text1
stringlengths 1
3.21k
| text2
stringlengths 1
3.21k
| label
float32 0
1
|
|---|---|---|
underlying the u. s. current account deficit are likely to unwind only gradually, however. thus, we probably have little choice except to be patient as we work to create the conditions in which a greater share of global saving can be redirected away from the united states and toward the rest of the world - particularly the developing nations. | to avoid preventable foreclosures, which can be costly to all involved β the borrower, the lender, and the communities in which they are located. steps that should be taken in this area include ensuring adequate funding and staffing of mortgage servicing operations and adopting systematic, proactive, and streamlined mortgage loan modification protocols aimed at providing long - term sustainability for borrowers. finally, the agencies expect banking organizations to conduct regular reviews of their management compensation policies to ensure that they encourage prudent lending and discourage excessive risk - taking. thank you. i would be pleased to take your questions. | 0.5 |
even when these headwinds fully dissipate. the next question i wish to consider is how the fed will likely manage its balance sheet as the taper process is completed and lift - off eventually occurs. unlike previous normalizations of monetary policy, which only involved the level of short - term rates, this prospective tightening cycle also involves considerations with respect to the size and composition of our balance sheet. the committee stated in its june 2011 exit principles that changes in shortterm rates will be the primary means for adjusting monetary policy post - liftoff, not discretionary shifts in the balance sheet. in other words, the balance sheet will be set on automatic pilot. i believe this approach still very much applies. however, the language in the june 2011 exit principles concerning agency mortgage - backed securities ( mbs ) sales no longer applies. as chairman bernanke noted in the press conference following the june 2013 fomc meeting : β while participants continue to think that in the long run the federal reserve β s portfolio should consist predominantly of treasury securities, a strong majority now expects that the committee will not sell agency mortgagebacked securities during the process of normalizing monetary policy. β the balance sheet would shrink post - lift - off as treasury securities matured and mortgages were prepaid, but outright agency mbs sales are no longer contemplated during the process of monetary policy normalization. also, i think that the language in the june 2011 exit principles with respect to reinvestment needs to be revisited. the exit principles state : β to begin the process of policy normalization, the committee will likely first cease reinvesting some or all payments of principal on the securities holdings in the soma. β there are two considerations that suggest to me that ending the reinvestments prior to lift - off may not be the best strategy. first, such a decision might complicate our communications regarding the process of normalization. ending reinvestments as an initial step risks inadvertently bringing forward any tightening of financial conditions as this might foreshadow the impending lift - off date for rates in a manner inconsistent with the committee β s intention. second, when conditions permit, it would be desirable to get off the zero lower bound in order to regain some monetary policy flexibility. this goal would argue for lift - off occurring first followed by the end of reinvestment, rather than vice versa. delaying the end of reinvestment puts the emphasis where it needs to be β getting off the zero | if individuals lost their jobs during a deep recession that has been followed by a still tepid recovery β a cyclical problem in labor markets. in the first case, the long - term unemployed may be less well - attached to the labor market in terms of exerting downward pressure on compensation, while in the second case they were particularly unlucky β they are long - term unemployed because of bad timing. i suspect that a much greater proportion of those who are currently long - term unemployed have simply been very unlucky compared to historical averages. this blunts somewhat the distinction between being short - versus long - term unemployed. β’ if the long - term unemployed are simply unlucky as opposed to not having the appropriate skills, then their impact on wages presumably depends on whether or not there is an excess supply of short - term unemployed. if there are plentiful shortterm unemployed, they may get the best job opportunities first. in part, this reflects employer bias against the long - term unemployed when they compete with those who have been unemployed for shorter periods. but, once the short - term unemployed pool is depleted, then the long - term unemployed will become more relevant to the labor market supply, so their impact on wages and the labor market will likely increase as the labor market tightens. to sum up, this isn β t likely to be a case of black ( only total unemployment matters ) or white ( only short - term unemployment matters ) with respect to compensation cost trends. i suspect that the degree of attachment falls on average as one is unemployed for longer periods of time. but, i don β t believe that this pattern of attachment is stable. it is affected by the nature of the business cycle and how and why people have become long - term unemployed. before i turn to the implications of the economic outlook for monetary policy, let me leave you with a final thought on inflation and our inflation objective. i think there is some confusion as to whether the fomc β s 2 percent inflation objective is a ceiling or not. my own view is that bis central bankers β speeches 2 percent is definitely not a ceiling. once we reach 2 percent, i would expect that we would spend as much time slightly above 2 percent as below it, recognizing that we will hardly ever be exactly at 2 percent because of the inherent volatility in prices. if inflation were to drift above 2 percent, all else equal, then we would tend to resist such a rise. but, if | 1 |
where am i? " and the farmer below says, " you are in a balloon. " and the man in the balloon says, " he must be an economist. he is telling me something right that is totally useless. " looking at how we use numbers is really the point, right? as they say, an accountant is someone who attempts to value the present, right? [ they ] look at the past. and, hopefully, an actuary is someone who attempts to value the future with all its uncertainties. and, clearly, that is very useful. for instance, in the bangko sentral ng pilipinas ( bsp ), we have economists, we have statisticians, econometricians, [ and ] accountants. they will look at data in a very 1 / 3 bis - central bankers'speeches different way. maybe the bsp needs some more actuaries. maybe we would do a better job if we had more actuaries, judging by the conversations we were having [ earlier ] at the table. i would like to tell you, for instance, that our human resource department informs me that there are more than 1, 100 positions in the bsp that have to do with data. of course, they use data differently. and maybe taking your view on many things, maybe we could learn a lot from you [ actuaries ]. of course, when you look at the bsp, it has three pillars. the most important pillar, i think, is price stability, which is, right now, very simple to explain : keeping inflation between 2. 0 β 4. 0 percent. for this year, we will clearly miss the target. and as we will explain, we will miss the inflation target because the high inflation is due to what we call " supply shocks, " which is not our accountability. in other words, if inflation is too high because we [ at the central bank ] created too much demand, we created too much credit, too much money, then blame it on us. but the [ current elevated ] inflation is due to shocks that have little to do with demand but have more to do with supply. clearly, central banks cannot control them. what we are saying is because it is a supply shock, we should take the necessary policies so that the inflation will return to 2. 0 β 4. 0 percent. and in our calculation - if we are right - by the second half of next year, inflation will already be | would rather have a capital market where the insurance companies play a bigger role. and i am sure you, actuaries, will play a very big role in that. in short, banks, by their very nature, have a lot more resources than insurance companies, but they also are much more limited in what they can do by the very nature of their funding sources. so, i will cut through some parts of my speech because i am sure that you are in a hurry to be sworn in. i was told you have 400 members. and just like us, as i already said, you must want your decisions to be based on data. so, the question we ask ourselves always in the bsp is : how else can we get it? how else can we extract as much as we can from our data? and, in that sense, you probably have exactly the same concerns that we have. i will just tell you that, okay, we are very confident. although i am less than a hundred percent sure that, given what we are doing, we can support the nascent economic growth. what have we done? we have raised interest rates. but fortunately, we seem to be right that high interest rates will not kill the economy. and then, we hope that with the interest rate adjustments, inflation will come back to normal by the middle of next year, unless there are new supply shocks, new surprises. and then by 2024, hopefully, we will be back to normal inflation rates again. i heard the speech of the outgoing president. i congratulate you on a job well done. and it seems to me that every society has exactly the same problem, right? some are happy ; some are not happy. but in the end, the society survives and prospers. by the way, my other impression is you seem to be better funded than economists. you have nicer meetings, okay? so, congratulations to all the members, especially the new officers, and it is my great privilege to be able to swear you in. magandang gabi sa inyong lahat. 3 / 3 bis - central bankers'speeches | 1 |
the treaty requirement that each member state treat its exchange rate policy as a matter of common interest. free trade and capital movements could clearly not be sacrificed in a true single market. also, europeans saw fixed exchange rates as an important component of fair competition. it was thus the national sovereignty over monetary policies that would have to be let go. in this sense, the single currency became a way of maximising the benefits of the single market. and the empirical evidence suggests that sharing a currency has indeed boosted trade, although the effect may be smaller than was earlier suggested. 4 let me also add that, for several member states, joining the single currency implied not only greater policy efficacy, but paradoxically, greater national influence. whether austria before 1999 or latvia today, many member states pursued a fixed exchange rate policy or currency board vis - a - vis a bigger neighbour β germany in the past, the euro area today. this meant that they were effectively importing a monetary policy over which they had no say. now, as members of the euro area, they have a say. when latvia will adopt the euro on 1 january next year, my colleague the governor of the central bank of latvia will partake fully in the formulation of the ecb β s monetary policy. the same cannot be said of the countries that peg their currencies to the us dollar, some of which are considerably larger. from a single currency to a banking union the implications of the decision to set up a genuine single market are not limited to the creation of the single currency. the single currency itself has consequences, of which the most pressing is banking union. the establishment of a banking union has been agreed by heads of state and government in europe and is now being delivered in stages, starting with the single supervisory mechanism. this has been entrusted to the ecb and has recently been approved by the european parliament. we trust that a single resolution mechanism will enter into force by the beginning of 2015. to understand why banking union is a consequence of monetary union, it is worth recalling that only a small fraction of money is β outside β money, meaning the liability of the central bank. the bulk of money used in the economy is β inside β money, meaning the liability of a commercial bank. for money to be truly single within a currency area, there has to be full substitutability between its different forms. this means that one euro in a bank in any euro area country has to be fully substitutable with a | yves mersch : a regime change in supervision and resolution keynote speech by mr yves mersch, member of the executive board of the european central bank, at the european supervisor education ( ese ) conference, frankfurt am main, 26 september 2013. * * * ladies and gentlemen, thank you for inviting me to speak today. as you know, europe has in recent years faced the worst economic and financial crisis since the 1930s. growth remains weak and unemployment is unacceptably high, with only the first shoots of recovery showing through. yet out of these difficulties, some positives have begun to emerge. the euro area has recognised that, for its collective stability, it has to deepen integration in certain areas β and it is now beginning to do so. what we are seeing playing out today is not so much the β audacity of hope β, but rather the β audacity of necessity β. in my view, the most significant change taking place is the development of banking union. monetary union needs banking union, not least because a stable banking sector is an essential complement to a sound money. i therefore see the project of building banking union as the most important integration step since the launch of the euro. for those of us involved in supervision and other financial sector issues, it is an especially fascinating time. we are at what political scientists call a β critical juncture β β that rare time when a window of opportunity opens to fundamentally redesign institutions. it feels like being back 25 years ago when we were preparing emu. but this also imposes on us a responsibility. this window may not open again for many years, so we need to make sure that the decisions we take today are the right ones. most importantly, we need to ensure that banking union is not just a label β that it initiates a genuine regime change in the way that banks are supervised and resolved. how to achieve this regime change is what i would like to focus on in my remarks today. the elements of a regime change in my view, a genuine regime change has to involve two elements : first, building a single system for banking supervision and resolution ; and, once that is in place, building a stricter system as well. why do we need both elements? we need a single system to ensure that we have a level playing field for the banking sector across europe β and hence to create a truly single financial market in europe. 20 years after the single market was supposed to be completed, the banking sector | 0.5 |
##fsme unwind mark an important shift in the size and composition of our future balance sheet. but they should not be seen as the bank stepping away from its appropriate role in financial markets. we have a range of facilities in our sterling monetary framework which allow firms to borrow liquidity in the form of reserves as needed. we encourage usage of these facilities as part of normal liquidity management, and while we would not expect firms to rely solely on our facilities ( and we have priced those facilities accordingly ), they are also not intended to be used as a last resort. [ 9 ] we are, and remain, β open for business β. as our balance sheet reduces to whatever level is the new normal, reserves will fall towards the minimum level of reserves that banks need and want, as shown in chart 4. this aggregate level of reserves demanded by banks for transactional and precautionary liquidity needs forms what we call the preferred minimum range of reserves ( pmrr ). at some point during the unwind, the stock of reserves will eventually approach the minimum level needed by banks. at that point, banks are likely to respond by seeking to borrow reserves in money markets, increasing the rates they are willing to pay to do so, and thereby causing short - term interest rates to rise relative to bank rate. if no other actions are taken, this would impair the transmission of monetary policy to the wider economy. so, in 2022 we announced the launch of the short term repo ( str ) to supply reserves on demand at bank rate against gilt collateral on a weekly basis, to ensure that market interest rates remain aligned with bank rate. we expect usage of the full set of our liquidity facilities to rise as the level of reserves in the system falls as qt and tfsme unwind progress. as already set out, the level of the pmrr and the timing for when it will be reached are both uncertain, and indeed may change over time, as andrew bailey flagged in his loughborough lecture earlier in february. chart 4 : stylised supply of reserves during apf unwind one key issue is the appropriate mix of assets that will back these reserves. we will decide this in consultation with relevant stakeholders, including hmt. with that in mind, i want to draw an important distinction between the mpc β s reduction of the bonds held in the apf, and the future of the bank β s balance sheet. our approach to this issue differs | . the bank can track its connection to bond markets all the way back to its incorporation in 1694. the bank came into being with the specific purpose of raising funds for england β s war effort against france. to help raise funds, the government created a new joint - stock company, where investors were effectively purchasing government debt to become shareholders in the company. that company was the bank of england and so began the 330 years, and counting, relationship between the bank and bond markets. the bank β s role in, and interaction with, markets has evolved over time. in july 1914, financial markets were shaken by the sudden outbreak of world war one, with a run taking place in both the london money market and the london stock exchange. the bank stepped in, acting as a β market maker of last resort β and buying substantial quantities of bills of exchange which resolved the immediate liquidity crisis. more generally for much of its history the bank, as the government β s banker, leveraged its market connections to act as the key agent and adviser to the government on debt management. [ 3 ] at the same time as being given operational independence for monetary policy in 1997 responsibility for debt management passed to the newly created debt management office ( dmo ), though the bank continued to be the government β s banker. as the earlier chart showed for the twelve years from 1997 to 2009 the bank β s direct involvement with the gilt market, while it continued to be important, was nevertheless limited to the kind of operations described by the bank official quoted by david kynaston in his one - volume history of the bank, β although we have less of a role in gilts, we have quite a portfolio of gilts for our own customers, and we continue operating ( for the exchange equalisation account ) in the foreign exchange market. β the bank as a significant holder of government debt the global financial crisis ( gfc ) of 2007 - 9 marked a watershed moment across all financial markets. amongst other things, its aftermath led to the adoption of quantitative easing ( qe ) in some jurisdictions, which transformed the role of central banks in the bond market, from engaged observers and occasional traders to the largest participants. across different jurisdictions, bond purchases aimed to lower long - term interest rates, boost economic activity, and meet the inflation target in the medium term. the 15th anniversary of the mpc β s decision to start qe in march 2009 is next week. since the gfc, the global economy including the | 1 |
impact on state finances as the outstanding liability of the state dropped from 33. 8 per cent of gsdp in march 2008 to 21. 1 per cent in march 2012 which is expected to further go down to 19. 6 per cent by march 2013. the reduction in liabilities significantly reduced the debt serving cost, thus opening up the space for higher capital outlays and social expenditure. given the developmental challenge to enhance social and economic infrastructure, it will be desirable for the state to step up mobilisation of its own tax revenues to scale up capital outlays without resorting to borrowings ( table 3 ). table 3 fiscal position of odisha ( as a per cent to gsdp ) note : minus ( - ) sign indicates surplus. source : budget documents of the state government. banking developments let me now turn to development of banking in the state. the formal financial system in india is dominated by banks and same is the case with odisha. the average population per bank branch in odisha declined from 16, 800 in march 2003 to 13, 800 in march 2011 which is bis central bankers β speeches somewhat comparable to the national average figure of 13, 400 ( chart 8 ). during this period the number of branches of commercial bank has increased from 2, 240 to 3, 234. apart from the branch network and its population coverage, another major indicator of banking development is the credit - deposit ( cd ) ratio. in the turn of the last decade in 2001, the cd ratio of odisha at 42 per cent was way below the national average of 54 per cent. as the state experienced rapid economic growth, the cd ratio not only accelerated but also exceeded the national average and peaked at 79 per cent in 2005 β 06. subsequently the cd ratio moderated, particularly after 2007 β 08 when growth slowed. as at end - march 2011, odisha β s cd ratio at 56 per cent remained significantly below the national average of 76 per cent ( chart 9 ). another indicator of credit penetration is credit to gsdp ratio. this ratio for odisha was also relatively low highlighting the scope for further development of banking in the state ( chart 10 ). bis central bankers β speeches not only that the c - d ratio has declined, the inter - regional inequality among districts in credit deployment has also increased in recent years underscoring the need for focused attention to deployment of comparatively less developed districts ( chart 11 ). chattopadhyay ( 2011 ) calculated a composite index of financial inclusion which showed that against the national | average rate of 7. 6 per cent, in line with the national level ( chart 1 ). bis central bankers β speeches in this growth dynamics, three important aspects stand out. first, in the earlier phase of 2003 β 08 growth was mainly led by industry. second, in the latter phase of 2009 β 12 growth was driven by the services sector. third, in both the phases agricultural growth remained low and volatile ( chart 2 ). at a more disaggregated level, the growth acceleration during the decade of 2002 β 12 was led by registered manufacturing, construction, mining & quarrying and trade & hotels ( chart 3 ). the varying growth trends are reflected in the compositional shift among sectors in the gsdp : the share of agriculture declined steadily ; the share of industry first rose and then moderated and the share of services first declined and then rose. in this structural transformation of the odisha economy, which is broadly consistent with the trend in the national economy, the rise in the share of industry is noteworthy ( chart 4 ). bis central bankers β speeches significantly, the initial growth spurt in odisha raised its gsdp share in national gdp from 2. 3 per cent in 2002 β 03 to 2. 7 per cent in 2008 β 09. as growth in gsdp slowed and converged to the national level, the share has since declined but remained steady around 2. 6 per cent after 2008 β 09. however, the most discerning impact can be seen in the rise of real ( at 2004 β 05 prices ) per capita nsdp from βΉ13, 923 in 2002 β 03 to βΉ25, 708 in 2010 β 11. this has helped improve odisha β s rank in terms of per capita income among the states from the bottom 3rd position in 2002 β 03 to 7th in 2010 β 11. notwithstanding this progress, odisha β s per capital income is still lower than the national average ( chart 5 ). while the economy is transferring towards industry and services, the labour force remains concentrated in agriculture. as against the national average of around 52 per cent of labour share in agriculture & forestry in 2010 β 11, the state has a much higher labour share of bis central bankers β speeches 59 per cent. furthermore, the share of manufacturing sector in the labour force remains lower compared to the national average despite the recent pick up in manufacturing activity ( table 1 ). moreover, labour force participation rate at around 50 per cent in 2010 β 11 was lower than the labour participation rate | 1 |
