our banking sector. the digital on - boarding platform project is designed to expedite the process for collecting, identifying and reviewing data of current or new bank clients. it will offer 3 / 5 bis - central bankers'speeches incremental advantages to both individuals and corporations. the | constantinos herodotou : current economic dynamics in the euro area and cyprus speech by mr constantinos herodotou, governor of the central bank of cyprus, at the london business school alumni cyprus club event, nicosia, 12 september 2022. * * * introduction i would like to thank the london business school alumni club of cyprus for arranging this event and for giving me the opportunity to participate in such an interesting, constructive, and open discussion. today i will focus on the current economic challenges faced by the euro area and cyprus. i will begin by providing a brief summary of recent economic developments in the euro area, followed by a discussion of monetary policy and how it responds to the new challenges of rising, persistent inflation and economic uncertainty. then i will move on to cover the main developments in the cyprus economy and its banking sector. euro area euro area economic developments starting from the euro area, a post - pandemic spending, fuelled by government expenditure, was expected to boost economic activity in 2022 and help households and businesses to rediscover stability after two difficult years. all of that changed when russia invaded ukraine. as a result, gdp is growing at a much slower pace this year than previously expected. growth is hampered by soaring energy and commodity costs, low confidence and supply chain disruptions. at the same time, inflation is approaching double digits, and a winter with possible energy shortages is on the horizon. nevertheless, a recovering tourism industry, decreasing unemployment, and eu funding payments all help to boost activity and limit, to some extent, output loss. more specifically the euro area quarterly economic growth reached 0. 8 percent in the second quarter, following a 0. 7 percent rise in the first quarter. even though these growth rates are below the rates expected before the start of the war, the 0. 8 %, growth is still the strongest performance in three quarters, prompted by the easing of covid restrictions and the good summer tourism season in southern countries. the impact from war developments is expected to be shown in the data of the fourth quarter of 2022 and the first half of 2023. this outlook is reflected in the latest ecb projections for economic growth, which have been revised down markedly for the remainder of the current year and throughout 2023. the euro area economy is now expected to grow by 3. 1 percent in 2022, 0. 9 percent in 2023 and 1. 9 percent in 2024, compared to the december 2021 projections of 4, 2 | 0.5 |
co - operation and operational involvement of central banks in order to allow the potential synergies between central banking and prudential supervision to be exploited. central banks β knowledge of the overall economy and financial system, and their information from payment and settlement systems and monetary policy operations, are valuable for the performance of the supervisory tasks. conversely, for central banks, supervisory information can play an important role in the oversight of payment and settlement systems and of market infrastructures, and in managing liquidity crises. strong comments have been made against this view. the most often used arguments against central bank involvement in supervision have been the increasing importance of financial conglomerates and the blurring of the distinction between the three segments of the financial sector. these developments would call for the establishment of a single financial supervisor which should not be the central bank β the argument runs β since this would worsen conflicts - of - interest between central banking and prudential supervision and would lead to a concentration of power. in my view, one should not be too dogmatic about these arguments. situations in which such conflicts of interest would arise are very rare in practice and central banks, like all other public bodies, are subject to accountability procedures. in any case, these concerns are dispelled in the euro area setting by the fact that decision - making takes place at different levels : euro area - wide for monetary policy, national for prudential supervision. the arguments for keeping central banks closely involved in prudential supervision are even reinforced in the context of monetary union. more integrated financial markets can absorb shocks more easily than in the past, which is a very beneficial outcome. however, if shocks do occur, they are likely to have a wider impact across borders through wholesale banking and capital market links β or through payment and settlement systems. thus, the contribution of the eurosystem to monitoring vulnerabilities in the financial system on a euro area - wide basis will be greater if the central banks are extensively involved in prudential supervision. let me move on to the european debate. the economic and financial committee has already assessed the adequacy of the existing arrangements for prudential supervision and the safeguarding of financial stability in the european union in the two reports produced under the chairmanship of henk brouwer from de nederlandsche bank. i wish to congratulate him on these important achievements. the outcome of this analysis was that the current institutional system based on national responsibility is appropriate, but there is a need | least temporarily. however, if we are able to boost our investment in people, ideas, and processes, as well as in machines, the economy can readily adapt to change and support everrising standards of living for all americans. | 0 |
one factor that could offset this is the continuing emergence of china which has to a large extent been shielded from the downturn. at the east asia regional summit of the world economic forum held in hong kong in october of 2001, developments in the chinese economy dominated the discussions. although the emergence of china was seen as positive for the region, it was also viewed with some trepidation in some of the countries, particularly hong kong. it is an irony that the most closed economies in asia i. e. china and japan, determine the future prospects of some of the most open economies in the world. growth projections for asia were also revised down by the imf, with recovery delayed into 2002. the newly industrialised economies of asian and asean were badly affected by the lower european, japanese and us growth and the collapse of the global electronics cycle, with hong kong and singapore being particularly vulnerable, and taiwan experiencing its first recession since world war ii. these countries are only expected to grow by around 1 per cent in 2002. the forecast for the asean countries for 2002 is 2, 9 per cent, although for developing asia the forecast is 5, 6 per cent, buoyed by a 6, 8 growth forecast for china. although the outlook for this region is relatively bright, particularly given the lower dependence on external capital flows, its heavy exposure to the electronics cycle make it vulnerable to developments in that industry. 8. latin america the outlook for latin america remains overshadowed by developments in argentina, but it appears that the worst of the contagion effects appear to be over. although the argentinean crisis was not caused by the general world downturn, the satisfactory resolution of the crisis in argentina does have an implication for the general β risk appetite β in the industrial countries, and therefore for capital flows to emerging markets in general. the adjustment in argentina is likely to be painful, and drawn - out, and is likely to remain a source of economic uncertainty and instability for some time and the recession is expected to persist through 2002. latin american growth in general is forecast to be 1, 7 per cent in 2002, with mexico having the lowest growth forecast at 1, 2 per cent ( apart form argentina ). mexico β s membership of nafta makes it more vulnerable to economic downturn in the us, whereas other latin american countries have greater trade exposure to europe. external financing requirements are relatively large in this region, and growth prospects will therefore be affected by a resumption of β normal β capital flows | such a downturn. overall, i believe the lvr policy is regarded as a qualified success. while it has its critics, it has also won considerable support amongst policy makers, the public and the banks. the banks have recognised the benefit of an external industry constraint that prevents an escalation of mortgage risk as banks compete for market share through greater risk taking. i take five broad lessons from the experience with macro - prudential policy to date. first, it is a policy that can reliably improve banking system resilience, on a sustained basis, but that has limited capacity to influence asset prices. the latter should not surprise us given the wide range of factors that influence asset prices more generally. second, and arising from the first, macro - prudential policy should always have a prudential purpose, and be modest in its ambition. it should not seek to control housing or financial cycles. it should seek to build resilience to these cycles while at the same time lean against the extremities of those cycles. third, to improve transparency and understanding, macro - prudential policy should have a wellunderstood and systematic framework for policy adjustments that is fully consistent with the underlying prudential framework. fourth, there is a need to build and sustain support for the macro - prudential framework β amongst politicians, the public and the banks themselves. to succeed long term, macroprudential policy must gain broad acceptance, along the lines of monetary policy. part of the challenge here is that many observers assume the main objective of macro - prudential policy is to stabilise asset price and credit growth rather than build financial system resilience. fifth, a good infrastructure is required to support macro - prudential policy. the reserve bank has invested heavily in better measurement and analysis of housing and rural credit risk. this has had positive spin - offs for prudential policy more broadly. international experience the countries we look to for lessons about our own policy are those with similar banking systems and with a propensity for housing cycles β such as australia, canada, ireland, and the uk. the latter three have been active in macro - prudential policy for several years while australia has been a more recent starter. the experience of these countries tends to reinforce the lessons i have mentioned. in ireland, the central bank sees borrower - based macro - prudential policies as an integral part of mitigating systemic risk from housing. | 0 |
0. 5 percentage points, to 14. 5 %. 2 / 3 bis - central bankers'speeches the easing of interest rate policy will support economic recovery, without threatening macrofinancial stability. the new level of interest rates on the nbu's operations is sufficient to maintain the attractiveness of hryvnia assets, safeguard exchange rate sustainability and retain moderate inflation. in particular, for these purposes, the nbu plans to continue operations with threemonth certificates of deposit as an effective element of the operational design of interest rate policy, which has proven to be effective over the past year. at the same time, in the context of the interest rate policy easing cycle and a steady slowdown in inflation, the need for a significant difference between the interest rate on this operation and the key policy rate is diminishing. in view of the above, the nbu is cutting the interest rate on three - month certificates of deposit by 1. 5 percentage points, to 17. 5 %. what is more, the nbu is decreasing the interest rate on refinancing loans by 1. 5 percentage points, to 19. 5 %. the interest rate on overnight certificates of deposit will continue to equal the key policy rate. if required, the nbu will continue to modify the parameters of operations with threemonth certificates of deposit. in particular, starting from 19 april, to determine the limit on banks'investments in three - month certificates of deposit, the growth of hryvnia household deposits with a maturity of more than 93 days will be calculated for the last 12 months ( rather than from 4 april 2023, as is currently the case ). this will encourage banks to increase their portfolios of hryvnia household term deposits, which is important for maintaining exchange rate sustainability and protecting international reserves. the nbu will continue the cycle of interest rate policy easing, provided that risks to inflation and exchange rate sustainability are sustainably reduced the nbu continues to be prepared to adapt its interest rate policy dynamically in response to changes in the balance of risks to inflation and exchange rate sustainability. maintaining a controlled situation in the fx market and moderate inflation, as well as increased foreign aid inflows, will create preconditions for further steps to cut the key policy rate and ease fx restrictions. they will promote lending and support economic recovery. 3 / 3 bis - central bankers'speeches | andriy pyshnyy : national bank of ukraine press briefing - monetary policy decisions speech by mr andriy pyshnyy, governor of the national bank of ukraine, at a press briefing on monetary policy decisions, kyiv, 14 march 2024. * * * dear colleagues, the board of the national bank of ukraine has decided to cut the key policy rate to 14. 5 % effective 15 march 2024. a further decline in inflation, sustained stable fx market conditions, and positive developments in the prospects to receive external assistance lay ground for an earlier resumption of the easing cycle of interest rate policy. at the start of 2024, inflation slowed more rapidly than expected by the nbu in february, inflation decelerated to 4. 3 % yoy. among other things, this was facilitated by higher supply of some food products and effects from last year's strong harvests. the reorientation of some producers to the domestic market also had an impact on food prices. in addition, the moratorium on raising some utility prices continued to restrain inflation. core inflation decelerated as well, to 4. 5 % yoy. stable fx market conditions β among other things, owing to the nbu's monetary policy and currency supervision measures β improved inflation and exchange rate expectations across the majority of respondent groups. this reined in underlying price pressures. the official and cash exchange rates became almost equal, and the hryvnia exchange rate fluctuated moderately in both directions, which was in line with the managed exchange rate flexibility. since the previous monetary decision taken in january, market rates on hryvnia instruments have not changed much. yields on bank deposits and domestic government debt securities continued to exceed inflation expectations of businesses and households. together with the controlled situation on the fx market, this supported interest in domestic currency savings. in particular, ukrainians'holdings of domestic government debt securities increased, and retail deposits placed for three months and longer showed steady growth. inflation will remain moderate, in particular thanks to the nbu's consistent monetary policy the nbu estimates inflation will remain within the target range of 5 % Β± 1 pp in the coming months and will accelerate only moderately in h2. a gradual increase in incomes of ukrainians and higher business costs during the war will fuel the inflationary pressure. at the same time, some utility tariffs being frozen and the nbu's monetary policy aimed at supporting the attractiveness of hryvnia | 1 |
growth achieved so far and the one projected ahead has many facilitators, but implementation and leveraging of technology is, by far, amongst the biggest enablers in the context. i have divided my talk today into three parts. in the first part we would look at core banking, the journey so far and the need to look β beyond core banking β. in the second part i would be touching upon the initiatives taken by idrbt and the areas and technologies that the banks should set their focus on. in the concluding part i would be speaking on the initiatives taken by the reserve bank of india in the area of information technology. part i core banking solution β an assessment core banking systems ( cbs ) have facilitated building up customer - centric, service oriented architecture of banking services at front end and also created the capacity to efficiently handle large volumes of transactions, data and book - keeping requirements. cbs is positioned as an integrated solution to the basic banking operations pertaining to deposits, withdrawals, credit delivery, and attendant backend jobs, mainly in the retail and small business segments. it has enabled the introduction of efficient and convenient delivery channels like atms, net banking, tele banking etc. so, when the banking industry has reached, so to say, a critical mass as far as using cbs is concerned, what β s next? do we bis central bankers β speeches need to go β beyond core banking β and if so, what should be the areas and technologies that the banks need to focus on? let us now look at the banking services in india from a different perspective. it is said that india lives in its villages. then, isn β t it strange that only 5 % of them have proper banking services and that there β s only 1 branch per 15, 000 persons. it is also a fact that although banking in india is fairly well developed in certain areas, it is fairly under - penetrated and grossly under - served in other areas. if one views the areas which have not been served, it may be said that that until now, banks have not seen banking in rural areas as an attractive business, although, in the recent past, the opportunity and growth in rural markets is equalising with urban markets. the fact that there is tremendous potential for inclusive banking is, now, making banks recognise rural banking as economically - viable, at least to a certain extent. to make this become attractive, technology provides solutions. banks need to utilise technology to harness this potential by | to support our economy β s trend of growth, and closely examine changes in real economic and financial stability conditions, we will need to judge carefully the necessity of any adjustment in the degree of accommodation. in this process we will have to devote special care to making sure that potential financial system risks, such as the buildup of household debt and the possibility of capital outflows, do not materialize. in order to operate our monetary policy effectively, accurate assessment and forecasting of financial and economic conditions are essential. and on the basis of this we will have to maintain consistency in our policy - making, while formulating the directions for our monetary policy operations from a medium - term perspective and communicating on them with the market. while devoting efforts to the efficient operation of our monetary policy, we will not hesitate to provide advice on pending economic issues overall. short - term policy responses to the risks facing us mentioned earlier are of course important, but when looked at from a long - term 1 / 3 bis central bankers'speeches perspective i believe that the work of resolving the structural vulnerabilities in our economy is a task that cannot be delayed any longer. through in - depth research we will have to precisely diagnose the urgent economic issues before us, seek viable responses to them, and consistently propose these to the policy authorities. to enhance our monetary policy β s effectiveness we will need to reconsider our policy framework and instruments. taking into account the changes in the relationship between growth and prices, as well as the importance of the central bank β s role in financial stability, we will have to deliberate deeply on measures to facilitate efficient operation of our inflation targeting system. since there is a possibility that, together with the drop in our potential growth rate, the scope for our base rate operations will become narrower than previously, it will be necessary from a medium - to longterm perspective to also devise measures for securing our policy capacity. we will have to respond actively to the changes in our financial environment due to the developments of fintech and new technologies such as blockchain. technological innovation these days is so rapid and complex that it is difficult to compare it with past cases. these changes do bring to us new opportunities and convenience, but they can also lead to unanticipated risks and also threaten our financial system β s stability. we will have to strengthen our research on the impacts that digital innovation is having on the real and financial economies, while at the same time also participating actively | 0 |
impact on the rest of the world. and it means that asia will need to prepare for a future in which it relies more on the strength of growth at home rather than on the strength of growth in the rest of the world. as asia makes further progress in financial reform and toward more flexible exchange rate regimes, it will be in a better position both to deal with the inevitable challenges that come with economic and financial integration, and to make the necessary transition to stronger domestic demand led - growth, which will prove a more sustainable foundation for future improvements in living standards. thank you. | . | 0 |
s s mundra : financing india β s growth β challenges and way ahead keynote address by mr s s mundra, deputy governor of the reserve bank of india, at a summit on β financing india β s growth β way forward β, organised by phd chamber of commerce and industry ( phdcci ), new delhi, 9 september 2015. * * * shri yaduvendra mathur, chairman & managing director, export import bank of india ; shri sunil srivastava, dy managing director, state bank of india ; shri alok shriram, president, phd chamber of commerce and industry ( phdcci ) ; shri sanjeev gupta, chairman, banking committee, phdcci ; delegates to the summit ; members of the print and electronic media ; ladies and gentlemen! i am grateful to the phd chamber for inviting me to deliver the keynote address on a very important theme β financing india β s growth - way forward β. i am happy to note the efforts being made by the phd chamber for promotion of industry, trade and entrepreneurship through its research - based policy advocacy role. the summit today, i feel, is an important step in that journey. i also understand that the phd chamber and crisil have combined to prepare a knowledge report highlighting key issues essential for financing india β s growth and i compliment them for their efforts. i trust that the recommendations made therein would positively impact the economic growth and development of the country. 2. in my address today, i intend to talk about india β s growth potential, suitable model for india β s growth, key challenges that undermine the achievement of the potential growth rate and the way forward in overcoming these challenges. let me ; however, begin with an overview of the global economic situation and where india stands at present. global overview 3. the global economy is presently dominated by four themes - the chinese slowdown, the impending rate hike by the us federal reserve, the large - scale slump in global commodity prices, especially oil and the continued sluggishness in the economic recovery. looking at the advanced economies ( aes ), growth is virtually stagnant in japan at 0. 8 % while the continental europe is slated to report only marginally higher growth at 1. 5 % during 2015. the recovery in north america, including in the usa is modest and uk is likely to witness a modest 2. 4 % growth during 2015. 4. the emerging and developing economies ( emdes ) have also been witnessing significant slowdown | position, they are also guided by the viability of the projects to be funded. risk aversion stemming from stress in financial assets has been one of the reasons for restrained bank credit growth in recent times. have borrowers been meeting their obligations? 17. i have raised the issue of borrowers β obligations on many occasions and at the cost of repeating myself, i would like to emphasise the point once more. while the quest to grow is understandable, the borrowers cannot exclusively rely on bank funds to finance this growth, without committing their own funds. the labyrinthine maze through which several large infrastructure projects have been funded point to extremely low or negligible levels of equity contributions leading to extremely high levels of leverage and virtually no skin in the game for the promoters. there is a very visible pattern here. the last few years β growth was largely on account of infra projects. these projects were launched by a handful of promoters with thin equity as i alluded to earlier. i suspect that this small group has run out of even such thin level of equity to contribute their fair share for revival of the stalled projects, not to talk about commissioning of new projects. so, it should be obvious to everyone that if momentum has to continue then they have to either find fresh equity on their own or make way for others who can contribute such equity both for the existing projects and also for new ones. 18. it is also pertinent to mention here that the present legal system does not facilitate an easy closure / takeover of unviable firms. in order to overcome such problems and to salvage value in firms in distress, it is imperative to take measures for an early enactment of a bankruptcy code. creation of a central authority for resolution of financial firms in distress also needs an early finalization. 19. high levels of debt accumulation by corporates has been encouraged in part by the availability of low - cost, abundant and flexible debt, facilitated by the search - for - yield environment created by the extraordinary policy measures undertaken in the us, uk, euro area and japan. several corporates have increased leverage, by borrowing in both foreign and domestic currencies. as corporates, you have to be mindful of global uncertainty, which is a given. the interconnectedness of markets lends itself to volatility. the entities with significantly higher unhedged forex borrowings are most likely to face maximum distress. governance reforms 20. india would continue to need external capital for growth and | 1 |
##ors which can be especially detrimental to growth in countries who need capital most. 1. 2. several factors are at play when financial asset prices experience more amplified and volatile moves. the first set of factors relate to the behaviour of market participants : some market participants have become more inclined to engage in " short - termism ", that is, they might be too much concerned with their short - term results, exhibiting market β myopia β. this trend might result, in particular, from growing pressure of investors to yield immediate financial results that are not necessarily sustainable, the so - called β tyranny of return on equity β. moreover, the mark - to - market completed by mark to model of a wide range of assets and liabilities has also contributed to this widespread focus on immediate financial performances. this focus on short - term performance can translate into additional volatility in the price discovery process : indeed, the shorter the investment horizon of market participants, the larger the impact on prices of any new information. mimetic behaviour is by no means a new phenomenon on financial markets. however, technological developments on markets may have gradually reinforced this type of behaviour. the spread of benchmarking, which allows fund managers and clients to measure performance against that of other funds, together with the growing competition within the sector, appears to have favoured such β herd behaviour β. some operators have come to the conclusion that it is better to be wrong along with everybody else, rather than take the risk of being right alone. a striking example of rational mimetic behaviour is the influence that hedge funds enjoyed, a few years ago, as " opinion leaders " and trend makers. the second set of factors relates to new market techniques or financial engineering devices. here are a few examples of some of these mechanisms : β’ the inclusion of contingent or trigger clauses in loan and bond contracts. these clauses provide creditors with a form of insurance since the level of interest rate paid by debtors increases when specific trigger events occurs ( typically the downgrading of the debtor by rating agencies ). these clauses were designed to help borrowers access financing at lower rates. however, these clauses create a sort of vicious circle. indeed, rating agencies are expected to help borrowers to make informed decisions for future financing ; still, through these trigger clauses, rating decisions have an impact on the outstanding debt of borrowers, thus aggravating the situation of the debtor. β’ the generalisation of credit risk hedging through short | the elements that could potentially counter the boom - bust tendencies. let me give two examples of what is being done : β’ as regard prudential supervision, i would only mention the fantastic work which has been achieved by the basel committee under the leadership of bill mcdonough, the president of the federal reserve bank of new york, in the field of banking supervision. i trust that the new accord will permit a better and more appropriate handling of this extremely important domain as regards financial stability. i am also happy that the concept of β dynamic provisioning β, which is anticyclical by nature, has been recognised by the basel committee as a useful concept. β’ as regards accounting standards, it seems to me that we should also inject in the present meditations in the us, in europe and at a global level the concern for financial stability. let us beware of changes that would increase the procyclicality of accounting rules. let us favour changes that would simultaneously help fair accounting and diminish procyclicality. in that regard, it seems important to me to design accounting practices which would try to take into account of the time horizon of institutions and market participants. otherwise, we would take the risk of driving all financial institutions and market participants to shorten their time horizon down to a day - to - day basis. this could be a recipe to favour inappropriate market functioning and foster herd instinct in time of excessive volatility. 2. the need for an enhanced framework for crisis prevention and management i do not need to remind you of the long list of financial crises emerging market economies have gone through in the last two decades. against this background, the international community must, on the one hand, enhance crisis prevention and, on the other hand, design and implement better procedures for crisis resolution. 2. 1. authorities must reflect, in conjunction with the financial industry, on building up a suitable system of surveillance and crisis prevention. the objective of strengthening crisis prevention is shared by the private sector and by official community given the magnitude of potential losses ; indeed, in some cases, restructuring costs for banking crises have reached more than 40 % of gdp. building on international standards and codes is instrumental in establishing an appropriate institutional, supervisory and regulatory framework in the financial sectors of all market economies. the value of international standards is now widely recognised, insofar as they contribute to spreading international best practices and codes of good conduct, very closely linked to the globalisation process and the expansion of | 1 |
play in the transmission mechanism of monetary policy is well known theoretically, although quite difficult to characterise empirically. monetary policy mainly controls the interbank overnight rate, which is not directly relevant for any material economic decision. the way to which monetary policy affects the real economy is when it impacts on relevant financial prices, i. e. when it moves the whole yield curve, or when it affects the exchange rate and other assets prices. there might be several channels through which the policy rate can affect asset prices or asset valuations : Β· first, changes in interest rate modify people β s expectations about future economic growth, and thus their profit expectations ; Β· second, monetary policy decisions may change the set of discount factors economic agents apply to their profit expectations or to the future stream of services or revenues from the asset they hold ( housing for instance ) ; Β· finally, interest rate changes may induce portfolios β shifts amongst assets that may in turn affect their relative prices. besides this, and for the sake of simplicity, i will call it the β interest rate channel β, changes in asset prices also generate wealth effects that may have a significant impact on several components of aggregate demand, namely consumption and investment. these wealth effects feed through to the economy via various channels, such as a direct increase in net wealth, which may lead to a rise in consumption because of households β inter - temporal smoothing behaviour ; via tobin β s q, which activates firms β investment ; or via an increase in the value of collaterals, which may reduce agents external financing constraints and enhance final spending, in accordance with the β broad credit channel β. although the evidence is mixed about the effectiveness of the wealth channel, even in the united states, it is likely to have increased over recent years. moreover, asset prices fluctuations or changes might also activate some confidence or expectations channels that may in turn influence households β or firms β spending decisions. for all of these reasons, asset prices have a particular role in the conduct of monetary policy. how should central banks react? does this mean that monetary policy should react directly to asset prices? or, more precisely, should asset prices be directly taken into account by the central bank β s reaction function? this issue is still debated amongst researchers and academics ; my feeling is that we should remain extremely cautious about it, perhaps because it would be like opening pandora β s box if we started setting our key policy rates according to asset price changes. another reason for being extremely cautious is that assessing asset prices β valuation | of major determinants of inflation β fully recognized by the governing council of the ecb. that is the reason why we rely upon a binocular vision of the factors of inflation, i. e. as a monetary phenomenon according to pillar 1 and as the result of short - term to medium - term developments of inflation according to pillar 2. this framework is also well suited to addressing the asset price bubble issue. in this context, the first pillar is very helpful for analysing how ample liquidity is within the euro area, that is to say how much the broad monetary aggregate ( m3 ) deviates from its reference value, and how economic agents make use of this liquidity : credit and loan developments are carefully monitored, in line with economical and financial developments. portfolio shifts are also an important part of the monetary analysis. too rapid a credit expansion to the private sectors associated with large portfolios shifts towards equities and a strong rise in stock or asset prices would, under normal economic conditions, signal the risk of a bubble formation. the second pillar consists of a wide range of economic and financial indicators : stock and bond prices, housing prices, exchange rates are also analysed in depth. obviously, their assessment is made in the context of maintaining price stability over the medium term, and the ecb does not react to their signals unless price stability is endangered. to recap, if monetary policy does not react directly to asset price developments or to an asset price bubble, it has clearly to take under consideration all the consequences of these developments on aggregate demand and aggregate supply, on economic agents β confidence and expectations, since they may at some point affect price developments. let me now turn to my second point, that is the implications of asset prices bubbles for financial stability. 2. implications for financial stability over the last decade, we have experienced several financial crises and contagion episodes : just to name a few episodes, the mexican crisis in 1994 - 1995, the russian - ltcm in 1998, the β tech - bubble β that ended in 2000, or more recently the financial crises in argentina and turkey. however, recent j. m guttentag and r. j herring ( 1986 ), β disaster myopia in international banking β, essays in international finance, 164, princeton university. research has shown that, if the frequency of financial crisis is not significantly different from what was observed in previous periods over the long run ( 1883 - 1998 ), recent episodes were certainly shorter | 1 |
2015, would have amounted to about β¬50 billion, or 5 per cent of all loans disbursed, close to precrisis levels. the growth of npls was strongly influenced by recovery times, which until now have been particularly long in italy ; the measures approved in the last year will shorten them significantly. as the bank of italy has emphasized in the past, reducing average recovery times even by just two years would have determined, together with a higher valuation of npls, a ratio of bad debt to total loans close to half of what it is today. most italian banks are capable of dealing with the still fragile cyclical conditions, lending to the economy and competing efficiently on the market. a number of assessments made in the last few weeks put the recapitalization needs of the entire italian banking system at somewhere in the order of tens of billions of euros, based on the assumption that the total stock of bad loans, and possibly even some of the loans that are β unlikely to be repaid β, must be sold at once by all banks at a price equal to approximately half the value of the bad loans recorded in banks β balance sheets. in italy a loan is classified as β non - performing β based on harmonized criteria established at the european level and published by the eba in 2013, which are largely aligned with those previously applied in italy and with international practice. for the valuation of non - performing loans in their balance sheets, italian banks must comply with international accounting and reporting standards ( ias / ifrs ). as they permit discretion we have constantly encouraged banks to adopt prudent valuation policies that take sufficient account of the degree of uncertainty in recovery times and flows. our supervisory action on provisioning in 2012 and 2013 is a clear example of this. in the approach traditionally taken in italy, npls can be divided into at least two large and very dissimilar categories based on the degree of difficulty faced by debtors : of the β¬360 billion worth of gross npls outstanding at the end of 2015, bad loans accounted for β¬210 billion ; β¬150 billion were in loans classified as β unlikely to be repaid β, past - due or in breach of overdraft ceilings. these two categories of npls obviously have different requirements in terms of coverage and write - downs. both types of loans must be booked in the balance sheets with due prudence, but not at values corresponding to their immediate liquidation. loans in the second | ##ly adopted by the bank of albania, allows the albanian economy to withstand these shocks at minimum cost. let us leave this mechanism operate smoothly, without excessive reactions from the market or its agents. any smooth moves towards the exchange rate equilibrium will be in the albanian economy β s own interest. any hasty short - term reactions, like the ones we have been attesting to over the course of the present year and in the early days of this week, bring about individual financial cost to those undertaking them, as well as financial cost to the economy. no economic agent is stronger than the foundations. the high volatility and uncertainty in the foreign exchange market do not have any real base. the euroisation of the economy is a visionary idea, not only for albania but for the entire region as well, since its final aspiration is the membership into the european union. it encourages the domestic and the regional market, and the european authorities, to speed up the convergence process. however, convergence in the euro area is a derivative of continuous structural reforms and strengthening of financial systems, wherein the stability of the currency is of prime importance. there can be no european integration without a longterm equilibrium of the national and european currency. in the long run, the exchange rate will inevitably reflect the sound foundations of the albanian economy, which are to remain so. the past years β equilibriums remain real indicators of the potentials of the albanian economy. in the long run, we remain deeply convinced of the benefits the free floating exchange rate regime brings about. it will be the passport to and the best support to the albanian economy in its path to european integration. i take this opportunity to invite all the economic agents to consider the benefits, that our national currency provides, impassively, as the best long - term instrument for protecting their savings and as the greatest buffer to wealth volatility. to albania, the lek has been, is and will remain a successful currency. the lek serves as an anchor for all our european initiatives. in the last 17 years, the lek has managed to withstand the inflationary pressures and the pressures deriving from the foreign markets. therefore, it should be left alone. it should move freely on its path, concurrent with the market demand and supply. the lek is the icon of the albanian economy that will guide us through the european gates. i take this opportunity to invite the media to comprehend this message and transmit it to the public at large. before giving the | 0 |
the money market participants in prospera β s survey thought at the time that the repo rate would be brought back into positive territory towards the end of 2016 and then continue to increase. one can say that the riksbank purchased government bonds that gave a return of approximately zero but that were expected to be funded according to the repo rate forecast. the chart shows that the riksbank therefore expected to make a loss, as the funding costs were expected to be higher than the yield. 11 chart 4. actual and expected interest rate developments per cent repo rate survey mpr february 2015 mpr october 2016 - 1 - 1 note. survey responses show the mean value for the repo - rate expectations of money market participants in february 2015. β mpr β refers to the riksbank β s forecast for the repo rate in its monetary policy reports. sources : statistics sweden and tns sifo prospera but chart 4 also shows that the repo rate has so far turned out to be much lower than the interest rate forecasts. the bonds have therefore risen in value and the funding of the bond purchases seems to become cheaper than expected, something which, at least in the short term, has led to higher profits than expected for the riksbank. this is 11 an alternative measure of the future repo rate is provided by the market β s pricing of certain derivatives. this pricing suggested that the repo rate would increase more slowly than in the riksbank β s forecast, but the bond purchases would realise losses also according to these market - based expectations. 6 reflected in, for example, the forecast for the riksbank β s dividend - qualifying profit in 2015 and 2016. 12 at the end of 2014, a total loss of just over sek 10 billion was expected for those two years. 13 in march 2015, when bond purchases had begun on a small scale, the expected loss had risen to almost sek 14 billion. the latest forecast, from october this year, has the benefit of hindsight and indicates that the outcome will instead be a profit of almost sek 13 billion. losses likely in the period ahead the fact that the riksbank β s bond purchases have so far been profitable does not mean that this will always be the case. for example, the ever - lower interest rates have made bond purchases after the spring of 2015 increasingly costly. the riksbank has now purchased bonds for about sek 275 billion and several bonds have a | consumer loans to the pre - pandemic level. however, given recent months β data, we will soon make a decision on additional macroprudential measures to cool down this segment of the retail market. 2 / 3 bis central bankers'speeches i will now speak on possible risks to the forecast. proinflationary risks continue to prevail. we consider that the main risk is a potential anchoring of inflation expectations at a high level. fuelled by high inflation expectations, temporary growth might become sustained. there is a slight increase in risks associated with a possible faster normalisation of monetary policies in advanced economies. as a result, market volatility in emerging market economies might intensify, which can affect exchange rate and inflation expectations. there are also certain risks caused by structural changes in the labour market due to the pandemic. the demand for some professions is declining, whereas the demand for others is rising. this is confirmed by data on a record - high increase in vacant jobs. adjusting to the new needs of the economy requires time for specialist retraining. consequently, this provokes local staff shortages. the situation is aggravated even more due to the restrictions on the inflow of labour migrants, which affects construction and seasonal agricultural works most seriously. the situation in the labour market might increase companies β costs. proinflationary risks associated with the environment in global commodity markets persist. nonetheless, june β july recorded the first signs of a decline in world prices. therefore, i would say that this risk is less acute than at the moment of our previous key rate meeting. furthermore, investment from the national wealth fund and geopolitical risks are still in the focus of our attention. disinflationary factors are much weaker. a rich harvest might result in a more significant seasonal decrease in food prices. the pandemic situation is still uncertain. the spread of new coronavirus strains worldwide might force countries to introduce new restrictions and disrupt production and supply chains, which in turn might slow down global economic recovery. for russia, this would involve a decrease in external demand and intensify disinflationary risks, on the one hand. on the other hand, if borders are closed, domestic demand will remain elevated longer, which might become a proinflationary factor. in conclusion, i would like to comment on monetary policy prospects. beginning from march, we have raised the key rate by a total of 2. 25 percentage points. we will | 0 |
. jorgen elmeskov indicated that debt beyond a threshold level can adversely affect growth. hence, debt reductions should be aimed by improving primary balance and raising productivity growth. parthasarathy shome suggested that the solution to the present economic crisis led by european sovereign debt crisis lies in austerity through stronger imf surveillance. summing up the proceedings of the session, dr. k. c. chakraborty, deputy governor, emphasized that more than quantum of debt, the purpose of debt, and the quality of assets created against the debt are important. benjamin friedman noted that with higher debt, if economic growth is adversely affected, inflation may be used to lower debt - gdp ratio as there is not much growth sacrifice at moderate levels of inflation. the third session was devoted to the financial stability issues. in this session, stephen g cecchetti indicated that when private credit to gdp ratio exceeds a threshold of 100 per cent, financial sector could be a drag on growth by reducing productivity growth. bill white felt that leaning against economic and financial excesses during boom makes more sense as cleaning up after the bust is impossible. the trilemma is less on the upswing, but magnifies in the downswing. y. c. park questioned the efficacy of macro - prudential tools in containing mortgage credit growth in korea. the capital control tools are largely towards containing capital inflows but there are no effective tools to control capital outflows. while summing up the third session, mr. anand sinha, deputy governor noted that the potential conflict between monetary policy and macro - prudential policies is overdone, and indicated that india offers an example that macro prudential policy has been less reactive and more preventive. naoyuki shinohara noted that the international architecture to deal with some of the challenges discussed is still not in place as yet, and the expectations should recognize that. in the panel discussions, governor gudmundsson highlighted the importance of clarity on domains and tools and the difficulty of maintaining financial stability with flexible exchange rate movements. bis central bankers β speeches governor khatiwada underscored the need to consolidate the role of different regulators to achieve policy effectiveness of multiple goals, particularly in developing economies. governor rehman indicated that, given the chain of inter - linkages among monetary policy, debt management and financial stability, it is not possible to have a meaningful separation and underscored the important role of government in | in addressing the trilemma. in the technical sessions, the first session on β conducting monetary policy post - crisis : challenges to transmission mechanism and operating framework β focused on whether the framework of monetary policy needs to be re - designed in the light of lessons drawn from the crisis. leading the discussion, professor benjamin friedman drew attention to the interplay between financial stability and responsive monetary policy. he suggested that one has to look into the three building blocks of macroeconomic and financial policy - set, in order to prevent the recurrence of crisis. the three elements of the policy - set are : one, monetary policy centered on an active use of short - term interest rates ; two, an intermediation system built on banks and other deposit - type institutions with significantly leveraged balance sheets and three, asset markets characterised with open entry and free trading. prof. friedman articulated that if these policy mix sow the seeds of the crisis, there is a need to change the policy mix. bis central bankers β speeches professor eswar prasad argued that central banks need not be constrained by the orthodox one instrument one target framework but need to explicitly address the financial stability concerns. he argued that under more realistic conditions of imperfect markets and credit constrained consumers, flexible headline inflation targeting could be the optimal monetary policy framework. in the indian context, mr. deepak mohanty provided evidence that policy rate increases have a negative effect on output growth with a lag of two quarters and a moderating impact on inflation with a lag of three quarters and the overall impact on inflation persists through 8 β 10 quarters. summarising the first session, mr. h r khan, deputy governor emphasized that the orthodoxy that central banks should restrict themselves just to setting interest rates and not regulate or supervise financial markets has come under question since the financial crisis. dr. subir gokarn, deputy governor highlighted three important messages from the session : one, monetary policy framework should not be locked into single target, two, more flexibility in defining objectives and instruments is necessary, three, boundary conditions for policy environment keep changing, but transmission within the boundary conditions is what a central bank could aim at. the second session was devoted to the theme, β impact of crisis on sovereign debt : implications for macro - economy and inter - linkages with other policies β. in this session, frank smets suggested that large scale asset purchase programs can lower long term interest rates. but there is a risk that the central bank could lose its hard earned credibility | 1 |
