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action plan of the bank of albania is a broad and complex process, which consists in legal and institutional regulations and decisions. i am happy to see that the ebrd has reached the conclusion that this legal, regulatory and institutional process will contribute to reducing the nonperforming loans, in the long term. it is also encouraging to note that the report makes a similar positive assessment for a group of reforms undertaken by the albanian government and other authorities in the area of market liberalisation, privatisations, energy sector and infrastructure. 1 / 2 bis central bankers'speeches looking ahead, the report assesses objectively the global macroeconomic environment as overall favourable. the nature and origin of capital flows toward the transition economies is immune from the adverse effects from the brexit or increase in interest rates in the us economy. for the central and southeastern europe, during 2017, the economy is expected to grow faster, driven by domestic factors and a slight and stable improvement of the economic situation in foreign trading partners. the main risks relate to the performance of commodity prices, and in particular to geopolitical and global economic developments. the deepening social inequality is an issue of particular concern that has been present across the board in transition countries. the report evidences that inequality in the economy, in terms of opportunities and financial inclusion, has been expanding, contributing negatively to economic welfare in transition countries. finding solutions is a difficult challenge, with financial education and financial inclusion considered as tools for addressing this issue successfully. i would like to take advantage of this opportunity to emphasise that the bank of albania and the banking system are paying particular attention to these two topics. our financial education programmes, informative publications on banking products and services, coupled with regulation, licencing, introduction and support for new payment and financial services technology and instruments, are aimed at enhancing financial inclusion and generating opportunities for financial access for all groups of the society. the bank of albania deems that more may be done with regard to designing and promoting financial products that satisfy better the needs of such groups. in addition, we think that there is more space for faster growth of credit to the private sector, particularly for certain sectors, in which inequality is more notable. more concretely, agriculture is a good example to illustrate this point. while it contributes a significant share to the gross national product, it only gets a small share of credit and other financial products. beyond these policies and strategies for developing financial products, the real fight against poverty and inequality | workable process by which modest improvements in supervision and regulation at the outset can be adjusted and further enhanced over time as experience and operational feasibility dictate. in particular, we should avoid mechanical or formulaic approaches that, whether intentionally or not, effectively β lock β us into particular technologies long after they become outmoded. we should be planning for the long pull, not developing near - term quick fixes. it is the framework that we must get right. the application might initially be bare - boned but over time become more sophisticated. for example, it could begin with a limited number of risk β buckets β and, over time, be expanded to include not only more risk categories, but also the use of an individual bank β s full credit - risk model β all within the same supervisory framework and unique to each bank. the design of the improved oversight approach is a work in progress. we are endeavoring to develop a program that is the least intrusive, most market based, and most consistent with current and future sound risk - management practices possible, given our responsibilities for financial market stability. | 0 |
systems, capital account, and capital markets. it is noted that the target date is beyond 2015 for the aec. this is because financial markets are much harder to integrate than goods markets given different structures and policies among membership and the sector β s sensitive nature. of the four areas, the first three are under central banks. let me however touch on only the first two which i deem are most relevant to this audience. the first area, financial services liberalization will be done primarily through the creation of qualified asean banks or qabs, indigenous asean banks that are allowed to operate in all asean countries under the dimensions of equal access, equal treatment, and equal environment. currently, involved regulators are focusing qab discussions on the qualification of such banks as well as regulatory and supervisory issues to ensure the soundness of financial institutions. bilateral negotiations for qabs may commence this year for countries which are ready. for payments and settlements systems, the aec vision is to have β integrated, safe, and efficient β systems that will β enable businesses and individuals to make or receive electronic payments with greater convenience. β bis central bankers β speeches to achieve this vision, five key sub - areas are targeted : cross - border trade settlement, money remittances, retail payment system, capital market settlement, and standardization. examples of specific goals in these areas are achievement of t + 1 receipt of funds for crossborder payment, full regional atm interoperability, and an adoption of iso 20022 as a common standard for payment and settlement messages. ladies and gentlemen, given the limited time, it is impossible to get into fine details. nevertheless, i hope that i have given you a big picture of the changing role of central banks post global financial crisis. this encompasses the reorientation of monetary policy and regulatory frameworks and to a lesser extent central banks β financial - sector development role. as i outline what lies ahead in the policy environment, some of you may worry about the increasing interest rate environment and higher regulatory costs, outweighing your excitement for the aec. but let me assure you that these are healthy developments for the long run. with lower crisis risk, risk premia will be lower. and the most efficient and well - run financial institutions will be the ones who reap the most benefits from this new environment. thank you for your attention. bis central bankers β speeches | and payment systems. this interoperability for the time being remains to be ensured. 1 / 3 bis - central bankers'speeches from a stability perspective it is clear that currently the crypto ecosystem is not large enough and interconnected enough to threaten the stability of the whole financial system, as shown by the modest impact on mainstream finance of the may / june crypto assets market turmoil in the wake of the terra - luna collapse and more recently the impact of the collapse of the ftx crypto - conglomerate. but let me note first that, those collapses did have significant negative spillover effects within the crypto ecosystem, and second that, in attempting to replicate some of the functions performed by the mainstream financial system, the crypto ecosystem inherits and may amplify the vulnerabilities of that system. for instance, tokenisation increases operational risks, especially cyber risks. it is currently the number one operational risk to financial players, and it has the ability to jeopardise the stability of the entire financial system. the tokenisation of finance creates in particular new points of vulnerability : let me mention bridges between blockchains, or oracles that feed data to blockchains. in addition, the governance issues of public dlt infrastructures, which contribute greatly to the risk of hacking, are still far from being resolved. ii / impact on our role and activities in response to these transformations, we see our role as twofold : as a financial stability authority to help bring tokenised finance within a regulatory framework which allows its benefits to be reaped but also its risks appropriately mastered to safeguard financial stability and therefore confidence. but we see ourselves as being part of the innovative ecosystem with the objective to act as a facilitator and catalyst, in our operational role of central bank services provider. 1 / contributing to a confidence prone regulatory framework fundamentally, what does not change in the financial sector is the need for confidence. consumers of financial services need to have confidence : in the security of transactions, in the protection of their assets and in their freedom of choice. the players in the sector also need to have confidence : in each other, because they remain interdependent, and in the rules of the game, i. e. in the regulatory conditions under which they can carry out their activity. as financial stability authorities, central banks and supervisors have a role to play in maintaining this confidence, in all the forms i have just mentioned. in this respect, i would like to | 0 |
if we recognise that markets do not always work perfectly, the following considerations must be inferred. first, it is not correct to subject only to the judgement of the market the suitability of the economic policy of a country, especially when this may involve highly destabilising effects for millions of people. i am not arguing that we should ignore market valuations, but we should be aware of the conditions in which such assessments are made ; these valuations cannot be the sole reference parameter, at least for those who are responsible for the public good. second, faced with the imperfections of the market, intervention by an economic policy authority may be justified. this applies particularly when markets are subject to high for example, c. nelson and a. siegel, 1987, parsimonious modelling of yield curve, journal of business. bis central bankers β speeches uncertainty and the time horizon of market participants is getting shorter, making necessary a participant with a longer time horizon to counter market malfunctions. even milton friedman recognised that in some circumstances the intervention of a public authority such as a central bank could be necessary to stabilise financial markets. 4 the monetary authority tends to intervene to a limited extent in issues related to liquidity and the smooth functioning of markets, which influence the effectiveness of monetary policy itself. given the importance of the government securities market in the financial system, its malfunctioning has a direct impact on the monetary policy transmission mechanism. this is done through three main channels : i ) the influence that the interest rates on public debt have on the rates that banks pay on their liabilities, and then pass on to households and firms, ii ) the effect of changes in the prices of government securities on the accounts of financial intermediaries, which in turn affects the ability of banks to provide credit to the real economy, iii ) the ability to use government securities as collateral for refinancing in the money market or from the central bank, which influences the liquidity of the banking system. here i would like to refer to the second factor relating to the importance of the government securities market to the good functioning of monetary policy. in any basic textbook of macroeconomics β from burda and wyplosz to mankiw β the operations of the central bank aimed at regulating the amount of liquidity in the system β the so - called open market operations β are essentially characterised by purchases and sales of government securities or the re - financing of the banking system against collateral | curtailed price increases on their own products to avoid losing sales. this all suggests that in an economy with well - anchored inflation expectations, relative prices adjust quickly to maintain the overall rate near target ; with domestic price inflation, for example, moving in the opposite direction to import price inflation. in effect, where the target is credible, the market adjustments to relative prices will do most of our work. that is another reason for paying very close attention to inflation expectations. the mpc has been successful over the years in maintaining inflation expectations at a rate broadly consistent with the inflation target. anchoring expectations in this way is important because it prevents the wage - price spirals that were a key part of the inflation process in the past. if wage and price setters believed that inflation was going to rise above the target, then they would make some allowance for this in setting 28 - 30, 2003. the bank for international settlements has also emphasised the β increasing global character of the inflation process β, see bis annual report 2006. current wages and prices. that would add to current inflationary pressure, requiring higher interest rates to control it. while there was some evidence of a pickup in the general public β s inflation expectations at the beginning of the year, probably in response to higher gas prices, they have fallen back a little since then and do not yet appear to have had any effect on actual wages or prices. conclusion to sum up, by delivering the inflation target the mpc seeks to produce a platform of stability. that doesn β t produce a quiet life for businesses β on the contrary it can make the pace of change quicker because it makes the underlying business imperatives clearer. in recent years, we have been helped in keeping inflation low and stable by the integration of new economies into the world market and the disinflationary pressure that has produced. as a result of that stability, the market and the public now expect inflation to remain around target and that appears to have helped to damp the impact of the recent oil price hikes on the overall inflation rate ; the total impact has been modest and there are no signs yet of spillovers into wages and prices. we do not know yet whether the benign international context will continue or what other shocks may occur. we are seeing renewed rises in energy prices this year which have helped push inflation back above target. our role is to continue to assess the situation as it develops, monitoring economic data, financial markets, and listening to our regional agents and their business contacts | 0 |
67 over the next two decades, the ratio of the number of years that the typical worker will spend in retirement to the number of years he or she works will rise in the long term. a critical step forward would be to adjust the system so that this ratio stabilizes. a number of specific approaches have been proposed for implementing this indexation, but the principle behind all of them is to insulate the finances of the system, at least to a degree, from further changes in life expectancy. sound private and public decisionmaking will be aided by determining ahead of the fact how one source of risk, namely demographic developments, will be dealt with. the degree of uncertainty about whether future resources will be adequate to meet our current statutory obligations to the coming generations of retirees is daunting. the concern is not so much about social security, where benefits are tied in a mechanical fashion to retirees β wage histories and we have some useful tools for forecasting future outlays. the outlook for medicare, however, is much more difficult to assess. although forecasting the number of program beneficiaries is reasonably straightforward, we know very little about how rapidly medical technology will continue to advance and how those innovations will translate into future spending. to be sure, technological innovations can greatly improve the quality of medical care and can, in theory, reduce the costs of existing treatments. but because medical technology expands the range of treatment options, it also has the potential of adding to overall spending - in some cases, significantly. as a result, the range of possible outlays per recipient is extremely wide. this uncertainty is an important reason to be cautious - especially given that government programs, whether for spending or for tax preferences, are easy to initiate but can be extraordinarily difficult to shut down once constituencies for them develop. in view of this upward ratchet in government programs and the enormous uncertainty about the upper bounds of future demands for medical care, i believe that a thorough review of our spending commitments - and at least some adjustment in those commitments - is necessary for prudent policy. i also believe that we have an obligation to those in and near retirement to honor what has been promised to them. if changes need to be made, they should be made soon enough so that future retirees have time to adjust their plans for retirement spending and to make sure that their personal resources, along with what they expect to receive from the government, will be sufficient to meet their retirement needs. i certainly | about and understanding regulatory and tax policy. but incentives also help motivate people in a variety of other settings, such as encouraging students to do their best in school, helping reduce traffic jams, or even nudging someone to save more or to exercise regularly. economics is a practical and powerful tool for understanding how we relate to each other. and that β s why what you do for your students is so important. like all teachers, you are helping prepare them for success in life. the knowledge you impart and the intellect and talents you help develop are tools that your students can use to achieve that success. economics teaches analytical and critical thinking skills useful to anyone. part of your students β success is their economic success as capable, creative, and productive members of the workforce and as consumers adept at managing their finances. your students benefit from this education, but so does everyone else in society. we all benefit when better - educated citizens support economic policies that help our nation prosper. we all benefit from the capability, creativity, and productivity of our workforce, because nothing is more important to a healthy and growing economy. responsible consumers skilled in managing their finances are better prepared to weather bad 1 / 2 bis central bankers'speeches times, and stronger household finances overall can help sustain economic growth and mitigate a downturn. stabilizing growth and mitigating a downturn, of course, are aspects of the federal reserve β s mission. monetary policy can be a powerful tool to achieve these ends, but, in truth, its powers are dwarfed by larger forces, such as the productivity of the american people and the strength of their finances. by educating students and supporting their future contributions to the economy as workers and consumers, all teachers, especially economics teachers, are furthering our goals at the fed, so let me offer my further thanks for making our job easier. to help support your work as teachers, the federal reserve board and the 12 reserve banks conduct programs, organize events, and publish books to spread knowledge of economics, financial literacy, and the role of the fed in promoting a healthy economy and financial system. you can find some of those resources at our websites : federalreserve. gov and federalreserveeducation. org. each of the reserve banks has community outreach and educational initiatives, and the outreach to economics teachers is coordinated by the system economic education group, which has been chaired by princeton williams. at the board of governors, for some years we have | 0.5 |
expectations are highly backward looking and / or if the economy is vulnerable to shocks generating negative correlation between output and inflation. 21 highly persistent a current example may concentrate the mind. what if it were thought that central banks might keep rates too low for too long from a price stability perspective in order to repair the banking system ( from a financial stability perspective ). rising inflation expectations and bond yields could undermine the recovery. walsh distinguishes between asset prices in normal and in bubble situations ( 2009, p. 32 ). a financial bubble and the policy response to it create the danger of yielding the reverse, i. e., short - term price stability but longer - term persistent deviations from the desired price path. see steinsson ( 2003 ). relative price shocks may also pose a problem for macro stabilization under price - level targeting. 22 any decision on the overall merits of price - level targeting must take all of these considerations into account. conclusion experience has shown that monetary and financial stability are more tightly bound than had been appreciated. price stability is a necessary, but not sufficient, condition for the stabilization of economic activity, and it must be supplemented by a robust macroprudential regulatory framework. this, in turn, will have consequences for the implementation of monetary policy. if these macroprudential tools prove insufficient to achieve financial stability, monetary policy faces a difficult trade - off between flexibility and credibility. as a consequence, authorities may wish to adjust the monetary policy objective to have the credible flexibility required to achieve both targets. price - level targeting offers one potential avenue for consideration. a formal assessment of the merits of price - level targeting will require the development of a framework that has a more realistic depiction of real - financial linkages than is embodied in the standard financial accelerator model. these models are still in their infancy, and their use to study the relative merits of inflation targeting and price - level targeting is the subject of ongoing research at the bank of canada. the financial stability aspect of the price - level versus inflation targeting debate is only one of many relevant dimensions. the bank has launched a multi - year research initiative that includes a comprehensive examination of the possible advantages of moving to a price - level target. 23 our efforts in this area are ongoing and we look forward to continuing to work with monetary policy experts, academics, and central bankers from across the world. carl walsh has made a valuable contribution to that debate today. references adrian, t. and h. s. shin. 2008. β financial intermediaries | on risk management and investments in resilience. a key function of financial institutions is to help households and businesses manage the risks they face. financial institutions also have a responsibility to manage their own risks prudently so that they do not themselves become a source of uncertainty and instability. as canada's central bank, we have a role to play in mitigating and managing risks and uncertainty. our primary mandate is price stability - in other words, low, stable and predictable inflation. we also have mandates to foster a stable financial system and ensure safe and efficient payments. let me say a few words on financial stability and payments. and then i'll finish with some thoughts on monetary policy. our financial stability focus is on risks that could lead to system - wide stress. and we publish these findings in our annual financial stability report ( fsr ). 1 in our most recent fsr, published in may, we reported that canadian mortgage holders had experienced a modest increase in levels of financial stress. since then, we've observed that arrears on mortgages have continued to rise, although they remain below pre - pandemic levels. it also appears that these households have not leaned on revolving credit products such as lines of credit and credit cards to a greater degree than before the pandemic. but there is a notable increase in financial stress among borrowers without a mortgage, mainly renters. during the pandemic, for most credit products, the share of these borrowers missing payments reached historical lows. however, we're now seeing a larger share of these borrowers lagging behind on credit card and auto loan payments. over the past year the share of borrowers without a mortgage who carry a credit card balance of at least 90 % of their credit limit has continued to climb. and this share is now above typical historical levels. this is concerning. our responsibilities related to payments require us to adapt to increasing digitalization. innovation in payments continues to accelerate. in 2021, the bank assumed a new mandate for the supervision of retail payment service providers. starting november 1st of this year, more than 3, 000 service providers will need to register with the bank and follow new rules aimed at safeguarding consumers and protecting the integrity of retail payments. we are also looking at the bigger picture of payment innovation, both in canada and around the world. as part of this work, in the past few years we've built an extensive body of knowledge about the framework and technology behind | 0.5 |
banks on cross - border banking supervision and payment systems, continental training on issues relating to banking supervision and regulation, and the collection of data needed to support bank supervisory activities. closer to home, the sarb also engages with the central banks of lesotho, namibia and swaziland, who together with south africa are members of the cma. the central bank governors of the cma meet three times a year to discuss economic developments in their respective countries as well as other issues related to crossborder spillover effects among cma members. the exchange of information as well as the collaboration on research and other matters of mutual interest have proven extremely useful in assisting the cma countries to fulfil their respective obligations stipulated in the multilateral monetary agreement which governs the cma arrangement. conclusion the sarb remains committed to playing its role in the development of the region, the continent, and the global economy. in many instances, we do this in collaboration with our counterparts in your respective countries. tonight, we celebrate this cooperation, and we trust that our partnerships will only strengthen in the times ahead. in the spirit of this cooperation, i would like to invite you to approach the sarb through our international economic relations and policy department should you need an update on economic and / or monetary policy developments. page 6 of 7 thank you for honouring our invitation. please enjoy the rest of the evening. page 7 of 7 | spending at home. other countries could also introduce more flexibility to the exchange rate of their currencies and allow relative prices to change. fiscal policy in some emerging markets can also stimulate domestic demand away from exports and toward more consumption at home. this is all well known but i think it bears repetition. before i conclude, i would like to present a quotation from a book about the history of the bank for international settlements in basle 10, when during one cold snowy december night in north carolina, the author woke up on a power failure which, in his words, took him back to the 19th century and he realized that we take for granted so many things in life and i quote : β β¦ the payments system is yet another example of a highly complex network technology. we take it for granted that our checks clear, atms instantly provide cash anywhere in the world, imports are paid for in the required currency, and the desired amount of liquidity is available to us any time at the lowest cost. in fact, we should marvel at the ordinarily smooth working of the international payments system rather than be surprised at its occasional malfunction... β unquote. gardner, 1980. toniolo, 2005. clearly, the global crisis of the past two years is hardly an occasional malfunction. however, i would like to suggest that the bretton woods agreement and subsequent reforms did serve the global economy well since world war ii. furthermore, markets do work and even when they become dysfunctional, as we saw during the past 18 months or so, markets were sending a clear message for corrective action. of course the coordinated non - conventional measures taken by major central banks, in particular the federal reserve, the bank of england and the ecb, as well as action taken by governments, did save the global economy from a meltdown. the managing director of the imf suggested last spring that 1 / 3 of the effectiveness of stimulus measures was due to global coordination. those same measures taken individually may not have produced the same result. a quick review of all statements by ministers at the imf meetings last spring would reveal that the terms β multilateralism β, β coordination β and β surveillance β were the most frequently used terms. at least one minister called for β compulsory multilateral coordinated surveillance β. the ministers β remarks were reflected in the β g - 20 framework for strong, sustainable and balanced growth β which emphasized the mutual assessment of members β monetary, exchange rate, | 0 |
also a regulator. this approach will ensure innovative policies that work for the market and ensure financial inclusion for all kenyans, lower unit cost of financial services and also ensure the market stability. ladies and gentlemen : in conclusion, i would like to assure the banking sector and other market players that the central bank will continue to support the market development by providing an enabling environment for growth in the banking sector. we shall continue to ensure that the sector operates efficiently, effectively and soundly, supported by the following three pillars : β’ first, strengthening financial stability, through a robust supervisory and regulatory framework. in this regard, the central bank has adopted a consolidated supervision approach to take cognizance of the growing pan - african nature of the kenyan banking sector β and where applicable, supervisory colleges will be used. β’ second, enhancing financial integrity in the banking sector so as to ensure that the financial systems are safeguarded against money laundering and financing of terrorism in line with international best practice. β’ third, promoting financial inclusion for financial deepening and development in line with the aspirations under the kenyan vision 2030. we expect banks to strengthen their screening and monitoring role of their clients, new or potential ones for market development. the kenyan bank of india should take advantage of the market vibrancy as well as initiatives put forth by the central bank to grow its market share even further in the coming years. ladies and gentlemen : with these few remarks, let me once again applaud the kenyan bank of india, as you celebrate your diamond jubilee and wish the bank continued prosperity in the years to come β not only in kenya but also in the east african community region. thank you and god bless you all. bis central bankers β speeches | eli m remolona : mitigating climate change through collaboration speech by mr eli m remolona, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at 2nd philippine climate forum " gearing towards low - carbon and climate - resilient 2030 ", manila, 5 june 2024. * * * i am grateful to join this 2nd philippine climate forum. the theme, " gearing towards low - carbon and climate - resilient 2030, " echoes the urgency of necessary actions as we move closer to the end of the decade. while the country's greenhouse gas emissions seem negligible as compared with those of the advanced economies, we disproportionately bear the brunt of the impact of climate change. the investments needed to reach our country's climate goals is estimated at us $ 17 billion a year up to 2030. the national budget appropriation for this only stood at around us $ 8 billion for 2024. this means that a significant amount of private sector financing is needed to augment the national government's budget. it is in this light that the financial sector regulators issued guidelines aimed at promoting effective management of risks and accelerating the growth of the sustainable finance market in the country. one such issuance is the sustainable finance taxonomy guidelines. the taxonomy is a tool to classify activities on the extent to which they meet the identified objectives. this initially covers climate change mitigation and adaptation, and in the future, circular economy, and biodiversity. we are in the very early days of a taxonomy framework. the bsp ( bangko sentral ng pilipinas ) will observe how the banks are applying the taxonomy in their credit and investment portfolios. this can then inform supplementary regulatory guidance and reporting. over time, as we establish trends on the banking sector's taxonomy - disaggregated exposures, we expect to have more meaningful industry discussion on setting targets. we want to see the percentage of the banks'green - labeled exposures increasing, with adaptation activities getting equal if not higher share than mitigation. we also need to see green - labeled exposures stand to benefit small businesses and vulnerable communities where adaptation finance is most needed. this is in line with the bsp's inclusive sustainability agenda. 1 / 2 bis - central bankers'speeches an inclusive approach entails two things. one, we avoid unintended exclusionary | 0 |
retaliation from all affected regions on an equivalent amount of u. s. exports. β scenario 4 : confidence shock β introduces a temporary global shock to confidence on top of scenario 3. it is assumed that advanced economies see risk premiums increase by 30 basis points - - about half the increase observed during the β taper tantrum β - - around two years after the additional tariffs, while emerging economies would face a shock that is twice as large. source : imf, β g20 surveillance note, july 21 - 22, 2018. β chart 3 real gdp growth and breakdown by component ann., q / q % chg. private consumption government spending imports real gdp private business fixed investment, etc. exports change in inventories, etc. - 5 - 10 - 15 cycy 17 17 source : cabinet office, β quarterly estimates of gdp for april - june 2018 ( first preliminary estimates ). β chart 4 outlook for economic activity and prices ( july 2018 outlook report ) medians of policy board members β forecasts, y / y % chg. fiscal 2018 forecasts made in april 2018 fiscal 2019 forecasts made in april 2018 fiscal 2020 forecasts made in april 2018 real gdp cpi ( all items less fresh food ) + 1. 5 + 1. 1 + 1. 6 + 1. 3 + 0. 8 + 1. 5 + 0. 8 + 1. 8 + 0. 8 + 1. 6 + 0. 8 + 1. 8 note : figures for the cpi ( all items less fresh food ) exclude the direct effects of the consumption tax hike scheduled to take place in october 2019. source : bank of japan, β outlook for economic activity and prices, β july 2018. chart 5 household consumption before and after consumption tax hikes consumption before and after tax hikes real private consumption by type apr. 1996 and apr. 2013 = 100 104. 9 durable goods 104. 6 120 103. 9 non - durable goods services 100. 5 122. 3 tax hike in fiscal 2014 ( from 5 % to 8 % ) tax hike in fiscal 1997 ( from 3 % to 5 % ) apr. 2013 = 100 106. 9 106. 3 103. 0 99. 4 95. 8 87. 7 96. 8 13 fy 1996 14 fy 2013 92. 8 note : the latest figures are as of june 2001 and june 2018. source : cabinet office, β synthetic consumption index. β 13 εΉ΄ [UNK] fy 2013 14 notes : 1. the latest figures are | yen weakening. domestic wholesale prices continue to decline as a whole mainly in machinery and chemical products, although the decrease in the prices such as of electronic parts seems to have ceased. consumer prices are weakening reflecting the decline in prices of imported products and their substitutes. corporate service prices continue to decrease. as for the conditions surrounding price developments, the effects of the past decline in crude oil prices are likely to continue for a time. on the other hand, the recent yen β s depreciation is regarded as a factor to support prices in the period ahead. however, as the economy continues to deteriorate, the balance between supply and demand in the domestic market will increasingly exert downward pressure on prices. furthermore, in addition to the declining trend of machinery prices caused by technological innovations, the decreases in the prices of goods and services reflecting deregulation and the streamlining of distribution channels will continue to restrain price developments. overall, prices are expected to follow a gradual declining trend for the time being. moreover, given the high this report is based on data and information available at the time of the bank of japan monetary policy meeting held on january 15 and 16, 2002. the bank β s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on january 15 and 16 as the basis for monetary policy decisions. degree of uncertainty regarding future economic developments, the possibility that weak demand will further intensify downward pressure on prices warrants careful monitoring. in the financial market, the overnight call rate continues to move around zero percent as the bank of japan provided further ample liquidity to the money market by aiming at maintaining the outstanding balance of the current accounts at the bank at around 10 to 15 trillion yen due to the changes in the guideline for money market operations decided at the monetary policy meeting held on december 19. interest rates on term instruments are declining on the whole reflecting additional monetary easing measures. the japan premium remains negligible. yields on long - term government bonds rose slightly and are mainly moving around 1. 40 - 1. 45 percent recently. as for the yield spreads between private bonds ( bank debentures and corporate bonds ) and government bonds, while spreads between bonds with relatively high credit ratings and government bonds remain mostly unchanged, those between bonds with low credit ratings and government bonds tend to expand. stock prices rebounded somewhat towards the start of the year, but are weakening recently. in the foreign exchange market, the yen depreciated further towards the | 0.5 |
respective inflation rates around 1980, 3 / 4 bis central bankers'speeches and why inflation in japan has remained consistently below that in the united states since then, including during the period of japan β s economic overheating in the second half of the 1980s. the differences in inflation dynamics across economies following the covid - 19 crisis and the inflation differentials between japan and the united states over the long term have renewed my awareness that our understanding of inflation remains limited. i have the impression that this kind of awareness is generally shared by officials in other countries and regions as well, given that central bankers have viewed being β humble β as the key since the outbreak of covid - 19. instead of being boxed in by our conventional views, i think it is important for us to be humble in examining the actual price data to understand why inflation in japan is weaker than in the united states and europe, whether the reasons are structural, and whether any of this is likely to change in the future. i hope that this workshop, through an active exchange of views with experts and scholars, will advance our understanding of inflation, including the points i just mentioned. thank you very much for your attention. 1 macroeconomists such as emeritus professor olivier blanchard and professor lawrence h. summers have warned since relatively early on about the risk of persistent high inflation, arguing that aggregate demand expanded by massive u. s. fiscal spending and its multiplier effect is highly likely to go well beyond the potential supply capacity. in contrast, scholars such as professor paul krugman and authorities such as the federal reserve and the international monetary fund have argued that supply - side constraints and shifts in demand are to a large extent transitory factors brought about by the pandemic, and that the increase in inflation is likely to moderate relatively quickly. for an example of a debate among academic economists and central bank economists, see furman, j., β why did almost nobody see inflation coming? β project syndicate, january 17, 2022, www. project - syndicate. org / commentary / 2021 - us - inflation - forecasting - errors - economic - models - by - jasonfurman - 2022 β 01. 2 it already had been pointed out in a monthly bulletin that the bank published in 1975 that, as a result of an upward shift in the short - term phillips curve due to a rise in inflation expectations, the long - term phillips curve becomes vertical. for details, see β 1970 - nendai no se | global - wide impact because of the underlying interconnectedness. the issues of trust, robustness of markets and financial infrastructure, counterparty - risk, information gap, as well as, liquidity will become important possible triggers of the future market disruptions. in addition, geopolitical events or trade tension can also lead to disruptions in global liquidity and trigger a global - wide impact. the main message here is that, going forward, future crises will be different. they will relate less to misalignment in the individual economies because of better policy and regulation, but will relate more to the resiliency of the global system, market and institutions, as well as the ability of the policymakers to prevent or address the vulnerabilities beforehand. forth, for emerging markets, the most threatening externally - induced crises going forward will be those that relate to the concentration of global liquidity, either too much or too little, in the form of large, persistent, and volatile capital flows that overwhelm the capacities of individual countries to manage and adjust to. and the most worrying aspect of this is that the trigger would lie outside the controls of emerging market β s policymakers since the flows would be the results of market conditions and policy prescription elsewhere. let me now turn to my second observation on the implications that the changing nature of future crises can have for the conduct of ewe going forward. on this, i have four points to make. first, in view of the changing nature of future crises, it is therefore important that the thrust of the ewe is mindful of this possibility. in my view, the focus of ewe should expand beyond macro - misalignments based on historical relationships to include assessing the robustness and the resiliency of the systemically - important markets, system, and institutions. this means the key objective of ewe will not be to forecast future crises per se, but to identify vulnerabilities in the most important areas in advance, especially those risks that are not covered by market data or by the surveillance process elsewhere. second, for ewe to be effective and comprehensive, it should be done at two levels to cover both the global dimension and the country - specific dimension of risk. the global dimension must be the responsibilities of the imf and the fsb given their comparative advantage as international organization. and as i already noted, ewe by the imf and the fsb should focus on monitoring the development of risk in the | 0 |
needs to move towards a β financial union β, with a single euro area authority responsible for the supervision and resolution of large and complex cross - border banks. this authority should also be responsible for a euro area deposit insurance scheme. with bank resolution and deposit insurance funded primarily by private sector contributions, taxpayers would be shielded from picking up the bill for future banking crises. essentially, i envision an authority similar to the federal deposit insurance corporation in the united states. decisive and far - sighted reforms like these, unrealistic until a short while ago, are now gaining support. reacting to the pressure of events may seem unattractive, but it may also be the only way forward. as on other occasions in european history, this crisis offers a chance to progress ; we must be ready to act on it. let us not waste this opportunity to advance european integration. bis central bankers β speeches slide 2 bis central bankers β speeches slide 3 bis central bankers β speeches slide 4 bis central bankers β speeches slide 5 bis central bankers β speeches slide 6 bis central bankers β speeches slide 7 bis central bankers β speeches slide 8 bis central bankers β speeches slide 9 bis central bankers β speeches slide 10 bis central bankers β speeches slide 11 bis central bankers β speeches | benoit coeure : interview in delo interview with mr benoit coeure, member of the executive board of the european central bank, in delo, conducted by mr miha jenko and published on 15 february 2014. * * * delo : mr cΕure, your last visit to slovenia was in october 2012 when it hosted an ecb governing council meeting. how do you see developments in the country since then, over the last 16 months? benoit cΕure : over the last 16 months, slovenia has been through a very difficult period, with many serious challenges both from an economic and also from a financial standpoint. the slovenian authorities have acknowledged and understood the challenges and have been addressing them in a systematic and serious way. the first appropriate and important steps have been taken, in particular when it comes to the restructuring of the banking sector. by completing the asset quality review and the stress tests they have reached a milestone, allowing for the restructuring of the banking system. but there remains a lot to be done. indeed, what else should be done? what are the tasks that still lie ahead? both the slovenian government and banka slovenije have a very good understanding of what has to be done. this relates to three key issues. the first is financial sector restructuring. this is well advanced. the asset quality review and the stress tests have been important and have been done in a serious and professional way, but this is only the first step. from now on you need a comprehensive reform of the banking system as part of a broader strategy for the entire economy. in this respect there are quite a few further steps to be taken. second, there is the fiscal dimension, where you need to bring down the fiscal deficit, but it is also very important to bring down the public debt. in this respect, slovenia must observe the recommendations issued by the european commission regarding the reduction of the structural deficit. this fiscal effort should be aimed towards a visible reduction in the debt level. and the third aspect is obviously economic reform and improving the efficiency of the economy. no other effort will be successful if the economy does not become more efficient. yes, the imf has also warned slovenia in its latest report about the risk of rapidly increasing public debt which could soon go beyond the hard - to - manage level of 85 %. what are the necessary steps to reduce this risk of unmanageable public debt and high interest rate costs? one of the key policy actions is privatisation, | 0.5 |
is going to fill in an institutional gap in our financial sector, which recent developments have made ever more evident. in a banking sector, which remains relatively well profitable, compared to their european peers, despite the decline in lending to nonfinancial corporations, we need an institution that can help create an environment where banks feel comfortable to extend credit to innovative firms, namely firms that may page 8 of 10 not be able to provide adequate collateral due to the nature of their business, but which are still good business opportunities. besides the development bank, there are other policy measures that should help facilitate the flow of credit. at the central bank we will continue to evolve our credit register to provide more information to banks and help reduce credit risk. more broadly we will continue supporting government in its attempts to reduce excessive bureaucracy and further improve the insolvency process. we will also continue to take macroprudential measures to ensure timely policy interventions to safeguard the stability of the financial system. the struggle against bureaucracy is a key element in the broader effort to improve the ease of doing business in this country. we are pleased to note that the world bank ease of doing business team is finally making serious efforts to understand our national specificities. the central bank urges and supports government β s ongoing efforts to take the ease of doing business conditions to a new level. of course, it would be unforgivable of me not to seize this opportunity to urge the consultancy community to ensure that the information we provide to international competitiveness ranking agencies is up to date and factually correct. i also take this opportunity to observe that in 2018, malta will undergo a comprehensive and detailed analysis of its financial sector through a financial sector assessment programme ( fsap ) conducted by the international monetary fund. at the same time, malta will be evaluated against international standards on anti - money laundering and counterterrorism financing ( aml / cft ) by moneyval as part of the council of europe β s peer review process. we are eagerly looking forward to both. our economy has managed to outperform because we managed to evolve and diversify rapidly. i believe that our financial services and banking sector needs to mirror this, to continuously evolve and adapt to the changing economy. after the success of recent years, we are now in an excellent position to solidify our gains. this requires us all to focus our glance further into the future, and to devote a greater share of current economic prosperity towards financing more long - term projects. | of the national safety nets is put in doubt. β’ despite the strong financial position of the nordic countries and the high integrity of nordic supervisors, there, may still be a positive impact on the customer perception. one could also expect that improved prudential supervisory procedures could have positive spill - over effects on the market - conduct supervision and even consumer protection which will remain national responsibilities within the ssm. conclusions [ slide 6 ] the disparity between international banking and national supervision and resolution powers have been the achilles heel of the european banking market, a problem that is now finally being addressed. it is regretful that we had to wait until the recent crisis before progress started on this front. β’ this is particularly important for the nordic banking market, which is exceptionally integrated and interconnected, while the countries β starting positions are so divergent, not all being members of the euro area. i hope that the different currency arrangements in the region will not prevent progress in supervision. an important impulse for the establishment of the banking union came from the desire to protect taxpayers and reduce their liability in the banking system. however, in my view, the ssm should also offer significant benefits to the supervised banks : supervisory requirements will be harmonised across borders and there will be one entry point into supervision. grouplevel supervision will be emphasised rather than the supervision of subsidiaries. β’ this should be quite beneficial especially for those banks which have large crossborder activities. big nordic banks are prime examples of such banks. clearly, the ssm will ease banks β international operations and help ensure a level - playing - field for banks. to the above we can add the benefits of stronger investor confidence which should result from the strong, objective and high - quality supervisory work. finally, the billion dollar question : would the recent financial crisis have been avoided in europe if the eu had established the banking union before the problems surfaced? i think probably not completely, since the reasons for the crisis were to a large extent global in nature. but the crisis would likely have been milder and less damaging. the european bis central bankers β speeches market would have been less fragile and the authorities could have been able to act more quickly and more decisively. both supervision and resolution would have contributed to that. on the supervision side, better, more credible and internationally uniform supervision would have reduced uncertainty among investors and politicians about the condition of the banking systems of the highly indebted countries. that would have made markets more resilient and avoided some | 0 |
rundheersing bheenick : fostering africa β s growth in the new reality β from vision to action address by mr rundheersing bheenick, governor of the bank of mauritius, at the opening plenary of the swift africa regional conference, balaclava, 30 may 2011. * * * it is a pleasure to be here this morning and to address you at the opening plenary of the swift africa regional conference. let me add my own words of welcome to the foreign delegates, especially those visiting our country for the first time. i have no doubt that you will be joining the ranks of satisfied repeat visitors as you discover for yourself how right one of our earliest publicists was when he claimed boldly that heaven was copied after mauritius. the name of the publicist? a certain mark twain. he may have been exaggerating β but just a wee bit! i thank swift for giving me the opportunity to share with you some thoughts on the theme of β fostering africa β s growth in the new reality β from vision to action β. i shall focus on the need to strengthen financial market infrastructure ( fmi ) in our region. fmis play a key role in promoting financial stability and economic growth. when financial markets get the jitters, the world economy grinds to a halt, as we have just painfully re - learnt. it is difficult to think of a more appropriate topic for a gathering such as this at a time when we have all become acutely aware of the importance of strong financial markets for economic prosperity. it is true that much progress has been made in strengthening fmi in africa ; it is equally true that much remains to be done as african financial systems are still lagging behind and are weakly integrated with the global financial system. as policymakers in advanced economies direct their efforts towards global reforms for a more robust global financial system, it may be a suitable time for some fmi initiatives in the african region. first, let me briefly recapitulate the scope of swift β s activities and operations in the global fmi, just to give the uninitiated some idea of its systemic importance and explain why regulators take such a close interest in swift. a few metrics will suffice to give you an indication of the criticality of swift to the operation, safety and soundness of the global financial system. since it was set up in the mid - 1970 β s, swift has rapidly become an indispensable element of | , in 1946, several decades before the euro, the 14 countries of the west african economic and monetary union ( waemu ) had already adopted a single currency and had actually set up their central bank in 1962, the banque centrale de etats de l β afrique de l β ouest ( bceao ). 1981 saw the establishment of the preferential trade area, a free trade agreement between east and southern africa, of which mauritius was a foundermember. this was succeeded in 1994 by the common market for eastern and southern africa, which has emerged as one of the pillars of the proposed african economic community. the southern african development community ( sadc ) was launched in 1992, building on the southern african development coordination conference ( sadcc ), itself set up since 1980. mauritius joined sadc in 1994. sadc has worked on the harmonisation of bis central bankers β speeches payments systems among its member states with the result that today all members of the sadc either have, or are in the process of implementing, a real time gross settlement ( rtgs ) system. there have been initiatives to integrate african capital markets and one of these is the regional exchange, the bourse regionale des valeurs mobilieres ( bvrm ). in sadc, a number of initiatives have been launched to create a fmi by 2018 on the assumption that there will be monetary convergence and a sadc central bank by that date. there are parallel, if not overlapping, programs and projects at the level of comesa, aacb β the association of african central banks β, and the african union. all of these draw their inspiration from the desire for greater integration in africa, culminating ultimately in the distant future in the realisation of the vision of a united states of africa, with a common currency and a common central bank. however, despite this grand, overarching, vision β and a flurry of loosely - coordinated actions and initiatives to realize it β, the reality on the ground is that, african financial markets remain fragmented and costly. the integration of african payments systems into an fmi has a long way to go. the financial infrastructure of continental africa can best be described in terms of adjectives of extremes. payment systems range from the highly advanced to the underdeveloped ; banking systems range from highly regulated to purely market - driven systems ; and banking penetration ranges from several bank accounts per head to the highest proportion of unbanked people. over the years | 1 |
) following which he went on a prestigious two - year assignment to the development research centre of the world bank. almost all of his later active career, from 1978 on, was in the delhi school of economics where he served with great distinction, first as a professor, then as head of the department of economics and finally as the director of the school. from 2000 until his retirement in 2004, professor tendulkar served as the executive director of the centre for development economics in the delhi school. professor tendulkar β s concern for data quality led him to a life - long involvement with the process of generation of economic data through a succession of public assignments. he served on numerous working groups for the design and conduct of the national sample surveys, was the chairman of the governing council of the national sample survey organisation ( nsso ), chairman of the national accounts advisory committee and chairman of the national statistical commission. quite understandably, prof. tendulkar β s commitment to empirical research and his sensitivity to poverty led him to very extensive and influential work on estimation of poverty in india. he was a member of the lakdawala committee for estimation of poverty 1993 which, among other things, recommended state specific consumption baskets for estimation of poverty. the more recent tendulkar committee report, which was the subject matter of a vigorous bis central bankers β speeches national debate, revisited these norms and improved on them by recommending bringing estimation of rural poverty in line with that of urban poverty. although i had long heard of prof. tendulkar from his students and colleagues who spoke very highly of him, i did not have the good future of meeting him until late in my career when he was a member of the prime minister β s economic advisory council and i was the secretary to the council. later, he became the chairman of the council in which position he advised the prime minister on important policy issues. my association with prof. tendulkar continued as i moved to the reserve bank in 2008. prof. tendulkar was a director on the central board and chairman of the eastern region local board of the reserve bank during 2006 β 11. the reserve bank deeply values this association with him and has benefitted immensely from his wise counsel and mature guidance. like thousands of his students, colleagues and well wishers, we in the reserve bank were deeply saddened by his unexpected demise in june 2011. we remember him as an outstanding economist distinguished by his intellectual integrity, and more importantly, as a wonderful human being | duvvuri subbarao : understanding inequality and poverty in india welcome remarks by dr duvvuri subbarao, governor of the reserve bank of india, at the first prof tendulkar memorial oration, at the college of agricultural banking ( cab ), pune, 19 january 2013. * * * on behalf of the reserve bank of india, i am delighted to welcome prof. abhijit banerjee, who will shortly be delivering the first professor tendulkar memorial oration. i also have great pleasure in acknowledging the presence here of smt. sunetra tendulkar and other family members of late prof. tendulkar. your presence here means a lot to us. a hearty welcome also to all the distinguished invitees to this lecture. prof. s. d. tendulkar prof. suresh tendulkar was, by all accounts, one of the pre - eminent economists of india who was deeply respected both in the academia and the public policy space. his scholarship straddled a wide range of sub - disciplines in economics but his seminal work on the measurement and analysis of living standards in india, with focus on inequality and poverty, will remain his enduring legacy to public policy formulation. this topic which dominated his academic work, and the passion with which he pursued it say a lot about two essential characteristics that defined prof. tendulkar. the first was his abiding sensitivity to poverty and his belief that the design and implementation of anti - poverty programmes should be informed by a deeper understanding of the nature of poverty and the sociology of the poor. the second was his dedication to empiricism. not for him broad generalizations based on anecdotal evidence. he believed that the only route to knowledge and wisdom is data, and that public policy should be based on research findings that are drawn from diligent analysis of sound data. both these characteristics β deep sensitivity to poverty and a commitment to data based research to understand poverty β have in a way determined prof. tendulkar β s academic and career graph. his academic track record will overawe any student of economics. after a masters degree in economic statistics from the delhi school of economics in 1962 where he finished at the top of his class, prof. tendulkar got a doctorate from harvard university with big names like professors hendrik houthakker and hollis chenery as his thesis advisers. he returned to india to join the indian statistical institute ( isi | 1 |