manuel sanchez : emerging markets amid heightened uncertainty remarks by mr manuel sanchez, deputy governor of the bank of mexico, at the credit agricole central bank seminar, rome, 23 october 2014. * * * i am honored to join you here today in the magnificent city of rome, a cradle of western civilization, one of europe β s great cultural centers, and a muse for poets and artists throughout the centuries. thank you for the invitation to share a few words with you on the topic of emerging markets. emerging economies now confront a new reality, one in which some apparent certainties have disappeared, and different challenges have arisen. i would like to touch on three subjects in this context, starting with the performance of emerging economies, moving on to financial market conditions, and concluding with a brief overview of mexico in particular. as always, my views are entirely my own and do not necessarily reflect those of the bank of mexico or its governing board. developments and the outlook for emerging economies two distinctive trends characterize developments in emerging economies during the last few years. the first is higher growth since the beginning of this century, relative to the previous decade. economic expansion has surpassed that of developed nations substantially, with china and india playing prominent roles. what forces have driven this phenomenon? although emerging economies are not all alike, as a group they seem to have benefited from generally sound policies implemented in the 1980s and 1990s. these include the strengthening of macroeconomic and financial frameworks and the liberalization of markets, reduced regulations, and greater openness to international trade. additionally, high and rising commodity prices and ample access to external credit during the 2000s have helped. by and large, better policy and institutional settings seem to be responsible for the fact that emerging economies were relatively resilient to the shocks of the great recession. indeed, in 2009, while the advanced economies contracted more than 3 percent, the emerging economies grew slightly above 1 percent. 1 nonetheless, since 2011, growth in emerging economies has been declining, the second notable trend for the group as a whole. although still above that of advanced nations, average output change in the last four years has been less than that observed prior to the crisis in this century. several factors may contribute toward an explanation of the slowdown. one possibility is structural. some emerging economies such as china may be reaching the production frontier derived from their reforms. they cannot grow at constant extraordinarily high rates indefinitely. another possibility, which could be complementary to the first, is that | be to external disturbances, own calculations based on the international financial statistics database, imf. dudley, w. ( 2014 ), β u. s. monetary policy and emerging market economies. β remarks at the roundtable discussion in honor of terrence checki : three decades of crises : what have we learned?, federal reserve bank of new york, new york city, march. bis central bankers β speeches empirical evidence to support this hypothesis is inconclusive. thus, the authorities should continue to watch the financial risks carefully. 7 the mexican economy during the last decade, mexico β s economic growth was, on average, lower than that observed in other emerging markets. several factors may help explain this. one is high integration with the u. s., where gdp has remained below the long - term trend since the crisis. another is that mexico is mainly a manufacturing exporter, and thus it did not overly benefit from previously booming commodity prices. third, long - stagnant total factor productivity reveals pervasive inefficiencies in the economy. furthermore, since the middle of 2012, mexico was hit by a succession of domestic shocks, including the bankruptcy of major housing developers and a contraction in public investment. in 2014, the economy started to pick up, driven first by more dynamic exports of goods and services, and more recently, by stronger private domestic demand. third - quarter data on industrial production and retail sales suggest that momentum continues. the broad - based outlook is one of gradual recovery during the rest of this year and in 2015. 8 both upside and downside risks to the growth scenario are present, with upside risks prevalent. these include the possibility of faster - than - expected u. s. economic recovery and positive effects from structural reforms implemented during the last couple of years to enhance productivity in many sectors of the economy. on the downside, less favorable international conditions could dampen activity. market reactions in mexico to external financial volatility in the last year and a half have been relatively manageable. the peso has depreciated less than many other emerging - market currencies, a noteworthy fact given the absence of intervention in the foreign exchange ( fx ) market. also, both the fx and bond markets have been orderly, with traded volumes and bid - ask spreads tight. furthermore, peso - denominated bond holdings by nonresidents have remained relatively stable for the last two years, despite being at high levels, suggesting that investors are taking | 1 |
500, 000 hours of queuing up to pay will be saved. bis central bankers β speeches with this enormous advantage, most payment terminals ought to be adapted to contactless payment within the next couple of years. contactless payment is already a success in other countries and may really take off in europe. also prompted by the societal and political call to up the speed of payment transfers, and create the possibility to make payments at all days and hours of the year, the forum is working together with the covenant parties on a plan to be presented at its autumn meeting on 21 november 2014. i β m already looking forward to it, as this plan may even spark real - time payment transfers. this will in fact also demand comprehensive renewal of the payments infrastructure, which will have to be paid for. in fact, the call for faster payments transfers has already led to tangible improvements in sweden, denmark, the uk, and australia. so payments transfers are on the brink of numerous innovations. the agreement that was just signed is an excellent response to this and is decidedly forwardlooking. on the road to state - of - the art european payments. i call on all parties to include the agreement in the erpb debates to work on new european payments products. dnb will also do this, of course. this requires from all representative organisations, and in fact from us all, the willingness to take a more european perspective, and work closely together at a european level. we will now bring the national representative organisations and the european ones closer together. i look forward to a near future, in which european retailers, businesses and consumers will be even more able to reap the benefits of a safe, robust, socially efficient and innovative payments system. this is in fact also one of the stated objectives of the economic and monetary union. i sincerely congratulate the signatories, and with them essentially all retailers, consumers and banks, on the start of the innovative european payments era. thank you for your attention. bis central bankers β speeches | central bankers β speeches β and numerous other measures were implemented to guarantee that debit card payments go through without fail, and β the introduction of the connect reporting system has improved communications and guidance among banks, providers, and retailers when payment systems fail. in addition to this, the forum is working hard on initiatives to reduce the dependencies between online banking, mobile banking and ideal. this will definitely be discussed at the foundation β s autumn meeting. pin agreement 2014 prelude to european efficiency and innovation with the introduction of iban, european payment transfers and european direct debits, the migration to the single euro payments area was successfully completed on 1 august 2014. in 2012, sepa had already been brought closer when the magnetic strip on bank cards was replaced by the emv chip. you all made an impressive contribution to the successful migration to sepa, which warrants a well - deserved compliment from de nederlandsche bank. but sepa is only the start of efficiency in payments transfers. we are on the brink of a new payments world in which businesses, retailers and consumers will be able to reap the benefits of the european market even more. road clear for innvations the 2014 pin agreement has provided an excellent stimulus by explicitly promoting innovation. it builds on the rapid technological innovations and the quickly changing consumer preferences and market conditions. to my mind, the dutch agreement is an example that the netherlands can convey to the single european payments market. this will not be done overnight. changes to the large european market require great commitment from market participants. to streamline these changes, the euro retail payments board, the erpb was launched last may with a view to sepa. this new european payments governance body may grow into a european version of the forum on the payment system with users and suppliers working together on the further development of sepa. the erpb therefore definitely deserves the chance to prove itself in the years ahead. contactless paying may be generally adopted a few years from now currently half of all bank cards and over one tenth of the 280, 000 payment terminals have been equipped for contactless payment. the latest generation of smartphones can also be used for contactless payments. particularly for payments up to eur 25 β the most frequent ones β this saves a lot of time, as they take nine seconds as opposed to 20 seconds for contact payments. if we assume that some two billion debit card payment up to eur 25 will be made by 2018, this means that a total of | 1 |
peter praet : long - run saving and monetary policy speech by mr peter praet, member of the executive board of the european central bank, at the parliamentary evening on " challenges for long term savings products in the context of the zerointerest rate policy ", brussels, 14 november 2016. * * * accompanying slides the european central bank ( ecb ) has carried out a number of unconventional monetary policy measures since the crisis to bring about a return of inflation to our objective. these measures include targeted long - term repos, negative deposit facility rates since 2014 and large - scale asset purchases. we have received criticism of these unconventional policies from some quarters surrounding their potential negative consequences. in the light of that criticism, i wanted to answer three crucial questions tonight relating to our unconventional measures : why have we implemented them? have they been successful in their aims? and, finally, have they had unduly large negative side effects on the distribution of wealth and income? the determination of long - run interest rates first of all, i would like to spend a few moments discussing the determination of interest rates and what has happened to long - run interest rates over the past three decades. these two things have significant bearing on the rest of my remarks. put most simply, saving is the decision to forgo consumption today, in return for higher consumption in the future. since people are by nature impatient, they require compensation for delaying consumption, compensation usually in the form of interest payments. that compensation is paid for by those seeking to spend more today than their current income, such as people buying houses, or firms investing in new capital, who in return will not consume all their income in the future to repay the debt. there are two parts to interest payments β the real component which is the extra amount of goods and services you can buy in the future relative to today and the inflation component which compensates for the changes in the prices of goods and services in the future. long - run nominal interest rates have been falling across major advanced economies for more than three decades. in major part, this is due to the success of central banks in taming inflation. the expected inflation rate and the inflation risk premium incorporated into long - run interest rates have fallen. yet changes in expected future inflation that are in turn realised are benign for savers β it is changes to the amount of goods and services that can be purchased in the future that matter, not changes in nominal prices. but it is not just long - | the supply side pushes one further to the right of the schematic picture in chart 8. chart 8 : lags in the inflation process mean that, when the policymaker is uncertain about supply, there β s a trade - off between a better understanding of the economy and the timeliness of the policy response the lag between movements in spare capacity and inflation is longer and the price one pays for this extra information, in time, is therefore higher. there are clearly risks in moving only when you see β the whites of inflation β s eyes β. but it may still be a price worth paying. the two graphs below ( chart 9 ), derived from a simple model of inflation in which there β s incomplete information about the shocks hitting the economy [ 7 ], help to cement the point. in this representation inflation can be moved around by four underlying drivers β demand, productivity, firms β mark - ups and movements in the nairu β but the policymaker has only three observable variables from which to deduce them ( output, unemployment and inflation itself ). importantly, he or she is assumed to understand how variable these underlying disturbances are ( estimates that can be built up over time ). but there is nonetheless what is sometimes called a β signal extraction β problem, and one can estimate only imprecisely, in real time, what is driving what. and, in doing so, the policymaker will lean on a greater range of information. chart 9 : more weight put on unemployment when there β s uncertainty about underlying productivity growth ; uncertainty about the nairu means wage and price inflation matter too sources : ons and bank calculations. first panel plots the contribution of activity and unemployment data to the estimated variance of the output gap, where along the x - axis we increase the standard deviation of the supply shock relative to the others. second panel charts the contributions of unemployment and inflation to the estimated variance of the output gap, where along the x - axis we increase the standard deviation of the shock to u *. the graphs plot two pairwise comparisons of the relative importance of the observable series for estimates of the output gap, depending on the variance of ( and therefore uncertainty about ) the underlying shocks. as uncertainty about underlying productivity growth rises, the policymaker puts increasing weight on developments in unemployment rather than gdp growth. when the nairu is more uncertain, inflation becomes more significant. as that happens, the variability of inflation itself rises, because policy has a less precise understanding | 0 |
all banks must have at least 4. 5 per cent of their risk - weighted assets in share capital and retained earnings. in addition, the lowest permitted level for total tier 1 capital is raised from four per cent to six per cent. basel iii also introduces a capital conservation buffer of 2. 5 per cent, consisting of core tier 1 capital. this means that the banks should have a core tier 1 capital holding of at least seven per cent. if a bank falls below the seven per cent limit, its entitlement to pay dividends and to conduct share buy - backs will be restricted. the proportion of profits that must be retained within the bank increases the further below the seven per cent limit the bank goes. the idea behind this is to force the banks to accumulate their profits as capital instead of paying them as dividends to the shareholders. however, this will not affect sweden, at least not directly. swedish banks are well capitalised and have a quota for core tier 1 capital that is already above seven per cent. we will, however, see effects at the international level and, as we are highly affected by what happens abroad, swedish banks and sweden in general will also benefit from the fact that banks in other countries will become more resilient. apart from the changes in levels, there are also stricter requirements regarding the quality of the capital held by the banks. as equity constitutes the difference between assets and liabilities on the balance sheet, both the size and quality of the capital will be highly affected by how a bank β s assets and liabilities are valued. to ensure that the banks β capital really can cover losses, they must already today make certain adjustments in their equity on the basis of what actually exists on the asset side. the principles governing how to do this will now be tightened up. for example, deductions will have to be made directly from the core tier 1 capital, unlike today when either the total tier 1 capital or the total capital base is adjusted. nor will the banks be able to include assets that form the capital base in other financial institutions. the idea behind such a limitation is to counteract the domino effects that can arise if a bank goes bankrupt. other important assets on the balance sheet that will require adjustment of the capital are goodwill and deferred tax assets. another important change is that it will not be possible to include hybrid capital to the same extent as before. innovative hybrid instruments with a so - called step up will, for example, be | fish, particularly the tilapia and the nile perch, has become an important export and therefore source of uganda β s foreign exchange earnings and economic development. this stamp is geared to enhance this industry. the fourth stamp of shs 2, 000 features the mountain gorilla found in the bwindi impenetrate forest & mgahinga gorilla reserves. there are less than 600 left in the wild in the entire world! the objective is joining the worldwide effort to preserve this endangered specie and in turn promote tourism to uganda. in conclusion, let me reiterate bank of uganda β s commitment to deliver the bank β s mission of fostering price stability and a sound financial system. it gives me great pleasure to officially launch asset of four the bank of uganda commemorative stamps. i call upon the stamp collectors and the public to make full use of these stamps. allow me once again to thank post uganda for partnering with us in issuing these stamps. | 0 |
inclusive finance committee. actually, our objective to have a more inclusive financial system is embedded in the other policy initiatives of the bsp. we are continuously working on reforms for a more robust banking sector. we are also working toward increasing the scale and scope of bank operations to support the needs of the market, particularly those in the countryside. what is clear is that banks now have more opportunities to provide a wider range of services and products to their clients on the basis of the following : a liberalized branching regime ; bangko sentral β s receptiveness to various product and technological innovations in banking services ; bangko sentral β s support to further improve bank efficiencies by allowing, among others, the outsourcing of some functions ; and the expanded range of services and opportunities that qualified rural banks can undertake, such as foreign currency deposit accounts and equity investments in atm networks. through these initiatives, we envision stronger banks with a broader geographical presence providing competitively - priced and well - designed products for all market segments, including the previously unserved. with these in place, i am confident that we will continue to see further innovations toward greater financial inclusion. in this context, i am reminded of bill gates who once said that β never before in history has innovation offered promise of so much to so many in so short a time β. it is in this spirit that i ask all of you who are participating in this conference β¦ and other microfinance practitioners as well to continue to take advantage of the opportunities innovations bring, to broaden and sustain the liberating and empowering force of microfinance in improving the lives of our entrepreneurial poor and their families. finally, on behalf of the bangko sentral ng pilipinas, i thank all of you for your continuing support as we move forward to build better lives and a solid bedrock for a stronger economy through microfinance. thank you and i wish you all a fruitful and successful conference. mabuhay ang microfinance! | amando m tetangco, jr : building a stronger economy through microfinance speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the conference on microfinance : powering innovations in microfinance, asian development bank, manila, 24 july 2008. * * * microfinance council of the philippines president rolando victoria, adb vice president lawrence greenwood, adb ed marita magpili jimenez, mr. barry hitchcock, other officers of adb, fellow advocates and workers in microfinance, distinguished participants, representatives from the banking community, special guests, good morning. this two - day conference organized around the theme β powering innovations in microfinance β is truly a special event. ten years ago, one would not associate the words power and innovations with microfinance in the philippines. while some of today β s leading microfinance ngos were already around at that time, microenterprises did not have access to formal financial services and had to resort to informal lenders with very high cost of funds. formal financial institutions were cautious of this market due to high credit risk and transaction costs. what a difference a decade makes! today, microfinance is no longer a mere buzzword but part of the financial mainstream, with 229 banks actively engaged in the sector. as of december 2007, these banks had an outstanding loan portfolio of p6 billion, extended to nearly 800, 000 clients or an average of 7, 500 pesos per borrower. significantly, our microborrowers have also become net savers ; as of end 2007, their combined deposits with banks have reached close to 2 billion pesos. indeed, microfinance has firmly established a track record across our country for nurturing successful microentrepreneurs who have attained financial security for themselves and their families. equally important, microentrepreneurs serve as catalyst for development in their respective communities. what triggered the mainstreaming of microfinance in our country? well, to put it briefly, it resulted from the convergence of the need to find ways to liberate millions of our entrepreneurial poor from the cycle of poverty ; innovations, of course ; and the willingness of key stakeholders to adopt new ways of doing business. i will now share the story of bangko sentral and how we responded to the challenge of mainstreaming microfinance within our financial | 1 |