securities transfer act. the efficiency of our financial markets would be improved if provincial and territorial governments would proceed with legislation to replace the current patchwork of legal rules in this area and to provide a sounder legal basis for the holding and transfer of rights in securities that are held in book - entry form. this is just one example of encouraging initiatives that are under way. at the bank of canada, we will continue to contribute to these efforts by conducting research and promoting discussion on ways to improve the functioning of our financial institutions and markets and to enhance the safety and soundness of canada's financial system. we share this research with regulators, market participants, and the public. our financial system review, published twice a year, is part of that effort. conclusion let me now conclude. as i noted at the beginning, there are powerful global economic forces at work, and economies everywhere need to adjust. businesses in ottawa, and in the rest of canada, are making adjustments to meet these challenges and to take advantage of emerging opportunities. at the bank of canada, we will continue to monitor these global forces closely and to assess their impact. we will continue to conduct monetary policy with the aim of keeping inflation close to our target and the economy operating at its full potential. we will maintain our efforts to promote a safe and efficient financial system. and, as always, we will work to enhance the confidence of canadians in the value of their money and the stability of their economy. in this way, we will do our part to facilitate the adjustments that the canadian economy is making to changes in the global economy. | saskatchewan β oil prices and food. if you look closely, you will notice that both of the real - price series are relatively stable, unlike the nominal - price series, which have risen sharply over the past 40 years, reflecting the effects of generalized price inflation. the long - run price stability of most commodities, subject to subtle differences in trend, should not come as a surprise. given sufficient time, consumers and producers adjust to changing market conditions. persistent price increases encourage consumers to economize on the use of more expensive commodities and move to alternative goods. at the same time, producers find it profitable to tap new and often more expensive sources of supply, and to develop new technologies to assist them. investment and innovation also allow producers to bring new products to market, facilitating the process of economization and substitution. all of this takes considerable time, however. while the supply responses might be shorter in some sectors such as agriculture, for major energy projects the gestation period can be as long as 10 or 15 years. eventually, though, demand and supply adjust β in many cases taking prices back to where they started. this is what economists often refer to as β mean reversion. β what about the significant price increases we β ve seen since 2002? although mean reversion is frequently observed in the very long run, commodity prices can also experience large and persistent swings over 5 -, 10 - and even 20 - year periods. price increases are usually followed by price declines, and vice versa, but the timing of these reversals is highly uncertain. 3 see d. coletti, β the long - run behaviour of key canadian non - energy commodity prices : 1900 β 91, β bank of canada review ( winter 1992 β 1993 : 47 β 56 ). for convenience and by convention, world commodity prices are usually quoted in u. s. dollars. this means that whenever the foreign exchange value of the u. s. dollar changes, commodity prices usually change too. estimates from the international monetary fund ( p. cashin, c. j. mcdermott and a. scott, β the myth of comoving commodity prices, β imf working paper, wp / 99 / 169, 1999 ) suggest that the average length of a slump in oil prices is about 50 months, while oil - price booms typically last just over 20 weeks. however, there is obviously a great deal of variance around these averages. bis central bankers β speeches the magnitude and timing of commodity price | 0.5 |
, 20 january 2022. 9. goldfayn - frank, o. and j. wohlfart ( 2020 ), expectation formation in a new environment : evidence from the german reunification, journal of monetary economics, vol. 115, pp. 301 - 320. 10. d β acunto, f., u. malmendier and m. weber, what do the data tell us about inflation expectations?, nber ( national bureau of economic research ) working papers, no. 29825, march 2022. 11. rogoff, k. s., the age of inflation, foreign affairs, november / december 2022. 12. schnabel, i., monetary policy and the great volatility, speech at the jackson hole economic policy symposium organised by the federal reserve bank of kansas city, 27 august 2022. 13. blinder, a. s. ( 2000 ), central bank credibility : why do we care? how do we build it?, american economic review, vol. 90 ( 5 ), pp. 1421 - 1431. | short, you are bringing with you the skills needed at the helm of the bundesbank. you are, without doubt, the right person to take on the challenges facing the president of the bundesbank. i wish you and the bundesbank all the very best! thank you very much for your attention. 1 weidmann, j., ansprache zur offiziellen einfuhrung in das amt des bundesbankprasidenten, speech of 2 may 2011. 2 weidmann, j., crises as a catalyst for change β lessons from the past, challenges for the future, speech delivered on 19 november 2021. 3 schlesinger, h., eine europaische wahrung muΓ genauso stabil sein wie die d - mark, handelsblatt, 31 december 1991. 4 issing, o., central banks β independent or almighty?, safe policy letter no 92, november 2021. 4 / 5 bis central bankers'speeches 5 barro, r. j., a matter of demeanor, wall street journal, 20 may 1994. 5 / 5 bis central bankers'speeches | 0.5 |
anselmo l s teng : recent economic and financial developments in macao opening speech by mr anselmo l s teng, chairman of the monetary authority of macao, at the annual meeting of the offshore group of banking supervisors, macao, 30 october 2007. * * * mr. powell, chairman of ogbs, dear delegates, distinguished guests, ladies and gentlemen, welcome to macao! on behalf of the special administrative region government, i wish to express our gratitude to members of the ogbs for choosing macao to be the venue to hold its annual meeting. apart from all the hard work that lies ahead, please spare some time to appreciate the excitement and nostalgia provided by this fascinating city. macao is no doubt in the lime light. after the lacklustre years before and in the wake of the new millennium, economy picked up in 2004 in which gdp jumped by 28. 4 % which was mainly attributed to the opening of our gaming right and the β individual traveller β scheme of the mainland. 2005 saw a consolidation of 6. 9 % growth. 2006 achieved flying colours again with a growth of 16. 6 %. in the first half of 2007, we achieved a gdp growth of 28. 9 %. the burgeoning tourism services industry, which is undergoing diversification, has been the locomotive of our thriving economy in the past years. the booming economy enables the banking sector to continue to burgeon. banks in macao made a total profit of mop3. 9 billion in 2006. a 21. 7 % growth in the first 6 months of 2007 was witnessed. both assets and deposits also grew by double digit while non - performing loan ratio stands at 0. 9 %. against such a backdrop, the current capital adequacy ratio of the whole sector is maintained at a high level of around 16 %, doubled the required 8 % benchmark set by the basle committee on banking supervision. the financial sector of macao contributes about 10 % to gdp. the sector is dominated by banks and insurance companies. at the moment, there are 27 banks operating in macao of which 3 are operating under offshore regime. apart from local participants, you will find capitals provided by investors from china, hong kong, portugal, the us, the uk, france, singapore and chinese taiwan. in fact, overseas capitals account for the majority in our banking sector. doubtless, from a global perspective, the financial sector of macao is highly internationalized. | insurance, by appointing the liquidator, who will direct the insurer in liquidation β kosova e re β and will ensure fair and equal treatment, always in accordance with applicable legal requirements, to all creditors. with the appointment of the liquidator, all responsibilities of the administrator, the board of directors and the management of the insurer in relation to its management cease. the liquidator will be available to review all claims, primarily policyholders as well as other creditors. the liquidator will report on a monthly basis to the cbk regarding the progress of fulfillment of obligations to creditors. at the same time the liquidator will notify in more detail all creditors and other stakeholders regarding the manner of communication and will provide phone contacts, email and location for submission of all requirements of policyholders and other creditors. 1 / 2 bis central bankers'speeches the central bank instructs all policyholders and other creditors to follow announcements in the coming days by the liquidator and the cbk regarding the instructions on processing the claims they have in relation to the insurer in liquidation β kosova e re ". on this occasion, i would like to express our high appreciation to the insurers operating in our market who have expressed their willingness to take over all active policies of the insurer β kosova e re β so that citizens do not need to repurchase the policies of insurance. the cbk, in accordance with the duties and responsibilities set forth in the law on the central bank and other relevant laws governing the activity of financial institutions, will continue its activities to ensure full compliance of the activity of financial institutions with the requirements set by applicable laws and regulations. maintaining the ability of financial institutions to meet financial obligations is of a great importance for maintaining financial stability in the country, which is the primary objective of the cbk. therefore, in order to maintain financial stability and protect users of financial services, the cbk remains committed to use all legal opportunities to ensure the smooth running of the financial system in the country, providing the country β s economy with a financial system in function of macroeconomic development and stability, as well as a system that provides security for all users of financial services. revocation of the license of the insurer β kosova e re β does not endanger the stability of the insurance sector in kosovo. kosovo β s financial system, since the beginning of its operation, has had a stable development and has served as an important source of macroeconomic stability in the | 0 |
view, therefore, japan β s economy is currently experiencing adjustments arising from positive structural changes. there is no need to be unduly pessimistic simply on account of the current low growth rates in wages and prices. rather, i personally find the current state of the economy to be very promising, since both demand and supply are improving in a balanced manner, and developments in wages and prices are steadily making progress toward increases. what is crucial in this situation is not to hinder these positive developments. to this end, i think that it is important that the bank continues to pursue powerful monetary easing under the current framework for monetary policy. at the same time, i hope to see continued progress in the various initiatives and efforts by the government and firms toward strengthening the economy β s growth potential, including structural reforms. 7 / 7 bis central bankers'speeches | as a result of swift and aggressive responses taken by the government and central bank in each country and region, tension in financial markets has abated somewhat. however, the markets have remained nervous due to a decline in liquidity. in addition, although japan's financial system has maintained stability on the whole, financial conditions have become less accommodative in terms of corporate financing, as seen in deterioration in firms'financial positions. ii. conduct of monetary policy next, i will explain the bank's conduct of monetary policy. the bank considers that the important thing in terms of monetary policy under the recent economic and financial situation is to support financing mainly of firms and maintain stability in financial markets. with this in mind, in march and april, it enhanced monetary easing. moreover, at the unscheduled monetary policy meeting held on may 22, the bank decided to introduce a new fund - provisioning measure to further support financing mainly of small and medium - sized firms. the bank has introduced and enhanced the following three measures since march : purchases of cp and corporate bonds, ( 2 ) the special funds - supplying operations to facilitate financing in response to the novel coronavirus ( covid - 19 ), and ( 3 ) the new fund - provisioning measure. through these three measures, which are referred to as the special program to support financing in response to the novel coronavirus ( covid - 19 ) with the total size of about 75 trillion yen, it will actively support financing mainly of firms while cooperating with the government. in addition, with a view to maintaining stability in financial markets, the bank has been providing ample yen and foreign currency funds without setting upper limits mainly through purchases of japanese government bonds ( jgbs ) and the conduct of the u. s. dollar funds - supplying operations, and has been actively purchasing assets such as exchange - traded funds ( etfs ). by conducting these measures, it will continue to contribute to supporting financing mainly of firms and maintaining stability in financial markets. the bank recognizes that powerful monetary easing measures will contribute to supporting economic and financial activities, coupled with various measures by the japanese government as well as those by the government and central bank of each country in response to the spread of covid - 19. on this basis, the bank will closely monitor the impact of covid - 19 for the time being and will not hesitate to take additional easing measures if necessary. thank you. | 0.5 |
host of not only the first ever conference on climate risks and supervision, but also the first ever conference of the central banks and supervisors network for greening the financial system. we hope and are convinced it won β t be the last. | core transaction details of all otc derivatives are kept and stored by trade repositories all using the same high - quality data model, the reporting burden will not just cease to grow ; it will even decrease, as the trdata may then serve various regulators. and we, as fsb, will be able to ascertain precisely which transactions have taken place, and how exactly they should be aggregated, which now can still be β a bit of problem β. we can only measure the size of a global market if we use a uniform measuring method everywhere, thus ruling out the risk of double - counting owing to a lack of unique numbering or overlapping product definitions. it being a foregone conclusion that further use of bad data quality will only add to the regulatory reporting burden, we must lose no time and join forces, not only to enhance the quality of the data used in the trade reporting, but also to ensure they are globally consistent. and that is why you are here today! this is where you come in! for uti is a critical data element in making the global otc derivatives markets transparent. for this reason it is vital that you, the regulators and private sector representatives gathered in this room, are going to pay particular attention today to the governance aspects of the uti. as you will no doubt be aware, work on the governance of the uti is already underway. last month, the fsb launched a consultation on proposed governance arrangements for the uti. later this year, similar proposals for the unique product identifier will be put out for consultation. but, welcome as this development may be, i would add that the proposed arrangements should be considered with great care. for, as probably no one knows better than you, the world of hedging and related derivatives is changing continuously. governance mechanisms must therefore be designed to ensure that the reporting framework can cope with those changes in order maintain a high data quality level. i hope that with this caveat in the back of your minds, you will collaborate successfully in today β s workshop. and that you will do so in the knowledge that the fruit of your efforts will be for the benefit of both the private and public sectors, both authorities and counterparties, if only by helping to reduce the reporting burden. as a member of the fsb, i would like to thank you in advance for your effort to make our work easier and β possibly β more effective! thank you. | 0.5 |
, financial stability report ( washington : board of governors, november ), https : / / www. federalreserve. gov / publications / 2020 - november - financial - stability - reportpurpose. htm. see the committee β s march 23, 2020, postmeeting statement ( quoted text in paragraph 2 ), which is available on the board β s website at https : / / www. federalreserve. gov / monetarypolicy / fomccalendars. htm. see lorie logan ( 2020 ), β treasury market liquidity and early lessons from the pandemic shock, β speech delivered at the brookings - chicago booth task force on financial stability ( tffs ) meeting, held via videoconference, october 23, https : / / fedinprint. org / item / fednsp / 88983. - 7been suggested to strengthen the resilience of the treasury market. for instance, further improvements in data collection and availability have been recommended to enhance transparency related to market participants, such as broker - dealers and hedge funds. some have suggested that the federal reserve could provide standing facilities to backstop repos in stress conditions, possibly creating a domestic standing facility or converting the temporary foreign and international monetary authorities ( fima ) repo facility to a standing facility. 9 other possible avenues to explore include the potential for wider access to platforms that promote forms of β all to all β trading less dependent on dealers and, relatedly, greater use of central clearing in treasury cash markets. 10 these measures involve complex tradeoffs and merit thoughtful analysis in advancing the important goal of ensuring treasury market resilience. offshore dollar funding markets the global dash for cash also led to severe stress in offshore dollar funding markets, where foreign exchange swap basis spreads increased sharply to levels last seen in the global financial crisis. foreign banking organizations serve as key conduits of dollar funding for foreign governments, central banks, businesses, nonbank financial institutions, and households. 11 see board of governors of the federal reserve system ( 2020 ), β federal reserve announces establishment of a temporary fima repo facility to help support the smooth functioning of financial markets, β press release, march 31, https : / / www. federalreserve. gov / newsevents / pressreleases / monetary20200331a. htm ; and board of governors of the federal reserve system ( 2019 ), β minutes of the federal | crisis. signs of acute stress were readily apparent in intermediaries and vehicles with structural funding risk, particularly in prime money market funds ( mmfs ). indeed, it appears these vulnerabilities had increased, as assets held in prime mmfs doubled in the three years preceding last march. when the covid shock hit, investors rapidly moved toward cash and the safest, most liquid financial instruments available to them. over the worst two weeks in mid - march, net redemptions at publicly offered institutional prime mmfs amounted to 30 percent of assets. this rush of outflows as a share of assets was faster than in the run in 2008, and it appears some features of the money funds may have contributed to the severity of the run. 2 the run in march forced mmfs to rapidly reduce their commercial paper holdings, which worsened stress in short - term funding markets. funding costs for borrowers shot up, and the availability of short - term credit at maturities beyond overnight plunged. these markets provide the short - term credit many businesses need to keep operating and meet payrolls. so when shortterm funding markets shut down, it can imperil many businesses, too. for the second time in 12 years, a run on mmfs triggered the need for policy intervention to mitigate the effect on financial conditions and the wider economy. to head off the risk of widespread business failures and layoffs, the federal reserve took a number of actions, including announcing the commercial paper funding facility on march 17 and the preliminary research by federal reserve staff has found that investor withdrawals accelerated as prime funds β liquidity levels fell close to the 30 percent weekly liquid assets threshold, where these funds can impose redemption fees or suspend redemptions temporarily. see lei li, yi li, marco macchiavelli, and xing ( alex ) zhou ( 2020 ), β liquidity restrictions, runs, and central bank interventions : evidence from money market funds, β working paper. - 3money market mutual fund liquidity facility on march 18, 2020. following the announcement of these facilities, prime mmf redemptions slowed almost immediately, and other measures of stress in short - term funding markets began to ease. the march 2020 turmoil highlights the need for reforms to reduce the risk of runs on prime money market funds that create stresses in short - term funding markets. the president β s working group on financial markets has outlined several potential reforms to address this risk, and the securities and exchange commission recently requested comment on | 1 |
flows to emerging economies. as regards the medium and long term, the nature and functioning of transactions differ from those for short - term transactions. the financial services provided by banks for longer - dated terms are, essentially, financing and the extension of guarantees and bonds needed to participate in international tender procedures. on many occasions these are syndicated operations, or operations performed by several banks from various countries. we should highlight here the role played by export credit companies. this activity is subject to the rules set under the oecd arrangement on officially supported export credits, or the oecd consensus, as it is usually called. the oecd consensus the oecd consensus, signed in 1976, has regulatory status in the european union and seeks to prevent financial facilities granted by a state to an exporter from distorting bis central bankers β speeches competition and giving an exporter an unfair advantage against competitors from other countries. the consensus also works on the assumption that official support is warranted only if there is a β market failing β that prevents the private sector from properly meeting its task as a financier. the consensus sets common rules for exports in the medium and long term, understanding as such terms over two years, and specifies that official support may take the form of either direct public financing of the export, or the underwriting by the public sector of the refund of the export financing granted by private institutions. in spain, cesce ( spanish export credit insurance agency ) pursues its activity on behalf the state, complementing that of the banking system. among its operations, what affords the greatest value added is the coverage of credit risk arising from a spanish export, of a relatively high amount, at a term of over two years, habitually financed by a bank. such coverage is the norm for exports towards countries with appreciable risk and in transactions which, frequently, have the sovereign guarantee of the importing country. cesce also provides underwriting on the state β s behalf for the political risks associated with exports ( the main such risk being default by the sovereign or by the institutions backed by the sovereign ), except in operations at less than two years in eu and oecd countries, where it is considered that there is a sufficiently developed private underwriting market ; it also extends guarantees and bonds for participating in international tender procedures and projects. from 1998 to 2007 there was a strong expansion in international banking activity in financing for spanish companies β international activity. banks took on a relevant | historical pattern. large spanish companies initially directed their foreign investment towards latin america, diversifying subsequently towards the european union. currently, these two areas account for 50 % and 30 %, respectively, of total spanish foreign direct investment in the rest of the world. direct investment flows into spain, after having been interrupted at the height of the euro area financial market tensions in 2012, are regaining their pre - crisis levels. the gains in competitiveness and the reforms undertaken have no doubt increased the attractiveness of our economy to investors. the headway made in the internationalisation of the economy against a particularly difficult background underscores the competitive capacity of part of the spanish productive system. however, despite progress in recent years, spain β s share in some potentially very dynamic markets is still low and faces major challenges, in a world of growing competitive pressures and the globalisation of production channels. nor should it be forgotten that our economy β s dependence on energy and capital goods imports and the high net payment of income to the rest of the world, as a result of high external indebtedness, are a permanent constraint as regards achieving the surpluses on current and capital account that are needed to deleverage our economy. institutions and financial policy for the internationalisation of spanish companies internationalisation calls for a series of financial services in which the banking industry plays a central role. these services can be grouped into two major categories : operations geared to mitigating the risk of transactions, namely guarantees and insurance ; and those geared to providing liquidity or financing to companies. on the data available, regarding the importance of banks in financing international trade, banks participate directly in approximately one - third of global trade. on one hand they offer financing, usually short - term in nature, which responds to the exporter β s or importer β s liquidity or working capital needs. they also offer coverage for risks through guarantees or insurance, ensuring the successful completion of transactions for the customer. moreover, the extension of coverage for credit risk facilitates β albeit indirectly β access to financing by reducing risk on the company β s balance sheet and, consequently, reducing the financial cost of the transaction. bis central bankers β speeches the remaining two - thirds of the financing of international trade are covered through intercompany credit, without the direct involvement of banks. nonetheless, these transactions might be indirectly backed by the banking sector, for instance through the discounting of bills that enables the company to obtain financing by using its customer trade receivables | 1 |
cpi inflation rate ( excluding fresh food ) turned positive in june for the first time in 14 months, accelerating to plus 0. 8 percent. the outlook for economic activity and prices has improved and stock prices have risen by more than 30 percent since the beginning of the year. while these should be factors that lead to increases in long - term interest rates, japan β s long - term interest rates have declined from about 0. 8 percent as of the beginning of the year to less than 0. 7 percent. these rates have declined since end - may, even in a situation of long - term interest rates in the united states and many other countries having substantially increased across the board. the break - even inflation rate and expected inflation rates judged from various surveys have been increasing. thus, the qqe has been exerting its intended effects and japan has been steadily moving toward overcoming deflation. concluding remarks the qqe is an unprecedented policy, in that it aims to increase inflation expectations in a situation where there is no room to further reduce nominal interest rates. while this is a daunting challenge, developments thus far have been encouraging. with the aim of achieving the 2 percent price stability target, the boj will continue with the qqe as long as it is necessary for maintaining that target in a stable manner. thank you for your attention. bis central bankers β speeches | haruhiko kuroda : quantitative and qualitative monetary easing remarks by mr haruhiko kuroda, governor of the bank of japan, at the international council meeting of the bretton woods committee, washington dc, 10 october 2013. * * * introduction it is my honor to take part in this wonderful meeting as a panelist today. when i first looked at the list of questions prepared by the committee to shape my remarks, i was stunned by the sheer number and scope of the questions. this points to the fact that we are surrounded by daunting challenges in this interconnected world, and it is our responsibility to sincerely meet those challenges. given the time constraints today, my focus will naturally be on monetary policy. the steering of policy has become increasingly difficult in recent times, and many of my fellow central bankers have found themselves in uncharted waters. since the outbreak of the lehman crisis, major central banks around the globe have introduced unconventional monetary policy measures, including asset purchases, amid the constraints of a zero lower bound for nominal interest rates. the bank of japan has also implemented unconventional monetary policy several times, since more than a decade ago, and has successfully accumulated ample experience. however, we have not been successful in overcoming deflation. to this end, in april, immediately after i became the governor of the boj, we introduced quantitative and qualitative monetary easing, dubbed the qqe. the qqe is markedly different from the policies the boj implemented in the past and from unconventional monetary policies other central banks have been carrying out. today, in the time allotted to me, i would like to explain the uniqueness of the qqe. challenges and economic situation japan β s economy has been mired in deflation for the past 15 years. in the meantime, people β s inflation expectations declined and the recognition that prices will not increase β namely, deflationary expectations β became entrenched. amid the situation of prices not increasing, the holding of cash or deposits became a better investment, and thus firms and households hoarded cash and did not make other productive investments. persistent deflation encouraged behavior to stay status quo, and this deprived japan β s economy of vitality. there were phases of economic recovery in the meantime, but they did not lead to a sustainable increase in prices. the phillips curve, which shows the relationship between the output gap and inflation, shifted downward in tandem with a decline in inflation expectations. the average inflation rate | 1 |
to the resident private sector continued to fall in 2015, albeit at more moderate rates than in 2014, both for households and for non - financial corporations. for the latter the fall in credit progressively eased, with the rate of decline for smes ( - 2. 8 % ) appreciably lower than that for credit to large corporations ( - 6. 4 % ). non - performing loans continued to decline in 2015, falling by more than β¬37 billion ( against the fall of β¬24 billion in 2014 ). at end - 2015 the proportion of npls on spanish banks β balance sheets was 22 % down on the previous year. this trend has been seen both in credit to non - financial corporations and in that to households. profitability is unquestionably a fundamental challenge facing european and spanish banks. in 2015, consolidated income at the global level for the sector as a whole was close to β¬14 billion, almost 13 % down on the previous year ; and the return on equity fell from 6. 9 % in bis central bankers β speeches 2014 to 5. 6 % in 2015. in terms of domestic business, profitability was worse than for consolidated activity at the global level, with the roe in 2015 standing at 4. 4 % ( against 5 % in 2014 ). the main factor bearing down on the sector β s profitability may be said to be the environment of very low interest rates, and this environment might be expected to hold as long as inflation expectations justify the highly expansionary monetary policy stance in the euro area. the spread between the return on assets and liabilities in domestic business is at levels very close to all - time lows. also, there is little room for further downward movement as regards the cost of funds ; accordingly, if asset - side rates continue falling, net interest income may continue declining. but we should mention another two factors bearing down on profitability. on one hand, a stilllow level of banking activity ( as credit continues to fall ). on the other, the significant volume of non - productive assets ( non - performing and foreclosed ) still on bank balance sheets, although it is true that non - performing assets are declining notably, which translates into fewer provisions and an improvement, therefore, in results. against this backdrop, efforts to cut costs and bring about efficiency gains are of particular importance. lastly, it should be stressed in connection with banks β solvency that the maximum - quality capital ratio, namely cet1, has increased | euro area annual inflation is expected to rise to 10 % in september. this means that average inflation during the third quarter stood at 9. 3 %, a figure somewhat higher than anticipated in the ecb's last forecast exercise ( 9. 1 % ). 3 more importantly, euro area inflation is expected to remain above 9 % during the fourth quarter. the rise in energy and food prices is the main factor behind the high levels of inflation in the region. the depreciation of the euro has also contributed to upward price pressures, particularly by increasing the price of commodity imports. specifically, according to the flash estimate, the price increases over the past year in the energy and food components of the consumer price index stood at 37 % and 11 %, respectively, in september. these two components account for almost 70 % of the increase in consumer prices in the euro area over the past year. nonetheless, inflationary pressures are also spreading to the less volatile components of the consumer basket. underlying inflation, which excludes food and energy consumer prices, is expected to hit 4. 8 % in september. this is more than double the figure recorded at the beginning of the year ( 2. 3 % in january ). in this case, certain pandemic - related factors may have facilitated a faster than expected pass - through of inflationary pressures. first, the bottlenecks i referred to earlier, which since 2021 have constrained the supply response to growth in demand. but also the strong demand for home renovation or, more recently, the rapid pace of resumption of activities involving more social contact, after two years of demand constraints. 4 moreover, the labour market has so far performed relatively robustly in europe, an issue i will come back to later. in this context, and in view of the escalation of the energy conflict with russia, we expect the inflationary episode in the euro area to be more intense and longer - lasting than we initially thought before the summer. this is reflected in the latest ecb staff forecasts, which, https : / / ec. europa. eu / eurostat / documents / 2995521 / 14698140 / 2 - 30092022 - ap - en. pdf / 727d4958 - dd57 - de9f - 996599562e1286bf these projections were published on 8 september, with a data cut - off date of 22 august. pacce, del rio and sanchez ( 2022 | 0.5 |
emmanuel tumusiime - mutebile : achieving middle income status by 2017 β prospects and challenges remarks by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the first economic dialogue on the vision 2040, kampala, 26 august 2013. * 1. * * need for a realistic time scale the world bank defines middle income countries in terms of gross national income ( gni ) per capita, with a lower bound of $ 1, 036 for lower middle income countries. uganda β s gni per capita was $ 510 in 2011. to attain the minimum threshold of $ 1, 036 for lower middle income status, uganda must double its gni per capita in real terms. with real gdp growth of 7 percent and population growth of 3. 2 percent, per capita incomes will grow at 3. 7 percent per year. at this rate of per capita income growth, it will take 19 years for uganda to double its real income per capita. it is, therefore, clearly not possible for uganda to double its real income by 2017. a more realistic target would be to reach middle income status by the early 2030s. to achieve middle income status, government needs to adopt a long term approach to economy strategy, focusing on the policies which can generate sustainable high rates of growth for the next 20 years. uganda has established a good track record of macroeconomic management over the last two decades. it is imperative that macroeconomic stability is maintained over the long term, which means that demands for public spending must be accommodated within the available budget resource envelope so that public debt remains sustainable and does not crowd out private sector borrowing from the banking system. but macroeconomic stability is a necessary but not sufficient condition for sustainable growth over the long term. it must be combined with structural reforms which strengthen the supply side of the economy, enabling the economy to generate growth in productivity. there are three crucial areas pertinent to the supply side of the economy where uganda needs to do much better if it is to achieve middle income status and transform the structure of its economy. these are : i ) the modernization of agriculture ; ii ) accelerate the demographic transition and iii ) raise private sector investment rates. 2. modernisation of agriculture there are very few developing economies, other than city states, which have successfully transformed their economies and reached middle income status without modernizing their agriculture. agricultural modernization is a prerequisite for industrialization, for three reasons ; i ) to generate agricultural surplus | part in reshaping the global thinking on this front. the effects of the global financial crisis on markets are indeed still fresh in our minds. 1 / 4 bis central bankers'speeches history β and a too late array of empirical evidence and research β has shown how the lack of awareness on the part of consumers in advanced economies drove them to make flawed decisions on the subprime mortgages and synthetic instruments used for trading. the drive for higher returns, coupled with a lack of visibility on the risk side, prompted many people to invest in these securities. these events eventually highlighted the critical importance of financial literacy, prompting its inclusion as a matter of priority on the agenda of policy makers globally. in september 2009, at the g - 20 leaders β summit in pittsburgh, a pledge was made, i quote, t β o support the safe and sound spread of new modes of financial service delivery capable of reaching the poor β. unquote. the pledge also called on financial standard - setters to promote successful regulatory and policy approaches and elaborate standards on financial access. a year later in seoul, the g - 20 committed to the launch of the global partnership for financial inclusion and developed a financial inclusion action plan. at the level of the united nations, financial inclusion is positioned as an enabler of other developmental goals in the 2030 sustainable development goals, where it is featured as a target in eight of the seventeen goals. ladies and gentlemen, poor financial decisions are often not only the result of financial recklessness, but also of bad planning, and lack of information. the implications of these shortcomings can easily spiral beyond control. undeniably, in today β s world, many of these decisions originate from β or are based upon β the increasing use of technology. add to that the consequences of β buy now pay later β targeted campaigns which can unfortunately fuel poor spending habits and ballooning debts. we are all aware that trust is the cornerstone for the effective functioning and stability of the financial system. as the system evolves and becomes more complex, access to financial services also becomes easier. what this implies is that there needs to be an appropriate level of financial education to enable customers to make informed decisions about the suitability of financial products to their specific situation. concurrently, a robust financial consumer protection framework must be in place to shield consumers from abuse and make them become judicious users of financial products and services. this is precisely the rationale behind the elaboration of our 2022 financial literacy strategy | 0 |
are no longer in place. in any case, we can withdraw the ample liquidity created as a side effect of the long - term operation whenever the governing council deems liquidity conditions are excessive in view of the outlook for price stability. all the tools necessary for large - scale liquidity withdrawal are already in place or will be readily available when needed. this is consistent with our monetary policy strategy. it emphasises the monitoring of monetary and credit developments, which are linked to both financial imbalances and threats to price stability over longer horizons. it ensures a more symmetric policy with respect to bis central bankers β speeches financial misalignments and some β leaning against the wind β if monetary trends signal inflationary pressures over and beyond what standard conjunctural analysis and macroeconomic projects imply. 4 conclusion in conclusion, i return to where i started : the transmission mechanism and how a stabilityoriented strategy can influence its multiple paths ( see slide 24 ). the most important link in the long chain is the monetary policy strategy. clarity about the objective and about the key indicators can anchor expectations and empower monetary policy decisions. as you know, adjustments to expectations can amplify any action taken by a credible central bank. our strategy has supported this mechanism in normal times. in crisis times, as markets ceased to transmit price signals, our tools had to change. the eurosystem β s response has been timely ; all non - standard measures have been temporary and tailored to the special features of the euro area. our tools have changed but our strategy has not β it is in fact supporting a gradual process of normalisation. the euro area is an economic and monetary union ( emu ). its monetary pillar has performed well so far and will continue its work in the future. the economic pillar is now being considerably strengthened. the new fiscal framework should now be promptly ratified and forcefully implemented under the leadership of the european commission ; as a complement, growth initiatives will be welcome, insofar as they address the long - term growth potential. see fahr, s., r. motto, m. rostagno, f. smets and o. tristani ( 2011 ) β lessons for monetary policy strategies from the recent past β in β approaches to monetary policy revisited β lessons from the crisis β, ed. m. jarocinski, f. smets and c. thimann, pp. 26 β 67, european central bank. bis central bankers β speeches bis central bankers β | must focus on containing persistent trends in inflation. distinguishing between temporary and more persistent shocks to inflation is therefore crucial. experience has shown that paying attention to specific measures of β core inflation β may mislead monetary policy. an overly mechanical view of such indicators can lead to an underestimation of the strength of inflationary pressures at the global level. third, policy decisions should have been based on better models of monetary policy transmission. monetary and financial factors have been too easily dismissed, especially by inflation targeting regimes. placing greater weight on monetary and credit indicators should allow interest rate decisions to be better calibrated to achieve the appropriate medium - term objectives of monetary policy. can central banks learn from experience? they can if they are able to recognise what went wrong, rather than sweeping the hard questions under the carpet, and if they are able to adapt their analytical and decision - making framework. suggesting that monetary policy had nothing to do with the crisis will not help, and might encourage us to make the same mistakes in the future. the reaction to the crisis has however shown that central banks learn fast and can take decisive action to protect the economy. their response is in stark contrast to how they reacted to the great depression. on that occasion, monetary policy - makers were largely responsible for causing the crisis, for deepening it and for preventing a quick recovery. we can be more optimistic this time around. | 0.5 |
area as a whole from 2012, or for the larger member countries. this is particularly surprising because forecasters did take into account the fall in economic activity in most euro area countries after 2011, which generated significant gaps between actual and potential output. the ecb has not been alone in over - predicting euro area inflation. the imf, ecb survey of professional forecasters ( spf ), consensus economics, euro zone barometer, oecd and european commission have also systematically overpredicted both headline and core inflation at all horizons, especially since the second quarter of 2012. bis central bankers β speeches figure 3 however, as policy makers we need more than just good inflation forecasts : we also need to understand the inflation process in order to better assess the role of monetary policy. we also need to be able to explain our reasoning to the public, as the management of expectations has become such an important monetary policy instrument. this is one more reason for continuing to use the phillips curve as a tool to discuss inflation dynamics. the current attention to the relationship between inflation and economic slack has led to an intense debate on the stability of the phillips curve and its power to explain the twin puzzle. empirical research, especially in the united states, shows that the slope of the phillips curve has varied over time, with a clear tendency to flatten over the years. for the euro area, the evidence from several recent papers points to a steepening in recent years ( see e. g. oinonen and paloviita ( 2014 ), riggi and venditti ( 2015 ) and foroni and porqueddu ( 2015 ) ). this development is especially marked in those countries which experienced deeper and longer recessions and made greater efforts to reform their product and labour markets, with an impact on nominal rigidities ( see, for italy, riggi and santoro ( 2015 ) and, to a lesser extent, for spain, banco de espana ( 2013 and 2015 ). when analysing the excessive disinflation in the euro area since 2012, natural questions arise as to whether we are facing a new regime of low inflation ( e. g. due to demographics, integration of low - cost countries in global trade, less powerful trade unions, dominance of a service economy ), and whether the phillips curve ( and β which β phillips curve ) is still an appropriate framework of analysis. a number of technical issues pertaining to the phillips curve have not yet been settled in the literature. | is a source of vulnerability for europe's banking sector. if the banking union had been complete, the recent contagion from the united states and switzerland to the eu financial system would have been far more muted. the lack of a complete banking union is still a very wide gap in the eu's institutional framework. thank you for your attention. 4 / 4 bis - central bankers'speeches | 0.5 |