wages to prices, and other forms of nominal rigidities. because these causes of a diverging evolution of ulcs are of a structural nature, and their effects on ulc growth and competitiveness positions can persist, we need to monitor and assess their implications carefully. should we be concerned by what we observe in certain euro area countries? yes, because persistent ulc growth in excess of the euro area average can be expected to give rise to sustained inflationary pressures and losses in competitiveness, with adverse effects on the real economy. what does the evidence tell us? first, the cumulative change in ulc over a period of time is highly correlated with the hicp inflation over the same period across euro area countries. the close relationship between the cumulative ulc growth and inflation rates is impressive ( see slide 13 ). a second unfavourable impact of persistently higher ulc growth is that the resulting effects on competitiveness are likely to contribute to a worsening of trade and current account balances. indeed, there is some evidence that countries with cumulative losses in cost competitiveness, as measured by the cumulative relative ulc growth, often exhibit large current account deficits or worsening current account balances ( see slide 14 ). what have been the consequences of these effects on economic growth performance? prior to emu, diverging inflation and competitiveness developments and sizeable current account deficits would have heralded, sooner or later, external adjustment via the exchange rate. within a monetary union, this adjustment channel does not exist any longer. the effects on gdp growth of losses in competitiveness as measured by the cumulative relative ucl growth are not visible in all countries ( see slide 15 ). why have we not witnessed, so far, expected adverse effects on output growth and employment in all countries that have experienced strong ulc growth? there are several reasons. let mention two : first, the negative effects of persistent above - average ulc growth and losses of competitiveness on economic activity and employment may take some time to materialise. second, these adverse effects on the real economy have been counteracted, and even fully offset, over the past few years by favourable effects of other, structural or cyclical, factors. such factors have included substantial interest rate decreases in the run - up to emu, eu structural funds support, immigration flows and financial liberalisation. their positive impact on economic activity may imply that the link between adverse ulc developments and economic activity was less visible and the respective | , and the challenges they will face in the years and decades to come. the origins and achievements of european banking supervision 1 / 5 bis - central bankers'speeches our common ties can be traced back to the origins of european banking supervision. the ssm was born out of crisis. in the years leading up to the establishment of european banking supervision, the euro area economy was struggling to recover from the great financial crisis and the euro area debt crisis. financial crises and financial fragilities led to de - risking and deleveraging, which had negative repercussions on economic growth and the inflation outlook. back then, weaknesses in the banking sector hindered the transmission of our accommodative monetary policy into similarly favourable financing conditions for companies and citizens. these obstructions to the transmission mechanism made it much more difficult for the ecb to maintain price stability. ultimately, the persistent weaknesses in the european banking sector led governments to establish the banking union. in addition to european banking supervision through the ssm, with a central role for the ecb, the banking union would include a single resolution mechanism and a european deposit insurance scheme, although this third pillar is yet to be implemented. one of european banking supervision's achievements has been the strong culture of cooperation within our pan - european joint supervisory teams, who use a harmonised supervisory methodology that ensures the same standards are applied across all supervised banks. this has helped to significantly reduce risks in the european banking sector and increase the resilience of european banks. the efforts of european banking supervision have paid off. this became clear during the pandemic, which was the first major crisis since the creation of the banking union. instead of being sources or amplifiers of shocks like in previous crises, banks proved to be resilient to the pandemic shock. in fact, they were able to help dampen it by extending credit to citizens and companies that had experienced a sudden loss of income. unlike during the crises that predated the banking union, banks were no longer part of to the problem, but part of the solution. of course, it should be kept in mind that they were able to do so in a context of massive fiscal support to citizens and companies and accommodative monetary policy. sound banks and effective monetary policy transmission so where do we stand now? let me start with the positives, but i must stress that these are no reason to be complacent. on the banking supervision side, we see that | 0.5 |
indicators point to its lesser impact on economic growth. the government β s prudent approach in the first eight months of 2010 in view of meeting the planned deficit figure for 2010 actualized in the annual reduction of public expenditure and budget deficit. the latter amounts to all 23. 2 billion, which is within the projected figure in the budget and about 51 % lower than in 2009. the 2010 state budget revision in july, which established the reduction of expenditure and budget deficit by 10 % and 23 %, respectively, is an expression of the fiscal authority β s firm commitment to safeguarding economic stability and ensuring fiscal sustainability in the long run. the high growth rates of exports and the contained performance of imports yielded a positive contribution of foreign demand to economic growth in the second quarter of 2010. foreign trade data on july and august attest to moderate annual growth rates of exports and positive annual growth rates of imports, hence leading to higher trade deficit in this period. the growth of exports in 2010 was fuelled by the recovery of global economy and the favourable conjuncture of prices in the global markets, the depreciation of the exchange rate, the albanian entrepreneurship efforts to expand the market and by some other factors of transitory nature. therefore, promoting exports in a stable and long - term fashion requires undertaking structural reforms, which will in turn enhance the competitiveness of the albanian economy. this would ultimately serve to the transition to a more stable economic growth model and, at the same time, to curbing the reliance on foreign financial sources. our analysis of monetary indicators concludes that the growth of money in economy is concurrent with the economic agents β demand for monetary assets, hence creating no room for inflationary pressures in the future. aggregate m3 β s average growth was 11. 2 % in july and august, being in line with the nominal economic growth and the enhanced confidence in the banking system. its growth during this period was mainly determined by the increase of the banking system β s net foreign assets. private sector credit grew by 9. 8 % y - o - y, close to the previous quarter β s rate. although the better liquidity figures and the improved banks β balance sheets led to higher banking supply and provided greater room for lending, the latter has progressed at moderate rates. our analyses on lending in economy show that demand remains contracted and the number of worthy projects to lend is still low. the foregoing remains a constant concern for the bank of albania. to this purpose, alongside the banking system, we | are considering the required measures that may lead to the growth of lending in line with the cyclical and structural needs of the economy. economic and monetary developments elaborated above yielded an environment of contained inflationary pressures. average annual inflation marked 3. 4 % in the third quarter. against a background of below - potential economic growth, and given the absence of monetary - related inflationary pressures, inflation was largely affected by the rise in administered prices. the contribution of the latter β s rise to headline inflation is 1 p. p. in the absence of second - round effects, the effect of the rise in administered prices is expected to be transitory, while the inflationary pressures arising from domestic demand remain well contained. on the other hand, the depreciation of the national currency has been declining, hence offsetting the rise of primary commodity prices in the world markets and the increase of inflation in albania β s main trading partners. the absence of inflationary pressures in the medium run and the contained fiscal policy provided room for pursuing a stimulating monetary policy that sustains economic activity. in july, the supervisory council of the bank of albania cut the key interest rate by 0. 25 p. p. bringing it to the historical low of 5. 00 %. in addition, the bank of albania continued to supply the banking system with the required liquidity in order to ensure the smooth operation of the money markets and to enhance financial intermediation in economy. the favourable liquidity situation facilitated the rapid transmission of the key interest rate cut to the interbank and the primary market, hence allowing for the reflection of this cut in other interest rates in the economy as well. the bank of albania considers that the inflationary pressures remain well contained all through the time frame of the monetary policy effect : the effect of supply - side factors is expected to be offset by the downward pressures arising from the performance of demand in economy. the projections for inflation and inflationary expectations remain well - anchored around the bank of albania β s target. therefore, the central bank considers that monetary conditions in economy are adequate to warrant the safeguard of price stability in the medium - run and to boost economic development further. the bank of albania will, in response to actual and expected economic and monetary developments, continue to pursue a prudent monetary policy, thus providing the required monetary conditions for achieving the inflation target and safeguarding macroeconomic stability. | 1 |
david klein : coping with the challenge to reduce poverty speech by mr david klein, governor of the bank of israel, at the imf / world bank annual meeting, dubai, 23 september 2003. * * * mr. chairman, mr. kohler, managing director of the imf, mr. wolfensohn, president of the world bank group distinguished governors, delegates, ladies and gentlemen, the world recognized the need to give priority to the global poverty problem, and expressed a wide consensus on this matter in the millennium development goals. let me devote my statement today to this subject, and say a few words on the challenges facing israel in its efforts to reduce poverty. we believe that poverty cannot be tackled effectively if policy is not focusing on growth. growth is not a sufficient condition for reduction of poverty, but it is, at one and the same time, the highway to raise the living standards of those who are able to work, and the provider of resources to support those who are unable to help themselves. we also believe that in order to realize its potential growth, the israeli economy - perhaps like some other small and medium - sized economies - has to be open to free movement of goods, services and capital, and to adhere to international standards of macro - economic management, including the standards for fiscal deficit and price stability. such a framework maximizes israel β s potential contribution to science and technology as a major vehicle of growth through international trade. however, this approach also requires to make our tax regime competitive with that of other countries, which necessarily means to commensurately reduce government expenditures to keep a lid on its debt. therefore, the macro economic framework constrains the room to handle the challenge of reducing poverty by just increasing welfare payments. when we come to formulate an alternative strategy, we rely on the experience and advice of the world bank and the imf and the policies of other countries, like those adopted by the european union. one fundamental element in our strategy consists of various reforms in the labor market leading to an increase in the ratio of employed persons in the working age population. this is one dimension in which we lag behind the developed world. i need not elaborate here on the significant relation between the rate of employment and the incidence of poverty. a second key element in our strategy is targeting of the policy to reduce poverty. like some other countries, we have a history of increasing welfare payments without making a distinction between those who are able, or unable, to work, | and without applying an income test for welfare entitlement. the new policy of reducing poverty will have to target the poorest and least empowered population, and let them have a dominant role in shaping their future. to evaluate the progress we are making in poverty reduction we add to the traditional relative definition of the poverty line a need - based ( absolute ) definition of poverty. once we have a meaningful and measurable target, we will be able to make our policy more effective : to introduce quantitative indicators for follow - up, define legislative measures and budgetary instruments, determine accountability for policy implementation and to make sure that full transparency of the policy making and implementation is in place. mr. chairman, the dc communique published yesterday stated : today we renewed our commitment to achieve the millennium development goals and to continue our work on implementing the strategies, partnerships and actions agreed in doha, monterrey and johannesburg. israel has been, and will continue to be, a firm supporter of this worldwide effort to reduce poverty. finally, ladies and gentlemen, i would like to extend special thanks to the government and people of the united arab emirates for their warm hospitality to all the participants of our annual meeting and for their generous assistance to the efficient organization of the meeting. thank you mr. chairman. | 1 |
##ages between individual sectors of the economy and, even more so, between large financial institutions. there are some important areas of the financial sector where we lack complete statistical coverage, especially relating to what we call the β shadow banking system β. these areas include some complex market products and instruments. similarly, our new responsibilities in european banking supervision call for new data concepts and definitions, greatly extending the need for granular data. a successful start has been made, with a new set of legal acts. the collection of loan - by - loan data is already being implemented, but further improvements are possible. in particular, we need to make sure that the data we collect are of a high quality and comparable. bis central bankers β speeches effective data integration and cooperation but today β s conference is about more than just collecting additional data. the sharing of data by authorities is also critical. doing this effectively and efficiently, while maintaining data confidentiality, is a priority for policymakers. it requires action from policy institutions and lawmakers. putting in place the right architecture will permit a faster and more efficient response to requests across all our policy areas, greatly enhancing the usefulness of granular data. we have made some progress on the legal foundations for sharing granular data. council regulation 2533 / 98 has been amended to permit the ecb to ( re ) use confidential statistical information to perform its supervisory tasks. the information can also be shared with union institutions, including supervisory and resolution authorities, the european systemic risk board and the european stability mechanism for the purposes of prudential supervision and ensuring financial stability. this is a major achievement. the european system of central banks ( escb ) has also taken important steps to improve the harmonisation and standardisation of data. the current work on the banks β integrated reporting dictionary, a joint project involving seven national central banks and 26 commercial banks under the leadership of the ecb, is the best example. this process could and should ultimately enable us to organise the various reporting requirements into a single, comprehensive and harmonised european reporting framework. but the need for harmonisation and standardisation also extends beyond europe. finance is a global business, and both the regulation and the underlying data requirements for global institutions would benefit from more harmonisation worldwide. concrete steps towards standardisation include the establishment of mandatory requirements regarding the use of the international securities identification number and the global legal entity identifier. europe should retain its prominent role in the implementation of the second phase of the g20 data gaps initiative. | contribute to it. let me start my discussion by stressing the importance of securities markets and the particular interest of the ecb. securities trading, clearing and settlement are indeed at the core of our financial system and any inefficiencies in these processes are bound to have important negative implications. when trading, clearing and settlement are too costly or complex, financial transactions are discouraged. this in turn would have negative effects on the allocation of capital, risk sharing across agents, and economic growth. on its part, the ecb has a particular interest in integrated securities markets because all central bank credit operations need to be fully collateralised. the functioning of the payment system and the implementation of monetary policy therefore crucially depends on a smooth and efficient working of the securities clearing and settlement infrastructure. unfortunately, reality is quite different and substantial barriers continue to exist to efficient crossborder clearing and settlement, as identified by the group headed by alberto giovannini. the european securities infrastructure today remains highly fragmented with over 30 national exchanges, about 20 national clearing and settlement institutions, and an additional 20 other systems in acceding countries. in this period of transition, we have to cope with a substantial degree of fragmentation of our securities infrastructure, which adversely affects market liquidity, leads to redundant investments in different systems, and requires additional layers of intermediation. compared to, say the us, where the infrastructure has been over time highly consolidated, the costs of securities settlement are greater in europe. although it is very hard to calculate the benefit that we could gain from consolidation and therefore the opportunity cost of the remaining fragmentation, there can be no doubt that it is substantial. i am of the opinion that there are good reasons to believe that integration in the european securities markets will accelerate in the future. the european trading and post - trading infrastructure is now in a period of consolidation, with technological and regulatory changes supporting the removal of barriers to the cross - border provision of services. the proposed new investment services directive should simplify the regulatory framework and increase the uniformity of securities regulation. it will also lead to the effective adoption the single passport concept and contribute to safeguarding issuers and investors β interests. this would also be supported by the provisions of the market abuse and prospectuses directives. the adoption of an appropriate set of international accounting standards, as well as the proposed transparency directive, dealing with disclosure requirements of listed companies, should equally enhance investors β confidence and uphold the transparency of european equity markets. overall, i also observe that | 0.5 |
deposits with a 1 - week duration from banks holding more liquidity than needed. in addition, on an extraordinary basis and for a temporary period ( i. e. until the end of 2009 ), the list of assets accepted as collateral in our monetary policy operations has been expanded. as a result of this expansion, banks will be able to post as collateral with the eurosystem some categories of assets available within the euro area that were not eligible before. in addition, we have temporarily lowered the minimum credit rating accepted for marketable and non - marketable instruments ( expect for abss ), while maintaining the requirement that assets must be β investment grade β. the temporary expansion of the list of eligible collateral may potentially imply an increase in the risks taken by the eurosystem through its refinancing operations. in order to fulfil the eurosystem β s statutory obligation to ensure that its balance sheet remains adequately protected against financial risks across time, adequate risk control measures will continue to be carefully and thoroughly applied to the enlarged collateral set. 4. 2 governments governments all over the world have been involved in interventions designed to provide support to systemically - relevant individual banking institutions. initially, interventions were addressed to address isolated cases of stressed institutions and mainly fell into two categories : ( 1 ) the rescue of troubled individual institutions, whose failure may have given rise to financial instability ; and the ( 2 ) provision of guarantees covering the liabilities of individual institutions under stress. in the us, government support in the form of liability guarantees was extended to non - bank financial institutions β notably, the government - sponsored mortgage agencies freddie mac and fanny mae β whose insolvency may have triggered systemic disruptions worldwide ( though the failure of government guarantees to stabilise the agencies prompted the us government to subsequently take them over ). some governments also announced measures to provide relief to struggling homeowners and made use of traditional fiscal policy tools to stimulate the domestic economies, particularly in countries where the slowdown in housing markets was more significant. more recently, the scope and reach of interventions by governments has broadened, with several countries announcing more general and comprehensive schemes designed to support the entire domestic financial industries rather than individual institutions. the need to develop broader plans for public intervention has become more acute with the intensification of the financial market turmoil and the increasing awareness that the current turmoil has the potential to jeopardise financial stability and, ultimately, macroeconomic stability in the world economy. as part of the | as long as needed. these liquidity - providing operations do not have a direct effect on euro liquidity conditions, but are conducted to address the availability of us dollar funding for euro area banks and aim at improving global funding conditions. it is important to stress that the actions in connection with the taf marked, to my knowledge, the first systematic, multilateral and successful central bank co - operation in the money market field, a market which is central to the implementation of a central bank β s monetary policy. i believe that all of these actions have proved to be effective in easing the tensions at the short - term end of the global money markets and in maintaining control of short - term interest rates in the euro area. i am sure that global money and funding markets will continue to benefit from our very close cooperation. we will carry on working together closely and are prepared to take appropriate steps as needed to address funding pressures. 4. 1. 3 increased financial intermediation before discussing the latest monetary policy decision, i would like to point out that as a result of its enhanced liquidity interventions in euro and usd over the last fifteen months, the eurosystem has significantly increased its involvement in financial intermediation in the euro area. indeed, the eurosystem has moved from the situation before the start of the turmoil in which it provided banks only with as much liquidity as necessary to implement its monetary policy stance, with the intermediation being performed by the market, to the present condition in which it effectively intermediates liquidity flows among banks in order to mitigate dysfunctions of money markets. the increased intermediation role assumed by the eurosystem during this period of turbulence has contributed to the stabilisation of short - term liquidity conditions, as well as to contain volatility in the very short - term rates ( especially in the overnight rate as measured through the so - called eonia ) and to limit somewhat the volatility in the three - month euribor, even if the behaviour of the money market remains extremely tense. of course, this is not the ideal solution in a market - oriented economy like the euro area and, indeed, the eurosystem looks forward to the reactivation of inter - bank lending and to banks resuming their traditional intermediation activity. however, as long as money markets remain dysfunctional, the eurosystem will continue to provide liquidity as needed in order to ease tensions in the impaired money markets, with a view | 1 |
jean - pierre landau : extreme events in finance β some reflexions remarks by mr jean - pierre landau, deputy governor of the bank of france, at the conference on extreme events jointly organised by the bank of france and the toulouse school of economics ( tse ), paris, 3 september 2008. updated on 23 november 2008. i want to thank benoit coeure and my colleagues laurent clerc, sylvie matherat, imene rahmouni, anne - marie rieu and pierre - francois weber for their comments and suggestions on earlier versions. * * * the current crisis is a strong reminder, if needed, that extreme events can occur inside the financial system. over the last year, we have witnessed many episodes ( 1 ) whose outcome can reasonably be defined as " catastrophic " and, ( 2 ) which could not have been predicted according to probability based on past experience. here, i would like to develop four points : are financial systems prone to extreme events? is this propensity aggravated by modern finance, as it evolved during the last decade? does this problematic help us understand the current crisis? and, finally, what are the possible policy responses? are financial systems prone to extreme events? i can see at least two reasons why this may be the case. 1. financial systems are complex systems. they are based on interdependence between multiple actors and counterparties. transmissions occur through networks whose structure and architecture is constantly transformed by financial innovation and regulatory arbitrage. this potentially creates numerous feedback loops. it is well known that such systems can exhibit the following features : non linearity and discontinuities ( a good example being liquidity freezes ) ; path dependency ; sensitivity to initial conditions. all this accounts for truly unpredictable behaviour. it creates uncertainty in the knigthian sense : even with full knowledge of the " fundamentals " it may be impossible to associate a probability distribution to future states of nature. however, complexity creates the possibility of extreme events. it does not make them happen necessarily. other factors may also contribute : one of them is human behaviour. 2. financial systems are " human " systems. their dynamic is shaped by the way human beings react to changes in their environment. those reactions can help and amplify initial shocks to a point that a real " catastrophe " may occur. herd behaviour has long been known as an essential feature of financial markets. more subtly, individual reactions, by themselves rational, can, by the virtue of | amplification can also create persistence if the system is path dependant. we may thus have to broaden our definition of procyclicality, looking not only at fluctuations around a trend but also at changes in the trend itself, which would move the equilibrium of markets and prices and potentially create extreme events. a very subtle question arises, which would deserve both theoretical and empirical investigation in this context : when do cyclical fluctuations degenerate into a more fundamental and permanent deviation and what could be done to prevent it? rating by essence, the rating process is discontinuous. changes in ratings therefore create non linear effects in the dynamics of financial markets. those effects are stronger when there are a limited number of rating agencies with the same behaviour and methodologies. for that reason, we need to consider whether both our supervisory processes and market practices do not rely too much on rating. such " hardwiring " of ratings in our financial infrastructure may amplify small and localised discontinuities, thus creating the possibility for more extreme events. understanding the current crisis arguably, one major problem underpinning the current crisis is the pricing of risk. for some years before the turmoil erupted, we have been puzzled by how low risk was priced in most credit markets. again, with slight exaggeration, the case can be made that mispricing of risk occurred because extreme events β i. e. tail risks β were systematically ignored. at a general level, complexity and opacity in the originate and distribute model made it difficult to understand the " true " nature of risk i. e. the probability distribution attached to specific instruments. more subtly, i wonder whether the slicing and tranching process β which gave rise to structured products β has, intentionally or not, both created additional tail risk and contributed to conceal it. most managers, for instance, have been caught by surprise by the fast downgrading of aaa cdo tranches, which triggered massive write downs. with hindsight, we know that those tranches had lower average probability of default than the underlying loans β which provided the rationale for the aaa rating β but also possessed a much higher exposure to tail risk. that latest characteristic was not apparent from the rating. as a consequence, tail risk was clearly not priced in, which made those securities both very attractive and absolutely lethal. tail risk was not only deeply concealed in the complex structure of the instrument. it was also, to some extent, " created " by | 1 |
media and research - speeches opening remarks for the meeting of asia pacific joint group on money laundering date : may 04, 2022 occasion : meeting of asia pacific joint group on money laundering speaker : bsp governor benjamin e. diokno embers of the joint group, financial action task force secretariat, and the asia pacific group m on money laundering secretariat. our colleagues from various government and law enforcement agencies. good morning and good afternoon. in june 2021, the philippines was placed among the jurisdictions under increased monitoring or the financial action task force ( fatf ) grey list and has been given international co - operation review group ( icrg ) action plan items to be accomplished until january 2023. and i am pleased to share that the political commitment of the philippines in addressing the action plan remains strong and steadfast as all relevant agencies of the philippine government continue to contribute toward producing the expected results over a sustained period. this is evident, in particular, in the constant monitoring and participation of the office of the president of the philippines as well as the department of finance and department of foreign affairs. but just as the philippines is committed to swiftly and concretely implement the action plan as provided by the asia pacific joint group ( apjg ), so, too, must the apjg commit to adhere to the given action plan and refrain from expanding its scope. the philippines, however, truly appreciates the assessment on the other immediate outcomes that the apjg has initially rated as largely addressed, particularly, immediate outcome 3 - 3 on continuing the efforts to implement the new registration requirements and apply proportionate and dissuasive sanctions to unregistered and illegal remittance operators ; and immediate outcomes 10 / 11 - 2 on demonstrating that supervisors undertake risk based supervision of targeted financial sanctions by financial institutions and designated non - financial businesses and professions. the philippines has also demonstrated positive and tangible progress for immediate outcomes 8 - 2 and 9 - 4. in immediate outcome 8 - 2, the action plan calls for the philippines to demonstrate that cross - border measures are applied to all main seaports and airports of the country, including detection of false - declarations of currency and confiscation action resulting therefrom with particular focus on high - risk activities in line with the philippines risk profile. to address this, the philippines has applied upgrades in the regulatory framework of its bureau of customs and subsequently employed cross - border measures in all the country β s major international sea and airports. in immediate outcome 9 | ##richt treaty. secondly, its high degree of independence will give the ecb / escb a certain amount of institutional credibility right from the outset. recently, we have heard many voices, among political decision - makers, on the one hand, and academic researchers, on the other, who have emphasized the necessity of the accountability and transparency of the ecb. central banks and central bankers have since the onset of liberalization understood that one essential ingredient of monetary policymaking is openness. the more carefully the central bank explains its thinking to the financial markets, the more readily the markets β reactions to monetary policy measures can be predicted. that is to say, openness eases the conduct of monetary policy and strengthens its impact. the role of national central banks in accountability and in promoting transparency within the escb will be that of communicator to national decision - makers, labour market participants and the general public regarding the analyses and views of the ecb, but also specifically regarding the domestic monetary policy transmission mechanism. and the national central bank will need to continue analysing and forecasting its country β s inflation path in the regime of the single monetary policy and, on this basis, present its outlook on possible national imbalances and national needs for corrective measures via other segments of economic policy, particularly fiscal policy. * [UNK] * * the single monetary policy will of course bring demanding challenges to peripheral countries whose industrial structures, behavioural modes and business cycles have previously diverged from those of the core countries. as for finland, thorough analyses have showed that external shocks have not been much bigger for finland than for other countries. instead, the domestic reactions in the economy and economic policies to these external shocks have greatly strengthened their effects. in the short run, inflation rates may differ somewhat between emu - member countries, but in the medium term harmonization is necessary. the real costs of this harmonization will be smaller when the common inflation target is more clearly credible and acknowledged and when all sectors are more clearly aiming at it also in the short run. we have seen clear improvement in this kind of awareness in finland during the last few years, but of course it will be acid - tested during the current economic boom. the corporate sector has used a substantial part of its profits from good years to improve its capital structure. it has built up a good buffer to be used in bad times and in covering losses without having to cut wages or reduce staff. since wage developments are the most important cost factor | 0 |
impacting both the financial health of banks and the quality of their assets. the non - bank financial sector has grown considerably in both size and significance ; however, it is not as tightly regulated as the banking sector. last but not least, the overvaluation of real and financial assets could increase the probability of abrupt and widespread corrections in asset prices and thus transform into a systemic risk. having said that, it is important to highlight that a number of monetary policy measures implemented by monetary authorities also contributed to alleviating the impact of the low interest rate environment on the banking sector. examples include the introduction of a two - tier system for remunerating credit institutions'excess reserves, as well as the remuneration on tltros linked to the achievement of lending targets. finally, banks'profitability was underpinned by increased asset values and stronger economic outcomes. as mentioned above, in the counterfactual, the consequences on bank lending and loan servicing would have been severe, with adverse implications for banks'revenues and cost of credit risk. the same applies to the non - bank financial sector. 3 / 7 bis - central bankers'speeches is it already decided that central bank balance sheets must remain large forever? what are the tradeoffs of a large structural bond portfolio? let me first say that these issues are part of the review of the ecb's operational framework and are still under discussion at the governing council. these issues have to be addressed in a holistic way. we plan to publish the outcome of our deliberations in spring. the views i will express today do not necessarily reflect those of the governing council. starting from the balance sheet, we expect that, in the steady state, the eurosystem balance sheet will be significantly smaller than it is today, but still larger compared to its pre - crisis levels. although demand for reserves from banks is volatile and hard to forecast, there are reasons to anticipate that, in the steady state, banks will demand a materially higher level of excess reserves than before the financial crisis, due to the following : first, supervisory regulation, which is likely to translate into increased demand for liquidity. second, banks, in the wake of the global financial crisis, have maintained a precautionary stance. to guard themselves against liquidity and counterparty risks, they show hesitance about lending each other. this places obstacles to the efficient redistribution of reserves not only across, but also within jurisdictions, giving rise | occur when asset prices tumble? monetary policy automatically takes asset price developments into account the first point i need to make is that day - to - day central banks pay attention to asset prices when setting monetary policy, even when, as in new zealand, their formal focus is exclusively on consumption prices. this is primarily because asset price movements impact on cpi inflation and large movements in asset prices can have significant implications for cpi inflation. for starters, in the case of physical assets, if their prices are rising faster than general inflation, people try to build or create more. for example, if the price of paintings is going up artists get painting. to do that they have to buy more paints, brushes and canvas, putting pressure on prices of these materials. in addition to that direct impact, asset price movements - physical and financial - also feed into cpi inflation due to the so - called β wealth effect β. as asset prices rise, people tend to feel wealthier. some people go shopping as a result, and in an economy already running at full steam this gives inflation a push. this can apply with any kind of asset, but in new zealand we see this mostly through house prices, due to the high proportion of home ownership here, as well as the large proportion of household wealth associated with housing, as illustrated in graph 1. graph 1 household wealth : housing and net financial assets asset prices also feed through into spending and hence inflation in other ways. for example, asset price increases improve balance sheets, increasing the borrowing power of firms and individuals. increases in net worth tend to increase the willingness of lenders to lend and borrowers to borrow, facilitating a general expansion in spending as well as an expansion in spending on the construction of appreciating assets. in new zealand, for example, house price inflation can lead to greater demand for houses, and price increases in construction - related goods and services. these goods and services are directly included in the cpi making up about 8Β½ per cent. lately, β purchase and construction of new dwellings β has been notching up price increases approaching 7 per cent year - on - year. this is much higher than the cpi average of around 1Β½ per cent ( see graph 2 ), and contributed materially to our recent nontradables inflation of around 4Β½ per cent. graph 2 the link between house price inflation and the cpi ( annual percentage change ) central banks also pay attention to asset prices because they contain information that β s very useful when setting monetary policy | 0 |
improvements that ensure competitiveness are products of β real β advances in efficiency, technology and management. lowering the exchange rate makes no one more efficient. β’ the focus of monetary policy on the single objective of price stability is key to convincing savers and investors that, in taking their decisions, they do not need to factor in a large inflation risk. it is only in that way that we can get sustainably lower interest rates. β’ as our own history well demonstrates, any short - term gains that may be available to exporters as a result of a one - off depreciation of the exchange rate are quickly eroded as future inflation increases. as a fix for competitiveness problems, exchange rate depreciations are both addictive and ultimately destructive. β’ central banks do not determine real exchange rates in the long term. markets and relative economic efficiency / productivity trends determine real exchange rates. what of the balance of payments deficit? let me touch on one other issue that is relevant to the longer - term behaviour of the new zealand dollar and new zealand interest rates - - the balance of payments. we are currently running a current account deficit of the order of 6 percent of gdp. that puts us amongst the largest external deficits in the oecd. note also that new zealand β s net foreign debt currently amounts to around 80 percent of gdp - - which puts us at the top end of international experience. to prevent that external debt ratio from increasing further, it is necessary for the current account deficit to decrease to less than the annual growth of gdp - - ie, to something less than about 3 percent. the key issue here is domestic savings behaviour. to the extent that domestic savings are insufficient to fund the nation β s investment needs, we must rely on foreign savings. and if we are reliant on foreign savings, we must, by definition, continue to run a current account deficit. that is a simple accounting identity. i note with interest the estimates of some commentators who suggest that the forestry industry alone will require substantial volumes of foreign investment over the next few years. they may be correct in their estimates of investment needs. but if those needs are met from foreign investment, we must accept that that is equivalent to saying that new zealand must continue to run a current account deficit. will new zealand generally, and the forestry sector in particular, have difficulty attracting the investment capital it requires? probably not. so long as investors have confidence in the quality of our industries, the reliability of future earning streams | for the lender. a restriction on the volume of high lvr loans should reduce the inherent risk in banks β mortgage portfolios as well as reducing the overall supply of credit to the housing market. the international evidence suggests that a prevalence of high lvr lending can accentuate loan losses and worsen economic disruption when inflated house prices correct abruptly. two examples are the united states and ireland. while lending practices in these countries were far more extreme than we have seen in new zealand, their experiences are instructive. in both countries, house price appreciation was fuelled by competition between lenders, and falling lending standards. by 2006, 20 percent of new mortgage lending in the united states was sub - prime, often with minimal credit checks and very high lvrs. similarly in ireland, lending was often occurring at lvrs over 100 percent. annualised house price growth peaked at 16 per cent and 15 per cent in the us and ireland in the lead up to the gfc before falling sharply. the subsequent sharp downturns gave rise to considerable financial distress in both countries, with high lvr borrowers particularly hard hit. at the bottom of the us housing market in 2010 / 11, around 25 percent of the 50 million or so mortgage holders had loans larger than the value of their houses. in new zealand, losses from housing loans in the wake of the gfc were well contained compared to many countries, although there was an increase in defaults. the reserve bank recently analysed data on banks β loss rates, by lvr category, over the period from 2008 to 2012. the increase in loss rates followed a fall in nominal house prices of around 10 percent from their peak in 2007. while there was some variation across banks, the data shows that loss rates on high - lvr loans generally increased more ( and in several cases substantially more ) than loss rates on lower lvr loans. this evidence of high and correlated loss rates supports the proposition that higher lvr loans have more systemic risk than lower lvr loans. it is on this basis that the reserve bank recently took the ( micro - prudential ) measure of increasing high lvr risk weights on the housing exposures of the major banks ( rbnz, 2013c ). bis central bankers β speeches a number of countries have applied lvr restrictions over the past few years, including canada, sweden, norway, israel, korea and hong kong sar. in the case of sweden and norway, the lvr restrictions are | 0.5 |
established, as a major policy priority, the development of a sound financial system with strong individual component institutions. the idea is to position the sector as a major growth driver, to support an inclusive broad - based economy with the full implementation of new higher minimum capital requirements by the end of this year. we know that banks are working strenuously to meet this requirement which would help establish a banking industry that is well capitalized to support the much needed economic transformation ghana needs. 5. as the bank of ghana pursues this objective, alongside strengthening the regulatory and supervisory environment to restore confidence and promote stability and integrity of the banking sector, it is important that we also take concrete steps towards implementing cyber security measures to combat financial crime. through the bank β s monitoring systems, we have observed the daily attempts by cyber criminals to bypass security controls and exploit vulnerabilities within the cyber and information security defenses of financial systems. we cannot ignore the fact that the increasing use of technology with its attendant interconnectedness has enabled some of these challenges. 6. globally, risks associated with cybercrime on financial systems have increased, notable among them are the financial disruptions arising from cyber - incidents in bangladesh and malaysia. indeed, cyber - attacks have the potential to pose systemic risk by disrupting business operations within the financial sector. for ghana, the threat is growing. a recent study in 2016 disclosed that there were more than 400, 000 malware incidents, 44 million spam incidents, and 280, 000 bot incidents within ghana β s financial industry. 7. with this background and the complexities associated with the advancement of technology, it is imperative that the bank of ghana takes steps to counter these threats to ensure the integrity and operational security of the financial system. it is in this regard that the bank of ghana has developed the cyber security directive for financial institutions. the objectives of this directive are to ensure an uninterrupted financial intermediation process through a robust and resilient financial sector and also to boost the trust and confidence of consumers in the banking industry. 8. ladies and gentlemen, we will all agree that the resilience of the financial sector is largely dependent on the soundness of financial institutions and the robustness of the financial market infrastructure. the cyber security directive for financial institutions does not fall short of addressing these objectives. among others, the directive seeks to establish the conduct and operational guidelines for the cyber and information security environment. specifically, it sets out procedures for governance, risk management | to do so, sitting it out will not be a sufficient strategy to tackle these dynamic inefficiencies. to address them, public economics may naturally draw procedural policies, such as quotas. yet, substantive economic policies are equally key in achieving sustainable forms of gender parity. in a seminal work first published in 1949 which remains uncomfortably relevant in today β s world, simone de beauvoir noted that the β abstract legal framework alone does not suffice to define the concrete situation of women ; this situation depends to a large extent on the economic role women play in society β. 11 breaking the still prevailing β glass ceiling β requires bottom - to - top empowerment encompassing targeted fiscal, social and labor market policies as well as educational initiatives. 12 as prof profeta makes clear in her book, the political economy angle and the public economics view cannot be meaningfully separated as they are constantly interacting in feedback and amplification loops : the degree of gender diversity in decision - making bodies shapes economic policies, which in turn influence progress, and sadly sometimes also setbacks, in terms of gender parity in many areas of public and private life - and vice versa. thus, i hope that we will be able to shed some light on both of these perspectives and their interactions during the remaining time of this session by sharing in our distinguished panelists β personal, professional, and institutional experiences. see profeta ( 2020 ), introduction, chapter 2 and chapter 5 for a discussion of the caveats associated with the difference between β nurture β and β nature β. 8 for example, see alesina et al. ( 2013 ). see diouf and pepin ( 2017 ) for the specific context of monetary policy. 9 to be sure, the author explicitly acknowledges that the term gender encompasses more than the simple dichotomy male vs. female. 10 for example, by 2019, only 8 % ( 14 out of 173 ) of all central banks were headed by a woman ( istrefi, 2019 ). 94 % of all european central bank β s governing council members serving between 1998 and 2018 were men - and other major central banks do hardly any better. see also profeta ( 2020b ) for status quo bias and riboni and ruge - murcia ( 2008 ) on inertia in committee decision - making settings. 11 the original french text reads as follows : β [ l ] e droit abstrait ne suffit pas a definir la | 0 |
be taken purely on commercial criteria, without being distorted by the provision of cheap credit or other forms of finance from the government. government induced distortions in financial markets will lead to the misallocation of resources, reducing the social rate of return to these resources. modernising smallholder farming will entail smallholders making greater use of purchased farm inputs. hence modernisation will require smallholders having better access to finance. nevertheless finance is unlikely to be the binding constraint on modernisation of smallholder agriculture and unless more important constraints are tackled, enhancing smallholders β access to finance will be ineffective. policy measures to strengthen the provision of financial bis central bankers β speeches services in the rural areas must be part of a much broader set of interventions to support smallholders to adopt modern farm technology and produce for the market, of the type i have already mentioned. unless smallholders have adopted good agricultural practises, such as the use of improved seeds, proper field preparation, timely planting, weeding and pest control, proper harvest and post - harvest handling, etc β practises which can improve yields significantly β they will not be able to utilise credit effectively because their farms will not be profitable. how should government support the development of rural financial markets? the key interventions required are to alleviate the market failures which impede the delivery of financial services to farmers. for example, it is necessary to strengthen the institutional environment for loan security to reduce the credit risks of lending to farmers. strengthening land rights to allow farmers to use land as loan collateral would help to make farmers more creditworthy. the proposed establishment of a collateral securities registry and the enactment of the chattel securities bill, which is currently before parliament, will help to widen the range of assets which are acceptable to lenders as collateral. promoting the warehouse receipt system set up by the uganda commodity exchange would also be a useful measure to support lending to agriculture. microfinance institutions ( mfis ) and savings and credit cooperatives ( saccos ) are much better suited institutionally than commercial banks to serving small farmers, but they are often constrained by managerial and technical weaknesses. hence there is an important role for government to assist mfis and saccos to strengthen their management and the professional skills of their officers. the bank of uganda is encouraging the larger tier 4 mfis to upgrade to become licensed deposit taking mdis. assisting mfis and saccos to strengthen their technical and managerial capacities so that they can mobilise funds from the | lucas papademos : opening address at the fifth ecb central banking conference speech by mr lucas papademos, vice president of the european central bank, at the fifth ecb central banking conference β the euro at ten : lessons and challenges β, frankfurt am main, 13 november 2008. * i. * * introduction on behalf of the executive board, i would like to welcome you to the fifth ecb central banking conference, taking place in the tenth year of the ecb β s establishment. we are delighted that this year β s conference has attracted many distinguished participants from academia, central banks, governments, international institutions and the financial sector. your contributions will ensure that this conference will provide insightful and thoughtprovoking analysis and generate debate on many policy issues of relevance to central banking. as we will be celebrating the 10th anniversary of the introduction of the single european currency in a few weeks β time, the theme of this conference is, of course, focused on β the euro at ten : lessons and challenges β. the introduction of the euro was a historic milestone in the process of european monetary, economic and political integration, with wide - ranging implications for the european and global economies. accordingly, this conference will concentrate on several issues of relevance to the performance of the euro area economy and financial system and on the challenges for the conduct of monetary policy and the performance of other central banking tasks in an increasingly integrated global economy. ii. the euro : economic performance and policy challenges the first session will examine the macroeconomic performance of economic and monetary union, its achievements and challenges, over the past ten years. there are several key questions to be addressed. first, has the euro and the single monetary policy established a zone of monetary stability as envisaged, with all the direct and indirect benefits this entails for the 320 million citizens of the euro area? the evidence unambiguously provides a positive answer. the euro has been a resounding success : it has established itself as a stable and credible currency, which has become the second most important currency in the world after the us dollar. a deeper analysis, however, should reveal the contribution of monetary policy, and of other factors, to this achievement and the challenges that lie ahead and must be effectively addressed in order to ensure the preservation of price stability in the years to come. a second key question is whether β or to what extent β the euro has contributed to boosting the trend growth of the euro area economy by strengthening competition, enhancing market efficiency | 0 |