and financial environment almost certainly enhances the capacity of monetary policy to fight occasions of cyclical weakness in the economy. a central bank β s commitment to price stability over the longer term does not mean that monetary policy can ignore the short - term impact of economic events. it is important to recognize that, even when an economy is set on the path to price stability, and price expectations are contained, it does not necessarily mean that all potential sources of inflationary shocks have been eliminated. moreover, while there is no long - run trade - off between unemployment, or output, and inflation, both formal evidence and common sense observation on wage and price rigidities attest to the existence of such a trade - off in the short run. in the long run, however, monetary policy β s impact is only on inflation ; potential output primarily is determined by advances in technology, growth in human and physical capital and other real resources. because of the uncertainty about the timing and significance of short - term monetary policy effects on economic activity, as well as all other uncertainties concerning the economy, there are always differences of view about the speed with which policy should be adjusted, and on the balance of risks in dealing with ongoing economic developments. these conflicts become more marked when an economy confronts supply shocks that drive up prices sharply and suddenly - - such as the two oil shocks of the 1970s. in those circumstances, from my perspective, the appropriate course, consistent with maintaining longer term price stability, should be to bring inflation down somewhat gradually, as the economy adjusts to the shift in relative prices. as i see it, monetary policy must be formulated cautiously, and cannot ignore business cycle developments. in establishing price stability as the primary goal of monetary policy, therefore, it is best to recognize that monetary policy does affect output in the short run. a central bank can appropriately be assigned the task of promoting sustainable economic growth, while maintaining long - term price stability and ensuring the health of the financial system. this way of articulating policy goals has the advantage of meeting the public β s need to understand the basis for monetary policy decisions, and may help, therefore, to enhance the democratic accountability of monetary policy. once monetary policy is firmly committed to price stability, how can a central bank best reach that goal? clearly, at an operational level, no single formula or implementation strategy can be expected to succeed in all countries and under all circumstances ; possible approaches can take many different forms. the choices depend on a country β s history | , business closures, and job losses created tremendous hardships for many americans, and was especially devastating for communities of color. we know that people of color, and black people in particular, experienced higher rates of illness and death. 1 significant representation in essential services work β jobs that required close contact with others β contributed in part to these tragic outcomes. 2 over the past 18 months, we learned how these issues played out for families through regular conversations with community leaders in our district and beyond. separately, our research shone a spotlight on many of these painful realities. for example, a team of new york fed economists published a series earlier this year aimed at understanding the gap in covid - 19 intensity by race and by income. 3 and last month, they shared their findings around racial differences in icu stress during the third wave of covid - 19. 4 1 / 2 bis central bankers'speeches there β s no single or simple solution that can fully address these problems. but, as a nation we can build a stronger foundation so that everyone can fulfill their economic potential, thus better enabling the federal reserve to fulfill its mandate. that β s why at the new york fed β and across the federal reserve system β a key area of focus is to better understand economic drivers of health and wellbeing, and to champion promising solutions. we are able to do this in large part through our community development efforts to better understand the needs and issues of low - and moderate - income communities throughout our district. our community development team recently adopted a new strategy to concentrate on three key areas : health, household income, and climate. 5 our aim is to connect people, programs, and proposals β especially those focused on fostering racial equity β with the funding needed to promote equitable growth and tackle economic inequality. we are already doing important work in this space and there is so much planned for the future. a few months ago, we brought together mental health and policy experts to examine the pandemic β s impact on mental health in communities of color, including the correlation between depression, anxiety, and economic factors such as lost income. 6 and next week, we β ll be hosting an event in collaboration with new york university β s rory meyers college of nursing, the new york city department of health and mental hygiene, the low income investment fund, and the robert wood johnson foundation to discuss the need for investments in maternal and child health. 7 our goal for convening this coalition of thought and civic | 0.5 |
it to market forces to keep the financial sector in check. as long as banks perform on all three parameters, the credibility and soundness of the bank will ensure their ac - side 5 af 9 cess to the necessary capital and funding. and with the resolution regime in place we no longer need governments to save banks with taxpayers money. the most important effect, however, is that we significantly reduce the likelihood of a new financial crisis with all its detrimental effects on our economy. slide 9 : unconventional monetary policy let me now finally turn to some future perspectives for us in the central banks. since the beginning of the financial crisis many things have been far from normal for central banks. in response to persistently weak demand and low inflation, central banks across the globe have reduced their monetary - policy rates to historically low levels. in fact, danmarks nationalbank was a central bank pioneer in terms of setting the key monetary - policy rate well below zero already in 2012 in order to offset large capital inflows. as we have seen in denmark, the low interest rates set by central banks across various currency regimes are simply the result of one thing and one thing only : central banks are trying to fulfil their specific mandates which have been assigned to them by elected representatives. the low interest rates in denmark have been nothing but a necessary consequence of our fixed exchange - rate policy. however, very low and even negative interest rates might not be preferred for an extended period. long periods with very low interest rates create risks of financial bubbles in specific sectors of the economy. for example, we have seen increasing prices in the housing market here in aarhus and in copenhagen. [ this is something we will keep an eye on in the coming years. ] * * * slide 10 : major global central bank balance sheet with interest rates close to their effective lower bound central banks have deployed a range of so - called unconventional measures to achieve the desired amount of monetary accommodation. the most famous one has side 6 af 9 been to engage in purchases of financial assets including government bonds on a massive scale β known as quantitative easing, or qe. qe has become an integral part of the set of unconventional tools central banks use to support economic growth and increase inflation towards target levels. [ as you can see from this figure, the balance sheets of the world's major central banks, the fed, bank of japan, bank of england and the ecb have therefore expanded to historically high levels. ] the key question is : do these | that is good news 2. need for strengthen the financial regulation and prevent future crises 3. hopefully we enter more normal times with a lowkey role for central banks in economic policy increased competition and new partnerships facebook google alibaba fintechs starbucks bigtechs amazon apple denmark is a digital front - runner the cyber threat today source : bank of england. generic perceptions based on central and commercial threat intelligence. fsor : financial sector forum for operational resilience lessons learned from the financial crises the crisis revealed a need to shake - up the regulation of banks the pillars of financial regulation unconventional monetary policy major global central bank balance sheet are cryptocurrencies a mirror of the tulip mania? bitcoins have skyrocketed but have no fundamental value the future of central banking 1. money in society depends on demand it is not possible to create more money than household want to hold 2. cbdc β central bank digital currency hard to identify what cbdc can do better 3. digital money already exist in denmark deposit guarantee, full access to bank accounts and instant transfers | 1 |
leveraged homeowners would be forced to sharply curtail their spending. to be sure, indexes of house prices based on repeat sales of existing homes have significantly outstripped increases in rents, suggesting at least the possibility of price misalignment in some housing markets. but a destabilizing contraction in nationwide house prices does not seem the most probable outcome. to be sure, the recent marked increase in the investor share of home purchases suggests rising speculation in homes. ( owner occupants are rarely home speculators because to sell, they must move. ) 10 however, nominal house prices in the aggregate have rarely fallen and certainly not by very much. and even should more - than - average price weakness occur, the increase in home equity as a consequence of the recent sharp rise in prices should buffer the vast majority of homeowners. for statistical methodology see karen dynan, kathleen johnson, and karen pence ( 2003 ), " recent changes to a measure of u. s. household debt service, " federal reserve bulletin, vol. 89 ( october ), pp. 417 - 26. a new survey by the national association of realtors reports that purchases of vacation homes and homes for investment amounted to more than a third of total existing home purchases last year. mortgage originations data reported under the home mortgage disclosure act ( hmda ) indicate that the share has been rising significantly since 1998. house prices, however, like those of many other assets, are difficult to predict, and movements in those prices can be of macroeconomic significance. there appears, at the moment, to be little concern about corporate financial imbalances. debt - toequity ratios are well within historical ranges, and the recent prolonged period of low long - term interest rates has enabled corporations to refinance liabilities and stretch out bond maturities. * * * the resolution of our current account deficit and household debt burdens does not strike me as overly worrisome, but that is certainly not the case for our fiscal deficit, which, according to the congressional budget office, will rise significantly as the baby boomers start to retire in 2008. our fiscal prospects are, in my judgment, a significant obstacle to long - term stability because the budget deficit is not readily subject to correction by market forces that stabilize other imbalances. one issue that concerns most analysts, especially in the context of a widening structural federal deficit, is inadequate national saving. fortunately, our meager domestic savings, and those | ##s that they struggled to repay so soon after taking out the loan, the prevalence of " stated - income " lending was a clear culprit. substantial anecdotal evidence indicates that failing to verify income invited fraud. moreover, when we looked at the loan - level data we saw a clear correlation between " low - doc " or " no - doc " lending and performance problems, particularly early payment defaults. that is why we have proposed to complement a broad requirement to assess repayment ability with a specific requirement to verify the income or assets a lender relies on to make a credit decision. we recognize that stated - income lending may have a proper place when not layered on top of too many other risks. therefore, we would target the verification requirement to higher - priced loans, including the higher - priced end of the alt - a market, where the risks of stated - income lending could be layered on top of too many other risks. the proposal identifies standard documents that would be acceptable, such as w - 2 forms. it also allows, however, any third party documents that provide reasonably reliable evidence of income. some consumers may have access to only nonstandard documents and others, such as self - employed entrepreneurs, may have some difficulty documenting their income. this rule is meant to preserve consumer choice by allowing the market to identify credible nontraditional documentation of consumer income β for example, check - cashing receipts. to help ensure that the proposal preserves access to credit for the full range of consumers, we have sought public comment on this issue. escrows for taxes and insurance another part of our proposal for higher - priced loans β a requirement to escrow taxes and insurance β would also help ensure that borrowers can afford their payments. escrowing has become standard practice in the prime market, and the case for making it standard in the subprime market, too, appears compelling. consumers with shorter or weaker credit histories may be less likely to appreciate the sizable burden that taxes and insurance can add to the cost of homeownership, or more vulnerable to being misled by payment quotes that leave out these amounts. moreover, when we looked at the data, we saw in the unusually high level of early payment defaults possible evidence that the lack of escrows hurt consumers who did not have experience paying property tax and insurance bills. we have proposed to address the problem with a requirement to escrow taxes and insurance on higher - priced loans, accompanied by a limited allowance | 0.5 |
benoit cΕure : the economic consequences of low interest rates public lecture by mr benoit cΕure, member of the executive board of the european central bank, at the international center for monetary and banking studies, geneva, 9 october 2013. * * * i wish to thank giovanni lombardo and oreste tristani for their contributions to these remarks. i remain solely responsible for the opinions contained herein. ladies and gentlemen, it is a pleasure to be here at the icmb. in recent years, monetary policy interest rates have been reduced to exceptionally low levels. the main reason for maintaining highly accommodative monetary conditions has been to avert the risk of an economic depression and to counter deflationary pressures. at the same time, given the financial disruptions which led to what is now widely called β the great recession β, the reduction of interest rates has helped to offset the excessive increase in borrowing costs caused by the widening of financial spreads. from this perspective, monetary policy actions have favoured borrowers. over the same period, returns on safe financial assets have been very depressed. this has implied that on the one hand, savers in search of safe investment opportunities have found themselves having to accept extremely low rates of return β possibly negative when corrected for inflation β while on the other hand low rates have boosted asset prices and, hence, have favoured households and firms with a positive net wealth. yet, given the length of the economic slowdown and the persistence of the low interest rate environment, the media on both sides of the atlantic have been reporting on the difficult investment climate for savers. 1 the correlation between these two facts β low monetary policy interest rates and low returns on safe financial assets β may suggest a causal explanation. after all, low nominal yields on safe, long - term bonds are the result of current and expected low interest rates as well as of a term premium. it is tempting to conclude that, facing a choice between helping borrowers and supporting lenders, central banks have chosen the first group. the reduction of monetary policy interest rates would thus be seen as aiming to reduce borrowing costs for consumers and firms. savers would simply have to suffer the collateral damage from a policy aimed at other objectives. in my remarks today, i wish to argue that this conclusion is unwarranted. specifically, i will maintain that persistently low asset returns or, more generally, poor investment opportunities are simply one of the many manifestations of a deep recession. in such an environment | the influence of the payment systems on monetary policy needs to be assessed not by efficiency alone, but by reference to the velocity of money, defined as the average frequency with which a unit of money is spent in a specific time, under the assumption of a given money supply. velocity of money circulation is endogenously determined by the economic agents β decisions regarding liquidity holding, lending, borrowing, investing, consumption and labour. yet an increase in the efficiency of payment systems increases the velocity of money circulation exogenously. from a monetary policy point of view it becomes important to estimate the quantitative and qualitative impact of this exogenous change. an increase in the efficiency of payment systems results in an increase in the use of accounts relative to the use of banknotes and coins. less time is required for each peace of money or securities to lie unused in an account between two successive payments, leading to a shorter time period between inflow and outflow, i. e. to a higher velocity of money in bis central bankers β speeches circulation. the new situation is reflected in a higher turnover in markets, provided that economic agents are able to use the electronic forms of payment, are able to monitor their cash flow and are confident that the increased efficiency does not compromise security in terms of fraud. the task of the central bank is to facilitate a more efficient management of liquid funds. an efficient management of liquid resources enables economic agents to use cashless payment systems not only as a signal for their willingness to pay, but also to pay for the exact amount they owe. cash payments, in contrast, make economic agents incur costs in the form of interest foregone and increased security risks however, the increase in the velocity of money circulation is not linear. as technological advances in payment systems are seldom used at their maximum capacity, the increase in their efficiency is a gradual, rather than spasmodic process. in order to better estimate the impact of technology - driven change on the velocity of money in circulation and thereby on monetary policy, central banks thus need to use data from a variety of sources in sum, payment systems are an essential precondition for the implementation of operational monetary policy and their degree of sophistication has a direct impact on the velocity of money circulation, thereby influencing monetary policy itself turning to financial stability, there is a strong link between efficient payment systems and financial stability. financial stability implies that the financial system is robust to systemic risk, i. e. the risk that problems in one | 0 |
jerome h powell : introductory comments β roundtable on the interim report of the alternative reference rates committee introductory comments by mr jerome h powell, member of the board of governors of the federal reserve system, at the roundtable on the interim report of the alternative reference rates committee, sponsored by the federal reserve board and the federal reserve bank of new york, new york city, 21 june 2016. * * * i want to thank you all for coming today, and i also want to thank the alternative reference rates committee ( arrc ) for all its work in developing its interim report. this report marks a new stage in reference rate reform. 1 reference benchmarks are a key part of the financial infrastructure. about $ 300 trillion dollars in contracts reference libor alone. but benchmarks were not given much consideration prior to the recent scandals involving attempts to manipulate them. since then, the official sector has thought seriously about financial benchmarks, conducting a number of investigations into charges of manipulation, publishing the international organization of securities commission β s ( iosco ) principles for financial benchmarks and, through the financial stability board ( fsb ), sponsoring major reform efforts of both interest rate and foreign exchange benchmarks. 2 the institutions represented on the arrc have also had to think seriously about these issues as they have developed this interim report. now, we need end users to begin to think more seriously about how they use benchmarks and the risks they are taking on by relying so heavily on a reference rate β in this case u. s. dollar libor β that is less resilient than it needs to be. in saying this, i want to make it clear that libor has been significantly improved. ice benchmark administration is in the process of making important changes to its methodology, and submissions to libor are now regulated by the united kingdom β s financial conduct authority. however, the term money market borrowing by banks that underlies u. s. dollar libor has experienced a secular decline. as a result, the majority of u. s. dollar libor submissions must still rely on expert judgement, and even those submissions that are transaction - based may be based on relatively few actual trades. this calls into question whether libor can ultimately satisfy iosco principle 7 regarding data sufficiency, which requires that a benchmark be based on an active market. that principle is a particularly important one, as it is difficult to ask banks to submit rates at which they believe they could borrow on a daily basis if | we share with germany : vigorous and fair competition and a stable financial system. indeed, in some sense it follows the lead of the european union and its member states in ensuring that all large subsidiaries of globally active banks meet basel capital rules. we believe that our foreign bank proposal, which would increase the strength and resiliency of the u. s. operations of these firms, would meaningfully reduce the likelihood of disruptive ring - fencing at the moment of crisis that could undermine an spoe resolution of a large foreign bank. we are fully committed to the international efforts to address crossborder resolution issues and to maintaining strong cooperation between home and host supervisors during normal and crisis periods. i will close by observing that the international effort to strengthen financial regulation cannot succeed unless each nation understands the goals and challenges faced by its partners. the federal reserve and the bundesbank have a long history. i believe there is a trust between us that is the basis for collaboration. i look forward to working with you to make the financial system safer and stronger. thank you. board of governors of the federal reserve system ( 2011 ), β federal reserve board proposes steps to strengthen regulation and supervision of large bank holding companies and systemically important nonbank financial firms β, press release, december 20. bis central bankers β speeches | 0.5 |