under certain conditions. more generally, maintaining our high stock of assets until the third step of our sequence gives us through our reinvestments more leeway on the markets. conclusion as of 2006, olivier blanchard said : β monetary policy can pretend to be close to science if it can be conducted using simple and robust rules [ β¦ ] monetary policy must be closer to art if it is frequently confronted to new, poorly anticipated and poorly understood, contingencies. β this mix of science and art is something i like in monetary policy. therefore, i have cherished our discussions in the governing council, for my past seven years as governor : if it wasn β t for discussion, why should we have meetings? but as i suggested in my remarks today, you can trust us around president christine lagarde to make pragmatically the right decisions in the right order and timing, in order to reach our course : bringing inflation back firmly and durably to around our 2 % target. i thank you for your attention. 5 / 5 bis central bankers'speeches | pace instead of a quarterly one, and app purchases could therefore end in q3, at some point to be discussed. in parallel, another way to enhance optionality could be to remove the word β shortly β from the forward guidance on asset purchases. this would be a possibility to break the quasi automatic temporal link between the two instruments whilst retaining the sequencing. optionality would mean that the lift - off could possibly take more time, if warranted. this temporal decoupling could give more scope for fine - tuning, which is an advantage in uncertain times. rather than forcing ourselves to act on both instruments almost simultaneously ( which could fuel fears of an excessively brutal effect ), we could give ourselves more time and consider the latest inflation outlook before deciding about the calendar of rate hikes : a decision that anyway we don β t need to make before our june meeting. any speculation about this calendar of future lift - off is at this stage premature. the forward guidance on interest rates let me stress here an important semantic point about our monetary stance : the steps i am discussing here are about the normalization of our monetary policy, not about tightening. it β s still the exit from exceptional instruments and an extremely accommodative monetary policy ( increase of the already large assets stock, negative interest rates ). it β s the first phase of a gradual return towards a more neutral stance, which we are still far from. tightening would be another story, going beyond a neutral stance, which is not within our present policy horizon. let me then remind you of the three state - dependent criteria on our forward guidance : β the governing council sees ( i ) inflation reaching 2 per cent well ahead of the end of its projection horizon ; ( ii ) and durably for the rest of the projection horizon ; and ( iii ) it judges that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at two per cent over the medium term β. today, in my personal judgement, it might be considered that the first criteria ( with a headline inflation significantly above 2 % since summer last year and expected to remain there for months ahead ), and the third one ( with underlying inflation around or above 2 % by most definitions ) are fulfilled. at this stage, according to our december forecasts, the remaining one ( about inflation remaining at or above 2 % for the rest of the projection horizon ) is not met. this could possibly change in the next quarters. however, we should | 1 |
several countries undertook trade - defensive measures, in particular imposing discriminatory anti - dumping duties specifically targeted against low - cost exporters, such as china. in a number of cases, developing countries have also introduced new tariff and non - tariff barriers ; advanced countries have instead often turned to measures in support of the domestic sector ( such as the bail - out of specific domestic industries or economic stimulus packages incorporating discriminatory clauses ), with potential indirect anti - trade effects. more importantly, lack of effective political support has continued to delay the conclusion of the wto doha round. protectionism remains the wrong answer, all the more at the present juncture. trade is a powerful engine of growth. it helps break down local monopolies, reduce prices to the benefit of consumers and firms. international competition favours productivity improvements through the reallocation of resources from less to more efficient firms and by spurring firms to innovate. this takes us to the second keyword of the efige project : competitiveness. in a monetary union the lack of competitiveness causes stagnation, unemployment, and, in the long run, budgetary strains. the new european strategy, β eu2020 β, sees in competition, human capital, innovation and r & d the crucial growth - enhancing factors. these factors also interact with firm productivity and size to determine a firm β s success on international markets. in the manufacturing sectors more severely hit by the crisis, the most resilient firms have been those that have been capable of shifting their sales to the most dynamic emerging markets, and those with a high degree of market power warranted by their ability to innovate and satisfy their customers β needs. the efige project has a third important facet which is worth mentioning : its european perspective. in europe, common cultural and historical roots, common goals and policy frameworks live together with a pervasive national heterogeneity. the diversity ranges from institutional architectures to political decision - making, to economic agents β choices and patterns of behaviour. for analysts, this is a resource : they can compare countries and firms located in different countries to isolate the relevant differences, to learn from such differences, to identify the best practices. for policy makers it is a difficult challenge. we must reinforce the construction of europe : the difficult times some european countries have had this year in coping with competitiveness and fiscal crises prove that beyond any doubt. we definitely need a stricter and more coordinated | it is next to impossible to make predictions. consumer inflation, pushed by its more volatile components, reached 9. 5 per cent yearon - year in september, a figure not seen in more than three decades. the general index mainly reflects the direct and indirect effects of energy prices, as well as the increase of food prices. energy prices kept increasing, by 45 per cent year - on - year. even core inflation, however, reached 4. 4 per cent, owing to the acceleration of both services and non - energy industrial goods. 1 / 4 bis - central bankers'speeches inflation expectations for 2023 and beyond vary depending on sources and methods used to measure them, but have been on the increase. according to the september wave of consensus economics, inflation projections for italy in 2023 stood on average at around 4. 3 per cent, more than one point higher than the in previous month's estimates. our own inflation scenarios will be unveiled on 13 october, together with the growth scenarios. despite these developments, in august contractual wage growth was broadly stable, at 1. 0 per cent year - on - year in the non - agricultural private sector. looking ahead, forceful action to reduce inflation is essential to preserve the purchasing power of households and avoid'pointless wage - price spirals'1. price stability is the lodestar of central banks. central banks all over the world have started a normalisation of monetary policy. many governments in europe have adopted measures to mitigate the immediate impact of exceptionally high increases in energy prices on household and firm balance sheets. while it makes sense to smooth temporary peaks, it is important to remember that energy prices had to go up to achieve our stated long - term goal of climate transition ; the current turbulence makes that goal even more vital. relative price signals should, by and large, be preserved, also to help balance demand and supply in the current circumstances. better to concentrate the limited public - budget resources available on income relief for the most affected households, and on investment in renewables and energy efficiency. collectively, there is no escaping the'unavoidable tax'2 imposed on us by higher fossil fuel prices β except by reducing our dependence on fossil fuels. keeping prices low through debt - financed subsidies is illusory in the long run, and would shift the financial and environmental burden once again to the next generations, which will inherit from us a heavy enough burden anyway. financial developments since the end of july, there has been a marked deterioration in | 0.5 |
bimal jalan : indian banking and finance - managing new challenges speech by dr bimal jalan, governor of the reserve bank of india, at the banking economists'conference, kolkata, 14 january 2002. * * * introduction in my inaugural address last year, i had indicated a vision for indian banking in the new millennium β that of a vibrant, internationally active banking system, drawing upon its innate strengths and comparative advantages to make india a major banking centre of the world. i had pointed out then that, while it may take up to 10 or even 15 years to achieve this vision, the time to begin was now. recent developments have only served to bring forward the urgency attached to embarking upon this quest. even as we do so, it is necessary to recognise that, in view of recent global developments and the economic slowdown, the progress towards this goal would call for even greater effort and determination. in this context, the theme chosen for this year β s conference i. e., β indian banking : paradigm shift β is most timely as it provides an opportunity to deliberate on the new challenges ahead, and the action that we must take to manage them. i am happy to be a part of these deliberations and rd to deliver the inaugural address to the 23 conference of bank economists here today. as you are aware, global economic prospects turned sharply adverse since september 2001 following the terrorist attacks on the us. the possibilities of a recovery in the global economy have become highly uncertain, belying the initial expectations of a v - shaped recovery as well as the subsequent hopes of a u - shaped recovery. as of now, the consensus of forecasts settles around 2. 4 per cent for world gdp growth for 2001. world trade volume growth could slow down to around 1. 3 per cent and net capital outflows from developing countries may now be larger than anticipated earlier. although the sharp spurt in international oil prices has abated, their future behaviour remains unclear. macroeconomic weaknesses have also been associated with an erosion of business confidence. insurance, airlines, tourism and hotel industries have been hit hard and the exposure of financial institutions to these industries can be a potential source of vulnerability. despite the relatively inward - looking nature of the indian economy, it cannot remain insulated from these international developments. the direct effects of these external developments on our banking system are expected to be limited. indirect effects, especially through exports and subdued industrial activity could, however, impact upon the asset quality of our banking system and | than in the preceding year. foreign exchange reserves rose to us $ 48. 0 billion as on december 28, 2001 recording an accretion of the order of the us $ 5. 8 billion over the end - march 2001 level. in the context of the recent deceleration in the economy the intermediation role assumes even greater relevance. banks and financial institutions should endeavour to play a β supply - leading β rather than β demand - following β role in initiating the upturn by energising the financial intermediation process. by virtue of a bird β s eye view of the economy and their superior credit assessment of the investment proposals and the efficiency of capital, banks should endeavour to economise on β search β costs in identifying and nurturing growth impulses in the commodity and service producing sectors of the economy. in the recent period, monetary policy in india has also moved into a counter - cyclical stance signalled by cuts in key interest rates and cash reserve requirements. at the same time, market operations have ensured adequate liquidity to support the revival of aggregate demand with a clear preference for softening of interest rates within the overall institutional constraints on the interest rate regime. inflation has been steadily falling and this has had a positive impact on inflation expectations, along with the underlying resilience of the macroeconomic fundamentals of the indian economy. the 50 basis point reduction in the bank rate and the 200 basis point reduction in the crr, announced recently, are expected to significantly enhance the lendable resources of the banking system. the current situation of comfortable liquidity provides an opportunity for banks to transform idle liquidity into investible resources for growth. the easy interest rate environment would make it possible for banks to β price in β projects which would have earlier remained unfunded due to inherently lower returns to capital or due to lack of access to prime lending rates. this will, however, require reassessment of portfolios and internal liquidity constraints, even adjustments in risk profiles and risk management. the deceleration in the industrial growth scenario, of course, opens up the moral hazard of adverse selection and the possibilities of large - scale contamination of portfolios. in a situation of generalised slowdown, unviable projects can look potentially bankable given the scarcity of investment avenues. nevertheless, the possibilities for financial intermediation in the current situation are too varied and challenging to ignore. there is no systematic evidence that financial sector reforms by themselves and without supportive policies in | 1 |
. nor have any serious imbalances arisen. so thus far there is reason to be positive about the economic situation ; most leading indicators point to an economic recovery, with an upturn in activity during 2002. there is, however, the problem that inflation has for a time been clearly above the riksbank β s 2 per cent target. to a certain extent the comparatively high inflation can be explained by various supply shocks that have raised the prices of electricity, meat, fruit and vegetables, for instance. the background to these shocks includes the previous winter β s low precipitation for hydroelectric power, livestock diseases and poor harvests due to last autumn β s unusually cold weather in europe. as i said, shocks of this type can raise the general price level and lead, as in these cases, to a transitory increase in the rate of inflation. but even if one disregards these price increases, inflation has risen. as we discussed in a number of inflation reports last year, this probably has a number of interacting explanations. one is that resource utilisation in the swedish economy has probably been somewhat higher than envisaged earlier. this in turn no doubt explains why wage increases, particularly in domestic sectors, have been higher than expected. as this has been accompanied by weak productivity growth, mainly it seems for cyclical reasons, it has led to upward pressure on prices. a general contraction of profit shares in the economy as a whole has presumably helped to modify price increases in recent years. but this has also left firms with less room to β absorb β further additions to costs and weak underlying productivity growth. all this naturally raises questions about potential growth resource utilisation, inflationary pressure, competition in various markets and the workings of the economy. resource utilisation higher than expected ever since inflation expectations closed onto the target some time after the mid 1990s, a very important consideration for inflation forecasts and thereby for the formation of monetary policy has been resource utilisation. this indicator concerns the relationship between actual demand and what the economy is capable of producing in the longer run without price and wage increases accelerating. let me point out first that neither the potential growth rate, resource utilisation nor the inflation propensity in a wide sense is something that can be measured directly. for some years now the riksbank has been drawing attention to questions of this type, analysing them and presenting detailed accounts in the inflation report. although we have mainly referred to various supply shocks as explanations for inflation β | solely transitory have already left their mark on monetary policy. that was the case not least last summer, when we raised the repo rate because of concern that the weak exchange rate combined with comparatively high resource utilisation might lead to the higher inflation becoming entrenched. in september we, like other central banks, cut the interest rate 0. 5 percentage points ; later in the autumn, however, we were more cautious about lowering the instrumental rate than, for example, the european central bank. since last may, the risk of higher domestic inflation has been weighted into our decisions. whereas the swedish repo rate at the beginning of last year was lower than its counterparts in the euro area and the united states, it is now higher. looking ahead, we have as usual not committed ourselves. what we do or refrain from doing with the repo rate will depend on the new information that becomes available and on how we assess and analyse it. what happened last year is a good illustration of the appropriateness of this approach. neither positive nor negative surprises can be ruled out. we have to be ready to cope with that. that said, we have inflation that is relatively high, even though we count on it becoming a good deal lower in the coming six months. resource utilisation is probably relatively high, too. the path of the interest rate will then depend β as long as inflation expectations remain in place β on how economic activity develops. if activity continues to strengthen as expected and there is no reason to reappraise the economy β s inflation propensity, it is reasonable to assume that the repo rate in sweden will be adjusted successively upwards. this does not come as a surprise to participants in financial markets. it is a natural consequence of the riksbank being in earnest about its task of ensuring a rate of price and wage increases that is in line with the inflation target in a situation where economic activity in sweden is become gradually stronger. here i am prompted to refer to what knut wicksell, the well - known political economist, pointed out in his day ; it is a matter of looking for the β natural β rate of interest at which the economy can expand without prices and wages rising too quickly. | 1 |
ex ante safeguards consisting of a sound, robust and resilient non - bank financial intermediation system. 19. this issue is particularly relevant at a time like this, when central banks are moving away from the ultra - accommodative monetary policies of the recent past, as the british gilt episode clearly shows. regardless of the fiscal policy issues that triggered it, the episode stems from a structural mismatch between the maturities of the assets and those of the liabilities of local pension funds. in order to avoid its destabilising potential, the bank of england was forced to act in a way that made the implementation of its monetary policy exit strategy more complicated. easing such trade - offs would help make the simultaneous pursuit of monetary and financial stability more effective. banks 20. the banking system is also affected by the normalisation of monetary policy. 21. the impact of the new stance will be visible firstly β and to some extent it already is β on net interest income. long hindered by low interest rates and a flat yield curve, traditional banking is making a comeback as a significant contributor to profitability. in the first six months of this year, when policy rates had not yet been changed but tightening expectations were already being incorporated, at least in part, into market rates, italian banks'net interest income rose by 9 per cent compared with the same period a year earlier. the increase in policy rates and in the slope of the yield curve will lead to further net interest income growth, at least in the short run. 22. this positive effect is likely to fade as rate hikes feed into interest expenses as well. some 20 per cent of total bank bonds outstanding will mature in the coming year. these securities have already seen their secondary market yields rise substantially since the beginning of this year, in line with money market yields. furthermore, bond funding is set to increase in compliance with mrel requirements and to replace, at least in part, tltro iii refinancing operations. 23. however, the effect of this on net interest income is expected to be positive overall. our estimates, which incorporate the bank of italy's most recent macroeconomic projections, suggest that net interest income could rise on average by around one fifth per year over 2022 - 24. 24. secondly, the increase in interest rates has a negative impact on the valuations of securities held for trading. this will weigh on the income statement, in terms of profit or loss | , some have become state - owned via rescue programme. their systemic importance has risen further along with their market power, and regulation must rise up to the challenge. the interdependence of the financial sustainability of these financial giants and sovereign risks have become increasingly linked, while perception of state guaranty of such institutions may distort local or even global markets, creating un - level playing - field. the demand for accountability for public bail - out money puts pressure on managing such banks, which have now become β public institutions β. thus, the intervening authorities face a strong risk of having to micro - manage the institutions, and with this the associated risks, not least reputational and legal. timely exit is important for the reason cited. exit policy however could also be complicated, for example if recovery value of bailed - out fund is under pressure from weak market conditions. most importantly, it is important to observe that, the precedence set by the actions regulators took in such intervention could have a long - term implication. we may very well be setting a new expectation, standard and text - book for bank resolution, and it may not be the standard we want to set going forward. moral hazard and time inconsistency are always difficult subjects. for financial institutions in the seanza region, many regional financial institutions, thus far unaffected directly by the crisis, are also moving into new markets, such as expanding regionally. indeed, there is some indication of search for yield, as managed funds start to flow overseas to markets which have attractive risk - return prospects, for example due to prospect of faster recovery, or due to some distortion created from implicit risk - guaranty on certain asset classes as a consequence of rescue package. in some countries, certain asset classes such as real estate may be benefiting from ample liquidity, giving rise to concern on asset bubble. all these spell potential for increased volatility and demand increased vigilance on management of risks, not only for those arising from country risk and market risk exposures, but also to exposures from counterparty and liquidity risks arising, for example, from hedging positions in otc markets. some of these risks, such as country risk, may have hitherto been marginal for regulators in emerging markets, but going forward things may change quickly. moreover, with credit - play still a very risky and expensive business, with lending subdued by low demand for loans, treasury return could be a potential profit centre, especially | 0 |
william c dudley : unconventional monetary policies and central bank independence remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the bank of mexico international conference β central bank independence β progress and challenges β, mexico city, 15 october 2013. * * * it is a pleasure to be here today. does the implementation of unconventional monetary policies pose a threat to central bank independence? my short answer, which i will elaborate on, is that while the threat is low, central bankers need to be cognizant of such risks, and clearly explain the motivations for their actions in order to mitigate such risks. the best way for central banks to maintain their independence is to use all their available monetary policy tools to best achieve their objectives. because the use of our unconventional monetary policy tools has been in pursuit of our dual mandate objectives of maximum sustainable employment in the context of price stability, i do not see the use of these tools as creating significant new risks to our independence. as always, what i have to say today reflects my own views and not necessarily those of the federal open market committee or the federal reserve system. to start, it is important to be clear on what we mean by unconventional monetary policies. in my remarks, i am going to focus only on the set of unconventional monetary policies that are relevant today in an environment in which central banks are constrained from lowering their policy rate any further due to the zero lower bound. i will not discuss the type of extraordinary interventions that occurred at the height of the financial crisis. 1 a starting point is that the independence of the central bank with respect to its budget supports its overall independence. the federal reserve β s traditional monetary policy framework has helped to assure this budgetary independence. the liability side of our balance sheet consisted primarily of currency and reserve balances on which we did not pay any interest. the asset side consisted primarily of treasury securities. there was no meaningful credit risk and the interest rate risk was limited because assets were generally held to maturity. this, combined with the zero cost of the fed β s liabilities, resulted in the federal reserve turning over a large amount of earnings to the treasury each year after covering all of its operating costs and retaining a small portion of its earnings to maintain a level of surplus capital equal to the amount of capital paid - in by member banks. thus, one key question is how this budgetary independence might be threatened through the use of unconventional monetary policies. after all, some | market or the distance between a foreclosed home and other surrounding homes. 4 moreover, neighborhoods that have significant concentrations of vacant dan immergluck and geoff smith ( june 2005 ), " there goes the neighborhood : the effect of single - family mortgage foreclosures on property values, " woodstock institute ; william c. apgar and mark duda, properties are not attractive to potential buyers, further challenging community - stabilization efforts. vacant homes also drain the coffers of municipalities, who must secure the homes from crime, keep them clear of trash, or in extreme cases, demolish them in order to maintain stability in the broader community. 5 for example, the chief of regional development for the city of cleveland estimates that the city will spend $ 65 million each year for five years to address costs related to abandoned properties. 6 not only are these costs high, they come at a time when tax revenues are generally decreasing because of declining home values. as state and local governments face diminished resources for dealing with vacant properties, many nonprofit organizations are likewise struggling with capacity issues. we have heard from many nonprofit community development organizations that foreclosures, and the impact on the neighborhoods affected by them, limit the organizations'ability to proactively engage in their previous development activities. as a member of the board of neighborworks america, i am keenly aware of the resources needed to deal with community stabilization in the wake of foreclosures. i am also aware of some promising examples of programs that neighborworks affiliates have developed to address problems associated with vacant and abandoned homes. in chicago, the neighborhood housing services redevelopment corporation, in cooperation with the city, has acquired hundreds of abandoned properties from several sources, such as hud, reo from financial institutions, and private owners. the properties are then rehabilitated and sold to owner - occupants, frequently with appraisal - gap subsidies provided by the city and federal resources. in other highly depressed housing markets across the country, municipalities often demolish the worst - quality units in order to mitigate safety hazards, reduce the total number of vacant homes, and restore the quality of life in the community. the purpose of our partnership with neighborworks america is to support local communities as they assess local housing conditions and evaluate responses to the challenges before them. the partnership will develop and deliver training designed to help local communities acquire, rehabilitate, and manage foreclosed reo. working with neighborworks america, the federal reserve will develop training | 0 |
easily wage growth falls in response. if people recognise the drop in productivity growth, and demand growth falls alongside it, and / or if nominal wage growth is reasonably flexible and can accommodate the decline in the warranted real wage without unemployment having to rise, it needn β t result in higher inflation. but if demand fails to decline or if there β s resistance in real wages inflation is likely to rise. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice tighter than the rate of unemployment alone would suggest. though this assessment is necessarily preliminary, the news since the end of the furlough scheme does not look to have changed that picture. in october, claims for unemployment benefit fell again and survey indicators of labour market conditions tightened further. although it β s made little contribution to higher inflation so far, the risks to future inflation from the tight labour market may well be more significant. developments in domestic costs tend to be more persistent than those in tradable goods prices ( chart 6 is one indication of that ). they β re unlikely to introduce the same degree of a trade - off between the mpc β s objectives : stronger labour demand narrows the output gap and raises inflation11. and, although it β s possible that these strains too could pass β there β s a chance these frictions are simply the result of the sheer speed of hiring, and will ease of their own accord β there β s also an upside risk to wage costs from currently high inflation. if wage earners β expectations of future inflation rise in response, of if they seek compensation for the rises in the costs of living that have already occurred, wages could also accelerate further, even without any additional decline in unemployment. the paths of all these things are, of course, extremely uncertain. but that β s always the case, to one degree or another. precisely because policy decisions take time to work, and because other things can intervene in the meantime, it isn β t possible to control inflation perfectly. what we can do β and what is the best possible approach β is to think at every meeting about the level of interest rates that will maximise our chances, a couple of years from now, of hitting the inflation target exactly. that is what we will continue to do. thank you. this is a more subtle question than i β ve pretended here. stronger demand for labour clearly doesn β t introduce a trade - off : it reduces | eddie yue : keynote speech - 2023 bund summit keynote speech by mr eddie yue, chief executive of the hong kong monetary authority, at the 2023 bund summit, hong kong, 22 september 2023. * * * distinguished guests, ladies and gentlemen, good morning. it is an honour and a pleasure to join you today at the 5th bund summit. with globalisation now at a crossroads amid increasing risk of geo - economic fragmentation, this session " what's next for globalisation " could not be more timely. globalisation has brought enormous benefits to emerging markets and helped keep global inflation in check. the golden era of globalisation, however, has given way to a gradual slowdown in global trade in goods after the 2008 financial crisis. in certain parts of the world, public support for globalisation has also waned for various reasons, notwithstanding the obvious benefits of better, more affordable products delivered by globalised value chains. it appears that this slowing down in global goods trade is likely to continue, leaving trade in services and other flows to pick up the baton in sustaining globalisation. as economic efficiency becomes less of a priority, the global economy risks being fragmented into different blocs. such setbacks to globalisation are unfortunate, particularly for asia, given the region's relatively open economies. according to the imf, if the world were to segregate into two distinct blocs with little or no trade between them, asia pacific's gdp could be reduced by over 3 % annually. such a dismal outcome seems unlikely, as no economy can be fully self - sufficient. a fullblown financial decoupling is also unlikely, given how highly interconnected the global financial system is. even so, we now seem to be moving down the path towards fragmentation, as practical and pragmatic economic considerations are giving way to protectionism and cross - border restrictions. our recent joint study with the bank for international settlements ( bis ) finds that the total number of global value chain network linkages dropped by some 30 % between february 2020 and the end of 2021. of course, part of these changes may reflect pandemic disruptions, and efforts by businesses to shorten and regionalise supply chains. unfortunately, geopolitics has also played a part. with all these developments, one question often asked is about the role of china in this " new normal " environment. how will china's trade and investment relationship with some of its major trading partners evolve | 0 |
the rt hon sir edward george gbe : towards a safer banking system speech by the rt hon sir edward george gbe, governor of the bank of england, to the association of professional bankers sri lanka 12th anniversary convention, on 27 august 2000. * * * mr governor, ladies and gentlemen, it is an immense pleasure, and a very great honour, to have been invited to address this annual convention. the theme of the convention is β towards a safer banking system β. it is a theme which gladdens my heart. the safety of the banking system is fundamental to financial stability in a broader sense. it is vitally important, of course, to you - as professional commercial bankers. but it is vitally important, too, to us, central bankers, because you simply cannot have monetary or broader economic stability, which is a key part of our responsibilities, without stability of the financial system - they go together like love and marriage! and monetary and financial stability are vitally important, too, to our societies at large and to the individuals that make up our societies - they are absolutely necessary, if not in themselves sufficient, conditions for the economic prosperity to which we all aspire. the question is what can we do - working together - to improve the safety of our banking systems. and you will notice that i emphasise β working together β, because while we all clearly have a common interest in that objective, we all - commercial bankers, banking supervisors, central banks and governments - have distinct responsibilities and distinct contributions to make towards bringing it about. and we will not succeed unless we all play our respective parts. from the programme for your convention i see that most of your working sessions have been concerned with the steps that commercial banks can take to protect themselves against risk in a rapidly changing financial environment and the role of banking supervisors. i should like to start from the other end, as it were, and talk about the role of the authorities more broadly. i suppose that the most frequent cause of financial instability is macro - economic shocks of one kind or another. certainly major disturbances can originate within the financial system itself - and that of course in turn can generate macro - economic instability. but my observation is that the causality more often than not runs the other way. from our own experience in the uk, the exaggerated economic boom and bust cycles of the past - at least i hope they are in the past - and fed in some instances by abrupt financial deregulation - have led to a | to share your views as part of the all - important process of ongoing debate on financial stability. thank you. page 5 of 5 | 0 |
in july, concerns on the financial markets regarding the crisis in the euro area had increased and the prospects for growth in sweden had thus deteriorated. there was considerable uncertainty over future developments. work was underway on resolving the problems in the euro area. but it was also clear that much remained to be done before sustainable solutions could be implemented. risks in the euro area β focus on greece and spain the concern on the financial markets stemmed of course from the public finance situation and problems in the banking sector in the euro area. concerns increased during the spring, mainly due to developments in greece and spain. the situation following the parliamentary election in greece in may fuelled speculations of an emu exit. after a new election in mid - june, the political parties that support the savings programme managed to form a new government. however, it was still uncertain whether the new government would be able to implement adequate measures. at the same time, spain continued to have problems with its public finances and yields on their government bonds rose. the problems in the spanish banking sector also became more acute. in june, the eurogroup promised to provide loans of up to eur 100 billion to enable the spanish banks to increase their capital adequacy, and the spanish government formally applied for bis central bankers β speeches assistance. increased concern over the situation in spain also meant that italy and the country β s large sovereign debt attracted greater attention. at the end of june, just before our monetary policy meeting, the european council decided on a number of measures to stabilise the situation in the euro area in the short term. the focus was on how the efsf funding programme and later the esm can be used. for instance, the possibility was created to use the mechanism to recapitalise a banking system directly, without burdening the country β s national debt. in this way, the link between the banks β and the country β s credit rating can be broken. when we met to decide on the repo rate on 3 july, it was uncertain what effect the measures would have and whether they were sufficient. crisis management but persisting concern personally, i found it difficult to evaluate the european council β s agreement and the other decisions taken during the spring to improve the situation in the euro area. as i noted at the monetary policy meeting, it is necessary to assess what is going on from both a short - term and a long - term perspective. in the short term, we need measures that will quickly lift the | ##c, the south african reserve bank saw in this arrangement a great opportunity for closer co - operation amongst the central banks of the region. in the beginning, however, it proved a major task to get recognition from the political leaders for the need of an independent committee of governors of central banks. in many of the participating countries the central bank is regarded, and often unfortunately also used, as just an extension of the treasury department of the central government. in succeeding to get the approval for the establishment of this committee of governors an important seed was sown in each one of these there are a number of other protocols, co - ordinated by other countries, for example : inland fisheries ( malawi ), marine fisheries and resources ( namibia ), livestock production and animal disease control ( botswana ), environment and land management ( lesotho ), energy ( angola ), mining and labour and employment ( zambia ), tourism ( mauritius ), industry and trade ( tanzania ), food, agriculture and natural resources ( zimbabwe ), human resource development ( swaziland ), and culture and information as well as transport and communication ( mozambique ). countries for the acceptance of the undeniable advantages, also for the politicians, of an independent central bank. a second major obstacle was overcome when approval was granted for the establishment of a small specialised secretariat and research facility within the south african reserve bank to serve the committee of governors. this avoided the need for adhering to the cumbersome procedure of communicating within the central banking fraternity through the conduit of the sadc secretariat, based in gaborone, the capital of botswana. the sadc finance and investment sector was formally established only in 1995, and the committee of governors held its first meeting on 24 november 1995 in pretoria. now, eighteen months later, this committee can already look back on a number of accomplishments, and can report good progress with a number of projects being pursued in the interest of promoting economic development in the southern african region. a number of technical subcommittees and working groups have been formed, consisting mainly of officials of the sadc central banks, to work on specialised projects. 4. the basic philosophy behind financial co - operation in the region before the governors β committee was established, sadc approached financial co - operation in the region on the basis of proposals made by european advisers, and was based mainly on the model of financial integration in the european community. the folly of this approach was immediately grasped by the governors at their first meeting. the | 0 |
r gandhi : problem loan management & msme financing valedictory speech by mr r gandhi, deputy governor of the reserve bank of india, at a workshop organised by crisil ( the credit rating information services of india ltd. ) on β credit risk and problem loan management β, goa, 30 january 2015. * * * assistance provided by mr a k choudhary and mr nethaji b are gratefully acknowledged. 1. i am very glad to be talking to you on a subject which is very contemporary and very critical for the economy. both the government of india and the reserve bank have long been convinced of the contribution, and of the enormous potential, of the sme sector to the economic growth, employment and income generation for vast masses of the country. recent government pronouncements about β make in india β are fundamentally based on these convictions. therefore, detailed discussions and debate on the ways, procedure, precautions and follow - up on sme financing are very apt and timely. i appreciate the efforts of crisil and others in this regard. i understand that in this workshop you all had discussed about sme loan life cycle management, credit scoring as a technique for credit appraisal, strategies and tools to monitor sme loans and handle problem sme loans, including building early warning systems, etc. i am sure all of you have been benefited by these discussions. let me dwell a bit more on the problem loan management, as currently it is a serious issue for the banking sector. asset quality 2. asset quality is an important parameter to measure the health of the banks. in the last twenty years or so, the gross non - performing asset ratio as well net non - performing asset ratio of indian banks have been showing a declining trend due to many factors, and very significantly due to the sustained improvements in the credit risk management practices adopted by the banks. the gross non - performing assets ( npas ), in percentage terms, have declined steadily from 15. 70 % at end march 1997 to 2. 35 % at end march 2011. however, asset quality of the banking system has suffered significant deterioration in the recent years. npas expressed in terms of gross npa ratio increased to 4. 11 % at the end of march 2014. during the period, the β restructured but standard loans β ( restructured in terms of regulatory dispensation provided to banks for supporting viable accounts facing temporary difficulties and in line with public policy imperatives ) as a | recovery of npas. npas of scbs recovered through various channels ( amount in βΉ billion ) recovery channel year no. particulars sarfaesi act total 13, 408 1, 90, 537 10, 44, 636 lok adalats drts 8, 40, 691 no. of cases referred amount involved 1, 058 amount recovered * 3 as per cent of 2 6. 1 14. 1 27. 1 21. 9 no. of cases referred 16, 36, 957 28, 258 1, 94, 707 18, 59, 922 amount involved 1, 731 amount recovered * 3 as per cent of 2 6. 2 9. 5 25. 8 notes : 1. * : refers to amount recovered during the given year, which could be with reference to cases referred during the given year as well as during the earlier years. 2. drts : debt recovery tribunals. bis central bankers β speeches 17. however, the present legal system is unable to cope with the mammoth task, considering the ever increasing number of suits and the limited infrastructure available at drts / courts. further, there are various issues relating to drt and sarfaesi, which needs to be strengthened to make these channels more efficient and effective. they are being examined at various levels. 18. banks also explore entering into a compromise settlement / one time settlement with the borrower to optimise its recovery in present value term. msme financing 19. as this workshop was meant to specifically discuss sme financing, let me share a few thoughts on this matter. 20. as i mentioned in the beginning, micro, small and medium enterprises ( msmes ) play a major role in economic development, particularly in emerging countries. there is heightened attention by the international community on msme sector. this is primarily because of the critical importance of job creation in the recovery cycle following the recent financial crisis, and the msme β s potentials in that respect. 21. yet, lack of access to finance is a major obstacle to their growth. although the situation can differ among countries and individual businesses, the financing gap for smes in the developing country has a few well - accepted causes. these include information asymmetries, higher risks, sizeable transaction costs and a lack of adequate collateral. these factors can be exacerbated by institutional factors within a country. finally, there are a number of β demand side β considerations that deserve more attention. | 1 |
zhou xiaochuan : learn lessons from the past for the benefit of future endeavour speech by mr zhou xiaochuan, governor of the people β s bank of china, at the china bond market development summit, beijing, 20 october 2005. * * * ladies and gentlemen, it is a pleasure to attend the china bond market development summit. let me focus on china β s corporate debt and briefly summarize lessons from past experiences. corporate bond includes, among others, enterprise debt. the development of enterprise bond market has always had the attention of many. in the past, we made quite some mistakes in this field. thus our corporate bond market has been very sluggish. compared with some other financial instruments, and in the backdrop of a high savings rate and high proportion of m2 in gdp, china β s corporate bond market has been developing very slowly, and its role in economic growth has been rather limited. such lack of development has also distorted financing structure and produced considerable implicit risks, whose consequences may be grave for social and economic development. of course, past setbacks and mistakes had their roots in the specific circumstances of that time, i. e. in the early days of the transition when the economy was more planned than market - driven and market economy had yet to establish itself as a way of thinking and a general environment. therefore, a review of the past is not to find fault with anybody, but to draw lessons. the decisions on several issues of improving the socialist market economic system adopted by the 3rd plenum of the 16th cpc central committee has provided for enhancing direct financing, establishing a multi - layered capital market system, expanding debt market and encouraging the growth of institutional investors. only by thoroughly understanding and clearly analyzing the problems and mistakes in the past, can we find an effective solution and implement the decisions in a concrete manner. i. problems in enterprise bond development a number of serious mistakes were made in the early days of enterprise bond development, i. e. from the end of 80s until the first half of 90s. as a result, the development was wrought with setbacks and never fully recovered. a thorough discussion on this issue is necessary. here, i made a list of a dozen mistakes. 1. issue quota and number of issuers were planned and allocated. enterprise bond was not issued on a market basis. for example, quota was allocated by the government to the next level of government, from the state to the province, and then to the localities. 2. administrative | are different views. i would not qualify this as surprising or even negative as bis central bankers β speeches such. in the future, we will also always try to reach consensus. but sometimes we have to take decisions. you have mentioned the impact the ecb β s policy has on the euro. your colleague ewald nowotny made even more blunt comments by saying the aim was to weaken the currency. is the ecb also in this respect becoming more like other central banks, which implicitly use the exchange rate as an instrument? don β t you fear counter - measures by others? i have to contradict you : we have not taken a single decision which was aimed directly to the exchange rate. no one can say that. our monetary policy is targeted to domestic objectives. we are justified to do so because of the difficult situation of low inflation we are in. of course everybody knows that unavoidably there are consequences for the exchange rate. the devaluation of the euro is a collateral consequence of our policy. but what really matters is the domestic objective. not a goal for the exchange rate. we have not changed our policy in that respect. this reminds me of japan. in 2013 japanese leaders also said that the ultra - expansionary monetary policy was aimed at domestic targets and not to weaken the yen. at that time also european policymakers and central bankers doubted and criticized that. if you read the imf or the g20 statements, the japanese policy was always considered acceptable because it was directed towards understandable domestic targets. now the same applies to the euro area, although in a different scale : we are not in deflation and we will not be in deflation. in germany the ecb β s policy is heavily criticized. this will increase with the planned asset purchases. one concern is that the ecb takes risks on its own balance sheet which could at the end cause some problems for taxpayers again. isn β t it a big risk that the support in germany for the ecb could be get lost completely? this is of course a concern to us. we don β t live in an ivory tower. but we have a mandate and this mandate is for the 18 euro area countries as a whole. but i also think there are a lot of misunderstandings and unjustified fears in germany. just to give one example : when we started buying some government bonds for the first time in 2010, everybody was writing in germany about the forthcoming hyperinflation. this did | 0 |