continue paying close attention to the exchange rate and exchange rate developments, in particular, towards the us dollar and the euro. on the other hand, there are good reasons to believe that, in an increasingly integrating world, the global economy needs more exchange rate flexibility in dealing with large shifts in relative prices that affect advanced and emerging countries differently. such large shifts in relative prices are almost certainly to occur under the assumption that the convergence of real income levels witnessed in many emerging markets in recent years continues. the recent rise in food and energy prices provides a prominent example of substantial movements in relative prices and their non - proportional impact on advanced and emerging economies. in such an environment, differing interest rate levels are needed to maintain price stability in the global economy. given their higher rates of inflation, higher interest rate levels would be required in emerging markets. assuming that authorities will face increasing difficulties in limiting capital inflows by administrative measures and changes in minimum reserve requirements, interest rate differentials can be achieved only with emerging markets adopting more flexible exchange rates. to a european observer the two opposing forces i have just described are quite familiar. they had been at the heart of the discussion on european monetary and exchange rate policies since the collapse of the bretton woods system. 10 and, in the 26 years that followed before the creation of the euro, the european countries tried almost any possible exchange rate regime to cope with the challenge of conducting independent monetary policies on an increasingly integrated continent. in the end, both β corners β prevailed : a hard peg among european countries and the euro area itself operating an independent float ( padoaschioppa, 1995 ). in light of this, it is not surprising either to observe that there are still differing exchange rate regimes among the new eu member states which have not yet adopted the euro. at the same time, real and financial integration in the eu is already strong and is set to increase even further. thus, given the unique institutional environment of european integration, countries are expected to adopt the euro once they are deemed to have fulfilled the conditions set by the treaty. globally, however, and having reviewed all arguments, i expect that the global monetary system of the future will probably consist of more emerging markets adopting a domestic nominal anchor and a more flexible exchange rate regime. from an emerging market perspective, dooley and garber ( 2005 ) explicitly compare the current configuration of the global monetary system with the later years of the bretton woods period. the main advantage of adopting a domestic nominal anchor instead of | . the pattern of financial integration has been very different as well. for advanced economies, financial integration has mainly taken the form of an intensive two - way trade of debt and equity instruments, reflecting portfolio optimisation strategies by private agents ( fecht et a. 2007 ). by contrast, emerging market economies strengthened their international investment position by a substantially larger and increasing share of fdi in total foreign liabilities, and a build - up of foreign exchange reserves. overall, the evidence suggests that β with the exception of the new eu member states, where financial opening has been a key prerequisite for eu membership β emerging markets have been pursuing a gradual approach towards financial integration. indeed, several features indicate that countries have aimed at reducing vulnerabilities to sudden stops and reversals of capital flows ( edwards 2007, kose, prasad, terrones 2007 ). this may have lessened the need for further movements towards the β corners β, hard pegs and managed or independent floats, in the past few years. monetary policy let me now turn to monetary policy. chart 3 shows that, since 2002, inflation rates have been converging in emerging markets to moderate levels, irrespective of the exchange rate regime chosen ( white 2008 ). how have countries achieved this outcome? distinguishing between countries with a soft peg and countries operating a managed or independent float prompts the following observations. 1. several countries with a soft peg reverted to outright administrative measures, sterilised interventions and rising minimum reserve requirements to limit the inflationary impact of rising capital inflows, in some cases supported by fiscal policy ( mohanty and scatigna, 2005 ; cardarelli, elekdag and kose, 2007 ). 2. countries with a domestic nominal anchor made use of the flexibility with regard to interest and exchange rates to reduce inflation and achieve price stability. at the same time, the substantial accumulation of foreign exchange reserves suggests that the exchange rate has remained an important policy objective for many countries with a managed and independent float ( imf 2005, rose 2006, edwards 2006, mishkin and schmidt - hebbel 2007 ). 3. more recently, emerging market floaters with inflation rates reaching levels close to those in advanced economies have been able to maintain price stability without major exchange rate fluctuations by following the pattern of interest rates in advanced economies. overall, the evidence on monetary policy may be summarised as follows : with the great moderation β or to put it in | 1 |
/ swansong. html ). bis central bankers β speeches let me remind you that the rand has depreciated by 16 per cent against the dollar so far this year. we have raised our policy rate by 100 basis points over an 18 - month period. in 1998, before the adoption of inflation targeting, the rand also depreciated by 16 per cent and we hiked rates by 690 basis points in a period of six months. lower pass - through from the depreciation to inflation has also helped to moderate potential policy responses. of course, floating exchange rates are dangerous if domestic borrowers have run up large, unhedged foreign - currency debts. where this is the case, the monetary authority may end up facing only bad choices. one is to use foreign currency to prop up the domestic currency to protect the economy, but this has clear limits and typically fails. the alternative is to step back and let sectors of the economy adjust on their own to the new currency level, implying much higher financing costs. the clear differentiator for south africa against many other emerging markets is that this particular policy dilemma doesn β t feature in our decision - making process. renouncing the β forward book β and allowing the β fear of floating β to wear off over time has limited the extent of foreign - currency borrowing, encouraging the development of our own capital markets and reducing a major risk for non - resident investors in rand assets. 2 when a country adopts a floating exchange rate, the reasons for holding foreign reserves also change. the goal is no longer managing the value of the currency. instead, reserves serve to bolster the national balance sheet, reassuring investors that the country has access to safe, liquid resources even in extreme situations. the use of reserves is therefore very different. the reserves provide insurance, a guarantee that markets will be able to price exchange rates. the fact that emerging markets have accumulated many more substantial reserves than they held, for instance, in the 1990s or early 2000s, suggests that markets will be able to function in more orderly ways, and that large, long - term investors will feel comfortable trading in those markets. monetary policy the exchange - rate policy fits within the broader policy of inflation targeting. inflation targeting provided us with a policy goal more realistic than the previous eclectic approach to policy, because we could hit it. that goal was also more meaningful for citizens, because we could focus on protecting the buying power of regular consumers in domestic markets β as opposed to, say | rates in both the third quarter of 2020 and 2021 as a whole. but they can be misleading. in level terms, our model only expects real gdp to gradually converge back towards pre - covid - 19 levels. at the time of the september mpc meeting, the quarterly projection model ( qpm ) pointed to a large output gap that will only gradually narrow over the remainder of the forecasting period and remain negative even in 2022. the combination of ongoing economic slack, an undervalued real effective exchange rate and a recent decline in medium - term inflation expectations suggest that inflation should not be a problem for the next two years or so. the qpm projects that both headline and core inflation rates will remain largely within the lower half of the target until the end of 2022, with the exception of a short - lived spike in the headline inflation rate in the second quarter of next year as a low base distorts energy price inflation. baring materialisation of upside risks, this benign inflation outlook should allow the sarb to maintain an accommodative stance for most of the coming two years, and only withdraw stimulus in a gradual fashion, as the output gap slowly closes. indeed, the latest qpm projections are consistent with a rise in the policy rate to 4. 0 % by the end of 2021 and 5. 0 % in 2021, which would still be 100 basis points below the average of the past decade. 5. can there be a new paradigm in the long run? in summary, there appears to be a growing consensus β both among forecasters and policymakers β that the interest rate cycle in the next couple of years, both globally and in south africa, is going to be one of gradual normalisation. but towards which levels are interest rates going to normalise, and what is going to be their average over the longer term β say, a horizon of five years or longer? few economists presently seem willing to make forecasts over such a horizon, at a time when it is not yet clear how long the pandemic will be with us. will the past few decades β trends towards lower equilibrium interest rates persist or, on the contrary, will covid - 19 usher in structural changes that are consistent with higher interest rates over time? economic theory tells us that equilibrium interest rates should reflect potential real gdp growth, inflation expectations and a risk premium that varies with the term of the loan and the creditworthiness of the borrower. the outlook for all | 0.5 |
toshihiko fukui : toward sustainable economic recovery speech by mr toshihiko fukui, governor of the bank of japan, to the naigai josei chousa kai ( research institute of japan ), tokyo, 28 february 2005. * * * for japan, this year is a crucial one, which may set the future direction of the country's economy. with the full removal of blanket deposit insurance scheduled for april 2005 now imminent, it is important to ensure that the financial system remains stable, the functioning of financial markets is further enhanced, and that the economy is brought firmly onto a sustainable growth track. today, i will talk about the bank of japan's assessment of the economic and financial situation and the thinking behind its conduct of monetary policy. i. recent economic developments the bank releases its assessment of the economy as " the bank's view " in the monthly report of recent economic and financial developments following discussions at monetary policy meetings ( mpms ). in " the bank's view " for february, the bank's assessment was that " japan's economy continues a recovery trend, although there seem to be somewhat weak movements mainly in production. " in other words, the economy is at a temporary pause : production has been weak reflecting exports, which have been more or less flat. production in the it - related sector has been weak due to continued inventory adjustment reflecting lower - than - expected growth in demand for digital appliances and the decline in global demand for pcs and mobile phones. in addition, production in the materials - related industry is lackluster, as spare production capacity is limited. for example, with the surge in demand, especially in exports to other asian economies, steel and chemical industries have been producing close to full capacity and find it difficult to raise their production levels immediately. in the processing and assembly industries, such as automobiles, it has been reported that firms may not be able to increase production due to the limited availability of materials such as steel plates. although these firms cannot increase production significantly, they have been able to raise profitability by expanding margins and improving productivity. corporate profits are at high levels across most industries, although some it - related firms have revised their profit forecasts downward. the ratio of current profits to sales in fiscal 2004 for firms of all sizes in all industries is likely to exceed not only the peaks recorded during the recovery phases of the 1990s but also the high point of the bubble period in the late 1980s. given such improvements in | fixed investment. however, such cases are still limited, with a large number of firms placing priority on reducing interest - bearing liabilities by using their increased profits, and taking a " wait - and - see " attitude toward investment commitments. although many firms are increasing business fixed investment, this is being kept within the limits of their cash flow. as pointed out earlier, firms have been cautious about increasing inventories during this recovery phase. the persistent decline in bank lending is also indicative of firms'hesitancy about making forward - looking commitments. firms became concerned about business risk and financial risk management, having experienced highly volatile economic conditions during the 1990s and financial system instability during the second half of that decade. their incentives to reduce interest - bearing liabilities and increase their capital bases as much as possible are therefore understandable. expanding business lines is not so easy for firms in the current situation where, faced with price - sensitive consumers, they have difficulty in raising product prices in order to pass on the rise in materials and intermediate goods prices caused by the surge in commodity prices at home and abroad. there may also exist some concern about the impact of changes in the economic environment, such as those caused by the low birth rate and rapidly aging society. however, corporate management will not continue to appeal to uncertainty about the economic outlook to justify its hesitancy in making positive commitments for long. amid rapidly changing technology and increasing competition, firms know that they need to maintain high profitability in the medium term by continuously and swiftly reallocating their management resources while continuing to invest in highly profitable areas. the economic environment surrounding firms is now well suited to encourage such commitments. in the labor market, deregulation and changes in people's attitudes and lifestyles have combined with firms'need to adapt to changes in the industrial structure and to improve profitability, with the result that the number of non - regular employees has increased. although indicative of firms'unwillingness to commit themselves to hiring longer - term regular employees, such developments, in so far as they illustrate the increased flexibility of the labor market, also suggest that firms have become better able to adapt to change. in addition, some firms have started to invest in highly profitable areas. they have been studying consumer needs so as to provide attractive new products and new services, and this has contributed greatly to private consumption, which has continued to be firm despite sluggish growth in income. a breakdown by household spending behavior shows that spending is increasing in a wide range of | 1 |
to inform the ipsa review include recommendations from two external reviews of insurance regulation and supervision. these were an imf financial sector assessment programme6 ( β fsap β ) in 2017 that assessed new zealand compliance against international standards for prudential supervision of insurers, followed by an independent review of reserve bank supervision of cbl in 20197. other developments that 5 significant factors that indicate an overseas entity is carrying on insurance business in new zealand include ( but is not limited to ) having a physical place of business, staff or infrastructure in new zealand or actively and directly advertising or soliciting business within new zealand. 6 https : / / www. rbnz. govt. nz / news / 2017 / 07 / bulletin - article - reviews - outcomes - of - imfs - financial - sector - assessmentprogramme 7 https : / / www. rbnz. govt. nz / - / media / reservebank / files / regulation - and - supervision / insurers / cbl - rbnz - finalreport. pdf provide material for consideration in the ipsa review include the fma / rbnz thematic review of life insurer conduct and culture, the thematic review of the appointed actuary regime, and the amendments in train to the conduct legislation. as it stands, our plan is to resume the ipsa review from october with : the release of an initial overview paper ; commencement of a consultation on the solvency standards at the same time ; subsequent consultation papers on various components of the review during 2021 to 2023. we welcome feedback through the formal processes associated with the consultation papers as well as being open to engagement and discussions on a continuous basis throughout the review β s duration. details will be covered in october β s paper. we envisage a staggered implementation of changes, ranging from operational changes that might be relatively easy to implement, through to legislative changes that require decisions from parliament. this impacts on timeframe and our estimated completion date is 2024. the solvency standard is an example. it will need to be revised for ifrs 17 by end - 2021, and is expected to be further revised to align with the ipsa changes by 2024. the ongoing impacts of covid - 19 on the sector as we reported in our may financial stability report, there is considerable uncertainty as to how covid - 19 and the associated economic downturn will affect new zealand insurers. whilst death and disability claims do not currently pose a threat to the solvency | of life insurers, covid - 19 could play out in a number of ways, including the possibility of further waves of infection. the initial economic responses to the pandemic created major disruptions to economic activity - particularly travel - and that has been reflected in travel insurance claims. other key areas of impact or potential impact include credit insurance in relation to unemployment and impacts on investment portfolios. overseas, there are also some questions about the scope of business interruption insurance and liability in relation to covid - 19 related claims and many will be watching closely to see if outcomes from ongoing court cases have implications for local insurers. low interest rates have impacted some insurers adversely and this factor will continue to materialise in the next few years. insurers adapted quickly to working under the lockdown environment and we sensed an almost routine response by insurers to the recent return to level 3 in auckland and level 2 elsewhere. we β ve also noted the various ways in which insurers have sought to provide customer - focused responses to hardships arising from covid - 19. our stance in relation to prudential risks to insurers from covid - 19 is that there are many unknowns still to play out in terms of flow - on impacts from what we have already experienced, as well as the potential for new outbreaks. this caution is also reflected in our stance on capital retention and dividend payments, which we regard as being imprudent under these conditions. we will update insurers on our stance on this at or before publication of the next financial stability report in november. appointed actuary review appointed actuaries have a critical legislated role to measure and report on material risks and the role also entails providing impartial advice to an insurer β s board and senior management to assist with decision - making. insurance is about known and unknown risks and strong, independently minded actuarial advice is crucial to managing risks. this was the backdrop to our recent appointed actuary review8, so that we could better understand how the appointed actuary role works in practice for insurers, actuaries and the reserve bank, and to identify potential areas of improvement to make the role and regime more effective. we selected 15 insurers and their appointed actuaries for the review and published our findings and recommendations in june. the input and participation from industry stakeholders in this review was incredibly helpful, and we look forward to similar constructive engagement in the ip | 1 |
of recommendations on lending in foreign currencies, since foreign currency lending to unhedged borrowers has recently also increased in a number of eu member states. we were pleased to see that our dinarization measures so far, and plans in our strategy for the future, fully coincide with esrb recommendations. as stated in the document, excessive foreign currency lending may produce significant systemic risks in individual countries and may create conditions inducing negative cross - border spillover effects. the new set of esrb recommendations deals with consumer protection issues, borrowers β creditworthiness, credit growth fuelled by fx lending, internal risk management of banks, additional capital requirements, liquidity and funding as well as reciprocity and cooperation among supervisors. dinarization strategy in serbia rests on three inter - connected pillars. the first pillar relies on delivering low and stable inflation and strengthening the stability of the overall macroeconomic environment. this is, perhaps, the most general, but also the most important goal and it focuses on countering the history of macroeconomic instability experienced in serbia during the 1990 β s. this prior instability is believed to be one of the main reasons for the high level of euroization of the serbian economy. in this respect, the nbs will continue to implement and further reinforce its inflation targeting regime. the second pillar consists of measures geared at promoting dinar - denominated financial instruments and markets, with special emphasis on the development of the dinar bond market. in this respect, government, corporates, banks and the ifis ( both as issuers and guarantors ) can play an important role. development of an actively traded dinar yield curve is an important milestone of this pillar. the third pillar aims to promote hedging of the existing foreign currency risks. the nbs has been leading the efforts in this field, working together with the banking sector on introducing and developing basic hedging instruments in both the interbank market and in client transactions. the national bank introduced regular foreign exchange swap auctions for banks. in addition, the nbs has organized a series of seminars and conferences on foreign exchange hedging in the country and launched a foreign exchange hedging webpage. throughout 2011, the nbs continued to implement measures geared at a greater use of the dinar and a gradual reduction of the fx risk in the domestic financial system. bis central bankers β speeches 1. in early 2011, in the area of monetary policy instruments, the nbs adopted the new decision on banks | to announce that over 100, 000 mobile payments of top up fees for prepaid mobile telephony use is registered through the dina card system on a monthly basis. our target, of course, is a manifold increase of this number during this year. on this occasion i would also like to announce another new project to be soon realized in cooperation with the telekom that will enable our citizens to request issuance of and mobile payment for excerpts of various personal documents kept on records with the state institutions. finally, allow me to remind you of another topical issue in the european environment that we are striving to join, which can be used to exemplify how technology can bring on a change even to the regulatory systems within our region. i am referring here to the initiation of the system of interbank payments in accordance with the sepa ( single european payment area ) and the ecb initiative. what is it that sepa will bring about? here is an example : an internet user from belgium pays electricity bill for his daughter studying in france from his account opened with a spanish bank and is charged fees for banking services as if all these transactions were taking place in one and the same country. this example is the best illustration of the encouraging impact of high technology not only in respect of the development of the financial services market but also in respect of encouraging market regulators and finding innovative solutions. the nbs hopes that application of similar technologies in serbia will enable faster development of the financial industry. one thing is for sure, the existing multitude of fees charged for banking services would certainly have remained if it were not for the decisiveness of the european central bank and other regulators who insisted on treating all payments within the euro zone as strictly domestic β and only seven years after they began using the same currency. i wish much success to all of you present in this meeting, and hope that we shall all come up with new ideas and initiatives to enable application of the 21st century technologies in the financial market of serbia. | 0.5 |
extraordinary 8 plus - percent rate in the third quarter. in part, these gains are cyclical and reflect firms β unwillingness, until recently, to expand their payrolls. in addition, the productivity gains have translated into an improvement in businesses β income statements : real wages have not kept up with the growth in productivity, and with businesses generally reluctant to spend, corporate profitability has improved markedly this year. this development has allowed firms to reduce the debts inherited from the 1990s. some slowing in productivity growth from the third - quarter pace is almost inevitable. however, looking beyond the quarter - to - quarter movements, i remain optimistic that we have seen a permanent step - up in the underlying rate of labor productivity growth. as i noted before, businesses have achieved considerable efficiency gains through the information technology that they have installed since 1995. moreover, as my y2k example illustrated, i believe companies are continuing to adapt their operations to take advantage of the capabilities of these technologies and are seeing a payoff for these actions in their bottom lines. the apparent step - up in the underlying rate of productivity growth in recent years implies that the nation β s rate of potential output growth - the rate of growth in real gdp that is consistent over time with a stable rate of inflation - has also risen. that β s good news because it means that the economy can grow at a faster pace than in the past without generating upward pressure on prices. moreover, the level of potential output is still well above that of actual gdp, and this output gap is likely to persist for some time even if real gdp grows in excess of its potential pace. finally, let me say a few words about inflation. although the overall consumer price index has been buffeted by swings in food and energy prices, the core measure that excludes these components has slowed noticeably over the past year. the core cpi is up only 1ΒΌ percent from its level of a year ago. this performance means that the u. s. economy has reached effective price stability. that is an achievement that owes to many factors : economic slack, faster productivity growth, stable inflation expectations, and the general public β s belief that the federal reserve is committed to keeping inflation under control. moreover, recent research has shown that, as inflation has been brought down over the past two decades, the sensitivity of prices to the level of resource utilization has also fallen. this finding implies that, unlike in past periods, the specter of rising inflation is less likely to haunt the economy as | jumped to an annual rate of 1. 62 million units in october, a record high for this series. moreover, sales of both new and existing homes have also held near historical highs. as i noted before, the business sector has been the locus of weakness in this expansion. however, the extreme caution that had been gripping firms now appears to be dissipating. real outlays for equipment and software rose at an annual rate of 15Β½ percent in the third quarter, after an increase of 8ΒΌ percent in the second quarter. moreover, businesses also are hiring again. private non - farm payrolls increased at an average pace of about 120, 000 per month in september and october, and further declines in initial claims for unemployment insurance suggest that this improvement in the labor market has continued into november. finally, manufacturing production is perking up. although light vehicle assemblies have slipped from the very high levels of the summer, production of other goods rose 0. 2 percent in september and an additional 0. 4 percent in october, reflecting fairly widespread gains across industries. the sustainability of the recovery will depend importantly on future trends in employment, household spending, and business investment. twice before in this recovery we have seen short periods of strong growth, followed by a return to sluggish, subpar growth. given the strength of the incoming data that i have just outlined, the risk that the economy will again stall out must be given a smaller probability than that assigned just a few months ago, but the risk cannot be discounted completely. for example, the strength in consumer spending in the third quarter might prove to be temporary - a one - time surge related to the fiscal stimulus. indeed, analysts who subscribe to this view would take some solace in the latest data on non - auto retail sales. under these circumstances, businesses likely would remain very cautious about the demand conditions they expect to prevail in the year ahead. this would make them reluctant to expand and hire new workers - factors that would hold down economic expansion in 2004. while the consensus forecast for next year calls for a growth rate of 4 percent ( on a fourth - quarter - to - fourth - quarter basis ), which seems reasonable, a weaker outcome than that is not hard to imagine. productivity, potential growth and inflation one of the most prominent characteristics of this economic expansion has been the rapid gains in labor productivity. output per hour rose at an annual rate of 4Β½ percent in the first half of this year and at an | 1 |
, technology developers, representatives from the voluntary and education sectors, unions and the wider public and explore how the bank can maintain stability and reduce uncertainty. inclusive communications also requires more tailored content. our visual summaries of our inflation and the financial stability reports, explain how developments in the global economy and financial system affect the outlook for inflation and financial stability without the need for dense text. deploying social media, including facebook and youtube, can make our messages available directly to a broader audience. new digital products, such as knowledgebank, use accessible language and engaging visuals to help us tell a story about what the bank does. our strategy is working, with major progress over the past five years. for example, female representation in senior roles at the bank has increased from 17 % in 2013 to 31 % today, and is on track for our target of 35 % by the end of 2020. 1 bame representation below senior management is 19 %, up from 13 % in 2013. in 2018 we were one of the first organisations to conduct a special cognitive diversity survey. our results indicate colleagues are generally positive about inclusiveness at the bank on every metric measured. in 2018 we were one of the first organisations to conduct a special cognitive diversity survey to gain a better understanding of how our colleagues feel about working at the bank. the survey measured seven inclusivity metrics including interpersonal interactions, flexible working, communication with leaders as well as recruitment and promotion, and results are cut across twelve different aspects of diversity. our results indicate colleagues are generally positive about inclusiveness at the bank on every metric measured by the survey. and 80 % of colleagues in our annual employee survey reported they think the bank takes diversity seriously, 7 percentage points higher than the uk average. and 87 % of bank colleagues say they are treated with respect as an individual, 6 percentage points higher than the uk average. see also my letter to nicky morgan, chair of the treasury select committee, on 4 july 2018. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx let me now turn specifically to ethnic diversity at the bank. investing in ethnicity2 our diversity and inclusion strategy has had a positive impact on bame diversity at the bank of england. since we implemented name - blind recruitment processes in march 2018 around one quarter of all recruitment offers ( internal and external ) have been to declared bame candidates. but there is scope for further improvement. the turnover rate | ben s bernanke : brief remarks speech by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the united states - mexico chamber of commerce annual gala, washington dc, 12 may 2011. * * * good evening. i am very pleased to join the united states - mexico chamber of commerce at this gala dinner as its members look back on another year of working to build the mutually beneficial trade and investment relationship between our two countries. the ties between mexico and the united states, both economic and cultural, are close and enduring β in no small part, i am sure, because of the nearly 40 years of effort by the chamber. thus, i am especially honored to join agustin carstens, the distinguished governor of the bank of mexico, in receiving your good neighbor award. thank you very much. muchisimas gracias. i have benefited from many years of contact and shared experiences with agustin and his colleagues at the central bank of mexico. some years ago, i had the opportunity to visit the bank of mexico. as an economist, i found the visit very stimulating. but i must confess that i enjoyed the trip as much for the cultural excursions as for the economics. i remember in particular the beauty of diego rivera β s monumental mural in the national palace in mexico city. as with so many things, i credit my wife, anna, who has a graduate degree in latin american literature, for my greater - than - average appreciation for the arts of mexico and the other latin american nations. perhaps agustin might also credit his spouse, the writer catherine mansell carstens, for an appreciation of culture that encompasses both of our nations. i met agustin not long after i came to washington to serve on the federal reserve board. he was then a highly regarded deputy managing director of the international monetary fund. in late 2006, not long after i became chairman, he became finance minister of mexico, and last year he succeeded guillermo ortiz as governor of the bank of mexico. we have had many opportunities to meet and share views about the u. s., mexican, and global economies. my appreciation for his wisdom and insight as an economist and policymaker has grown with each encounter. our productive and, i hope, mutually beneficial relationship reflects the close relationship of the united states and mexico. our countries are tightly linked through trade. the united states is by far mexico β s largest trading partner, accounting for about two - thirds of total mexican merchandise trade. | 0 |
growth and development of the country. an increasingly liberalising foreign exchange regulatory regime will be an essential ingredient to this vision. thank you. | , the model that the united states has now turned to, appropriate? can we apply the same regulatory regime for both wholesale and retail banks? the burden of all the above questions is to identify the drawbacks in the present regulatory regimes and indicate possible solutions. there is no doubt that we must pursue all these questions. in doing so, i would urge that we remember two things. the first thing to remember is that no one size fits all. for example, universal banking may be good in some countries and in some situations, and not so in others. the second thing to remember is that some regulations arguably have been behind the curve. there is no denying that regulations have to keep pace with innovations. but in doing so, we must be mindful of the risks of over tightening regulations so much that they stifle innovation. while on the subject of reforming regulation, there is also the larger question of risk modelling. true, the probability of risk follows a normal distribution β popularly called the bell curve. but our regulatory regimes have been tailored to respond to the central, higher probability portion of the bell curve. typically, we ignored the black swan lying in the long tail of the curve. we now know from the benefit of hindsight that this was a fatal flaw. the black swan represents the low probability, high risk events that pose systemic risk. while our regulatory regimes were tailored to address institutional failures, they were not equipped to address systemic failures. so, the issues for debate are the following. what are the flaws of the current regulatory regimes? how do we fix them? in what ways can international cooperation be fostered in this regard? how do we address the black swan systemic risk events? 4th debate : how do we address regulatory arbitrage? around the world, regulations governing the banking system have typically been quite stringent on the premise that the interests of the depositors need to be protected. but under the very nose of the regulators grew a very extensive and complex network of a β shadow banking system β, comprising hedge funds, broker - dealers, private equity funds, structured investment vehicles and conduits and money market funds. this shadow banking system was typically highly leveraged, and had an extensive nexus with the banking system. however, the shadow banking system suffered much lighter regulation. this β regulatory arbitrage β encouraged loose practices, hunt for quick yields and non - transparent and risky financial products. when the systems began to unravel, it was realised that many of these | 0.5 |
mugur isarescu : overcoming economic problems, the experiences of sweden and turkey β an inspiration for romania? opening speech by mr mugur isarescu, governor of the national bank of romania, at the conference β overcoming economic problems, the experiences of sweden and turkey β an inspiration for romania? β, bucharest, 23 september 2013. * * * ladies and gentlemen, your excellences, distinguished guests it is a pleasure for me to welcome you to the national bank of romania. i salute the presence of such a distinguished audience : their excellences, the ambassadors of sweden, turkey, brazil, cyprus, germany, the netherlands, members of the diplomatic corps, economists, bankers, businessmen, journalists. we are honored to host this international conference : β overcoming economic problems, the experiences of sweden and turkey : are these an inspiration for romania? β the title is, i believe, self - explanatory. in today β s globalized world, learning from other countries β experience is of utmost importance. and while it might be true that no one really learns but from his own mistakes, one can hope that some other mistakes may be avoided when learning from other people β s experiences. why sweden and turkey? before answering this question i wish to emphasize that the national bank of romania is open and willing to host other conferences with similar topics. and today β s conference might be considered the first of a series, involving clusters of countries with relevant interactions. with reference to the question above, i can tell you that there have been several reasons to begin with these three countries, but the main reason for which we compare today the present situation in sweden, turkey and romania is due to the diligent and assiduous activity of the ambassadors of these two countries in bucharest. then, i would like to salute their presence here today : his excellency mr. anders bengtcen, ambassador of the kingdom of sweden, and his excellency mr. omur solendil, ambassador of the republic of turkey and to particularly extend my gratitude to them and to all the persons involved in the materialization of this conference. i also thank mr. klas eklund, senior economist at the swedish bank seb and adjunct professor of economics at the lund university and mr. cagri memisoglu, deputy general manager at garanti bank romania. there are, of course, historical links between the three countries. i do take this opportunity to highlight a few of them. | with the republic of turkey one could go back to the proclamation of the new state as a republic, last century, and even more, centuries of ties between the romanian principalities and the ottoman empire. i also like to notice the connection between our two central banks. in the national bank of romania β s archives there are letters, exchanged between governor mitita constantinescu and governor salahattin cam, regarding the organization of a conference for the governors of the central banks in the balkanic coalition, in november 1937, in ankara. now, both central banks are members of the club of governors of the black sea area. regarding sweden i will grasp your attention with a historical moment that incidentally connects sweden with bucharest and the ottoman empire. one of bucharest β s landmarks, the coltei tower ( part of the coltei hospital which you can see across the boulevard ) has been built in the early xviii century by the swedish soldiers, during king charles xii retreat to adrianople after his failed campaign in russia. bis central bankers β speeches i will end now my brief journey into history, which has not been nor exhaustive, not even relevant, and get back to our conference topic. during the debate one should not forget that the size of the economies and the development level is different in these three countries. for example in a list compiled by the international monetary fund for the year 2012, turkey ranks 17th, with a nominal gdp of 795 billion dollars, while sweden ranks 22th, with a nominal gdp of 525 billion dollars ( romania is 56th, with 170 billion dollars ). gdp / capita is also rather different. i do hope that this conference will elicit a lively debate. i believe that we have much to learn from the swedish and turkish experience since they have been market economies for a longer period of time compared to romania. i kindly invite their excellences the ambassadors of turkey and sweden to address the audience and to introduce their speakers. the debate will be moderated by mr. valentin lazea, the national bank of romania chief economist. thank you for attending this conference, which i do hope will turn out to be a very successful one. bis central bankers β speeches | 1 |
no market value changes, that is, none of the key financial signals that determine who gets credit, and who does not, and hence who produces what, and sells to whom, in a market economy. in short, none of the financial infrastructure which converts the changing valuations of consumers into market signals that direct production for profit are available. but it didn β t matter in the soviet - bloc economies. few decisions in those centrally planned systems were affected by the lack of a developed financial system. that centrally planned economies, as a consequence, were highly inefficient is best illustrated by the fact that energy consumed per unit of output was as much as five to seven times higher in eastern europe and the former soviet union than in the west. moreover, the exceptionally large amount of resources devoted to capital investment, without contributing to the productive capacity of these economies, suggests that these resources were largely wasted. regrettably, until the berlin wall was breached and the need to develop market economies out of the rubble of eastern europe β s central planning regime became apparent, little contemporary thought had been given to the institutional infrastructure required of markets. nonetheless, in the years immediately following the fall of the berlin wall many of the states of the former soviet bloc did get something akin to a market system in the form of a rapid growth of black markets that replicated some of what seemingly goes on in a market economy. but only in part. black markets, by definition, are not supported by the rule of law. there are no rights to own and dispose of property protected by the enforcement power of the state. there are no laws of contract or bankruptcy, or judicial review and determination again enforced by the state. the essential infrastructure of a market economy is missing. black markets offer few of the benefits of legally sanctioned trade. to know that the state will protect one β s rights to property will encourage the taking of risks that create wealth and foster growth. few will risk their capital, however, if there is little assurance that the rewards of risk are secure from the arbitrary actions of government or street mobs. indeed, today β s russia is striving to rid itself of a substantial black market intertwined with its evolving market economy. law enforcement in support of private property is uneven in its application. private security forces, to a large extent, have taken over protection, with results sometimes less than satisfactory. the shift of vast real resources from the defunct soviet state to private parties, whose claims in many instances are | to be free of hidden political manipulation. government censorship in any form renders information suspect. such information will be disregarded by market participants as virtually useless, requiring individuals to rely on rumor and other dubious sources of information. this leads to misjudgments about the changing patterns of consumer demand and hence significantly eviscerates the market β s effectiveness and its role in directing real resources to their optimum uses. most other rights that we americans cherish - - protection against extra - legal violence or intimidation by the state, arbitrary confiscation of property without due process, as well as freedom of speech and of the press, and an absence of discrimination - - are all essential to an effective, functioning market system. indeed a list or bill of rights enforced by an impartial judiciary is, and i hesitate to use the analogy, what substitutes for the central planning function as the guiding mechanism of a free market economy. it is these β rights β that enable the value judgements of millions of consumers to be converted through a legally protected free market into prices of products and financial instruments ; and it is, of course, these market prices that substitute for the state orders of the centrally planned economies. we depend on government in a free society to ensure those market β rights. β perhaps of greater importance, those rights can also be viewed as a list of prohibitions delimiting the actions of government. thus, the more effective the list is in constraining the arbitrary actions of government officials, the less it matters what they do. the tighter the proscription on government officials β discretion, the less arbitrary government power is available to the highest bidder. the democratic process, of course, is needed to ensure that the β list of market rights β has the continued sanction of the people. since any bill of rights specifies the limits to which government officials can infringe on the rights of individuals, the rational self - interest of the populace is always to protect and broaden individual rights. the self - interest of those officials who have the power to exert discretionary power in areas not specifically delimited by a bill of rights, is, too often, to broaden that scope. hence, authoritarian societies, even benevolent ones, are biased to restraining the rights of individuals generally and property in particular. clearly, not all democracies protect the private right of property with the same fervor. indeed, they vary widely. nor is it the case that all | 1 |
2 % when there are no local banks operating in a fire - hit region, whereas it remains unchanged when local institutions take an active ro le in lending. 9 see oecd ( 20 23 ). " taming wildfires in the co ntext o f climate change β. oecd publishing, paris. 10 see euro pean co mmission, joint research centre, hugo co sta, daniele de rigo, giorgio liberta, tracy ho uston durrant and jesus san - miguel - ayanz ( 2020 ). " euro pean wildfire danger and vulnerability in a changing climate : to wards integrating risk dimensions : jrc peseta iv pro ject : task 9 - fo rest fires β. publicatio ns office o f the euro pean union. 11 alvarez - ro man, laura, sergio mayo rdo mo, carles vergara - alert and xavier vives ( 2024 ). β climate risk, so ft info rmation, and credit supply β. banco de espana, wo rking paper. 12 also, because lo cal banks have better access to qualitative data, they can reduce their lending to firms to a lesser extent witho ut incurring greater risk. fourth, flooding is another type of extreme weather event that can pose physical risks. according to a granular analysis 13 conducted by the banco de espana, 1. 3 % of the residential properties used as mortgage collateral in spain are located in areas at risk of flooding within the next 10 years. over longer time horizons ( 50 and 500 years ), this proportion rises to 2. 7 % and 7. 7 %, respectively. 14 overall, this analysis therefore suggests that the banking sector β s mortgage portfolio currently has limited exposure to flood risks. however, the frequency of such events and the size of flood - prone areas could increase in the future if nothing is done to prevent climate change. in any event, further work is needed to improve the available databases and to continue researching, inter alia, the extent to which property appraisals already capture flood risks or if, alternatively, there is a risk that appraisal values might suddenly change were such events to occur, and the role of insurers. fifth, severe environmental degradation can also have adverse economic and financial impacts through various channels, including, again, the value of real estate collateral. we already have evidence of these kinds of effects in spain. | not forget the role that so - called β macroprudential policy β can and should play. the introduction of macroprudential instruments to complement the stabilising capacity of monetary and fiscal policies is probably one of the most significant advances in the wake of the international financial crisis. for the countries belonging to a monetary union, the introduction of these tools is particularly important. this is because it is one of the few instruments available nationally to ensure the stability of the domestic financial system. in my opinion, macroprudential policy has a dual role to play in the current setting. first, continuing low or even negative interest rates over an extended period may have adverse effects on financial stability. macroprudential policy should be primarily entrusted with reacting if some of these risks emerge, actively combating potential excessive debt growth and protecting financial institutions against the hypothetical materialisation of these see chapter 4, β fiscal policy in the euro area β, in the annual report 2016, banco de espana. see arce et al. ( 2016 ), β policy spillovers and synergies in a monetary union β, international journal of central banking, 12 ( 3 ), september, pp. 219 - 277. see chapter 4, β fiscal policy in the euro area β, in the annual report 2016, banco de espana. 12 / 16 risks. this policy action should affect both the banking sector and the non - bank financial sector, depending on where the signs of exuberance are perceived. second, some macroprudential instruments, such as the countercyclical capital buffer ( ccyb ), can be used to build up capital buffers at financial institutions in times of plenty that can be deployed when conditions worsen. the use of macroeconomic stabilisation mechanisms, such as the ccyb, is particularly significant in a setting, such as the present one, in which monetary policy scope is more limited. 15 structural reforms conducive to raising potential growth must be undertaken it is also imperative to address the structural shortcomings hampering productivity and the generation and harnessing of investment opportunities in the euro area. at the same time, measures should be introduced geared to making all citizens party to the benefits the european project entails. these structural reforms, insofar as they are expansionary supply - side policies, are especially appropriate in the international setting i have described, in which the main growth shocks and risks ( such as protectionist tensions and the uncertainty surrounding brex | 0.5 |
; and it allows advantage to be taken of the resources and management capacity of those savings banks which, on the basis of their greater soundness, have led the various integration processes. other far - reaching measures have been brought to bear in this restructuring process. for instance, there is the reform of the savings bank regulatory framework, which is allowing for their conversion into institutions more subject to market discipline and better prepared to meet the requirements of the new international regulatory framework. and we have the tightening of provisioning arrangements, which has entailed stricter requirements in respect of asset valuation criteria. i would also like to highlight the efforts to reinforce transparency, through the disclosure of exhaustive information on all spanish institutions β exposure to assets considered doubtful. the latest measure of significance was the approval in parliament of a royal decree - law ( rdl ), whose aim was to dispel doubts about our banking system. these doubts emerged essentially as a result of the contagion of the mistrust stemming from the sovereign debt crisis in certain euro area countries. three months later, this rdl may be said to have contributed significantly to allaying fears about the soundness of our banking sector and to substantially speeding through the restructuring of our savings banks. the rdl reinforces the solvency of all spanish institutions, requiring of them a core capital ratio of at least 8 %, with a further 2 % required for unlisted banks and those more reliant on wholesale markets, which are those in which the main doubts were concentrated. the rdl also stipulates that institutions receiving public aid should pursue their financial activity through a bank, which will better enable them to obtain funds on markets and will contribute to enhancing their transparency in the face of investors. the process laid down in the rdl is unfolding as scheduled. all institutions that have applied for aid from the frob have sent their recapitalisation plans to the banco de espana, and the work on the valuation of these institutions, which will be set by independent experts, is already under way. of the 13 institutions or groups of institutions that need to reinforce their capital, the four banks will fund themselves on the market, while the savings banks have submitted various strategies, which initially or ultimately include the possibility of obtaining the necessary funds from the frob, which acts as a backstop that assures the markets that all spanish institutions will have a core capital ratio of at least 8 %. now, how and when parliament has decreed, the | luis m linde : profile of professor nicholas bloom β winner of the xii german bernacer prize opening remarks by mr luis m linde, governor of the bank of spain, at the xii german bernacer prize ceremony, madrid, 24 september 2013. * * * ladies and gentlemen it is a great pleasure for me to introduce this award ceremony for the 12th german bernacer prize. first of all, let me once again thank the organizers and sponsors of the prize. they have established an excellent programme to support economic research in the fields of macroeconomics, monetary policy, and financial economics. this is the 10th time that the bernacer prize award ceremony has taken place at the banco de espana. the continued support and backing of this initiative of the observatory of the european central bank by the banco de espana is justified by its conviction of the importance of macroeconomic research, insofar as it concerns the functions to be performed by the european system of central banks. by recognizing the relevance of a prize like this, which has been awarded, in every instance, on the basis of academic excellence, the banco de espana reaffirms its commitment to economic research. as many of you know, this prize commemorates a distinguished spanish macroeconomist who worked at the banco de espana, as director of its research department, during the 1930s. despite the isolation of the spanish economics profession at that time, german bernacer obtained substantial international recognition for his research contributions. in this edition, to the very illustrious list of previous winners of the german bernacer prize, we add, with all due merit, professor nicholas bloom, a british economist, who is today professor in the economics department at stanford university. professor bloom graduated in economics from cambridge university, obtained his masters at oxford university and his ph. d. at university college london. he has been awarded the 2010 frisch medal of the econometric society, is a fellow of the american academy of arts and sciences and an associate editor of, among other journals, econometrica and the quarterly journal of economics and management science. he has published many articles on economic and management issues in top journals, including the american economic review, econometrica and the quarterly journal of economics. professor bloom β s two main areas of research are macroeconomic uncertainty and firm organization and productivity. in the first area, his main contributions are to show that macroeconomic uncertainty increases substantially in the aftermath of significant shocks. he also shows that during | 0.5 |
for vital issues regarding the agenda. i desire you all success with the materialization and accomplishment of your present and future projects and i conclude by wishing all the foreign guests at this conference a good stay in romania. i am now giving the floor to mr kurt puchinger, coordinator of the eu strategy for the danube region and chair of the first session, to start the conference. thank you. bis central bankers β speeches | line that represents the potential growth path it is supposed to follow. this owes to the fact that it is in a vicious cycle under which a decline in aggregate demand on the back of a continued fall in prices β that is, a state of deflation β leads to a further fall in prices. in order to revitalize the economy, which has fallen into this vicious cycle of deflation and a decline in aggregate demand, bold monetary easing β the first arrow β is effective and imperative as a means of stopping the continued fall in prices and bringing economic activity to the level that should have been achieved. this represents the thinking behind the bank β s current monetary easing policy. it is exactly what i have been emphasizing as a researcher for a number of years. as i said before, it will take some time until the effects of the first arrow ( monetary policy ) permeate the economy. it is for this reason that the effects of the second arrow ( fiscal policy ) will first materialize, and as the effects of monetary easing strengthen, the actual economic growth path will approach the potential growth path shown as the dotted line in slide 2. in contrast, the third arrow ( growth strategy ) plays a role of raising the potential growth path depicted by the dotted line. in other words, while monetary policy and fiscal policy are the policies to restore economic strength from its temporary decline to being in a sound state, the growth strategy is meant to raise the capabilities of the economy itself. for japan β s economy to achieve long - term growth, this growth strategy is a key to success. ii. what is β quantitative and qualitative monetary easing β? now, i would like to focus my speech on today β s main theme : the first arrow, which is the monetary easing policy the bank has been conducting. on january 22, 2013, the bank newly introduced the β price stability target β of 2 percent in terms of the year - on - year rate of change in the consumer price index ( cpi ). furthermore, the bank decided on april 4 to enter a new phase of monetary easing both in terms of quantity and quality in order to achieve that target at the earliest possible time, with a time horizon of about two years. this is the bold monetary easing policy called β quantitative and qualitative monetary easing β ( hereafter qqe ). i would now like to explain, as plainly as possible, the key features of the monetary easing that the bank has been conducting. however, | 0 |