more resilient β with multiple sources of raw materials, multiple production locations, and multiple warehouse hubs and distribution channels. the desire to mitigate china concentration risk has led to some diversification of production locations in asia. even before covid - 19, firms had started to adopt a β china plus one β sourcing and production strategy as wage costs rose in china and us - china trade tensions intensified. new production locations and value chains have emerged in vietnam, taiwan, and to some extent malaysia. the pandemic has added some impetus to this trend. but we do not expect extensive relocation of production out from china in the near term. the bigger force diversifying supply chains is the continued rise of asia β s middle class. middle class consumption patterns are boosting and reshaping intra - asian trade in goods and services supply chains that used to focus on asian exports to europe and america are increasingly diversifying to also meet final demand in asian markets. this means more regional trade routes and regional ports growing in importance. last year, 12 of the top 15 container ports in the world were in asia. as sailors navigating choppy waters would put it : β we cannot direct the wind, but we can adjust the sails. " and the wind is blowing towards asia. flexible supply chains are more resilient β where production can ramp up or down in line with changing demand and where alternative routes can be used quickly. in the wake of the covid - 19 pandemic, there is no doubt a rebalancing from just - in - time to just - in - case operations. but while inventories are likely to be somewhat larger going forward, maintaining huge stockpiles is expensive. smart firms are recognising the value of flexible supply chains and exploring alternative production possibilities from the stocks on hand. a good example of flexible production lines was seen in france earlier this year, where luxury goods manufacturer lvmh shifted its perfume factories to produce hand sanitisers within 72 hours of the government β s call for support. similarly, the factories of giorgio armani, gucci, and prada were repurposed to produce medical overalls to support the overwhelmed italian healthcare system. 2 / 7 bis central bankers'speeches improved visibility and transparency on shipments can help make supply chains more flexible and resilient. of course, it is not as easy to retrofit ships to carry different types of cargo as it is for airlines to convert passenger planes | back - stop β provider of liquidity, and can therefore provide liquidity insurance to the financial system, promoting financial stability. oliver wyman : fintech 2. 0 paper : rebooting financial services ( june 2015 ) and mckinsey : global payments report ( 2016 ). all speeches are available online at www. bankofengland. co. uk / news / speeches retailers. as designed, libra may substantially improve financial inclusion and dramatically lower the costs of domestic and cross border payments. 15 the bank of england approaches libra with an open mind but not an open door. unlike social media for which standards and regulations are being debated well after they have been adopted by billions of users, the terms of engagement for innovations such as libra must be adopted in advance of any launch libra, if it achieves its ambitions, would be systemically important. as such it would have to meet the highest standards of prudential regulation and consumer protection. it must address issues ranging from anti - money laundering to data protection to operational resilience. libra must also be a pro - competitive, open platform that new users can join on equal terms. in addition, authorities will need to consider carefully the implications of libra for monetary and financial stability. our citizens deserve no less. leveraging our position at the heart of the international financial system and one of the world β s largest fintech hubs, the bank of england will help lead the way on these issues at the g7, g20, the fsb, bis and imf. whatever the fate of libra, its creation underscores the imperative of transforming payments. the bank β s strategy to open access to a wide range of payment solutions combined with appropriate regulatory oversight of them maximises the likelihood that the payments revolution will meet the demands of the new economy and the needs of all our citizens. supporting more lending to smes through an open platform big data is opening up new opportunities for more competitive, platform - based finance of smes. artificial intelligence ( ai ) and machine learning ( ml ) techniques are already mining fields of data generated by online activity. this has the potential to yield enormous benefits for households and businesses by opening up new lines of credit, providing greater choice, better - targeted products and keener pricing. putting data to work is critical to closing one of the biggest funding gaps in the country. smes are the engine room of our economy, generating around 60 % of all private sector employment | 0 |
in place the necessary coordinating platforms to manage disaster risks holistically across the entire value chain of disaster risk assessment, disaster risk financing and disaster risk response. first, disaster risk assessment. in 2013, the asean cross sectoral coordinating committee on disaster risk financing and insurance ( acscc ) was established to strengthen regional coordination of disaster risk management. acscc brings together 3 key stakeholder groups : finance ministers and central banks represented by the asean finance and central bank deputies meeting ( afcdm ) ; insurance regulators represented by the asean insurance regulators meeting ( airm ), and the national disaster management organisations which are represented by the asean committee of disaster management 2 ( acdm ). under acscc, the asean disaster risk financing and insurance ( or adrfi ) programme was established as the central platform to coordinate asean - wide efforts in developing and implementing disaster risk financing strategies over 3 phases. phase 1 was completed in 2017, which developed a historical loss database of 5 asean countries for earthquake and typhoon events3, initial country studies for phillippines and thailand to review their national policy and legislative frameworks, and two workshops on disaster risk financing. second, disaster risk financing. the asean + 3 countries have recently come together to establish the southeast asia disaster risk insurance facility, known as seadrif, in 2 / 4 bis central bankers'speeches partnership with the world bank. as the first regional catastrophe risk facility to be established in asia, seadrif will provide participating asean countries with climate and disaster risk solutions. to be incorporated and licensed as a general insurer in singapore in september 2019, seadrif will start with a flood risk pool to provide rapid response financing to myanmar, laos and potentially cambodia. third, disaster risk response. since 2005, the asean agreement on disaster management and emergency response ( aadmer ) has served as a common platform to jointly respond to disaster events in asean. as part of the aadmer work programme, the asean coordinating centre for humanitarian assistance on disaster management was set up in 2011 to be the home of β one asean one response β. it has since played a key role in monitoring disasters, raising regional standards in disaster preparedness, and coordinating asean β s collective response to disasters. asean disaster risk financing and insurance programme today, i am pleased to announce the official launch of phase 2 of the asean disaster risk financing and insurance programme. adrfi phase 2 will be impact - focused, 11. and targeted at strengthening asean β s capabilities in ex | balance sheet is integral to the operations undertaken in the areas i oversee, markets and banking, payments and financial resilience. and it is central to the bank β s mission for monetary and financial stability : the balance sheet is the hard infrastructure that supports much of the bank β s policy activity. for most of the time it may not be as newsworthy as some of the tools it supports, like bank rate, qe or β lender of last resort β. but it is foundational : were it not to be of sufficient size or usability, that would quickly make headlines at times of financial stress. gender diversity in central banking was discussed at the excellent recent conference that the bank, together with the federal reserve and the european central bank, hosted on gender and career progression : https : / / www. bankofengland. co. uk / events / 2018 / may / gender - and - career - progression, while the treasury β s women in finance charter encourages gender diversity in the financial industry more generally : https : / / www. gov. uk / government / publications / women - in - financecharter. of course, gender is just one important element in the broader drive to improve diversity in the economics profession. for more information on the sm & cr, see allen, t. ( 2018 ), β strengthening the link between seniority and accountability : the senior managers and certification regime β, bank of england quarterly bulletin, 2018q2, available at https : / / www. bankofengland. co. uk / / media / boe / files / quarterly - bulletin / 2018 / senior - managers - certification - regime. these include : responsibility for management of the bank β s capital and the bank β s funding and liquidity operations ; responsibility for the bank β s treasury management functions ; responsibility for the bank β s proprietary trading activities ; responsibility for the protection of clients β assets. all speeches are available online at www. bankofengland. co. uk / speeches in my remarks today i want to account for how we β ve got to where we are and what the balance sheet of today is used for. i β ll then give some pointers on where it might go, drawing on a discussion paper we published in august 2018. and i β ll conclude with some remarks on the current policy environment, which the balance sheet is supporting. th the 11 anniversary of the start of the global financial crisis but i couldn β t give a speech in september | 0 |
were deposited in the fund, but the entire amount was transferred back to the central government budget to cover some of the non - oil deficit. however, the norwegian economy rebounded and transfers to the fund started in 1996. the fund has since acted as a buffer between widely fluctuating oil revenues and public expenditure. the decision regarding annual petroleum revenue spending can be made independently of the size of the revenues. thus, the fluctuations in government petroleum revenues do not have an automatic impact on the norwegian economy. the fund also has a stabilising effect on the krone exchange rate because capital outflows increase when norway β s petroleum revenues rise. the fiscal rule for petroleum revenue spending, which was adopted in 2001, states that the government may spend β as an average over the business cycle β the expected normal real return on the capital in the fund over the central government budget. this return is estimated at 4 per cent. the rule ensures that the capital in the fund is not drawn on unless the real return on the fund is lower than 4 per cent. in this way, future generations will also benefit from the oil wealth. it is also important that the government β s portfolio of financial investments is constructed without considering the financing needs of norwegian enterprises. by the same token, norwegian companies can choose their funding structure independently of the government β s financial investments. the capital market serves as intermediary between the government as investor and firms β capital needs, and this ensures the separation of public and private choices. the norwegian capital market is part of a nordic market and increasingly part of a report no. 4 ( 1988 β 89 ) to the storting : long - term programme 1990 β 93. larger international market. capital markets are a very efficient tool for channelling savings into investment. since capital started flowing into the fund, the savings plan has remained intact. this indicates that both the fund mechanism and the fiscal rule are well anchored. this is a prerequisite for escaping the resource curse. on the other hand, only once in 2007 did the government budget bill call for spending below 4 per cent of the fund. it later transpired that petroleum revenue spending was also lower than 4 per cent in 2006 and 2008. the fund is in the process of becoming a major financing source for public expenditure for the coming decades. the fund has reached nok 3 trillion, or 120 per cent of gdp, of which nok 600 billion are returns in foreign currency. the government can now spend nok 120 billion | campaign ". this campaign focuses on four main themes : the visual appearance of the banknotes, their security features, their denominations and the common changeover modalities. it is designed to complement the other information campaigns on the euro, particularly those run by the national authorities in each euro area country. naturally, and as i mentioned earlier, we are also relying on the efforts of the banking community in this regard. at the end of the day, no television advertisement or billboard can replace the direct and immediate advice which competent bank employees can give to their customers. ladies and gentlemen, roughly a year from now, we shall finally be using the new euro banknotes and coins and our national currencies will no longer be in circulation. however, even then, the euro area will still not completely function as a truly unified currency zone. as i mentioned earlier, euro area financial markets are not yet fully integrated. i would also like to draw your attention to another area, which directly concerns the banking community, and where the potential benefits of the euro have yet to be fully exploited. i am referring to the price differential that continues to exist between cross - border retail payments within the euro area and those within individual member states. like the cash changeover, this is another area where the banking community has a crucial role to play in securing the full benefits of the common currency. i appreciate that this also represents a substantial task. however, once european businesses and citizens are using the euro for their everyday transactions, the provision of low - cost, efficient cross - border retail payment services will undoubtedly become a clear policy priority. finally, returning to the title of my speech " where are we 11 months before e - day? ", i would say that so far we are well on track. even before the introduction of euro banknotes and coins, the euro has already delivered much of what was expected. we regard these achievements with some satisfaction. nonetheless, this does not mean that we are complacent. the enormous challenge of the cash changeover still has to be met and, despite all past and ongoing work, a lot remains to be done. even after the changeover, the ecb does not anticipate settling down to " business as usual " anytime soon. our objective is to make the euro a lasting success. i am confident that - by also building on our good working relations with the banking community - we shall continue to succeed in this endeavour. thank you ladies and gentlemen. | 0 |
will continue to surround future progress. speaking of risks associated with the european debt problem, there is a risk that stagnation in the real economy might become protracted under the vicious cycle of public finance, the financial system, and the real economy, and there is a risk that a financial crisis might occur due to concern over the financial system. put simply about the recent developments in bis central bankers β speeches europe, it can be summarized that the risk that stagnation in the real economy, including the spillover to core countries, might become protracted has still been large, while the risk that a financial crisis might occur has subsided due to various policy responses. current state of the u. s. economy let me turn to the united states. the u. s. economy has been on a modest recovery trend with a moderate increase in private consumption, including automobile sales, and signs of a pick - up in the housing market. however, there have been weak developments. improvement in employment has been slow and, amid economic adjustment in europe being protracted, business sentiment, mainly of manufacturers operating globally, has recently become cautious and an increase in business fixed investment has been slowing. against such a backdrop, the federal reserve has recently decided to keep the target range for the federal funds rate at 0 to 1 / 4 percent and changed the outlook for the duration in which exceptionally low levels for the federal funds rate are likely to be warranted, from β at least through late 2014 β to β at least through mid - 2015. β in addition, it has decided to purchase mortgage - backed securities ( mbs ) issued by governmental financial institutions, called agency mbs, at a pace of 40 billion dollars per month until the outlook for the labor market improves substantially in a context of price stability. in the united states, while balance - sheet adjustments due to the burst of a housing bubble have been progressing to a certain degree, it has steadfastly remained. in such a situation, in addition to the effects of the european debt problem, there are no prospects for a solution to the so - called fiscal cliff problem and there is an increasing awareness about uncertainty of fiscal consolidation over time. those factors are likely to continue to constrain economic activity for the time being through growing cautiousness in household and business sentiment. while the u. s. economy is expected to continue recovering partly supported by accommodative financial conditions, the pace of recovery for the time being is likely to be only moderate | but also spread over to major southern european countries, including spain and italy. in those countries, due to a rise in government bond yields, namely, a decline in government bond prices, financial institutions β assets have deteriorated, which has led to a rise in funding costs and instability of financial positions. as a result, financial conditions surrounding firms and households have worsened, posing pressure to suppress economic activity. such deterioration in the real economy and concern over the financial systems have been fed back to the fiscal problem through a decline in revenue and an increase in support for financial institutions. in such a way, in europe, a vicious cycle of public finance, the financial system, and the real economy has been at work, mainly in peripheral countries. therefore, the stagnation in the european economy has been protracted, and that has recently been spread to core countries, including germany, mainly in terms of business sentiment. the growth rate of the euro area economy has been negative for three consecutive quarters. in the meantime, the european authorities have been taking various policy measures. in july, a financial support measure to inject public funds into spanish financial institutions was compiled, and in the beginning of september, the european central bank ( ecb ) introduced a new program to purchase government bonds with a maturity of between one and three years, with no ex ante quantitative limits on the size of purchases. however, in starting purchases of government bonds, the ecb is going to make some conditions. for example, the issuer countries of bonds to be purchased will have to accept monitoring by the eu and the imf on the progress of fiscal consolidation. thanks to those various policy responses, stability has been maintained in interbank funding markets, and investors β risk aversion has abated somewhat in international financial and capital markets as a whole. the policy responses by the ecb and other policy authorities are indispensable for containing the vicious cycle of public finance, the financial system, and the real economy. however, in order to resolve the european debt problem fundamentally, it is necessary for countries whose fiscal sustainability has been a cause for concern to make some progress in meeting the challenges such as fiscal consolidation, strengthening medium - to long - term growth potential, and reinforcing the stability of the financial system. in addition, for europe as a whole, integrating fiscal policy and banking supervision of the nations is an unavoidable challenge. none of these challenges is easy to meet and thus it is likely that high uncertainty | 1 |
the shocks that hit the euro area over the last two years would reduce inflation by at least 1 percentage point more than in a standard rational expectation model ( see figure 2 ). besides being a problem in its own right, this would also imply that the ( standard ) models central banks use for forecasting may become inaccurate and provide poor guidance for policy decisions. our research also shows that there is a concrete risk of an outright de - anchoring of inflation expectations ( cecchetti et al., 2015 ). as long as expectations are well anchored, changes in relative prices or supply shocks should affect the price level in the short - but not in the longrun. hence, the correlation between short - term and long - term expectations provides a gauge of de - anchoring risk. in the euro area this correlation has risen in recent months. in particular, the probability of downward changes in short - term expectations becoming associated with variations in longer - term expectations has increased substantially ( figure 3 ). technicalities aside, it is clear that even declines in inflation due to favourable supply shocks may have adverse consequences when nominal interest rates are at the zero lower bound and debt levels are high. 2 to cut a long story short, it is crucial that central banks keep pursuing their price stability target. 3. is monetary policy approaching its limits? ( no! ) the next question is whether central banks can achieve their goals when interest rates are at the zero lower bound. are their tools up to the task? this debate has intensified since the ecb governing council β s decision of last march, but it is hardly new : doubts about the effectiveness of monetary policy, as well as claims that it has now β really β reached its limit have been voiced after each round of monetary expansion in the last eight years on both sides of the atlantic. the effectiveness of monetary policy might be hindered because of the zlb ; because β you cannot push on a string β ; or because monetary stimulus is necessarily weaker after a financial crisis, when firms and households want to deleverage and the bank transmission channel is broken ( masciandaro, 2016 ). my initial response to this question is contained in the title of this speech : β never say never β. there are no obvious limits to what central banks can do. the suspicion that they might really run out of tools and ideas is understandable, but it is backward - looking and has proved groundless more than once already. my considered response is that we now have | axel a weber : growth prospects after the crisis speech by professor axel a weber, president of the deutsche bundesbank, at the 21st european business school ( ebs ) symposium, oestrich - winkel, 17 september 2010. * 1. * * introduction professor jahns, ladies and gentlemen, i am delighted to have been asked to assume the patronage of the 21st ebs symposium and thus to have the opportunity to speak to you today. occasions like this which provide a platform for students to meet professionals are an agreeable complement to academic study. this symposium has traditionally been organised by first - year students who, i must say, appear to have done very well in performing their task. 2. growth and the financial system β some general remarks the topic of this year β s symposium is β growth β a future without boundaries β. economic growth is widely associated or even equated with prosperity, and in light of the current crisis the topic is receiving a lot of attention : after all, the crisis not only resulted in the most pronounced downturn since world war ii, for many it also cast doubt on the path of economic activity once the crisis is over. nevertheless, if we wish to make a sound and comprehensive judgement it is not advisable to look only at current gross domestic product ( gdp ). economic growth is a concept that embraces a longer - term perspective and we would be well advised to look beyond the current crisis. the concept of potential output permits a calm and objective view of the matter. abstracting from cyclical fluctuations, it covers the medium to long - term trend of gdp and links it to the driving factors for such a time horizon. to be more specific and to focus our minds on the lasting economic impact of the crisis, it helps to take a simple textbook model of economic growth as a starting point. in this stylised model, growth is determined by three factors : capital, labour and technical progress. how are these three factors, in turn, affected by the financial system? the first factor β capital β points perhaps most obviously to the importance of the financial system. after all, the financial sector is not only a part of the economy with a distinct value added, it also plays a crucial role in capital accumulation. however, especially in highly developed economies that typically boast sizeable and sophisticated financial sectors, the role of the financial system goes far beyond that of mere capital accumulation. in such economies, the financial system plays a key role in | 0 |