to this mission by the french government and already came twice to tokyo in the last months to convey this very concrete message. 3 / how can we give further impetus to europe? getting back to the european level, i would like to point out that many improvements have also been made in the field of crisis prevention and management. prevention is based on much more 2 / 3 bis central bankers'speeches efficient financial regulation and on a european governance framework that is better organised now with well - designed monitoring mechanisms on fiscal performance as well as on macroeconomic imbalances and structural reforms. banking union contributes to strengthening financial stability in the euro area and the eu as a whole and to ensuring that the banking sector is safe and reliable. the global european picture is of substantially enhanced resilience since the crisis. the common equity tier 1 ratios of significant banking groups in the euro area have risen from 7 % in 2008 to 14 % today. crisis management β including for greece β has also evolved considerably with the creation of the esm. so you can be fully confident about the resilience of the euro and of the euro area. it is not only an economic asset, it is also a political one, supported by each of the 19 governments and β which is still more important β by 68 % of euro area citizens ( and even by 70 % of french citizens and 73 % of german citizens ). moreover, monetary policy played its full part to maintain euro area cohesion. europe has clearly succeeded with monetary union, but monetary policy should not remain the only game in town. we must continue to make progress towards economic union in order to achieve more and to further join forces in the new international context. to do so, europe should seize the opportunity to move forward on three concrete steps towards economic union : the first step, as of today, is to build a β financing and investment union β ( fiu ) to steer abundant savings into productive investment. resources are not lacking : in the euro area, the current account surplus, which is a measure of the excess of savings over investment, stands at more than 3 % of gdp. this trend is often described as a β saving glut β but i believe it is more fitting to talk of an β investment crunch β [ slide 6 ], since we lack productive investment. the fiu would merge together the initiatives already in place : the capital markets union of course, but also the juncker investment plan β which aims, through the use of limited public guarantees, | empirical analysis β, the journal of business, 78, issue econpapers. repec. org / repec : ucp : jnlbus : v : 78 : y : 2005 : i : 6 : p : 2435 β 2464. 6, pp. 2435 β 2464, 3 credit value adjustment. 4 correlation trading portfolio. 3 / 3 bis central bankers'speeches | 0.5 |
24. 05. 2017 welcome address i conference on financial stability / banco de espana - cemfi luis m. linde governor good morning ladies and gentlemen, it is my pleasure to welcome you to this first conference on financial stability, jointly organised by the banco de espana and the centro de estudios monetarios y financieros ( cemfi ). thank you very much for your interest in and attendance at the conference. we have a very interesting agenda for today and tomorrow, structured around six sessions and a panel discussion covering a wide range of topics related to the theory and policy practice of financial stability. this event is bringing together distinguished speakers and discussants from central banks, international financial institutions and academia - a combination which will offer a diversity of perspectives and also ensure a lively and, for sure, interesting debate over the next two days. this conference has been possible thanks to the joint effort of banco de espana and cemfi. i am very grateful to the organisers, in particular to rafael repullo, director of cemfi, as well as to all the members of the scientific committee responsible for promoting this meeting and selecting the papers to be presented in the programme. this event has aroused particular interest among researchers, with - i am told - nearly one hundred papers having been submitted for just twelve slots. with this auspicious start, i trust this conference may become a regular forum of dialogue between researchers and policy - makers : central banks and financial supervisory authorities have many things to learn from the research carried out in academia, away from the frequent policy - making urgencies that drive the daily workload in our institutions. financial stability and macroprudential policy the last crisis generated a good deal of issues to be dealt with by authorities with a role in financial stability. the experience gained over recent years has shown the importance of safeguarding the stability of the financial system as a whole. we now understand that this ambitious task requires the use of sophisticated analytical tools to identify vulnerabilities at an early stage and anticipate how potential shocks can propagate across the financial system. to this end, both micro and macroeconomic methodologies can offer valid insights, and this is why the conference programme intends to offer a mix of both approaches. one of the most relevant and obvious legacies from the crisis is the introduction of a fullyfledged macroprudential policy framework. as we all know, macroprudential policy has, essentially, a | and assistance in the digital transition. naturally, we will have to analyse the practical implementation and sufficiency of the protocol in the coming months. however, beyond the banking sector β s response, if society is to derive maximum benefit from digitalisation while minimising the costs of the transition, i believe that a comprehensive response is required from the public authorities. a response which surely transcends the financial sphere, to which the financial authorities can no doubt make an important contribution. that is why we are going to focus precisely on improving digital skills in the coming years using, for example, the financial education plan launched jointly by the ministry of economic affairs and 1 / 2 bis central bankers'speeches digital transformation, the cnmv and the banco de espana. because we are fully aware that digital literacy is also part of our financial education. that is also why the banco de espana has long identified the economic and population differences in urban and rural areas ( also in terms of access to general services and, more specifically, to banking services ) as phenomena that warrant priority analytical attention. such analysis must provide the basis for informed decision - making. our most recent annual report, presented before parliament last year, included a chapter dedicated to these issues. in the coming months we shall present the findings of several studies which examine in depth the phenomenon of financial exclusion in relation to digitalisation processes. specifically, we are going to present a comparative study of access to cash in spain and in other euro area countries, focusing particularly on the differences between rural and urban areas. we will also provide a detailed picture of access to digital banking services in spain and recent developments in this area. lastly, we will conduct a review of the action taken to combat financial exclusion nationally and internationally, which may prove a good platform for future actions in our country. to conclude, i would simply like to thank again the deputy prime minister and the ministry for their efforts to address this problem. and the banking associations for their agile and swift response in drafting and signing this protocol. and, of course, i would like to thank the individuals who have made us more aware of the problem and whose actions have prompted this rapid response. i believe that we should all aim to ensure that spain continues to take the lead on financial inclusion in the digital era, as it has always done. and i would like to add that the banco de espana is firmly committed to this goal and that we will do everything within our power to attain it. thank you very much | 0.5 |
, and canada was an early adopter. under our current agreement, we aim to keep inflation around a target of 2 per cent, and we usually try to accomplish this over six to eight quarters. even in the absence of financial stability threats, the practice of monetary policy requires the central banker to deal with vast amounts of uncertainty. think of the most important aspects of a macroeconomic model β the level and growth rate of potential output, the real neutral interest rate, and the transmission of terms - of - trade shocks. none of these can be observed ; they all must be estimated. the assumptions that we make in running our models inject uncertainty throughout the policy - making process. and, since the crisis, we have also been confronted with the risk that our models have been distorted because of fundamental shifts in economic behaviour. now, on top of all this uncertainty, we have to add the uncertainty represented by risks to financial stability, a concept that is difficult to quantify. adding this whole other dimension of uncertainty complicates the practice of monetary policy by forcing us to weigh both sets of risks, the probabilities that they will be realized and the potential consequences of a policy error. so how do we manage the risks? at the bank of canada, we try to be realistic about the things we don β t know and do a thorough examination of the related risks. every time we come to a decision, there are a number of potential paths for policy that could be consistent with the inflation goal. in the process of formulating policy, we weigh these possibilities and focus on those that fall into a zone where the range of likely outcomes makes us reasonably certain that we β ll achieve the inflation target over an acceptable time frame and that financial stability risks will evolve in a constructive way. bis central bankers β speeches still, we know there can be times when setting policy to achieve the inflation target within the usual time frame can increase the level of financial stability risk to an unacceptable level. this would take us out of the zone where the risks are essentially balanced. because the flexibility in our framework allows it, we reserve the right to choose our policy tactics so that our actions don β t significantly worsen financial stability concerns by opting for a policy path that aims to return inflation to target over a longer time frame than normal. risk management, then, does not mean that the central bank will adjust policy to try to lean against every emerging financial imbalance. since we are an inflation - targeting central bank | these activities make financial markets more complete and, so, enhance their efficiency. the size and sophistication of pension plans also lead them to be actively interested in good corporate governance, thus contributing to market discipline, which supports overall market efficiency. the decline in defined - benefit pensions in recent years, defined - benefit pension plans have been in decline. the number of canadians covered by defined - benefit plans has fallen by roughly 5 per cent since 1992. while the large majority of employer - sponsored plans are still of the defined - benefit variety, defined - contribution plans have grown significantly. we have seen many employers either collapse their defined - benefit plans or restrict new entrants into the plans. we have also seen increasing deficits in many defined - benefit pension plans. the ability of individuals with rrsps to use a registered retirement income fund rather than a life annuity does allow more sophisticated retirees to mitigate this risk somewhat. i am not aware of any canadian research on this topic. but it is a reasonable assumption that these results would apply to canada. but many defined - benefit plans lack portability, which lessens their attractiveness. arbitrage refers to a trading strategy that tries to take advantage of differences in prices for the same asset trading on different exchanges. 3 / 5 while part of the decline in defined - benefit plans comes from developments in the economy and the labour force, part is also due to the incentives under which these plans operate. let me elaborate. defined - benefit plans should operate so that the expected value of all benefits to be paid out equals the expected value of all contributions plus the expected returns on investments. but when the actual value of one of these variables differs from the expected value, the sponsor of the plan takes on responsibility for making up any difference. what would make a sponsor accept this responsibility? one reason would be if sponsors could mitigate the risk of worse - than - expected outcomes by being allowed to benefit from better - thanexpected outcomes. but while there is no question that the sponsor is responsible for any deficit in the plan, it is not at all clear that the sponsor benefits from any surplus that may be generated. the question of who " owns " a surplus in a defined - benefit plan has been before many different courts at different levels and in different jurisdictions in recent years. while the precise answer depends on the specific wording of the rules of any given pension plan, in general, provincial and federal pension law has evolved so that employees | 0 |
david clementi : the city and the euro : innovation and excellence speech by mr david clementi, deputy governor of the bank of england, at the city seminar on'london into the 21st century'at the palace hotel, tokyo on 13 february 2001. * * * introduction the city of london is, and always has been, a centre of innovation and excellence. i want to talk to you today about the city's role in the euro markets as an example of how london proposes to maintain its standing and reputation for innovation and excellence in the 21st century. for me, it is a great pleasure to be able to talk to you about this here in tokyo. there are historic links between tokyo and the city of london, and i am glad that these links are continuing to flourish. we welcome the fact that so many important japanese financial institutions are represented in london ; and, of course, that uk - based financial institutions have operations here in tokyo. it is not surprising that there are such strong links between tokyo and the city of london, because london is one of the three global financial centres, alongside tokyo itself and new york. tokyo and new york are global centres because of their large domestic markets. unlike tokyo and new york, london's primary focus is international. london is much the largest international financial centre in europe. historically, london developed as a financial centre because of the international role of the pound sterling. but nowadays, london's role depends mainly on making markets and providing financial services in foreign currencies, like the dollar. that means that london continues to thrive only by remaining internationally competitive. and i should add that we in the bank of england take a close interest in this. maintaining the stability of the financial system and the effectiveness of the uk's financial services are key objectives for us. the city is a centre of innovation and excellence london is internationally competitive, because it acts as a centre of innovation and excellence, in a whole range of complementary ways. β’ london has a vast, critical mass of markets and financial services in commercial and investment banking, securities and derivatives, fund management, insurance and commodities. β’ london has a long track record of innovation, and a ready availability of financial skills and professional support services in law, accountancy, tax, property and communications. more than 300, 000 β’ people work in financial services in london, and nearly a further 600, 000 work in the supporting professions and services. β’ london is at the forefront of technology, with an effective | to the equivalent of around $ 6 trillion, compared with some $ 16 trillion in the us. ) since the launch of the euro, the focus of risk assessment in the corporate debt market has shifted from currency risk towards credit and liquidity risk. a growing number of companies in the euro area have been seeking external credit ratings. and an equity culture is beginning to take root in the euro area, despite the volatility in tmt stocks over the past two years. in europe as a whole, for example, there were over 17, 000 m & a transactions with a combined value equivalent to $ 1. 5 trillion last year. the second change concerns the integration of euro trading and settlement. trading has increased in most euro markets, and dealing spreads have narrowed. electronic trading and communication networks have greatly increased the reach of traditional financial markets, while allowing new providers to enter at relatively low cost. in particular, there has been much greater cross - border activity in europe, supported by fully - integrated pan - european systems for making wholesale payments. but many systems for the trading, clearing and settlement of securities are still fragmented nationally by sector. market firms are keen to see consolidation of the arrangements for clearing and settling securities trades, where costs are still considerably greater in europe than in the us. even without mergers, market firms can of course trade remotely from a single location, though this does not address the issue of duplicate investment costs. but it seems that full rationalisation may take years to implement and, while the broad vision of integrated european systems is widely shared, there are still differences of view about how best to achieve it. the third change is the diversification of investment. the launch of the euro has begun to encourage a shift in funds away from the particular national market in which they have traditionally been invested, and towards investment across the euro area as a whole. this helps to explain the increasing use by fund managers of european benchmark indices against which to measure investment performance, rather than national benchmark indices. portfolio diversification has so far been rather slower than originally expected. but there is evidence that diversification is continuing to take place, and it is expected to pick up over time. fourth, financial institutions themselves are consolidating, including in some cases across borders, so that they can better provide a service to clients across the single european market as a whole. consolidation is already far advanced in investment banking, where critical mass is of particular importance to profitability, and a us link has proved | 1 |
of enhanced credit support helped restoring a more normal transmission of our monetary policy stance and ensuring that banks could maintain their crucial role in financing the real economy. the ecb also engaged in a covered bond purchase programme worth β¬60 billion throughout the euro area. the covered bond market is important in our economy and it was vital to re - start and support its functioning. in may 2010 increasing market concerns about the sustainability of public finances led to severe tensions in certain market segments, which were hampering the transmission mechanism of monetary policy and thereby the effective conduct of our efforts to maintain price stability. once more the ecb decided on appropriate measures. private financial intermediation was again threatened. with the rapid increase in secured interbank lending in the euro area in recent years, the impact on money markets of developments in government bond markets has grown substantially. government bonds have traditionally been an important element in the monetary policy transmission process because they serve as a benchmark for the pricing of other financial contracts and fixedincome securities. they have also emerged as a prime source of collateral in interbank lending. as a result abrupt changes in the value or availability of these securities can imply a sharp deterioration in banks β funding conditions β with adverse effects on both the supply of bank loans to the real economy and their prices. all our non - standard measures help to restore a more normal monetary policy transmission mechanism, which is necessary to fulfil our primary mandate of maintaining price stability in the medium term. in recent weeks, the tensions associated with the irish fiscal problems and the reorganisation of its banking sector have led to renewed bouts of high volatility in financial markets. more than ever it is important that governments step up consolidation in way that is credible and lays the foundation for sustainable long - term growth. there is a clear need to strengthen public confidence in the capacity of governments to return to sustainable public finances and thus support sustainable growth over the medium term. to this end, it is essential that countries pursue credible multi - year consolidation plans and fully implement the planned consolidation measures. positive fiscal developments that may emerge, reflecting factors such as a more favourable than expected economic environment, should be exploited to make faster progress with fiscal consolidation. europe β s economy : the current situation and the challenges ahead let me come to the third and final part of my remarks : what are the lessons we have learned from these events? first, our monetary policy strategy has proved to be effective. the quantitative definition of price stability and the medium - term orientation | in may 2016, compared with 1. 2 % in april. developments in loans to enterprises continue to reflect the lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and non - financial sector balance sheets. the annual growth rate of loans to households ( adjusted for loan sales and securitisation ) remained broadly stable at 1. 6 % in may, after 1. 5 % in april. the euro area bank lending survey for the second quarter of 2016 indicates further improvements in loan supply conditions for loans to enterprises and households and a continued increase in loan demand across all loan categories. furthermore, banks continued to report that the targeted longer - term refinancing operations had contributed to more favourable terms and conditions on loans. the monetary policy measures in place since june 2014 have significantly improved borrowing conditions for firms and households, as well as credit flows across the euro area. the comprehensive package of new monetary policy measures adopted in march this year underpins the ongoing upturn in loan growth, thereby supporting the recovery of the real economy. in the light of the prevailing uncertainties, it is essential that the bank lending channel continues to function well. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need to preserve an appropriate degree of monetary accommodation in order to secure a return of inflation rates towards levels that are below, but close to, 2 % without undue delay. monetary policy is focused on maintaining price stability over the medium term and its accommodative stance supports economic activity. as emphasised repeatedly by the governing council, and as again strongly echoed in both european and international policy discussions, in order to reap the full benefits from our monetary policy measures, other policy areas must contribute much more decisively, both at the national and at the european level. the implementation of structural reforms needs to be substantially stepped up to reduce structural unemployment and boost potential output growth in the euro area. structural reforms are necessary in all euro area countries, although specific reform needs differ across the individual economies. the focus should be on actions to raise productivity and improve the business environment, including the provision of an adequate public infrastructure, which are vital to increase investment and boost job creation. the enhancement of current investment initiatives, including the extension of the juncker plan, progress on the capital markets union and reforms that will improve the resolution of non - performing loans will also contribute positively to this objective. in an environment of accom | 0.5 |
insurance regulatory authority to offer shariah - compliant insurance services. although the concept of β takaful β has been in existence in the global arena for several decades, this product is now being offered for the very first time by an entity incorporated and licensed in kenya. ladies and gentlemen : first community bank ltd has again trail - blazed by introducing a shariah - compliant mutual fund. i am informed that the fund will be denominated in kenya shillings and the aim is to pool funds amounting to ksh. 1 billion. the fund will invest principally in sharia - compliant opportunities in kenya and other countries in the eastern africa region and may also undertake offshore investments. the bank intends to invest in money market instruments, equity, structured investments and other collective investment schemes that are all shariah - compliant. indeed, this fund will avail investment opportunities to many people, particularly those who could not invest in the available products on account bis central bankers β speeches of faith - based or other risk related restrictions. it is a welcome addition to deepening kenya β s nascent capital markets. this move is also a positive step towards not only attracting increased foreign direct investments into the country and the region at large, but also enhancing the capacity of the kenyan people to harness the available resources for national development. as you are aware, a key goal of the government of kenya, as espoused in vision 2030 is establishing kenya as a premier financial services hub in the region with a wide range of competitive products and services. one of the ways of achieving this goal is ensuring that kenya becomes the gateway for shariah - compliant financing, through establishment of an enabling environment that supports the development of shariah - compliant financial services and products. to this end, the central bank has in the recent past liaised with the shariahcompliant banks and established the main challenges that impede the achievements of this objective. some of these impediments are : inadequate shariah - compliant products. for example, the lack of shariah - compliant liquidity instruments places shariah - compliant banks at a disadvantage compared to the conventional banks ; uncertainty on the tax treatment of shariah - compliant financial instruments ; inadequacy of the requisite human capital with respect to shariah - compliant finance. ladies and gentlemen : the central bank is in this regard engaging other relevant arms of government to address these challenges in order to propel shariah - compliant finance to | the next level. the future of islamic finance in kenya and in the region remains bright. on its part, the central bank will continue to pursue policies that create an enabling environment that will eventually culminate in kenya establishing itself as a regional financial hub as envisaged in vision 2030. with these few remarks, i want to wish first community bank ltd as well as the first community bank capital ( investment bank ) the best in their future endeavours. the islamic finance picture is thus complete. thank you bis central bankers β speeches | 1 |
low inflation outcomes. the more flexible supply side means that employment growth can be stronger without fears of overheating. at the same time, the unemployment rate that would put upward pressure on inflation is also lower than it once was. as the evidence accumulated in support of these propositions, the outlook for monetary policy changed and the board lowered the cash rate in june and july. in making these decisions the board also recognised that the earlier concerns about the trajectory of household debt had lessened. the board has also paid attention to the shift in the outlook for monetary policy globally. these two recent reductions in the cash rate will support demand in the australian economy. so too will recent tax cuts, higher commodity prices, some stabilisation in the housing market, ongoing investment in infrastructure and a lift in resource sector investment. we also need to remember that the underlying foundations of the australian economy remain strong. it remains to be seen if future growth in demand will be sufficient to put pressure on the economy's supply capacity and lift inflation in a reasonable timeframe. it is certainly possible that this is the outcome. but if demand growth is not sufficient, the board is prepared to provide additional support by easing monetary policy further. however, as i have discussed on other occasions, other arms of public policy could also play a role in this scenario. whether or not further monetary easing is needed, it is reasonable to expect an extended period of low interest rates. on current projections, it will be some time before inflation is comfortably back within the target range. the board is strongly committed to making sure we get there and continuing to deliver an average rate of inflation of between 2 and 3 per cent. it is highly unlikely that we will be contemplating higher interest rates until we are confident that inflation will return to around the midpoint of the target range. thank you for listening. i look forward to answering your questions. https : / / www. rba. gov. au / speeches / 2019 / sp - gov - 2019 - 07 - 25. html 13 / 14 7 / 25 / 2019 inflation targeting and economic welfare | speeches | rba endnotes [ * ] i would like to thank ellis connolly for assistance in preparing these remarks. conceptually, it is possible to think of these structural factors as adding to global supply, so this third explanation could be seen as elaboration of the second explanation. these structural factors are also likely to be pushing down the equilibrium real rate of interest. simon j and m sutton ( | each scheme, there are multiple cards with differing interchange fees, and market share tends to shift towards those cards with the higher fees. it β s an illustration of the the acquirer is the bank that services the merchant. the issuer is the bank that issued the credit card to the cardholder. in a typical credit card transaction, the acquiring bank pays an interchange fee to the issuer. principle that, in these rather unique conditions, competition for market share tends to push the average price up rather than down. what i β ve just set out is obviously not a complete description of the cards market. but i think it captures those features that are particularly distinctive, and which raise at least the potential for concerns about efficiency and the adequacy of competition. with that background, i β ll turn now to the rba β s involvement in card payments regulation. the origin of that involvement was the decision by the federal government, in 1997, to implement the wallis recommendations by giving regulatory oversight of the australian payments system to the rba. the act set up a payments system board of the reserve bank, with responsibility for payments - system efficiency and stability. among other things, the act gives the board the power to designate a payments system and, where a system has been designated, to set regulatory standards with respect to such things as fees and operating rules. the board β s first major study in this area was conducted jointly with the accc, and was released in october 2000. that study raised a number of concerns about market practices in the industry, particularly the setting of scheme interchange fees and a range of other matters related to competition and the efficiency of price signals. since industry attempts to address accc concerns about interchange fees had failed, and given that the payments system board had a clear mandate in this area, the board then moved into a process of reform, starting with the credit card schemes. after a period of consultation, the first package of credit card reforms was announced in august 2002. that package had three main elements, which were : a cost - based standard on interchange fees ; disallowance of no - surcharge rules ; and rules to expand access to the network. but the bank was always of the view that reform of the payments system needed to be holistic. so over the next few years, the reform process added a number of other elements, which covered both credit and debit cards. some of the key ones were : a restriction on the honour - all - | 0.5 |
central bank digital currency ). because paying digitally based on private solutions is already a well - functioning daily experience for chinese people, encouraging them to change their behaviour and adopt cbdc ( central bank digital currency ) seems quite a burden. however, payments are a network industry, so it is crucial to attract a broad user base as soon as possible. for this reason, the people β s bank of china ( pboc ) distributed an amount of cbdc ( central bank digital currency ) for free to nudge payers to adopt it. for sure, there might be certain features of cbdc ( central bank digital currency ) which could be considered unique from a user perspective, like offline capability or a specific focus on privacy. but since cbdc ( central bank digital currency ) will require close cooperation between central banks as well as commercial banks and other payment service providers, all parties have to reflect on the way cbdc ( central bank digital currency ) can be made a convenient and widely accepted means of payment offered in a public - private partnership. for instance, the european system of central banks has to act in accordance with the principle of an open market economy with free competition, according to its statute. [ 2 ] suppressing private sector institutions that offer payment solutions would not fit into this concept. nevertheless, it will also take some thinking out of the box by private players to develop entirely new solutions from scratch. moreover, standards, rules and procedures in the digital world might need to be more prescriptive in order to ensure interoperability and pan - european reach. here comes the analogy with a payment scheme into play. however, there are a variety of options for what such a scheme might look like, and how it is operationalised. one might even consider cash a rather light payment scheme, as compared with the fully - fledged card schemes operated by the international card providers. all of this needs much more elaboration. but one thing is certain : cbdc ( central bank digital currency ) will need much more communication and cooperation among central banks, a strong commitment from private payment service providers, and buy - in on the demand side. payees, mostly merchants, have to understand the clear - cut and attractive features offered by a cbdc ( central bank digital currency ), and payers have to learn that cbdc ( central bank digital currency ) is a β somewhat official means of payment β, offered to them by their trusted payment providers at conditions that are transparent to them and don β | the act in itself is a step in the right direction since it heightens what the imf, in its last article iv consultation, 10 called the β level of preparedness β. the fact that legislative change is also still needed in germany before the key attributes and the eu directive can be fully and consistently implemented does not contradict my β in principle β positive assessment of the restructuring act. 3. 3 rigorous monitoring of the implementation of the new international standard experience over the past few years has shown that international standards can sometimes be futile if they are not implemented and applied in a consistent and timely manner. for this reason, the fsb wants to rigorously monitor the progress made in implementing the key attributes in its member states. what makes this all the more important is the fact that the key attributes take us into unchartered waters. moreover, implementation will require legislative and institutional changes β some of them extensive β in all g20 jurisdictions. last but not least, monitoring of consistent implementation is crucial for overcoming obstacles to cross - border cooperation which will play such an outstanding role. to facilitate the monitoring process, work is currently underway, as a matter of urgency, on an assessment methodology that will make it easier to objectively assess the level of implementation in individual countries. this instrument is to be used by various bodies : a ) countries will be able to perform a self - assessment in order to identify any gaps in implementation ; b ) the imf / the world bank will use this methodology when carrying out their fsap assessments ; c ) the fsb is already planning a first review for 2012 as part of its peer review process, and d ) the fsb peer review council, which has not yet been set up, will apply this instrument to global systemically important financial institutions. countries with a below - average performance in these assessments will be required to provide an explanation, and can expect the results to be published. i believe implementation must be monitored rigorously because the new standard closes a serious gap in the regulatory framework. 4. conclusion this gap illustrates perfectly that the regulatory framework before the financial crisis was not geared to the stability of the financial system as a whole. this failure to take sufficient account of the systemic stability perspective must and will be remedied. for this reason, let me draw your attention to the german government β s draft of the financial stability act, which the german cabinet passed yesterday. this act will assign central tasks of macroprudential oversight to the bundesbank | 0.5 |
gang and i have worked closely over the years. the pboc and mas have a longstanding relationship of mutual trust and financial co - operation. this relationship deepened during yi gang's tenure as pboc governor, especially in digital finance and sustainable finance. in 2018, pboc and mas signed a fintech cooperation agreement to promote joint research and collaborative projects in areas such as digital and mobile payments, distributed ledgers, and digital currencies, focusing on use cases such as cross - border payments and trade finance. in 2022, pboc and mas formed a joint china - singapore green finance task force to strengthen our cooperation in green and transition finance, and to facilitate collaboration between our public and private sectors towards a lowcarbon future. yi gang will speak to us today on china's perspective on central bank digital currencies. china is at the forefront of digital payments and in the development of digital currency. since the pboc started piloting the e - cny in 2019, the programme has expanded to cover 26 cities across china, with more than 13. 6 billion digital yuan in circulation. pboc is now beginning to experiment with cross - border applications of e - cny. ladies and gentlemen, please join me in welcoming dr yi gang to deliver the 11th mas lecture. 2 / 2 bis - central bankers'speeches | ravi menon : introducing yi gang opening remarks by mr ravi menon, managing director of the monetary authority of singapore, at the mas lecture 2023 by dr yi gang, singapore, 19 july 2023. * * * dr yi gang, president, china society for finance and banking, distinguished guests, friends and colleagues, good afternoon. welcome to the 11th mas lecture. since its launch in 2000, the mas lecture has featured distinguished members of the international financial community. today, we are honoured to have with us, dr yi gang. yi gang needs little introduction, and i can scarcely do justice in five minutes to his many achievements over a distinguished career spanning more than 30 years. one perhaps less well - known of yi gang's accomplishments is that he co - founded the china centre for economic research at peking university nearly 30 years ago, in 1994. this has since been transformed into the national school of development which is now a key platform for academic exchanges between chinese and overseas scholars. the value of such exchanges cannot be over - emphasised in today's world. it is vital that the rest of the world gets to better understand china, and china in turn better understands the world outside its borders. in a small way, we hope, having yi gang deliver today's mas lecture will help to advance this understanding. of course, we are most familiar with yi gang's role in china's monetary and financial policies. he has served as director - general of its monetary policy department and administrator of the state administration of foreign exchange. since becoming pboc governor in march 2018, yi gang has steered china's monetary policy and macroprudential supervision through the covid - 19 pandemic, not to mention structural trends such as the rapid digitalisation of finance and the transition to a greener economy. yi gang is among the most familiar of china's senior officials internationally. i have seen first - hand, at meetings of central bank governors β be it in washington dc or basel or here in asia β the key role that yi gang has played in communicating the challenges and peculiarities of the chinese economy and the rationale behind china's economic and financial policies. yi gang does with a style that is clear, candid, and cogent, projecting a voice of reason and balance. he takes to difficult questions in a kindly and patient manner. so, this is an encouragement for those who want to ask questions later! 1 / 2 bis - central bankers'speeches yi | 1 |
dollar. these effects in turn influenced the overall response of demand and inflation to the acceleration in productivity. rate and the nairu. the nairu constructed in this way is best thought of as being a long - run value that is relevant once the economy has fully adjusted to any shocks or in the absence of such shocks. but, of course, additional shocks almost always directly affect inflation, most often on the supply side of the economy. one, therefore, must take into account both the demand pressures captured by the relationship between the unemployment rate and the nairu and supply shocks. alternatively, one could derive an alternative measure of the nairu that took into account the supply shocks. by its nature, such an adjusted nairu would be more of a short - run concept. because an acceleration in productivity initially lowers inflation for any given unemployment rate, it also lowers the unemployment rate consistent with steady inflation in the near term. that is, the direct disinflationary effect lowers the short - run nairu relative to its long - run value. whether or not inflation will rise or fall in the immediate aftermath of an acceleration in productivity cannot be judged therefore by comparing the actual unemployment rate to the estimate of the long - run nairu. the relevant comparison is between the current unemployment rate and an estimate of the short - run nairu that takes into account the disinflationary effect of the productivity shock. my preference is to estimate a short - run nairu that directly takes into account the disinflationary effect of an acceleration in productivity because the effects of an acceleration in productivity on inflation may persist long enough that the adjusted nairu might be useful in policy decisions. on the other hand, i would leave out of such an estimation the effect of swings in oil prices, for example, because their effect on inflation dissipates more quickly. the demand and direct disinflationary effects are both temporary, but the period over which each has its influence depends on different considerations. the persistence of the demand effect depends on how long it takes for business capital stocks to adjust to higher expected profitability, for consumer durables to adjust to higher wealth and higher projected future income, and for market interest rates to close the gap relative to the higher equilibrium real interest rate. the direct disinflationary effect of an acceleration in productivity is, in my view, temporary because it likely arises from the lag in the adjustment of nominal wages to the productivity acceleration. it dissipate | ilmars rimsevics : standing firm against manipulations with lats'exchange rate article by mr ilmars rimsevics, governor of the bank of latvia, published in the daily diena on 16 february 2007. * * * economists are currently discussing ways to improve the ability to compete of the latvian economy and they are right to do so because it is being undermined by high inflation. morten hansen from the riga school of economics has also devoted this issue a great deal of thought, sharing some of his insights with the readers of the newspaper diena ( 10 february ). the latvian economy is still the fastest growing economy in the european union and that should make us happy because our standard of living is raised. the downside, from the macroeconomic perspective, is that the speed at which we are traveling can be compared to driving at 200 kilometers an hour, because it is accompanied by high inflation, record high prevalence of imports over exports ( current account deficit ), decreased ability to compete, a fast growing foreign debt. for quite a while now, the main problem of the latvian economy has been the overly high domestic demand that exceeds supply ; the economists call it β overheating β of the economy. the budget deficit is also too high for this juncture in our economic development : we are not saving for the moment when the pace of the economy will abate. estonia, where the situation is very similar, last year recorded a budget surplus of 3 % of gdp. ) if we fail to have a firm grip on the steering wheel and we dismiss the danger of driving too fast, our breakneck speed can land us in a ditch! we can only regret that mr. hansen has not applied his theoretician β s savvy to come to the aid of the latvian economic policy makers : to specify the list of tasks that would allow the excessively rapid development to slow down so that latvia would continue to develop in the long term with a yearly growth of 6 - 7 % instead of running the danger of overheating as is obvious from the estimates of the last quarter of last year. it would have been wonderful if mr. hansen had made use of his teaching skills, which involve the ability to get things across with ease, to remind us that in the marathon distances β in our case, approximating the level of european standard of living β sprinter β s tactics are of no use. in such a list, there would be tasks that produce immediate | 0 |
than 2 % and seek to maintain that over the medium term. in practice, we have a preference for inflation lying within a range between around 1 and 2 %. this reflects potential measurement error in price indices as well as our desire to avoid deflation. having flagged our aversion to persistent deflation, let me turn to the substance of the question. my answer is clear β in the present situation i see no immediate risks of deflation in the euro area, albeit for the wrong reasons. service price inflation accounts for around 40 % of the hicp index and competition in this sector is rather low. in addition, the sizeable government sector has a role in price setting in many areas. both factors tend to put a floor under price increases. our wage and price setting mechanisms are simply not flexible enough to allow widespread or persistent deflation in the absence of a severe or prolonged recession. although formal wage indexation in europe is considerably lower than in earlier decades, we are not at the point where nominal wage cuts are likely to be broadly accepted. similarly, nominal price declines are also rather rare. deflationary risks generally arise from one or more of the following factors β the bursting of an asset price bubble, difficulties in the financial sector or ongoing losses by businesses. clearly these triggers are generally interconnected, and can reinforce each other. these interdependencies make deflation such a difficult problem and its impact widespread and corrosive. turning to a discussion of these triggers, a prolonged or severe recession is not what we are currently experiencing. in fact, we are in a situation where the relatively quick recovery we observed in early 2002 seems to have stalled. part of the reason why we continue to feel that we are in a difficult situation is that we had hoped that the recovery would be rapid. at the beginning of this year we expected that economic growth would be close to trend by the end of this year. in fact, growth will remain substantially below potential this year and the recovery is unlikely to gain much momentum until next year. i do not want to go into the reasons behind that now. my point is simply that the current downturn is not sufficiently severe to generate deflationary pressures. and as i will argue below, the same conclusion holds as regards the other possible triggers for deflation β asset price declines or financial sector fragility. overall, therefore, i am confident that europe will not experience a period of persistent deflation β and the associated problems that this | could cause. i can also assure you that we are aware of the risk. in particular, we are aware that it is difficult to put the deflation genie back in the bottle once it has come out. if signs of widespread problems emerge, we will act swiftly to counter them. an advantage of our measured monetary policy response to date is that we have plenty of policy room available to react if necessary. is there a risk to financial stability closely related to the question of deflation is the issue of financial stability. a period of deflation could be caused by, or contribute to, financial stability problems as real debt burdens rise and borrowers struggle to service their debt commitments. again, i expect that you know more about this than i do. however, let me give you my interpretation of recent developments in europe and their implications for financial stability. asset price declines one concern has been that recent stock price declines could trigger financial instability by weakening balance sheets across the economy. clearly there has been a significant adjustment in stock prices around the world over the past year or so. europe has also been affected. european stock prices are now back around the levels seen in 1998 and have fallen by around 30 % since the beginning of this year. nevertheless, to put this fall in perspective, stock prices remain well above 1996 levels, which was when chairman greenspan made his comments on irrational exuberance. this holds true even when you adjust for inflation. regardless of whether or not stock prices are too high, a decline of the magnitude we have seen is bound to have some impact on the macroeconomy. at the dutch central bank we have estimated that a sustained decline of 30 % would have a cumulative negative impact of just over Β½ % on european growth over three years. our model implies that there will be an insignificant impact on prices. however, these estimates are for the direct influence of lower stock prices only and abstract from confidence effects. as an aside, it is interesting to note that the wealth effects from changing share prices are considerably stronger in the united states. for example, a fall of 30 % in us share prices results in a cumulative negative impact of over 3Β½ percent of gdp over the same three year period. there would also be a negative impact on consumer prices of a little over Β½ % over three years. the different impacts stem largely from the lower extent of share ownership in europe than in the us. although direct share ownership is gradually spreading in europe, it remains considerably less widespread than in the | 1 |