country needs, but they are critical steps in moving forward. we can square the circle of policy complementarity by moving faster on the reform of the energy sector and other structural reforms that would make south africa β s investment environment more attractive to domestic and foreign capital. thank you. | remarks by lesetja kganyago, governor of the south african reserve bank, at the jse / nyse market close event, new york, 10 october 2022 good afternoon distinguished guests, investors, members of the media, south african delegates, and new york stock exchange representatives. it is a privilege to address you here today, following the signing of a new memorandum of understanding ( mou ) between the johannesburg stock exchange ( jse ) and the new york stock exchange ( nyse ). this new mou will foster closer ties between the two markets, and is aimed at increasing economic partnerships and trade opportunities. it is encouraging that the jse and nyse will continue to explore new areas of cooperation and collaboration in strengthening their value propositions for their respective markets. south africa shares significant economic interests with the united states ( us ). south africa is the us β s largest african trading partner and has the most diversified and industrialised economy on the continent. despite the rapid growth in asian economies, the us remains one of south africa β s top five main trading partners. 1 in 2021, us exports to south africa totalled us $ 5. 5 billion β a 25. 8 % increase from 2020, while us imports from south africa totalled us $ 15. 7 billion β a 38. 5 % increase. there are approximately 600 us businesses operating in south africa and many use south details are available at http : / / www. dirco. gov. za / foreign / bilateral / usa. html africa as their regional headquarters, 2 and a springboard for greater opportunity on the african continent. these structural features of our economic relationship are stable and will certainly grow in the coming years. nevertheless, the global economic environment is challenging and is likely to remain as such for the next year or so, as we all find our way out of the economic repercussions of the covid - 19 pandemic. critical to shaping our path will be considered policies that seek to reduce volatility and uncertainty, and which aid the long - term investment that underpins sustainable economic growth. let me focus briefly on the global economy and south africa β s response. this is an unusually challenging time for the global macroeconomy. high inflation has now taken centre stage in the global debate on monetary policy, as prices continue to climb at rates last seen decades ago. 3 we have seen major central banks raising interest rates at the fastest pace in a generation. the current inflation surge has | 1 |
and the dissemination of financial education, since 1880 until the present day. even though we are living difficult times, we should remember that we share a common institutional collective memory. the national bank of romania has been a member of the bank for international settlements since its establishment, on january 20, 19301, when the final act of the second hague conference2 was adopted. on behalf of all my colleagues in romania, we salute the great endeavours of all the predecessors that steered the global banking and finances in the last 90 years and overcame major challenges and financial and economic crises, to foster enhanced preparedness for future times. starting with 1 january 2007, when romania joined the european union, the national bank of romania became part of the european system of central banks ( escb ). such a long and substantial period has forged the central bank into a pillar for the banking system, building trust and ensuring reliability. the national bank of romania stands as a promoter of the country β s economy, policies, society and collective spirit, national dignity and international openness. during 140 years of eventful history, the national bank of romania has contributed to romania β s destiny and her trustworthy position on the international stage. every year we have been celebrating together : colleagues both from the national bank of romania and other central banks around the world, colleagues from international financial institutions, academia, historians, university students, journalists, etc. we get together to remember those who came before us, to exchange opinions on matters of the day and imagine the future. the current situation prevents us from meeting in person and enjoying the dialogue. we are confident that better days are ahead and we will be able to celebrate the national bank of romania together in bucharest. https : / / ihl - databases. icrc. org / ihl / intro / 185 https : / / ihl - databases. icrc. org / applic / ihl / ihl. nsf / article. xsp? action = opendocument & documentid = b5f24859d28a2c45c12563cd00516449 | bucharest, april 29th 2020 mugur isarescu, governor of the national bank of romania dear colleagues, early this year, we found ourselves during challenging times, under an awful threat of medical nature, which has affected our lives, as well as the global economy. many sectors have experienced sudden stops. the negative effects of covid - 19 pandemic have required the adoption of comprehensive and coordinated packages of measures in order to respond to lockdowns and deterioration of economies, trying at the same time to establish grounds for future opening up and strategies for restarting the activities. recent history has shown us that central banks have always exerted their full functions within mandate to support countries and people to overcome the economic effects of wars, catastrophes and disasters of any kind. these trying times make no exception. the outstanding cooperation within the framework of the prestigious bank for international settlements, of its remarkable members and management, will stand proof for deepening our commitments that bind us all. on a more positive note, i wish to let you know that the national bank of romania celebrates today its 140 year anniversary. the day of april 29th has a strong historical significance. since mid19th century, the romanian society had witnessed swift, in - depth social, economic, political and institutional changes. so, steps were taken to found a central bank, drawn on the statutory principles of banque de france and the national bank of belgium. on april 29th 1880, the law on the establishment of a discount and circulation bank, i. e. the act laying down the setting up of the national bank of romania, was published, ranking our institution among the first modern central banks. we hold dear the memory of our founding fathers. we honour them each year, but now i wish to commemorate two of them : the prime minister of those times, ion c. bratianu, whose commitment and great efforts materialized in the cornerstone law for the establishment of romania β s central bank as a modern institution for β monetary circulation and a solid credit system β and the the artisan of the national bank of romania eugeniu carada, advisor to the prime minister, a man of deeds, rather than words. eugeniu carada took up the strategic mission to achieve the establishment of our central bank, had a clear vision of its role and set up a sound and modern credit system to foster loans and investments. by implementing modern instruments and policies for those times, the national bank of romania also contributed to the expansion of financial intermediation | 1 |
a sharper deterioration in the credit cycle. all in all, the outlook for both global and euro area financial stability remains highly uncertain. a lot will depend on the interaction between macroeconomic developments and the financial system and on how banks respond to an operating environment that presents various challenges, including some new ones. the financial turmoil could be gradually broadening in scope and evolve into a more traditional credit - cycle downturn. in such circumstances, it is likely that the adjustment process will remain protracted as key participants in the financial system continue their efforts to strengthen their liquidity and capital positions. in an environment where balance sheet conditions can change unexpectedly, there is obviously no room for complacency. vigilance remains of the essence for market participants and policy makers. thank you for your attention. | 2 a series of studies have revealed the similarity of monetary policy transmission channels, with the interest rate channel playing the prominent role in all countries and the bank credit channel a less predominant role. 3 national financial structures, however, still continue to exhibit significant differences. for instance, the role of debt securities and shares in financing the private sector and the types of vehicles ( pension, insurance and mutual funds ) used to manage the long - term savings and pensions of households are markedly different across countries. as a result of the high degree of trade, particularly intra - industry, and financial integration, as well as the high degree of convergence of macroeconomic policies in the euro area, the business cycles tend to be significantly synchronised. cross - correlations of business cycles ( in particular industrial output ) have been quite high between the larger euro area countries4 over the past decade, although business cycles have also tended to be more synchronised across the world. moreover, the dispersion of real gdp growth rates in the euro area has remained very close to its historical average, suggesting the absence of any major asymmetric shocks. as differences in gdp growth rates partly reflect differences in potential growth rates, and consequently differences in the successful implementation of structural reforms, the dispersion also indicates the scope for countries with low growth to achieve higher growth rates. it is important to note that even if there have been no major asymmetric shocks, diverging developments may have arisen from the transmission of common shocks, implying that adjustment mechanisms, working via external competitiveness or automatic fiscal stabilisers, are still necessary. for the new member states, business cycles are less correlated within the group and with the euro area, showing also higher output variability. while this partly reflects the profound structural changes and reforms that have taken place, it may also reflect the fact that these countries are rather small and specialised. as trade integration and foreign direct investment flows into these countries continue, there is reason to believe that the level of synchronisation will increase. as a matter of fact, there has been a marked increase in investment flows towards the 10 new member states in recent years. certainly, the euro area also lacks some properties that would make countries and regions more resistant to economic disturbances and improve performance in terms of gdp growth and employment, in particular a high degree of wage and price flexibility and labour market mobility. some have also argued that the sustainability of emu hinges on the existence of a cross - country fiscal transfer | 0.5 |
sturzenegger, β does it matter how central banks accumulate reserves? evidence from sovereign spreads β, nber working paper no. 28973, june 2021. available at : https : / / www. nber. org / papers / w28973 agustin samano β international reserves and central bank independence β, policy research working paper no. 9832, 2021. available at : https : / / openknowledge. worldbank. org / handle / 10986 / 36483 olivier jeanne and damiano sandri, β global financial cycle and liquidity management β, bis working papers no. 1069, january 2023. available at : https : / / www. bis. org / publ / work1069. pdf in addition to these tools, we should consider our macro policy narratives. for a start, we need to rediscover the dangers of government borrowing. responsible policymakers never forget that fiscal debt is risky. but the nature of policy discussions is that while many claims are valid, some points get more emphasis than others. in the past decade, one such point was that fiscal consolidation hurts growth and is therefore self - defeating. another was that higher government debt levels were safer than previously thought. i have personally observed these claims justify sustained fiscal slippage in south africa. if we had felt the urgency of debt sustainability more keenly, we would have had a wiser conversation. we need a more responsible set of narratives around fiscal risks. 35 we also need to think more clearly about allocative efficiency. one of the strongest lessons i have learnt as a policymaker is that poor countries are poor not simply because they do not have money, but because they do not use money effectively. too often, there is a tendency to look at a problem, cost out a solution and focus on raising the cash. implementation is just a black box. but good policymaking starts with implementation and the financing need should reflect what can be used efficiently. indeed, one might cast the volatile and often damaging history of capital flows as a conflict between budget constraints and capacity constraints. capital flows provide spending power and can radically shift the budget envelope, but implementation capacity is stickier, and budgets can easily overshoot capacity. this point is relevant, once again, in the global dialogue about climate change justice and the financing that should be directed from rich countries to poor ones. there is a strong focus on costing the climate change impact for poor countries and | to provide significant support to those seeking to disclose and has encouraged steadily increasing uptake. these initial steps greatly helped to define appropriate parameters, drive towards consistency, and give the public sector a running start in developing their own approaches. now it is time to build on that work. it will be useful to establish a globally consistent baseline standard for climate - related disclosures. globally consistent and comparable entity - level disclosures by non - financial companies, banks, insurers, and asset managers are increasingly important to market participants and financial authorities as a means of providing information needed to assess and manage risks. the g20 presidency, in developing its 2021 work program, asked the fsb to encourage more consistency in disclosure practices. as a start, the fsb surveyed what financial authorities across our membership were doing to promote disclosures. almost all our members have 1 / 3 bis central bankers'speeches already set requirements, guidance, or expectations or plan to do so. we found some heterogeneity in the approaches they were taking. some members prefer mandated disclosure while others would make it voluntary. there is also variation in the desired scope of disclosures. however, there is a trend towards an important baseline that focuses on one - way materiality β or the financial risk that climate change could have on a particular entity β based on the tcfd recommendations. the majority of our membership are already using the tcfd recommendations as a baseline for their own requirements or guidance. the international financial reporting standards foundation ( ifrs ), in consultation with other international organizations, will develop a set of standards, starting initially with climate and building upon these tcfd recommendations. as reflected in our december 2020 statement, the fsb supports ifrs's advancement of an international sustainability standards board to take this work quickly forward. 3 this work holds the promise of providing baseline standards that could inform or be built upon by national authorities as they develop their approaches to climate - related financial disclosure or broader sustainability disclosure. the initial focus of the ifrs will be on climate standards, while allowing for interoperability with individual jurisdictions'frameworks, that may go beyond climate - related impacts. consistency in one - way disclosures would provide a needed avenue for accurate and appropriate risk assessment and comparability to assess investment decisions. simultaneously, the ifrs standards are intended to provide flexibility for national authorities to build on the baseline. the " interoperability " feature will allow jurisdictions to address broader or jurisdiction - specific concerns in a | 0 |
roger w ferguson, jr : information technology in banking and supervision remarks by roger w ferguson, jr, vice - chairman of the board of governors of the us federal reserve system, at the financial services conference 2000, st. louis university, st. louis, missouri on 20 october 2000. * * * i am pleased to speak with you today on technological innovation in the financial services sector. as you may know, technology and its impact have been key areas of focus at the federal reserve in recent years. as my colleagues on the federal reserve board have often noted, technological innovation affects not just banking, financial services, and regulatory policy, but also the direction of the economy and its capacity for continued growth. some argue that dramatic structural changes are in store for the financial services industry as a result of the internet revolution ; others see a continuation of trends already under way. what is clear is that the last few years have seen a truly phenomenal pace of new technology adoption among even the most conservative banking organizations. a number of financial trade publications are now devoted almost entirely to emerging technologies and the latest financial technology ventures. we know that many banks are making what seem like huge investments in technology to maintain and upgrade their infrastructure, in order not only to provide new electronic information - based services, but also to manage their risk positions and pricing. at the same time, new off - the - shelf electronic services, such as on - line retail banking, are making it possible for very small institutions to take advantage of new technologies at quite reasonable costs. these developments may ultimately change the competitive landscape in financial services in ways that we cannot predict today. technology is also changing the supervisory and regulatory landscape. it is creating new tools for supervisors and new supervisory challenges. technology - driven issues such as privacy and the nature of electronic communications have reached the forefront of the policy agenda. and the line between electronic banking and electronic commerce is becoming more difficult to define clearly. i would like to explore more deeply a few of these issues in my remarks today. technology investments more than most other industries, financial institutions rely on gathering, processing, analyzing, and providing information in order to meet the needs of customers. given the importance of information in banking, it is not surprising that banks were among the earliest adopters of automated information processing technology. the technological revolution in banking actually began in the 1950s, well before it began in most other industries, when the first automated bookkeeping machines were installed at a few us banks. automation in banking became common over | the supervisory process, any reporting of technology - related investments and expenditures. lack of consistent data significantly limits systematic industrywide or peer group analysis by supervisors or economic researchers that would shed light on some of these questions. as i consider the very recent, admittedly mixed, experience of the financial services sector with technologies - looking at the examples of internet banking, on - line banking, smart cards, and atms - it seems that several lessons emerge. first, many of the investments have been made to automate existing processes, but the challenge of fundamentally rethinking the process from start to finish - the so - called core process redesign that is necessary to reap the full benefit of the current generation of technologies - has proved daunting. this is in part because many of the services that banks are attempting to automate currently are β joint goods β, that is, the production and consumption of the product or service depend on the inputs or behaviors of many players outside of the bank and even outside of the financial industry. for example, the flow of services from checks depends on a complex of economic actors, including consumers willing to write checks, merchants willing to accept them, and an infrastructure in place to clear and settle them. attempting to automate part of the check process by imaging or to replace checks with a single instrument, such as the debit card, requires cooperation among all the organizations that support a checking transaction. internet banks are another example of these interdependencies. many internet banks have discovered that they are using any savings in β brick and mortar β operating costs to pay β bounties β, or fees, to other internet sites that refer new customers and to operate call centers to field the customer inquiries that invariably arise. another lesson from the history of technology in banking is that so many of the costs in banking are shared across products, and even across customers. therefore, an investment that might have a positive impact on one customer base or product may not have the desired impact on the overall cost base. i believe that the early history of atms illustrates this lesson. the atm was originally introduced as a way to reduce costs of the branch network. although the atm succeeded in moving small - value withdrawal transactions from branches, that accounted for only a portion of the customers served and the transactions performed by a branch network. therefore, early atm networks added cost without substituting for branch networks. for atms to become truly economically attractive, they had to evolve to offer a fuller range | 1 |
the republic which have been acquired directly from the treasury by subscription to new issues, the conversion of existing issues or otherwise, a sum exceeding its paid - up capital and reserve fund plus one third of its liabilities to the public in the republic β. this section therefore restricts the direct financing of government deficits. at the same time, the act also allows the reserve bank to provide unsecured loans and advances to government and companies in which it has acquired shares. although there are limits on government borrowing, serious consideration in the revision of the reserve bank act should be given to removing this potentially dangerous provision. the south african reserve bank is also financially independent from the government because of its adequate financial resources and full control over its own budget. 8. conclusion in pursuing financial stability, the south african reserve bank is relatively well aligned with international best practice. it operates autonomously within a legal framework which affords it a substantial degree of independence, while remaining accountable to parliament. but ultimately it is the appreciation by the public at large of the importance of financial stability, and their understanding of and support for the role of the reserve bank in this regard, that is needed to entrench and develop the bank β s independence. to this end, ongoing communication between the reserve bank and all levels of society is essential. in this connection, governor jean - claude trichet asked the question : β so to whom is the central bank accountable? in the end, i think it is accountable to public opinion itself. it is our great responsibility to communicate with public opinion as a whole, and not just market operators and investors. this communication must be as direct and precise as possible, in terms as simple as the subject matter allows while remaining very professional. β while we are fully aware that we face many daunting challenges, it is gratifying to note the degree of financial stability that has been attained over the past years. and it is exciting to note that financial stability provides a sound basis for sustainable strong economic growth and development ; more and more evidence suggests that central bank independence and prudent policies in general are starting to pay off in south africa. | longer be allowed to comment on monetary policy. as the outgoing governor, however, i will take advantage of this platform to remind you of a few truths, one being that no central bank worth its salt can ever tolerate high inflation. price stability may not be a sufficient condition but i maintain that it is a necessary condition for a solid foundation for sustainable growth and prosperity. i would like to believe that steve biko would have been gratified by the fairly contained pace of inflation over the past 15 years, knowing the dire consequences of inflation for the poor β those who are usually least able to hedge against inflation β in particular. since 1994 average headline inflation has amounted to approximately 6, 5 per cent per annum. over the steve biko, i write what i like, a selected of his writings. preceding 15 years, 1979 to 1994, it had averaged almost 14 per cent per annum. inflation has been uneven over the period, though, induced typically by significant changes in key exogenous drivers of inflation, such as oil prices. secondly, the recent upsurge in strike action has led to some commentators describing the wave as a β winter of discontent β. in this regard, i would like to comment on some worrying trends in the settlements reached. wage settlements above the projected rate of inflation and in excess of productivity gains tend to undermine the fight against high inflation. they lead to labour cost increases way above those of trade competitors and, therefore, loss of competitiveness. though i will discuss the labour market in much depth later, i need to refer briefly to our labour laws. many commentators have described the labour market as rigid and inflexible. as the country β s first post - 1994 minister of labour, some of the blame has been pointed in my direction. i am the first to admit that some things could have been done differently. hindsight, however, is useful only when it improves our foresight. i would like to take this opportunity to espouse some of the theoretical and philosophical underpinnings behind the labour relations act. the labour movement regarded me as a hero then. social ills the break with tradition, however, cannot be complete when addressing such an established forum. i will, therefore, digress slightly and venture an opinion on a few matters not related to economics and central banking. the shameful xenophobic tendencies we witnessed last year should have caused all south africans to exclaim : β oh, beloved country, what would steve biko have | 0.5 |
environment would be large. because you can read press releases to learn our policy stance rather than the pattern of reserve additions or drains, there is much less chance for confusion. for pricing any instrument beyond overnight, market participants apparently find the intended federal funds rate to be more informative than the noisy effective federal funds rate. nonetheless, it would be helpful to prevent a further increase in the volatility of the effective federal funds rate that might result from a further sweep - induced decline in required reserves. and a means is available to the congress today to accomplish that end : the federal reserve should be permitted to pay interest on reserves. as it stands now, depositories resort to complicated means to evade our reserve requirements - - such as retail sweeps - because our reserves are sterile and to do less would put them at a competitive disadvantage in a market where profit margins are paper thin. by paying interest on reserves, the incentive to engage in sweeps would be sharply reduced and the practice would likely diminish over time, if not end entirely. as a result, bankers could devote their attention to more productive pursuits, and reserve markets would be easier to read. conclusion i can assure you that i view financial markets as a national resource. to be sure, they do not light the way to proper policy making as perfectly as true believers may assert. but there is information to be gotten, and it has been my experience that policy makers do try to extract it. for our part, we will try to preserve those benefits. for your part, the private open market committee does public good - - even if it is the by - product of the pursuit of personal profits - - when it views policy making with a skeptical eye. after all, it is only the best of friends who have the courage to point out the most sensitive of faults. | lending as liquidity dried up. 3 in the immediate aftermath, despite a substantial reduction in jumbo lending as a share of the overall mortgage market, the data indicate that the share of community bank jumbo mortgage lending held steady. such lending actually increased at community banks that were not dependent on correspondent banking and at those that were sufficiently well capitalized and more profitable. and, by their sheer numbers and their central role in local communities, these banks are vital and competitive players in a highly diverse landscape for financial services. they often provide competitive options where none would otherwise exist, thereby lower borrowing costs for businesses and consumers. whether we single them out for special advantage is a question for legitimate debate. what i do know is that what we most certainly should not do is hinder them from engaging in a fair fight. the post - crisis regulatory landscape this brings me to regulatory policy. one of the questions i am most frequently asked when i speak to audiences like this one is, β what on earth is going on in washington these days? β well, there certainly is a lot going on. right now, among some other things, federal regulators are working to build out hundreds of requirements laid out by congress in the dodd - frank wall street reform and consumer protection act. and, in the midst of this complicated rule - writing effort, there is a renewed debate over whether these requirements are sufficient to end too - big - to - fail. regulators are also continuing to oversee improvements to the operational problems in the massive numbers of foreclosures in the wake of the financial crisis and exploring the risks to financial stability that may persist in the differentially regulated parts of our financial system. this is all necessary work, and it is appropriately getting significant attention from officials at the highest levels in multiple agencies. uses to define community banks. and the vast majority of these ( 91 percent of all insured commercial banks ) are much smaller as of that date, with less than $ 1 billion in total assets. to highlight the importance of such research, the federal reserve system and the conference of state bank supervisors will host a conference on β community banking in the 21st century β at the federal reserve bank of st. louis on october 2 β 3, 2013. see paul calem, francisco covas, and jason wu ( 2011 ), β the impact of a liquidity shock on bank lending : the case of the 2007 collapse of the private - label rmbs market ( pdf ), β ( washington : board of governors of | 0.5 |
some of the largest global financial institutions. these institutions may also be tempted to take excessive risks when they come under pressure from heated competition and shareholders β demands for value. of course, the prudential authorities approve of high returns on equity, but systematically aiming for returns on equity of 15 %, 20 %, or more while world growth averages 3 % to 5 % could make institutions more vulnerable. actually, the search for profitability should not induce institutions to resort to extreme gearing in which debt replaces capital, or distort portfolio structures by undue focus on high - yield financial assets which also entail a high degree of risk. nor should it lead them to curtail operating costs excessively, thus reducing the resources devoted to internal control. on credit markets, the financial position of banks can also be seriously jeopardised if they are tempted to reduce margins drastically in order to maintain or increase their market share, or if they make insufficient provisions during cyclical upturns. more generally, some of the most widespread management methods are not entirely without risk : β’ the accounting practice of marking - to - market most of the assets in credit institutions β balance sheets renders them more vulnerable to price fluctuations. the spread of market valuation through the concept of β fair value β could make banks β total assets and profits highly volatile. this is why french prudential authorities have reservations about this method. β’ in the same vein, the asian crisis has highlighted the limits of systematically resorting to rating agencies, which can reinforce the herd behaviour of markets. these ratings, which can never be perfectly accurate and up - to - date, should be taken for what they are : just one of several instruments for risk management. β’ the turbulence surrounding the asian crisis also clearly showed that the models used for managing complex derivatives do not adequately take into account abrupt gyrations in one or several markets. and lastly, the public authorities must meet new challenges. β’ in general, the default of the ltcm fund in september 1998 underscored the risk of contagion between financial systems. however, the resolution of the crisis demonstrated the ability of the monetary and prudential authorities to undertake effective, coordinated and pre - emptive action which prevented it from turning into a full - blown financial crisis. β’ the increase of bond markets, shorter durations for interbank financing and the growth of derivatives [ such as structured bonds with index - linked yields ] challenge the involvement of the private sector in the resolution of international | security and management of the associated liquidity in the context of an integrated, competitive and innovative market for all cashless payments in euro. 3. improving the attractiveness and competitiveness of the paris financial centre the competitiveness of the paris financial centre is an advantage in our crisis exit strategy and one that is important to continue developing β particularly after the announcement of bis central bankers β speeches ice β s takeover bid for nyse euronext, which could substantially change the role of the financial centre β s players and generate new opportunities. it is essential that efforts undertaken to consolidate and develop market infrastructures as well as market and post - trade services be intensified. from this point of view, 2013 will represent an important step forward with the full deployment of the offer of clearing and triparty collateral management services for repo transactions in euro that has been developed with paris β s principal financial operators, banks, clearing and settlement infrastructures and the banque de france. we will also strive to take advantage of new opportunities as they emerge, particularly in the areas of services for financing, investment and settlement in increasingly international currencies ( such as the renminbi ) and infrastructures for enhancing market transparency ( such as data warehouses for the repo market for example ). 4. supporting the economy by offering financing under the best possible conditions the last point i would like to make is also crucial for economic recovery : it concerns lending to the economy. the downward trend that has been observed for some time is primarily due to a fall in demand. but we must of course ensure that the offer of financing remains sufficiently broad so that smes and mtes, who rarely have access to market financing, can weather the current difficult economic period without encountering additional difficulties. in particular cash facilities must remain sufficiently available and the conditions under which they are offered should not be systematically tightened. in fact, our quarterly survey of several thousand smes show a regular contraction of the rate at which smes β requests for cash facilities are fully granted. in the last quarter of 2012, this rate was only slightly higher than 50 %. the same is true, although to a lesser extent, for mid - tier enterprises ( mtes ). i therefore enjoin you, in general terms, to avoid reducing lending to the economy, which would aggravate the situation of companies and make the necessary economic recovery more difficult. * * * ladies and gentlemen, i have no doubt that you are ready to meet these challenges β particularly as you | 0.5 |
customer due diligence procedures issued by the basel committee on banking supervision. the financial services commission, which has responsibility for non - deposit - taking financial institutions such as insurance companies, securities dealers, unit trusts and mutual funds, has also recently issued similar guidelines. the bank of jamaica actively participates in national efforts to ensure that jamaican financial intermediaries are not being used as conduits for the funding of terrorist groups. the central bank chairs a financial crimes task force that has been charged with the responsibility of making proposals for relevant amendments and / or enactment of legislation covering all facets of financial crime, inclusive of money laundering, terrorism financing, and related issues. these efforts have culminated in the legislative amendments that were referred to earlier. in closing, let me stress the importance of the collaborative efforts of the relevant authorities within jurisdictions, regionally and internationally, in ensuring the effectiveness and success of the aml / cft measures. the effectiveness and success of these measures depend critically on this collaboration. i therefore trust that the combined efforts of all our caribbean colleagues will restrict those who seek to exploit our financial systems and corrupt our economies and societies for their own selfish gains. i believe that over the next five days the sessions will serve to strengthen the capacity of our examiners and facilitate the application of the new 2004 imf / world bank assessment methodology as the basis for future anti - money laundering / combating of financing terrorism ( aml / cft ) assessment exercises. in the meantime, i wish to thank the caribbean financial action task force, the international monetary fund and the world bank, for the timely scheduling of this workshop. i hope that you will all have a very productive week, as you learn how to implement the imf 2004 assessment methodology and draw on the wealth of knowledge of the presenters and the experience of your fellow participants. to all our overseas visitors, i hope that you will find some time to make it jamaica again in the near future, when you can relax and explore our beautiful island. thank you. | authorities may take actions to reduce the risk of local financial imbalances. in such a case, macro - prudential measures may exert cross - country spillovers that matter for monetary policy. for example, raising capital requirements in one jurisdiction may dampen lending in the whole euro area, while a tightening of loan - to - value ratios may simply shift lending between respective jurisdictions, leaving the euro area aggregate unchanged. a monetary authority may therefore have a legitimate interest in which macro - prudential measure is used. many of these questions are yet to be fully explored and we have to acknowledge that the macro - prudential policy framework is still in its infancy. we are in a learning process. the objectives, transmission mechanisms and effects are still being established, and this is an area where the esrb β s systemic macro - prudential oversight is playing an integral role. conferences such as today β s can provide crucial input here. bis central bankers β speeches overall, i am optimistic that macro - prudential policies, if properly coordinated at the european level, will strengthen our defences against future financial instability in the euro area, while also addressing some of the side effects that come from a single monetary policy. conclusion let me conclude. with the three challenges of : ( i ) ensuring price stability in the face of a prolonged period of low inflation, ( ii ) setting up the ssm and rebooting the banking system to support credit and growth, and ( iii ) establishing an effective macro - prudential policy framework to increase resilience in the face of future financial turbulence, the ecb will have its hands full in the coming year. we are committed to doing our job, but do not expect us to do the job of others. it is more important than ever that, in parallel, governments continue to pursue their structural reform agenda. the return of confidence in the euro area is evidence that the reform efforts will eventually pay off. this is visible from the return of market confidence. but, more importantly, it is visible from the return of political confidence β as expressed, for example, in prime minister helle thorning - schmidt β s assessment that joining the euro would be in denmark β s best interest. ultimately, the common theme in all our efforts is to further the aims of the european union. these are to promote peace, its values and the well - being of its peoples. as the recent events in ukraine demonstrate, these aims remain as attractive and compelling as | 0 |
dropped sharply in the fourth quarter. the unwinding of these factors should provide some support to growth of real activity in the near term. indeed, the most recent data suggest that economic activity in 2006 is off to a solid start. payroll employment expanded briskly in january - - the latest month for which figures are available - - on top of sizable gains over the preceding two months. although these increases contain some bounceback from the effects of the hurricanes, they also likely reflect underlying strength in labor demand - - an impression that is corroborated by the recent low readings on initial claims for unemployment insurance. in addition, the underlying pace of activity in the industrial sector has been quite robust recently. real household spending continued to climb in january ; although unseasonably warm weather that month left an imprint on the data, the result suggests some underlying strength in this sector. housing activity has, on balance, been a bit softer recently but still remains at a high level. overall, the fundamentals appear sufficient to support continued economic expansion. underlying productivity growth remains strong, the financial positions of households and businesses remain conducive to spending, and, if we have no further run - up in oil prices, the drag on activity from higher energy prices should diminish over time. and the outlook for activity abroad is quite favorable. in japan, the expansion appears to be broadening, and signs suggest that the japanese financial sector may finally be stabilizing. prospects in europe are gradually improving, particularly in germany, after several years of sluggish growth. many emerging market economies also are doing well, with exports providing a significant boost to activity in these countries. these developments should provide some ongoing support to the u. s. economy. the inflation outlook the continued surge in energy prices was the dominant factor affecting inflation last year. rising energy prices contribute to consumer inflation in several ways - - by boosting prices for gasoline and other energy goods ; by raising the price of non - energy goods and services as firms pass on increased energy costs ; and by putting upward pressure on expectations of future inflation. despite those pressures, core inflation has, as i mentioned, remained contained, a result likely attributable to a range of causes. the decline in the economy's energy intensity is one of the factors that has restrained the passthrough of energy prices into core inflation in recent decades. as energy prices started to rise in the 1970s, households responded by purchasing products that were more energy | won β t try to suggest that the model does more than it can, despite being the best of breed. a healthy degree of caution has to be applied to all such exercises. still, i think you β ll find the results interesting. we begin with a base case and use our model to identify a set of conditions that are sufficient for the resolution of global imbalances. these include : β’ increasing u. s. private savings rates and maintaining them through time at 6 per cent of gdp ; bis central bankers β speeches β’ engineering a gradual, timely and credible fiscal consolidation in the united states, europe and japan ; β’ allowing the real effective exchange rate for china to appreciate by 20 per cent, while the u. s. dollar depreciates by 15 per cent ; β’ implementing policies to stimulate domestic demand in china and emerging asia ; and β’ pursuing a program of gradual but meaningful structural reform in europe and japan to raise potential growth. this should not be interpreted as a goldilocks scenario. it might be possible to do much better with more ambitious and concerted action ; however, it is sufficient to stabilize government debt and deficits, together with current account balances, at sustainable levels. we might call it a β good, β as opposed to β great, β outcome. in an alternative scenario, we ask what would happen if the implementation of these corrective measures were delayed by five years ( i. e., over our projection horizon ), after which time they are allowed to kick in. in other words, this alternative scenario eventually course corrects and is by no means as bad as it can be. the results for the good and ( somewhat ) bad scenarios are shown in the graph below. postponing the required policy measures in emerging asia, including china, and in the advanced countries produces a cumulative 8 per cent decline in world and u. s. gdp relative to the baseline, while the difference in china β s gdp is roughly 12 per cent. in 2017, world gdp is lower by over us $ 7 trillion, and it could well be much worse ( chart 8 ). a third, and separate, scenario that we conducted on an earlier occasion is in many ways even more interesting. it asks what would happen if fiscal consolidation and household balance - sheet repair were actively pursued in the advanced countries β whether voluntarily or driven by impatient financial markets β but without the support of rising external demand in those countries that needed it ( i. e., absent exchange rate | 0 |
patrick honohan : ireland β institutional indebtedness and the banking crisis opening statement by mr patrick honohan, governor of the central bank of ireland, to the joint committee on finance, public expenditure and reform, dublin, 27 march 2012. * * * although i will need to take great care in my statement to protect the financial interest of the state in view of current discussions, recognising the interest and concern of the committee to understand the various issues surrounding the promissory notes, a scheduled amortisation payment of which falls due next week, i will be glad to provide as clear an account of the matter as i can. the promissory notes owned by the irish bank resolution corporation ( ibrc ) are part of the legacy of the banking crisis. they represent just one aspect of a large and complex structure of institutional indebtedness involving the government, the banks and the central banking system, which has resulted from that crisis. although some commentators have tended to exaggerate the extent to which the tax increases and spending cutbacks which have to date been put in place in ireland can be attributed to the banking debt, this debt does hang over the economic and financial recovery of ireland and β as is generally agreed β needs to be set on a more secure basis. the promissory notes were provided by the minister for finance, using powers granted to him by the oireachtas under the credit institutions ( financial support ) act 2008, as a way of ensuring the compliance of anglo irish bank and irish nationwide building society β the precursor institutions of ibrc β with the capital requirements directives. this became necessary as a result of the losses entailed in the prices announced in march 2010 and the following months for the various tranches of nama purchases. the pace of the annual cash payment stream provided for in the notes was, from the outset, structured β perhaps somewhat arbitrarily β as one - tenth of the value of the note to be paid on march 31 each year, with the total duration of the payment stream being set to ensure the capital requirement. the notes were reset on several occasions during 2010 to reflect the progressive crystallisation of losses. interest on the value of the notes was included at the yield required by the market on irish government securities of comparable maturity at the time of each issue of the notes. it is relevant to note that the spread on ten year irish government securities above bunds immediately after the end - march 2010 pc | ##ar announcement, that made it clear ( to any that still doubted it ) that extremely large banking losses would be incurred by the banks in the nama purchases, was only about 125 basis points. clearly, the cost of refinancing the amortisation payments at such a yield would have been much lower than it is today. the first annual amortisation payment was made in march 2011. ( i abstract here from the question of the interest holiday for the first two years ). meanwhile, it should be recalled that, when, despite the government guarantees that covered many but not all of them, deposit outflows and bond repayments exceeded anglo β s capacity, the central bank, consistent with the euro - area view that no senior bank creditors should suffer losses in the crisis, extended emergency liquidity assistance to anglo irish bank. to cut a long story short, much of this is still outstanding to ibrc, and much of it is secured by the promissory notes. funding such flows is not something that a central bank will normally do for any longer than is necessary. with the troika and the other irish authorities, the central bank has been actively studying ways of enhancing the security of the arrangements surrounding the provision of liquidity to ibrc and ensuring that avoidable deleveraging costs to the system as a whole are not incurred in the disposal of non - core assets. this is a large ambition, and the design of a full bis central bankers β speeches solution that would achieve the objectives and respect the constraints of all the parties has not yet been finalised. given the deepening of the crisis since april 2010 and in particular the loss of market access by the government and the need to have recourse to the eu - imf programme to ensure continued financing of the government β s budget, the sequence of annual cash payment by the government of β¬3. 06 billion envisaged for the coming years in the promissory notes has become a source of risk to financial stability. a way of funding this cash payment over a much longer period would clearly help reduce this risk. ahead of the scheduled march 2012 payment, the central bank has been working vigorously with the ecb and other parties on a mechanism for ensuring such a result in a manner that is at an acceptable cost to ireland and whose design is beyond criticism from the perspective of articles 123 and 124 of the treaty. while some technicalities still need to be resolved, it now seems likely that this effort will be | 1 |
the global financial cycle, capital flows, and policy responses remarks by luigi federico signorini senior deputy governor of the bank of italy g20 rbwc workshop towards a more resilient international financial architecture online event, 10 may 2021 the covid - 19 crisis gave rise to a synchronised sudden capital stop in march 2020, whose magnitude exceeded that observed during the global financial crisis. fortunately, this episode was short - lived and concentrated in the early stages of the pandemic. the pressure on emerging market capital flows eased after the unprecedented policy interventions carried out by both advanced economies ( aes ) and emerging market economies ( emes ). an important factor in the scale of the outflows seen at the outset of the pandemic was the shift that had occurred over the previous decade in the composition of capital flows, towards non - bank financial intermediaries ( nbfis ), and in particular, investment funds. this is the first of two main points i want to make. nbfis tend to be more volatile than other sources of finance, such as bank lending and foreign direct investment. this was apparent during the march 2020 β dash - for - cash β stage. investment funds accounted for around half of the portfolio outflows observed, even though they ( by some accounts ) only represent a third of the stock of global portfolio liabilities. why has nbf intermediation and cross - border activity grown so much? several factors have contributed, but let me mention just two that are especially relevant to global flows : β first, the basel reforms adopted after the global financial crisis led banks to deleverage, thereby reducing non - core assets and cross - border lending ; β second, low interest rates in developed markets encouraged investors to diversify their assets by investing in emerging markets, often through dedicated funds ( or through increased allocations to emerging markets by globally active funds ). the growth of market - based finance is, on balance, a welcome development, notably because it increases the diversification of funding sources. this is particularly important for those countries and systems, such as italy and much of continental europe, that are overly dependent on banks. while funds may increase the size and liquidity of markets in peacetime, they are also known to be a potential channel for shock amplification in the event of stress. because of redemption pressures coming from end - investors, fund managers may find themselves forced to sell assets, contributing to price - liquidity spirals. this | luigi federico signorini : risks from inflation and opportunities from fragmentation speech by mr luigi federico signorini, senior deputy governor of the bank of italy, at the villa mondragone international economic seminar, round table on " risks from inflation and opportunities from fragmentation ", monte porzio catone ( rome ), 7 june 2023. * * * after the second world war, multilateral institutions, such as the international monetary fund, the world bank and the world trade organization ( as it is now called ), have provided a framework in which a rule - based system of international cooperation has flourished, though initially only in our part of the world. a similar framework for cooperation in other key fields has been provided by the who and other institutions. starting about a generation after the war, and over another generation, the system expanded in stages. in the late 1970s or early 1980s, china began to experiment with a cautious, but rapidly accelerating, opening to a more market - oriented economy and to international trade ( while pursuing, in parallel, a normalisation of diplomatic relations with the rest of the world ). at the end of the 1980s, the soviet bloc disintegrated, and with it the socialist planning system that had ruled its economy ; many of the former soviet bloc countries became free democracies as well. soon after, india started to dismantle the so - called " licence raj " β a process that lasted for an extended period of time β and gradually embraced the idea of free markets as the driving force for development. much of east asia did the same, notwithstanding the great diversity of political regimes that existed then and still exists today. globalisation accelerated, spurred by increasing economic freedom, lower international barriers and the revolution in information and communication technologies. looking back, globalisation has been an enormous, though sometimes underestimated, force for improving prosperity worldwide. those of my generation cannot have forgotten the destitution and hunger that were widespread half a century ago in what was then called the third world, including much of asia outside japan ; the recurring appeals to the rich world's conscience for mitigating the suffering this produced, amid a rapidly growing population ; the political tensions and wars, sometimes arising from extreme economic disparities, and often stoked by superpower rivalries. sure, poverty and malnutrition are still there. but the share of people suffering from malnutrition globally has decreased from 34 to 13 per cent in the past | 0.5 |