we are contemplating such a move. wouldn β t negative rates discourage people from keeping their money in banks? this depends on how negative they would be. indeed, rates that fall deep into negative territory could have an impact on depositors. but a deposit rate slightly below zero does not necessarily imply that depositors would be affected, while still providing incentives for banks to lend more. in recent years, the ecb has used a number of non - standard monetary policy tools. it has purchased bonds on the market, pumped hundreds of billions of euro into the market in the form of cheap loans for banks. the ecb has had to use different instruments at different stages of the crisis. now the economic and financial situation in europe is significantly better. financial fragmentation has receded, member states have made significant efforts towards economic convergence and the governance of the euro area has been strengthened. we are gradually moving out of the bis central bankers β speeches crisis phase into a different environment, with the focus shifting from solving the crisis to ensuring stable economic growth and inflation close to 2 %. it requires a different approach and different instruments. the developments beyond our eastern border are the big topic of debate in poland at the moment. could the conflict between russia and the ukraine affect europe and its economy in any way? the impact on trade or the financial system has thus far been limited. but this situation does give rise to uncertainty, so it can be regarded as a potential negative factor that could hinder economic growth in europe, and that is part of our risk assessment. what about the strong euro? aren β t you worried it could cause problems for european exporters and hinder the recovery? the ecb doesn β t target the exchange rate. our primary mandate is price stability, and within this mandate, the exchange rate of the euro is among the factors determining the level of inflation. and indeed, the strong euro is contributing to the current low inflation. consequently, any further strengthening of the euro strengthens the case for more policy action by the ecb aimed at bringing inflation closer to 2 %. is there a risk of global currency wars? each country wants to overcome the crisis as quickly as possible and the easiest way is to weaken its currency and thus improve the position of its exporters. these issues have been discussed many times, including among the g20. countries have agreed that the exchange rate should not become a target for monetary policy. as long as the exchange rates are driven by the various countries β internal situations and | domestic monetary policy actions, this is not a currency war but an adjustment of exchange rates to the current policy, stemming from their economic developments. this assumes, of course, that exchange rates will adapt in a flexible way to the changes in economic conditions and monetary policy. it was thanks to the weakening of the zloty β among other things β that poland has come out of the 2009 crisis unscathed. for many people, this is an argument against the joining the euro area. poland β s future is linked to the euro area and the future of the euro area is linked to poland. the euro area without poland β one of the largest eu countries β will not be complete. that is why poland is welcome to join. but it is up to you to meet the entry criteria, laid down in eu law, and, in doing so, decide when to join. bis central bankers β speeches | 1 |
in asia. we are seeing financial institutions leveraging on the strengths and expertise that have been developed in both islamic and conventional financial markets. this is expanding the range of shariah - compliant products and allowing the islamic finance industry to tap on broad and deep investor pools globally and in asia. β’ malaysia is widely recognised as a leader in islamic finance, in particular for the issuance of sukuks. β’ islamic finance is also seeing growing interest in other asian financial centres such as singapore, hong kong and tokyo. β’ just recently in mid - november 2012, institutional and private investors in singapore and hk were the largest investors in the us $ 15. 5 billion global sukuk issued by the abu dhabi islamic bank ( adib ). aaoifi is accounting & auditing organisation for islamic financial institutions international organisation of securities commissions international association of insurance supervisors bis central bankers β speeches β’ between our two countries, we are seeing malaysian banks collaborating with singapore corporates and financial players to structure s $ denominated corporate sukuk programmes. and singapore - listed companies are venturing out to tap the ringgit sukuk market in malaysia. these are trends that we are keen to encourage. to repeat therefore, i am optimistic that we can realise the significant growth potential for islamic finance in the next 10 β 15 years. managing the challenge of capital flows in the post - crisis era let me move on now to say a few things about the challenges that many in the emerging world face in managing capital flows, particularly in the face of the extremely low interest rates being set in the advanced economies ( aes ). we are in an unprecedented situation. interest rates are expected to stay extremely low in the us and much of the advanced world for a few years, reflecting decisions by their central banks to keep monetary conditions highly accommodative until their economies resume normal growth. there is debate among economists on how effective these activist monetary policies, such as the us fed β s qe3 strategy, will be in reviving entrepreneurial spirits and private investments. if the strategy succeeds and the us economy recovers, it will be a plus for asia as well. in the meantime, however, there are significant implications for emerging market economies, as global investors search for better returns β better than the near - zero rates they get on cash and treasury bills. with large amounts of liquidity now moving between markets, short - term shifts in investor sentiment leads to volatility in capital flows. we have | developments in the economy and their implications, and mapping out necessary policy actions. thus, a central bank needs to put emphasis on the institutional culture of constant learning. 12 the third aspect is the integration of wide - ranging areas of knowledge. taking an example of monetary policy, a central bank generally relies heavily on the macroeconomic theory in conducting monetary policy. the economic theory plays an important role in providing a framework for understanding a complex world. at the same time, we should be careful that sticking to one specific theory potentially distorts our views. historical knowledge is also useful. looking back at the history of financial crises, we are stunned by the common mentality of β this time is different. β 13 in addition, knowledge on banking operations, just i mentioned, is also indispensable. a central bank needs to make constant efforts to produce synergy effects between monetary policy and prudential policy wings by overcoming some differences in the cultures of the two policy wings. the fourth aspect is cooperation among central banks. we expect that economic activity and financial market transactions will continue to grow across borders, but we do not imagine that sovereign nations will disappear in the foreseeable future. in that case, cooperation between central banks will become increasingly important in achieving financial system stability. under the current global financial crisis, central banks have communicated with each other intensively at various levels, from top central bankers to mid - class staffers, which surely becomes considerable wealth for the future of the central bank community. vi. closing remarks central bank conferences reflect the institutional culture of central banks, and this conference entails such aspects more clearly with its title of β future of central banking. β i am see king ( 2005 ) for the importance of learning for central banks. see reinhart and rogoff ( 2009 ). convinced that the one - and - a - half - day conference will give us profound insights into the future of central banks and central banking. thank you very much. references blanchard, olivier, giovanni dell β ariccia, and paolo mauro, β rethinking macroeconomic policy, β imf staff position note, 2010. blinder, alan s., the quiet revolution : central banking goes modern, yale university press, 2004. cagliarini, adam, christopher kent, and glenn stevens, β fifty years of monetary policy : what have we learned?, β paper presented at the 50th anniversary symposium of the reserve bank of australia, february 2010. caruana, | 0 |
the " long and variable lags " between policy actions and the economic effects. economists agree that monetary policy cannot " fine tune " the economy to ensure that the full employment objective is continuously maintained. however, a considerable amount of research supports the contention that monetary policy can reduce the variability of output around its full - employment level. for a discussion of the case for price stability, see fischer ( 1996 ). much of this research involves simulations of empirical macroeconomic models with alternative policy rules. the simple policy rules used in these exercises mimic the systematic aspects of the response of discretionary policy to changes in the macroeconomy. for example, taylor has shown that federal reserve policy actions in recent years have been broadly similar to what a simple policy rule would have prescribed. these exercises therefore demonstrate the ability of simple rules β and by extension, discretionary monetary policy more broadly β to both reduce the variability of output and achieve a long - run inflation target. see taylor ( 1999 ) for a series of papers involving simulations of models with various policy rules. preferences households and businesses are presumed to prefer low and stable inflation to high and variable inflation. but they also prefer high and rising real income per capita and output that is consistently close to the economy's maximum sustainable level of output. this is often expressed in terms of a loss function where the loss to society is expressed as a weighted average of squared deviations of inflation from its target and of output from its potential level. the squaring of the deviations ensures that deviations on either side of the target are treated equivalently as losses. the weights, a and 1 - a, indicate the relative intensity of the public's distaste for deviating from their preferred rates of inflation and output. the loss to society, l, can be expressed as ( 1 ) l = a ( f - f * ) + ( 1 - a ) ( y - y * ) where f is the rate of inflation, f * is the target rate of inflation, y is the level of output and y * is the target level of output or potential output. tradeoff between inflation and output variability although it is possible in principle to achieve price stability and full employment simultaneously, an inevitable tradeoff between the variability of output and the variability of inflation exists. this tradeoff is most obvious in the case of a supply shock, for example an abrupt increase in the price of oil. an adverse supply shock typically raises inflation and lowers aggregate demand ( by reducing the | habits, may be combined in ways that indicate race, gender, and other protected characteristics. 15 even after one online platform implemented new safeguards pursuant to a settlement to address the potential exclusion of consumers from seeing ads for credit products based on race, gender, or other protected characteristics, professor alan mislove and his collaborators have found that the complex algorithms may still result in bias and exclusion. 16 therefore, it is important to understand how complex data interactions may skew the outcomes of algorithms in ways that undermine fairness and transparency. makada henry - nickie, notes that β β¦ [ i ] t is of paramount importance that policymakers, regulators, financial institutions, and technologists critically examine the benefits, risks, and limitations of ai and proactively design safeguards against algorithmic harm, in keeping with societal standards, expectations, and legal protections. β 17 i am pleased that the symposium includes talks from scholars who are studying how we can design ai models that avoid bias and promote financial inclusion. no doubt everyone here today who is exploring ai wants to carol a. evans and westra miller, β from catalogs to clicks : the fair lending implications of targeted, internet marketing, β consumer compliance outlook, third issue, 2019, https : / / www. consumercomplianceoutlook. org / 2019 / third - issue / from - catalogs - to - clicks - the - fair - lendingimplications - of - targeted - internet - marketing /. piotr szapiezynski et al., β algorithms that β don β t see color β : comparing biases in lookalike and special ad audiences, β ( 2019 ), https : / / sapiezynski. com / papers / sapiezynski2019algorithms. pdf ; till speicher, et al., β potential for discrimination in online targeted advertising, β proceedings of machine learning research 81 : 1 β 15, 2018 conference on fairness, accountability, and transparency, http : / / proceedings. mlr. press / v81 / speicher18a / speicher18a. pdf. makada henry - nickie, β equitable algorithms : examining ways to reduce ai bias in financial services β ( testimony before the house committee on financial services task force on artificial intelligence hearing on february 12, 2020 ), https : / / www. congress. gov / 116 / meeting / house / 110499 / witnesses / hhr | 0.5 |
support members of an associated group of companies. experienced bank supervision cannot fully substitute for poor lending procedures, but presumably it could encourage better practice. apparently even that has been lacking in many economies. and training personnel and developing adequate supervisory systems will take time. i pointed earlier to cross - border interbank funding as potentially the achilles β heel of the international financial system. creditor banks expect claims on banks, especially banks in emerging economies, to be protected by a safety net and, consequently, consider them to be essentially sovereign claims. unless those expectations are substantially altered - - as when banks actually incur significant losses - - governments can be faced with the choice either of validating those expectations or of risking serious disruption to payments systems and to financial markets in general. arguably expectations of safety net support have increased the level of cross - border interbank lending from that which would be supported by unsubsidized markets themselves. this would suggest resource misallocation. accordingly, it might be useful to consider ways in which some added discipline could be imposed on the interbank market. such discipline, in principle, could be imposed on either debtor or creditor banks. for example, capital requirements could be raised on borrowing banks by making the required level of capital dependent not just on the nature of the banks β assets but also on the nature of their funding. an increase in required capital can be thought of as providing a larger cushion for the sovereign guarantor in the event of a bank β s failure. that is, it would shift more of the burden of the failure onto the private sector. alternatively, the issue of moral hazard in interbank markets could be addressed by charging banks for the existence of the sovereign guarantee, particularly in more vulnerable countries where that guarantee is more likely to be called upon and whose cost might deter some aberrant borrowing. for example, sovereigns could charge an explicit premium, or could impose reserve requirements, earning low or even zero interest rates, on interbank liabilities. increasing the capital charge on lending banks, instead of on borrowing banks, might also be effective. under the basle capital accord, short - term claims on banks from any country carry only a twenty percent risk weight. the higher cost to the lending banks associated with a higher risk weight would presumably be passed on to the borrowing banks. borrowing banks, at the margin, might reduce their total borrowing or shift their borrowing to nonbank sources of funds, perhaps with the shift facilitated by the lending banks, who | new monetary policy framework at our september fomc meeting, the committee made important changes to our policy statement that upgraded our forward guidance about the future path of the federal funds rate, and that also provided unprecedented information about our policy reaction function. we indicated that, with inflation running persistently below 2 percent, our policy will aim to achieve inflation outcomes that keep inflation expectations well anchored at our 2 percent longer - run goal. we said that we expect to maintain an accommodative stance of monetary policy until these outcomes β as well as our maximum - employment mandate β are achieved, and also that we expect it will be appropriate to maintain the current 0 to 1 / 4 percent target range for the federal funds rate until labor market conditions have reached levels consistent with the committee β s assessments of maximum employment, until inflation has risen to 2 percent, and until inflation is on track to moderately exceed 2 percent for some time. we also stated that the federal reserve will, over coming months, continue to increase our holdings of treasury securities and agency mortgage - backed securities at least at the current pace to - 4sustain smooth market functioning and help foster accommodative financial conditions, thereby supporting the flow of credit to households and businesses. the september fomc meeting was the first since the committee approved in august our new statement on longer - run goals and monetary policy strategy and adopted a new policy framework. 3 the changes we made in our september fomc statement bring our policy guidance in line with this new framework. in our new framework, we acknowledge that policy decisions going forward will be based on the fomc β s estimates of β shortfalls [ emphasis added ] of employment from its maximum level β β not β deviations. β this language means that going forward, a low unemployment rate, in and of itself, will not be sufficient to trigger a tightening of monetary policy absent any evidence from other indicators that inflation is at risk of moving above mandate - consistent levels. with regard to our price - stability mandate, while the new statement maintains our definition that the longer - run goal for inflation is 2 percent, it elevates the importance β and the challenge β of keeping inflation expectations well anchored at 2 percent in a world in which an effective - lower - bound constraint is, in downturns, binding on the federal funds rate. to this end, the new statement conveys the committee β s judgment that, in order to anchor expectations at the 2 percent level consistent with price stability | 0.5 |