million of equity investments in ltcm made by three u. s. banking organizations in september of 1998. as of the third quarter of 1998, only five u. s. commercial banks had material otc derivative exposures to hedge fund counterparties. credit exposures arising from these relationships consisted of the current mark - to - market value of the derivative transactions as well as the potential exposure that might arise from future changes in these market values ( the potential future exposure or pfe ). all of the banking institutions mark their derivative positions to market on a daily basis and require any net current market value owed to them to be fully collateralized, generally with high quality securities, such as u. s. treasuries or sovereign debt from g - 10 countries. for those hedge funds judged to be of lower credit quality, banks generally require the posting of collateral or margin above current market values to protect against the potential future exposure of derivative contracts with these counterparties. with regard to ltcm, the review found that the fund was atypical among hedge fund counterparties in both the size of its positions and the amount of leverage it employed. while several hedge funds had larger net asset values ( capital ) than ltcm and a few funds may have employed the same or comparable book leverage, ltcm β s combination of size and leverage was singular. investigations of the management of the ltcm account at several institutions found that an over - reliance on the collateralization of the current market value of derivatives positions and the stature of ltcm β s managers led to compromises in several key elements of the credit risk management process. in some cases, assessments of ltcm β s creditworthiness was found to be less than adequate as a result of limited information on the fund β s true risk profile and risk management capabilities. in particular, exposure measures and scenario analyses that could have identified potential losses under stress situations were found to be less than adequate. importantly, while ltcm was found to be atypical among hedge fund counterparties, shortcomings in the risk management of hedge fund counterparty exposures appeared to extend beyond this one fund. in several cases, the review team found inadequate counterparty risk management policies and procedures. in others, while formal policies and procedures may have existed, gaps between policy and practices were identified. specifically, the review team found that the due diligence and ongoing risk assessments of hedge funds were largely qualitative and lacked quantitative rigor. the review also found compromise | mr meyer β s testimony on the federal reserve β s policy guidance to banks regarding hedge funds testimony of mr laurence h meyer, a member of the board of governors of the us federal reserve system, on hedge funds before the subcommittee on financial institutions and consumer credit of the committee on banking and financial services, us house of representatives, on 24 march 1999. i welcome this opportunity to discuss the federal reserve β s supervisory actions in the aftermath of the near - collapse of long - term capital management ( ltcm ). today β s hearings cover an important topic. the ltcm incident merits study to ensure that the lessons it provides are sufficiently understood and that constructive action is taken to effectively reduce the potential for similar events in the future, without compromising the efficiency of global capital markets. the primary issues raised by the ltcm incident appear to revolve around the broad theme of how to control the leverage and risk - taking of unregulated financial institutions β in particular, hedge funds β so that they do not become a source of systemic risk or jeopardize taxpayer funds via the federal safety net. in our market - based economy, the discipline provided by creditors and counterparties is the primary mechanism for β regulating β this risk - taking. in the case of ltcm, this discipline appears to have been compromised. weaknesses in several key elements of the risk management processes at some creditors and counterparties were magnified by competitive pressures, resulting in risk exposures that may not have been fully understood or adequately managed. less - than - robust risk management systems, evidenced by an over - reliance on collateral, compromised both the assessment of counterparty creditworthiness and the measurement and control of risk exposures at several financial institutions. to be sure, the lessons stemming from this episode have not gone unlearned, and there is no lack of effort to identify and implement appropriate public policy and private sector responses to the potential risks posed by hedge funds. these efforts range from private industry and supervisory initiatives aimed at strengthening the credit risk management infrastructures at financial institutions, to consideration of enhanced disclosure by global financial institutions, to those evaluating the costs and benefits of direct regulation of hedge funds. efforts to promote market discipline by strengthening the risk management systems of creditors and counterparties offer the most immediate and efficient way to accomplish the desired objective of minimizing the potential for systemic risk arising from the activities of hedge funds. supervisory oversight of bank risk management practices, including the issuance of guidance on sound practices, reinforces | 1 |
likely to come mainly through two channels. the first is a lower value of the exchange rate than otherwise would have been the case. the second is a boost to the disposable income of the household sector. in aggregate, the household sector pays around two dollars in interest for every dollar it receives in interest income. so, in aggregate, lower interest rates reduce the net interest payments of the household sector and so boost overall disposable income. in time, we would expect the lower exchange rate and the boost to disposable income to lead to more jobs, lower unemployment and a stronger economy. this should benefit us all, although i recognise that in the short run the effects are felt unevenly across the community. it is partly because of this unevenness that i want to repeat a point i made in answering the second question. and that is : the best approach to delivering lower unemployment and a stronger economy is through structural policies that support firms expanding, investing, innovating and employing people. these policies can have distributional effects too, but the benefits are more broadly based. so, as i said, as we ease monetary policy, it is in the country β s interest that other policy options are considered too. that brings me to the end of my four questions and answers. i hope that this has helped you understand the board β s thinking and why we took the decision today. i am happy to answer other questions that you might have. thank you for listening and for joining us this evening. 4 / 4 bis central bankers'speeches | as i have noted, compensation in financial instruments for various risks is very skinny indeed. investors in the long - term debt of most sovereigns in the major countries are receiving very little β if any β compensation for inflation and only minimal compensation for term. some model - based decompositions of bond yields suggest that term premia on us long - term debt and some sovereign debt in the euro area are actually negative. compensation for credit risk is also narrow in many debt markets. bis central bankers β speeches moreover, because the search for yield is a global phenomenon, considerable amounts of capital have flowed across borders. there is some evidence to suggest that as emerging country bond markets have developed, particularly in asia, more issuers have been able to raise funds in their local currencies. this leaves the foreign exchange risk associated with the capital flows more with the investor rather than a local bank or corporate, which is a good development. nonetheless, we don β t have full visibility of those risks and there has been a notable build - up of debt overall in some emerging markets. the other factor of importance is a set of structural changes in capital markets, where there are two key features worth noting. one is the expanding role of asset managers. the search for yield, and the general tendency since the crisis for some intermediation activity to migrate to the non - bank sector, has resulted in large inflows to asset managers since the crisis. yet liquidity β the ability to shift significant quantities of assets in a short period without large price movements β has probably declined, which is the second of the structural changes worth noting. certainly the willingness of banks and others to act as market - makers in the way they did in the past will have diminished considerably. now, of course, to some extent this is a result of the changes to financial regulation which have aimed to improve the robustness of the financial system. we should be clear that it was intended that the cost of liquidity provision in markets be more fully borne by investors. liquidity was under - priced prior to the crisis. nonetheless, the question is whether end - investors truly appreciate that the availability of liquidity in the system has declined. good asset managers have sufficient liquidity holdings to meet redemptions that may occur over any short time period and will also offer appropriate redemption terms and so pose only limited risks to the broader financial system. but the cost of holding the most liquid assets in a world of very low returns overall may pressure some asset managers to | 0.5 |
talk about the global economy. it plays an important role in our forecasts because we rely on exports for one - third of our gross domestic product ( gdp ). our main trading partners β including the united states, the euro area, china and other emerging markets β continue to show solid growth. such synchronous growth across these regions has not been seen in many years. data we have received since mid - april, notably with respect to the us economy, continue to suggest the global economy is expanding roughly as expected. and while global financial markets continue to function well, financial stresses have recently developed in some emerging - market economies as well as in europe. though global growth will eventually moderate over time as excess capacity is absorbed, the world economy is nonetheless expected to remain strong and to contribute to our export growth. despite a rather slow start to the year, the growth of our goods exports jumped to 3 per cent in march. their contribution to canadian gdp in the first quarter should be greater than what we had forecast in the april mpr. this is encouraging. that said, we know that our exporters are facing increased foreign competition. as we noted in april, the market share of canadian non - energy goods in the united states has shrunk by almost half since the early 2000s. we see this competition in many sectors β from automobiles to electronic goods to forestry β which is why we are monitoring competitiveness very closely, and expect to publish further analysis on this issue in the months ahead. we also know that international trade has undergone some significant changes in the past 10 years. before that, international trade was growing at roughly twice the rate of the global economy. it is now growing at the same rate as the global economy. this, together with more competitive world markets, has been restraining our exports. another important factor is the fact that many of our exporters are already operating at full capacity. at an industrial level, three - quarters of the sectors are at their highest capacity utilization rates since 2003. so investments would be needed to meet rising demand. given ongoing trade policy uncertainty, some firms are waiting to invest in new capacity, while others are deciding to expand outside of canada. this could limit exporters β ability to grow further even as foreign demand rises. for their part, canadian oil exports are likely to be stronger than expected in april, following pipeline outages last year. large upward revisions to oil exports in january suggest that oil exporters recovered much faster from these outages than suggested | slower than that in british columbia, contributing to relatively stronger wage growth. interestingly, we also see the impact of labour supply adjustment in regional housing markets. how the labour supply adjusts in the face of rising demand conditions is an issue we are watching closely because it affects the evolution of our economic capacity. for example, given revisions to past investment and our anticipation that trend labour input will rise over the next three years, we increased our estimate of potential output growth in april to 1. 8 per cent. still, with the uncertainty inherent in measuring potential output, we carefully monitor our measures of underlying inflation to ensure they are consistent with our assessment of economic slack. as such, core measures of inflation remain essentially at 2 per cent, consistent with the economy operating at close to capacity. however, higher crude oil prices, on average, relative to our april forecast are expected to lead to a higher headline inflation rate in the near term. monetary policy typically looks through transitory fluctuations such as this, as we did last year when inflation was held down by other temporary factors. 4 see d. brouillette, m. dockrill, h. lao and l. savoie - chabot, β bending the curves : wages and inflation, β bank of canada staff analytical note no. 2018 - 15 ( may 2018 ). yesterday β s decision this brings me to our decision yesterday to leave our policy rate unchanged at 1. 25 per cent. as we have emphasized several times in the past, our policy decisions remain guided by incoming data, since they inform our outlook for growth and inflation. as such, in reaching yesterday β s decision, we carefully weighed the information we have received since our april mpr. let me take a few moments to summarize the developments that factored the most into our deliberations. first, i want to reiterate that the economy is evolving largely as expected, with inflation roughly at our 2 per cent target and economic activity near potential. given this context, we began by acknowledging the better - than - expected tenor of many recent economic indicators. as i outlined earlier, manufacturing and investment activity has been solid, and exports are proving to be stronger than we expected in april, helped by increased energy exports. another positive sign is the 11 per cent increase in nominal service exports in the first quarter, which reinforces our view that services will continue to lead export growth, as they have in recent years. similarly, higher prices, on average, for canadian oil | 1 |
possible to pursue an independent monetary policy on a sustained basis. eventually, current - account disequilibria and changes in reserves will provoke an attack on the exchange rate. the enormous increase in capital flows has been accompanied by abrupt reversals of these flows. whereas the logic of the thesis of the impossible trinity suggests that exchange - rate attacks typically originate in response to current - account disequilibria and build up gradually, in fact, recent speculative attacks have often originated in the capital account, have been sudden and difficult to predict, and have included the currencies of countries without substantial current - account imbalances. capital - flow reversals have involved a progression of speculative attacks, mostly against pegged - exchange - rate arrangements. these reversals of capital inflows and resulting exchange - rate devaluations or depreciations have often been accompanied by sharp contractions in economic activity and have, at times, entailed β twin crises β - crises in both the foreign - exchange market and the banking system. finally, there has been a tendency of instability in foreign - exchange markets to be transmitted from one pegged - exchange - rate regime to others in a process that has come to be known as β contagion β. the victims of contagion have seemingly included innocent bystanders - economies with sound fundamentals whose currencies might not have been attacked had they adopted one of the corner solutions. this triad of factors - ( 1 ) the difficulty of conducting an independent monetary policy when the exchange rate is pegged and the capital account open, ( 2 ) sudden capital - flow reversals, and contagion - have profoundly affected the way we think about exchange - rate regimes. the experience of greece : pre - erm the foregoing factors significantly affected the greek economy in the 1990s. through 1994, the performance of the greek economy was pretty dismal. growth was almost flat, and inflation and the fiscal deficit as a percentage of gdp, were in the double - digit levels throughout the period. other eu countries were moving forward in their quests to become members of emu while greece was falling farther and farther behind. clearly, a regime change was called for. it came in 1995. the signing of the maastricht treaty in 1992 and the government β s publicly - stated objective of joining the euro area provided powerful incentives for mobilising broad public support for policy adjustment. among the policy measures undertaken were the following : β’ | 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 |
the medium run, the macroeconomic policies should be prudent in terms of public and private savings level, in order to control the need for using foreign financing resources. the fiscal policy during the first half of 2009 had an expansionary stance, being featured by a rapid growth of expenditures and budget deficit. budget revenues have recorded a more moderate growth, partially reflecting even the economic slowdown effects. though remaining within the projected level for 2009, the budget deficit by about all 30 billion constitutes a much higher amount than in the same period of the previous year. under these conditions, the bank of albania would appreciate the taking of measures for keeping budget deficit levels and public borrowing in check, helping the maintaining of the internal and external balances in the economy. preserving the projected budget parameters will impact positively on macroeconomic stability, by controlling the fiscal stimulus on aggregate demand and dampening the pressures on monetary markets. the demand for monetary assets increased during the last months. money supply rise by about 8 percent is based on money creation in the economy from the public sector and from private sector borrowing, mainly in all. loan portfolio grew moderately, by all 7. 5 billion or about 5 times less than as of the same period of the previous year. reduction of bank funds source and increase of uncertainty in the country influenced the significant deceleration of credit growth rates. however, credit to economy increased along the first months of the year, while the banking system has signalled no further tightening of the lending terms in the third quarter of the current year. the private sector β s demand for lek - denominated loans is faced with an increasing willingness from banks, thanks to stabilization of liquidity situation and easing of monetary conditions at start - 2009. restraint of foreign currency money supply has resulted to contraction of foreign currency component of money structure, even on the demand for money side, bringing about shifting of money supply structure towards the lek. in the first half of 2009, the financial market situation was influenced by increased uncertainty and revaluation of risk premiums that associated the liquidity constraint, consequent to deposit outflows and lending activity reduction. ongoing intervention of the bank of albania in the money market, combined with measures that aimed at relaxing the market and encouraging the interbank market activity, as well as the maintaining of sound financial system indicators, made the end of the period record stabilization of liquidity positions and of interest rates. the latter displayed different behaviour, according to maturity term. short - term | be constantly subject to bank of albania β s supervision and stress - test analyses. | 1 |
such as the domestic output gap and inflation expectations ). today, inflation is becoming increasingly less local, and in turn, becomes more and more dependent on global factors, i. e. the relationship between global demand to global supply. research that analysed the course of inflation in 22 oecd countries between 1960 and 2003 has shown that 70 % of inflation volatility may be explained by a common factor 7. this global, common factor explains not only the change in the inflation trend ( the increasing inflation between 1960 and 1980 and its subsequent decrease ), but also inflation fluctuation over a business cycle. the research has also shown that, where domestic inflation deviates from the β global β inflation, it exhibits a β global - inflation - reverting β tendency. as a consequence, modelling and forecasting of domestic inflation may be improved significantly by taking into account the β global inflation β. the fast - progressing globalisation is closely related to offshoring and outsourcing, whose scope is also growing. unfortunately there is not much hard data that would allow for assessment of the scale of the phenomenon. offshoring analysis is available only for selected countries and covers only selected industries. however, the growing scale of the phenomenon is reflected by data on global trade in goods and services and on foreign direct investment. over the past 15 years, the shares of individual regions in the global trade have changed significantly, whereby the decreasing share of the eu is accompanied by increasing shares of the developing countries, including the asian countries. globally, foreign trade expressed as percentage of the gdp increased from the average 19 % of the gdp between 1980 and 1989 up to 25 % between 2000 and 2004. table 1. shares of individual regions in global trade % total developed countries us ue15 developing countries asia source : imf direction of trade statistics bis 75 annual report, 2005. th ciccarelli, mojon β global inflation β, central bank of chile working papers no 357, december 2005. global capital flows keep growing even more dynamically, whereby the share of the global fdi in the global gdp increased from 8 % in 1989 to 22. 1 % in 2003, and foreign assets expressed as percentage of the gdp increased from 62. 6 % of the gdp to 186. 1 % of the gdp, respectively. as evidenced, the role of trade and financial links between enterprises in various countries has become more important over recent years. previously, in response to growing fuel prices or costs of living, trade | joined the structures, our part of the world has also seen an increase in migration, which is shown in table 3 below. in some cases, a significant part of the domestic work force took up employment in other countries. the estimates show that, for example, ca. 5 % of lithuanians took up employment in countries that opened their labour markets for the new eu member states following 1 may 2004. table 3. number of work permits in the uk, ireland and sweden issued to citizens of new member states following the eu accession in thousands uk * ireland * * sweden * * * total in % of workforce β lithuania 44. 72 26. 37 0. 37 71. 46 4. 4 latvia 23. 03 12. 94 0. 16 36. 14 3. 2 estonia 4. 68 3. 39 0. 36 8. 43 1. 3 poland 204. 90 70. 14 2. 16 277. 20 1. 6 czech republic 20. 01 6. 39 0. 07 26. 47 0. 5 hungary 10. 35 3. 83 0. 20 14. 37 0. 3 slovakia 36. 36 10. 93 0. 09 47. 38 1. 8 * source : accession monitoring reports, http : / / www. ind. homeoffice. gov. uk. the data include the period between may 2004 and december 2005. nbp calculations. * * source : skills needs in the irish economy : the role of migration, a submission by the expert group on future skills needs and forfas to the minister for enterprise, trade & employment, http : / / www. skillsireland. ie. the data include the period between may 2004 and august 2005. * * * source : migracje specjalistow wysokiej klasy w kontekscie czΕonkostwa polski w unii europejskiej. centre for migration research, warsaw university. the data include the period between may 2004 and december 2004. β workforce β people of 15 and more years of age in q1, 2004. hsbc β the great migration. how china β s 200 million new workers will change the economy forever β, hsbc global research, october 2005. a conclusion may be drawn that opening of the low cost economies, especially of the chinese economy, and the increasing international competition on the market of goods and services related thereto, changes the methods of setting prices by enterprises and determining wages on the labour market. enterprises are | 1 |
william c dudley : what does interconnectedness imply for macroeconomic and financial cooperation? remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the swiss national bank - international monetary fund conference, zurich, 8 may 2012. * * * it is a pleasure to have the opportunity to speak here today. as i see it, the complex interconnections that exist between the real and financial sectors of the economy, both within and between countries, have important implications for both macroeconomic and regulatory policy. in particular, cross - border coordination in both realms is warranted. often, macroeconomic and regulatory policies are too narrow in their focus. at times, policies are designed with the goal of being β best β at the national level. yet the resulting mix of national policies is distinctly inferior to what a well - coordinated global regime could have produced. today i will discuss two important challenges that go along with living in an interconnected world. the first is how to define what aspects of macroeconomic policy or regulation require greater international coordination and harmonization. some issues can be handled effectively at a national level, but the crisis has demonstrated clearly that many can not. the second challenge is how to make international coordination workable so that progress can be made in a timely manner while still preserving sufficient autonomy for countries to fashion policies to suit their particular idiosyncratic structures. as always, my remarks today reflect my own views and not necessarily those of the federal open market committee or the federal reserve system. we live in a globalized economy in which the flows of products, capital, and ideas across borders have led to significant economic gains for literally hundreds of millions of people around the world. thus, there is a strong public interest in ensuring that this global economic integration is supported by a coherent set of coordinated national macroeconomic policies and a harmonized international regulatory regime. this applies to the policy actions we undertake to reduce economic imbalances as well as to the regulations we develop to address the vulnerabilities in our financial system that were exposed by the crisis. the better we are able to develop cooperative global solutions to these types of issues, the more successful we will be in creating a sounder and more sustainable global economy and financial system. it is clear that there were important imbalances in both economic and financial activity in the years preceding the financial crisis. for example, in the u. s., too much of economic activity was based on an | complete. the news at the end of the day is good : it turns out that the alert was a false positive. but, the organization lost half a day of productive activity. in a simple world, controls detect problems immediately, diagnose with perfect accuracy, and result in corrective actions that are instantly and fully effective. in the real world, detection takes time, diagnosis is not always accurate, solutions take time to implement, and they don β t always work. that said, we must make decisions β including ones about whether and how to execute controls β based on the information available at the time. control design and execution take place in a world in which there is uncertainty about whether 3 / 5 bis central bankers'speeches there is a problem, what the problem is, what to do about it, when to do something, and what the effects of what we do will be. we can make better decisions when we understand and manage that uncertainty. there is also uncertainty about threats. we will never be able to envision the characteristics of all future causes of disruption. even when we plan effectively, we will be surprised again. and, like any other system, the control system will exhibit performance variability. for these reasons, we can β t rely solely on prevention. resilience requires the ability to withstand and recover when threats make it through preventive barriers, so a strong control system must incorporate preventive, detective, and corrective controls. perhaps because we are overoptimistic about prevention, detective and corrective controls sometimes get second - class billing. for many threats, time is not on our side ; the impact grows as the detection time increases. that β s the case with β dwell time β for cyber breaches, which is the amount of time attackers are on your network before you detect them. 9 it β s important to decide how long you are willing to wait to find out that you have a problem, and then use that as a requirement to design detective controls. underinvesting in corrective controls is problematic too. for example, how would you feel after a ransomware attack, if you find out that your backed - up data is intact but it will take months and millions of dollars to restore? or, if your first corrective action is the wrong solution and makes the problem worse? it takes time and resources to develop the tools, procedures, and skills to accurately diagnose causes, contain the immediate threat, and implement a long - term | 0.5 |
central bankers'speeches policies in euro area countries needs to be substantially stepped up to boost euro area productivity and growth potential, reduce structural unemployment and increase resilience. the 2019 country - specific recommendations should serve as the relevant signpost. regarding fiscal policies, the euro area fiscal stance is expected to remain mildly expansionary in 2020, thus providing support to economic activity. in view of the weakened economic outlook, the governing council welcomes the eurogroup β s call for differentiated fiscal responses and its readiness to coordinate. governments with fiscal space should be ready to act in an effective and timely manner. in countries where public debt is high, governments need to pursue prudent policies and meet structural balance targets, which will create the conditions for automatic stabilisers to operate freely. all countries should intensify their efforts to achieve a more growthfriendly composition of public finances. likewise, the transparent and consistent implementation of the european union β s fiscal and economic governance framework over time and across countries remains essential to bolster the resilience of the euro area economy. improving the functioning of economic and monetary union remains a priority. the governing council welcomes the ongoing work and urges further specific and decisive steps to complete the banking union and the capital markets union. we are now at your disposal for questions. 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, 12 december 2019. * * * ladies and gentlemen, welcome to our press conference. today is the first time that i have had the privilege and pleasure of chairing the monetary policy meeting of the governing council of the ecb. i am delighted to proceed now with reporting on the outcome of our meeting, together with the vice - president. the governing council meeting was also attended by the commission executive vice - president, mr dombrovskis. based on our regular economic and monetary analyses, we decided to keep the key ecb interest rates unchanged. we expect them to remain at their present or lower levels until we have seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2 % within our projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics. on 1 november we restarted net purchases under our asset purchase programme ( app ) at a monthly pace of β¬20 billion. we expect them to run for as long as necessary to reinforce the accommodative impact of our policy rates, and to end shortly before we start raising the key ecb interest rates. we also intend to continue reinvesting, in full, the principal payments from maturing securities purchased under the app for an extended period of time past the date when we start raising the key ecb interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. the incoming data since the last governing council meeting in late october point to continued muted inflation pressures and weak euro area growth dynamics, although there are some initial signs of stabilisation in the growth slowdown and of a mild increase in underlying inflation in line with previous expectations. ongoing employment growth and increasing wages continue to underpin the resilience of the euro area economy. the comprehensive package of policy measures that the governing council decided in september provides substantial monetary stimulus, which ensures favourable financing conditions for all sectors of the economy. in particular, easier borrowing conditions for firms and households are underpinning consumer spending and business investment. this will support the euro area expansion, the ongoing build - up of domestic price pressures and, thus, the robust convergence of inflation to our medium - term aim. in the light of the | 1 |
jean - claude trichet : laudatio for hans tietmeyer speech by mr jean - claude trichet, president of the european central bank ( ecb ), at munster city hall, westphalia, 26 march 2010. * * * lord mayor, mr hillebrandt, dear hans, ladies and gentlemen, it is a great pleasure to be here giving this speech in honour of my dear friend hans tietmeyer. the westfalen - initiative has made an excellent decision in inducting hans tietmeyer and freiherr vom stein ( 1757 β 1831 ) into the westfalische ehrengalerie [ westphalian gallery of honour ]. induction into the westfalische ehrengalerie is a means of honouring prominent westphalians for their services to the region. of course, the achievements of hans tietmeyer, like those of freiherr vom stein, can be seen far beyond westphalia. the historical significance of this city hall also extends way beyond westphalia. it has played host to pivotal events in the history of europe, having witnessed the negotiation and conclusion of the peace of westphalia more than 360 years ago. the treaty of munster and the treaty of osnabruck formed the basis for the establishment of peace in europe following the thirty years war. hans tietmeyer has also participated in pivotal events in europe β s history. indeed, he played a decisive role in laying the legal foundations for europe β s economic and monetary union. the introduction of the single currency represents the greatest achievement to date in the history of european integration β a process which has ensured six decades of peace and prosperity in europe. today, europe faces further pivotal decisions. the global financial crisis has resulted in major challenges for europe β s economic and fiscal policies. i will talk more about these issues at the end of my speech. i had the pleasure of spending many years working with hans β particularly between 1987 and 1999. initially, hans was secretary of state in the ministry of finance and i was director of the treasury. later, our periods as the governors of our respective central banks coincided. when the ecb was established, we both became members of the governing council of the ecb. it was hans who proposed not using members β countries of origin to determine the seating plan for the governing council β s meetings and instead using alphabetical order to decide who sits next to whom. after all, the members of the governing council are there to represent the euro area as | ##y. to the extent this is done generally across those funds that are less transparent, have weak risk management disciplines and / or inadequate operational infrastructure, they will be able to take on less leverage, which would limit the potential risk they may pose in a disruptive event. as these points suggest, it is not enough to simply manage the firm β s direct potential future credit exposure to hedge funds within prudently low limits. this has to be complimented with a more exacting approach to the evaluation of a firm β s overall vulnerability to market risk that includes full consideration of the potential impact of a large shock, including one that involves hedge funds. alongside these enhancements to risk management practices, we believe that market participants should also intensify their efforts to improve the underlying infrastructure of the markets in which hedge funds are important. weaknesses in close - out procedures for otc derivatives were among the areas singled out by the crmpg for collective action in the wake of ltcm, and important progress has been made in this area since. in addition, there are potentially valuable efforts underway to standardize documentation and improve the confirmation and execution process in these markets. but looking forward, given the size of the otc derivatives markets and the participation of hedge funds in those markets, it is worth reflecting on whether central counterparty clearing arrangements for the more standardized portion of the otc derivatives market could play a useful role. certainly, there are many challenges associated with such a project, and its potential to mitigate risks effectively would have to be clearly demonstrated, but surely it is worth looking carefully at whether that or similar efforts could provide meaningful improvements to the core infrastructure of what is undoubtedly a systemically important set of markets. taken together, these areas of focus are important to ensure that there is adequate capital not just against growing direct exposures to hedge funds, but the indirect exposures that could affect market conditions and firms β positions in a more stressful environment. we believe that the dealers that act as major counterparties to hedge funds have a collective interest in improving market practice in these areas. this is a good time for them to reassess how practice has evolved against the standards set out by the crmpg in 1999, and to examine whether the bar established at that time is appropriate for the conditions that exist today. it took a major market event to expose the extent of weaknesses in market practice that prevailed prior to 1998 and to catalyze improvements across the financial community. those reforms have played an important | 0 |
solve this supply bottleneck. it can help foster macroeconomic stability conducive to business investment, but most of the efforts to address supply - side impediments still need to come from a broader and more balanced set of economic policies including fiscal, industrial, technology, and labor market policies. concluding remarks let me end my talk today by saying that, as a central banker, we should be ambitious in making the best use of all available policy tools and in improving our understanding of the economy as well as the shocks driving it. but setting the ambition higher than the capability of monetary policy would likely prove to be counter - productive. it is an old established wisdom that what monetary policy can best deliver is price stability. while we have learned for a great deal about other aspects of macroeconomic stability, there is little disagreement that price stability must remain the central objective of monetary policy in the long run. abandoning this objective risks de - anchoring price expectations and inducing unnecessary economic volatility. the deployment of supplementary tools can go some way to help relax its limitation, but monetary policy is no panacea. ladies and gentlemen, only by understanding both the power and limits of monetary policy, will the economy be able to reap the most benefit out of this policy lever. the bank of thailand will continue to do our utmost to strive for overall macroeconomic stability, and the long - term prosperity of thailand. thank you. bis central bankers β speeches | bandid nijathaworn : financial developments and the thai banking sector keynote address by dr bandid nijathaworn, deputy governor of the bank of thailand, at the third euromoney thailand investment forum, bangkok, 10 june 2009. * * * thank you and good morning first let me thank euromoney for the invitation. it is an honour to be speaking to you today. for the last few years that i have been coming to this forum to speak, i find the session to be very useful as it provides an excellent opportunity for us at the bank of thailand to interact and share our views with investors on thailand β s current issues, including our policies. so, it is a pleasure to be here this morning. my topic today is about financial developments and the thai banking sector. given the limitations of time, i want to focus my remark today on two issues. the first is the short - term issue about the current economic and financial conditions, and the policy response that we have had in trying to strengthen the process of recovery. next, i will speak on the mediumterm issue of financial sector reform, beginning with how we see the new or the post - crisis financial landscape emerging and our plan to respond to these changes in the context of our financial sector master plan. first, the current conditions. latest economic data in thailand continues to show deterioration in economic activities as evidenced by the estimated decline of 7. 1 percent in this year β s first quarter gdp growth. however, most recently, while the overall domestic activities remain weak, more positive signs on the real sector are emerging, especially in the monthly april data that show greater stabilization in the pace of contraction on a month - on - month basis, of exports, manufacturing output, capacity utilization, and private consumption, as well as a narrowing of the trade surplus. on the financial front, recent rally in equity prices is also positive. the rally, which is largely liquidity driven, is indicative of two developments that are taking place in our financial markets at this time : first, the resurgence of capital inflows linked to the return of risk appetite globally ; and second, the search for yield by thai savers, on account of the low nominal deposit rates, which sees savings shifting away from bank deposits to other instruments. hence, the latest round of deposit rates increase by banks can be seen as a response to this development. on liquidity, at this time, liquidity in the thai banking system remains ample | 0.5 |
mario draghi : ecb press conference β introductory statement introductory statement by mr mario draghi, president of the european central bank, frankfurt am main, 15 april 2015. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. based on our regular economic and monetary analyses, and in line with our forward guidance, we decided to keep the key ecb interest rates unchanged. as regards non - standard monetary policy measures, on 9 march we started purchasing euro - denominated public sector securities as part of our expanded asset purchase programme, which also comprises purchases of asset - backed securities and covered bonds. purchases are intended to run until the end of september 2016 and, in any case, until we see a sustained adjustment in the path of inflation that is consistent with our aim of achieving inflation rates below, but close to, 2 % over the medium term. when carrying out its assessment, the governing council will follow its monetary policy strategy and concentrate on trends in inflation, looking through unexpected outcomes in measured inflation in either direction if judged to be transient and to have no implication for the medium - term outlook for price stability. the implementation of our asset purchase programmes is proceeding smoothly, with volumes in line with the announced figure of β¬60 billion of securities per month. in addition, there is clear evidence that the monetary policy measures we have put in place are effective. financial market conditions and the cost of external finance for the private sector have eased considerably over the past months and borrowing conditions for firms and households have improved notably, with a pick - up in the demand for credit. looking ahead, our focus will be on the full implementation of our monetary policy measures. through these measures, we will contribute to a further improvement in the economic outlook, a reduction in economic slack and a recovery in money and credit growth. together, such developments will lead to a sustained return of inflation towards a level below, but close to, 2 % over the medium term and will underpin the firm anchoring of medium to long - term inflation expectations. let me now explain our assessment in greater detail, starting with the economic analysis. real gdp in the euro area rose by 0. 3 %, quarter on quarter, in the last quarter of 2014. domestic demand, especially private consumption, continued to be the main driver behind the ongoing recovery. the latest economic indicators, including survey data up to march, suggest that the euro area economy has gained further momentum since the end of | loi m bakani : commodity and food prices, inflation and monetary policy in papua new guinea presentation by mr loi m bakani, governor of the bank of papua new guinea, to the national research institute food security policy conference on β high food prices in papua new guinea β, port moresby, 6 september 2011. * * * i wish to express my gratitude to the national research institute for arranging this conference on food prices in papua new guinea and for inviting me here today to make a presentation. i would also like to thank other policy makers and specialists working in this crucial field. today i will be discussing global commodity and food prices, how this has affected inflation in papua new guinea, and how the bank of papua new guinea has responded to these issues. international commodity price boom since 2004, global commodity prices have increased substantially, largely due to increased demand in resource - intensive emerging economies such as china, which has outstripped global supply. other factors have supported this boom, including low interest rates, a weaker us dollar, and arguably some speculation. international food prices increased at a slower pace during this period until they surged in 2007 and again in 2010, largely due to supply constraints. prices indices of food and png's exports ( usd ) international food price png mineral export price png non - mineral export price q 20 1 q 20 3 q 20 1 q 20 3 q 20 1 q 20 3 q 20 1 q 20 3 q 20 1 q 20 3 q 20 1 q 20 3 q 20 1 q 20 3 q source : food and agriculture organization, bank of png. the commodity price boom has had numerous positive benefits for the png economy. first, due to increased mining and petroleum export revenues, the government has been able to reduce its external debt, allowing for more stable financing of the budget and external position. moreover, with stable government financing, there has been no central bank financing of the government β s budget, which historically has led to high inflation and exchange rate depreciation. additionally, the increased export prices have contributed to high gdp growth, while higher non - mineral export prices have increased incomes and bis central bankers β speeches employment. because of these factors, the bank of png has been able to increase its international reserves, while the kina exchange rate has appreciated mildly and been broadly stable. impact on inflation in png these factors have changed the nature of inflation in png in recent years. historically, inflation was relatively stable up | 0 |
but there is no such thing as a cryptocurrency. 3 / a european mobilisation on private payment infrastructures thanks notably to the involvement of the major european banks in the european payments infrastructure ( epi ) project. it is crucial that we go beyond the current national systems, and offer cross - border solutions together with a pan - european brand. there is no contradiction between the cbdc and the epi. we could very probably need both. the bis recently underlined this complementarity between public and commercial money in its report published on friday. i would therefore like us to build a public / private partnership. the potential impacts on the banking industry and financial stability could be controlled using different means : for example, by having the retail central bank digital currency distributed by the banks, directly to individuals ; and by limiting the amount of digital euro in circulation to prevent an excessive conversion of deposited commercial bank money into cbdc. * * in conclusion, i would like to repeat a conviction : fintechs are no longer separate from the world of finance. they are transforming the practices of financial institutions, their relations with customers β we can see it clearly with payments β as well as their relations with supervisory authorities : new technologies are useful not only for improving crisis prevention and management, but also for optimising the work of the supervisor. we are talking about regtech and suptech. all these dimensions will be taken into account in the banque de france β s next strategic plan, β building 2024 together β. thank you for your attention. 3 / 3 bis central bankers'speeches | ##cb ) and - some time later - into the eurosystem are well under way. as the historic process of reunifying europe unfolds before our eyes, let me assure you that the ecb is ready and looking forward to playing its part. | 0 |