janet l yellen : remarks on women β s history month remarks by ms janet l yellen, chair of the board of governors of the federal reserve system, at the women β s history month reception, us capitol, washington dc, 25 march 2014. * * * it β s an honor and a pleasure for me to be here with you to mark women β s history month, which itself has some history behind it. march 8, 1911 was the first international women β s day, and it was 1980 when president carter established national women β s history week. in 1987, congress acted to make that week a full month. women, of course, are also a part of history for the other 11 months of the year. and i would add that women were influencing the course of history long before 1980, or 1911. but i am glad that there is, each year, a time when we pause to think about the role of women, because history is more than simply what happened, and more than what women and men did to make it happen. history is what we remember about those deeds. it is the lessons we have taken from the past and the knowledge we draw on to live today and to shape the future. for me, one lesson from history is that it is no coincidence that america β s great success in the past century came as women steadily increased their participation in every aspect of society. starting with gaining the vote, just a few years before international women β s day, β the american century, β as it β s sometimes known, was also a century of progress for women. fundamental to our country β s values, to those ideals that have been and continue to be so influential around the world, is the principle of equality for all, including for women. one reason america β s example is influential elsewhere is because progress toward these ideals has been accompanied by great success in broadly raising living standards. and i think our economic success has been due in substantial part to the fuller participation and contribution of women to the economy. their increasing participation in the workforce, particularly after 1970, was a major factor in sustaining growing family incomes. making fuller use of the talents and efforts of women in the workplace has made us more productive and prosperous. if i were to apply this lesson, i would hope that our nation continues to reap the benefits of greater participation by women in the economy and that we do everything that we can to foster that participation. women have made great progress in many occupations and professions | much of it owed domestically with the balance held by multinational or national financial institutions, not commercial banks ; a rising level of net international reserves from rs85. 8 bn in 2007 to rs109. 6 bn in 2011 ; a fiscal deficit of 3. 2 per cent in 2011 ; gross fdi inflows of rs10 bn in 2011, not far below the record level of 2010 ; a record profitability posted by the largest bank in the country, a domestic one that has been in business since 1838 ; and a free floating currency that has adjusted flexibly without the benefit of any controls to appreciate during the crisis with the exchange rate index, meri 1, standing at 91. 6 in december 2011 from its base of 100 in calendar year 2007. such a tableau, invraisemblable as it seems, is not the fruit of the imagination of our hypothetical script - writer. the country depicted does exist. and the experience highlighted is the result of the patient and combined efforts of policy - makers, real sector operators and its people generally, as they strived to adapt and re - adapt to the continuously - changing external environment confronting them. the picture that is painted is that of mauritius : vibrant, resilient, and resolutely moving forward. and the bank of mauritius, that i have had the privilege of leading, has contributed to the rich palette that comprises the policy landscape, especially the financial and monetary aspects, adding our own touches and flourishes as we proceeded. in keeping with past practice, i next highlight the main developments of the past year before concluding with my perspective on the current year. links are provided at the end of the relevant paragraphs for those readers who may be interested in delving in greater detail into some of the issues discussed. economy the mauritian economy continued to display a creditable degree of resilience despite difficult external conditions. growth momentum was maintained in 2011 at 4. 1 per cent, not far below trend, and projected to be slightly below 4 per cent in 2012. the unemployment rate was fairly stable at 7. 9 per cent, a far cry from the rising joblessness in our main export markets. the fallout from the euro crisis will continue to affect our euro - centric economy. the call that we launched two years ago to diversify production and find alternative markets, which then fell on deaf ears, is increasingly finding a favourable echo among real - sector operators and decision - makers. ( more on this issue | 0 |
since mid - 2014 are working ; noting the increase in downside risks in recent weeks, the governing council will review and possibly reconsider the monetary policy stance in early march. in relation to the longer - term agenda for the euro area, the financial crisis also made clear that the original institutional design of the euro area suffered from a lack of risk - sharing and crisis management mechanisms. while there has been significant progress in reforming the institutional setup of the euro area, the recent five presidents β report highlighted that further reforms could help in improving the resilience of the monetary union. this reform agenda should be a high priority for european policymakers. another favourable recent development has been the twenty per cent depreciation of the euro against the dollar in the last eighteen months, which has been especially helpful for ireland through both trade and financial mechanisms. that said, the recent depreciations of many emerging market currencies is a countervailing force in terms of the overall trade - weighted exchange rate for the euro area. it is important to recognise that ireland β s recent economic performance has been broadly based, with domestic sectors now making a significant contribution to overall growth performance. while we do not have final data yet, the likelihood is that gdp grew by 6. 5 β 7. 0 per cent in 2015. looking ahead, the latest forecasts suggest that the economy will continue to grow rapidly this year, with gdp growth expected to moderate slightly to around 5 per cent. it is always necessary to point out that measured gdp is only a limited guide to economic performance, especially in relation to highly - globalised economies such as ireland. financial transactions within multinational firms or lumpy investments such as in new aircraft can have a sizeable effect on measured irish gdp. still, faster growth in consumption and employment confirm that the domestic economy is growing at a robust pace. this reflects the confluence of several positive factors, including the employment - rich nature of the recovery, a less constrained policy environment, the boost to purchasing power from lower energy prices, the of course, in addition to this electronic payments system, the central bank is responsible for the issuance of notes and coins through the banking system, which entails a considerable logistical and security operation. the ending of production of one and two cent coins will deliver cost savings ; the recent rounding campaign has proceeded quite smoothly. the central bank also operates the deposit guarantee system ( dgs ), which protects deposits up to β¬100, 000 per person per institution. for | phase. and fiscal incentives for the already over - dimensioned construction sector continued for far too long. while the overall headline figures for the government β s finances showed a comfortable position, and the debt ratio fell to 25 per cent of gdp, stable sources of revenue had been displaced by volatile ones, and large expenditure commitments were undertaken making the future evolution of the public finances over - dependent on a continuation of the housing boom. getting the public finances back on track after the collapse of the property boom would have been painful enough, but the added borrowing resulting from the bank failures ( and from the assumption by government of banking debts ) was the straw that broke the camel β s back, triggering a loss of access to international financial markets as awareness grew of the scale of the losses. quick action to negotiate a programme of financial assistance from the imf, and from official eu lenders, stabilised the situation and eventually enabled the government to finance much of the additional borrowing on favourable terms. the very fact that the most significant banking failures outside of ireland in this crisis occurred in non - euro area countries ( iceland, latvia, the uk, the us ) does help to emphasise that the irish crisis was not a creation of the euro area. true, there were major banking failures in euro area countries too, spain, netherlands, belgium, germany, france and so on. banking excesses were essentially a global phenomenon in the first decade of the 2000s. yes, irish banks probably found it that bit easier to access foreign funds when no account needed to be taken of exchange rate risk. but iceland β s banks also sourced international funds without much difficulty. in the past, exchange rate regimes did not come complete with specific external supervision of domestic policies. to be sure, the international monetary fund ( imf ) has conducted surveillance of its members β fiscal policies for decades, regardless of their exchange rate regime. ireland β s peg to sterling was of course not accompanied by banking supervision conducted by the bank of england. nor did the european monetary system have a banking supervision arm. and that was the decision also when the euro area was established : creation of something like what has now been established as the single supervisory mechanism ( ssm ) would have been seen as a step too far by anti - federalists. still, in its enthusiasm for forging an understanding of the euro area as the most relevant policy unit for its actions, the ecb may have gone too far in the other direction of failing to appreciate the dangers posed by | 0.5 |
frank elderson : all the way to zero - guiding banks towards a carbon - neutral europe keynote speech by mr frank elderson, vice - chair of the supervisory board and member of the executive board of the european central bank, at the conference on β the role of banks in greening our economies β organized by the european bank for reconstruction and development and hrvatska narodna banka, frankfurt am main, 29 april 2021. * * * it is a great honour for me to be with you today to discuss the role of banks in greening the economy. and i am very happy to delve into the topic of climate change at an event co - organised by the european bank for reconstruction and development ( ebrd ) β an institution whose own work remarkably exemplifies what international cooperation can achieve in supporting the greening of the economy. your commitment to meeting the goals set under the paris agreement is outstanding. it offers great inspiration to all of us in european institutions who are just as adamant about doing the same. as many of you know, climate change considerations feature prominently in the ecb β s ongoing monetary policy strategy review. but today i will focus on how they will be taken into account by ecb banking supervision. the challenge of climate change is daunting. this is certainly true for the consequences if climate change continues unabated, such as increased natural disasters and the loss of habitats and biodiversity. and it is also true for the transformation necessary to avoid these dire consequences. the oecd1 estimates that global investments of usd 6. 9 trillion every year are required until 2030. and that is just to keep us on track to limit global warming to 2 degrees celsius above pre - industrial levels. investment will need to be considerably higher than this usd 6. 9 trillion figure if we are to live up to our commitment under the paris agreement of limiting the increase in global temperatures to 1. 5 degrees. to put this number into perspective : we are talking somewhere around 8 % percent of global gdp each year. europe β s financial system is largely bank - based, so banks are playing a pivotal role in greening the economy. but what is the supervisor β s role in this process? the ecb aims to ensure the safety and soundness of the banks we supervise. climate change creates material risks for banks, so it is our job to ensure that the banks under our supervision address these risks adequately and proactively. regarding the risks emana | addiction to alcohol, they are treated as taking rational decisions. we know one reason why people below poverty line never move up the ladder is that often they spend large portion of their meagre incomes on wasteful habits of consuming alcohol / tobacco or spending on social events although they know such habits would only aggravate their current economic problems. behavioural economics explains why such addictions happen. it is thus possible that people underestimate the effect of current consumption on future consumption and may under appreciate the formation of a habit. 16. behavioral economics also throws useful insights for policy makers. researchers at the federal reserve bank of boston are engaged in studying the implications of behavioral economics for economic policy. papers presented at the 2007 conference on behavioral economics at the boston fed shed light on the role of emotions and the idea of fairness on economic decisions. evidence on how emotions like anger and regret affect the price setting decision of firms and the purchasing decisions of firms. the idea of fairness also has implications for labour market outcomes. evidence also suggested that it was difficult for us consumers to formulate and executive saving plans. this obviously has immense implications for policy makers and policy making. many commentators were of the opinion that complex sub - prime assets were sold to unsophisticated borrowers who did not understand the contracts fully. findings presented at the conference also suggested that less than fully rational investors could affect housing prices. if prices are always expected to continue their past trend among the irrational investors then house price bubbles were more likely to form and macroeconomic stabilization could be more difficult. this in fact actually happened in the us. insights were given on how behavioral economics could help central banks communicate economic policies. another important aspect from the point of view of central banks is that expectations, not rational but adaptive, play an important role in influencing the actual inflation path. for instance, if workers believe that inflation will be higher in the future period then they may demand higher wages which could in turn feed into the headline inflation through wage push effect. this has been evident in india in recent years as not only inflation expectations have been high in double digits, even the extent of increases in wages in both rural and urban areas has been higher than the actual inflation levels. generally, in a weak growth environment or a condition of moderating demand, wage push spiral may not be sustained for long. antiinflationary monetary policy, that remains committed to containment of inflation till the impact of moderating demand on inflation and wage demand becomes visible, could | 0 |
legislative reforms ; ( b ) the requirement that institutions have resolution plans in place ; ( c ) assessment of the effective resolution ability of the authorities of the respective crisis management groups ; and ( d ) the need for institutions to have the loss - absorbing capacity or funds to ensure that, in a situation of resolution, it can be carried out β from within β, i. e. without need for capital injections by the relevant authorities and without destabilising the financial system as a whole. allow me to take a moment to talk about loss - absorbing capacity in resolution, or total lossabsorbing capacity ( tlac ). on 10 november the fsb published a proposal on the tlac requirement to be met by systemically important banks, the final design of which is scheduled for the end of 2015. the consultative process of the tlac proposal will be conducted in parallel with an impact study which will include ( i ) an analysis of the tlac needs for each institution which may have to be resolved ; ( ii ) a survey to assess the depth of the market in each jurisdiction bis central bankers β speeches involved ; ( iii ) an analysis of the historical losses incurred by global systemic banks at the height of the crisis ; and ( iv ) an assessment of the economic impact of the proposal, both at institution level and as to how it will affect the supply of credit. the difference from the basel requirements lies in the instruments eligible for meeting the new requirement. thus, in addition to all the equity instruments envisaged under basel, the proposal permits, and in fact requires, the inclusion of debt instruments, generally subordinated debt instruments. experience shows that capital may disappear in a crisis, and quickly so. the authorities must, therefore, have debt and equity instruments which ( through debt reduction and / or conversion into equity instruments ) allow them to resolve and recapitalise institutions from within, without need for bail - out by the public authorities. will this be the end of the reforms? i think not, at least as far as other financial sectors are concerned. the considerably higher prudential requirements on banks naturally cause some credit intermediation to shift to other financial sectors, in a phenomenon commonly known as β shadow banking β. the fsb has set in train two courses of action to prevent an excessive concentration of banking risk off the balance sheets of banks : first, it monitors their size, activities and risk characteristics ; and second, it is working on the introduction | negative externalities on the financial system. this prospect creates an additional argument for capital by β customer facing liabilities, β i mean liabilities to households, retail investors, and businesses. in financial intermediaries, these liabilities are not only greater than in similarly sized balance sheets of non - financial firms. they also disproportionately arise from financial transactions β such as accepting deposits or investments β rather than for performance of services or delivery of goods. bis central bankers β speeches requirements β or, more precisely, an argument for progressively higher capital requirements that would reduce the probability of the failure of the systemically important intermediary. note that this last discussion has moved us toward consideration of macroprudential reasons for capital requirements β specifically, for higher requirements aimed at reducing the probability of insolvency below that which would be warranted if the sole regulatory aim were to protect customers, depositors, or even a government deposit insurance fund. as has been much discussed in recent years, pre - crisis financial regulatory regimes had substantially undervalued systemwide considerations. indeed, in the first instance the crisis spread not only because of the direct effects engendered by the insolvency of individual firms, but also because of the dramatic contraction of funding available throughout markets for widely held assets such as mortgage - backed securities. the pre - crisis explosion of short - term wholesale funding, both inside and outside traditional banks, left the entire financial system vulnerable to the disappearance of this market funding as real estate prices declined sharply and uncertainty spread about the value of the assets being funded. concerns about solvency accelerated the run of wholesale funding from bear stearns and lehman brothers, raising the prospect of classic fire sales of their assets, with consequent depressing effects on the balance sheets of all firms holding these assets. experience during the financial crisis vindicated the view of those who had argued that liquidity, as well as capital, in large intermediaries needed to be regulated. 2 it also buttressed the view that capital and liquidity regulation are closely related and need to be developed in tandem, if not as part of the same regulatory framework. much academic research prompted by the crisis has focused on the interrelationship between funding and solvency problems. 3 here, then, is another way in which the characteristics of the liability side of an intermediary β s balance sheet should determine the form and stringency of capital regulation. shorter duration and, if you will, increased | 0 |
net exports, consumer spending on services remained robust, and residential activity and business investment in equipment and intangibles strengthened. payroll employment has increased at a strong pace through april this year, partly reflecting increased immigrant labor supply. although we had seen signs of the labor market coming into better balance, recent employment reports show a continued tight labor market, with the unemployment rate remaining below 4 percent, and the number of job openings relative to unemployed workers is still above its pre - pandemic level. last year, the average 1 / 3 bis - central bankers'speeches pace of job gains slowed, and the labor force participation rate rose. in recent months, however, job growth has rebounded, and labor force participation has flattened out around its peak from last year, suggesting there has not been further improvement in labor supply along this margin, as labor force participation among those aged 55 and older has been persistently low. at its current setting, our monetary policy stance appears to be restrictive, and i will continue to monitor the incoming data to assess whether monetary policy is sufficiently restrictive to bring inflation down to our target. as i've noted recently, my baseline outlook continues to be that inflation will decline further with the policy rate held steady, but i still see a number of upside inflation risks that affect my outlook. first, much of the progress on inflation last year was due to supply - side improvements, including easing of supply chain constraints ; increases in the number of available workers, due in part to immigration ; and lower energy prices. it is unclear whether further supply - side improvements will continue to lower inflation. geopolitical developments could also pose upside risks to inflation, including the risk that spillovers from regional conflicts could disrupt global supply chains, putting additional upward pressure on food, energy, and commodity prices. there is also the risk that the loosening in financial conditions since late last year and additional fiscal stimulus could add momentum to demand, stalling any further progress or even causing inflation to reaccelerate. finally, there is a risk that strong consumer demand for services, increased immigration, and continued labor market tightness could lead to persistently high core services inflation. given the current low inventory of affordable housing, the inflow of new immigrants to some geographic areas could result in upward pressure on rents, as additional housing supply may take time to materialize. wage growth has remained at an elevated rate of between 4 and 5 percent, still higher than the pace consistent with our 2 percent inflation goal given | michelle w bowman : brief remarks on the economy and monetary policy brief remarks by ms michelle w bowman, member of the board of governors of the federal reserve system, at the massachusetts bankers association annual convention, key biscayne, florida, 3 may 2024. * * * i would like to thank the massachusetts bankers association for the invitation to meet with you today. 1 one of the most enjoyable and informative aspects of my role is the time i spend with bankers, listening to issues that are important to you and that affect you and your customers. banks play a key role in supporting economic growth and lending to serve their customers and communities, which is an indispensable role in the u. s. economy. conversations such as ours today help inform my work at the federal reserve board - for my understanding of both the broader u. s. economy and the banking regulatory and supervisory environment. before our conversation, i would like to briefly touch on the economy and monetary policy. over the past two years, the federal open market committee ( fomc ) has significantly tightened the stance of monetary policy to address high inflation. at our meeting earlier this week, the fomc voted to continue to hold the federal funds rate target range at 5 - 1 / 4 to 5 - 1 / 2 percent and to continue to reduce the federal reserve's securities holdings. after seeing considerable progress on slowing inflation last year, we have not seen further progress over the first quarter of this year. the 12 - month measures of total and core personal consumption expenditures ( pce ) inflation have moved roughly sideways since december and remained elevated at 2. 7 percent and 2. 8 percent, respectively, in march. with annualized 3 - month core pce inflation jumping to 4. 4 percent in march, well above average inflation in the second half of last year, i expect inflation to remain elevated for some time. the recent pickup seems to be evident across many goods and services categories, suggesting that inflation was temporarily lower in the latter half of last year. prices continue to be much higher than before the pandemic, which is weighing on consumer sentiment. inflation has hit lower - income households hardest since food, energy, and housing services price increases far outpaced overall inflation throughout this episode. economic activity increased at a strong pace last year and has maintained momentum over the first three months of this year. although first - quarter growth in gross domestic product was temporarily dampened by volatile categories, such as inventories and | 1 |
payment solutions, person - toperson mobile payment solutions and payment initiation services by the industry in 2017 ; 2. how the eurosystem β in its role as operator β could advance the retail payments market by offering instant payment settlement services in central bank money. 1. fostering european retail payments integration β deliverables the eurosystem expects from payment service providers in 2017 for the eurosystem, a major challenge of digitalisation in the payments industry is ensuring that the introduction of innovative payment solutions does not ( re ) introduce fragmentation into the european market. it is understandable that, initially, most innovative retail payment solutions delivered by the industry tend to focus on national markets. however, i want to be very clear here and emphasise that innovative solutions that do not have the potential to extend their 1 / 3 bis central bankers'speeches reach at pan - european level are not in line with the expectations of the eurosystem and the goals of the single market. the three most important areas for improving the user experience in retail payments are instant payments, ( person - to - person ) mobile payments and payment initiation services. in conjunction with the european legislator and the erpb, the eurosystem, in its role as catalyst, fosters paneuropean developments in all three areas. ( 1 ) instant payments in line with the expectations of the erpb, the eurosystem encourages payment service providers to make instant payment solutions in euro available to end users at a paneuropean level from november 2017. ( 2 ) ( person - to - person ) mobile payments aligned with the timeline for the implementation of the instant payment scheme, the eurosystem expects the launch of a standardised look - up service that allows ( person - to - person ) mobile payments using the mobile phone number of the payee as a proxy for the iban. this service should be launched by the end of 2017 and should not be restricted to national ibans. ( 3 ) payment initiation services in line with the erpb, the eurosystem expects the market to work on the definition of a common set of technical, operational and business requirements for the development of an integrated market for payment initiation services. these requirements will be based on the provisions of the payment services directive and the related regulatory technical standards ( rts ). they should become available in 2017 so as to leave sufficient time for the relevant market actors to implement them by the time the rts apply ( i. e. towards the | yves mersch : 2017 - a decisive year for innovative retail payment services keynote speech by mr yves mersch, member of the executive board of the european central bank, at the french payments committee conference on " technological innovations in payments and beyond ", bank of france, paris, 6 january 2017. * * * introduction between christmas and new year, many tv programmes and magazines looked back at events, cultural and political, that shaped 2016. focusing on the field of payments innovation, i will also begin with a very short review of the events of last year. but the main part of my speech will be dedicated to looking ahead. in particular, i will discuss why 2017 is going to be a decisive year for the success of innovative retail payments services in europe. in 2016 the foundations were laid for pan - european innovative payment solutions. in the scheme layer, the european payments council ( epc ) finalised the framework for pan - european instant payment solutions. the instant payment scheme is the basis for the europe - wide implementation of instant credit transfers, as well as the launch pad for other innovative payment solutions, such as person - to - person mobile payments. fostered by the euro retail payments board ( erpb ), work is under way not only on instant payments and mobile payments, but also payment initiation services and e - invoicing, among other things. in the clearing layer, ( some ) automated clearing houses ( achs ) agreed and committed to a paneuropean approach for clearing instant payments in euro. this approach consists of ( i ) harmonised risk management, ( ii ) a uniform settlement procedure in target2 and ( iii ) fair and open access policies to facilitate interoperability. in the settlement layer, the eurosystem launched an investigation into providing a pan - european instant payment settlement service in central bank money. with these foundations in place, 2017 will see decisive action in all three layers. first, payment service providers will have to deliver instant payment solutions to the end users. second, most achs will be ready to launch their instant payment clearing systems. and last but not least, the eurosystem will decide on whether or not to provide a pan - european instant payment settlement service in central bank money to payment service providers. i would now like to look more closely at two specific areas of action : 1. how the eurosystem β in its role as catalyst β will continue to drive european retail payment integration by fostering the provision of pan - european instant | 1 |
##p, diwa c guinigundo, for making available those annual reports and other literature on the liquidation of the cbp. as mentioned above, the net foreign assets of cbp became negative from 1981 onwards due to the depletion of reserves and the increase in foreign borrowings. they were negative by 4 billion pesos in 1981. but, the negative position progressively increased thereafter rising to a peak of 141 billion pesos in 1990 and recording at an annual average level of 101 billion pesos during 1982 - 90. the result was the payment of interest surpassing significantly the interest receipts. the total such losses amounted to 91 billion pesos for the period 1983 - 90. the net outcome of all these adverse developments was the decline in the net - worth of cbp to a dismal level of 2. 6 billion by june, 1993 as against a total outside liability level of 605 billion pesos and a domestic asset creation of 440 billion pesos. the capital funds as a percent of domestic assets fell to an insignificant level of just 0. 5 % indicating that the entirety of the currency issue ( monetary liability ) had been backed by worthless domestic assets. by end 1993, the foreign exchange liabilities of cbp amounted to us $ 11. 4 billion or 35 % of the philippine β s gdp 7. thus, cbp became insolvent and had to be liquidated in july, 1993. a new central bank by the name of bangko sentral ng pilipinas or bsp was set up under the patronage of the world bank and the export - import bank of japan 8. arrangements were made to repay the liabilities of the old central bank in 25 years 9. the issue at hand is how the oncoming signs of insolvency of cbp were not noticed by its auditors. the growing distress of cbp due to the wrong policy of defending the exchange rate at the expense of losing foreign reserves, accumulation of losses in cbp, rising foreign borrowings through unsustainable swaps and the depletion of net - worth of cbp were obvious to the auditors as early as 1985. it was simply the sad story of one mistake leading to another mistake and that mistake leading to a further mistake and so on. once a policy making body gets entangled in an β enmeshed policy paradox β of this nature, it is impossible to escape the paradox without outside support. had the first mistake, that is, defending the exchange | wages. these include bar attendants & baristas, waiters, child carers and aged & disabled carers. it is also difficult to get a good read on the prevalence of β gig economy β jobs. the share of people working as independent contractors has declined a little over the past decade, the share of people working casual jobs is also little changed. the labour account data reports information on workers with more than one job. it suggests that secondary jobs β i. e. filled by people who also have a https : / / www. rba. gov. au / speeches / 2018 / sp - dg - 2018 - 10 - 17. html 4 / 13 10 / 17 / 2018 the state of the labour market | speeches | rba primary job β account for around 6 per cent of total jobs, which hasn't changed much over the past five years. unemployment the aggregate unemployment rate has fallen over 1 percentage point since its recent peak in october 2014 and is now at its lowest level in six years. it has fallen from its peak across all states and territories. recently, we have seen strong declines in the unemployment rates of victoria and south australia ( graph 3 ). in trend terms, my home state of south australia has the third lowest unemployment rate for the first time since 2012 and its unemployment rate has fallen over 2 percentage points since its most recent peak. graph 3 the recent decline in the unemployment rate has also been broad based across all age groups in the economy. the unemployment rate of younger people ( 15 β 24 year olds ) has recorded the sharpest fall over the past year ( graph 4 ). the youth unemployment rate tends to be more sensitive to economic conditions than the unemployment rate of other age groups. despite this, the share of younger part - time workers who want to work more hours than they currently do remains high. furthermore, the share of 20 β 24 year olds that are neither engaged in employment nor full - time education or training remains higher than it was a decade ago. https : / / www. rba. gov. au / speeches / 2018 / sp - dg - 2018 - 10 - 17. html 5 / 13 10 / 17 / 2018 the state of the labour market | speeches | rba graph 4 looking at the duration of unemployment, the median duration of unemployment has declined over the past year to be around 15 weeks. there has been a noteworthy decline recently in those who have been unemployed for a year or less. however, the unemployment | 0 |
robert holzmann governor oesterreichische nationalbank introductory remarks 48th oenb economics conference may 20, 2021 gender, money and finance 48th oenb economics conference of the oesterreichische nationalbank in cooperation with suerf β the european money and finance forum and the joint vienna institute ( jvi ). good afternoon everyone! 1 it is my great pleasure to welcome you to the first session of this year β s suerf - jvi - oenb joint conference on gender, money and finance. i am particularly thankful to the two highly distinguished panelists who have agreed to join me today for this first session on the topic of gender and economic policy - making. i could hardly imagine any more suitable, outstanding candidates and role models for this panel. hence, i am both very happy and very honored to be able to welcome christine lagarde, president of the european central bank, and kristalina georgieva, managing director of the international monetary fund as panelists to this first session. our session β s title, gender and economic policy - making, seems to be an appropriate starting point for contextualizing the topic we will discuss on this panel. in fact, the title itself may suggest a unidirectional focus of this session on the range of effects gender can have on economic policymaking, including both policy deliberations and policy decisions. yet, the impact of economic policy - making on gender diversity and gender parity across the entire universe of socioeconomic and political dimensions certainly constitutes a second, equally valid perspective on our topic today. in her recent book, gender equality and public policy, prof paola profeta ( who will take part as a panelist in session 2 of this conference ), fittingly describes these two perspectives as the political economy angle and the public economics view of the link between gender and economic policy - making respectively. i would like to thank kilian rieder for his contributions to this speech. for citation, only the spoken version of this speech is relevant ( please check against delivery ). verlegerin und herausgeberin : oesterreichische nationalbank referat pressestelle 1090 wien, otto - wagner - platz 3 postfach 61, 1010 wien starting with the political economy aspect of our session, let me give you one concrete example for why gender matters for economic policy - making, and why increased gender diversity can have substantial positive economic effects by boosting the quality | difficult to predict the precise effects of increasing gender parity on economic policy outcomes, it is important to emphasize what they share in common : none of them constitutes a cogent argument for advocating against more gender diversity. when you think about it, we constantly take policy decisions based on strong theoretical underpinnings and analogical empirical reasoning rather than precise causal estimates of the policy at hand see gerling et al. ( 2005 ) for a summary of condorcet β s jury theorem and an extensive survey on group decision - making. see rieder ( 2021 ) for a discussion of this point in the context of monetary policy decision - making. 4 see profeta ( 2020 ), in particular chapter 5, for an excellent summary of relevant research on this topic. 5 experimental research on these topics abounds. profeta ( 2020 ), in particular chapter 5, summarizes the main contributions to the field. some examples are as follows. for altruism, c. f. andreoni and vesterlund ( 2001 ) ; for risk aversion c. f. eckel and grossman ( 2008 ) ; and for negotiation strategies, c. f. small et al. ( 2007 ). 6 see profeta ( 2020 ), chapter 5 for a detailed discussion of the empirical challenges involved in identifying the causal effect of gender on behaviour and policies. and, to be sure, monetary policy is no exception here. i think the time is more than ripe to apply the same standards when it comes to pushing for more gender parity. this brings me to the public economics view on the link between gender and economic policymaking. the reason why economic policy - making needs to play an active role in enhancing gender parity - and here i refer to gender parity in more general terms, beyond the mere composition of decision - making bodies - is certainly not limited to the β benefit of the doubt β type argument mentioned above. research has shown that gender inequality and gender gaps around the world often depend on nurture, rather than only nature. 7 persistent stereotypes are known to lock in inefficient equilibria due to path dependence and the intergenerational transmission of certain cultural values. 8 moreover, status quo bias can prevent even very highly qualified women 9 from ascending the ranks, and this rings particularly true for economic policy decision - making bodies. 10 hence, if we value an increase in gender diversity, and, as i have argued, there are good reasons | 1 |
questions. new housing loans ( excluding renegotiations ) remained at a low of eur 8. 7 billion in november, even though the conditions for a gradual recovery now seem to be in place : households'wait - and - see attitude should gradually dissipate as house prices begin to fall. mortgage rates should stabilise, in line with ecb and livret a passbook rates, with long - term rates finally falling, and with a return to a quarterly usury rate. the hcsf standards are not the explanation here, since banks have the capacity to lend more by making greater use of flexibilities, ii in particular with the three new adjustments decided in december. iii to clear up the misunderstanding that still seems to exist about banks'willingness to lend, i would like to reiterate my support, like the minister, for a market - wide agreement to re - examine creditworthy loan applications : this mechanism can be put in place by the end of january, and it must be simple, accessible and efficient. i would like to add a wish with regard to household savings : that sufficiently attractive returns on life insurance be accompanied by the use - in a proportionate manner - of available reserves to promote a smooth transition, in particular for the benefit of the euro fund. 2. 2 the reawakening of europe iv let's face it : neither europe nor the franco - german couple are in the best of shape, just a few months before the european elections. in each country, the temptation is to focus on the β very real β domestic problems, but i firmly believe that this would be a mistake : we face more shared challenges than ever before, and the solutions are just as shared. the pioneering success of the european model in the 20th century consisted in reconciling economic growth and social justice. our promise for the 21st century should be to combine growth and sustainability, prosperity and ecology ; to achieve this promise, we can and must harness the potential of three powerful levers. the single market is often seen only as a legacy from the past, from jacques delors, that great european who first set down roots at the banque de france. to quote the french president, his memory invites us to " reconcile the french with the economy, france with europe, and europe with its future ". precisely, page 5 of 5 the potential of the single market is far from having been fully tapped. according to the imf, deeper integration would | attention. i wish you a successful and enjoyable conference. bis central bankers β speeches | 0 |
##ntial bis central bankers β speeches supervision. it will be particularly important to strike the right balance between ensuring fair competition by treating the same risks equally and, at the same time, allowing for varying market and banking structures as far as these cater for the heterogeneous needs of the real economy. however, this supervisory approach must not exist only on paper, but must also be infused with life. i see ese as playing an important role here. ese can support us supervisors in conveying the new supervisory standards and thus make a crucial contribution to consistent and high - quality supervisory practice in the ssm. as supervisors in a system currently encompassing 17, and soon 18 countries, however, we need not only technical expertise but also communication and teamworking skills. we need not only specialists but also first - class networkers. this corresponds to ese β s approach, which from the beginning was aimed at creating a joint european supervisory culture. and this is why there has always traditionally been a social event at each ese seminar. this conference is no exception, and i am already looking forward to an evening of exciting and stimulating conversation. 5. conclusion ladies and gentlemen, ese can look back upon a successful history, and i am convinced that the ssm will make good use of ese β s expert knowledge and experience. i wish the organisers of the european supervisors education initiative and all their helping hands every success for the coming challenges. there are two thoughts i want to leave you with before i invite you to help yourselves at the buffet and look more closely at the works of art under the motto of β frankfurt, goethe, money β. the first thought is : the banking union can succeed only if every single one of us, supervisors and supervised alike, is ready to take action and welcome the new. the second thought is β and this is addressed not only to the ese seminar participants, but to all parties involved in the banking union β we must be willing to keep learning, to open ourselves to new ideas and experiences, and to bring along the β doubting thomases β, the hesitant ones, for the ride. the bundesbank will make every effort to support this process β with words, and with deeds. thank you for your attention. bis central bankers β speeches | can be for the better β and by future - proofing our banks and perhaps also our personal choices β we can create not a grave but a braver new world, which is more inclusive, more responsible, more sustainable, and more prosperous. technology will provide the means, but a more liveable, sustainable planet will provide the purpose. thank you. 8 / 8 bis central bankers'speeches | 0 |
sector projects including highway construction and housing, and perhaps to a lesser extent some private sector projects. local sales of cement β a key indicator of construction activity β were up by 12Β½ per cent ( on a year - on - year basis ) in the third quarter of 2013. the performance of the distribution sector reflected increased retail sales in several industries, including dry goods, supermarkets and groceries and motor vehicles. regarding the latter, sales of new motor vehicles have been running at double digit rates into the third quarter of 2013. the pda motor vehicle series was ended within a record 3 months. in the face of still weak private demand, the government budget has served as the main stimulus to economic activity over the past few years. given the country β s strong foreign exchange reserves and low public debt to gdp ratio, i believe that the government has enough fiscal space to run temporary budget deficits. in fact, since 2010 the central government has realized moderate fiscal deficits not exceeding 3 per cent of gdp. nevertheless, it is important for the government to respect its own plan for moving to fiscal balance over the medium term, and to accelerate these plans, once conditions permit. ladies and gentlemen, our public debt remains within manageable levels. after a decade long absence, trinidad and tobago successfully returned last week to the international capital markets with international investors demonstrating overwhelming confidence in the country β s medium term prospects. we were able to issue a us $ 550 million eurobond that was oversubscribed by a factor of almost ten times. indeed, i see this tremendous vote of confidence by foreign investors as a much needed wake - up call to the local private sector. the message is clear. the local business community must get back into the game ; stop watching and commenting from the sidelines. some commentators have questioned the rationale behind this bond issue. one concern relates to the government β s decision to access the international capital markets rather than use the ample liquidity available in the domestic financial system. another concern is that this bond issue could jeopardize our public debt situation. let me put to rest these concerns. first, trinidad and tobago enjoys the second strongest credit rating in latin america and the caribbean, after chile. we need to leverage our investment grade credit rating to differentiate ourselves from other countries in the region, who are still struggling from the global crisis, and to highlight the quality of our economic management amidst the global uncertainty. second, it is true that government could have easily raised this volume of financing | one of negative sentiment. when i assumed office just over 15 months ago, i faced the following economic conditions : β’ sharp contraction in economic growth β’ soaring food price inflation β’ declining external reserve position β’ weak business confidence today : β’ economic growth is slow but steady β’ food price inflation is down to within single digits β’ external reserves have stabilized β’ business confidence is returning, albeit slowly therefore is not all doom and gloom. at the same time, we are not complacent. we recognize the inflection point faced by the global economy. we recognize the considerable economic challenges facing trinidad and tobago, especially diversifying away from the heavy reliance on the energy sector. the central bank is absolutely committed to maintaining macroeconomic stability so the business sector can continue to make longer - term decisions in an environment of increasing bis central bankers β speeches confidence. by explaining the cross - currents at work in our economy, our projections for what β s ahead, and our monetary policy response, we are doing our part to help strengthen business confidence. so now it is your turn to be the positive change you want to see in trinidad and tobago. i thank you. bis central bankers β speeches | 1 |
. earlier on, we used to set the rate by averaging the mean of the bid / offer rates polled from a few select banks as at 12 noon on every working day. a few months ago we changed the method. now we poll a select list of contributing banks at a randomly chosen five minute window between 11. 45 am and 12. 15 pm and put out the reference rate at 12. 30 pm. the contributing banks are selected on the basis of their market - share in the domestic foreign exchange market and representative character. the reserve bank periodically reviews the procedure for selecting the banks and the methodology of polling so as to ensure that the reference rate remains a true reflection of market activity. ( v ) data interpretation : need to look behind the data 43. information technology has improved data availability. paradoxically, this has also increased the likelihood of misinterpretation of data. in his recent book, thinking, fast and slow, daniel kahneman explains where we can and where we cannot trust our intuition and how we can tap into the benefits of slow thinking. orphanides, a ( 2001 ) : β monetary policy rules based on real - time data β, american economic review, 91, 964 β 985. bis central bankers β speeches 44. consider an example : in a recent financial daily, an analysis based on last quarter operating results of indian companies claims that interest costs were 11. 1 per cent of total revenues, and infers on that basis that a cut in rbi β s rate can make a significant difference to the prospects of profits of firms. 4 arithmetically, this is correct and will make the reader believe that high interest costs have adversely impacted profitability. the reader would also intuitively attribute the deceleration in real gdp growth to 6. 5 per cent in 2011 / 12 to the increase in the policy rate of the reserve bank by 375 bps during march 2010 β october 2011. but a closer look at the same sample suggests that the data used for this analysis includes financial and insurance firms which typically have interest to sales ratio of as high as 65 per cent. in contrast, non - financial firms, which account for more than 85 per cent of business, have interest cost of only 2. 7 per cent of sales. therefore, it is necessary to look behind the data and explore what lies underneath. 3f 45. consider another important variable β the real interest rate. research in the reserve bank shows that real interest rate and investment activity are inversely related | n., and e. nelson, ( 2001 ), β optimal horizons for inflation targeting β, journal of economic dynamics & control, 25, 891 - 910. see footnote 2 for details. β monetary policy in sweden β replaces the clarification of monetary policy published in 1999, see heikensten, l. ( 1999 ), β the riksbank β s inflation target β clarifications and evaluation β, sveriges riksbank quarterly review, 1999 : 1, 5 - 17. in this context, let me also mention something about risks. more specifically, the risks connected to rising asset prices and credit expansions. this is a question that has been much discussed in recent years, both between central banks and within the academic world, as house prices have risen rapidly in many countries including sweden. this debate could in itself be the topic of a speech so let me just briefly say that the position of the riksbank is that we do not consider it to be reasonable to entirely ignore these risks, even though it might be difficult to take these risks into account in the usual forecasting process. we have therefore acted to reduce these risks and to contribute to a calmer adjustment in house prices. the inflation forecast and future interest rate developments one of the recent changes in our strategy was the assumption regarding the development of the policy rate, which is used as a base for our forecasts. like most central banks with an inflation target, the riksbank previously made forecasts under the assumption that the policy rate would not change during the forecast period. since october last year we instead use an assumption that has gained in popularity among central banks, namely that the policy rate will develop in line with market expectations, as reflected in implied forward rates. the earlier assumption had the advantage that it illustrated in a simple manner when there was reason to change the policy rate. if inflation two years ahead was expected to be lower than two per cent, this was a signal that the interest rate needed to be cut, and if it was expected to be higher, the rate needed to be raised. of course, this rule could not capture all of the nuances in the monetary policy considerations, but it provided a rough explanation of the monetary policy decisions. however, there were also disadvantages. in normal cases it is not, for instance, particularly realistic that the policy rate would remain unchanged a couple of years ahead. the fact that the forecasts were based on this assumption made it | 0 |
customer, or kyc, as we have got used to saying. this platform will make it possible to reduce the number of banks β refusals and companies β expenses for the communication with banks. clients β risks will be assessed not by banks, but by the platform developed by the bank of russia that will classify companies into three risk groups according to the traffic light principle. banks will be able to focus only on the group having these risk signs and on the analysis of the operations of clients involving potentially higher risks. we are going to launch this platform into regular operation at the end of 2021 and then scale it up so as to embrace all credit institutions by the end of 2022 q1. of course, we believe that it will make life easier for smes. we have also discussed how to improve this platform together with you. the second issue is the faster payments system ( fps ). initially, we launched it to enable p2p transfers. we can see that it is highly requested. however, right from the beginning, we have built this system considering the needs of retailers and small businesses and comprehending that this system may help smes cut costs significantly. the fps addresses the issue of high acquiring fees and considerably reduces costs for trade and service companies. in contrast to direct caps on fee amounts, it does not disturb the balance in the market. the fps fees are 2 β 3 times lower than acquiring fees and may not exceed 0. 7 %. another advantage of the fps is that it helps reduce the cash gap since funds transferred via the fps are credited into companies β accounts instantaneously. this speeds up the turnover of enterprises β funds, which is also essential for business. the third aspect is that the fps is easily deployed. this system requires no additional equipment, and all necessary software may be promptly installed on the already existing 3 / 5 bis central bankers'speeches terminals and cash desks. installation and debugging take two or three days on average. at the beginning of next year, we will also launch the mobile application of the fps. it will enable any retailers to integrate with the system faster, without the need to create their own apps. moreover, other applications will function as well. we are going to carry out regular training workshops on the fps, with the first one scheduled for 15 december. so, you are welcome to join it. in future, we will hold such events together with opora russia and other business associations. | the eu front, the ec recently adopted β temporary framework β allows for the use of state aid through liquidity recapitalization ( state guarantees on ela, guarantees on ggbbs ), precautionary recapitalization or impaired asset relief measures ( creation of public amcs ) without any burden sharing requirements ( bail in ). the objective of such aid would be solely to address covid - 19 related losses. the β greek asset protection scheme ( hercules ) β was the first step taken by the greek government in november 2019 to address the npl legacy issue, based on the italian gacs model. the european commission ( ec ) approved a state aid guarantee scheme for the securitization of up to β¬32bn gross npls. npls and restructured loans would be sold to spvs through securitizations. subject to a bb - rating ( compared to a bbb for gacs ), the government would guarantee then the senior tranche for a total amount of β¬12bn. the issued senior tranches would have a zero risk weighting. complementary to hercules aps a recent proposal by the bank of greece with the short cut national bad bank. in the recent past, there were numerous cases whereby the eu provided state aid in the form of equity and guarantees on notes issued by the amcs : mark ( 2016 hungary ), bamc ( 2014 slovenia ), sareb ( 2012 spain ) and nama ( 2009 ireland ). lessons learned from these cases can help us design and successfully run a public amc. among the key features of the bad bank proposal are the following : a ) an attempt to address at the same time the dtc issue on which greek banks, like npls, constitute another outlier in the eurozone. b ) an open issue to be resolved in the near future is the transfer of npls, which could take place at real economic value ( above market value ) following valuation exercise carried out by an independent auditor and instructed by dg com. c ) the national bad bank can outsource the servicing of the loans to existing authorized servicers by the bank of greece to leverage from experience and economies of scale. d ) another open issue is the pricing of the senior bonds, receiving a credible rating and foremost attracts investors. e ) and last but not least is the funding issue ( apart from senior bonds, esm funds? etc. ). in all the above issues and many more, the bank of | 0 |