difficulties β, as they have become systemically more important with compulsory centralised clearing for derivative instruments. above all, we must ensure a balance between financing channels. all discussions on the shadow banking system must continue in order to take account of the risks that may have moved into this sector as a result of the ramping up of requirements in the regulated sector, and for banks and insurers in particular. it has been estimated that the segments that may pose financial stability risks represented a total of usd 34 trillion. 14 the priority has now shifted from the solvency of banks, which has improved substantially, to the liquidity of the shadow banking sector, particularly funds and asset management companies that are exposed to the risks of sudden panic - driven runs. lastly, progress is required on fintechs and above all on the major digital platforms and businesses, which, if they carry out financial activities, will have to comply with similar regulations sooner or later. 3 ) the third challenge is evaluation. evaluation is essential to the credibility of the financial reforms that have been adopted worldwide, and to this end, the g20 adopted a postimplementation evaluation framework this summer. this framework should allow us to determine whether the reforms have actually achieved their desired results, without any unexpected, adverse effects, and to make adjustments if this is not the case. two initial evaluations are already underway : the first deals with the effectiveness of reforms that encourage the use of central clearing while the second assesses the impact of g20 reforms on access to financing, which will begin by looking at infrastructure financing before focusing on credit to small and medium - sized enterprises ( smes ). the first evaluation reports are expected to be made public by the end of 2018. 4 ) the fourth challenge, in order to consolidate the progress we have made, is to ensure that the new regulatory framework is implemented consistently across the board while remaining vigilant to avoid backtracking. in the country doctor, balzac wrote β... in all things human, is not constancy the highest expression of strength? ", rightly reserving this virtue for the great men of his day. now, as you know, the new us government has raised the possibility of reviewing their national banking regulations. 15 certain national adjustments could be considered appropriate and justified, as is the case, for example, for regulations that concern entities whose operations are only local in scale, or regulations that are purely american in scope such as the volcker rule | we were aware of its fragility stemming from its increasing refinancing difficulties and we knew that there were longer - term liquidity risks. the cif is a textbook case where a downgrade by ratings agency expedited the disclosure of funding problems. would you say that moody β s was responsible for this situation? no, the primary responsibility lies with its management, which was unable to find a merger solution when it was possible and we had asked it to do so. did you lack coercive power in this case? yes, definitely. we have very great powers when an institution does not comply with regulations, but we do not have powers that enable us to prevent a crisis. as things stand, we can appoint temporary administrators if need be or revoke an authorisation, but we do not have powers of resolution allowing us to impose the restructuring of a banking group or transfers of assets. we worked on a draft regulation before the european project started to be discussed, but we underestimated the length of time needed to arrive at a european proposal. i regret this somewhat as it would have been useful for us. is the french banking system still sufficiently robust? in fact, french banks are increasingly robust as they are reducing their risks and increasing their capital. the reduction of risk has resulted from the selling - off of business lines, often abroad, and a scaling - back of some market activities ; the increase in their capital reflects the setting aside of profits that remain substantial thanks, in particular, to the resilience of retail banking in the face of the economic slowdown. their core tier 1 capital grew by 0. 5 percentage point in the second quarter and they have exceeded the target set by the eba. in terms of liquidity, they have managed very well the withdrawal of us money market funds last year by adjusting their assets, as well as the rebalancing of their sovereign bond portfolios. this goes to show that, if it is based on a sound internal model, the universal banking model works well. bis central bankers β speeches do you remain opposed to the separation of investment and retail activities? i really do not understand the benefit of this principle of separating activities. the only thing i wish to see is the outright prohibition of speculative activities and stronger internal controls for the risks associated with market activities. otherwise, banks should be able to serve their customers, whether they are private individuals, companies or institutions, in all of their operations β on bond markets, fore | 0.5 |
the lending to the economy, introduction of atm and other new banking products etc.. banks with private albanian capital, that have been licensed in the last three years, have been active in trying to position themselves in these changing market. they offer a full range of banking services, having the advantage of better understanding the local environment. despite the above achievements, the economy is still fragile and considerable progress is needed to establish an attractive framework favourable to investment and sustainable growth, driven by private sector development. customs procedures, tax administration, land and construction permits, sector licensing, and the judiciary system are the major obstacles to investment in albania. what can the central bank governors do to continue to encourage this new growth? are there any downsides? governance and institution building reforms remain critical for developing a rules - based business climate and attract increasing levels of investment. under this framework the bank of albania is committed to go ahead with additional structural reforms to enhance banking sector intermediation and financial services provision. in close consultation with commercial banks, governmental institutions, and the private sector, the bank of albania developed an action plan for increasing the use of the banking system in the regular conduct of business. regarding an important aspect of our central bank, the banking system stability, a lot of work has been done to encourage the development and consolidation of a sound banking and financial system for the country economic progress. measures supported by the bank include the privatization of the savings bank, the development of a deposit insurance system, improvement of the bankruptcy framework and collateral enforcement, and strengthening of bank regulation and supervision, which will also assist the government β s anti - money laundering efforts. the imf has provided technical assistance to the bank of albania. the imf has also funded a resident adviser to support the implementation of the institutional development program for banking supervision developed by the bank of albania in the wake of the large savings bank privatization, the financial sector is showing welcome dynamism and the boa is stepping up prudential vigilance. the recent fsap exercise will certainly help to advance reforms in the financial sector. bank of albania is also committed to increase the mutual relationships with all international partners. we are trying to be a real partner in the discussing table, arguing on the economical - financial policies, through presenting its solution alternatives, being elaborated not only on the economic logic base but also on the albanian reality. i am satisfied that, in the end, albania is on the way to get a new prgf / eff arrangement with | stability. inflation has been distinguished generally by lower rates relative to other transition economies. in the last five years, inflation has stabilized at moderate levels as measured both at the end and average period figures, though it sometimes diverges from the target due to unforeseen shocks and speculative factors that are mainly beyond the central bank β s control. we will continue to aim inflation rates around the 3 percent level. however, several threats may prevent the bank from reaching the target while preserving growth. to begin with, the signalling power of monetary aggregates targeted by boa may start to deteriorate. this might involve changes in the administrative prices and structural reforms in general, fiscal uncertainty issues, the impact of dollarisation on the effectiveness of monetary policy, the potential decrease in foreign remittances and its implication on exchange rate volatility, financial system development and stability etc. also, what β s more important, as the economy gets more and more formal we may start losing some of the flexibility seen so far, making it more and more difficult our task of keeping inflation down with little real costs. in face of this forthcoming developments, we are considering alternative regimes such as it that could both transmit central bank signals better and are more suitable to keep a better balance between economic shocks and inflation. on top of theoretical benefits of an it regime compared to the other regimes, ( summarised in a series of paper by mishkin et al. ( 1997, 2000, 2002 ) ) such as broader information base it utilises, its relatively higher flexibility with regard to supply shocks, the fact that it is easily understood by the public, there is also the successful reference to regime shifts in other european transitioning and developing economies can be made, such as the czech republic, hungary, iceland, poland and turkey. bearing the above issues in mind the boa retains that a switch to inflation targeting over the medium term will put us in a better position to strike the right balance between growth and stability. accordingly, it has initiated steps to improve its governance structure and strengthen its analytical capacities, with technical assistance from the fund. to this end an open forum took place at the end of last year where most of the issue regarding the implementation of inflation target were discussed by top experts all around the world. the main motivation for moving to the it regime is the anchoring of inflation expectations in the medium to longer term while allowing some room to respond to shocks. i β m conscious that going to fully fledged inflation | 1 |
nonetheless, risks to the u. s. financial system do not appear to be flashing red in the way they did in the run - up to previous downturns. it is also possible that the natural rate of unemployment has moved lower or that the unemployment rate still may be overstating the strength of the labor market. while it is encouraging that the share of employees who work part time for economic reasons has continued to move down, there may well be slack remaining along this margin. and another key measure β the prime - age employment - to - population ratio β remains more than 1 percentage point below pre - crisis levels, and further improvement there would be welcome. the outlook looking at economic activity more broadly, although first - quarter gross domestic product ( gdp ) was soft, the data so far suggest a rebound in the second quarter. the weak q1 reading follows a recurring pattern in recent years, with the first quarter of the year often weaker than subsequent quarters. moreover, below the top - line number, there were some encouraging signs of strength : residential construction posted a double - digit increase and contributed 1 / 2 percentage point to first - quarter gdp growth. drilling for oil and natural gas is rebounding sharply, and nonresidential construction contributed 3 / 4 percentage point to first - quarter gdp growth. business spending on equipment and intangibles, which fell slightly in 2016, rebounded to a 7 percent annualized increase in the first quarter and contributed another 3 / 4 percentage point to the overall increase. a key reason overall gdp was so weak last quarter was consumer spending, which rose only 0. 6 percent at an annual rate. nonetheless, there are good reasons to think that the first - quarter weakness in consumer spending will not persist. household incomes should continue rising with the continued strengthening in employment and wages, home prices should be contributing through improved household balance sheets, and consumer sentiment remains upbeat. recent changes in financial conditions have, overall, been supportive of further gains in the real 3 / 7 bis central bankers'speeches economy. the s & p 500 index is up almost 8 percent since the start of the year. at the same time, a broad measure of the exchange value of the dollar is down about 4 percent so far this year, which should help boost net exports. after moving up sharply late last year, long - term interest rates have moved down somewhat so far this year. in addition, the balance of risks has shifted over the past two quarters, with a number of | community bank acquisitions and reorganizations. their findings on bank acquisitions echo both the findings of deyoung and his coauthors and the wisdom of many community bankers, namely that you increase your profits by sticking to what you know. post - acquisition performance of community banks is better, the closer the target bank is to the acquirer. while more - distant acquisitions might lead to greater diversification benefits, these appear to be outweighed by the greater difficulties in managing the performance of two banks operating far apart from each other. i should note that these findings could conflict to some extent with the antitrust responsibilities of financial regulators and the department of justice. while a merger with a crosstown rival might lead to the greatest efficiency gains, the federal reserve has a statutory responsibility to make sure that such consolidations leave a sufficient number of local firms to ensure a competitive banking environment. community bank profitability is affected by both external factors outside of bank control, such as local economic conditions, and factors within bank control, such as the composition and stability of the bank β s loan portfolio. the paper by amel and prager examines the effects of bis central bankers β speeches these two sets of factors on bank profitability over the past 20 years. they find that local economic conditions and demographic changes certainly affect bank profitability, but also that the quality of bank management and the stability of bank portfolio composition consistently have a very substantial impact on a bank β s level of profits. they find that any major change in a bank β s portfolio composition tends to lower bank profits, indicating yet again that banks tend to be better off when they stick to the markets and products that they know. the papers in this morning β s second session on supervision and regulation of community banks are of great interest to me, given my current responsibilities on the community bank subcommittee at the board. the papers in this session stress the need for flexibility in bank regulation and the need β subject to the constraints imposed by congress β to tailor regulations to fit banking organizations that cover a huge range, from quite simple to extraordinarily complex. the paper by bassett, lee, and spiller provides reassuring evidence that camels standards have been quite consistent over time, with no indication that camels ratings were unduly stringent during the recovery from the recent recession. however, they do find that there was a slight tendency for exam ratings to become more stringent as we entered both the recession of the early 1990s and the one we just experienced. this finding | 0 |
speech date : 17 june 2020 speaker : deputy governor henry ohlsson venue : riksbank. se sveriges riksbank se - 103 37 stockholm ( brunkebergstorg 11 ) tel + 46 8 787 00 00 fax + 46 8 21 05 31 registratorn @ riksbank. se www. riksbank. se monetary policy during the economic crisis * the economic crisis the world economy is now experiencing is the deepest for many decades. both demand and supply have declined substantially around the world. economic policy faces major challenges. sweden, which is a small open economy, has been severely affected by the reduced economic activity in the world around us. naturally, we have also been affected by how international economic policy to deal with the crisis has been formulated. i will in this speech highlight three challenges that monetary policy has faced during the spring. these challenges have by no means disappeared, we will continue to deal with them. the first challenge has been that the financial markets function less smoothly during severe economic crises. this has been an important base for the riksbank's monetary policy during the spring. monetary policy aims to attain the inflation target. a second challenge at present is that the inflation statistics are difficult to interpret. for instance, there are no prices for many goods and services because there is quite simply no economic activity on these markets. monetary policy must also be forward looking. under normal circumstances this means that monetary policy is formulated according to forecasts of future economic developments. the third challenge is that we are currently living with genuine uncertainty. who could have imagined in autumn 2019 that spring 2020 would turn out the way it did? * i would like to thank marten lof, who has helped me with this speech. moreover, i have received valuable comments from charlotta edler, mattias erlandsson, rebecka hallerby, peter kaplan and marianne sterner. 1 monetary policy has pushed down market rates during the spring, the riksbank has decided on a number of monetary policy measures. when financial markets do not function as normal, the credit supply in the economy is threatened. here, i wish to highlight four measures that the riksbank has implemented. 1 the first has concerned buying government bonds, mortgage bonds and municipal bonds, as well as commercial paper for a total of sek 300 billion. the riksbank has, secondly, decide to give the banks the opportunity to borrow from the riksbank so they | per cent over the coming year will contribute to bringing inflation back towards the target of 2 per cent a couple of years ahead and contribute to a balanced development in production and employment. however, there is still considerable uncertainty regarding the economic outlook and inflation prospects. conditions for the riksbank β s monetary policy steering system how is an interest rate decision put into practice? what actually happens when the executive board decides that the repo rate should be raised, cut or held unchanged? this can best be answered with a description of how our system works. like many other central banks, the riksbank aims its monetary policy at steering the shortest market rate, the overnight rate. this can be done in many different ways. we have a system where we decide the conditions for the banks β deposits and loans with the riksbank. the riksbank supplies a payment system, rix, which manages payments in swedish krona. a payment system is an infrastructure that makes it possible to forward payments from one bank to another, and thus payments from households β and companies β accounts in one bank to the recipient β s account in another bank. rix consists of an account system where each of the participating banks has its own account in which payments between the banks are booked. by determining the conditions for the banks β deposits in and borrowing from the rix system, the riksbank can affect the overnight rate, that is the interest on overnight loans between the banks. deposit and lending rates set the limits for the overnight rate when the payment system closes for the day and trade between the banks in the overnight market has been concluded, the banks β accounts in rix must be in balance. this means that the banks must finance their deficits or invest their surpluses. the banks have two alternatives for achieving this. they can either balance their respective deficits and surpluses against one another on the overnight market, or they can use the riksbank β s deposit and lending facility. the latter means that they can deposit in or borrow from the riksbank overnight at interest rates published in advance. these are known as the deposit and lending rates, which are 0. 75 percentage points below and above the repo rate respectively. this difference creates an incentive for the banks to firstly borrow from and deposit funds with each other at a rate of interest in this so - called interest rate corridor. one could thus say that the deposit and lending rates set the limits for the overnight rate. how does the riksbank ensure | 0.5 |
turning point in the last quarter of 2006. thus, we are now in the continuing upward phase of the business cycle, as validated by the strong growth of the economy posted in the first three quarters of 2007. moving forward and barring any unforeseen risks, economic growth is expected to continue. this will be driven by the combined acceleration of the industry and services sectors on the production side and consumption and investments, both private and government, on the expenditure side. average inflation was below the target of 4 - 5 percent in 2007, is projected to fall within the 4 percent Β± 1 percentage point target for 2008 and within the 3. 5 percent Β± 1 percentage point target for 2009. this benign inflation outlook would in turn allow us to maintain an environment of low interest rates. the external payments position is seen to remain as a source of strength for the economy over the near term. dollar inflows particularly from remittances and foreign investments are likely to remain robust. this should enable us to further build up our cushion of international reserves, and continue to provide support to the peso. we also envision a more resilient and profitable banking system as banks improve their ability to anticipate and manage risks, perform their functions of intermediating funds to the broadest set of users, and providing alternative investment vehicles to savers. policy directions this brings me to the second reason why i am convinced we are up to the task β ladies and gentlemen, we are focused on our reform agenda. the bsp β s main policy thrusts in 2008 will involve nurturing a resilient economy by ensuring that this is anchored on sound macroeconomic fundamentals and building a strong financial system that is flexible in the face of growing global integration and innovation. managing risks to inflation and inflation expectations will remain the key policy priority of the bsp. in this regard, the bsp will maintain an appropriately prudent monetary policy stance supportive of non - inflationary growth. this will require relentless environmental scanning, continuous surveillance of key macroeconomic variables and regular sharpening of our inflation forecasting models. on the external front, our policies will be geared toward : ( 1 ) ensuring sustainability of the country β s external debt, ( 2 ) maintaining a market - determined exchange rate, with scope for occasional official action in cases of sharp movements in the peso, and ( 3 ) maintaining a comfortable level of reserves as market opportunities will allow. reforms in the financial sector will be aimed at maintaining | working with industry players, industry associations such as baiphil, and other financial regulators to further strengthen the foundation of corporate governance for our supervised financial institutions. rationale for corporate governance reforms on a global level, adherence to good corporate governance also plays a key role in sustaining the overall health of the financial system and ensuring its ability to withstand crises. to recall, fundamental weaknesses in corporate governance have been identified as among the factors that triggered the 1997 asian crisis and other financial catastrophes in recent years. in the case of the asian crisis, financial systems in the region became vulnerable to external shocks arising from excessive concentration of risk, poor credit policies, and inadequate risk management systems. the international response, which emerged as a consensus was to move toward best practices particularly on corporate governance. on our part, we at the bangko sentral rationalized the regulatory framework to closely align prudential standards with practices that promote the good governance tenets of transparency, accountability and fairness. let me now highlight these initiatives. bsp β s corporate governance initiatives bangko sentral β s corporate governance agenda is anchored on the practice of effective corporate directorship, sound audit and compliance systems, and enhanced disclosure in financial reporting. in this regard, we have issued several regulations intended to reinforce these critical elements of good governance. at the core of these regulatory initiatives is the leading role to be played by the board of directors in the overall corporate governance agenda. clearly, board oversight is key to effective bank governance and ultimately, to achieving overall stability within the organization. toward this end, we have emphasized the collective responsibility of the banks β board of directors and senior management to ensure the soundness and stability of their respective banks. one way to instill such accountability to the board of directors is through director education. since 2002, the bsp has been requiring bank directors and trustees of non - stock savings and loans associations ( nsslas ) to undergo the mandatory seminar on corporate governance to familiarize them with their duties and responsibilities as corporate decision makers. as of end - march 2007, a total of 6, 856 directors and trustees or 84. 7 percent of the 8, 094 directors / trustees of banks, quasi - banks and nsslas have attended corporate governance courses. let me take this opportunity to remind those who have yet to take the governance course to get their schedule as soon as possible. this is mandatory. we have also enforced and strengthened our fit and proper standards for directors and officers of financial institutions. in this | 0.5 |