timothy lane : thermometer rising - climate change and canada's economic future remarks by mr timothy lane, deputy governor of the bank of canada, at the finance and sustainability initiative, montreal, quebec, 2 march 2017. * * * i would like to thank erik ens for his help in preparing this speech. introduction it is my privilege to speak to you about the economic implications of climate change β one of the biggest challenges facing canada and the world in the 21st century. let me first congratulate the finance and sustainability initiative for your leadership in promoting responsible investment for sustainable development. your work is vital to putting finance at the service of environmental sustainability β helping the private sector to identify the risks and opportunities inherent in climate change and green finance. the connection between climate change and the bank of canada β s responsibilities for the stability of prices and the financial system is not an obvious one. we are not experts on climate science, nor do we control the tools to limit global warming. however, climate change itself and actions to address it will have material and pervasive effects on canada β s economy and financial system. while many of these will play out over many decades, i will argue that they are already starting to become important. so, the bank needs to consider these effects as we deliver on our mandate to promote the economic and financial well - being of canadians. in the time i have with you, i would like to share the bank of canada β s perspective on the economic effects both of global warming and of the tools and policies that can be deployed to address it. i will discuss some of the challenges β as well as the opportunities, because there are many β that lie ahead for canada. i will also talk about how the work of the bank connects with these issues. the future becomes the present here in montreal in early march, it might be tempting to think that rising temperatures could be a welcome change for canada. but, as we know, that would be wrong. global warming is already having negative effects, with significant economic costs compounding a heavy human toll around the world, including in canada. climate scientists are convinced that global warming is, at least to a large extent, attributable to human activity. climate systems, like economic systems, are complicated : the forces at work can interact in unforeseen ways, so there are some significant unknowns. but these unknowns are all the more reason to act, especially if they imply even a small risk of a | judgments on those issues. the bank β s approach to policy is evolving in light of these developments. we have made some major advances in our thinking in the past year, and in the transparency with which we present these issues to you. many of the key variables that are essential to the policy decision β measures of capacity, the neutral rate of interest, our outlook for growth and inflation, and so on β are now conveyed in ranges. these elements of uncertainty are being explicitly incorporated into our decision making. all of this demands that we think of monetary policy as an exercise in risk management. although we regard the risks around attaining our inflation target over a reasonable time frame to be balanced, as policy - makers, we acknowledge that, in the current situation, the consequences of an upside risk would be more manageable than those associated with a downside risk. if this makes central bankers seem overly preoccupied with downside risks, and seem gloomy to you, then take heart β we are just doing our job. bis central bankers β speeches | 0.5 |
steven maijoor : public trust - the litmus test of financial innovation speech by mr steven maijoor, executive director of supervision of the netherlands bank, at the institutional digital assets and crypto regulation symposium, london, 17 november 2022. * * * hello everyone. it is great to be back in london β one of the great financial centres in today's globalised world. before i delve into the developments of the day, i'd like to draw some parallels between crypto - asset markets and a key historic financial innovation. i'll argue that the lessons we learned in the past remain relevant for our regulatory efforts today. i'll also argue that successful financial innovations must be underpinned by public trust if they are to stand the test of time. to illustrate, let's go back to 17th and 18th century amsterdam, which became a staging ground for significant financial innovation. after a long and arduous struggle, the netherlands was able to gain independence from the spanish empire. this kickstarted a period of rapid economic growth. one of the developments that proved instrumental to the dutch economic and financial success was the emergence of a stablecoin avant la lettre. my colleagues from the bank for international settlements ( bis ) and the dutch central bank ( dnb ) have written a very thoughtful piece on the bank of amsterdam and its proto - stablecoin, the guilder, but allow me to summarize. 1 four centuries ago, many different metal coins circulated in the netherlands. and exchanging one coin for the other happened in the streets. you can imagine how cumbersome trading was. but then, in 1609, the bank of amsterdam was founded. and its services were simple. the bank of amsterdam allowed merchants to deposit their metal coins β any coins that were in circulation β into a deposit account. it would then value these coins against each other and credit merchants with bank guilders. and this would allow for easy transactions between deposit accounts. this is a great example of human innovation. just as the entire financial system is indeed proof of our immense human creativity. the reason that today, after so many centuries, we still have a well - functioning financial system β a system that, i dare say, has generally improved over the course of many years β is because, sooner or later, the litmus test for any financial innovation is the public's trust. that trust is the true bedrock of our financial system. that trust allows for innovations | pointing in opposite directions, and in particular that central banks have the necessary operational tools and can use them at all times if required. recent experiences indicate the larger role of the financial stability objective in modern central banking in contrast to the orthodoxy of the post - 1970s era when monetary policy alone came to the fore. this rebalancing in some ways takes us back to the earlier classical gold standard era of central banking. but in modern central banking, the separation principle is much more important than it was in the classical era. by this i mean distinguishing between, and communicating the distinction between, monetary policy and financial stability actions. public looking at recent experience in the uk, the so - called ldi event was clearly a financial stability not monetary policy one, and the challenge was to structure the intervention and communicate it in a way that reinforced this point. the march 2020 β dash for cash β was more complicated because it arose in the context of both financial stability and monetary policy events ( the latter in the sense of the severe and unexpected recession ). how to structure and communicate the policy response by central banks in this β hopefully highly unusual - situation deserves more attention. that said, in the normal state of affairs we are moving to a world where our standard operations meet the system β s demand for liquidity in normal times, and not more than that. against this backdrop, monetary policy can most effectively set the official interest rate. in normal conditions, meeting the demand for liquidity β most obviously through the level of reserves banks choose to hold β should also support financial stability. beyond that, we must then have a set of effective and usable exceptional tools for financial stability stresses including when they arise in the non - bank part of the financial sector. the classical gold standard was an era of prolonged monetary stability punctuated by the need to respond rapidly and forcefully to financial stability shocks, and in doing so preserve monetary stability. walter bagehot β s critique of the bank of england in the classical gold standard era was for not responding in a timely and forceful way to financial stability shocks. in the covid - ukraine era central banks did respond rapidly and forcefully. some would still say we did too much. i disagree with that assessment. but i do think that going forwards β and as we experienced positively with the ldi crisis β rediscovering the distinctive roles of monetary and financial stability actions will help us. financial stability issues themselves create macroeconomic trade - offs which can affect monetary policy. but these will | 0 |
to domestic demand recovery. repayment of overdue debt to farmers, approvals of backlog projects by the boi, and fresh loans to the smes provided quick relief in and of themselves, but the combined multiplier effects could also be meaningful. by shoring up income and improving overall sentiments, these measures constitute an important effort to revive private spending. fast indicators already suggest that private consumption and investment are stabilizing, and private confidence improving. we expect the recovery of domestic demand to gain more traction going forward, especially in the second half of this year. in light of these recent events, our latest growth projection for this year has been revised upward to 1. 5 percent. while this figure may be much lower than long - term potential growth of around 4 to 5 percent, it is chiefly dragged down by the first - quarter contraction β bygones if you like. from this quarter onwards, we anticipate a clear pickup in growth and a v - shaped recovery. many independent forecasters are currently holding a similar view, and most have revised up their growth projections after the political turning point in may. bis central bankers β speeches this brighter economic outlook is not without risks, however. exports of goods in particular have underperformed thus far this year, despite their insulation from domestic political turmoil. a number of factors are at play, some temporary, others more secular. weaker economic growth in regional trading partners, including china and asean, has been one cyclical hindrance. global trade also appears to be lagging global growth, limiting scope for emerging economies like thailand to leverage on advanced economies β recovery. more deep - rooted structural issues at home may also be responsible, as segments of the manufacturing sector are not integrated into the modern global supply chain. for these reasons, exports may play a less active role in its contribution to growth this year. on the financial stability front, we remain cautious but optimistic. domestically, the prolonged period of economic slowdown has subjected indebted households and smaller businesses to financial strains. loan quality for weaker borrowers has deteriorated somewhat as a result. the good news is that these risks have been confined to specific sectors, and the banking system remains strong and has weathered the slowdown very well, owing to their prudent risk management policies. externally, we also cannot rule out further episodes of volatile capital flows owing to shifts in monetary policy abroad. our economy has proven resilient to such shocks in the recent past, thanks to strong macro | ##es. the imf staff has taken these developments into account in the april 2017 world economic outlook ( weo ) and forecasts that world gdp growth will be noticeably higher over the next two years than in 2016 β a slight upward revision relative to the october 2016 weo. 5 there may well even be some chance that foreign economies kick into gear enough that u. s. and foreign business conditions become reasonably well aligned, as occurred during the u. s. monetary tightening cycles that began in 1999 and in 2004. in both of those episodes, u. s. exports grew substantially against the backdrop of a brisk expansion in foreign activity and a stable or even slightly depreciating dollar. of course, it is hard to predict whether foreign economies continue to strengthen so that the global economy will move more in sync β as i hope β or if a substantial gap will remain between the business cycle positions of the united states and our foreign trading partners. however, even if monetary policy divergence remains substantial, there is good reason to think that spillovers to foreign economies will be manageable. first, i expect that the fed β s removal of accommodation will be driven by a continued expansion of the u. s. economy ; thus, foreign economies are likely to benefit from the developments that induce the fomc to tighten. second, most foreign central banks should be able to mitigate an undesirable tightening of their own financial conditions through appropriate policy actions. an important lesson of the taper tantrum was that effective communication and actions by major central banks, including the european central bank and the bank of england, were helpful in quickly pushing bond yields down to levels that these central banks regarded as appropriate to their economic situation. third, many emes have markedly improved fundamentals β including smaller current account deficits and more anchored inflation expectations β that should allow them to better withstand the effects of u. s. tightening, though some vulnerabilities remain. finally, i expect that u. s. policy normalization will be gradual under likely scenarios for the evolution of output and inflation. a gradual and ongoing removal of accommodation seems likely both to maximize the prospects of a continued expansion in the u. s. economy and to mitigate the risk of undesirable spillovers abroad. references ammer, john, michiel de pooter, christopher erceg, and steven kamin ( 2016 ). β international spillovers of monetary policy, β ifdp notes. washington : | 0 |
so a possible interest rate hike would represent a return to conventional monetary policy terrain. and it is not so much the timing of the interest rate move that matters as the subsequent interest rate path which the fed follows. what would a return to normal policy rate conditions in the united states mean for the euro area and for germany β s banks? since 2013 we have observed that policy divergence between the united states and the euro area has had two knock - on effects. first, the differential between us and euro - area interest rates has widened ; second, the euro exchange rate has dwindled. this trend gained traction early this year when the eurosystem announced the large - scale purchase of government bonds. that increased the spread between us treasuries and german bunds and sent the euro plummeting against the dollar. so german banks need to remember that even if the fed raises its policy rates, the spell of low interest rates in the euro area looks set to continue. remember what i said just a few minutes ago β sitting tight and hoping for the best simply isn β t an option. and as far as possible exchange rate volatility is concerned, banks might theoretically be exposed to currency risk. two factors play a role here. the first is banks β funding gap in dollars. that gap measures the excess of a bank β s us dollar assets over its us dollar liabilities. the bigger this overhang, the more exposed the bank is to exchange rate risk. the second factor is the bis central bankers β speeches mismatch between the maturities of assets and liabilities denominated in us dollars. this maturity mismatch measures both exchange rate risk and interest rate risk. at the onset of the global financial crisis in 2008, both the funding gap and the maturity mismatch of german banks were very large indeed. when the forex markets dried up and german banks got cut off from us dollar funding, the central banks had to step in and lend a helping hand. since then, the ecb, to name but one, has been providing swap facilities, but the take - up now is virtually non - existent. german banks have reduced their vulnerability since those days, slashing their funding gap by downsizing their stock of us dollar assets. what remains substantial, though, is the scale of the maturity mismatch of their us dollar investments. however, the actual risk exposure here is relatively small, because german banks these days are much better hedged against currency risk | this is because more than half of all loans to households are loans for house purchase. [ 1 ] at 80 %, real estate makes up the lion β s share of fixed assets in germany. our assessment of the real estate market situation is similar to that of last year : cyclical risks, to which the real estate market is making a significant contribution, are continuing to mount. however, we see no need to activate borrower - based instruments intended to stabilise lending standards β in other words, a loan - to - value ratio and an amortisation requirement. how have we reached this assessment? house prices are an important indicator and have continued to grow sharply, rising by around 8 % over the past year. property prices in german cities are likely to stand around 15 % to 30 % above the value that would correspond to the fundamentals. at present, however, we do not see any clear indications of mounting speculation being driven by credit. whether there is a self - reinforcing β narrative β β to use the words of nobel prize winner robert shiller β cannot be clearly assessed. [ 3 ] there are indications of this, however. β’ first of all, the competition in granting residential real estate loans is highly intense. with growth of 5 %, loans for residential property recently grew at a slightly above - average rate. segments of the market have shifted to the savings banks and credit cooperatives. β’ prudential surveys amongst institutions show that there are certain signs of lending standards being relaxed β but only slightly and not across all institutions. β’ households and banks expect residential property prices to rise further. it is difficult to say whether they are being overly optimistic here. at the very least, households are expecting less pronounced price rises in rural areas than in big cities and they expect smaller increases in prices per year over a period of five years than over one year. all in all, it would therefore be premature to issue the all - clear for the real estate market. there is a need for action in two areas. in a warning to germany, the european systemic risk board ( esrb ) has just recently highlighted the need to close existing gaps in the data. we still know too little about one particular central indicator for estimating risk : the quality of lending standards. surveys of institutions, like those we have conducted once again over the past year, provide us with vital information. ultimately, however, they are costly for all involved and do not offer a robust statistical footing for forward - | 0.5 |
we will be in a position to make announcements soon. for example, the measures being considered relate to modifications in the operation of standing facilities offered by the bank as well as the use of longer - term foreign exchange swaps. the bank conducts money market swaps in foreign exchange as a fine - tuning tool to manage money market liquidity. foreign exchange market the size of the south african foreign exchange market, measured in terms of average daily turnover in usd, has fluctuated between usd10bn and usd15. 2 since the time of the last fmd cocktail, with the composition in terms of spot, forward and swap transactions remaining relatively unchanged. very much like in other parts of the world, conditions in the foreign exchange market continued to be volatile. the bank has continued its involvement in the foreign exchange market mainly for reserves accumulation purposes. as a result of the appreciation in the rand exchange rate in 2009 and earlier this year, there were heightened calls for the bank to intervene aggressively in the foreign exchange market or to even peg the rand to the us dollar. as indicated before, the bank remains committed to a flexible exchange rate regime, with the exchange rate determined primarily by the market. the commitment to a flexible exchange rate should, however, not be misunderstood as an indifference towards the exchange rate. the rand is one of the most volatile currencies and the bank is cognisant of the impact that this can have on business, and the uncertain operating environment it creates. extended periods of misalignment can lead to a misallocation of resources between sectors within the economy and lead to an uneven and unbalanced economic recovery. having acknowledged that certain sectors of the economy have been affected by what may be perceived to be a relatively strong exchange rate, it is also crucial to again highlight the importance of inflation management. one must bear in mind that a depreciation in the nominal exchange rate together with an increase in inflation would not lead to an improvement in the level of competitiveness of the rand. any consideration for more aggressive participation in the foreign exchange markets would also have to be carefully assessed against, among others, the prospects of success given the factors that may be driving the exchange rate in any particular direction at any given point in time. more aggressive intervention or pegging the rand to the us dollar would be a very costly exercise. firstly, how much foreign exchange reserves would be required to artificially peg the rand to the us dollar and to maintain this peg in the event of pressure to de | daniel mminele : the south african reserve bank β s activities in financial markets address by mr daniel mminele, deputy governor of the south african reserve bank, at the financial market department β s annual cocktail function, pretoria, 3 june 2010. * * * introduction good evening ladies and gentlemen and welcome to the fourth annual cocktail function of the financial markets department ( fmd ). it is our privilege to host this event. thank you for accepting our invitation. you are all familiar with recent economic and financial market developments, but please allow me to just briefly touch on these events from the perspective of the central bank. i will then discuss the bank β s activities in the financial markets given that, in some form or another you are all counterparties to our operations and activities in the financial markets, or are affected by what we do. international developments since the previous fmd cocktail at the end of july 2009, there have been a number of economic developments, which have had a significant impact on global risk appetite and trends in financial markets. for much of 2009, the eur was relatively strong, appreciating to usd 1, 51 in early december 2009. speculative currency positioning, as represented by weekly data from the commodity futures trading commission ( cftc ), showed aversion towards the usd in this period. the usd showed a net short position of over 280 000 contracts. the vix index, a popular measure of expected volatility, and often referred to as the β fear index β, hovered around its long - term average of 20 index points, while advanced and emerging market equity markets were recording double digit gains. in developed bond markets, short dated yields were declining owing to the still lax monetary policy, while long - term yields were rising in reaction to increased government debt issuance. emerging market bond spreads as measured by the emerging market bond index ( embi ) plus spread, had come off their high levels of almost 900 basis points in october 2008 to 280 basis points in december 2009. credit default swap ( cds ) spreads for the advanced economies and for certain european countries recently in the spotlight were also stable over this period, indicating little concern about sovereign default risks. money markets were also relatively stress - free, as reflected by the continued narrowing in overnight index swap ( ois ) spreads at the time. the global economy emerged from recession in the latter half of 2009, much sooner - thanexpected and at a pace that was stronger than even the most optimistic forecasts | 1 |
lesetja kganyago : issues confronting monetary policymakers in south africa address by mr lesetja kganyago, governor of the south african reserve bank, at the thomson reuters economist of the year awards jse limited, sandton, 11 august 2015. * * * good morning, ladies and gentlemen, and thank you for the opportunity to deliver the keynote address at this prestigious awards ceremony. this competition is about forecasting a number of economic variables. predicting the future is difficult at the best of times, and with the economic environment becoming increasingly turbulent, forecasting is becoming that much more difficult. it is also a challenging time for policymakers ; in the face of heightened uncertainty, our decisions become more datadependent than usual. this makes it more difficult for analysts to forecast policy moves. we interact with market participants and other interested parties on a regular basis to help them understand our thinking on various issues. in the recent past, a number of questions have repeatedly come up, and in my address to you today, i will focus on three of these interrelated questions. first, how should monetary policy respond to changes in the exchange rate, particularly when driven by terms - of - trade shocks? second, given the importance of us policy normalisation in our communication, does this mean that the bank follows global interest rates in making policy decisions? and finally, how does the bank think about inflation expectations? responding to exchange - rate shocks since the beginning of 2014, when the bank started the tightening cycle, the rand has depreciated by about 18 per cent against the us dollar and by about 6 per cent on a tradeweighted basis. for some time, we have been indicating that the rand exchange rate is one of the main upside risks to the inflation outlook. however, this does not mean that we target the rand in any way : the rand is but one of a number of determinants of inflation acting simultaneously, sometimes in different directions and with varying intensities. monetary policy actions do not attempt to influence the exchange rate but rather focus on the overall inflation outlook. a complicating issue recently has been the fact that the traditional pass - through relationship from the exchange rate appears to be lower than during previous episodes of rand weakness. time will tell whether or not this is a cyclical phenomenon which may be reversed at some stage, or whether it is of a more structural nature. a number of factors have impacted on the rand, and i will highlight three | currencies of other commodity producers have also been affected, in some cases more so than the rand. since the beginning of the year, for example, during which time the rand has depreciated by about 9 per cent against the dollar, the rand remains more or less unchanged against the australian dollar and the russian ruble, but has appreciated by about 8 per cent against the new zealand dollar, by about 17 per cent against the brazilian real, by about 2 per cent against the chilean peso, and by about 3 per cent against the canadian dollar ( although there was generally a good deal of volatility between these two periods ). monetary policy reactions have differed ; over this period, monetary policy has been tightened in brazil, unchanged in chile, and loosened in australia, canada, and new zealand. the question is how monetary policy should react to different categories of shocks. textbooks distinguish between portfolio shocks and terms - of - trade shocks ( apart from standard domesticdemand shocks ). the challenges posed to the rand by the us policy uncertainty clearly fall into the category of portfolio shocks. here, literature tells us that policymakers should respond to these shocks by tightening monetary policy. in an inflation - targeting framework, the tightening would depend on the extent to which the weaker exchange rate was expected to impact on inflation rather than acting to protect the exchange rate per se. the role of inflation expectations ( and monetary policy credibility ) would be central to this. reaction to a terms - of - trade shock is less straightforward, as it would also depend on whether it was a decline in an export price ( for example the gold or platinum price ), which would in itself have less impact on domestic prices, or whether it was an increase in import prices ( for example oil prices ), which do impact more on domestic inflation. in general, a terms - of - trade deterioration driven by a decline in export prices implies a decline in domestic incomes which can be disinflationary. a fall in export prices may be accompanied by currency depreciation which moderates the impact of the decline in export prices on demand and inflation. a policy response would need to try and β see through β the first - round effects of the change in the exchange rate. however, again, much depends on the extent to which inflation expectations are well anchored. where countries have inflation under control, a response to depreciation and negative termsof - trade shocks can be more supportive to economic activity. other commodity producers β | 1 |
profession, and feded has furthered these goals by making sure to include schools with significant numbers of minority students. this past school year, feded sent research assistants into nine different schools and feded volunteers have visited 38 different schools since 2012. feded was back in schools last fall, drawing from 48 research assistants who volunteered to participate. feded also sponsors several speaker events a year that bring students into this board room. students recently heard a presentation from scott alvarez, who oversees the board β s legal division, and, in february, vice chairman stanley fischer will speak to students at another event. feded is overseen by two research assistants, caroline shinkle and jamie lenney, along with karen pence, who is an economist at the board. all three are with us this evening and prepared to answer further questions about the program. online resources for teachers can be found on the board β s website at federalreserve. gov, and additional resources available throughout the system are at federalreserveeducation. org. the websites include videos in which policymakers and the staff describe the fed β s functions. also, the sites include historical materials and a wealth of information related to the financial crisis and the fed β s response. let me leave it there, and again thank teachers for participating in this town hall, and offer my thanks, on behalf of the board of governors, for the valuable work you do every day. i would be very happy to respond to your questions. 1 purposes and functions is available on the board β s website at www. federalreserve. gov / pf / pf. htm. 2 more information about feded is available on at www. federalreserve. gov / aboutthefed / educational - tools / fed - education. htm. 2 / 2 the board β s website bis central bankers'speeches | - thirds of economic activity. consumers skilled in managing their finances are better prepared to weather bad times, and stronger household finances overall can help sustain growth, stabilize the economy, and mitigate an economic downturn. stabilizing the economy and mitigating a downturn, of course, also happen to be among the federal reserve β s primary responsibilities. when successful, monetary policy can be a powerful and effective tool to these ends, but its capabilities are dwarfed by larger factors such as the productivity of the workforce and the strength of household finances. by educating students and directly supporting their contributions to the economy as producers and consumers, all teachers, especially teachers of economics, are effectively furthering our mission at the fed, so let me offer my thanks for making that job a little easier. to help support your important work as teachers, the federal reserve board and the 12 reserve banks conduct programs, organize events, and publish books and other materials to spread knowledge of the role of the fed β and economics in general β and to promote financial literacy. before i get to those events and programs, let me say a word about what is probably the most important pedagogical aid that the fed produces β the 182 - page book called the federal reserve system : purposes and functions. the 10th edition of purposes and functions, published in october of last year, offers a detailed and comprehensive account of 1 / 2 bis central bankers'speeches what, why, and how the fed carries out its different responsibilities. i think it is a wonderful resource for teaching about the fed, and copies are available via the board β s website. 1 each of the fed β s reserve banks has community outreach and educational initiatives in the areas of the country they serve, and the outreach to economics teachers is coordinated by the group chaired by amy hennessy, the federal reserve system economic education group. at the board, we have for some years operated a program called feded, which sends fed employees into schools throughout the washington, d. c., metropolitan area and sponsors events for students here at the eccles building. 2 feded β s outreach to schools depends on the time and sacrifice of several dozen research assistants, who are typically recent college graduates who work for two or three years at the board. research assistants who volunteer for feded visit schools ; help teach about the fed, economics, and finance ; and answer questions about work opportunities at the board. the federal reserve is committed to promoting diversity in our ranks and in the economics | 1 |
, for example, the institutions have, in principle, to decide on their own initiative the basis of the valuation ; despite subjective elements, however, discretionary powers should not unduly restrict the comparability of the results because information on the quality of a loan book can be assessed to some extent independently of the valuation basis selected according to objective criteria. admittedly, there are other ways of assessing risk, as the example of japan has taught us. it is customary internationally and appropriate for different payment arrears in servicing debt to serve as a yardstick. furthermore, the comparable, because appropriate, use of discretionary powers when valuing assets is encouraged by the fact that, in principle, value adjustments on loans may be deducted from taxable profits. the banking supervisors are in favour of this. indeed, they regard it as an incentive to make appropriate risk provision in good time. by contrast, the absence of such an incentive may be a destabilising element in a financial system. japan is a good example of this, too. by the way, including value adjustments in tax assessment is also consistent with the principle of taxing on the basis of performance. having made these remarks of rather a national nature, i shall now return to international transparency. iv the basle committee on banking supervision, which was established by the central bank governors of the g - 10 countries as the committee on banking regulations and supervisory practices as far back as 1975, also issued statements on transparency and accounting as part of its core principles in 1997. the core principles describe the preconditions for an effective banking supervisory system. principle 21 requires, among other things, that β the bank publishes on a regular basis financial statements that fairly reflect its condition β. regarding accounts, it is said that β market participants need access to correct and timely information in order for market forces to work effectively, thereby fostering a stable and efficient financial system. for this reason, banks should be required to disclose to the public information regarding their activities and financial position that is comprehensive and not misleading. this information should be timely and sufficient for market participants to assess the risk inherent in any individual banking organisation. β the basle committee has since explained and amended its principles in various papers, the most recent being in october 1998. this was a consultation paper on the balance sheet treatment and valuation of credits and on the supply of information about credit risks in lending operations. a constructive relationship with iasc has also been maintained for some time in order | sabine mauderer : welcome speech - 15th anniversary of the deutsche bundesbank's representative office welcome speech by dr sabine mauderer, vice - president of the deutsche bundesbank, at the 15th anniversary celebration of the deutsche bundesbank's representative office, new york city, 24 september 2024. * * * check against delivery 1 welcome ladies and gentlemen : for me, it is always a great pleasure to be here. especially this year, as we celebrate the 15th anniversary of our trading office. since its inception in april 2009, the trading office has provided the bundesbank executive board with first - hand knowledge from wall street and beyond. i know for sure that its success rests on a network of exceptional people, namely you! therefore, i want to start with a big thank you to all of you, for your cooperation and trust over all these years. but before we move on to the fun part, let us look at what has happened in the markets since we last met in september 2023. 2 economic backdrop from an economic point of view, the world looked different a year ago. inflation in the euro area β and in the us too β was significantly higher. almost a year ago to the day [ sept. 2023 ], the eurosystem raised its key interest rates for the last time in the tightening cycle. in september 2023, the deposit facility rate reached 4. 0 percent. the tightening has done its part to cool euro area inflation. today, the eurosystem is well on the way to meeting its inflation target. in the us, we also see positive developments in this regard. inflation has decreased significantly, thanks to a series of interest rate increases. although us inflation remains above the fed's two percent target, things are heading in the right direction β just like in the euro area. in terms of economic growth, the us remains ahead of the euro area. while euro - area gdp grew by 0. 4 percent last year1, the us economy mustered 2. 5 percent growth2. as it stands today, the us is poised to outperform the euro - area economy once again this year β despite recent signs of a cooling in the us labour market. against the backdrop of lower inflation, central banks on both sides of the atlantic have taken steps to pare back the degree of monetary - policy restrictiveness. as expected, the fed last week [ sept. 18 ] decided to lower its target range for the federal funds | 0.5 |
one should downplay. 3. economic developments recent growth figures for the global economy have been rather disappointing. growth dynamics have dampened, not least in major emerging economies. the us economy contracted in the first quarter of this year due to a brief spell of poor weather. and the uk economy has also seen its growth rate shrink. the lower oil price is proving to be less of a driving force for the global economy than had been anticipated. the moderate recovery in the euro area is ongoing, however, and the economy has picked up further momentum. the latest eurosystem staff macroeconomic projections for the euro area see annual real gdp increasing by 1. 5 % in 2015, 1. 9 % in 2016 and 2. 0 % in 2017. the german economy has recovered more quickly than expected from the cyclical lull in the middle of last year and has returned to a growth path that is underpinned by both domestic and foreign demand. domestic economic activity is benefiting from the favourable labour market situation and the substantial increases in income. although foreign trade is currently being hampered by dampening global dynamics, it is simultaneously being buoyed by the euro β s depreciation and the strengthening cyclical recovery in the euro area. the bundesbank β s economists expect germany β s real gdp to grow by 1. 7 % this year, 1. 8 % in 2016 and 1. 5 % in 2017. a puzzling feature of the german economy is the divergence of business investment and employment, all the more so given that financing conditions are extraordinarily favourable. the weak level of business investment might be explained by the high degree of uncertainty over external developments, but it might also point to an anticipated future shortage of skilled labour. in other words : ageing tones down investment. 4. making europe more prosperous the wait - and - see stance adopted by many german enterprises is motivated not least by the modest economic outlook for the euro area. boosting growth in the euro area, then, needs to be the top priority. this would not only help the crisis countries to overcome their very difficult economic situation but also benefit all the other member states. to get to grips with the crisis, it is crucial for the troubled economies to press ahead with their adjustment process. that includes shoring up public finances ( in line with the fiscal rules of the stability and growth pact ) ; deleveraging the private sector ; implementing structural reforms and boosting price competitiveness. this, by the way | important shock absorber than public risk sharing. the integrated markets for equity capital in the us cushion around 40 % of total cyclical fluctuations between federal states. if a negative shock hits an industry or a specific region, then this loss is spread widely beyond that region. creditors, on the other hand, are not exposed to losses β except in the case of insolvency. in other words : equity is a shock absorber, debt is a shock amplifier. that β s yet another reason why we need to promote the integration of equity markets in europe, too. this should also include venture capital. when it comes to providing capital to innovative firms, the eu has a lot of room for improvement. in the us, for instance, finding investors is not much of a problem for innovative companies. on average, an innovative us firm can attract significantly more capital than one in the major european countries. dismantling national barriers and creating a european venture capital market would help fast - growing, fledgling enterprises to get better access to capital. while regulation has been harmonised to some extent, however, many crucial domains for venture capital funds, such as investor protection and insolvency law, remain fragmented. hence, to exploit all economic advantages of a capital market union would imply more legal changes than currently proposed by the eu commission. 4. 2 barriers to market entry another obstacle that particularly stifles growth by business start - ups is red tape. frequent administrative formalities, long approval periods or high fees make starting a business more complicated and expensive than it should be. even though an enterprise β s direct costs may appear to be manageable at first glance, the economic cost of difficulties in entering the market and, as a result, weaker competition should not be underestimated. for example, studies indicate that the differences between the cost of entering the market in the usa and in the eu, though relatively small, could still account for 10 % to 20 % of the eu β s productivity shortfall. the costs of removing red tape are comparatively low and could help strengthen growth. this holds true for many european countries β not least for germany, which ranks 106th in the global competitiveness report of the world economic forum on the question β how bis central bankers β speeches many procedures are required to start a business? β β alongside countries like ethiopia, zimbabwe, mozambique and chad. 4. 3 market integration even in the uk, i think, few would doubt that the single market has been a great | 1 |
search for yield, which can lead to a situation where returns no longer reflect underlying risk fundamentals. for example, at the fsb, we are closely monitoring developments in leveraged finance and the clo market. this market has grown to an estimated total of 3. 2 trillion usd and has been accompanied by declining lending standards and higher corporate leverage. covenant - lite loans were rare prior to the crisis, but since 2009 its share of issuance has increased to 50 - 80 %. moreover, there has been an increase in leverage and deterioration in credit quality. over 60 % of outstanding loans has a single b credit rating or lower. needless to say, such lending activities are vulnerable to a sudden change in market sentiment, a rise in interest rates or deterioration of the economic situation. public and private indebtedness a second important effect is that the low interest rate environment has led to a strong increase in total debt, both within the public as well as the private sector. total debt - to - gdp ratios stand at 350 % for japan, and around 250 % for the us, the uk and the euro area. higher debt levels may reflect a response to structurally lower interest rates and therefore structurally higher sustainable debt levels, but they can also create vulnerabilities. for example, despite the favorable economic conditions in recent years, very few countries have actually reduced their public debt ratio. in the current environment, governments do not face financing constraints. debt sustainability issues could however resurface when market sentiment shifts and risk premia were to increase. sovereign debts are particularly prominent in europe, where the preferential treatment of sovereign exposures effectively implies zero - risk - weighting at the banks. corporate indebtedness in advanced economies has also been rising and has peaked over 160 % of gdp. this might result in a debt trap where corporates can only service their debt because of the low interest rates, but do not have sufficient underlying earning capacity to cope with an unexpected rise in interest rates ( zombification ). real estate markets the third systemic risk that i want to mention is the strong increase in both residential housing prices and commercial real estate in recent years. real estate markets have traditionally been an important factor in the development or amplification of financial crises. several jurisdictions show increased signals of overvaluation in significant segments of the market. ii. macroprudential toolkit given the current stance of monetary policy and the outlook of a prolonged period of low interest rates, it | ##ctioning, they could also reflect more structural underlying problems that monetary policy measures cannot resolve. if the central bank were to respond to the latter, it would intervene in areas where other players have a responsibility to act. the key challenge is therefore to assess which circumstances apply, before deciding on the most appropriate instrument or set of instruments to activate. for a discussion of these results in a broader context, see bonam, d., galati, g., hindrayanto, i., hoeberichts, m., samarina, a. and i. stanga ( 2019 ). inflation in the euro area since the global financial crisis. dnb occasional study no. 3. 5 see for instance gertler and karadi ( 2015 ), monetary policy surprises, credit costs, and economic activity, american economic journal, 7 ( 1 ), 44 β 76. it is important to note that, next to the higher level of uncertainty, employing unconventional tools will also likely carry larger risks, for instance in terms of longer - run side β effects. i have therefore argued before that policymakers should consider exercising more caution in deploying unconventional instruments. 6 in times of severe market stress with equally severe frictions, however, the advantages of more aggressive action might outweigh the disadvantages of higher uncertainty and larger risks. specific challenges for the ecb against this backdrop, let me focus on two additional challenges related to the institutional context within which the ecb operates. the first challenge here is provided by the observation that the ecb has to operate in an incomplete monetary union with a more convoluted process of policy coordination. the design of our economic and monetary union remains a compromise between limited risk - sharing and a large degree of national liability and control. this confronts the ecb with more institutional restrictions than other central banks. it has to deal with 19 different fiscal counterparts, for instance, all of which face different sovereign risk premia. this makes the purchase of government bonds more fraught than in other jurisdictions. to what extent further steps toward fiscal risk - sharing should be taken, is very much a political question. from my perspective, i can only note that more effective fiscal stabilization would have the potential to make the ecb β s job significantly easier. the second challenge specifically faced by the ecb relates to the euro area β s financial architecture. within the euro area, banks play a dominant role. pervasive banking sector weaknesses like non - performing loans and | 0.5 |