from costs of crises that are borne by market participants. the bailout of banks during the crisis shifted private costs to taxpayers and raised levels of public debt worldwide. many reforms thus seek to realign incentives by withdrawing implicit public guarantees. as a result, risk - taking on the part of banks may decline, allocation of credit may change, and costs of debt may increase because creditors cannot rely on bailouts and thus demand higher risk premia. profits in the financial sector may decline as a consequence of reforms. taken together, costs are shifted from the public sector to the ( private ) financial sector. an example from environmental policy may serve to illustrate the point. a pigovian tax on chemical producers that pollute a river internalises the externalities of polluting the river by aligning private and social costs, thereby realigning the incentives to pollute. the direct result of this policy is lower production of chemicals, as pollution of the river is now part of the private sector β s costs, and lower sectoral profits. however, these are not the costs of the reform but the intended consequence. practical implementation of reform assessments needs to address the issue of a missing counterfactual. how should the benefits of the reforms that have been implemented be 3 / 7 bis central bankers'speeches measured ex post? is it possible to measure the benefits of reforms if no crises have occurred? wouldn β t the lack of a counterfactual render an assessment of the benefits of reforms impossible? these questions are not new, and they are in fact similar to cost - benefit analysis in other policy areas. it is in the very nature of counterfactuals that they cannot be observed. if monetary policy keeps the inflation rate at or below a target of, say, 2 %, how does one quantify the macroeconomic benefits of having avoided an acceleration of inflation? if educational policies increase school enrolment rates, how does one quantify the benefits of reduced youth unemployment and perhaps even reduced youth crime rates? the need to quantify benefits of ( economic ) policies without knowing the counterfactual is not unique to financial sector reforms. there are two β complementary β approaches of dealing with them : first, assessing the benefits of reforms can be done without directly measuring the broad objectives of reforms in terms of enhanced stability of ( global ) financial markets or a lower probability of financial crises. indeed, the benefits of reforms can be assessed by looking at the channels through which excessive risk - taking in | the financial sector materializes and through which risks to financial stability can build up. the focus can be on indicators that are closely related to factors contributing to financial sector stress. in the same vein, indicators might include the soundness of the financial sector and the contribution of the financial sector to real economic activity. this then leads to the second question, namely the question of establishing a causal impact of reforms on these indicators and the construction of counterfactuals : how would the financial system have developed without the reforms having been implemented? constructing macroeconomic counterfactuals is difficult and not desirable. we do not wish to see a financial crisis in a country that has not undertaken financial sector reforms just so we can improve our understanding of the benefits of reforms in a country that has undertaken such reforms. so, while the β real β counterfactual is neither possible nor desirable, there are nevertheless many ways to construct synthetic counterfactuals that can serve a similar purpose and many ways to use econometric methods that make it possible to establish causality. there are many possibilities of dealing with the challenge of causal identification, even in the area of macroeconomics ( fuchs - schundeln and hassan 2015 ). but empirical methods alone are not enough ; good conceptual and theoretical frameworks are also needed to decide what to look for in the data. b ) have reforms had similar effects across markets and jurisdictions ( heterogeneity )? reform effects differ across countries, banks, and sectors of the financial services industry. this heterogeneity facilitates rather than prevents reform evaluation. essentially, heterogeneity and institutional knowledge are important for good ( causal ) impact assessments. comparing countries that enacted different types of reforms at different points in time, comparing developments before and after reforms have been initiated, comparing banks for which new regulations are more or less binding can help to establish causal effects. understanding differential effects across markets or jurisdictions delivers valuable lessons for policy development that would be missed by looking only at averages. take, for example, the increase in capital requirements for banks after the crisis. higher capital requirements increase the resilience of banks with regard to shocks and provide the basis for sustainable lending to the real economy. trends in post - crisis bank lending have differed across countries and individual banks. a decline in lending can, for instance, be due to a decline in credit demand, more prudent lending behavior of banks in response to higher risks, or it can | 1 |
stability and economic prosperity in europe called for the creation of a common free trade area. but it was not enough just to do away with customs duties, since union was necessary in other areas too. his list included currency, prices, industrial and agricultural production and communications. monnet stressed that there could be no peace in europe, if states continued to be structured around the sort of national sovereignty that leads to the politics of privilege and economic protectionism. if the states of europe again cut themselves off from each other, it would again be necessary to amass huge armies. and before long we would be back at war. coincidentally, in the summer of 1944 paasikivi was discussing the fate of small countries. his reading of history had made him a pessimist : " states act for raison d'etat, i. e. in the interests of the state. it is frightful, blood - red ". he went on : " to date no system has been devised that would constrain raison d'etat and protect other countries from them. " where monnet spoke of nationalism and national sovereignty, paasikivi wrote about raison d'etat. ultimately, they were both talking about the same thing. paasikivi saw the key issue as how to limit raison d'etat, whereas monnet saw the basic problem as how to limit national sovereignty. paasikivi's starting point was the lot of the small country, but his thinking went further than this : " solving the problem of limiting raison d'etat and its relationship to morality is an issue that, although primarily affecting the future of small countries, will ultimately also determine the future of larger countries and the whole of mankind. " history had made paasikivi not only pessimistic, but also cautious. when monnet was accused of being over - optimistic in connection with his numerous initiatives, he always replied : " i am not an optimist, i am determined ". for his part, schuman summarized his own thinking in his unpublished memoirs : " the harsh lessons of history have taught me, as a man from a border area, that i should be wary of hasty improvisation and over - ambitious projects, but they have also taught me that when an objective judgment, founded in mature reflection and based on actual facts and the overriding interests of mankind, leads us into new or even revolutionary endeavors, we should remain steadfast and persevere with | the time. helo had been appointed ambassador in the new wave after the war as one of the so - called six. 2 helo's relations with the foreign minister were difficult, but paasikivi protected helo right until the end of his period of office. according to brotherus, the foreign minister even went as far as asking the french ambassador in helsinki to cancel schuman's planned visit to finland. paasikivi does state in his diaries that the foreign minister, torngren, said on 24 march, in connection with his weekly visit, that the foreign trade association wanted to make a big event out of schuman's visit, but that the government was not interested in organizing any dinner reception or in devoting any other particular attention to schuman. despite the awkwardness of the arrangements, schuman came to finland on a visit in april, three months after he had left the government. schuman's visit was given enormous coverage in the press. in his presentation schuman stressed that all wars had had their beginnings in precisely six states. " by defusing this hotbed of war, we have done something really fundamental for peace in europe, " he stated. the government did not in fact organize a dinner or devote any particular attention to schuman, unless one counts the supper invitation by social affairs minister, vaino leskinen, at the helsinki community hall, where schuman was to meet some trade union people. president paasikivi was, however, present at schuman's presentation and also had an audience with him. paasikivi wrote in his diaries about the pleasant impression schuman had made on him. schuman believed that the antagonism between france and germany would gradually be removed and that the coal and steel community would be a step towards this. paasikivi went on : " i explained the six is the name given to an opposition group of social democrats who left the party and allied themselves with the communists in the elections after the war. my own view and the position of finland. he understood it well. schuman is indeed an intelligent and charming man ". it was typical of the period that pravda reported on the visit a week later. according to pravda, schuman's visit was undeniably connected with the discussions, which the right - wing socialists had launched, against stepping up trade between finland and the | 1 |
speech of the governor on the occasion of the 20th anniversary of the cbk honourable... it is my great honour and pleasure to welcome you today for marking the 20th anniversary of the establishment of the central bank of the republic of kosovo. it is my great pleasure to have representatives of local and international institutions among us today, without whom it would not be possible to achieve the successes we have achieved to date. therefore, on behalf of all cbk staff and on my behalf, i would like to express my heartfelt gratitude for all that you have done for us over the years and for the honour you have done to us by joining us in marking this very important anniversary for us. to better understand the situation we are in, and the way we are heading, it is a good idea to go back a little retrospectively to remember how we got here, and to use the past as a driving force to move towards a more successful future. the central bank of the republic of kosovo was established in 1999, at a time when kosovo was beginning to build all institutions from scratch. along with the establishment of institutions, the foundation of the market economy in our country was also beginning. faqe 1 nga 7 cbk as a new institution, in spite of the great efforts to organize the institution itself, where everything was starting from scratch, began to commit itself towards building the financial infrastructure necessary to create the conditions for the financial system to start functioning in kosovo. this way, the cbk soon began the activity of building the payment system, formulating the regulatory framework for the financial sector, and developing other functions necessary to serve the country's economy. the beginning of the cbk's operation coincided with the time when most of the countries in the region were about to complete the transition process, where the omissions made at the beginning of this process, made the transition lengthy and difficult. cbk showed high diligence and learned from the difficulties that other central banks of transition countries went through, and chose the model that proved successful in developing an efficient and sustainable financial sector. in this way, cbk laid the foundations of a financial system based on private ownership and from the beginning opened the doors for the entry of foreign financial institutions. in fact, it was foreign financial institutions, especially banks, which first started operating in kosovo, bringing contemporary financial industry experiences and restoring the trust of the local people in the financial system. also, the cbk has consistently followed a sound licensing policy | swaminathan j : governance in small finance banks - driving sustainable growth and stability keynote address by mr swaminathan j, deputy governor of the reserve bank of india, at the conference of directors of small finance banks, bengaluru, 27 september 2024. * * * chairpersons and directors of the boards of small finance banks ; chief executive officers of sfbs ; executive directors, chief general managers and colleagues from the reserve bank of india ; ladies and gentlemen. a very good morning to all of you. it is an honour to address this distinguished gathering in the inaugural conference of board of directors of small finance banks organised by the rbi. as has been mentioned, this conference is in continuation of the reserve bank's efforts to reach out to its supervised entities through a direct dialogue with their boards and top management. our objective is to reaffirm the importance of good governance for maintaining financial stability and fostering sustainable growth. in his address1 to the directors of public and private sector banks last year, the governor outlined a comprehensive 10 - point charter that addressed key aspects such as the role of the board, its independence, the importance of setting the tone from the top, etc. his speech serves as an excellent blueprint for regulatory expectations from the boards of directors, and i encourage you to review it if you haven't already. today, i would like to discuss three key issues with you : ( i ) the vital role of small finance banks in promoting financial inclusion, ( ii ) the necessity of strengthening governance and assurance functions for sustainable growth, and ( iii ) important considerations regarding business models and risks that boards should be mindful of. important financial inclusion objective of sfbs as you are aware, the licensing of small finance banks was introduced a decade ago, in 2014, with the primary objective of advancing financial inclusion. beyond serving as a vehicle to mobilise savings, sfbs were also envisioned to extend affordable credit to underserved and unorganised sectors, such as small and marginal farmers as well as small business units, by leveraging technology to reduce costs and improve accessibility. india, today, stands at a pivotal moment in her development trajectory. in the last 75 years, we have transformed ourselves from an agrarian economy into one driven by industry and services. however, translating our gdp into higher per capita gross national income comparable to developed economies will require a comprehensive approach towards inclusive and sustainable economic growth. this will inter - alia entail education, skill development, employment generation, | 0 |
jens weidmann : the economic situation in germany and the euro area, monetary policy and the longer - term challenges facing the euro area introductory statement by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at a discussion with the association of the foreign press ( vap ), berlin, 23 august 2018. * * * 1 the german economy ladies and gentlemen i am delighted to have this opportunity to exchange my views with you today. allow me to first make a few brief remarks about the economic situation in germany and the euro area, monetary policy and the longer - term challenges facing the euro area before i take your questions. the german economy is flourishing : indeed, it is still enjoying a period of economic boom. economic output is outstripping pre - crisis levels by far. unemployment is at its lowest level since german reunification and employment remains on the up. the upswing is likely to continue. it is broadly based across demand components : consumption, investment and exports are all increasing. it will also benefit from a more expansionary fiscal policy stance, especially next year. however, it is unlikely that economic expansion will maintain the pace seen in 2017. in particular, exports will probably increase at a more moderate rate. at home, the rising shortage of skilled workers looks set to dampen employment growth. this is also the result of high levels of aggregate capacity utilisation. labour market tightness is contributing to higher wage growth and to increasing domestic price pressures. so far, the wage agreements concluded this year have been significantly higher than those concluded last year. but the uncertainty surrounding the outlook for the economy has increased. global economic growth remains buoyant, primarily driven by the two biggest economies in the world β the united states and china. however, political risks have increased, in particular β notably the risk of international trade conflicts intensifying. when tackling the global economic crisis of 2008 β 09, the g20 countries refrained from adopting beggar - thy - neighbour policies, thereby ensuring that they did not repeat the mistakes of the 1930s. back then, protectionist measures played a role in exacerbating the great depression. today, a major trade war could be severely detrimental to the global economy. recently, risks for individual emerging market economies have gained greater prominence. the developments in turkey make it crystal - clear that the best way to stave off crises is to run sound and responsible economic and fiscal policies | and to pursue an independent monetary policy geared towards price stability. 2 the euro area economy it β s not just germany β the euro area is also experiencing an economic upturn. this growth is broadly based across member states. measured since 1996, the differences between national 1 / 3 bis central bankers'speeches growth rates have never been as narrow as in recent times. however, the pace of expansion in the euro area eased off in the first half of the year compared with 2017. this is likely to be attributable to multiple factors : in particular, last year β s export growth was exceptionally high and therefore could probably not have been maintained ; capacity utilisation is going up ; and last but not least, the oil price hike is probably weighing on private consumption. nevertheless, the underlying forces driving economic activity remain intact : rising employment, favourable financing conditions and global economic growth. while the majority of sentiment indicators were unable to maintain the very high levels that they had previously reached, they still point towards continued economic expansion in the euro area. 3 price developments and monetary policy the economic upturn contrasts with the monetary policy stance remaining exceptionally expansionary. today, the stance of monetary policy is no less expansionary than it was at the peak of the crisis. this is suggested by indicators which, among other things, also take the effects of the eurosystem β s asset purchases into account. however, the very expansionary monetary policy stance should be seen against the backdrop of domestic price pressures remaining low. overall euro area inflation hit 2. 1 % in july, but inflation is currently being driven up by higher energy prices, in particular. domestic price pressures are still distinctly lower. however, they are likely to intensify as aggregate capacity utilisation increases. they will thus counteract waning impetus from other components of the inflation rate, such as energy prices. in their june projections, eurosystem experts predict that the annual inflation rate will come in at 1. 7 % until 2020. if you ask me, that is broadly consistent with our medium - term price stability goal. for this reason, it β s also time to begin exiting the very expansionary monetary policy and the non - standard measures, especially considering their possible side effects. thus, the ecb governing council β s june monetary policy decisions anticipated the end of the net asset purchases. the eurosystem β s large asset holdings are to remain constant for an extended period of time yet, as the proceeds of maturing bonds are | 1 |
, β interagency statement on the use of alternative data in credit underwriting, β https : / / www. federalreserve. gov / supervisionreg / caletters / ca % 201911 % 20letter % 20attachement % 20interagency % 20statement % 20on % 20the % 20use % 20of % 20alternative % 20data % 20in % 20credit % 20underwriting. pdf. kenneth p. brevoort, philipp grimm, and michelle kambara, data point : credit invisibles ( washington : consumer financial protection bureau, may 2015 ), https : / / files. consumerfinance. gov / f / 201505 _ cfpb _ data - pointcredit - invisibles. pdf. federal advisory council, which includes a range of banking institutions from across the country, recently noted that nontraditional data and the application of ai have the potential β to improve the accuracy and fairness of credit decisions while also improving overall credit availability. β 8 to harness the promise of machine learning to expand access to credit, especially to underserved consumers and businesses that may lack traditional credit histories, it is important to be keenly alert to potential risks around bias and inequitable outcomes. for example, if ai models are built on historical data that reflect racial bias or are optimized to replicate past decisions that may reflect bias, the models may amplify rather than ameliorate racial gaps in access to credit. along those same lines, the opaque and complex data interactions relied upon by ai could result in discrimination by race, or even lead to digital redlining, if not intentionally designed to address this risk. it is our collective responsibility to ensure that as we innovate, we build appropriate guardrails and protections to prevent such bias and ensure that ai is designed to promote equitable outcomes. as rayid ghani notes, β β¦ [ a ] ny ai ( or otherwise developed ) system that is affecting people β s lives has to be explicitly built to focus on increasing equity and not just optimizing for efficiency β¦ [ w ] e need to make sure that we put guidelines in place to maximize the chances of the positive impact while protecting people who have been traditionally marginalized in society and may be affected negatively by the new ai systems. β 9 federal advisory council ( fac ) record of meeting, ( december 3, 2020 ), https : / / www | banking industry. it has emerged as a key functional area driving hiring demand across financial services β some of the fastest growing job roles are in software development, cyber security, data analytics, artificial intelligence, and business process engineering. fintech alone is estimated to have contributed close to 2, 000 of the net jobs created during these two years. mas expects job growth in financial services this year to exceed the itm target. let me now take stock of progress in each of the three pillars of the itm : business strategies 6 / 11 bis central bankers'speeches jobs and skills ; and innovation and technology. business strategies i will start with our business strategies. singapore continued to do well in asset management, with assets under management ( aum ) increasing by an average 12. 7 % p. a. over 2016 and 2017. growth was robust across both traditional and alternative assets on the back of higher valuations and continued inflows to asian markets. we continued to anchor the operations of global asset managers in singapore. example : aia set up its first group - wide regional investment hub here. efforts to grow the private financing market are also showing signs of promise. alternative aum grew by an average 16. 9 % p. a. over 2016 and 2017, led by venture capital and private equity. there are currently about 220 vc and pe managers located in singapore with the majority of pe managers focused on growth and buyout strategies. around 85 % of their investments are across singapore and the region, targeting higher growth sectors such as consumer and retail, healthcare and it. we are also doing well in wealth management, with private banking aum expanding an average of 6. 6 % p. a. over 2016 and 2017. a growing number of asia β s wealthiest families have set up family offices in singapore to access investment opportunities in asia. singapore β s growth as a wealth management hub rests on its reputation as a clean and trusted jurisdiction. singapore β s activation of a broad network of automatic exchange of information, or aeoi, relationships, reaffirmed its commitment to international standards of transparency and tax cooperation. singapore is emerging as a leading asian bond market, with corporate debt issuance volumes rising by 22 % p. a. over the last two years. mas β asian bond grant scheme has supported asian companies to raise international capital in singapore. much of the increase in debt issuances here was by asian issuers β mostly from china, indonesia and india β raising debt capital in singapore for the first | 0 |
bear joint responsibility for them. first and foremost, the law describes these tasks as conceptional and operational monetary policy decisions. the chairman does not have any special powers. consequently, responsibility is shared. transparency and accountability are crucial, particularly in times of crisis, when the information needs of the general public and financial markets, as well as other authorities, are increasing exponentially. we have responded to this need. for instance, information on central bank balance sheet items and snb bills has been stepped up, and our news conferences can now be watched on our website. during the course of the crisis, in particular, at the time of the measures to strengthen the swiss financial system in october 2008, the number of appearances of governing board members before parliamentary commissions increased significantly. 8 i would like to hazard a guess that the snb has never been as transparent as it is today. in this respect, it also stands up well to international comparison. this is also laid down in the message on the revision of the national bank act with regard to art. 7 para. 1 nba ( 6191 ), β the snb β s decision - making autonomy must be retained because its accountability would otherwise inevitably come into conflict with its authority to act independently of instructions ( under art. 6 ). β consequently, the snb bears β sole responsibility for the mandates described in art. 5 β while the federal council, in turn, β is solely responsible for the economic decisions that fall within its area of responsibility. β in 2010, members of the governing board appeared 13 times before parliamentary commissions. bis central bankers β speeches however, central bank independence has its pitfalls. a latent threat to such independence can, in principle, always be said to exist. this threat is particularly great in times of crisis. consequently it was right and important, during the recent crisis, for central banks around the world to work closely with governments. however, the risk now is that false expectations have been raised amongst politicians. central banks need to remain firm and concentrate on their monetary policy mandate. while it was necessary to be close to other government authorities at a time of emergency, now that the crisis has been confined, a little more distance is in order. as i outlined at the beginning, the snb has also taken exceptional measures in order to fulfil its mandate. in doing so, it has shown that it is prepared to make use of the independence it has been granted. what is essential here is that we are always guided | β s gdp is likely to grow by around 1 % this year. in this environment, unemployment is likely to continue to rise gradually, and the utilisation of production capacity is likely to decline somewhat further. our forecast for switzerland, as for the global economy, is subject to significant uncertainty. the main risk is weaker economic activity abroad. monetary policy outlook ladies and gentlemen, allow me to return to our monetary policy. following the coronavirus pandemic, inflation rose strongly worldwide. in many countries, the increase in inflation proved to be more persistent than at first assumed. the snb began tightening its monetary policy at an early stage. we initially allowed the swiss franc to appreciate and then from june 2022 onwards raised the snb policy rate by a total of 2. 5 percentage points. in addition to this, we sold foreign exchange. page 3 / 6 zurich, 21 march 2024 thomas jordan, martin schlegel and antoine martin news conference tightening monetary conditions in this way had various advantages. first, the appreciation of the swiss franc significantly weakened the transmission of inflation from abroad. the increase in inflation in switzerland was therefore considerably smaller than in other countries. second, we had to raise our policy rate only moderately by international comparison. this also prevented a stronger rise in the mortgage reference interest rate. the tightening of our monetary policy led to inflation being above 2 % only for a short time, and rapidly decreased from its peak of 3. 5 % in august 2022 to the current level of 1. 2 %. inflation expectations remained well anchored throughout this period. overall, the secondround effects were limited. over the past three months, the underlying inflationary pressure has decreased further. this is reflected in our conditional inflation forecast, which we have revised down significantly compared with december. it is within the range of price stability over the entire forecast horizon. having already decided in december to no longer focus on sales of foreign exchange, we can now lower the snb policy rate by 0. 25 percentage points to 1. 5 %. our decision takes into account the significantly reduced inflationary pressure as well as the appreciation of the swiss franc in real terms over the past year. it also supports economic activity. with today β s easing, we are ensuring that monetary conditions remain appropriate. however, in the current environment uncertainty is still elevated. we will therefore monitor the ongoing development of inflation closely. if necessary we will adjust our monetary policy again. we also remain willing to be active | 0.5 |
which was rooted in the us housing market and caused a synchronised global recession, should continue to serve as a sober reminder of this. let me briefly now turn to the second thing on everyone's mind when they think about the economy - the ringgit. when it comes to the ringgit, bnm's role is to make sure that its value does not swing too fast or too much either way, and to allow an orderly price discovery. under a flexible exchange rate, it is reasonable for the ringgit to fluctuate from time to time. these adjustments allow the domestic economy to adjust to global economic and financial shocks. we saw this during the federal reserve's rapid and large interest rate adjustments last year, which caused huge shocks to the global economy. at one point, the ringgit declined as much as 11. 5 % between end - march to early november, before appreciating by 7. 8 % towards the year end. yet the real economy grew by 8. 7 % during the year, thanks in no small part to the ringgit's role as a shock absorber. 2 / 3 bis - central bankers'speeches in recent weeks, the ringgit has come under renewed pressure β underscoring the need for more than short - term solutions. we need structural reforms that will strengthen our growth prospects and encourage more investment opportunities. this will increase demand for the ringgit and secure a more enduring appreciation in its value over time. ultimately, to secure our future, the country must stay the course in implementing vital reforms. the issues we need to address are not new. but history and the passage of time should inform how we move forward. we must fortify our defences against crises. we must critically examine our priorities to increase our growth potential and meet sustainable goals. we must rebuild the buffers we have drawn down on to strengthen our resilience to future shocks. and we must enhance our capacity to adapt and change in order to manage risks and exploit opportunities that we may not yet see today. ladies and gentlemen, for many of the challenges malaysia faces, the solutions require a whole - of - nation approach. hence the theme of this symposium β " structural reforms for a stronger malaysia ". today will see in - depth discussions on various issues that my team has been working on in recent years. there will be seven sessions delving into topics such as digitalisation in the payments sector, financial sector policies, and broader economic and monetary concerns | . speakers will explore the opportunities that malaysia has to grow in these areas and the obstacles in our way. very shortly, we will also be launching malaysia's cross - border qr payment linkages with indonesia, thailand, and singapore. customers of participating financial institutions can now make retail payments by scanning qris, nets, and promptpay qr codes via mobile banking or e - wallet apps. as an added treat, we have merchants from these countries offering local delectables here today β do visit them and try making cross - border qr payments yourself! with that, i hope that you will find today's discussion enriching and enlightening, and contribute to the wider discourse on the state and future of our economy. sasana comes from the sanskrit word for message and education. it is my hope that the sasana we come away with will translate into important reform actions that will strengthen the foundations of our economy and propel malaysia forward. thank you, and have a productive symposium. 3 / 3 bis - central bankers'speeches | 1 |
of that year. initially the movement took root in the agriculture and fisheries sector, which in those times employed a significant part of the population. but later, as malta developed socially and economically, the movement continued to flourish and to expand, and new cooperatives were set up in practically every sector of the economy. indeed, there are currently some 60 cooperatives in malta, with over 5000 members, spread over a wide range of activities. these include the traditional agriculture and fisheries sector, transport and media, management and marketing consultancy services, wholesale, health, maritime, archaeology, restoration, fair trade, tourism, youth services and community care. our cooperatives are affiliated with the international cooperatives alliance ( ica ), and so abide by the seven basic principles established by the alliance mentioned previously. banks too have been with us for a long time. indeed one can trace the origins of banking in malta to the times of the knights of st john, though more rapid development took place under british rule, helped by the island β s strategic and central position in the british empire. in 1826, the anglo - egyptian bank started operations here, and through a series of mergers and acquisitions this later became barclay β s bank dco ( dominion, colonial and overseas ), which soon established an extensive branch network on the island. a number of smaller maltese - owned banks were also established, and some of these eventually merged to become the national bank of malta, which also established a branch network. there followed a period when these two major banks were nationalised, but following the subsequent bis central bankers β speeches liberalisation of the economy they were again privatised, with the government retaining only a 25 % share in bank of valletta. more banks began to operate here after malta joined the european union, but these were all commercial, joint stock banks. no one, till recently, seems to have thought of setting up a cooperative bank in malta. the distinctive characteristic of cooperative banks, as previous speakers have explained, is that they are banking entities that, for the most part, are owned by their members. the latter are both owners and customers of their bank. but this is not their only characteristic. generally, cooperative banks are deeply rooted in their regions or communities. they are very much involved in local development and contribute to the sustainable development of their communities, because their members and officers generally belong to the communities in which they operate. their main concern is not to make spectacular short - term gains for a small group | auditors to prevent cozy relationships undermining the integrity of the audit. a periodic change of the firm might have led to more serious questioning of the accounts. further, some us firms have announced plans to include, as an expense, the cost of executive stock options. the changes aim to more accurately describe the revenues and costs associated with companies β primary business. and standard and poor β s has introduced new benchmarks for reporting corporate earnings. these are all positive examples of participants working together to enforce the spirit of the rules under which financial markets operate. what has been done recently in switzerland to improve the transparency of swiss financial markets? some efforts have already started some time ago. most notably, the swiss exchange and the swiss business federation β economiesuisse β co - ordinated their efforts to develop two sets of rules which became effective on july 1, 2002 : the β swiss code of best practice β and the β directive concerning information on corporate governance β. this will hopefully lift the standards for corporate governance and improve the level of transparency for the publicly traded firms in switzerland. we have also seen political initiatives aiming at more transparency in remunerations. business uncertainty it would be shortsighted to believe that the recent stock market reaction has only been the result of misconduct and the lack of corporate governance. the world economy is still digesting the consequences from the deep retrenchment in capital spending, which started in 2000 in the high - tech and the telecommunications sectors. the investment climate was further muted by the terrorist attacks of last september, hitting hard other sectors such as air travel, tourism, and insurance. in short, there is considerable uncertainty surrounding the adjustment of investment spending and the dim prospects of corporate earnings. while the worldwide weakness in business investment lies at the very heart of our present problems, at the same time the most recent signals from abroad reveal that new potential risks have emerged. the most recent economic indicators from the united states show that domestic demand is growing less strongly than anticipated. the confidence indices registered a decline for the months june and july. the labor market has recently shown increasing signs of weakness ; both in terms of employment and hours worked. these recent developments weigh heavily against household spending, which has been considered the lifeline of the u. s. economy. the fear is that many households are stretched, adding fears to the strength of household consumption and the resilience of the u. s. economy to withstand further shocks. u. s. households on average have low levels | 0 |
between savers and investors, or if it leads to cross - jurisdiction establishment of subsidiaries and branches, the nature of credit risks facing financial institutions may also change. exposures to different business cycles will increase as will exposures to different sources of idiosyncratic risk. supervisory agencies need to make sure that appropriate risk control measures are implemented in individual institutions, and that their capital adequately reflects the market, credit and operational risks they are exposed to as they enter foreign markets. 22. here in hong kong we are well on our way to implementing the latest international standards in this respect, i. e. the basel ii standards. as the bank supervisor, the hong kong monetary authority has been working with banks and legislators to ensure that we are able to implement the new standards by 1 january, 2007. we have also been working with other regulators in the region through the emeap working group on banking supervision to share our experiences on the implementation process. 23. ladies and gentlemen, i have given you a brief personal perspective on financial integration and regulation in our region. i do not know whether i have convinced you of the importance of these topics for our continued economic prosperity and financial stability. but i certainly hope to have persuaded you that they are topics that deserve our attention whether we are policy makers, regulators of the financial system, or members of the private - sector financial community. i am sure that more will be said about these topics throughout the conference, and i look forward to hearing from our european colleagues about the experience in europe concerning financial integration and regulation in the euro area. | peter pang : developing critical financial infrastructure between hong kong and thailand opening remarks by mr peter pang, deputy chief executive of the hong kong monetary authority, at the hkma - bot joint press conference on the launch of us dollar β thai baht pvp link, hong kong, 28 july 2014. * * * deputy governor, ladies and gentlemen, 1. good afternoon. it is my great pleasure to welcome you all to this press conference jointly organised by the hong kong monetary authority ( hkma ) and bank of thailand ( bot ). i would like to thank deputy governor mr. krirk vanikkul for joining me here to announce the launch of the payment - versus - payment ( pvp ) link between bahtnet, the thai baht real time gross settlement ( rtgs ) system in thailand, and the us dollar rtgs system in hong kong. 2. time flies. about a year ago the hkma and bot announced in bangkok to build this pvp link. with the concerted effort of colleagues on both sides, the link went live today as scheduled, after completion of the system development and meticulous testing with the users. the banks in both jurisdictions have been fully engaged to ensure maximum readiness, on both technical and business fronts, for the launch of the link. 3. this pvp link is an iconic project that symbolises the determination of the hkma and bot to work together to promote financial integration and financial stability in the region through the linkage of critical financial infrastructure. it will bring significant benefits in three areas. 4. first and foremost, this pvp link will help eliminate settlement risk in us dollar - thai baht foreign exchange ( fx ) transactions. prior to this link, the settlement of the two currency legs was done in different time zones and in an uncoordinated manner β thai baht ( thb ) in the asian time zone, followed by us dollar ( usd ) during new york hours. with the new pvp link, all payments can be made within the asian time zone and in a coordinated manner by adopting the pvp mode. under this arrangement, when a thai bank delivers ( or receives ) thb to ( or from ) its counterparty in bangkok, the correspondent bank of the thai bank in hong kong receives ( or delivers ) usd at the same time. hence, the risk due to time lag in settling the two legs of the fx transaction can be removed. 5. second, the reduction in fx | 0.5 |
both resemble two sides that make up one coin as a whole. only through strong banking, which is able to execute its intermediary role properly, can we achieve financial system stability and ensure the usefulness of banking to the general public. throughout the past three years, bank indonesia has undertaken numerous measures to fortify our regulation as well as supervision of ; to persist with the restructuring of individual banks ; to establish sound banking industry infrastructure throughout 2004 - 2006, we have personally experienced activities which should have been concluded expeditiously but ended up protracted. conversely, there have been activities that we thought would take a long time which were concluded swiftly. this is why we make adjustments to our policy. however, in the process of determining policy, the overarching goal, which is to build a solid and beneficial banking system, is something that we must consistently strive to achieve. in the process, policy instruments may require adjustment depending on the prevalent situation. this restructuring process to me is a continuous and dialectic social process, which we can all dynamically comprehend and participate in. we have overcome numerous troubles and challenges, but there are even more that we must address, since it is true that β life is a game of improvement, not a game of perfection β. therefore, it is quite ordinary if adjustments occur in a policy, especially when the conditions and dynamics of our environment demand so. there is, however, a contemplation that we rely on as the monetary and banking authority : we will only consider adjustments to micro policy on condition that adjustments are taken measurably and cautiously, without sacrificing macroeconomic stability as a whole and consistent in the context of the overarching goal. in entering this defining moment, it also critical to note that in order to achieve such continuous economic growth, we require the presence of a robust formal sector which able to perform optimally. emphasis on the informal and micro, small and medium enterprise sectors, albeit with significant growth, should be considered as a temporary supporting pillar. it is true that we must push these two sectors to become a formal sector that is thriving, large, reliable and not merely serving as a social pillar. we must also encourage the expansion of the formal industry sector so that it can absorb more of the available unemployed human resources. regrettably, since the dynamic and developing crisis, this sector has remained insufficiently significant to achieve the desired growth. investment in this sector is limited compared to the amount required for noteworthy | development of domestic financial market, in particular, the government bond market. second, the need to increase the efficiency of domestic money market, which in turn benefits to enhance and to further strengthen banks β liquidity management. steps were also taken in the area of improving the capacity of financial institution, as well as improving financial market efficiency. banks are encouraged to strengthen their capital and compel to conduct best practices, especially in the area of risk management. on the other hand, we are also bounded to increase our supervisory capacity to ensure a prudent banking practice. years of strong commitment on reform has resulted in a resilient economic fundamental, at least, in the last five years. the economic growth accelerated to a 10 - year high. fiscal consolidation significantly reduces government debt, a proof of commitment of fiscal discipline. prudent macroeconomic management has also led to the declining trend of inflation and exchange rate volatility as well. in the financial sector, the banking sector is well capitalized and in a better balance sheet structure. strong macroeconomic fundamentals and resilient microeconomics structures lead to better risk perception, or a more accurate valuation from my point of view, as reflected by the recent rating upgrade. but to be frank, i feel that from the sovereign risk assessment, indonesia is still somewhat β undervalued β. it is perhaps that major rating agencies tend to be too conservative in assessing indonesia β s risk profile. this might possibly be a reflection of the β traumatic β view relate to the 1998 crisis. however, the recent update from some rating agencies has become a promising recognition into the fundamental transformation process in indonesia. following standard and poor β s, fitch, and moody β s, oecd has also upgraded indonesia β s country risk classification ranks from 5 to 4 on early april 2010. similar progress also came from the ranking upgrade of our global competitiveness index from 72 in 2003 to 54 recently. prospect and challenge ahead global recovery coupled with favorable risk perceptions support our optimism toward the outlook in 2010 and 2011. we are quite confident that the indonesian economy will grow at around 6. 0 % in 2010 and to 6. 0 β 6. 5 % range in 2011. this is mainly supported by the upturn on export and increasing investment. for the next periods, we expect that the economy will keep growing in an upward trend given the proven strong commitment from the government to implement reform measures on infrastructure projects and investment climate. on the later, it is important to | 0.5 |
jean - claude trichet : hearing before the economic and monetary affairs committee of the european parliament speech by mr jean - claude trichet, president of the european central bank, at a hearing before the economic and monetary affairs committee of the european parliament, brussels, 21 march 2007. * * * madame la presidente, mesdames et messieurs les membres de la commission economique et monetaire, c β est avec un interet chaque fois renouvele que je parais, tous les trimestres, devant votre commission afin de poursuivre le dialogue de la banque centrale avec le parlement. la banque centrale europeenne est, vous le savez, tres attachee a cet exercice qui contribue a rendre notre action transparente vis - a - vis du citoyen europeen. je commencerai mon intervention par une evaluation de la situation economique et monetaire. anschlieΓend werde ich auf die unterschiede, die bei den geldpolitischen transmissionskanalen in den usa und dem euroraum bestehen, sowie ihre praktischen auswirkungen eingehen. zum abschluss mochte ich die bedeutung von preisstabilitat aus sozialpolitischer perspektive erlautern. economic and monetary issues since my previous appearance before the european parliament in december last year, newly available information has served to confirm our assessment that economic growth in the euro area continues to expand robustly. in addition, the cross - checking of our economic and monetary analyses have underlined the existence of upside risks to price stability over the medium to longer term. accordingly, on 8 march the governing council of the ecb decided to increase key ecb interest rates by 25 basis points. our decision to increase key ecb interest rates in march contributes to ensuring that medium to longer - term inflation expectations in the euro area remain solidly anchored at levels consistent with price stability, which is a prerequisite for monetary policy to make an ongoing contribution towards supporting sustainable economic growth and job creation in the euro area. let me explain the assessment underlying this decision and the outlook for the economy and risks to price stability. starting with the economic analysis, according to eurostat β s first estimate, the quarter - on | shock to inflation is faster to dissipate β even if prices and wages are relatively more rigid β if inflation expectations are more firmly anchored. now, while the statistical approach has generally failed to spot significant differences across the two areas, structural analysis comes to two main conclusions. the first is that, in the euro area, prices are distinctly less flexible than in the united states. 1 second, an inflationary shock dissipates quickly in the euro area despite rigidities, and inflation has a tendency to return to its long - run norm reasonably quickly. survey - based measures of inflation expectations, for example, suggest that the ecb β s influence on expectations seems to have become much stronger since the establishment of the euro. 2 what are the implications for policy? i will mention two of them, both stemming from the notion that the appropriateness of policy cannot be judged in abstract terms : policy needs to be carefully calibrated to the underlying economic structure. 3 first, in a relatively rigid economy, the adjustment falls primarily on quantities. so, a central bank is generally well - advised to avoid volatile policy paths, which in those conditions can transmit unwelcome volatility to the economy and often necessitate corrective, countervailing action further down the road. second, inflation expectations that look more forward β to the central bank β s intentions β than backward β to inflation history β call for more persistence in the policy direction. again, a central bank that moves its policy rate around in response to each twist and turn in the data would under these circumstances have only a limited impact on the economy. when the inflation process is as forward - looking as it is in the euro area, policy shifts that lack persistence have little impact on longer - term interest rates, on expectations and β ultimately β on macroeconomic and pricing decisions. counterfactual policy evaluation is difficult to conduct and necessarily conditional on a long list of technical assumptions. nonetheless, recently conducted counterfactual policy - evaluation exercises suggest that since 2001 β and compared with the flexible economy par excellence, the us β our policy interventions had a greater stabilizing effect on the economy. in tune with the structural conditions the eurosystem has made important contributions to the analysis of price rigidities in the euro area. a summary of a very extensive research project conducted jointly by the ecb and the national central banks is provided in altissimo, f., m ehrmann. and f. smets ( 2006 | 1 |
would adopt similar measures within such a short span of years. i have become painfully aware of the need to more closely study each of the countries β experiences over the past quarter - century, and to draw true lessons that could be applied to future policy conduct. relevant topics for discussion range widely from monetary policy to regulation and supervision, payment and settlement systems, and so on. in my remarks today, i will raise for more details, see the following. ahearne, alan, joseph gagnon, jane haltmaier, steve kamin, and others, β preventing deflation : lessons from japan β s experience in the 1990s, β international finance discussion papers, no. 729, board of governors of the federal reserve system, june 2002. for the deleveraging process after the bursting of bubbles, see masaaki shirakawa, β deleveraging and growth : is the developed world following japan β s long and winding road?, β lecture at the london school of economics and political science ( co - hosted by the asia research centre and sticerd, lse ), january 10, 2012. bis central bankers β speeches several points with particular focus on the role of the central bank in maintaining macroeconomic stability at each of three phases : before, during, and after the financial crisis. i. before the crisis : financial imbalances and monetary policy i would like to start from issues relevant in the periods preceding financial crises, focusing on the role of monetary policy. conventional wisdom tells us that price developments serve as a trigger for changes in monetary policy. in fact, without exception, central banks pay attention to output gaps and inflation expectations, which have an impact on future inflation developments. in retrospect, however, when we look back at how bubbles were formed and then developed into financial crises, the most significant imbalance that destabilized the macroeconomy emerged on the financial front instead of the price front. the financial imbalances took the form of a sharp and significant rise in asset prices and credit expansion associated with increased leveraging and maturity mismatches. financial imbalances ultimately created a tremendous shock to financial institutions and the financial system, and led to a sharp and significant contraction of economic activity. while such acute pains wore off as a result of aggressive policy measures taken by the governments and central banks after the crisis erupted, the chronic affliction of low growth associated with balance - sheet repair remains. this experience has revealed the fact that the | 8 ). only the central bank is able to issue currency that private economic agents can accept without conditions. therefore, in a financial crisis where the credibility of counterparties is undermined, the role of the central bank becomes extremely important. in the midst of the crisis, it is crucial that financial institutions and investors manage the counterparty risk by controlling not only the amount of exposure at the end of the day but also that of intraday credit. in the past twenty years or so, it has been the role of the central bank, as a bank of banks, to make various efforts to improve the safety and efficiency of payment and settlement systems. such efforts have led to the introduction of real - time gross settlement, delivery versus payment, and simultaneous settlement of foreign exchange ( chart 9 ). without such efforts made by central banks, the lehman shock could have induced a complete termination of financial transactions. if i am asked what the most significant contribution by central banks is in terms of securing economic and financial stability in the past quarter of a century, i could point to their unceasing efforts to improve payment and settlement systems. iii. after the crisis : the effects and limits of aggressive monetary policy lastly i would like to discuss the role of monetary policy in the aftermath of the financial crisis β specifically, when the economy has overcome acute pains but still suffers from chronic affliction of low growth associated with balance - sheet repair ( chart 10 ). when taking monetary easing steps, it is essential to conduct a careful analysis of their intended benefits as well as unintended costs. while aggressive monetary easing is definitely needed after the bursting of bubbles, its side effects and limits should also be taken into consideration. although there is no universal conclusion to such cost and benefit analysis for monetary easing, as it depends on countries and phases, i would like to call attention to the following bis central bankers β speeches four aspects, which have not been paid sufficient attention in traditional arguments made before the recent crisis. 3 the first is the burden of balance - sheet repair. even with monetary easing, economic entities with excess debt neither increase expenditures nor embrace more risk taking until their debts are reduced to an appropriate level. monetary easing only mitigates pains associated with balance - sheet repair. moreover, employing this mitigator for a prolonged time comes with costs, as it reduces incentives to lessen excess debt and causes delays in balance - sheet repair, which ultimately is necessary for economic recovery. needless to say, the effect of low | 1 |
. for that to happen, economies have to perform better. what we see in france is in fact going in that direction. there is a reform momentum which i think has two dividends : one for the french economy itself and one for the euro area. france is a very large country, the second - largest country in the euro area. the euro area needs reforms and having a strong french economy is also something that can set off a series of dialogues, a series of reforms right across the euro area. france is now taking the path of that reform momentum and growth momentum? yes, but i don β t want to judge the ways and means of the french government, or the sequence of reforms. no, but as for the priorities set, labour law, public sector, then pensions, is it roughly what you recommend? labour law, the functioning of the labour market, of course, including training, which is essential. in that respect, the good news is that the government is vigorously tackling the reform of vocational training. this is just as important, if not more so, than the flexibility of the labour market and labour costs. for a very long time, emphasis was placed on the cost of labour in france. i don β t think now that the cost of labour is a major obstacle compared with germany, compared with france β s competitors. however, we do have a training problem which shows up in all the international surveys, and it is increasingly the priority. and the government is working on it. there β s been talk of a β budgetary jackpot β this weekend, how do you regard that? what are your comments? it β s a slightly ridiculous discussion ; i spent 15 years at the ministry of finance in a previous life. whenever france β s deficit goes below 3 %, there are some good souls who speak of a jackpot. if you listen to them, it means that 3 % will not be the upper limit of the deficit in france, it will be the lower limit ; it means that the deficit will never go below 3 %. government debt is 97 % of gdp. if our deficit remains at 3 %, it is clear that we are heading towards serious debt sustainability problems. so we shouldn β t listen to those good people who think that there is a jackpot when the deficit is a fraction below 3 %. it is a bit like giving an alcoholic sweet to a former alcoholic, so to speak, it seems to me a little dangerous. and | managing the deleveraging process, knowing that crisis management has to complement, but should not obstruct, crisis resolution. they must ensure that the economy does not enter into a downward spiral that would be inconsistent with price stability. but how can they succeed in this task without delaying structural repair? do they have the tools? if not, who can complete the policy framework? how can central banks align shortterm crisis fighting efforts with their longer - term monetary policy strategies and mandates? these are the questions that currently preoccupy central bankers around the globe, albeit to different degrees and a varying sense of urgency. let me frame these preoccupations today with a euro area perspective. i will proceed in three steps : β’ first, i will highlight the key challenges that central banks and policy makers face when formulating their crisis response in the context of acute deleveraging pressures. bis central bankers β speeches β’ second, i will explain how the ecb has responded to these challenges and how other policy domains have to contribute to tackling the deleveraging risks. β’ finally, i will reflect on how the institutional framework of economic and monetary union ( emu ) in europe directs, complements and bolsters the ecb β s crisis response. 1. ongoing balance sheet adjustments leverage cycles are difficult for central banks to tame, essentially for two reasons : first, they are difficult to empirically identify, measure and describe with available analytical tools, especially in real - time ; second, even if analysts found ways to spot them with reasonable accuracy in real - time, central banks and other macro - policy authorities may need to apply an atypical degree of inventiveness to control the potential macroeconomic fall - out, when leveraging finally goes into reverse. let me explain these two issues one - by - one. 1. 1 identification of the leveraging cycles first of all, it is financial cycles, i. e. long and deep swings in asset values, that policy authorities essentially care about. they do not necessarily care about leveraging per se. leveraging cycles become the problem because, as has long been recognised, swings in asset prices do not pose serious threats to the economy, unless they are facilitated and compounded by trends in debt. this combination and mutual feed - backs between trends in asset values and sustained movements in leverage are what james tobin defined the β achilles heel of capitalism β. so, let me concentrate on leveraging cycles, knowing that it is | 0.5 |