will continue. 6. outlook the pfandbrief is undoubtedly a winner of the financial crisis. the voluntary transparency initiative of the association of german pfandbrief banks has also contributed to this. this initiative could be a model for other asset classes β for example abs β to increase transparency and to regain investors β confidence. though issuers have to cope with higher competition for the favour of investors, from the perspective of the bundesbank the pfandbrief is well positioned for the future. thank you very much. bis central bankers β speeches | new features of money, the role of a central bank will not become obsolete. a stable currency is and will always be of utmost importance. we need trust. what does this mean for those modern endeavours of tokenisation, digitalisation and the use of distributed ledger technology? how should we react towards stable coins or crypto - tokens? as for digitalisation β this is a long - standing tradition in the world of finance. money in our accounts, bookings in our payment and settlement systems β all these have already been electronically digitalised for decades. and back in the 90s, in the β electronic β not yet β digital β age, we toyed with the idea of creating β electronic money β as a form of innovative banknotes. consequently, new regulatory regimes were invented and developed. however, these promises did not become a reality β at least not in europe and not beyond a few β niche β use cases. in germany, the card - based e - money product vanished after 20 years of very limited success. in the end, bringing innovation to fruition is a very complex process β particularly in the network industry of payments. apart from convenience and safety, cost is a key criterion. looking at the new technologies, a system based on distributed ledger technology may very well turn out to be superior in terms of transaction costs. in that case, we would be open to adopting it. the bundesbank is undertaking its own experimental studies into how we could use blockchain or dlt for payments or settlements. we have discovered that modern versions of blockchain are more than capable of handling the volumes of transactions currently settled in our conventional systems. however, they are somewhat more resource - intensive and a fair bit slower. so the overall assessment hinges on a cost - benefit calculation over the entire lifecycle of, say, securities. in the medium term, we imagine that dlt - based settlement systems might contribute to reducing overall transaction costs in securities settlement. and we are closely monitoring all related efforts. this relates only to the technological aspect. we are open to new devices, new settlement techniques or new message systems. what presents more of a fundamental issue, however, is money. the fundamental role of central bank money will not diminish. you can see that even the crypto community is betting on the stability of central bank money when it comes to creating stable coins. and many developers of new dlt - based prototypes have asked us to bring central bank money to the ledger | 0.5 |
that the various stakeholders have not learnt the lessons yet. we have also come across instances of fraudulent messages confirming documentary credits being transmitted using swift infrastructure. although, the latter incidents were mainly a result of failure of internal controls and non - adherence to β four eyes principles β, it is also on account of reliance on disparate systems whereby swift transactions could be done without originating a corresponding transaction in the cbs. - in another incident involving shared mobile wallet of a bank, vulnerabilities were observed in the application itself which led to exploitation by the attackers. the originator of the transfer could get the amount reversed back to him without corresponding debit in the recipient β s account in a large number of transactions ( total amount involved was around rs. 12 crore ). bank was not performing any real time reconciliation and noticed it only when there was a spike in transactions which led to detection during reconciliation. the vulnerabilities exploited in the incident could have been averted, had the launch of the product not been rushed through. - in another incident, an e - payment validation website of a large bank was hacked. surprisingly, the bank was not aware of the incident till it was notified by a law enforcement agency. there was a facebook post by a person from a neighbouring country claiming responsibility for the operation. though the hacking incident did not result in any pecuniary loss as the site attacked was only performing validations of inputs entered by end users, nevertheless it demonstrates a serious security breach. 15. as may be seen from the examples quoted above, the cyber threat landscape is widening. this is natural, given that the money no longer moves only in physical form, but mostly through electronic means. it opens avenues for unscrupulous elements to devise ingenious methods for stealing it. one of the key targets by the attackers is the credential of the customers, as it provides the key to the β khazana ( treasure ) β. recent experience shows involvement of organised gangs and nation - state actors having huge financial backing. on the other hand, the cost of orchestrating such attacks is coming down. there are several reports indicating availability of credentials of customers for sale in dark web, which is really scary. improving cyber resilience 16. globally, the focus has now shifted to cyber security. cyber security is no longer an isolated incident affecting one industry / one country. several cyber - attacks in recent times have been designed to achieve political / religious objectives as also for | the higher costs of shopping abroad, creates limits to competitive pressures. in addition, paying attention and adjusting to fluctuations in the exchange rate requires time and energy. it is costly. when fluctuations in the exchange rate are relatively small, not all firms and consumers tend to pay close attention. it makes sense to focus attention where it matters most. that is one reason why prices are only adjusted over time and price gaps persist. however, when the movements in the exchange rate are particularly large, they attract more attention and the adjustments are much faster, which we saw in the fall of 2007. the most useful illustration of these phenomena is the behaviour of online book prices. these are often completely homogeneous goods on both side of the border. the cost of changing prices for an online retailer should be minimal. in addition, it is difficult to think of an easier case for consumers to take advantage of price differentials : comparing prices is just a matter of visiting different websites, there is no constraint or tariff involved when ordering from abroad, and transportation costs are known. despite all this, while online book prices do change frequently, they typically do not respond quickly to fluctuations in the exchange rate. however, in the fall of 2007, they did adjust to the strong canadian - dollar appreciation. typically, exchange rate movements tend to be reflected quickly in prices for only a narrow range of goods that are homogeneous in nature, e. g. fruits, vegetables, gasoline and meat prices. for other goods and services, there is no apparent short - run pass - through. the greater the value added in canada to a good or service, the smaller the role played by the exchange rate in its price. however, estimates of pass - through at a more aggregated level, such as core cpi or total cpi, are quite low. estimated pass - through is about 3 per cent for core inflation and 4 per cent for total inflation. to elaborate further, this means that a 10 per cent rise in the dollar would be expected to lower the level of total cpi by 0. 4 per cent. similar to the experience of many countries, exchange rate pass - through has declined in canada in the last 20 years. some possible explanations include : better - anchored inflation expectations associated with the conduct of monetary policy and increased credibility, and the changing composition of trade ( e. g. switching to different goods as relative prices change ). i trust these comments provide some insights to the underlying dynamics of canadian - u. s. price differentials. with that | 0 |
on 30 october 2018 at the manila a & b, makati shangri - la, makati city page 1 of 3 this is the goal. the significance of today β s event is that... it is a bold step towards this goal. today β s moa signing between and among initial members of the php - rmb trading market is consistent with the bsp β s vision of allowing fx market participants to be involved in the rule - making process to enhance governance and transparency in the fx market. it promotes a level playing field, where participants multilaterally bind themselves to abide by their mutually - agreed upon fx market rules, as well as comply with the applicable laws and bsp regulations. ultimately, this will uphold fairness and integrity in the local fx market. why establish a php - rmb market? the development of a local renminbi ( rmb ) trading market in the philippines is timely and deserves particular attention. [UNK] china is the country β s top bilateral trading partner. total trade is worth usd 14. 1 billion or 16. 6 percent of total trade as of end - june 2018. development of a philippine rmb trading market facilitates greater use of the rmb as a settlement currency, resulting in payment efficiency and less costs for philippine exporters and importers. [UNK] the rmb has been included in the international monetary fund ( imf ) special drawing rights ( sdr ) basket as a fifth currency, along with the u. s. dollar, the euro, the japanese yen and the british pound. hence, the rmb has become one of the main freely usable currencies of imf members like the philippines. [UNK] the rmb is now one of the most actively traded emerging market currencies overtaking the swedish krona ( sek ), the hong kong dollar ( hkd ), the swiss franc ( chf ), and the australian dollar ( aud ) as most used currency for global payments. at present, the philippine peso and rmb are priced against the us dollar as an intermediate peg. this subjects them to conversion and other friction costs. by establishing the php - rmb trading market, the philippine peso can be directly priced against the rmb. initial participating bank members can streamline their currency conversion costs via a fair, transparent, and resilient domestic fx trading platform. morever, banks can now manage their rmb liquidity requirements and improve services with rmb deposits dedicated to | ##aid, re - priced, and refinanced at higher rates. while financial market interventions are highlighted in this report, the continuing value of sustaining our economic momentum is also emphasized. in the 2017 fsr, there are discussions on the asean integration and on the advent of financial technology applications. the fscc sees a strong upside in these initiatives. discussion of these topics contextualizes our shared goal to accrue benefits derived from them while at the same time, remaining vigilant and prepared to intervene should systemic risks develop. finally, the fsr also explores data gaps and other areas of policy interest. better data is essential as empirical basis for our actions is required. however, data gathering and analysis are recurring challenges in the field of financial stability. thus, a strong emphasis is placed on this work to support and address other policy issues along the way. our technical team put considerable effort in completing the 2017 fsr. we expect that future issues will be released in the first trimester of every year. we also expect more engagement 1 / 2 bis central bankers'speeches from the public, market players and the media, not just to highlight future content but to raise appreciation for financial stability issues through a concerted communication plan. we have much to look forward to. thank you again for joining us today and good afternoon. 2 / 2 bis central bankers'speeches | 0.5 |
model, and so have model - consistent expectations. bad things can happen β but only in virtue of exogenous shocks. and depending on the structure of the world, those bad states can be relatively small beer, as famously argued by lucas on the relative unimportance of business cycles. disagreeing with that, the so - called salt - water economists wanted to show that, upon the crystallisation of those exogenous shocks, really bad things, recessions and persistent unemployment, can happen due to flaws β or, as economists like to say, frictions β in the make up of the world. but the frictions perform an amplifying role only ; the initial impetus comes from an exogenous shock over which the behaviour of agents exerts no influence, directly or indirectly. that is because agents β firms and households, as normal people call them β do not make any ex ante mistakes. shleifer describes a different kind of world altogether. it is a set up in which the myopia of the agents β investors, bankers, intermediaries β leads them, and the economy more widely, a short summary of the first two volumes is in jonathan israel, revolution of the mind, radical enlightenment and the intellectual origins of modern democracy. bis central bankers β speeches towards trouble, sometimes disaster. because they are effectively blind to certain lowish probability risks, they generate and invest too heavily in securities that carry precisely those risks. the effects of innovation get out of hand. this is a nice complement to papers by academics and policymakers attributing the ballooning of abs issuance in the west to a combination of ( i ) an ex ante excess of savings from the east in the hands of investors with a preference for low risk fixed - income assets, and ( ii ) a shortage of precisely those highly rated fixed - income instruments. the effect, on that view, was initially to drive down credit risk premia relative to equity risk premia, and to spur the issue of synthetic securitisations to fill the gap in supply. 2 if that story drives expansion of abs / cdo issuance, shleifer β s model helps motivate a lot of those securities being fundamentally mispriced. during the good times, everyone feels that they are achieving a nice balance of risk and return. they are getting, they think, safety, liquidity and return! but something eventually happens to cause them to wake up, and | with harmful side - effects β as when the exaggerated fear of flying after 9 / 11 caused more people to drive. 5 these exaggerated risk perceptions are often amplified by others β words and actions. caution is contagious. what often then emerges is a β popular narrative β. these narratives have been found to be an important driver of collective behaviour in financial markets and the economy. 6 behavioural biases at times of existential risk, spreading contagiously, can result in pessimistic popular narratives detached from reality. at times of stress, a global game of chinese whispers can generate unduly negative expectations. see haldane see gigerenzer see akerlof and shiller all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice i think the prevailing popular economic narrative, among businesses and households currently, is unduly negative. it has emphasized recession and risk over recovery and resilience. it has resulted in good economic news ( of which there has been plenty ) being discounted too readily, and fearfulness about the future being accentuated. let me give a few simple examples. chart 5 plots a simple google search of the relative incidence of two words β β recession β and β recovery β ; it is an economic pessimism ratio. before the covid crisis, the pessimism ratio was steady. as the crisis struck there was a predictable and sizable spike upwards, by a factor of roughly 8. since then the ratio has fallen somewhat, as we might expect as the economy has moved from recession to recovery. the dynamics of this sentiment indicator are nonetheless revealing. the drift down in the ratio has been very gradual. it remained elevated well after economic recovery had commenced and recession ceased. even now, four or five months into recovery, recession is out - googling recovery by a factor of 15 to one, above its pre - covid level. the prevailing popular narrative on the economy has remained recessionary. chart 5 : ratio of google trends topic searches for the term recession vs economic recovery ratio of searches for recession : economic recovery economic growth monthly gdp q2 gdp released showing growth release sep - 19 oct - 19 nov - 19 dec - 19 jan - 20 feb - 20 mar - 20 apr - 20 may - 20 jun - 20 jul - 20 aug - 20 source : google trends a particularly revealing episode is associated with the notable spike in the pessimism ratio on | 0.5 |
potential in this sector is to be harnessed. for us at the bank of namibia, our efforts have been geared towards providing policy advice to relevant stakeholders in this regard. in a recent research paper by the bank, the issue of private equity and the contributions they could make to the growth of smmes received our attention. among others the paper concluded that private equity as a source of alternative finance for smmes in namibia could go a long way in removing the constraints posed especially by start up capital for smmes. the paper accordingly recommended, among others, that venture capital should be encouraged as one of the sources to finance smmes in namibia. in addition to providing finance, venture capital also assists with the provision of expertise necessary for the success of these businesses at the initial stages. specifically, the paper recommended that private - public partnership be encouraged particularly for investments in start - up businesses. this initiative will stimulate the growth of the smme sector, reduce the backlog of unemployment and thus promote the attainment of the goals of poverty and income inequality reduction in the economy. ladies and gentlemen, let me conclude by restating the fact that smmes will continue to play a very important role in the economy especially in developing countries where the twin problems of unemployment and poverty constitute major development challenges. well targeted government intervention in this sector remains indispensable provided such interventions do not displace the private sector. these are serious challenges. however, given the quality of papers that will be discussed in the course of this conference, i am convinced that useful policy recommendations will emerge at the end of the different sessions. i thank your for listening. | ##ing of inflation has supported the view that price stability fosters economic efficiency and higher productivity. indeed, price stability is now a formal objective included in the charters of nearly all central banks. a firm long - run focus on price stability does not mean that the central bank cannot have other economic goals, although central bankers disagree on this somewhat, at least in emphasis and priority. many nations or economic regions, including the united kingdom and the euro area, have adopted price stability as their primary objective. but in our case, we often summarize the multiple statutory goals of the federal reserve in terms of the " dual objectives " of price stability and sustainable economic growth. we see these twin objectives as fully compatible in the long run. our experience in the united states has been that multiple objectives for policy do not undermine policy performance when the public is convinced that the central bank is committed to price stability over the long run. indeed, the commitment to long - run price stability can afford the central bank some flexibility in employing its tools to address shorter - run economic issues. certainly such has been the case for the united states in recent years. since i joined the federal reserve in 1997, the u. s. economy has weathered a remarkable series of economic shocks - both positive and negative - and the federal open market committee ( fomc ) has adjusted the stance of monetary policy over a wide range in response to those shocks. and yet, through it all, long - term inflation expectations have remained very stable and at very low levels. partly as a result, long - term nominal interest rates, which contain a premium reflecting long - term inflation expectations, are as low as they have been in fifty years. although central bankers have focused much of their attention on combating and containing inflation pressures over recent decades, the very low levels of inflation and recent sluggish economic growth in the united states have prompted worries in some quarters about the potential for deflation in this country. the case of japan in recent years serves as a cautionary tale about the dangers of deflation, especially when a central bank has pushed its traditional policy tool - the short - term interest rate - to zero. however, i believe that the risks of a general deflation in the united states are minimal. first, further aggressive monetary and, in all probability, fiscal stimulus would be brought to bear in the unlikely event that deflation were to become a threat. furthermore, unlike the situation in japan, the balance sheets of financial firms in this country | 0 |