john c williams : finding balance in the economy remarks by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at the economic club of new york, new york city, 30 may 2024. * * * as prepared for delivery introduction i'm honored to be here today among so many economic club of new york members, fellows, students, and staff. the club has the privilege of hosting incredible speakers, but it's our members who truly create the robust, dynamic environment for our discussions. thank you for being part of this wonderful organization. as i look ahead to the end of my term as club chair, i'd like to thank my predecessor in this role, marie - josee kravis ; our board members ; our tireless president and ceo, barbara van allen ; and the small yet remarkably productive staff of the club. when i began my term as chair back in june of 2020, the ecny was strong and vibrant, all thanks to their vision, commitment, and hard work. at the same time, 2020 was a period of tremendous uncertainty for the ecny. after all, our hallmark was in - person events. with the onset of the pandemic, we needed to reinvent what it meant to be the ecny in very short order. we all quickly came together and innovated to an incredible degree so that we could reach our members in new ways. zoom became our meeting room, and we later found success in hybrid events. we launched new programs, including a series focused on diversity, equity, and inclusion, the innovation and social impact challenge, and the podcast. and we did it while maintaining the financial strength of the club. here is one statistic that captures the dramatic evolution of the club. over the past four years, we held 100 events, or 25 per year, on average. that compares to 660 events in the prior 113 years, or about six per year. that's over a 300 percent increase in productivity! there are many exciting things planned for the future, and i look forward to watching the club evolve and prosper in the years to come. for today's discussion, i'll transition away from my role as ecny chair and back to my job as president of the new york fed. i'll spend some time focusing on how the federal reserve is working to achieve both maximum employment and price stability. i'll also discuss the progress we've seen | our objectives. in terms of my forecast for the economy, i expect gdp growth this year to be between 2 and 2 - 1 / 2 percent. i expect the unemployment rate to be about 4 percent at the end of this year, and then move gradually down to its longer - run level of 3 - 3 / 4 percent thereafter. as the growth of economic activity gradually slows and demand and supply continue to come into better balance, i expect overall pce inflation to moderate to about 2 - 1 / 2 percent this year, before moving closer to 2 percent next year. it goes without saying that the outlook is uncertain. the risks are two - sided, with geopolitical events and china's growth outlook prominent examples. because of this, we will continue to keep an eye on the totality of the data, so that we make policy decisions that ensure that we get inflation sustainably back to 2 percent while maintaining a strong labor market. conclusion i'll close with this. we have seen a great deal of progress toward our goals over the past two years. i am confident that we will restore price stability and set the stage for sustained economic prosperity. we are committed to getting the job done. 1 for a discussion of the importance of job switchers for aggregate wage dynamics see fatih karahan, ryan michaels, benjamin pugsley, ayegul ahin, " do job - to - job transitions drive wage fluctuations over the business cycle?, " american economic review, 107 : 5 ( may 2017 ) : pp. 353 β 57. 2 martin almuzara, babur kocaoglu, and argia sbordone, " is the recent inflationary spike a global phenomenon?, " federal reserve bank of new york liberty street economics, may 16, 2024. 3 federal reserve bank of new york, multivariate core trend inflation ( march 2024 update ). 4 federal reserve bank of new york, survey of consumer expectations ( april 2024 survey ). 5 federal reserve bank of new york, global supply chain pressure index ( april 2024 update ). 4 / 5 bis - central bankers'speeches 6 jaison r. abel and richard deitz, " supply chain disruptions have eased, but remain a concern, " federal reserve bank of new york liberty street economics, may 20, 2024. 7 board of governors of the federal reserve system, federal reserve issues fomc statement, may 1, 2024. 5 / 5 | 1 |
##monic power but strong values : europe has also been in the in the 20th century a pioneering model of social progress, combining lower levels of inequality with a higher level of public services, and a social safety net. it is now forging a pioneering environmental model for the 21st century. the fragmented international environment definitively needs new institutional skills β¦ and to quote robert schuman again β the contribution which an organised and living europe can bring to civilization is indispensable to the maintenance of peaceful relations β. x * * * we live in the decade of decisive choices. the global order is confronted with a destructive triangle of β fragmentation / isolation / confrontation β. let us build a more promising perspective with an alternative triangle of β competition / solidarity / cooperation β, using the words of jacques delors, β we need competition that stimulates, cooperation that strengthens, and solidarity that unites β. xi europe has shown that this triangle could be made reality, despite page 8 sur 8 its history of rivalry and β yes β imperfection. thank you for listening to these personal thoughts i wanted to share with you in marrakech. the economist, how paranoid nationalism corrupts, 2nd september 2023. schuman declaration, may 1950. iii g20 - new delhi leaders'declaration final adoption, 9 september 2023. iv european parliament, eprs ideas paper, the future of multilateralism and strategic partnerships, september 2020. v speech by the president of the republic at the conference of ambassadors, 28 august 2023. vi palais royal initiative, report, 8 february 2011. vii palais royal initiative, ibid. viii jean - claude trichet, the future of the international monetary and financial system, politique etrangere, ifri, 2019. ix consolidated version of the treaty on european union, article 2. x schuman declaration, ibid. xi jacques delors, β the single market, cornerstone of the eu β, tribune, notre europe - jacques delors institute, 22 november 2012. i ii | β how paranoid nationalism corrupts β. i if we are not careful, the 2020s could bring us back to a situation reminiscent the darkest hours of the european history in the 1930s. the tragic events in israel since saturday are a very unfortunate reminder of this sad reality. page 2 sur 8 a2. the disease of nationalism is jeopardising international cooperation exactly at a time when we need it most. this is what i call the β global public goods β paradox. let me explain. probably more than ever, the global community must safeguard and deliver on existential public goods : ecological transition to address climate change, pandemic preparedness, digitalisation and cybersecurity, financial stability in the face of increased global debt, to name just four of them. these issues can only be resolved in a collective and concerted manner : none of us can tackle them alone. meanwhile, multilateralism is in a crisis without precedent. once a beacon of great progress, the g20 is clearly underperforming given the global challenges ahead. despite the growing impact of climate change, i have serious concerns that this priority is at risk of fading away, as observed in the most recent g20 and international discussions, due also to the increased polarisation of political debates around climate and environmental issues in the united states. europe is ahead ; the rest of the world shouldn β t lag behind β this would be my wish, my call, for the marrakech agenda in the next days. as geopolitical rifts deepen and trust fades, it is becoming more and more difficult for the international fora β including the imf and multilateral development banks β to deliver on their mandates. but let us be candid : multilateralism is first and foremost the victim of the russian war, but also partially of a backlash against the predominance of the global north and the post - wwii international order. only a system in which each country feels legitimately represented will be viable in the long term. we need to find pragmatic ways forward : i β ll come back to this later. a3. a few lessons drawn from european cooperation. as imperfect as it is, the european union is a historical experiment in overcoming decades of nationalist rivalry, from which we can draw three useful lessons for today β s multilateral challenges. the first relates to the objectives of cooperation. to bring results and cement solidarity, multilateral action should focus on limited, pragmatic and shared | 1 |
gas emissions, responsible for supervising three quarters of the global systemically important banks and two thirds of systematically important insurers. the conference was the first milestone for the network. this year, the ngfs reached its second milestone : a report with six recommendations on how central banks and supervisors should contribute to paris. in short : central banks can play a catalyzing role in promoting responsible financial markets. as investors, they can strive to make the economy more sustainable by managing the environmental risks of their own reserves. de nederlandsche bank has, for example, signed the principles for responsible investment. in the financial sector, we would be considered laggards, as this is already standard industry practice. but in the central banking community, we were the first ever to sign the pri. the direct effects of our action may be limited, given the size of our investment portfolio, which is 19 billion euros, and given the composition, which is mostly government bonds. but we hope that others will follow, and collectively, the impact will be larger. and apart from the absolute number, we as central banks exert influence by leading by example. the starting point for supervisors is the risk perspective. as i said before, climate change and the transition towards a carbon - neutral economy are sources of financial risk. the financial sector is particularly exposed to physical risks and transition risks. physical risks refer to the damage of the catastrophic effects of climate change. assets may by ravaged by climate calamities. and the whole economy may be affected indirectly through weaker growth and lower asset returns. these risks are not just in the distant future. 2017 and 2018 were already the costliest years on record in terms of weather - related disasters. here in germany, the hot summer of 2018 caused the closure of parts of the rhine to commercial shipping, for the first time in living memory. the closure of this vital waterway shaved 0. 2 % off germany's gross domestic product. shipping restrictions were again in place this year following the record temperatures. so it looks like climate - related disruption is here to stay. even if you are skeptical about climate change or its causes, there is no escaping climate regulation. the risks of stranded assets are very real. this is what we refer to as the transition risk. financial institutions have significant exposures to companies that emit high levels of co2. pension funds and banks, in particular, are vulnerable to their carbon intensive assets suffering a sudden loss in value. here again, risks are already | β. once it awoke to the consequences of physical targeting during the course of the second plan, the rbi strove to trim the size of the subsequent plans to match visible resources. another illustration of differences between the government and rbi culminating in the resignation of governor rama rau in 1957 is well documented ( balachandran g, 1998 ). another major area of discord between the rbi and the government in the late 1950s related to the financing of the cooperatives and the pattern of organisation of the lending agencies. interestingly, during the early 1960s, governor iengar identified four areas of potential conflict between the bank and the central government. these were interest rate policy, deficit financing, cooperative credit policies and management of sub - standard banks. it may be of interest to note that currently, in the year 2001, these four areas are still on the top of rbi β s concerns. this phase, from nationalisation of the rbi in 1948 till nationalisation of major commercial banks in 1969, may be considered as maturing of the rbi into a full - fledged professionally managed central bank, perhaps one of the foremost in developing countries. the mid - fifties, however, did see the beginnings of serious erosion of autonomy in the monetary policy function due to the emergence of the system of ad hoc treasury bills and automatic monetisation. it was agreed that rbi would replenish government β s cash balances by creation of ad hoc treasury bills in favour of the rbi. the ad hoc treasury bills, which were meant to be temporary, gained a permanent as well as a cumulative character. indeed, it became an attractive source of financing government expenditures since it was available at an interest rate pegged at 4. 6 percent per annum since 1974, i. e., actually at a negative real interest rate. the third phase that changed the contour of this relationship started with the nationalisation of major banks in 1969. while the problems experienced earlier by the rbi persisted to some extent, the change brought about a curious situation where the government became owner of a number of banks, but the supervision of these banks was, in turn, conducted by the rbi which was also owned by the government. the situation, however, was not unique to india and was somewhat similar to that of france. the fundamental factor affecting the relationship was the combined effect of government β s ownership of major commercial banks and the persistence of high fiscal deficits, which posed serious problems for prudent monetary management. for easy access of market borrowing | 0 |
balancing of risks to their outlooks before deliberating on whether to adjust their respective monetary policy stance in forthcoming meetings. domestic economic developments the domestic economy remained on a steady growth path in 2023q2, following robust performances in 2022q4 and 2023q1. the economy expanded by 6. 0 per cent in 2023q2, up from 5. 8 per cent in 2023q1. economic activity continues to showcase signs of resilience, with the'accommodation and food service activities ','construction'and'transport and storage'sectors being the locomotives of growth amidst the strong momentum in tourist arrivals and ongoing major infrastructural projects. the tourism sector, being one of the key pillars of the domestic economy, heralds encouraging performance for the year, underpinned by continued strong demand for the mauritian destination. around 1, 026, 700 tourists visited the island from january to 2 / 9 bis - central bankers'speeches october 2023, representing 93. 1 per cent of the 2019 level, and almost 45 per cent higher compared to the same period of 2022. in line with the resurgence in tourist arrivals, tourism earnings were also buoyant, aggregating rs60, 798 million during the period january to september 2023, higher by 46 per cent compared to the corresponding period of 2022 and well above the 2019 level. we project tourism earnings at rs85. 0 billion for 2023, significantly higher than the 2022 level of rs64. 8 billion. going forward, the tourism sector is expected to maintain its momentum, benefitting from pent - up demand for holiday travel, increased flight connectivity and diversification of markets. labour market conditions remained robust in 2023q2. the unemployment rate maintained its gradual decline and dropped to 6. 4 per cent in 2023q2. the female unemployment rate has increased slightly, standing at 9. 1 per cent in 2023q2, while youth unemployment rate declined to 18. 1 per cent β the lowest reading since 2010. labour market conditions are expected to improve further as the domestic economy sustains its growth momentum. the current account deficit as a ratio to gdp declined to 11. 5 per cent for 2022, from 13. 1 per cent registered in 2021. the improvement largely reflected the considerably better performance of the services account. the improvement in the current account persisted during january to september 2023, with 2023q1 registering a deficit of | harvesh seegolam : current economic conditions and outlook statement by mr harvesh seegolam, governor of the bank of mauritius, at the post monetary policy committee ( mpc ) press briefing, port louis, 28 november 2023. * * * ladies and gentlemen, members of the media, good afternoon. welcome to this press briefing for the third monetary policy committee ( mpc ) meeting of the year, marking the 69th sitting of this committee. as you may recall, at the two previous mpc meetings held during the year, we emphasised on the need to allow some time for our new monetary policy framework to become entrenched into the operational aspects of the banking sector and financial market operators. the bank continues to monitor progress made by market players in embracing the new framework, while taking note of the challenges identified and adjustments needed, if any. the bank is cognizant of the need to continuously review the framework so that it suits the requirements of our evolving economic environment. in this respect, the bank is following up on its overhauling process of the monetary policy framework and is engaging in extensive consultations with reputed central banks and other international organisations. this rightly underscores our aspiration to align our monetary policy framework with the best practices in other central banks and monetary authorities. let us now zero - in on the topic of the day. at its meeting today, the mpc discussed lengthily domestic economic prospects, whilst considering the latest developments taking place on the international front. i shall now elaborate on the essence of those elements covered extensively in the mpc policy deliberations. international economic developments the global economy remains resilient and continues to recover despite divergences noted across regions and sectors. the imf, in its world economic outlook of october 2023, projects growth at 3. 0 per cent for 2023, unchanged from the last projection made in july 2023, and higher by 0. 2 percentage point compared to its april 2023 projection of 2. 8 per cent. the us economy showed signs of improvement in 2023q3 supported by robust consumer spending amid a strong labour market, while continued sluggishness was observed in the euro area and in the uk. the chinese economy is still facing the effects of the downturn in its property sector, while india is well poised as one of the fastest growing economies. purchasing managers'indices ( pmis ), key leading indicators of economic activity, pointed towards continued expansion | 1 |
paul tucker : resolution of large and complex financial institutions β the big issues remarks by mr paul tucker, deputy governor for financial stability at the bank of england, at the european commission conference β building a crisis management framework for the internal market β, brussels, 19 march 2010. * * * many thanks for input to mark adams, andrew bailey, peter brierley, geoffrey davies and andrew hewitt, and to financial stability board colleagues for discussions on resolution issues. for background work to michael grady and for secretarial support to sandra bannister and cheryl feeney. i am delighted to be at today β s conference, the first major conference under commissioner barnier. as many colleagues here will know, i chair the financial stability board β s working group on cross - border crisis management. but my remarks today are offered in a personal capacity, albeit drawing on the international dialogue. the conference is very well timed given the commission β s work on a possible eu directive on resolution regimes. an increasing number of national authorities have already established or are prospectively establishing special resolution regimes for the resolution of commercial banks, enabling the transfer of deposits and good assets to another bank, with bad assets and other creditor claims going into an insolvency process. at a high level of generality, a distressed bank is split into a continuing good bank, typically acquired by a healthy bank ; and a gone - concern bad bank, which goes into administration. insured deposits travel with the β good bank β. all other creditors typically travel with the β bad bank β and become claimants in the insolvency. we can be confident that this will help to buttress stability. encouragement from the eu to all members states to establish such regimes would be really useful. but we also know that, of itself, this is insufficient. it cannot cope with distressed lcfis ( β large and complex financial institutions β ) without injections of public money. in the first place, every country having its own special resolution regime does not solve the problem of resolving cross - border banking groups. second, such regimes cannot cope with investment banking, whether national or global, if a buyer cannot be found. even for a ( hypothetical ) lcfi operating entirely within a single jurisdiction, with all of its counterparties, customers and contracts domiciled there, a standard resolution regime could not effect an orderly run down of, for example, a massive, complex derivatives portfolio. putting over - the - counter derivatives though central counterparties | to say that none of them yet seems to provide a completely convincing explanation. and although different mpc members place different weights on the possible explanations, we all agree that there is considerable uncertainty as to how productivity will evolve as the recovery proceeds. unemployment is certainly not a perfect guide to slack in the labour market. for instance, the recent increase in the number of workers wanting to work more hours suggests it understates the absolute level of slack1. but it is not unreasonable to expect this margin of β potential hours worked β to move in line with unemployment. and, unlike in the 1980s, we have not seen a substantial movement in the labour force participation rate, which suggests that the number of discouraged workers has not risen markedly. so overall, changes in the unemployment rate are, we think, likely to provide a reasonable guide to the evolution of labour market slack. now consider what will happen if the weak productivity performance of recent years is simply a consequence of the weak state of demand and so reverses as the recovery proceeds. in that case, businesses will be able to supply the extra demand without greatly expanding their workforces and unemployment will be slow to fall. in these circumstances, it is indeed appropriate to keep monetary policy loose as potential output is well above actual output. conversely, suppose that the financial crisis and subsequent recession has wrought lasting damage to productivity. in that case, unemployment is likely to fall faster as demand grows, meaning that unemployment will reach the 7 % threshold sooner. then it will be appropriate to tighten policy sooner in this case, as potential output will be lower. the only case where the linkage of policy to unemployment is potentially problematic is where there is scope for productivity to increase as demand recovers, but for some reason firms take on extra labour before the increase in productivity takes place. but this seems rather unlikely to me. in any case, it is important to realise that the 7 % threshold does not constitute a trigger for the mpc to raise bank rate. rather it represents a prompt for the committee to undertake a see bell, d n f and blanchflower, d g ( 2013 ) β underemployment in the uk revisited β, national institute economic review, no. 224. bis central bankers β speeches broad assessment of the prospects for demand, supply and inflation. if it appears that there is still a substantial degree of slack in the economy which can be absorbed without threatening the achievement of the 2 % inflation target in the medium term, then there will be | 0.5 |
own access to the interbank market in china, will offer these liquidity facilities via the renminbi / ringgit foreign exchange market, and the renminbi money and repurchase markets in the malaysian interbank market ; ii. second, non - resident financial institutions that meet the prudential requirements will be permitted to offer ringgit trade financing, in collaboration with resident financial institutions. in this regard banks in china will also be allowed to provide ringgit trade financing in china ; and iii. finally, in recognition of the growing significance of regionally active financial institutions and the increased financial inter - linkages between our two economies as well as in mutual recognition and acceptance of each others β securities, bank negara malaysia and the people β s bank of china has today signed a memorandum of understanding to establish a cross - border collateral arrangement that will enable financial institutions access to the central bank β s liquidity facilities. let me now conclude my remarks. the most pressuring challenge for the world economy is to achieve a sustained and inclusive economic growth. beyond the short - term volatility in the international financial markets, the prospects of the asian region are well anchored on solid fundamentals, and underpinned by our economic and policy flexibility and years of reforms. collectively, the asian region will be an important growth center in the world economy contributing to global stability. china in particular has been successful in rebalancing its economy amidst structural adjustments and reforms that brings its economy to a sustainable growth trajectory. with the progressive move by china towards the internationalisation of their financial system in the years to come, there will be increased interconnectedness of the chinese financial system with the rest of the region and the world and consequently, a wider role of the renminbi as it continues to grow in importance in international trade and financing activity. it would be inevitable that the renminbi will become an important reserve currency in the international financial system. against this development, the opening of the bank negara malaysia β s beijing representative office builds on the deep ties that has already been forged and signifies our confidence and commitment to this future. the beijing office will also serve as a key point for the chinese financial community to engage malaysia and understand the opportunities available in our countries. finally, i would like to express our great appreciation to the people β s bank of china for their approval and support for the bank β s representative office. bis central bankers β speeches | ##ised towards addressing contemporary issues facing the ummah. from ending poverty and hunger to promoting responsible production and consumption ; providing affordable housing ; better healthcare and education β shariah deliberations on islamic finance matters should reflect on the evolving needs of the economy and society. shariah scholars are constantly challenged to have a thorough and sound understanding of other fields of expertise such as economics, law, psychology and technology to formulate well - rounded and pragmatic ijtihad. with shariah scholars at the forefront of multi - disciplinary knowledge, the shariah fraternity can play a more prominent role in the global call for action for the financial sector to better respond to the contemporary challenges facing our world today. closer engagement with wider stakeholders, be it the financial industry, regulatory authorities, central banks and the public sector, has never been more pressing than before. it is the way forward. it is the way to ensure that the islamic finance industry continues to be able to deliver on the intended objectives of shariah. 1 / 2 bis central bankers'speeches transparency of shariah rule - making my second point relates to the importance of transparency of shariah reasoning and credibility of shariah rulings. this will encourage a deeper understanding of shariah requirements and outcomes beyond a compliance mindset. pronouncing a clear and comprehensive hukum is certainly not easy ; shariah deliberations would need to be anchored to a comprehensive and robust decision making approach that captures holistic considerations including legal, risk, accounting, operations and also stakeholder implications. it is equally important that shariah rulings are well - understood by everyone. this calls for an effective communication strategy to advocate the intended outcomes of each rulings and the underlying reasons for each decisions. platform such as this gathering β offers all of us the opportunity to learn and exchange views from each other β s experiences. best practices in shariah methodology and governance can be shared and deliberated to elevate the quality of rulings and stature of shariah advisory authorities globally. connectivity among centralised shariah advisory authorities the final point is on increasing connectivity among centralised shariah advisory authorities to promote mutual respect and knowledge - sharing. islam has flourished with a strong foundation of knowledge, wisdom and tolerance among its scholars. differences in ideas and open discourses to assess the veracity of knowledge β have always been practiced in many islamic societies. while achieving consensus is ideal β full appreciation of differences | 0.5 |
are likely to come onto the market in the months ahead due to the large volume of mortgage loans currently in the foreclosure process. for the government sector, large federal budget deficits are a constraint and fiscal policy is slowly shifting from an expansive policy back toward restraint. at the state and local level, the constraints are even more binding, as budgetary gaps will need to be addressed by spending cuts and tax increases ( chart 22 ). exports rebounded sharply over the second half of 2009, particularly to the emerging world ( chart 23 ). however, domestic demand in europe and japan β important export markets for the united states β remains very weak. this suggests that the u. s. trade balance is likely to change little over the next year or two, and, thus, will be relatively neutral in terms of its impact on growth. only business fixed investment is in a position to be a true locomotive of growth. profits have stayed high relative to investment, and corporate balance sheets are awash with cash ( charts 24 and 25 ). however, even here, the growth impulse is likely to be weak. prospective startup businesses are going to find it difficult to obtain funding. and larger businesses will unlikely increase investment spending sharply at a time when capacity utilization rates remain unusually depressed ( chart 26 ). relatively sluggish growth implies that the output gap will be closed very gradually. this suggests that inflation pressures will stay subdued. the excess supply of housing is putting downward pressure on rents, which represent a large share of the consumer price index ( cpi ) ( chart 27 ). in addition, unit labor costs have declined sharply over the past year due to the combination of unusually rapid productivity growth and slowing labor compensation growth ( chart 28 ). fortunately, longer term inflation expectations remain well anchored. these expectations have not declined and are broadly consistent with my views on the appropriate inflation goal ( chart 29 ). this is actually a welcome development right now because it will likely help to keep the trend inflation rate from falling too much. lessons to be learned we have just lived through a period in which rapid increases in asset prices led to a serious misallocation of resources and a severe financial crisis. what do we need to do to minimize the likelihood of avoiding this type of experience in the future? as i noted in a recent speech, we face three major challenges that will determine how smooth this economic expansion turns out to be. 5 first, we need regulatory reform that makes our financial system more stable and resilient | ##isation in payments? and what should or must the industry do to foster innovation and to keep pace in the digital future? i would like to mention two key concepts here : updating existing payment systems, for example via instant payments, and central bank digital currency ( cbdc ), specifically the project on a digital euro. nowadays, most people do not wait for the morning newspaper to be delivered in order to inform themselves β that is, if they have still subscribed to one. neither do they wait for the 8 or 9 o'clock television news. instead they receive information in almost realtime via the internet. while news and media are available instantly, according to current legislation sepa payments must be credited to the recipient's account within one working day at the latest. a big step towards faster payment execution was the establishment of the sepa instant credit transfer rulebook by the european payments council in a joint effort of the european payments industry. and central banks in the euro area launched the target instant payment settlement system β tips for short β in 2018. tips ensures the reachability of almost all institutions in payments throughout europe. to further facilitate the usage of instant payments in the market and to make instant payments the new normal, the european commission is currently developing a regulation which is due to be presented by the end of this year. here in spain, the bizum solution shows how great the potential is. it seems that more than 40 % of all credit transfers in spain are already instant. and statistics show that instant payments are not only substituting traditional credit transfers, but have also generated new volumes and new business cases. according to the ecb blue book, around 400 million additional credit transfers were processed in spain. instant payments are also suitable for new payment solutions with pan - european reach. we would benefit from a cashless european solution that works from the cabo de sao vicente in portugal to buy the famous " last bratwurst before america " to saariselka in the north of finland to pay for a snowmobile safari through lapland. thanks to european governance, a pan - european solution based on instant payments could be the basis for strategically important alternatives to the payment offerings of international bigtech firms and card schemes. for european banks, meanwhile, bank account - based 3 / 6 bis - central bankers'speeches payment solutions using instant payments offer an opportunity not to lose access to the customer side in payments. 4 new means of payment but beyond the development of instant payments and in | 0 |
the public opinion. dear students, today is the day to celebrate for this achievement. today is the day to feel proud. your dream to successfully complete your studies has come true. now, many opportunities and alternatives await you. be courageous and wise to make your choice. wherever you are, whether in the public or the private sector, in albania or abroad, i urge you to show integrity, optimism and determination. i have only one piece of advice to everyone : never give up! live your life with courage and self - confidence! time rewards those who dream big and dare to see beyond tomorrow. this is the right way to build a better society, capable to 1 / 2 bis central bankers'speeches generate prosperity for the future generations. renounce the ambitions for a fast track to an undeserved career. it is a path that leads to a dead end. life is a journey of many unknown things and i assure you that in the long run, those that stand out for their professional ability, devotion and respect of human values, shine bright on the lifeaβ¬β’s journey. concluding, i wish you once again every success and all the best in future endeavours. congratulations! 2 / 2 bis central bankers'speeches | ardian fullani : recent economic and financial developments in albania speech by mr ardian fullani, governor of the bank of albania, at the joint press conference of the imf mission with the ministry of finance and the bank of albania, tirana, 11 november 2008. * * * the regular visit of the imf β s eu1 european department mission is made in the context of the last review of the current 3 - year prgf β eff arrangement between the albanian authorities and the imf board of directors. this last review coincides with a sensitive outlook of the world economy, which is facing a highly intensive and uncommon global market correction. given this situation, present and future prospects still remain vague and uncertain. however, worth to note is that the albanian economy has exhibited admirable immunity to these developments. in this context, the prudent and systematic work of the bank of albania, both in terms of maintaining the macroeconomic balance at home and safeguarding the banking system β s financial stability, has provided an overwhelming contribution. over the last two years, the bank of albania has been an active actor in both directions, analyzing carefully all the risk factors and taking various measures to minimize their materialization in practice. in our work we have been guided by the philosophy that one cannot build authority in the market through the mechanical use of a set of instruments but through the market perception and trust in the policies pursued by the authorities. the conservative policy β the increase of the interest rate extended in a time period of 18 months β is the concrete application of this philosophy. in addition, measures have been taken in terms of amending and constantly improving the legal and regulatory package. the entire process of measures and decisions has aimed at ensuring the financial system β s efficiency and stability. the latest regulatory amendments, which have brought a new dimension to the banking business in relation to the customers, foreign currency lending, investments in parent banks and internal control, are of particular importance. the bank of albania will persistently make an assessment of the existing regulatory framework and aim at improving it, in order to address the present and potential risks. i believe the set of actions taken recently by the central bank have been a kind of intensive therapy which has contributed to the increase of the banking system β s immunity. with reference to the economic and financial situation at home, i would like to inform you that the bank of albania shares the same opinion with the imf and the ministry of finance regarding the current period as of end | 0.5 |
ivan iskrov : bulgarian national bank β independence, predictability and transparency speech by mr ivan iskrov, governor of the bulgarian national bank, before the 41st national assembly of the republic of bulgaria on the occasion of his election for a second term of office, sofia, 26 august 2009. * * * ms. speaker, ladies and gentlemen mps, allow me first and foremost to thank you for the enormous trust and the strong support you just now gave to the central bank and its governor, ivan iskrov. i don β t know of any head of any public institution that has so far enjoyed such a vast parliamentary vote of confidence with the support of 195 mps. this result exceeds the 165 votes in support of my nomination in the previous 40th national assembly. when a week ago i shared with the person closest to me that i had decided to use the parliamentary case of mr. nenovsky to submit myself to a confidence vote by the 41st national assembly, i heard the following : β isn't this step rather too risky, besides the prime minister publicly announced that he did not approve of the procedure but he respects the bnb as an institution, and highly values you as a governor and wishes you to continue on the post? " i replied that no one could predict the possible deliberations and how the 240 mps would vote, but that i was nonetheless obliged to ask for their confidence. or else on 9th october this year i leave! because, ladies and gentlemen, as i have repeatedly shared with my colleagues at the bank, when requiring the tasks to be performed with 100 % precision, rather than in a slapdash manner, we in the central bank have an asset even more valuable than its international reserves. this key asset is the reputation of the bnb and of each of its employees. i promised to your colleagues of the 39th national assembly that i would never take part in fruitless discussions, neither would i refute any possible silly allegations of dishonourable people or of unqualified β know - it - all β experts. the people around me, however, know how painful it was for me to bear any stupidity or slander, not for my own credibility but for the confidence the bulgarian society should have in our national bank. the bnb is de jure and de facto the most independent public institution ; it owes its independence to you β the elected representatives of the people, and reports only and solely to you, to the bulgarian national assembly. therefore i felt | practices. i will now go through the recent and ongoing climate - related initiatives related to our supervisory work. the ecb guide and climate - related disclosures 2 / 5 bis central bankers'speeches in november last year we published the ecb guide on climate - related and environmental risks. 6 it builds on the guide for supervisors7 of the network of central banks and supervisors for greening the financial system ( ngfs ), and communicates the ecb β s understanding of a prudent approach to managing such risks to banks, markets and the wider public, with the aim of raising banks β awareness and preparedness for managing them. in our guide, we outline our supervisory expectations for how climate and environmental risks should be embedded in all relevant bank processes, from banks β risk management frameworks to their governance structures, risk appetite, business model and strategy, and, importantly, their reporting and disclosures. our ultimate goal is to cause banks to make sure their business strategies fully reflect the paris agreement β and there is one thing that will be key in getting us there : data. when it comes to tackling climate risk as a financial risk, data are what we are missing the most. recently, a task force on climate - related financial risks that operates under the basel committee on banking supervision looked into the effects of physical and transition risks on banks. this task force, which i have the honour to co - chair with the federal reserve system β s kevin stiroh, concluded that climate - related risks can be captured in risk categories that are already used by financial institutions and reflected in the basel framework, for example credit risk, market risk, liquidity risk and operational risk. this is a key insight which saves us from inventing all kinds of new risk categories. the existing ones will do. however, the task force also concluded that we still need an enhanced toolbox that can better measure climate risks. this is why the ecb is encouraging banks to enhance both the quantity and the quality of their climaterelated disclosures, and to become more transparent about their overall exposures to climaterelated risks. banks are still in the early stages of incorporating climate change into their risk frameworks ; risk identification and risk limits around climate - related goals do not yet actually feature in their risk management processes. this needs to change. euro area banks need to drastically improve their capacity to manage climate - related and environmental risks and start acknowledging how these risks can drive others, including credit, market, operational and | 0 |
an organic vision of the objectives and instruments, the start of the action plans can restore confidence among all economic agents : the financial system, firms, consumers and savers. looking at the experience of the most advanced economies, it is necessary for europe to relaunch programmes for infrastructure, innovation and research. the progress made in economic and institutional integration and the union β s enlargement provide a solid foundation. in italy as well we must move resolutely in the direction of faster growth, higher employment, security for the elderly and valid prospects for the young. it can be done. we must do it. | is currently engaged in securitizing large volumes of doubtful loans. symptoms of deflation are still present. monetary policy has been even more expansionary. with the lessening of global political tensions, economic activity has picked up and progressively gained strength in the emerging economies as well. after two years of sharp deceleration, in 2003 the rate of growth rebounded to almost 6 per cent. in the emerging asian countries gdp growth was 7. 5 per cent. in latin america, the modest results achieved by brazil and mexico contrasted with the sharp recovery in argentina. the rate of growth in the euro area was no more than 0. 5 per cent. in 2003 the world economy is estimated to have grown by 3. 7 per cent. for 2004 the international monetary fund forecasts gdp growth of 4. 6 per cent in the united states, 2. 2 per cent in japan, 6 per cent in the emerging economies and 3. 6 per cent in the main latin american countries. in the twelve euro - area countries output is expected to grow by 2 per cent. the world economy is forecast to grow in 2004 by around 4. 5 per cent. 2. liquidity and the international financial markets in a context of low inflation and globally insufficient aggregate demand, markedly expansionary monetary conditions in the three major areas have driven interest rates down to historically low levels, fostered a faster expansion of credit and supported the recovery of the financial markets. during the nineties the money stock in the seven leading industrial countries was somewhere between 65 and 70 per cent of gdp. in the last five years it has risen steadily to reach nearly 80 per cent, an increase larger than that recorded in the previous twenty years. in the three major areas it was monetary base and the more liquid components of bank money that increased most. from the mid - nineties onwards the deposits of non - residents more than doubled, rising from around 3 per cent of gdp to nearly 8 per cent. conversely, short - term interest rates in the united states, the euro area and japan have fallen to their lowest levels since the end of the second world war ; net of inflation they are close to zero. real long - term interest rates on government bonds, which had touched 5 per cent in 1995, gradually came down to fluctuate around 2 per cent at the end of last year. after nearly doubling between 1996 and 1999, the capitalization of equity markets then fell and in 2002 was close to the value recorded six years earlier. the | 1 |
for the federal funds rate by 1 / 4 percentage point at both our march and june meetings, with the range now standing at 1 to 1 - 1 / 4 percent. and, in october, the committee began its balance sheet normalization program, which will gradually and predictably reduce our securities holdings. the committee set limits on the pace of balance sheet reduction ; those limits should guard against outsized moves in interest rates and other potential market strains. indeed, there has been little, if any, market effect associated with the balance sheet runoff to date. we do not foresee a need to alter the balance sheet program, but, as we said in june, we would be prepared to resume reinvestments if a material deterioration in the economic outlook were to warrant a sizable reduction in the federal funds rate. changes to the target range for the federal funds rate will continue to be the committee β s primary means of adjusting the stance of monetary policy. at our meeting earlier this month, we decided to maintain the existing target range for the federal funds rate. we continue to expect that gradual increases in the federal funds rate will be appropriate to sustain a healthy labor market and stabilize inflation around the fomc β s 2 percent objective. that expectation is based on the view that the current level of the federal funds rate remains somewhat below its neutral level β that is, the rate that is neither expansionary nor contractionary and keeps the economy operating on an even keel. the neutral rate currently appears to be quite low by historical standards, implying that the federal funds rate would not have to rise much further to get to a neutral policy stance. if the neutral level rises somewhat over time, as most fomc participants expect, additional gradual rate hikes would likely be appropriate over the next few years to sustain the economic expansion. of course, policy is not on a preset course ; the appropriate path for the federal funds rate will depend on the economic outlook as informed by incoming data. the committee has noted that it will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. more generally, in determining the timing and size of future interest rate adjustments, the committee will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. thank you. i would be pleased to answer your questions. 2 / 2 bis central bankers'speeches | high by historical standards, overall vulnerabilities in the financial sector appear moderate, as the banking system is well capitalized and broad measures of leverage and credit growth remain contained. even with a step - up in growth of economic activity and a stronger labor market, inflation has continued to run below the 2 percent rate that the federal open market committee ( fomc ) judges most consistent with our congressional mandate to foster both maximum employment and price stability. increases in gasoline prices in the aftermath of the hurricanes temporarily pushed up measures of overall consumer price inflation, but inflation for items other than food and energy has remained surprisingly subdued. the total price index for personal consumption expenditures increased 1. 6 percent over the 12 months ending in september, while the core price index, which excludes energy and food prices, rose just 1. 3 percent over the same period, about 1 / 2 percentage point slower than a year earlier. in my view, the recent lower readings on inflation likely reflect transitory factors. as these transitory factors fade, i anticipate that inflation will stabilize around 2 percent over the medium term. however, it is also possible that this year β s low inflation could reflect something more persistent. indeed, inflation has been below the committee β s 2 percent objective for most of the past five years. against this backdrop, the 1 / 2 bis central bankers'speeches fomc has indicated that it intends to carefully monitor actual and expected progress toward our inflation goal. although the economy and the jobs market are generally quite strong, real gdp growth has been disappointingly slow during this expansion relative to earlier decades. one key reason for this slowdown has been the retirement of the older members of the baby - boom generation and hence the slower growth of the labor force. another key reason has been the unusually sluggish pace of productivity growth in recent years. to generate a sustained boost in economic growth without causing inflation that is too high, we will need to address these underlying causes. in this regard, the congress might consider policies that encourage business investment and capital formation, improve the nation β s infrastructure, raise the quality of our educational system, and support innovation and the adoption of new technologies. monetary policy i will turn now to the implications of recent economic developments and the outlook for monetary policy. with ongoing strengthening in labor market conditions and an outlook for inflation to return to 2 percent over the next couple of years, the fomc has continued to gradually reduce policy accommodation. the committee raised the target range | 1 |