undertook an important survey on crt activity. but so much has happened since then β especially in terms of the substantial growth of the market and the increasing participation of hedge funds in taking on credit risk exposures β that at the current juncture, the available data are insufficient to make a sound assessment of these risks. should current trends continue, they will imply fundamental changes in the methods for assessing the ability of the financial system to cope with unexpected credit cycle deterioration. after the finalisation of the june 2006 fsr, some hedge funds endured financial losses, mainly as a consequence of turbulence in financial markets during may and june. subsequently, there were some highly publicised adverse developments in the hedge fund sector related to the collapse of amaranth advisors, a large multi - strategy fund. nevertheless, the hedge fund sector continued to benefit from steadily increasing investor demand. [ see slide 6 ] capital under management by hedge funds has been growing very rapidly and has reached close to one trillion us dollars. [ see chart on the left of slide 6 ] given this size of the sector, a growing concern is that trades are becoming increasingly crowded. higher correlation of hedge fund returns could be an indication of this. during the first half of 2006, correlations among and within hedge fund strategies remained relatively stable. it is noteworthy that the collapse of amaranth advisors in september did not lead to wider turbulence, despite the fact that the total loss experienced by the fund was much larger than that incurred by ltcm in 1998. the ability of the system to absorb the shock demonstrated that the hedge fund sector has become more mature and has the ability to repair itself in the event of idiosyncratic distress. however, it should also be recalled that this event occurred against a backdrop of rather benign market conditions, and it cannot be excluded that in a more challenging market environment, such as that which characterised markets after the russian crisis in august 1998, the impact of such an event could have been more disruptive. new risks have emerged related to what could be called a β triangle β of vulnerability connecting the state of the credit cycle ( which could deteriorate in the future ), credit derivatives and hedge funds [ see slide 7 ]. on the one hand, a marked adverse turn in the credit cycle, triggered either by a large and unexpected credit event, such as the collapse of a large corporation, or by a cluster of defaults by smaller and highly leveraged low - quality corporations, could lead to substantial payment obligations for counterpart | ( smp ) presently amounts to somewhat more than 60 billion euros, which again equates to 3 %. there is no evidence that asset purchases have had any significant impact on average euro - area sovereign bond yields on which euro - area monetary policy must exclusively focus as its main transmission channel. but the smp risks blurring the different responsibilities between fiscal and monetary policy. as the risks associated with the smp outweigh its benefits, these securities purchases should now be phased out permanently as part of our non - standard policy measures. 3. current and future challenges for monetary policy 3. 1 exit from exceptional policy measures the challenge facing monetary policymakers now and in the near future is to get the timing and sequencing of the exit from stimulus measures right. this applies to both the nonstandard measures as well as the monetary policy stance, and therefore, key interest rates, as the two dimensions of the exit. while we are far from declaring the crisis over, it would be unwise to postpone relevant considerations to the end of the crisis. as regards the eurosystem β s set of non - standard policy measures, these were designed with exit considerations in mind. the overwhelming majority of measures can therefore be easily withdrawn whenever we deem it necessary. as regards the two dimensions of exit consisting of phasing - out non - standard liquidity measures and normalizing our clearly expansionary policy stance, there are risks both in exiting too early and in exiting too late. i believe the latter are greater than the former. for example, maintaining the accommodative policy stance for too long may risk a de - anchoring of inflation expectations, which is costly to reign in. for the time being, however, the policy stance remains appropriate, since inflation risks remain low over the policy - relevant horizon. the two dimensions of exit are independent and separated by concept. thus, a normalization of key interest rates could in principle start before the phasing - out of nonstandard measures has been finished. the phasing - out of non - standard measures mainly depends on the situation in the financial markets and the interbank money market, in particular. while improved conditions enabled us to embark on a gradual phasing - out of exceptional policy measures at the end of 2009, renewed financial market tensions in early may forced us to reintroduce some measures that had already been phased out. looking ahead, the situation in the financial markets shows continuing signs of normalization β | 0 |
##ity. labour economists have employed sophisticated econometric techniques and innovative methodological approaches ( such as studies of twins who followed different education and life paths ) to establish causality between education and private returns. 5 moreover, the social return to education β that is the benefit of increases in the human capital of the population for the economy and society as a whole β will, in all likelihood, be further increased as a result of so - called human capital externalities. such externalities arise, for example, through knowledge spillovers from more educated workers to less educated ones. 6 for general surveys of the contribution of human capital and education to economic growth, see krueger and lindahl and wasmer et al. ( 2006 ). de la fuente and ciccone ( 2002 ) review the literature with specific reference to europe. see, for example, domenech and de la fuente ( 2006 ) and cohen and soto ( 2007 ). the so - called β mincerian equation β ( developed by polish - american economist jacob mincer ) specifies a relationship an individual β s education and experience and his or her wages. see mincer ( 1974 ). for en extensive review of the micro evidence, see card ( 1999 ). the importance of human capital externalities in the process of development has been stressed by lucas ( 1998 ) and azariadis and drazen ( 1990 ), among others. empirical studies in the us have, however, failed to detect human capital externalities at the us state and city level ( e. g. acemoglu and angrist, 2000 ; ciccone and perri, 2006 ). moretti ( 2004 ) does provide some evidence of sizable ( and statistically significant ) externalities at the us plant level. the quality of education education, however, is only one component of the broader concept of human capital, which also involves on - the - job training and learning as well as cognitive skills. moreover, the quality of education is at least as important as the years of formal schooling. 7 these factors are economically significant. for example, the returns on training could be as high as 5 %, which is a rate comparable to the range of estimates for the private returns on the years of formal schooling of between 6. 5 % and 9 %. there is also plenty of evidence that points to the importance of the quality of education. [ slide 9 ] this is usually measured by pupil - teacher ratios, by public spending on education | . 5 per cent. here, i would like to also re - assure the population that the normalisation process is a necessary response to help contain the negative effects associated with a high inflationary environment. the inflation we are seeing remains largely imported, and has a relatively big share of commonality with other countries. central banks worldwide have engaged in monetary tightening, with many continuing to do so. the long - term losses of high inflation may outweigh the short - term pitfalls associated with policy normalisation. 5 / 6 bis - central bankers'speeches in this regard, to accompany the population and the business community, the bank of mauritius is rolling out a series of measures. first, banks are being provided with greater flexibility to restructure loan facilities such that bank customers can continue to fulfil their financial obligations. second, the bank is engaging with commercial banks to introduce a package of measures geared towards households and smes with the objective of easing their debt servicing. third, the bank of mauritius will also come up with additional macro - prudential measures to ensure that the banking sector remains resilient. fourth, the task force on financial sector resilience continues to meet, monitor, analyse and make necessary recommendations. the task force will meet on the 20th of december. the bank is also putting a dedicated channel at the disposal of businesses, households and individuals should they need any support or clarification, or should they encounter any issue with their bank. queries and issues may be channeled by phone on 202 3800 or the support @ bom. mu dedicated email. i also wish to inform you that the bank has completed its series of consultations with respect to the new monetary policy framework. the framework will be officially introduced in january 2023. under the new framework, the bank is introducing flexible inflation targeting. the inflation target for the country has been defined to be in a range of 2 to 5 percent, with the aim to achieve 3 per cent in the medium term as recommended by the imf. the key repo rate will also be replaced by the key rate. as part of the introduction of the new monetary policy framework, you will recall that the bank started, with effect from the 4th of august 2022, the issuance of a 7 - day bank of mauritius bill to all banks. this instrument will further improve the transmission mechanism of monetary policy signals and help anchor short - term money market rates. the operational target, which is currently our 91 | 0 |
funds ; 2. may get you a lower cost of funds ; 3. may avoid fees and charges ; and 4. equity funding does not fetch interest costs ; mind you there are also risks to using the capital market and i am sure that you will cover these issues in detail in your sessions today. i hope that i have given you a flavour of what the capital market can do for you. let us get back to the question : how does all these support investment and economic growth? there are basically two ways : 1. one, it may encourage more savings. fiji savings rate is very low. if we remove the mandatory savings through fnpf, our saving rate is even lower. for investment to happen, we need to generate more savings. successful countries are normally associated with higher savings rate ; and 2. two, it directly promotes more investment by giving the one borrowing the money alternative sources of funds. with diversified sources of funds, more investors can emerge or more investments are made thus taking us towards the target of 25 percent of gdp. development of the capital market it is therefore extremely important that we develop the capital market in fiji. i must say that we have come a long way since the establishment of the cmda. i was very much involved in the establishment of the authority as the groundwork was done at the reserve bank. i can remember some of the ground breaking decisions that were taken then. they have begun to bear fruit. of course, one of the key roles of the authority is to regulate the market to ensure that everyone plays by the rule. the underlying aim is to protect the investors β interest. this is very important. confidence in the operation of the market is critical to people like you using the market. a lot has been achieved over the years in this regulatory area. i recall that one of the other major roles that we identified the authority to have was to develop the market. that was why the word β development β was specifically included in the name of the authority. how can one supervise a market that was not there in the first place? this meant that the cmda had to strike the right balance between regulation and development. i said that the market has developed in the last fifteen years. but i still have a sense that we still have some way to go. the challenge therefore is to take stock and re - examine our route. are there constraints that we still need to overcome? if so how can we do that and who should do it? i recall some | stress testing came with its integration with the federal reserve β s comprehensive capital analysis and review ( ccar ), beginning in 2011. one big change from the initial scap test was that stress tests were no longer a one - time emergency measure 2 / 6 bis central bankers'speeches intended to restore confidence in major financial institutions. instead, they became a recurring, ongoing process intended to maintain confidence in major institutions. second, stress tests were no longer a discretionary exercise by supervisors β under dodd - frank, they became the law of the land. and third, when they were integrated into ccar, stress tests became part of a comprehensive β it β s the first c in ccar β framework for capital planning that more closely connected capital regulation to risk management of banks and overall supervision. these were changes, but with the effect of reinforcing the founding principles of the scap test. transparency was enhanced when stress tests became mandatory, recurring events and the public could depend on continuing to have access to information about banks β capital adequacy. also, the independence of those judgments was enhanced when congress made them a statutory responsibility for the fed and when they were integrated into our ccar framework. further changes to stress testing have likewise reinforced the original goals. stress testing scenarios have become richer and more challenging, providing more information about how banks would deal with a range of adverse developments and, for example, exploring the effects of more differentiated risks that are not tied to the business cycle. large trading banks now face an instantaneous shock to their trading assets, and many participants in the stress tests now must address how they would respond to the failure of their largest counterparty. our stress tests demonstrate that banks have now built enough capital to withstand a severe recession. the capital - building phase of the post - crisis era is now complete, but as part of ccar, stress testing continues to contribute to the significant and ongoing improvement since 2009 in risk management by banks. the original reason for the qualitative objection aspect of stress testing was to provide incentives for banks to address the risk - management shortcomings that the federal reserve had observed during the financial crisis. for example, many firms supervised by the federal reserve had substantial deficiencies in their ability to measure, monitor, and manage their risks. these shortcomings made it difficult for banks to accurately report their risk exposures to the board, and consequently, threatened to undermine the credibility of the stress tests, which were, and remain, dependent on data | 0 |
guy quaden : a changing imf and world bank speech by mr guy quaden, governor of the national bank of belgium, at the annual meetings of the imf and the world bank, istanbul, 6 october 2009. * * * i would like to warmly thank the turkish authorities for their hospitality shown during these annual meetings. the past 12 months have demonstrated the importance of a strong and effective imf. the fund reacted appropriately to the unfolding financial and economic crisis, by giving substantial financial support and advice. in this regard, i welcome that important modifications to the fund β s instruments were implemented, improving its capacity to help its members. moreover, i welcome the major initiatives that are being taken to improve the fund β s surveillance capacity. all members β full cooperation is needed to ensure surveillance traction. the fund must retain the central surveillance role and should not be subordinated to any outside process. the financial resources of the imf were significantly enhanced, reassuring its members that the fund has enough ammunition to fight any crisis. i expect that the money raised under the bilateral loan agreements and the imf notes programme will be folded into the new and expanded nab. the fund β s legitimacy follows from its almost universal membership combined with adequate governance arrangements. as the world changes, the fund must adapt to those changes. the governance reform being discussed is therefore important to improve the fund β s legitimacy, as well as its effectiveness. i fully support the general quota review to be concluded by january 2011. this review should be based on objective economic and financial parameters, relevant for the fund β s mandate and applied in a uniform manner. it should be guided by the long term resource needs of the fund, ensuring the fund remains a quota - based institution and should at the same time realign quotas with countries β economic position and their responsibilities in the world. this also implies that there cannot be a disconnect between representation and financial contributions. the oversight role of the executive board should be strengthened and the board should focus more on the fund β s strategy. but there is no reason to fundamentally change the responsibilities of board and management. the current number of seats on the board, 24, is appropriate for an institution the size of the imf. a reduction by a few seats will not significantly improve its effectiveness. moreover, the freedom of the members to form constituencies should be respected. the strategic guidance provided by the imfc could be improved. but more political involvement should not lead to politicized decisions. | also, the composition of the board and the imfc should remain aligned. the mandate of the fund should be updated. i favour the formal extension of the fund β s jurisdiction over capital account transactions. the world bank group has shown its commitment to assist developing and transition countries in dealing with the aftermath of the multiple crises they face in a more flexible fashion, by stepping up its lending capacity and by speeding up the delivery of its assistance. however, the world bank group β s capacity to respond to crisis situations should be further enhanced. responding to a rapidly changing environment requires some important institutional and organizational changes. the bank needs to evaluate and reshape its lending toolkit and its decentralization policy in order to be able to respond more efficiently and effectively to these challenges. work is ongoing, but it needs to be accelerated. during the past year, the bank has been stretching the use of its capital in order to increase its lending capacity in response to the crisis. the question is whether a capital increase at this stage is necessary. therefore, the bank should analyze and assess in more detail postcrisis demand for world bank lending and explore other options before resorting to a general capital increase. as a result of the crises, the number of people living in extreme poverty has increased significantly. the bank group should not lose focus on this vulnerable group. in this respect we call upon all donors to secure a sufficient replenishment of ida - 16, for which negotiations will start soon. the second phase of voice and participation reform should be concluded within the agreed timeframe. this reform should be based on a widely accepted measure for countries β relative economic weight, but should also take into account members β contributions to ida. other ongoing institutional reforms related to decentralization, workforce diversity and country ownership, should receive proper attention in the debate. to conclude, a successful reform of the bretton woods institutions is important to keep the institutions in the vanguard of the effort for a more prosperous and equitable world. decisions on the reform of the institutions must be taken by their members. no other international institution is better placed to execute their mandate. | 1 |
2002 ) for electronic reporting of trades and online dissemination system and submission of bids for primary issuance of government securities and a clearing corporation of india ltd. ( ccil ), promoted by banks, financial institutions and primary dealers for clearing and settlement of trades in foreign exchange, government securities and other debt instruments, commenced operations in april 2001. the ccil acts as a central counterparty ( ccp ) to all transactions and guarantees settlement of trades executed through its rules and regulations eliminating counterparty risks in adherence to international best practices. oversight over the payments and settlement system is vested in a national payments council, and board for payment and settlement systems established within the rbi. as may be seen from this brief description of the various measures that had to be taken to develop the market and institutional framework for efficient monetary policy transmission, development of markets is an arduous and time consuming activity that requires conscious policy making and implementation. markets do not develop and function overnight : they have to be created, nurtured and monitored on a continuous basis before they start functioning autonomously. iii. exchange rate management the regime shift in the conduct of exchange rate management in india that occurred in the early 1990s had a significant impact on the monetary policy framework. coincidentally, the 1990s were characterised by bouts of currency turmoil and contagious financial crises in many parts of the world, developing, transitional and developed alike. monetary policy became increasingly complex. for the majority of developing countries, including those in the asian region, which continue to depend on export performance, appropriate exchange rate determination is of great importance as volatility imposes significant real effects in terms of fluctuations in employment and output and the distribution of activity between tradeables and non - tradeables, fluctuations that are difficult to absorb in such economies. in the fiercely competitive trading environment where countries seek to expand market shares aggressively by fiercely compressing margins, volatility in the exchange rate can easily translate ex ante profits into ex post losses along with the deleterious collateral impact on employment and economic welfare. the determinants of exchange rate behaviour however, seem to have altered dramatically. earlier, factors related to changes in merchandise trade flows and the behaviour of commodity price inflation were well understood and provided guidance for operating monetary policy. in this environment, monetary policy principally targeting low inflation was consistent with exchange rate changes under purchasing power parity. these traditional anchors of understanding have been swept away by the vicissitudes of capital movements, with currencies often moving far out | exchange rate depreciated, reflecting the fact that in a subdued global economy, exports are more sensitive to income ( i. e. global demand ) than to price. 46. reflecting the current and capital accounts in the bop, the exchange rate depreciated both in nominal and real terms ( table - 3 ) three concerns about cad 47. there are mainly three concerns about the cad in the balance of payments : ( i ) the quantum of cad ; ( ii ) the quality of cad ; and ( iii ) the financing of cad. let me briefly address each of these. bis central bankers β speeches quantum of cad 48. reserve bank β s estimates show that the sustainable cad for india is 2. 5 per cent of gdp. a cad above the sustainable level, year after year, is a clear macroeconomic risk as it raises concerns about our ability to meet our external payment obligations and erodes the confidence of potential lenders and investors. 49. an additional concern is that we are having a large cad even in the face of slowing growth. this is perplexing because economic logic suggests that the cad should improve in a slowing economy due to a decline in import demand. cross country evidence in fact supports this hypothesis. such an adjustment has not manifested in india though because : ( i ) oil and gold imports are relatively inelastic to income changes ; ( ii ) on non - oil imports, domestic supply is still unable to compete with imports, and ( iii ) supply constraints and subdued external demand are impeding exports. quality of cad 50. the concern about the quality of cad arises from the composition of imports. if we were importing capital goods, we can maybe countenance a higher cad because investment in capital goods implies building production capacity for tomorrow. on the other hand, import of gold, largely as a hedge against inflation, is a deadweight burden, especially at a time when the cad is beyond the sustainable level. financing of cad 51. even as the cad has been high, we have been able to finance it because of a combination of β push β and β pull β factors. on the push side is the amount of surplus liquidity in the global system consequent upon the extraordinary monetary stimulus provided by advanced economy central banks. on the pull side are the measures taken by us to attract capital flows such as liberalizing fdi, expanding the limits for foreign investment in corporate and government debt and easing restrictions on external commercial borrowing by corporates. 52. | 0.5 |
most of the time. indeed the high quality of accounting standards in this country is one critical reason why capital markets are so efficient. but the lessons of the past few months remind us that accounting rules can be bent. for six years i was a member of the emerging issues task force of the financial accounting standards board. this is the rulemaking body that deals with divergence in practice. the eitf β s role is to provide timely financial reporting guidance where divergence in practice is developing. in the time i served on the eitf i came to understand that professionals could and did disagree on the best accounting standard to apply to a new type of transaction. that is at the very heart of the struggle to keep accounting standards current. the rapid pace of innovations that i just mentioned makes it impractical to have a rule in place to anticipate every business transaction. rather, the more complex and dynamic the world of business becomes, the more important it is that accounting be based on strong principles that are sufficiently robust to provide the framework for proper accounting of new types of transactions. in the course of their work, financial officers and auditors face conflicts between the needs of the client, which is the management and board of the corporation that engages them, and the professional ethical standards that outside parties - - investors, customers, and creditors - - expect from them. while auditors are engaged by boards of directors, the users of the auditors β opinions are these third parties. if outsiders did not need independent assessments of standardized financial information, companies could design their accounting systems in any way they desired to support their business objectives. but the effective functioning of u. s. capital markets requires that basic information on the financial condition and performance of the organization be prepared and presented in a consistent way so that outsiders using the information can compare different companies. thus, we need to insist on higher professional standards and not permit financial officers and auditors to benefit from β gaming β the rulesbased accounting standards that are increasing in complexity, particularly in the united states. the core of these basic accounting principles should be professional standards followed by every corporate accountant and every outside auditor that would insist that they can answer β yes β to these questions : β does the accounting method selected faithfully represent the economics of the transaction? does the recognition, measurement and disclosure provide the user of financial reports with sufficient information to discern the nature of the significant transactions and risks of the organization? β but rules alone do not guarantee good financial | . this is because temporary shocks to food and energy prices typically don β t translate into changes in inflationary pressure. however, if these shocks persist, they may have an effect on core inflation and, more generally, on the economic behavior of households and businesses. core inflation can be affected when the price changes are propagated along the production chain - say from oil prices to the prices of chemicals and ultimately to the prices of goods made with those chemicals. in addition, shocks to food and energy prices may affect inflation expectations. thus, we also pay attention to broader measures of inflation. all things considered, the scene appears to be set for a deceleration in prices. one contributing factor is likely to be the slowing in economic activity i already discussed, which should ease the overall pressure on resources. another important factor affecting the inflation outlook is household and the numbers cited here refer to the price index for personal consumption expenditures ( pce ), excluding food and energy, as published by the commerce department in the national income and product accounts. business expectations for inflation. as best we can judge, inflation expectations appear to be well contained : measures of longer - term inflation expectations, based on surveys and on a comparison of yields on nominal and inflation - indexed government debt, have remained within the ranges in which they have fluctuated in recent years. finally, the recent decline in energy prices, if sustained, should reduce cost pressures along the production chain. but a decline in the inflation rate is not assured. outside of the housing and automotive sectors, growth remains sound and labor markets remain tight, especially for skilled workers. the unemployment rate began to decline in the second half of 2003 and by the fourth quarter of last year stood at a relatively low 4 - 1 / 2 percent. with labor markets comparatively tight by historical standards, unit labor costs have accelerated over the past year, and firms may pass on some of these higher costs to consumers. however, strong business profit margins, which are currently well above their historical averages, could act as a shock absorber if cost strains were to intensify. all told, in my judgment, inflation appears poised to decelerate in coming months as energy prices stabilize and resource pressures ease. but the risks to that outlook seem tilted toward the upside. the federal reserve and consumer protection my remarks on the economic outlook discussed developments in housing markets, but now i would like to delve into a specific area of mortgage lending : consumer awareness and understanding of changes in mortgage markets. given | 0.5 |
nestor a espenilla, jr : maintaining a conducive macroeconomic environment speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the european chamber of commerce of the philippines ( eccp ) membership luncheon event, makaty city, 25 october 2017. * * * mr. guenter taus, eccp president, distinguished officers and members of the eccp, special guests, ladies and gentlemen, good afternoon. the european union ( eu ) with its 28 member states and 512 million citizens forms the second largest economic market of the world. closer to home, 15 percent of philippine total exports go to the eu, making it a key trading partner. a major source of direct investments comprising roughly 12 percent of total gross placement of foreign direct investment comes from the eu. moreover, nearly 12 percent of total cash remittances from filipino overseas workers originate from the eu.... it cannot be doubted that the eu is a formidable economic partner of the philippines. with this important relationship in mind, and with a view of building stronger ties, cooperation and collaboration, it is my pleasure and privilege to be your guest speaker at today β s membership luncheon. i thank the european chamber of commerce of the philippines ( eccp ) for the invitation and welcome this opportunity to speak about our initiatives at the bangko sentral ng pilipinas which are aimed at promoting a conducive business climate. i am also pleased to share in greater detail how the philippines offers significant investment prospects as the economy is expected to grow strongly in the next few years. as long - term investors in the country, you may have witnessed how the macroeconomic stability we now enjoy was brought about by significant structural reforms pursued through the years. the list of reforms is long and the scope wide ranging. it is because of these reforms that price and financial stability have been achieved and maintained. since adopting the inflation targeting framework in 2002, inflation has generally been kept low and stable. this is our source of credibility as a monetary authority. to sustain the positive growth and inflation dynamics in the country, the bsp enhanced the implementation of inflation targeting through the adoption of the interest rate corridor ( irc ) system. the irc enhances the link between the bsp β s monetary policy stance and financial markets, and from there its impact on the real economy. the primary benefit of the adoption | pie. indeed, while implementing the nrps is most challenging, it also represents vast opportunities from the business point of view. equally significant, digitization of payments can promote greater financial inclusion. our national baseline survey in financial inclusion showed that only 4 out of 10 filipino adults currently have savings, of whom only 32. 7 % put their money in banks. the survey also indicated that 47 % of filipinos have debts but banks contribute only 4. 4 % of their borrowings ; the rest are from family, relatives, friends and informal lenders. ladies and gentlemen, the nrps initiative is a rare opportunity for all of us to work together to do something that can be a real positive game changer for the economy and for our people. bis central bankers β speeches i call upon the bancnet community therefore to give your full support to establish a safe, efficient, and reliable national retail payment system. as albert einstein once said, it is not enough to be a success, strive to be of value. once again, congratulations to bancnet on its 25th anniversary. mabuhay po tayong lahat! bis central bankers β speeches | 0.5 |
urgent, when decision - making processes need timely and high - quality studies, which can benefit from broader cross - country perspectives. these international awards are a way of encouraging both competition and cooperation. the aim is to not only recognise the extra talent of the winning teams, but also to get to know that of the other participants. this is why we arranged this awards ceremony. therefore, i would like to salute also those teams who have not won any prize and reassure them that there will be many more opportunities in future months. as a final word, let me take this wonderful opportunity to thank our colleagues and organizers from the bis and the bank of italy for their ceaseless patience and hard work in taking up an exceptional organizational challenge. thank you all. 2 / 2 bis central bankers'speeches | ignazio visco : awards ceremony for the g20 techsprint on green and sustainable finance welcome remarks mr ignazio visco, governor of the bank of italy, at the awards ceremony for the g20 techsprint on green and sustainable finance, organized by the bank of italy and the bank for international settlements, milan, 25 october 2021. * * * i am delighted to welcome you to this awards ceremony for the second g20 techsprint on green and sustainable finance organized by the bank of italy and the bank for international settlements. i would like to thank benoit cΕure, andrew mccormack and the whole team from the singapore bis innovation hub for their invaluable cooperation in all the steps of our techsprint. techsprints are technological competitions designed to spur innovation, collaboration and creative solutions to daunting problems. our g20 techsprint had a very ambitious goal. it was designed to help financial markets in sharpening their assessment and selection tools for channeling funds towards green and sustainable finance, leveraging on the latest technologies. fintech and innovators were summoned to put forward their best solutions. i am very pleased that the improvement in the public health situation, following remarkable progress in the vaccination campaign, allows me to be here in milan to acknowledge the achievements of the 21 brilliant finalist teams who have offered valuable technological contributions in a very special area. indeed, finding ways to foster appropriate green and sustainable finance to invest in the crucial fight against climate change has been one of the key priorities of the italian presidency of the g20 this year. the urgency of acting to stop climate change and of mitigating its consequences is plain to see. the increase in the intensity and frequency of extreme weather events has obvious, and major, social, as well as economic, consequences. central banks and supervisory authorities, international institutions and market participants have therefore been paying significant and increasing attention in recent years to developing a better understanding of the implications of climate change for the financial sector and financial stability. in fact, climate change - related financial risks pose both micro - and macroprudential concerns, but analysis and research are still at an early stage. although there is broad consensus within the scientific community on the trends and causes of climate change, the timing and magnitude of future climate outcomes remain uncertain. this range of possible future physical outcomes arising from climate change is crucial to understanding β climate risks β ( or better again, β | 1 |
some use technology maliciously, many more use it for a good cause. only by embracing this advancement, and by working together with tech - players, can we synergise and fully reap the benefits for the economy. in response to these technological shifts, β regtech β developments ought to be a high priority for global financial regulators. an end goal is to balance the risks and opportunities within the technological sphere. equally important here are the complementary roles of governments and industries in sharing information, so that we can holistically mitigate various aspects of security threats. the catalytic role of behavioural analytics and big data further provides us with tools to address threats channelled through the financial system. in order to adapt to the borderless nature of globalisation, international cooperation is vitally important. beyond the financial sector, we must prepare our human capital for the future. close collaboration between public and private sectors is critical to ensure that displaced workers are adequately retrained and equipped with new skills. those dislocated should not feel sidelined. we can address labour displacement by investing in education, skills re - training and increasing women β s participation in the workforce. we need to take a hard look at the current landscape of social safety nets, and draw best practices β both those tried and tested, and practices that can best respond to new challenges and needs of society. conclusion looking ahead, globalisation will likely work if we widen the horizon that touches positively on all segments of society. negative spill - overs are likely unavoidable. but it is incumbent upon us to formulate policies and give greater attention to those most adversely impacted by this process. kofi annan compared globalisation to gravity. with weightlessness, astronauts experience intense dizziness and lose their sense of orientation. without gravitational pull, their bones weaken, ligaments deteriorate and muscles atrophy. the same can be said about the force of globalisation β without it, economies weaken, relationships deteriorate and growth atrophies. globalisation is slowly but surely solidifying our shared future as one global nation of states. it is our collective responsibility to strengthen and sustain the state of this nation for the benefit of future generations. 4 / 5 bis central bankers'speeches let me end here by thanking the eminent speakers and participants for being here, and i look forward to hearing your views. i hope that you will also take some time during your stay here to enjoy the diversity of our country. thank | financial agreements and commitments. it is from this perspective that research has the potential to advance the current conversation on global solutions. as we re - evaluate our path of policymaking, there must be heightened focus on evidence - based research and greater room for experience - based policymaking. in line with the spirit of sasana, our meeting point today for the learned and the wise, i look forward to the exchange of ideas at this conference. in this regard, i would like to humbly offer some thoughts on three areas where the gains from globalisation can be safely acquired, more equitably dispersed, and impose the least cost to society. firstly, we must make financial globalisation safer and its benefits distributed more equitably. the global financial crisis, and the asian financial crisis, clearly demonstrated the risks and the damage that could be wrought by financial globalisation. it amplified the costs of policy and regulatory lapses and failures in crisis prevention and management. it is interesting to observe that despite consequences primarily associated with financial globalisation, trade has received the brunt of the blame. let me illustrate β in the wake of the gfc, between november 2008 to december 2009, 390 trade protectionist measures were announced or implemented by 19 of the g20 members. ironically, financial globalisation channels were not addressed as quickly. it is surprising how policymakers, particularly in the advanced economies, have yet to arrive at a consensus in recognising the harmful effects of free capital mobility that is disconnected with the real economic activity. this is an issue that many remain divided on until today. while we have instituted policy reforms to better manage our financial systems and institutions, more can be done. we need effective frameworks to ensure financial globalisation contributes to risk diversification, consumption smoothing and efficient intermediation of productive capital across international borders. the global community should decisively address the risks posed by large and volatile short - term capital flows. not enough is being done at the global level to manage the negative spill - overs to recipient countries. here, the imf can play its role as the trusted policy advisor. the fund can do more to ensure that global financial aspirations consider diverse circumstances and national objectives. efforts to encourage a more inclusive process in setting global financial standards and initiatives are positive steps in the right direction. perhaps the most important development of late is the unravelling of a β one - size - fits - all β approach to managing international financial flows. again and again, previous experiences | 1 |
prudently manage the bank β s risk, since they bear more of the risk of the bank β s activities. holistic review of capital standards i initiated a review of capital standards as one of my first actions as vice chair for supervision. this review was focused on capital requirements for large banks with more than $ 100 billion in total assets. capital requirements are multi - layered with different components. a holistic approach is important because the requirements function as a system β each component treats risks and associated capital needs differently, but all components together result in a certain amount of capital required. banks manage their operations with an eye on the entire system, and as such, adjustments to one part of the regime may imply adjustments to another. to that end, over the last nine months, i have engaged with a wide range of parties : policymakers and staff from the federal reserve and other agencies, banks and financial sector groups, public interest groups, members of congress, and academics to get a broad perspective on how the fed β s capital standards interact with each other and the result they together achieve. in the midst of this review, we once again learned the for a more in - depth discussion of why bank capital matters, see my speech in december 2022 on this topic : michael s. barr, β why bank capital matters, β ( speech at the american enterprise institute, washington, dc, december 1, 2022 ), https : / / www. federalreserve. gov / newsevents / speech / barr20221201a. htm. - 3importance of resilience when a sudden bank run and contagion caused three large banks to fail and we experienced significant stress in the banking system, stemmed only by invocation of the systemic risk exception and creation of an emergency lending facility. this should make us very humble indeed. i reviewed whether changes would be appropriate to better align capital requirements with risk - taking, to help ensure that our banking system is sufficiently resilient to serve its vital role in our economy. any proposed changes would go through the standard notice - and - comment rulemaking process, allowing all interested parties ample time to weigh in on the proposed changes. any final changes to capital requirements would occur with appropriate transition times. i will be pursuing further changes to regulation and supervision in response to the recent banking stress, including how we regulate and supervise liquidity, interest rate risk, and incentive compensation, as well as improving the speed, agility, | the risks posed by different banks engaged in a variety of activities. with respect to stress testing, i believe that the stress capital buffer framework is sound. 3 at the same time, i believe that the stress test should continue to evolve to better capture risk. the exploratory analysis conducted this year demonstrates the capacity of supervisory stress testing to test for a wider range of risks and the value of doing so. any changes to the stress test should be complementary to the changes to the risk - based capital framework i mentioned above. with respect to the other capital buffers β the global systemically important bank ( g - sib ) surcharge 4 and the countercyclical capital buffer ( ccyb ) 5 β i am not recommending fundamental changes. for the g - sib surcharge, i am recommending that we improve the measurement of systemic indicators under the g - sib surcharge framework, reduce β cliff effects, β and increase the sensitivity of the surcharge to changes in a bank β s risk profile. with respect to the enhanced supplementary leverage ratio ( eslr ), i am not recommending changes to the calibration at this time. with the revisions in risk - based capital requirements i mentioned above, the eslr generally would not act as the binding constraint at the holding company level, where treasury market intermediation occurs. the stress capital buffer framework uses the results of the supervisory stress test to calibrate a risksensitive buffer above a firm β s minimum risk - based capital requirements. a firm whose capital ratios are at or below its minimum plus its stress capital buffer requirements and any applicable global systemically important bank ( g - sib ) surcharge and countercyclical capital buffer ( ccyb ) is subject to automatic restrictions on capital distributions. the g - sib surcharge requires a firm that is identified as a global systemically important bank holding company to hold additional capital based on a measure of the firm β s systemic risk. the ccyb requires a firm to hold additional capital when systemic vulnerabilities are meaningfully above normal. - 6we will carefully monitor treasury market intermediation, and if problems arise, will consider appropriate policy responses. basel iii endgame an important aspect of my proposals will be to implement the changes to the risk - based capital requirements, referred to as the basel iii endgame, which are intended to ensure that our minimum capital requirements require banks to hold adequate capital | 1 |
radovan jelasic : price stability and state ownership in serbia speech by mr radovan jelasic, governor of the national bank of serbia, at a roundtable discussion with representatives of the government of serbia, belgrade, 3 july 2007. * * * ladies and gentlemen, let me focus on this occasion on two topics : 1. stability of prices in the light of interplay between fiscal and monetary policy, and 2. state ownership. few days ago i heard someone say : β it is the stable currency that everybody wants at first, and then they want as much as possible of the same currency β. that is a true picture of serbia today. and, while monetary policy sets a priority to constantly watch over the first part of this sentence, our citizens soon forget that a β surplus brings on a headache β, i. e. that by increasing spending we keep going back to the first part of the sentence and demand β stable currency. β it is of course unrealistic to expect citizens to gladly forsake some of their earnings in favour of the state so that the currency could remain stable. on the other hand, that is exactly why countries have or should have a responsible and professional government which takes into account medium and long run solutions to macroeconomic issues and is fully aware that the second part of the above sentence β and then they want as much as possible of the same currency β, in fact means inflation. in contrast to the nbs whose main objective β to attain and preserve price stability β is precisely defined by the law, governments are free to define their objectives and are not bound by any legal formulations. governments often alter their objectives as they go along. they are often unwilling to remember promises made only a few days earlier, not to speak of those made before they came to power or those made in their early days in power. as the governor, i am very pleased that the parliament has clearly defined our objective and that the objective is very good β β to attain and preserve price stability β. i am convinced, however, that that particular objective was set much more in line with the principle of β follow thy neighbour β policy than due to some deep seated conviction that price stability is key to economic development, improvement in the standard of living of all citizens, attracting foreign investment, etc. for forty years yugoslavia and serbia have been trying to attain β growth and development β and putting stability of prices into the second or the third line of interest. the culm | meeting of the central bank research association on 29 august. 3. non - general collateral ( non - gc ) refers to specific securities that are subject to particularly high demand in the repo market compared to similar securities ( general collateral, gc ). due to the high demand for these securities potential buyers in the repo market tend to offer a lower rate for cash in exchange, so that non - gc repo rates are usually below gc repo rates. 4. also in the united states and the united kingdom, the spread between overnight unsecured rates and collateral - driven repo transactions ( non - gc ) and short - term bill rates has widened since the start of the hiking cycle. | 0 |
identified to deal with the potential risks and vulnerabilities to the islamic system in this now more challenging international financial environment. these include steps that need to be taken for the implementation of the prudential standards ; the development of a liquidity management infrastructure ; the introduction of strong financial safety nets ; the development of an effective crisis management and resolution framework ; the development and implementation of accounting, auditing and disclosure standards ; the formulation of an effective macro prudential framework ; the development of credible credit rating institutions and processes ; and finally, to strengthen efforts for capacity building and talent development for the islamic financial services industry. given the global dimension of these building blocks, international cooperation and collaboration is significantly vital to advance these important agendas. regulatory harmonization commanding the highest level of international cooperation is particularly vital in the implementation of common prudential standards to safeguard the stability of the islamic financial system. this will contribute towards the harmonization of the regulatory and supervisory framework in islamic financial systems across borders. of importance is advancing the international standards and best practices that takes into account the distinct characteristics of islamic finance. such prudential regulation that considers the unique mix of risks associated with shariah - compliant financial business would enhance the effectiveness of the regulatory outcomes intended for islamic finance. much progress has already been made by the ifsb in promulgating an extensive set of prudential standards for the islamic financial services industry since its establishment in 2002. the ifsb has already introduced standards for capital adequacy, risk management, bis central bankers β speeches corporate governance and shariah governance. this important work has been significant in promoting international uniformity of regulatory frameworks and international best practices for the islamic financial system in different jurisdictions. its significant progress has benefited from the strong international cooperation and collective support from its member countries and global institutions. indeed, as an evolving global industry with varying stages of development across borders and various business structures and operating models used in the different markets, this close engagement has also allowed for the attainment of balanced views. whilst islamic finance has demonstrated resilience during the recent crisis, the ifsb has moved quickly to review its existing capital standards for possible enhancements and to incorporate new liquidity measures in its ongoing work in developing liquidity standards for islamic banking. this work is currently being addressed through the working groups for capital adequacy standards and for liquidity risk management. the overarching objective is to ensure that the salient features of islamic finance are effectively and | in asia is the rebalancing of the economies from being export - dependent to domestic demand becoming an important source of growth. rising incomes, stable labour market conditions and resilient financial systems have supported private consumption and investment activity. asia is, therefore, transitioning from being just global producers to being global consumers. asia also has the policy space to support and strengthen domestic demand. asia is becoming a huge cumulative market in the global economy. reinforcing the economic flexibility of asia is the diversity of the region. asia is one of the most diverse regions in the world in terms of size, stage of development, resources, economic structure, degree of openness and market orientation. in harnessing each other β s comparative advantage and leveraging on the regional complementarities, for asia as a region, the whole has become significantly greater than the sum of its individual economies. over the recent decade, this has generated a significant expansion in intra - regional trade, investment and financial flows. this trend is expected to intensify significantly going forward. the diversity of emerging asia also presents immense opportunities in terms of the growing markets across the entire spectrum of products and services. bis central bankers β speeches the third key trend that is shaping the future of the region is its demographic advantages. asia is by far the most populous region of the world, accounting for 60 per cent of the world β s population. a vast, growing and young middle class population, with increasing affluence, will be a key defining characteristic, and an underlying growth driver of asia. by 2030, it is projected that the current 500 million asian middle class will grow by more than six - fold, to be more than 3 billion. this will have significant implications on global consumption and trade patterns, and on urbanisation and infrastructure development. the scale is immense. the asian development bank has also projected that over this decade, asia will require an investment of over 8 trillion us dollars in infrastructure development. it has been projected that every year, 44 million asians are expected be added to the urban population. the opportunities generated by these trends are being further enhanced by greater regional economic and financial integration. the intensification in regional integration will not only contribute towards accelerating asia β s growth momentum, but also further strengthen the resilience and stability of the region. the increased intra - regional trade and investment linkages within asia over this recent decade have strengthened asia β s economic resilience to external shocks. indeed, the changing | 0.5 |