% in 2008 to 63 % in 2017. with stronger growth and rising employment, we also see a gradual build - up in price pressures. on the right - hand side you can see that, after a long period of quiescence, wages, here measured as compensation per employee, have finally started to recover. and as they are growing faster than the rate of inflation, many people are seeing their real incomes rising. this can only be good news for businesses β order books. so, overall, it is fair to say that the euro area economy is in the best shape it has been in for many years. yet we are well aware that there might be a discrepancy, or disconnect, between the macroeconomic data that the ecb primarily relies on β and that we use in communicating and justifying our decisions β and what people can see around them. for example, although in the euro area as a whole the recent rise in employment more than compensated for the decline since the crisis, the unemployment rate here in centre - val de loire 1 / 5 bis central bankers'speeches increased from 5. 5 % in 2008 to 8. 6 % last year according to eurostat. before the outbreak of the crisis, the unemployment rate in this region was lower than in the median euro area region ; today it is higher. let me reassure you that such differences across regions, or across countries, do not go unnoticed in the ecb headquarters in frankfurt. we are keeping a close eye on regional developments and carefully investigate the possible causes of persistent differences in growth and inflation. after all, a permanent divergence of the regions or countries in a currency union would make it increasingly difficult to define and implement a common monetary policy. there are instances where monetary policy can do very little about regional differences. i will turn to these in a minute. but there are also circumstances where central banks can and should help reduce perilous disparities, in particular when they threaten the effectiveness of our monetary policy. our experience since 2014 illustrates this aspect well. around that time, we faced a dangerous disparity in firms β access to credit. you can see this more clearly on my next slide. what you can see here are the responses to the ecb β s survey on the access to finance of enterprises, which is mainly targeted at small and medium - sized enterprises ( smes ) and conducted jointly with the european commission. specifically, the chart shows the responses of firms across broad european regions to the | benoit cΕure : the local impact of the european central bank β s monetary policy speech by mr benoit cΕure, member of the executive board of the european central bank, at les champs du possible, chateaudun, 4 october 2018. * * * it is a great pleasure to be here in chateaudun and have the opportunity to exchange views with you. the ecb governing council, which sets monetary policy for the euro area, benefits from such dialogue in two very important ways. 1 the first is that it enriches our understanding of the state and the drivers of the economy. earlier today, i had the opportunity to meet with local high school students. i also visited a company that exports its products to europe and the wider world. in a currency union with 19 countries, policymakers are always at risk of focusing too much on the big picture and overlooking local reality. the second benefit is that such visits to local communities enable us to explain our actions. we are accountable to the 340 million people living in the euro area, so we have a responsibility to clarify what we do and why we think our actions are appropriate. so that is what i would like to do in the next 15 minutes. in particular, i would like to talk about the role of the ecb β s monetary policy in the current economic expansion and describe how it has helped to foster employment and growth in the euro area as a whole, and also here in eure - etloir. and, perhaps even more importantly, i will also set out what monetary policy cannot do, and how sustainable growth crucially depends on growth and job policies decided at regional, national and european level. the ecb β s response to financial fragmentation let me start with an overview of the situation in the euro area. as you can see on my first slide, the euro area economy has now enjoyed five years of uninterrupted growth. gross domestic product β the blue line β is well above the levels we observed before the great financial crisis. the labour market has also improved notably in recent years. employment β the yellow line β has risen by 9. 2 million since mid - 2013. the unemployment rate fell to 8. 1 % in august 2018, its lowest level in ten years. the participation rate of people aged between 15 and 74 now stands at 64 %, 1. 5 percentage point higher than ten years ago. by comparison, in the united states the participation ratio of those aged 16 and over decreased from 66 | 1 |
india against financial services businesses had increased by 89 per cent. globally, financial services fraud attempts increased 149 per cent. clearly, both regulators and other stakeholders have to play their respective roles effectively to ensure that innovation in the fintech space continues to support india β s economic growth. 20. to sum up, the fintech landscape can be described in dickensian terms β we are in the best of times, with the promise of technological innovation in finance and hope of substantial efficiency gains, better customer experience and greater social welfare. but we also need to deal with threats of online frauds, compromise of customer credentials and data privacy and safety for the spring of hope not to turn into the winter of despair. 1 1 www. transunion. in / blog / fraud - trends - q2 - 2021 4 / 4 bis central bankers'speeches | finance curricula in the universities. so far, basically everyone within the central banking community involved with climate has had to study the issue for themselves. without proper and widespread analytical capabilities it will be impossible to make sure financial questions related to climate change get the attention they deserve. it is not enough that authorities and financial institutions have the capabilities. non - financial corporations also need to have at least a basic understanding in order to be able to determine the investments needed for their own transition to climate neutrality. given the time horizon to meet our climate goals, it is imperative that the knowhow and capabilities are developed quickly. and coming to the solutions, my first proposal would be to more actively try to find new data 1 / 2 bis central bankers'speeches sources and combine different datasets. this work is underway, and many non - traditional datasets have already been found, but it is safe to assume a lot more can be done in this regard. furthermore, we need to relax our assumptions about the extent to which we can rely on official statistics and accounting. even if approved, it will take years until we have adequate environmental accounting on which to rely. we need something in the meantime. perhaps machine learning, ai and data mining can be useful ways of decoding qualitative and text - based information into metrics that we can use in our analysis. as we compile datasets covering future decades, it becomes apparent that our traditional methodologies and assumptions are inadequate. we need to have a better grasp of scenario analysis methodologies to be able to include climate and relevant long - term possible futures in traditional economic analysis. this requires us to work even more with experts from outside our own field. and all this leads to the second solution, which relates to the need to build analytical capacity and understanding. for this we need people who can teach others. the central banks and supervisors β network for greening the financial system, or ngfs for short, and others are already building their own training programmes. but we need more. a lot of interdisciplinary cooperation is needed to build the relevant capabilities. we are already seeing more collaborative action between climate scientists and financial analysts, which helps in finding new ways to do things. similarly, this cooperation enables us to use metrics and approaches originally developed for other purposes. the ngfs scenarios are a prime example of this. it is my hope that academia, too, will acknowledge its role in this. thus far, sustainable finance has not been an integral | 0 |
this note, i would like to thank you for your attention and active participation over the last few days and look forward to working with all of you on building a fintech platform for seychelles. thank you. 1 / 2 bis central bankers'speeches 2 / 2 bis central bankers'speeches | steps have been taken towards developing our commercial relations as witnessed by trade volumes between countries. on the heels of 2001 crisis, the trade volume of turkey with the middle east region was just about usd 6 billion. it reached usd 43 billion just before the financial crisis and stood at usd 29 billion as of 2009. in the same period, the share of middle east in turkish trade volume climbed up by 5 percentage points to 12 percent, where as the share of european union declined by 10 percentage points to 43 percent. let me give you several country specific examples. syrian - turkish economic relations have strengthened rapidly in the past few years, particularly following the implementation of a free trade agreement between the two countries in 2007. all in all, trade volume between syria and turkey has doubled since 2006 and reached to 1. 75 billion usd in 2009. trade volume between turkey and egypt has also steadily increased from usd 500 million in 2003 to usd 3. 2 billion in 2009. it is expected that these figures will reach up to usd 5 billion in the next three - years. one reason for this rapid increase is that both countries have completed the legal ground which secures free trade between countries. the free trade agreement, which has recently been put into effect, does not only provide opportunities for higher trade volumes but also functions as a framework that brings together investors from both countries. turkey has long provided a significant conduit for the flow of humanitarian and economic assistance to iraq. today, the volume of bilateral trade is also rapidly rising. the bilateral trade volume has been increased significantly since 2006 and reached to 6 billions usd in 2009. the high - level official visits between turkey and iraq have been providing impetus to the diversification and advancement of our economic cooperation. moreover, turkish companies play a leading role in the reconstruction of iraq. our trade with jordan and lebanon exceeded usd 1 billion in 2009. with the conclusion of the ongoing negotiations on the free trade agreement between turkey, lebanon and jordan, trade relations among our countries are expected to gain volume. dear guests, increasing commercial relations naturally led to an increase in international banking services among our economies. having a sound financial position, turkish banks can contribute both to building commercial and financial links within the region. today, several turkish banks are interested in expanding their operations to the middle east, considering the growth potential in commercial relations and considerable amount of liquidity in the region. besides, the middle east is one of the world β s fastest growing markets in the banking and capital sector. islamic finance is | 0 |
area was inflation. through a gradual stabilisation of the exchange rate, disinflationary interest rate and fiscal policies, and the abandonment of wage and contract indexation, we managed to bring inflation down from almost 10 % in 2000 to just above 2 % in 2006. interest rates had also fallen substantially. this brings us to the second important point. conditions for borrowing of government and banks on international markets and credit conditions for business and households have improved significantly. we could observe something similar in croatia in previous years. these favourable developments also bring risks. better access to international financial markets has contributed to a strong credit expansion in slovenia, which was also supported by the strong growth of domestic construction sector, financing of corporate acquisitions and global economic upturn. following the global financial crisis and the drying up of liquidity in the interbank market, our banking system found itself in difficulties. the circumstances surrounding croatia's adoption of the euro are also a challenge of their own. however, bank regulation and supervision have been substantially upgraded in the last decade. macro - prudential policy tools are also more developed these days. ( iii ) the third important issue is the macroeconomic effects of the euro. given the proximity of eu accession and the adoption of the euro in slovenia, the effects of these two events are intertwined. that period of euro adoption was marked also by a strong global economic upturn, which was reflected in rising prices. croatia's adoption of the euro took place in an economically and geopolitically turbulent environment, at a time of the highest inflation in advanced economies in the last four decades. the confluence of different factors complicates the assessment of the impacts of euro adoption. 2 / 3 bis - central bankers'speeches in generally, adoption of the euro by a small economy brings higher price transparency and competition, lowers transaction and borrowing costs, reduces currency risks and makes it easier for domestic firms to do business in foreign markets. in both countries, the introduction of the euro was accompanied by concerns about price increases. analysis for slovenia shows that consumer prices increased by around 0. 3 percentage points in the first months after the introduction of the euro. price rounding was an important contributing factor. this may not be consistent with people's perception. a marked increase in the prices of goods with a lower nominal value that we consume on a daily basis can give the impression of an overall price increase. the so - called Β» espresso effect Β« has also been observed in croatia in | from accounting to improving legal certainty, and management of countries β external balance sheets. decision making about priorities is particularly challenging because we cannot be clear ex - ante how well the mitigation techniques will work, and we often need to rely on others to implement them. in addition we need to ask whether we are the right party to act. we also need to think about the relevance of our activities to our mandate β or β must dos β. in some areas, for example payment systems β one of our β must dos β β it is clear that we have a responsibility to reduce risks. in this case the questions we need to answer relate to the degree, methods and resource implications. but in other areas whether we should act is less clear cut. what particular contributions can we make and are there any areas where we can sensibly act alone? we need to ascertain areas where we can achieve results both domestically with hmt and fsa, and internationally with organisations such as the basel committee, the committee on payment and settlement systems and the financial stability forum. perhaps i can mention one area to which the challenge process suggests we should devote considerable resources β global institutional liquidity. as i have said before this is an area of potential vulnerability that has developed alongside the rapid globalisation of markets and of firms operating within them. i personally feel that it has been somewhat overshadowed in recent times by work in other areas such as capital adequacy. we feel that we can make a particular contribution here β both owing to our position in such a major global financial centre and because, in sterling at least, we are a potential provider of liquidity. so we justify devoting significant resources to the analysis of liquidity issues, and the development of potential risk reduction strategies for liquidity problems β nationally and in particular internationally. at the other extreme, whilst we feel strongly about the desirability of robust and widely applied accounting standards β and are prepared to express our views on the big picture aspects of this from time to time β we do not devote significant resource to analysis, or lobbying in this area. c ) preparation for a financial crisis and finally, tail event territory though it may be, we need to undertake preparation for financial crises. we need to think forward to being β in - event β where instability has actually been triggered, whether by a business failure of a firm or firms or by a terrorist or other disruptive event. we need to prepare now, in advance, to enhance predict | 0 |
is vitally important. thank you. buena suerte. 1 / 1 bis - central bankers'speeches | frank elderson : finance and biodiversity day of 16th united nations conference on biological diversity ( cop16 ) - transcript of video recording contribution by mr frank elderson, member of the executive board of the european central bank and vice - chair of the supervisory board of the european central bank, at the 16th meeting of the conference of the parties to the convention on biological diversity β finance and biodiversity day, cali, 28 october 2024. * * * the global economy and finance need nature to survive. analysis by the ecb shows that the economy depends critically on nature : 72 % of non - financial businesses in the euro area β around 4. 2 million individual companies β would experience significant problems as a result of ecosystem degradation. these businesses rely on ecosystem services like fertile soils, timber and clean water. and 75 % of bank loans are tied to these businesses. so, if they run into trouble, the banks that finance them will too. this interdependence underscores why the ecb made nature one of the focus areas of its climate and nature plan for 2024 and 2025. it is also why we push banks under our supervision to manage all material nature - related risks. the ecb does not stand alone in recognising this threat. the value of nature for the economy is acknowledged by the global network of central banks and supervisors for greening the financial system, which has 141 members worldwide. additionally, a recent stocktake by the financial stability board showed that a growing number of policy authorities around the world are considering the potential implications of naturerelated risks for financial stability. in recognition of the vital importance of nature for the economy, international fora must ensure that nature considerations are fully integrated into regulation and supervision, alongside ongoing efforts to account for climate - related considerations. this starts with identifying exposures and vulnerabilities to nature - related risks. while central banks and supervisors are not nature policymakers, we must take nature into account to fulfil our mandate of price stability and safe and sound banks. otherwise, we risk failing to deliver on our mandate. my message on this finance and biodiversity day is clear : if you destroy nature, you destroy the economy. the right conditions must be established for nature β and consequently the economy β to thrive. the economy needs nature to survive. financial stability needs nature to survive. to deliver on our mandate, we need nature to survive. and the survival of nature requires financing. therefore, your success here in cali | 1 |
funding and equity raisings. these trends have reflected several factors, not least of which has been a shift towards greater financial conservatism by households and businesses. household saving rates have increased, and there has been widespread de - leveraging by businesses. i expect this audience will be interested in the likely environment for lending by banks in the future. the trends i β ve just described can be seen ( at least in part ) as responses to the lessons drawn from the crisis β by households and businesses β regarding the dangers of excessive debt. another factor is that the funding environment for banks has been more difficult than it was before the crisis, and this has raised the net cost of financial intermediation. to some extent, these effects might be expected to fade as economic expansion proceeds and confidence in global credit markets improves. nonetheless, when we think about what the post - crisis environment might look like further ahead, it seems unlikely that we β ll be going back to the days of consistent double - digit growth in lending that we saw in the pre - crisis years. that growth was driven in part by factors that can β t be repeated β the deregulation of the financial system in the 1980s, and the transition to low inflation in the 1990s. there was also a world - wide trend towards greater appetite for risk and leverage. in the post - crisis environment, borrowers and investors are more cautious than they were, both at home and abroad. that β s likely to mean less demand for leverage and more reliance on equity funding, even when the economy itself is growing strongly. if those trends continue, i think it will be good for financial stability, but it will also mean that our lending institutions have to get used to lower rates of expansion than were typical in the pre - crisis years. bis central bankers β speeches | markets group also maintains close contact with financial market participants in australia and elsewhere, and the reserve bank gains valuable intelligence as a participant in both local and offshore markets. in the lead - up to the board β s meeting, all this material is carefully evaluated. at a meeting of the most senior officers in the week preceding the board meeting, discussion occurs about what should be recommended to the board. papers for the board containing the factual information available, the staff β s judgements about issues of interpretation in the data, the outlook and any topics of special interest are prepared. a four to five page paper, containing a high - level summation of the issues for policy and the recommendation, is completed on the thursday afternoon ahead of the meeting. board members receive the papers on the friday. at the board meeting, the most senior staff present the key messages from the papers. there is extensive discussion, and plenty of questions from the members about the material. the board, i can assure you, is no rubber stamp and its members are no group of shrinking violets. they come from a diverse set of backgrounds. they bring their own experiences and their own independently gleaned pieces of information about what is going on. the analysis and arguments put by the staff and management of the bank are well and truly tested. any weaknesses will quickly become pretty clear. this discussion usually takes about three hours. it is, i would think, the most intense regular discussion of the state of the economy that occurs anywhere in the country, as of course it should be. at the end of the discussion, the governor, as chairman of the board, will sum up and introduce the policy question. each member has an opportunity to give their view and their reasoning on the decision at hand. typically, a consensus emerges, and the decision is then taken. it then remains to issue a statement. the board meeting is not a drafting session β the members are usually content to leave the precise wording to the chairman, on the understanding that the statement will be consistent with the discussion at the meeting. the statement is then released at 2. 30pm and the community is thereby informed very quickly what the decision is and why we have taken it. subsequently, the draft minutes of the meeting are prepared. these are finalised after members have the opportunity to comment on the draft during the following week, and are released publicly on the tuesday two weeks after the meeting. a few days after this, the whole sequence begins over again. in addition | 0.5 |
member states entered into a political commitment, and the european commission is now proposing to create a single supervisory mechanism for banks in the euro area and to entrust this task to the ecb. this single supervisory mechanism should be implemented in a way that does not compromise the ecb β s independence and does not constrain monetary policy. it should be complemented by a single regime to wind down failed banks and by a single resolution fund at euro area level. finally, building a deeper emu requires a strengthening of democratic legitimacy and accountability. the people of europe will only accept a further pooling of competences at european level if european policy - makers are subject to high standards of accountability. bis central bankers β speeches the european parliament, whose representatives are directly elected by citizens, already plays a central role in holding the ecb and other eu institutions to account. as a consequence of deeper economic and political integration in emu, the euro area will become, in my view, more and more a β political space β in its own right and, as such, it will require proper euro area accountability mechanisms. political legitimacy is vital to build popular support for further integration. 4. conclusion ladies and gentlemen, when robert schuman drafted the declaration that started the european integration process, he predicted that β europe will not be made all at once, or according to a single plan. it will be built through concrete achievements which first create a de facto solidarity β. when looking at europe β s progress since the second world war and the step - by - step building of emu, we can indeed see that what holds europe together, what has been its engine, and the reason for its success, is the notion of solidarity. solidarity is sometimes narrowed down to mean one - way support, from donor to recipient. of course this has always been a key consideration in the european construction. the eu structural funds, which go to europe β s poorer regions, are a very tangible measure of this kind of solidarity. likewise, the european crisis mechanisms efsf and esm are a symbol of euro area solidarity. solidarity is not just a catch - phrase in emu ; it is essential for all. let me come back to schuman β s insight that β concrete achievements first create a de facto solidarity β. we have reached a point in the history of europe where de facto solidarity has created a need for concrete achievements. in recent years we have made impressive progress in putting emu β s architecture on a | , the domestic provision of liquidity via refinancing operations and asset purchases combined with liquidity inflows from other countries led to a considerable increase in deposits during the past year : liabilities related to monetary policy operations were up by β¬458. 5 billion compared with the end of 2019, hitting β¬1, 018. 8 billion β in other words, nearly doubling. euro - denominated balances of domestic and foreign depositors reported in liability items 3, 4 and 5 were likewise higher on the back of larger general government and foreign central bank holdings, rising by β¬202. 4 billion to β¬474. 0 billion. just under one - third of all deposits of credit institutions throughout the eurosystem continue to be held with the bundesbank. the value of banknotes issued by the bundesbank also rose further, climbing by β¬71. 5 billion to β¬821. 0 billion, an increase of 9. 5 %. the revaluation accounts are also worth taking a look at. this item increased by β¬17. 5 billion year on year to β¬161. 8 billion. the revaluation reserve for gold rose by β¬20. 4 billion to β¬159. 0 billion. the price of gold in euro as at the end of 2020 exceeded the previous year β s figure by around 14 %. viewed over the long term, there is a sustained marked increase in the revaluation reserve for gold. compared with its starting balance at the launch of monetary union ( β¬21 billion as at 1 january 1999 ), this revaluation reserve is, with a current balance of β¬159. 0 billion, around eight 1 / 2 bis central bankers'speeches times as large as it was at the start of january 1999. the revaluation reserves for foreign currencies shrank by over half due to the stronger euro, year on year, with the bulk of the decrease, totalling β¬3. 1 billion, being attributable to the us dollar. the exchange rate of the euro against the us dollar rose from us $ 1. 1234 to us $ 1. 2271. allow me to conclude with a brief overview of the profit and loss account. the main component of the profit and loss account is net interest income, which recorded a β¬1. 8 billion decrease from β¬4. 6 billion to β¬2. 9 billion. this is notably down to the β¬1. 4 billion increase | 0 |
choose to reveal such information in their speeches and other public communications. a natural next step would be to include a matrix of output, inflation, and unemployment, and the associated policy path assumptions that each policymaker submitted. this would make the information in the sep easier to interpret and give a better sense of the linkage between changes in economic conditions and policy. second, i believe the federal reserve should do a more comprehensive monetary policy report four times a year. currently, the chairman testifies before congress twice a year β in bis central bankers β speeches fact, he is doing so today β and that testimony is accompanied by a written report. in addition, the chairman holds press briefings four times a year to summarize the sep. i think there is an opportunity to combine these efforts in a more comprehensive report on monetary policy. most central banks that have adopted an inflation target have also sought to improve communication and transparency through the publication of a regular policy report. in the u. k., for example, the bank of england issues a quarterly inflation report. other countries produce a monetary policy report that discusses the central bank β s forecasts and the longerterm context of policy. these reports offer an opportunity to reinforce the underlying framework the central bank has adopted for the conduct of policy. i think the fed should consider producing a similar report to elaborate and reinforce its policy framework and how it relates to economic conditions. these reports will help improve the public β s understanding of policy, which will help make policy more effective and the central bank more accountable. third, i believe the fomc should adopt clearer guidelines on how policy evolves with economic conditions. the better the public and the markets understand how policy is likely to be adjusted as the economy changes, the more predictable policy becomes, which promotes price stability and better economic outcomes. the history of u. s. monetary policy is filled with stops and starts and changes in direction, yet the fed has communicated little about what drives those decisions. indeed, historically, central bankers have tended not to reveal such information, since they preferred discretionary policy over systematic policy. of course, policymakers do not know with any degree of certainty how economic conditions will evolve. so they cannot and should not say with any certainty what policy will be in the future. but policymakers can provide information about the factors that will influence their policy decisions. some call this a policy rule. milton friedman advocated a rule in the form of a k - percent growth rate of the money | . this uncertainty means that it is imperative to look beyond such measures of β full β or maximum employment toward other indicators of labour market slack. in this instance, the bank has pointed to relatively subdued wage growth as a possible sign that the job market may have more room to run. economic theory tells us that when the actual jobless rate is at the natural rate, an economy is essentially at full employment. at that point, we would expect wages to be rising at the same pace as the target inflation rate plus the trend rate of productivity growth. this is because the strongest underlying factors that determine worker pay in real terms are how productive workers are and their value to an employer β s production process. 4 so, for canada, this implies wage growth of around 3 per cent β 2 per cent for inflation and 1 per cent for trend productivity growth. wage growth has picked up considerably to average about 2Β½ per cent in 2018, compared with 2 per cent over the past five years. 5 but we are still shy of what one would expect in a tight labour market. the story is similar in the united states. the us jobless rate has been below 4 per cent for a while. this is much lower than the estimate of the us natural rate β currently pegged at around 4Β½ per cent. 6 yet, wage gains only recently reached the sum of inflation and productivity growth. in canada, regional and sectoral factors can explain a lot of why wage growth has been tame. the steep drop in oil prices that occurred in the second half of 2014 had an impact that rippled across canada and is still being felt. wage gains in energy - intensive regions continue to lag behind those in the rest of the country. to give you a sense of how big a deal this is, wage growth in the third quarter of 2018 was just under 2 per cent in alberta, saskatchewan, and newfoundland and labrador. it was about three - quarters of a percentage point higher in ontario and quebec, so closer to the 3 per cent one would expect. for more detail on how wages are determined, see the economy, plain and simple article that we released today. this is according to the bank of canada β s composite wage measure, called the β wage - common. β this measure is created by extracting the common signal from four sources of wage data ( the national accounts ; the productivity accounts ; the survey of employment, payrolls and hours ; and the labour force survey ) and filtering out indicatorspecific | 0 |
economic growth and keep our financial system strong. our combined actions will lead to a greener, better, and sustainable future for our children and the filipino people. congratulations and more power to the rebap! thank you and mabuhay! 5 / 6 bis central bankers'speeches 6 / 6 bis central bankers'speeches | our local debt market, liberalize further the domestic foreign exchange market, digitalize our payment system, and ultimately enhance access to financial services and products. all these complement our financial inclusion agenda. the philippines has a lot of potential as a promising investment destination. our capital market is being positioned to serve as an important source of long - term funding, in support of the national government β s β build, build, build β agenda. developing the domestic capital market is critical given its role in complementing bank lending to support economic growth. last august 2017, the bsp, together with the department of finance ( dof ), securities and exchange commission ( sec ) and bureau of the treasury ( btr ), unveiled the roadmap to hasten the development of the domestic debt market. deliberately, we sequenced and calibrated the roadmap to prioritize urgent and foundational issues. the initial phase will focus on improving market benchmarks, covers initiatives to increase volume of treasury issuances, promotes market - making and price discovery, enhances the yield curve, establishes an organized repo market, and strengthens regulatory oversight. we look forward to the launch of the first trade in the organized repo market by next month. on the part of the bsp, we have started improving the regulatory framework for project financing starting last year with the issuance of circular no. 914. just this month, we issued circular no. 976, which enhances prudential reporting requirements over project finance exposures. this will sharpen bsp β s ability to assess bank exposures to project finance, and timely deploy macroprudential measures, if necessary. finally, we issued amendments to provide banks and quasibanks ( qbs ) more flexibility in issuing bonds and commercial papers. these proactive measures are important as demand for infrastructure picks up and gains traction. complementing capital market development initiatives, we are also further liberalizing and rationalizing foreign exchange ( fx ) rules in order to reduce the cost of doing business and facilitate job - generating investments. this forms part of a broader fx market reform agenda to enhance transparency, improve price discovery, and increase availability of fx products, especially hedging instruments. ultimately, a deeper fx market will increase resilience of our domestic economy against external shocks even as we allow greater exchange rate flexibility. finally, we come to a topic that is closest to my heart, our advocacy for financial inclusion. we are passionate about em | 0.5 |
losses and recorded solid earnings in recent years. furthermore, the norwegian banking system is not large relative to the size of the norwegian economy. in response to the uncertain environment, banks abroad and at home are reluctant to lend to each other and are tightening their credit standards. credit channels are drying up. money market rates have increased markedly, and to levels substantially higher than central bank key rates. the fallout has been particularly pronounced in the us, but european interest rates have also risen sharply. the flow of dollars among banks has seized up at times. other than central bank measures to supply liquidity to banking systems, the authorities in the us and europe first approached the financial crisis as a succession of problems at individual institutions. in the us, a general package was adopted by congress on friday 3 october. usd 700 billion was allocated for purchasing illiquid assets from financial institutions. on 8 october, the uk government announced a number of measures to stabilise financial markets, but with emphasis on providing risk capital. euro area countries followed suit and on 12 october agreed to take similar action. on 12 november, the strategy for the us crisis package of usd 700 billion was changed to provide the authorities with the scope to inject capital into banks and other financial institutions. there is unusually high uncertainty surrounding economic developments ahead. this is reflected in equity markets among other things. since spring, stock indices have plummeted both abroad and on the oslo stock exchange. the oslo stock exchange has declined by more than 50 per cent since the peak in may. on 8 october, the central banks in the us, the uk, canada, the euro area, switzerland and sweden implemented coordinated interest rate cuts. the central bank of china also reduced its key rate. on 29 october, the federal reserve reduced its key rate by a further 0. 5 percentage point. on 6 november, the european central bank and the bank of england reduced their key rates by 0. 5 percentage point and 1. 5 percentage points, respectively. market participants expect key rates to be reduced further among most of our trading partners. norges bank reduced its key policy rate by a total of 1 percentage point to 4. 75 per cent. norwegian money market rates increased markedly as a result of risk premiums abroad spilling over into the norwegian market. the eurodollar market has been a widely used source of financing for norwegian banks. dollars in this market are used to procure nok liquidity and to redistribute liquidity among banks. banks | s assesses the outlook for price inflation and sets interest rates. since 1997, labour costs have increased annually by between 5 and 7 per cent. in spite of this, consumer price inflation has been close to 2Β½ per cent over the past few years. the krone exchange rate has appreciated as a result of a wider interest rate differential between norway and other countries. combined with low growth abroad and increased trade with low - cost countries such as china, this led to a slower rise in import prices. in norway, voluntary export restraints on clothing have been removed and tariffs on clothing have been reduced considerably. in the eu and the us, a similar tendency has not been seen to the same extent. this may explain why prices for clothing have fallen in norway relative to the eu and the us. however, there is still a long way to go before restrictions on clothing imports to norway are entirely dismantled. for example, there is a duty today on imported children β s clothing and on shirts, suits, jackets and trousers for men and boys. as the world economy recovers, import price inflation will edge up. a rise in labour costs of more than 5 per cent will then only be consistent with the inflation target if the krone continues to appreciate. in the long run, wages must be compatible with the value added that is generated by workers, i. e. labour productivity. over time, the increase in real wages is therefore determined by developments in labour productivity. in norway, productivity growth has averaged 1Β½ - 2 per cent over the last 20 years. if this continues to be the case, an increase in nominal labour costs of around 4 - 4Β½ per cent in the long term will be consistent with the inflation target. there is an important interaction between monetary policy and fiscal policy. according to the guidelines for fiscal policy, petroleum revenues are to be phased in approximately in pace with the expected real return on the government petroleum fund. this guideline implies that fiscal policy will contribute to stimulating aggregate demand in the norwegian economy every year for many years ahead. the guideline also implies that the use of petroleum revenues will increase as long as the petroleum fund is expanding. variations in oil prices are accompanied by considerable fluctuations in government petroleum revenues from one year to the next. it is important to prevent these fluctuations from spilling over to the mainland economy. public expenditure and taxes that vary in relation to oil prices would result in an unstable economic environment. financial markets would be marked by uncertainty and turbulence, with an increase in | 0.5 |
is especially important when the economy is energy inefficient. let me elaborate further. conceptually, potential output is the level of output which can be sustained over an extended period without exerting upward or downward pressure on inflation. when the actual level of output is above potential output, inflation tends to rise. conversely, when the actual level of output is below potential output, inflation tends to fall. in this regard, the task of monetary policy can be loosely described as getting the economy β s actual output as close as possible to potential output β tightening when actual growth exceeds potential and loosening when actual growth falls short of potential. now, if potential output also falls in the face of persistent supply shocks, then it is possible for inflation to persist even when actual output growth is moderating. for concreteness, imagine a car going at a 100 - kilometer - per - hour speed limit on a highway turning onto a local street where the speed limit is now 60 kilometers per hour. even if the driver reduces the speed of the car to 75 kilometers per hour, a 25 % reduction perhaps as a result of a narrower roadway, he will still be charged with speeding. in real - world policy making, this is what happened to the united states in the 1970s when falling potential output resulted in high and persistent inflation despite the slowing economy. at the time, the federal reserve overestimated the u. s. potential output during the oil shocks and unknowingly pursued policy that kept the economy going at the rate in excess of the reduced potential. the current tightening monetary policy of most central banks around the globe amid supply shocks reflects much of these concerns. it is important to recognize that growing beyond potential for too long is a serious threat to economic stability. to use monetary policy to accommodate growth when potential output is deteriorating would aggravate inflation and the subsequent disinflation effort would entail substantial costs. the u. s. disinflation experience in the early 1980s was the prime example of this. known memorably as the volcker disinflation, the federal reserve took about four years to bring down inflation, but at a cost of the 1981 - 2 recession which was the most severe in the post - world war ii period. of course, one could argue that monetary policy is ineffective against supply shocks and therefore raising the interest rate would only further hurt the economy. it is true that monetary policy is a demand management tool. it is true that the best remedy to | of funds. fifth, the banking sector is now much healthier than even a few years ago. the bis ratio of the entire banking system remained high at 15. 3 per cent in may. despite the economic slowdown, both ratios of gross npl and net npl to total loan declined slightly since the third quarter of last year. in fact, the outstanding amount of npl declined in the last quarter. in addition, the implementation of ias39 accounting standard in 2006 - 2007 and the preparation for the adoption of basel ii at the end of this year have together strengthened the stability of our banking system. with insignificant exposures to collateralized debt obligation ( cdo ) investments, the thai banking sector as a whole is also immune to the u. s. sub - prime spillover. last but not least, thailand is among the world β s top places when it comes to the ease of starting and operating businesses. the recent report, β doing business 2008, β by the world bank upgraded thailand by two places. despite all the storms we faced, we are now ranked at 15th place out of 178 countries for the most attractive destination to invest. this reflects a better infrastructure for doing businesses in thailand. the improvement was cited on the back of e - custom system introduced since october 2006. cost reduction, lesser time consuming and fewer procedures for imports and exports, all induce efficiency for international trades. overall, we have strengthened the infrastructure or the micro aspects of doing businesses in thailand. ladies and gentlemen, in all, i believe that quality investors look at both economic performance and policy credibility. it is obvious that short - term performance is not difficult to achieve but a consistent performance across horizon is a challenge. getting the political will as well as policy mix and actions in the right direction is essential. the bot has a clear stance and stands ready to secure the overall health of the thai economy. the mpc has done its action last meeting and i believe we are on the right track. i need not remind you that thailand is no stranger to difficult challenges. while being patient, we certainly have strong fundamentals for the second wind. it is just a matter of time to come. at this critical juncture, the most the bank of thailand can do is to keep the macroeconomic environment conducive to sustainable growth and productivity improvements. the key to high - performance economy inevitably lies in supply - side policies that raise the economy β s potential growth. the fact that supply - side policies take | 1 |
factor for further strengthening financial stability in albania and providing an impetus to the economy. on the other hand, the indirect role consists in the cooperation that you may offer to many structural reforms across all the sectors of the economy and in all the dimensions of the business setting. your expertise is not insignificant. it must assume an authoritative place in the economic debate. third, while acclaiming the cooperation between the bank of albania and the albanian association of banks and commercial banks in educational activities, i would also like to iterate the importance of financial education and financial inclusion. as financial services and products develop and become more complicated, financial education helps users to understand and use them ; it also helps preventing financial crisis and contributes to the financial stability and economic growth of a country. we need to continue to be key promoters in designing and implementing financial education programmes. financial education is an investment in the future and it should be an integral part of our agendas, engaging more intensively in the implementation of alternative and innovative methods for enhancing financial education among the public. in conclusion, let me assure you once again that you will find in the bank of albania a loyal, supportive and serious partner, adherent to its legal mandate. our decision - making will be transparent and all our initiatives will be guided by a spirit of cooperation with the banking sector, aiming at ensuring highest efficiency. i wish you a successful and prosperous year for you and your families. thank you for your attention! 3 / 3 bis central bankers'speeches | 2008. we project that the gdp will grow during the present year by 6 percent. in addition, our projections indicate that the 12 - month inflation will mark around 3 per cent at end year, which is very close to our numerical target. all the other macroeconomic indicators attest to a relative stability with rates being close to our projections. despite this positive outlook, the public attention is at this moment future - oriented. in this context, the year 2009 shows a more complex setting, with numerous challenges ahead not only for the real economy but also for the monetary policy, the fiscal sector, the external sector of the economy and the financial system at home. with respect to the international developments, the partner countries are close or have now plunged into economic recession. the decline of the economy, among others, affects negatively β the export of its surplus β in goods, capital and investments in partner countries. in this context, the possible slowdown in foreign currency inflows may constitute a future occurrence, although the intensity at which this phenomenon may be exhibited is still vague. in the recent months there has been a halt in the price rise of raw materials, oil and foods. in addition, a rapid correction process of these prices on the demand side has commenced. the further fall in prices may affect the decline on both sides of foreign trade. but, given the difference between imports and exports by several times, the net effect will naturally be the reduction of trade deficit. worth to note, however, is that the fall in prices may impact indirectly the performance of fiscal revenues since the amount on which the fiscal tariffs are applied will be lower. we are now facing the reduction in lending and credit lines extended by parent banks to their subsidiaries. based on these arguments, the bank of albania assesses that there is an increasing risk that the economic growth may slow down in 2009. the harmonization of the two basic policies in economy is a key element which ensures growth and a balanced development. in this context, we are in the process of analyzing the new project drafted by the government for 2009. we remain constant in the belief that the harmonization of both basic policies remains a priority in the future as well. to this purpose, we require from the government the inclusion in the fiscal package for 2009 of a fiscal rule on the performance of fiscal policy. this rule should be quantitative, monitorable and extended through the entire political mandate, with a clear bias towards the quantitative maastricht criteria. other possible risks involve those | 0.5 |
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