the potential for abrupt acceleration of nominal hourly compensation is surely greater. still, a strong signal of inflation pressures building because of compensation increases markedly in excess of productivity gains has not yet clearly emerged in this expansion. among nonfinancial corporations, our most reliable source of consolidated - 4costs, trends in costs seem to have accelerated from their lows, but the rates of increase in both unit labor costs and total unit costs are still quite low. nonetheless, as i have noted in previous appearances before congress, i remain concerned that economic growth will run into constraints as the reservoir of unemployed people available to work is drawn down. the annual increase in the working - age population ( from 16 to 64 years of age ), including immigrants, has been approximately 1 percent a year in recent years. yet employment, measured by the count of persons who are working rather than by the count of jobs, has been rising 2 percent a year since 1995 despite the acceleration in the growth of output per hour. the gap between employment growth and population growth, amounting to about 1. 2 million a year on average, has been made up, in part, by a decline in the number of individuals who are counted as unemployed - those persons who are actively seeking work - - of approximately 700, 000 a year, on average, since the end of 1995. the remainder of the gap has reflected a rise in labor force participation that can be traced to a decline of more than 500, 000 a year in the number of individuals ( age 16 to 64 ) wanting a job but not actively seeking one. presumably, many of the persons who once were in this group have more recently become active and successful job - seekers as the economy has strengthened, thereby preventing a still sharper drop in the official unemployment rate. in may, the number of persons aged 16 to 64 who wanted to work but who did not have jobs was 9. 7 million on a seasonally adjusted basis, slightly more than 5Β½ percent of the working - age population. this percentage is a record low for the series, which first became available in 1970. the gap between the growth in employment and that of the working - age population will inevitably close. what is crucial to sustaining this unprecedented period of prosperity is whether that closing occurs in a disruptive or gradual, balanced manner. the effects of the crisis in asia will almost certainly damp net exports further, potentially moderating the growth of domestic production and hence employment. the strength of domestic spending that has been bo | ##mediaries β through which the effects of monetary policy flow to the real economy β find themselves at a crossroads. starting in august, my fellow fed policymakers and i persistently subjected ourselves to the age - old dialectic in determining the breadth and depth of our policy response : what do we know? what do we think we know β that is, what do we suspect? what can't we know? and, perhaps most important, in light of various forms of uncertainty : what should we do about it? the more we asked ourselves these questions during this period of extraordinary tumult, the more we recognized the need to broaden our policy response beyond monetary policy's blunt traditional tool. changes in the policy rate affect many sectors, not just those that seem out the opinions i am expressing are my own and do not necessarily correspond with those of my colleagues on the board of governors or the federal open market committee. nellie liang and dave reifschneider, of the federal reserve board's staff, provided valuable contributions to these remarks. milton friedman ( 1968 ), " the role of monetary policy ", american economic review, vol. 58 ( march ), pp. 117 ; edmund s. phelps ( 2008 ), " our uncertain economy ", wall street journal, march 14. of balance. charlie munger, the under - heralded partner of the " oracle of omaha, " warren buffett ( perhaps comprising the finest investment team of the last half - century ), believes that economics remains a rather insular field of practice. he seems to delight in accusing the economics profession of suffering from " man with a hammer syndrome. " he recounts, " [ t ] o the man with only a hammer, every problem looks pretty much like a nail. " 3 i suspect munger feels similarly about the orthodoxy of monetary policy. consistent with munger's admonition, the fed saw it necessary to expand our toolkit beyond the proverbial hammer of the policy rate in the last nine months. and as i discussed in remarks last month, the fed's nontraditional policy response included the use of innovative liquidity tools to counter the market turmoil and improve the functioning of financial and credit markets. 4 in my remarks today, i would like to discuss the use of the hammer β the setting of the federal funds rate β particularly in extraordinary times. of course, determining the proper level of the federal funds rate is rarely simple, given typical imprecision on | 0.5 |
undergoing the process of balancesheet repair, limiting the contribution of private consumption and investment to the economic recovery. on the other hand, the relatively less affected emerging economies are recovering steadily amid robust domestic demand ( figure 1 ). bis central bankers β speeches this growth discrepancy between advanced and emerging economies and its implications for the turkish economy became the key determinants for the central bank of turkey β s ( cbrt ) monetary policy strategy in the fourth quarter. exceptionally loose monetary policies adopted by advanced economies to eliminate the downside risks on economic activity not only boosted global liquidity but also stimulated the search for yield, which encouraged more capital flows into emerging economies. moreover, the weak recovery in developed economies β turkey β s main export destinations, dampened foreign demand growth ( figure 2 ). low interest rates across the globe, soaring imports driven by strong credit growth amid increased short - term capital inflows, and weaker foreign demand caused the current account deficit to widen rapidly in 2010. all of these developments prompted the cbrt to adopt a strategy, which partly targets financial stability besides the main objective of price stability, parallel to the conditions referred to as the β new normal β. in this context, as stated previously, the cbrt has actively begun to use tools such as required reserves and liquidity management, in addition to the one - week repo auction rate, the main policy instrument. 1. inflation developments having summarized the global economic conditions and the implications of this outlook on the monetary policy, i would now like to inform you about the inflation developments of the last quarter. as you will recall, we underlined in the october 2010 inflation report that the increases in unprocessed food and tobacco prices β which are beyond the immediate control of the cbrt β added about 5 percentage points to annual inflation, and suggested that these items would leave sizable room for disinflation. indeed, inflation dropped by 2. 83 percentage points, yielding a rate of 6. 4 percent, meeting the year - end inflation target. as predicted in the previous report, the decline in inflation was due to the sharp drop in unprocessed food prices. accordingly, the annual rate of increase in food prices was 7. 02 percent at the end of 2010, undershooting the october estimate of 10. 5 percent. the slowdown that occurred was sharper than we expected. these developments in unprocessed food prices explain the almost one percentage point deviation in short - term inflation forecast | of the policy mix depends on the factors affecting price stability and financial stability. although it is too early to assess the success of these policies, initial impact so far seems promising. conclusion the recent crisis put front and center the rising economic power of emerging countries. it has also demonstrated the vulnerabilities within the global system, especially across financial markets. financial stability becomes a major concern for policy makers, which has the potential to reshape the monetary policy framework of central banks. significant steps have been undertaken, but significant progress is still needed to tackle global imbalances. that involves not only revisiting economic policies, but also economic and institutional infrastructure that shapes them. as the quest for a new global order continues both in theoretical and practical levels ; the predictability, balance and sustainability of the new global order will depend on the cooperative and coordinated efforts to establish a well - represented infrastructure. thank you for your attention. bis central bankers β speeches | 0.5 |
year or so. but the relatively stable aggregate outcome masks quite a lot of variation across countries. a good example is the high volatility in growth in the first two quarters of this year in the us and japan, the former resulting from weather, the latter from the consumption tax increase. nevertheless, the relative stability of macroeconomic outcomes might be delivering a little more stability in the numerator in investors β calculation of expected future returns. but it is not clear to me why there should be more stability in the denominator, the discount rate. if anything i would argue the converse, namely there is at least as much uncertainty about the future path of interest rates as in earlier periods. one popular argument for stability is that the low volatility reflects the forward guidance of central banks. this has purportedly reduced uncertainty about the outlook for policy. two - way volatility in interest rates has naturally been restricted as rates have moved towards the zero lower bound, but much of this effect has been present for some years now. bis central bankers β speeches moreover, with the zero bound being reached, policy uncertainty should translate to uncertainty about the use of other non - conventional tools to ease monetary policy. that is certainly true in japan in recent years and more recently has been the case in europe. but more importantly in my view, while there is more forward guidance from central banks in place than in the past, investors don β t have to believe it! indeed, there are plenty of examples in history where that has been the case. i find it somewhat surprising that the market ( in aggregate at least ) is willing to accept the central banks at their word and not think so much for themselves. moreover, as has been articulated any number of times, the guidance is clearly data dependent. if the data moves unexpectedly, in all likelihood so will the central bank. markets appear to be underestimating that possibility. one thing which is certain is that the low volatility will not persist. what will cause it to end? i really don β t know, as any of the events i mentioned earlier could have been a trigger for more volatility, but clearly they weren β t. one interesting market development is how cheaply volatility protection has been sold over recent months. there has been an increase in supply as more institutions who have not been traditional sellers of protection enter this market seeking returns as part of a search for yield. while that may have dampened volatility of late | fixed income markets globally, and most easily in us treasuries, there is little in the way of term premia ( that is, return for holding duration ). there also appears to be very little uncertainty priced in about the movement in short term interest rates. at the end of last year, the term premia had started to rise, separate from any increased uncertainty about short rates, this separation was a good thing. but those premia have now fallen right back. my concern is that both of these will rise in concert, exacerbating the disruptiveness of the sell - off. in thinking about the magnitude and nature of any sell off, an important question to think about is who will take the other side of the trade? how far do prices need to go before someone is willing to take the position? those questions are always relevant but the answers may be different this time around. i will now turn to look at some pricing developments in the foreign exchange market where as i mentioned earlier, there has been some return to more normal levels of volatility in recent weeks. fx the main development in foreign exchange markets in recent months is that the us dollar has appreciated. this has been a long - awaited event by many market participants, including ourselves. a sizeable number of macro funds had lost a fair amount of money over the past bis central bankers β speeches year waiting for this event to happen. 1 why the us dollar stayed at its low levels for as long as it did, and why it finally started to appreciate when it did, has baffled many in the market. as keynes famously said, β the market can stay irrational longer than you can stay solvent β. a few well - known hedge funds came close to proving that proposition over the course of this year. the appreciation of the us dollar was not associated with any noticeable change in interest rate expectations in the us, and, in the case of the aud / usd exchange rate, there was no material change in australian interest rate expectations either. while the us dollar has appreciated, on a trade - weighted basis it is still not that far above its all - time lows reached in 2011. it has only appreciated by 4 per cent in the past few months, which is a small move in the history of swings in foreign exchange rates, where movements of up to 40 per cent have occurred. similarly, while the euro has depreciated in recent months, on a trade - weighted basis the euro is not | 1 |
openness to the general public. we were not alone. that sentiment became mainstream across the globe, as well. central bankers are nowadays cornered to deliver more in their countries, to actively punish the offenders of fiduciary and prove more empathic with debtors and, why not, more compliant and tolerant with populist measures that affect the financial sector and macroeconomic stability. otherwise their independence would be put at risk, as it is already challenged by public representatives. given the rapid change in perceptions in a β post - truth β environment, with few impartial media and the increase in populism, most central banks across the world, including the national bank of romania, may face a possible delay in recovering the public trust to the pre - crisis levels. even if they spoke more plainly or loudly, using all the modern communication toolkits, the slow bridging 4 / 5 bis central bankers'speeches of the trust gap should not crush the contribution of independent central banks to the efforts to avert crises, achieve economic progress and be an open and responsible institution in the society. and, in the national bank of romania β s case, its legacy is an important pillar of romania β s modernisation. 5 / 5 bis central bankers'speeches | also well above industry and regulatory standards. your total loan portfolio is nearly half a billion which accounts to 65. 5 percent of your total assets. your lending activities have surely provided farmers and other entrepreneurial rural folks with wider latitude in accessing credit which translated to better lives for the rural community. with your wide array of deposit products and credit lending programs, you managed to sustain bottom line figures at very good levels. rang - ay β s performance definitely did not go unnoticed as evidenced by the various accolades from financial and non - financial organizations 2, the bangko sentral included. as such, one can say that rang - ay is poised to further improve its level of efficiency to ensure continuous market leadership during these challenging but equally rewarding times. to date, the rang - ay bank has 1 head office, 9 bank branches and 1 affiliate bank ( rural bank of burgos, which will be consolidated with rang - ay, inc. following the grant of the certificate of authority to operate by the bsp rang - ay received 1 award from the bsp, 7 awards from other banks, 1 award from rural credit and guarantee corporation and 3 awards from a private non - government organization ( ngo ). industry outlook let me therefore take the next few minutes to outline the banking industry prospects in 2006 to help you firm up your strategic plans for this year and beyond. we are optimistic that the rural banking industry will sustain its positive performance this year and remain in the forefront of reforms as catalysts of a broad - based development in the countryside. for our part at the regulatory front, the bsp remains committed to the continuous implementation of our reform program to sustain financial stability and growth. specifically, our objective is to have a more stable, more efficient and a more depositor and friendly banking system. we are still advocating clean up of banks β balance sheets through the expedient and innovative disposition of non - performing assets. this is central to restoring the credit supply to the productive sectors of the economy. our goal is to bring the banking industry β s npa / npl ratio to single - digit level. as of end - june 2005, the rural banking industry β s npa / npl ratios stood at 11. 9 and 14. 7 percent, respectively. this is still double the pre - crisis period since the sale of npas under the spv law only created a small dent on the inventory of acquired assets arising from soured loans. we, thus, welcome | 0 |
financing the transition. developed economies must lead by example and honour the usd 100 billion climate pledge made 14 years ago at cop15 in copenhagen. governments should also 1 / 3 bis - central bankers'speeches mobilise private finance by implementing transition policies and creating a sound and stable framework to attract capital flows at the national and global level. second, governments can push for reform of the multilateral financial architecture. the g20 β this year under india's presidency β can play a key role in unlocking additional funding. the review of the capital adequacy frameworks of multilateral development banks can offer such opportunity. more generally, we must identify and remove public and private barriers to green finance worldwide wherever possible. third, central banks around the world can and must, within their mandates, support the greening of the financial system. the network for greening the financial system, which brings together 127 central banks and supervisors from all around the world, has played a crucial role in accelerating global action and will continue to do so. we at the ecb have also made it a priority to take account of climate change, because ( i ) it affects inflation ; ( ii ) it affects our balance sheet ; and ( iii ) it is a financial risk for the banks we supervise. we have adjusted our corporate bond holdings and changed our collateral and risk management to better reflect climate risks and at the same time provide incentives to support the green transition of the economy. as supervisors, we make sure that banks consider climate risks when making business and lending decisions. we also stress test the impact of climate change on the economy and financial stability. through our advice, analysis and actions, we aim to manage the financial risks stemming from climate change as well as provide evidence to support the need for the transition i just mentioned. these transformations have occurred within a remarkably short period of just a few years, reflecting the growing momentum of our global collective efforts to combat climate change. today's conference is evidence of our shared dedication to ramp up our actions as the window to meet our climate targets narrows. we can preserve the 1. 5 Β°c threshold through our united efforts. as sir david attenborough so eloquently put it, " if working apart we are a force powerful enough to destabilise our planet, surely working together we are powerful enough to save it ". 6 through our actions, let's prove him right. 1 ki - moon, ban ( 2015 ), " speech to cop21 | christine lagarde : remarks at the summit for a new global financing pact speech by ms christine lagarde, president of the european central bank, at the summit for a new global financing pact, paris, 23 june 2023. * * * i am truly honoured to be with you here today at this important summit to address the most pressing issue of our time. eight years ago in paris, un secretary - general ban ki - moon opened the cop21 by stating that " paris must mark a turning point [ - ] " towards limiting global warming to 1. 5 Β° celsius. 1 today, the window of opportunity to achieve this goal is closing before our eyes : the past eight years have been the warmest on record worldwide2 and the critical 1. 5 c threshold for annual temperatures will likely be exceeded in at least one year before 2027. 3 record - breaking droughts, heatwaves and floods are already plaguing the world. they are inflicting suffering and damage on every continent and serve as a mere glimpse into the future. it is everyone's duty to take every possible step to ensure that the paris climate goal is reached. not only is this a matter of justice for future generations, it is also undoubtedly a matter of justice and responsibility for today's. developing nations are already the hardest hit by the impact of global warming. one fact is glaringly evident : developing countries are poised to bear a disproportionate share of the impact. more than 90 % of those who have perished owing to extreme weather events during the last half - century lived in these countries, where more than 70 % of reported disasters occurred. 4 the path forward is clear : we must forge ahead with a global transition to ensure our economies are future - proof. this means not only reducing greenhouse gas emissions to net zero and adapting our economies to shield them from climate change, but also tackling the root causes of the severe destruction of nature that is threatening the vital resources we rely on for our survival. ecb research shows that in europe alone, over 70 % of our economy is highly dependent on nature's ecosystem services5 β a figure that is likely to be much higher in developing economies. in taking up this challenge, there are at least three levers we can use to boost the funding needed for a green and just transition on a global scale. first and foremost, it is up to governments to lead the fight against climate change and honour their commitments to | 1 |
disadvantages the vulnerable groups with low bargaining power such as pensioners, housewives, students etc. it generates social disharmony and social tensions. β’ inflation also raises the costs of local enterprises by raising the prices of inputs and wages. this would adversely affect a country β s comparative advantage. β’ similarly, inflation also puts further pressure on the government budget by raising current expenditure due to increases in the prices of inputs and the salaries of employees. it also causes the revenue to fall behind the increases in the national income. therefore, the use of inflation as a measure for funding government budgets is not an advisable strategy for any government. this was very cogently expressed by dr. goh keng swee, economic pundit behind singapore β s economic miracle, in his reminiscences of why singapore chose to retain the currency board system, as follows : β financing budget deficits through central bank credit creation appeared to us as an invitation to disaster. there was no effective way of exchange control in an open trading economy like ours to deal with inevitable balance of payments troubles. β¦ β¦ the way to better life was through hard work, first in schools, then in universities or polytechnics and then on the job in the work place. diligence, education and skills will create wealth, not central bank credit. β there is no better explanation of the evils of inflation tax than the above statement of wisdom. countries which did not have this wisdom fell through the line and were gripped by uncontrollable hyper - inflation in their economies. the most recent example is zimbabwe where inflation presently runs at mo re than 3700 % p. a. its central bank governor, mr. gideon gono, recently lamented by equating his country β s hyper - inflation to an economic hiv, an epidemic that would kill people on a mass scale. hence, using inflation to fund budgets is just like getting a demon to work for you. | your credit decision is seriously flawed and sooner or later will translate itself into npa. why do we have high levels of npa? is the information necessary for evaluation of creditworthiness of a borrower available to the banks? is the credit decision taken on the basis of such evaluation - how current is the financial information on the borrower with the bank? the market is a dynamic place, where change takes place all the time. it is imperative that credit officers of banks be given maximum exposure to the real sector - the numbers in financial statements must have a direct relationship to the real sector to reflect the current status of the borrower β s business? they should support the repayment programme undertaken by the borrower on which the bank β s credit decision was predicated. you will see thus that information is critical to risk management without which you are groping in the dark and before long you will be faced with large losses. the emphasis should therefore be on the early identification of risk, which if addressed at the very initial stages, would not expose the bank to large scale losses at a later stage. effective credit risk management is the key to the health of the banking industry today. it is not the resolution of npa but the cause of npa that should be addressed. internal rating systems must be developed to afford an accurate and continuous picture of the level of risk exposure of the bank to individual credit risk so that timely action can be taken to soften the risk. management information systems must be strengthened. preventive and remedial actions should encompass additional capital, better internal controls and / or safer provisioning policies. capital is not a substitute for sound risk management. an operating environment based on prudent risk management rather than aggressive risk taking, gives us regulators comfort that profits are conservatively stated. this is the essence of prudence which underpins safe and sound banking. in an increasing trend to harmonise prudential frameworks across the globe, in recognition of the fact that banks, wherever they may be domiciled, are exposed to the same risks, it is becoming increasingly difficult to pursue country - specific solutions. we recognize that we too have to be internationally compatible in adopting common standards for regulation and supervision which are spearheaded by the basel committee. global financial reporting practices are not far away and there are efforts underway to establish a common set of internationally accepted financial reporting standards. differences of opinion between standard setters and regulators need to be reconciled ias 39 is one such which is | 0.5 |
). conclusion independence in the conduct of monetary policy is at the core of advanced modern economies. and it can be too easily forgotten by those who have only known its benefits. if the federal reserve lost its independence, its hard - earned credibility would quickly dissipate. the costs to the economy would be incalculable : higher inflation, lower standards of living, and a currency that risks losing its reserve status. now more than ever, market participants are watching the relationship between central banks and their governments. they are keenly gauging whether changes in conditions, policies, or practices pierce the veil of central bank independence. central bankers the world over must demonstrate that we are worthy of this moment, and will be steadfast protectors of our institutions β credibility. that means respecting our important but circumscribed role in the conduct of policy, and performing our mission with competence and consistency. | alan greenspan : stock options and related matters remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, at the 2002 financial markets conference of the federal reserve bank of atlanta, sea island, georgia ( via satellite ), 3 may 2002. * * * i asked jack guynn and bob eisenbeis what issues you would like me to address this morning. they suggested that events associated with the failure of enron have refocused attention on a number of accounting issues. in an economy as large, diverse, and complex as ours, sound corporate governance - - including the accurate measurement of corporate performance - - is essential if our nation's resources are to be directed to their most efficient uses. there can be little doubt that, on the whole, both, as employed in the united states in recent decades, have been of very high quality. we simply could not have achieved our level of economic performance if capital were allocated on the basis of grossly inaccurate information. but the very complexity and dynamism of our system requires that we constantly evaluate the tools employed for measuring corporate performance to ensure that they adapt appropriately to the evolving financial and economic environment. in that regard, the increasing use of stock option grants to employees has raised new challenges for our accounting system. such options are important to the venture capital industry, and many in high - tech industries have counselled against making any changes to current practices. they argue that the use of options is an exceptionally valuable compensation mechanism ; that recognizing an expense associated with these grants would reduce the use of options, harming high - tech companies ; that the effect of options on fully diluted earnings per share is already recognized ; and that we cannot measure the costs of options with sufficient accuracy to justify their recognition on financial statements. these are important concerns. this morning, i would like to address them and other related issues. the seemingly narrow accounting matter of option expensing is, in fact, critically important for the accurate representation of corporate performance. and accurate accounting, in turn, is central to the functioning of free - market capitalism - - the system that has brought such a high level of prosperity to our country. capitalism expands wealth primarily through creative destruction - - the process by which the cash flow from obsolescent, low - return capital is invested in high - return, cutting - edge technologies. but for that process to function, markets need reliable data to gauge the return on assets. measures of profitability | 0 |
1 ), and in kensington and chelsea average house prices have risen by almost 40 % since the start of 2005, compared with 20 % for greater london as a whole. eca international published a survey comparing average monthly rents for a 70 - square metre unfurnished flat in the largest cities and showed london over β¬ 2, 100, compared with new york around β¬ 1, 750 and paris below β¬ 1, 500. the figures on output also show that london has been growing relative to the rest of the country ( chart 2 ), and that has reflected the growth of financial and business services compared with other tradable sectors throughout the uk ( chart 3 and chart 4 ). and despite the fall in oil production in the north sea, we have seen a rise in the real exchange rate by over 15 % when comparing the period 1987 - 1997 to 1997 - 2007, although of course the financial sector would not have been the only factor behind that rise. more immediately, the gdp figures in may showed that financial intermediation grew by 6 % in the sixth months to 2007 q1 β an annual rate of over 13 %. that is not the same as the city of course ; but there is every reason to think the city has been growing at least as fast as the rest. however, while the success of the city is currently one factor in these trends, it is not the whole story. for a start there is a lot more to london than finance. there are other successful industries and, on the other hand, london is home not just to the wealthiest boroughs but also to some of the poorest and most deprived areas in the country. as a result it has one of the highest regional rates of unemployment overall. secondly employment and profits in the city have been highly cyclical. on scale first, a recent estimate put the total number employed in β city β jobs, including supporting professions like lawyers and accountants as well as bankers and asset managers, at around 340, 000. that amounts to about 9 % of the total in london ; significant but still lower than the number in distribution or in government services. and the growth of employment will continue to be the net result from the expansion of activity and from the economies made possible by it and by the relocation particularly of back office work to cheaper areas elsewhere in the uk or abroad. the jobs figures understate the importance of the sector in the economy because on average pay may be twice as high in the financial sector as in the rest of the | john gieve : london, money & the uk economy speech by sir john gieve, deputy governor of the bank of england, at the university of surrey, guildford, 26 june 2007. * * * introduction the past year has been one of rapid growth and record profits for much of the financial sector worldwide. the strength of the world economy has provided a favourable wind but the spectacular growth of derivative markets and the spate of leveraged buy outs have also fuelled the growth. and, of course, london has been at the centre of the story. in a speech in march i discussed the renewed ascent of london as a centre of international finance and concluded that it was based on powerful economic forces which were likely to persist. 1 i showed how the leading position london built up in the days when britannia ruled the waves gave it a strong comparative advantage based on language, law, time zone and, above all, by a concentration of expert labour. this allowed london to maintain an important role in international finance even while britain β s overall economic and political position was eroded. in the last twenty years we have seen a resurgence in the city which has established a strong position not just in traditional markets like foreign exchange, where its share is around 30 % of trading, but in new products, with a share in otc derivatives markets over 40 %. 2 the rapid growth of hedge funds in the west end is the latest example of the innovation that this cluster of financial skills has produced. you know something must be happening when the mayor of new york commissions a review of the threat london poses to new york β s position. london β s recent growth certainly has a cyclical element but it also reflects two more structural changes β the removal of barriers to international capital movements and the advances in information technology. these have led to a growing role for international capital markets compared to national banking and to a growing concentration of those markets in a few hubs among which london and new york are dominant. and this finance revolution is still underway. it is far more advanced in the us than in europe and in europe than in asia. in the absence of disasters therefore london, as the preeminent centre outside the us, can look forward to a long period of fast growth and expect its share of the uk economy to increase. this evening i want to discuss the implications of that trend for the uk economy and for economic policy. on the first, is london a goose laying golden eggs for the rest of the country or is it more | 1 |
to international trade, and through it, to wealth creation. the pinnacle of country β s trade performance was recorded during the reign of the king parakramabahu, the great, in the late 12th century. the evidence suggests that it was a complete free market economy policy that was followed during this whole period. according to the great chronicle of sri lanka, mahavansa, the king is recorded to have set - up the first ever export processing zone called antharaanga dhuura, bordering the present kalu ganga, bentara ganga and sinharaja forest. in this zone, elephants, ivory, timber, gems, pearls and spices were processed for export to india, china and the middle east 2. in order to facilitate trading with many different nations, the king parakramabahu made it mandatory for state officials to be fluent in foreign languages. during this period, sri lanka is reported to have functioned as a vibrant entrepot trade centre, the role played by singapore in the modern world. according to some authors, sri lanka had simultaneously imported and exported the same commodity, such as textiles and fabrics 3. this is considered as a very advanced form of trading known as intra - industry trade by modern economists. the same high profile of the country in foreign trade was continued unabated in the period afterwards. according to dr s arsaratnam 4, both the sinhala kings and the dutch used arabic traders to export elephants, gems, areca nuts and spices, and import rice, textiles and other requirements in the 16th to early 18th centuries. the british period that followed the dutch rule is marked by a continuation of the open - economy policy pursued by ancient sinhala kings. during this period, the country continued to rely on foreign trade for wealth creation and maintaining high standards of living. hence, the reliance on services, especially commercial services, for wealth creation was not a new policy paradigm for sri lanka. around the time sri lanka gained independence from the british rule, the country β s gdp was distributed in the proportion of 46 percent for agriculture, 20 percent for industry and the balance 34 percent for services. the high share of both agriculture and industry amounting to about a two - third of gdp indicated the prevalence of a limit for their continued growth devoid of a vibrant and efficient services sector. this anomaly was to be gradually, and in a slow pace, corrected in the subsequent five decades. in 1960, a slight improvement in the respective shares was observed with agriculture falling to | ) was enacted in 2007. the npsa empowered the bank of zambia to develop and implement the national payment systems policy so as to promote the efficiency, stability and safety of the zambian financial system. the bank of zambia thus designates players wishing to provide payment services such as money transfer services, mobile banking and other payment services. this process has strengthened the capacity of the boz to monitor transactions and to ensure that only safe and efficient institutions are allowed to provide payment services. distinguished guests, allow me to conclude by congratulating ecobank zambia limited for the innovative products that we are launching today. we hope that our people can send and receive money conveniently, safely, and at a reasonable cost. i also wish to call upon all banks and financial institutions to emulate ecobank by introducing such products which contribute to increasing access to banking services for the zambian people. the opportunity, primarily for banks and other financial institutions, is to find ways to leverage zambians in the diaspora to use remittance services that will both be profitable for the banks and will also provide them and their families with greater financial access. i thank you for your attention. | 0 |
this space, supported by consistently communicated, well - defined objectives and related evidence base, are necessary conditions for their acceptance and effectiveness. at present national macroprudential authorities play the central role implementing borrower based measures. the esrb however has an important coordinating role via the notification process. national authorities also benefit in their deliberations from interactions with the ecb. the ecb also has an important β top - up β power with regard to capital - based instruments like the ccyb and o - sii buffers. the impact of borrower based measures when they are binding is much more evident to the public at large than capital and liquidity restrictions imposed directly on banks. borrower - based measures can have important distributional and welfare effects in society, particularly in relation to access to home ownership. these factors underline the importance of getting the design of the measures right, taking into consideration country - specific factors, and also the need to communicate the overall framework and ensure it becomes generally acceptable in society as a permanent feature of the mortgage market. as well as the wide range of national - specific institutional features which influence the design and calibration of such instruments, this suggests that responsible authorities must be accountable at national level. although, we should be humble enough to acknowledge that the interactions between macroprudential policy measures may not be fully or correctly identified ex ante. significant progress has been made in the analytical toolkit to support macroprudential policy across the euro area, as was outlined in some of the presentations yesterday. as policy - makers 4 / 5 bis central bankers'speeches we should continue to draw on this input, encourage its further development, and understand where judgement in evaluating policies impact, effectiveness and interactions is necessary. in this regard, particularly as we are still in the early stages of an active macroprudential policy framework in europe, we should aim to avoid underlaps to ensure systemic risk is mitigated. as the framework in the eu develops, national designated authorities should continue to have a sufficiently broad set of tools to target identified systemic risks. we should continue to learn by doing. combined with a commitment to regularly, rigorously and transparently review policy measures, we will ensure the most effective tools are in operation, both in isolation and jointly, to mitigate systemic risk. * * * conclusion today, i have touched on a number of challenges that we have before us when considering the appropriate macroprudential policy framework for europe. as | ##sap bank stress test. the fsap adverse scenario was not predictive but designed to assess the capacity of irish banks to withstand a severe but plausible scenario of a simultaneous downturn in the irish and uk economies, characterised by a fall in property prices and a widening of sovereign spreads that triggers increased funding costs for banks. the exercise confirmed that the risks within the bis central bankers β speeches banking sector are manageable at a system - wide level. unsurprisingly, it also highlighted that some vulnerabilities still exist as a consequence of the recent crisis. the eba stress test serves as a useful barometer to assess the health of the european banking sector and focuses on the largest banks operating in the european union. relative to other member countries, the irish banking system has experienced higher loan loss rates since 2008. since projected credit losses in the adverse scenario are calculated based on past experience, the capital depletion in the adverse scenario is inevitably more pronounced for irish institutions. stronger starting capital positions coupled with ongoing balance sheet repair has enabled european banks, including the irish banks, to withstand a more severe scenario than in the 2014 stress test exercise. as with the fsap stress test results, the primary message from the exercise is that the irish banks included in the eba sample ( aib and bank of ireland ) are adequately capitalised but remain vulnerable to a downturn, especially in relation to the continued workout of problem loans and the sustainability under stress of current profitability levels. the fsap, eba and ssm stress test results, together with additional supervisory stress testing work, are being combined with the full risk assessment for all in - scope banks to feed into the annual supervisory review and evaluation process ( srep ), which is used to determine capital requirements and capital guidance for banks. in addition, the stress tests and srep inform the risk mitigation programmes, which are focused on driving the banks to continue to reduce their risk profiles. as the ecb is now the competent authority for the supervision of irish banks, the focus of our joint work includes ensuring that banks make further progress in the workout of problem loans, have credible business strategies and risk management plans to increase resilience to deterioration in their operating environment, including any adverse consequences of brexit. brexit the short - and medium - term macroeconomic effects on ireland of brexit depend on several factors. most directly, a slowdown in uk output growth and a depreciation | 0.5 |
economic mainstream. this would not only promote the opening of banking accounts amongst this target group but would also enable them to enjoy lower cost of financial services and better means of savings, thus benefiting the economy as a whole. as the electronic payment channels become more easily accessible, user - friendly and offered at a low cost, it would thus provide the opportunity to shift the remittance flows from the informal to formal channels. indeed, electronic payments can be one of the strategic tools to meet these objectives and achieve higher economic growth. electronic payment increases operational efficiency and improves productivity levels through expedient payments and receipts of funds. electronic payments would also provide the speed and convenience of making payments from any place or time. it also reduces costs through the reduction of redeployment of resources used for handling cash and cheques. accelerating the country's migration to electronic payments has therefore become a part of malaysia's larger national agenda to increase the efficiency of the nation's payment systems which would ultimately improve the competitiveness of our economy. cash payments in malaysia still account for a large portion of the number of transactions in the economy. going forward it is expected that its use will level off and stabilise with the increased use of electronic means of payments. credit cards, atm cards, debit cards including the e - purse application embedded in the mykad are among the card payments possibilities in malaysia. the increased use of cards is an international trend and is expected to gain significance in malaysia. giro transfers, other credit transfers and direct debit are also gaining significance by both individuals and businesses. finally, internet banking has also begun to experience stronger growth. while we have made considerable progress in promoting the adoption of electronic payment with notable growth registered across all electronic payment methods, paper - based payments still remains the more popular form of payment. cheques continue to account for a high percentage of the total non - cash retail payments while currency - in - circulation ( cic ) as a percentage of gdp remains relatively high at 5. 7 %. in 2006, malaysian consumers on average, made only 0. 7 transaction via direct debit and credit transfer and 0. 2 transaction via debit card transaction as compared to 84. 7 and 109. 5 transactions, respectively, in sweden. hence, more needs to be done to raise the level of adoption of electronic payments. in this regard, the bank has formulated an electronic payments roadmap aimed at bringing together relevant stakeholders to address the barriers that have | impeded the increased adoption of electronic payment in a comprehensive and strategic manner. the roadmap identifies the priority areas that require attention and collaboration to promote an environment that is conducive for greater use of electronic payment in financial transactions. firstly, is the need to put in place the payment infrastructure. the infrastructure for making payments would need to be widened and enhanced to provide the convenient access to electronic payments. in addition, solutions need to be developed to enable users to integrate easily with the payment offerings. secondly, the product range, the range of services would need to be expanded to cater for the different payment needs of consumers and business sectors. thirdly, the pricing framework, the formulation of a transparent and cost - effective pricing framework is important to provide the incentive structure that would spur the adoption of electronic means of payments. fourth, is the consumer awareness. programmes need to be implemented to inculcate the behavioral change among consumers. there needs to be trust and confidence in the electronic payment systems. the fifth area relates to the standards, the setting of common standards to address the interoperability of systems including standardising the payment messaging format is vital to the wider acceptance of electronic payment. finally, is the need to ensure the security and integrity of the payment system which thus requires the supporting regulatory and legal framework to be in place. among the series of initiatives that have been implemented to promote the greater use of electronic payment relates to the leadership role of the government in the migration to electronic means of payment. as most individuals and businesses have payment transactions with the government, the role of the government in accepting electronic payments has provided an important catalyst for the adoption of electronic payment on a national scale. in this regard, bank negara malaysia has been in active partnership with the government to drive the electronic payment agenda. this has also served to reinforce the government's objective to enhance the efficiency of the public delivery system. this collaboration has resulted in the acceptance of the use of cards including the atm card, which also functions as a debit card, for over the counter services and the offering of payment services via internet banking and the internet - based financial process exchange ( fpx ) payment system. another initiative undertaken has been the review of the remittance and e - money regulatory framework to encourage the introduction of payment products that would cater for the unbanked and underserved communities such as migrant workers and consumers with low income and low financial literacy and who may have no alternative but to rely on informal | 1 |
with each other, resulting in what we call digital islands. it is as if we are all putting our heads down and concentrating on developing our own platforms, forgetting that it is equally important for the platforms to communicate and work with each other. as suggested in the report, interoperation between the platforms could help to further modernise the global trade finance ecosystem and close the gap. 6. the commercial data interchange, also known as cdi, which the hkma is building, is precisely designed with enhancing interoperability in mind. by way of introduction, cdi aims to enhance the sharing of commercial data. currently, every time a bank wants to connect to a data provider, it has to set up a new, separate connection. with cdi, each bank and data provider will only need a single connection to the cdi platform, allowing banks to quickly access the business data of corporates. banks will also be able to conveniently and swiftly set up connections with new data providers because cdi uses standardised apis and data models, and adopts existing mainstream industry standards such as the legal entity identifier. 7. i mentioned that cdi is designed with improving interoperability in mind. because the platform can link up scattered digital islands and smoothen data sharing, it has great potential to enhance trade financing process and improve smes β access to financing. let me show you how this could be achieved with the aid of a story. 8. mr chu runs a small business called chu kee with the help of his wife and parents. chu kee imports chilled chicken from guangdong and sells them to supermarkets all around 1 / 3 bis central bankers'speeches hong kong. the delicious taste of the chilled chicken and the chus β impeccable service quickly earned chu kee a big group of loyal customers. 9. a few years ago, when mr chu was trying to apply for loans from banks to expand the business, he was unable to produce the financial statements required because he had never properly prepared one before. the loan approval process ended up taking almost six months, and the experience left mr chu rather upset, unfortunately. 10. last year, mr chu was ready to further expand chu kee, and decided to give cdi a try. this time, the banks, instead of asking for financial statements, obtained alternative data from various data providers through cdi. for instance, from integrated online shopping platforms, banks learnt the amount of chilled chicken chu kee supplied to | different supermarkets, and their value. 11. with the data, the banks understood chu kee β s latest operating conditions better and made credit decisions speedily. needless to say, before the data was used and shared, prior consent from chu kee was obtained. in the end, mr chu secured a substantial loan at a competitive interest rate, and was very pleased with the hassle - free experience. 12. now, what if i tell you that the above is based on a true story? 2 yes, during the technical exploration stage, cdi has already, in real life, helped smes in hong kong take more control of their own digital footprint, and use their own data to improve their access to financial services. importers of chilled food and sneakers, and manufacturers of phone accessories have already enjoyed the benefits of cdi firsthand. as more and more banks and data providers join cdi, we expect that an increasing number of smes will benefit from the platform. 13. for cdi to reach its full potential and successfully connect the digital islands, your active participation is crucial. cdi is definitely a team sport, and we all have a role to play as members of team hong kong. 14. the hkma, as a regulator, will facilitate a conducive environment, and we are doing that by building the infrastructure and offering guidance. to banks, we urge you to embrace fintech, and join the cdi platform. to data providers, we invite you to contribute meaningful data, such as logistics data and procurement data between buyers and suppliers, to enrich the types of data available. to sme owners, we encourage you to contact your bank and understand more about cdi. together, we can take hong kong β s data ecosystem to new heights, and ultimately contribute to bridging the global trade financing gap. 15. the benefits of a more digitally integrated trade finance system are plentiful, that much is certain ; and the hkma strives to help bring about an enhanced system in collaboration with different stakeholders. we look forward to working with the international chamber of commerce ( icc ) and the fung group in this regard so that the needs of the underserved segments can be better catered for. 16. before i close, i β d like to take this opportunity to offer you a glimpse of the hkma β s vision of digitalising cross - border trade. for those of you who have been following our cbdc developments | 1 |
be completely inadequate in the present volatile environment. even after the completion of the current round of increases in the quotas of the fund, the imf will not be in a position to supply the needs of its member countries in times of serious global financial crises. many recipients over the past year of imf assistance are also of the opinion that the conditionalities attached to imf loans are no longer appropriate for the present world environment. disruptions in international financial markets are no longer created by structural or temporary imbalances in international trade, but rather by volatile international capital inflows and outflows. the imf β s conditionalities are still directed, however, to the restoration of equilibrium in the current account of the balance of payments. a fourth conclusion from the developments of the past year is that the present international financial system of floating exchange rates and free capital movements provides increasing incentives for speculators and short - term profit explorers to exploit weaknesses of individual countries, often at the cost of the impoverished and the poor people of the world. 2. a hobson β s choice for the emerging markets smaller countries such as south africa can do little to change the world financial system, but may still be able to isolate themselves from the volatility of the world environment. this will, however, require comprehensive restrictive exchange controls on both residents and non - residents in respect of all international capital transactions. in the process, a country that moves in this direction will most probably be excluded from the ongoing process of financial globalisation, and will be barred from access to international capital markets. a few countries recently nevertheless opted for this alternative and rather preferred the route of isolation to the continued exposure of their economies to fickle foreign fund managers and international currency speculators. in the case of malaysia, it was judged that the country β s high domestic savings rate will generate sufficient funds to provide for its needs for future economic development. in the case of russia, the government had no other choice but to close its financial markets after a major collapse in the public and private sector financial systems. south africa, with its low level of domestic saving and massive needs for future economic development, has no choice. unless this country can rely on some regular substantial inflow of capital from the rest of the world, its economic growth rate will not create sufficient jobs for the already large number of unemployed and the annual addition to the labour force, or provide the resources needed for the social upliftment of the population. south africa must | therefore remain part of the global financial markets, and must pursue macroeconomic policies and introduce structural adjustments regarded as necessary to make the country attractive for foreign investors. it is not precluded that some important changes may be introduced to the world financial system over the next few years. south africa will, to the extent that it participates in this debate in various international fora, press for the introduction of measures that will reduce the volatility of the markets. we know from experience, however, that proposals for change to the global financial architecture can take a long time to find consensus, and changes will most probably only be introduced gradually. in the meantime, south africa will be exposed from time to time to volatile capital movements, and the domestic economy will remain vulnerable to external disturbances that may in the short term force macroeconomic policies inconsistent with domestic economic objectives. the question remains, what can, or should, south africa do to make sure that the domestic economy will, over the medium and longer term, be better protected against the disadvantages of international financial market volatility and still gain maximum advantage from international capital inflows? 3. the need for financial flexibility globalisation is about markets. it is markets that are being integrated in a worldwide system of unrestricted capital movements, and markets that are being opened up for participation by investors from all around the world. acceptance of any country in the global financial markets therefore requires a recognition of the principles of the market economy, and an adherence to the rules of the game. one of the basic rules of the game in a market economy is that governments must allow market forces of demand and supply to determine prices. intervention by governments in the markets for whatever purpose, if necessary, must always work through the markets, without suspending or restricting the forces of demand and supply. the price mechanism indeed provides the core discipline of the market economy, and through price changes, markets signal messages and activate automatic adjustment processes intended to hold demand and supply in equilibrium. in the context of international capital flows, the exchange rate is, of course, the most important price. it is important for the smaller countries therefore to ensure flexible adjustment processes for exchange rate changes in the environment of a volatile global financial environment. it is almost impossible to maintain a fixed exchange rate for any currency once large amounts of capital start flowing out of or into a country. efforts to maintain a fixed and unrealistic exchange rate in such circumstances will only entice speculative transactions that will eventually exacerbate | 1 |
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