- art capital equipment and the technology embodied in the existing stock of equipment remains across a broad set of industries. that gap implies continued incentives for capital investment. 3 although the exhaustion of technological possibilities seems unlikely to slow trend productivity growth, adverse changes in the economic, legal, and financial environment could threaten the longevity of the current productivity boom. for example, economists have long noted that free trade - and the specialization and economies of scale that it affords - fosters productivity increases. that our most recent productivity boom occurred against a backdrop of freer trade and increased globalization is likely no coincidence. however, the momentum for the liberalization of global trade now appears to be facing strong resistance. a halt in the movement toward freer trade or outright backsliding, such as the erection of new barriers to the trade of goods or services, would endanger the sustainability of the current productivity boom. some observers believe that security - enhancing limitations on the international flow of capital, labor, and goods in response to an increased terrorist threat could have similar effects. in addition, a failure to continue to vigorously address the corporate governance issues of the past few years could also threaten the current boom. as i noted earlier, the efficient channeling of capital to innovators has been a critical component of past productivity booms. fraud or dishonesty in corporate accounts increases investors β risk, raising the cost of capital and reducing incentives for investment. large government borrowing to fund current consumption could also raise the cost of capital and crowd out the investment on which the current boom depends. the magnitude of future government obligations to fund social security payments for the retiring baby - boom generation and the growing costs of providing medical care to the elderly add to the urgency to put government debt on a sustainable long - term path. doing so sooner rather than later would make the necessary adjustments easier and diminish the likelihood of significant future economic disruptions. some observers have also stressed the importance of large economic shocks, such as the oil price shock of the early 1970s, in bringing periods of rapid productivity growth to an end. it seems possible that the recent run - ups in energy prices, and the fact that markets expect much of them to be permanent, could reduce productivity growth by rendering energy - intensive technologies and capital obsolete. without dismissing such concerns, one needs to keep in mind that the recent shock to date has been significantly smaller than the oil shocks of the 1970s and that the economy today is far less energy intensive than it was then. additionally, one | that cannot be recouped from the failing firm itself. to avoid pro - cyclical effects, such assessments should be collected over time. establishing a resolution regime with these characteristics is, i would suggest, one of the most important financial regulatory reforms for every country that does not already have such a mechanism in place. it would lend substance to the idea that market discipline can be a solid third pillar of financial regulation, along with stronger prudential requirements and improved supervisory oversight. still, as is implicit in the foregoing discussion, an untested regime will probably not acquire complete credibility until it is actually applied successfully. for this reason, among others, it is important to ensure that other regulatory tools will help compensate for the uncertainties associated with an essentially untested mechanism. international efforts on resolution issues the looming or actual failure of a large, internationally active financial firm inevitably complicates the already challenging process of resolution. mismatches in the amounts and maturities of assets and liabilities held by the firm in the various countries in which it operates can lead host governments to take special action to protect the interests of depositors and creditors. and different insolvency regimes apply to separately incorporated subsidiaries across the world. some of those regimes may be substantively inconsistent with one another, or may not account for the special characteristics of a large international firm. a natural response, which one can find peppered through various law journals over the years, is to propose an international treaty that would establish and harmonize appropriate insolvency regimes throughout the world. just to state the proposition is to see the enormous hurdles to its realization. the task of harmonizing divergent legal regimes, and reconciling the principles underlying many of these regimes, would be challenge enough. but an effective international regime would also likely require agreement on how to share the losses and possible special assistance associated with a global firm β s insolvency. despite the good and thorough work being undertaken in both the basel committee on banking supervision ( basel committee ) and the financial stability board, we must acknowledge that satisfyingly clean and comprehensive solutions to the international difficulties occasioned by such insolvencies are not within sight. 2 it would certainly be useful if jurisdictions could at least broadly synchronize both standard bankruptcy and any special resolution procedures applicable to a failing financial firm. but even this significant advance would not settle many of the nettlesome problems raised by a cross - border insolvency. it thus | 0.5 |
peru and bolivia. further, the philippines ranked 1st overall in the area of regulatory framework. ladies and gentlemen, the survey results reflected the gains we have made together in microfinance. let us therefore give ourselves a well - deserved round of applause! with the continuing support of all stakeholders, the new policies and programs we have crafted are bound to further expand and deepen our microfinance sector. i refer in particular to the following circulars the bangko sentral ng pilipinas issued this year : circular 678 on housing microfinance and circular 680 on micro - agri loan products which address the needs of microfinance clients beyond enterprise loans. these circulars give banks the opportunity to expand the range of services they provide their clients, even as they maintain microfinance privileges. this includes no collateral requirements or the acceptance of collateral substitutes, cash flow and character based lending, small and frequent amortizations, as well as simple documentary requirements. in march, the bangko sentral issued circular 683 which allows thrift, rural and cooperative banks β subject to certain rules and regulations β to sell, market, and service approved microinsurance products by licensed insurance providers. thrift, rural and cooperative banks are ideal distribution channels for microinsurance products as they are the trusted financial institutions in the countryside and have a deeper understanding of the low income market. recent calamities from flooding and destructive typhoons underscore the importance of having adequate insurance protection especially for the poor who are more vulnerable to various risks. for thrift, rural and cooperative banks, therefore, microinsurance is a groundbreaking initiative that allows them to participate in a business that was once limited only to universal and commercial banks. on the other hand, bangko sentral β s circular 685 provides the rules for the recognition of microfinance institution rating agencies or miras. this should improve access to financing and capital as ratings have proven effective in enhancing the quality of microfinance institutions in terms of transparency, discipline, and overall governance. this should also promote investments in the philippine microfinance industry. these are the circulars the bangko sentral issued this year to promote the further development of our microfinance sector. with the support of all stakeholders, we should start seeing positive results from these initiatives. i also look forward to the participation of more banks in the microfinance sector. as of december 2009, there were more than 200 banks engaged in microfinance with total | amando m tetangco, jr : empowering entrepreneurial filipinos thru microfinance speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the 2010 microentrepreneur of the year official launch, manila, 21 may 2010. * * * fellow advocates of the microfinance sector, good afternoon and congratulations! yes, ladies and gentlemen, we have many reasons to celebrate. first, this annual national search for outstanding filipino microentrepeneurs is on its 8th year. this speaks well of the commitment of those involved in this program. and so, let us give a big hand to citi philippines headed by sanjiv vohra ; the microfinance council of the philippines headed by mr. ruben de lara ; the bangko sentral ng pilipinas and my fellow central bankers ; and finally my hardworking co - members at the national selection committee which includes philippine daily inquirer chairperson marixi rufino - prieto ; sm investments vice chairperson tessie sy - coson ; former mbm antonino alindogan ; gma network ceo atty. felipe gozon ; go negosyo movement head and rfm corporation ceo joey concepcion ; chair of the leadership and strategy department of the ateneo de manila university and finance educator of the year dr. darwin yu ; and ayala corporation president fernando zobel de ayala. they are not only hardworking judges, they are also deeply engaged in supporting microentrepreneurs. palakpakan po natin silang lahat. another reason to celebrate is the continued growth and development of the microfinance sector in the philippines that has produced so many inspiring success stories. this has allowed us to sustain our annual search across the country. of course, this has made the work of the national selection committee members more difficult but ultimately more satisfying. let us therefore celebrate the transformative power of microfinance with a round of applause. i am also pleased to report that our efforts to promote microfinance and financial inclusion in our country have placed us in the international radar screen. in particular, survey results of the first annual global microfinance index and study β which was conducted by the economist intelligence unit of the economist group β measured the state of the regulatory framework, investment climate and institutional development. overall, the philippines ranked 3rd out of 55 countries, next to usual leaders | 1 |
##modative monetary policy stance, ongoing improvements in financing conditions working their way through to the real economy, and the progress made in fiscal consolidation and structural reforms. in addition, real incomes are supported by moderate price developments, in particular lower energy prices. economic activity is also expected to benefit from a gradual strengthening of demand for euro area exports. at the same time, although labour markets have shown the first signs of improvement, unemployment in the euro area remains high and, overall, unutilised capacity is sizeable. moreover, the necessary balance sheet adjustments in the public and private sectors will continue to weigh on the pace of the economic recovery. the risks surrounding the economic outlook for the euro area continue to be on the downside. developments in global financial markets and in emerging market economies, as well as geopolitical risks, may have the potential to affect economic conditions negatively. other downside risks include weaker than expected domestic demand and insufficient implementation of structural reforms in euro area countries, as well as weaker export growth. according to eurostat β s flash estimate, euro area annual hicp inflation was 0. 5 % in march 2014, down from 0. 7 % in february. the decrease reflects falls in the annual rates of change bis central bankers β speeches of the food, goods and services components, partly offset by a more moderate decline in energy prices. on the basis of current exchange rates and prevailing futures prices for energy, annual hicp inflation is expected to pick up somewhat in april, partly related to the volatility of service prices in the months around easter. over the following months, annual hicp inflation is expected to remain low, before gradually increasing during 2015 to reach levels closer to 2 % towards the end of 2016. at the same time, medium to long - term inflation expectations remain firmly anchored in line with price stability. the governing council sees both upside and downside risks to the outlook for price developments as limited and broadly balanced over the medium term. in this context, the possible repercussions of both geopolitical risks and exchange rate developments will be monitored closely. turning to the monetary analysis, data for february 2014 point to subdued underlying growth in broad money ( m3 ). annual growth in m3 was broadly stable in february at 1. 3 %, compared with 1. 2 % in january. the growth of the narrow monetary aggregate m1 remained robust at 6. 2 % in february, after 6. 1 % in january. the main factor supporting annual m3 growth continued | to make the financial sector safer by strengthening the regulatory and supervisory framework β what has been termed β risk reduction β. and second, to deepen risk - sharing by creating the institutional conditions for more robust financial integration, which has been one key aim of the banking union. it is this latter aspect, and why it matters for monetary policy, that i would like to focus on in my remarks today. the main point i would like to make is that we need a more integrated banking sector in the euro area to achieve greater macroeconomic stability. but to achieve this, private and public risksharing have to be seen as complementary β that is, we cannot expect to have a fully integrated banking sector that can share risks without common institutions that can also share risks, namely for deposit insurance and bank resolution. without such institutions, there is a real prospect that the banking system will remain fragmented, and that is ultimately to the benefit of no one in the euro area. financial integration and monetary policy transmission why is financial integration in the euro area, especially in the banking sector, and the resulting degree of risk - sharing so important for monetary policy? the financial system helps smooth out 1 / 5 bis central bankers'speeches temporary fluctuations in economic conditions. companies and households can resort to financial intermediaries β in the euro area, typically banks β to accommodate their temporarily higher financing needs and reduce fluctuations in spending patterns. this leads to a higher degree of macroeconomic stabilisation. a sound financial system reduces the burden on monetary policy, which would otherwise have to step in to stabilise the economy. while banks in principle help to stabilise investment and consumption patterns, they can also contribute to procyclicality by becoming shock amplifiers or even trigger financial shocks. one of the main lessons of the crisis was that in order to effectively transmit monetary policy impulses to the real economy, banks need to be well capitalised through the cycle and conduct maturity transformation in a prudent manner. the euro area consists of a diverse group of countries with different degrees of specialisation in different economic sectors and in different segments of the value chain. short - term fluctuations as well as the long - term shifts in the global economy can have very different contrasting implications for individual euro area economies. these disparities have at times been compounded by diverging policy stances, for instance overly loose fiscal policies in countries that were already overheating compared with their euro area peers. in addition, varying macroeconomic dynamics are | 0.5 |
: a stable, modern and favourable tax system ; reducing businesses β non - wage costs ; encouraging innovation and exports ; and a predictable, business - friendly economic environment. attracting and maintaining fdi would support greece β s exit from the crisis and sustainable growth. fdi would entail significant benefits for the greek economy : introduction of new technologies and promotion of innovation ; physical and human capital deepening ; development of new higher - value added activities and products, notably in the tradables sector ; higher competition ; and job creation. more specifically, export - oriented fdi is an effective tool that can speed up the restructuring of the domestic production model. the integration of greek firms into global supply chains, the transfer of knowhow and foreign market expertise, as well as the upgrading of production processes and technology content to catch up with foreign competitors would make greek businesses more competitive and improve their export dynamism. 6 / 8 bis central bankers'speeches delays, procrastination and unwillingness to move forward with privatisations that have already been approved and planned are serious disincentives to the attraction of productive investment. ( c ) innovation and education fostering research, technology diffusion and entrepreneurship are key to harnessing human capital towards creating added value by linking the currently sidelined public research system to the productive economy, thereby contributing to greece β s return to sustainable growth. generally speaking, public policy intervention can encourage technology transfer, i. e. the commercialisation of academic and scientific research ( licensing and patents ), and at the same time open up career opportunities for talented young graduates. to attain this dual objective, it is necessary : first, to embed in society a culture of entrepreneurship and excellence and, second, to utilise the resources of the existing guarantee and financing funds. the use of the finance instruments available from the european investment fund ( eif ), part of the eib group, and the national strategic reference framework ( nsrf ) 2014 β 2020 offers a solution to the funding problems of innovative small and medium - sized enterprises ( smes ). ( d ) reducing income inequality and tackling poverty the relative at - risk - of - poverty rate based on 2014 income fell for the second year in a row, but still remains the seventh highest in the eu - 28 and significantly above the eu - 28 average. as percentages of the total population, the number of people at risk of poverty or social exclusion edged down slightly, while the number of people suffering from material | ##ncy ii directive and the conduct of an eu - wide stress test. the adjustment of the sector to the new framework is seen as overall satisfactory and, despite the adverse economic environment which obviously has negatively affected premium volumes, the insurance market is well - capitalised. however, there is no room for complacency, given the serious challenges posed by macroeconomic developments, low interest rates and the search for yields. consequently, the managements of private insurance companies must continue to improve their governance systems, personnel training, and transparency through the solvency and financial condition reports they publish under the responsibility of their respective boards of directors. preconditions for growth ( i ) an immediate completion of the second review the bank of greece as well as international organisations forecast robust positive gdp growth 3 / 8 bis central bankers'speeches for 2017. however, the realisation of these positive forecasts hinges upon the timely and effective implementation of the current financial assistance programme 2015 β 2018, which would signal a return to normality. this is why, as already mentioned, the successful completion of the second review is imperative. among its numerous positive effects, it would : secure the financing of government borrowing requirements and a smooth execution of the 2017 budget ; pave the way, together with the completion of the public debt sustainability analysis, for the inclusion of greek government bonds in the ecb β s quantitative easing programme ; bring about, in turn, a decline in borrowing costs for the real economy, facilitating restructuring in the private sector ; restore depositor confidence and allow a further easing or even full lifting of capital controls, thereby providing a boost to the export sector of the economy ; improve the confidence of global markets and investors in the growth prospects of the greek economy and allow greek firms to access international capital markets ; provide fresh impetus to the reform effort, geared to restructuring the economy towards a new, extrovert growth model ; and reinforce political and economic stability. ( ii ) acceleration of reforms as indicated by oecd and bank of greece estimates, the reforms can substantially increase greece β s growth potential. according to the oecd, the reforms implemented in greece from 2010 through 2016, together with those planned under the programme, can be expected, ceteris paribus, to raise real output by about 13 % over the next ten years. this estimate by the oecd is corroborated by relevant bank of greece research, indicating that structural reforms have positive effects, mainly in terms of total factor productivity growth | 1 |
colleagues, do every day. so i just want to draw your attention to three aspects of that work that speak to the man. the first is glenn β s dedication to the task. it has not been unusual for him to spend a full day at 65 martin place, have an official dinner in the evening and then go home and join an international conference call starting at 11pm to discuss some arcane regulatory issue. and then after getting to bed in the small hours of the morning he is back in the office early to lead our regular morning discussions of overnight developments in global markets. he has put in a herculean effort. the second is glenn β s relentless commitment to work of the highest standard. at the reserve bank we pride ourselves on producing work of the highest quality : whether in our written work or in the way we operate key parts of the national financial infrastructure. glenn β in his unassuming style β has led the way here. through his example, he has encouraged us to be the best we can be, and to be worthy of the trust that the public has put in our institution. the third is glenn β s open and consultative style. as you can imagine, in an institution with lots of economists there are lots of opinions too! glenn has managed this with great aplomb. he is always ready to listen and to seek out alternative perspectives. he has chaired both the reserve bank board and the payments system board in the same way. we have all benefited from his inclusive and consultative manner. in short, what you see externally is what my colleagues and i see internally as well. he is going to be a darn hard act to follow! before i finish, i also want to acknowledge the contribution of glenn β s wife, sue stevens, who is also here this evening. i know sue has been a fantastic support to glenn. sue has had to endure her husband working very hard and constantly being in the public spotlight. sue, you have done this with great dignity and quiet grace and you should be immensely proud of what you and your husband have accomplished. thank you. finally, could i ask you to be upstanding for a toast. glenn, on behalf of all of us here tonight, and more importantly, on behalf of the 24 million australians whom you have served so well, thank you. glenn stevens. bis central bankers β speeches | it was also evident in other measures, including bid - offer spreads, mispricing along the yield curve, and the ability to trade in futures without moving the price. these all improved, to be close to pre - crisis levels. the general improvement in financial sentiment β aided by the range of other policies, both monetary and fiscal β is also likely to have played a role. in any case, since late april we have scaled back purchases significantly and have not needed to purchase any bonds for some time. we stand ready though to buy bonds if bond market conditions deteriorate significantly, or indeed, if needed to achieve the target of around 25 basis points for the 3 - year ags yield. term funding another initiative from the bank was the term funding facility to lower borrowing costs and support lending, particularly to businesses. the tff does this by providing a guaranteed source of funding to adis for 3 years at the low cost of 25 basis points, with an incentive to increase lending to businesses, especially small and medium - sized enterprises ( smes ). funds provided under the tff are secured against collateral, as is the case with the bank's other facilities. the tff provided banks with the option of an initial allowance of around $ 90 billion. this has since grown to around $ 150 billion, with additional allowances granted to individual banks that have increased their lending to businesses since the facility began in april. take - up of the tff is currently around $ 26 billion, or around 17 per cent of the total currently on offer ( graph 7 ). there are a few reasons why banks have not taken up more of this funding at this stage in the program. one is simply that many banks have accessed even cheaper funding from other sources in recent months, albeit at shorter tenors than three years. in particular, banks have been able to issue bank bills at rates below 25 basis points. similarly, bank deposits have grown, and an increasing share of deposits have been paying rates below 25 basis points. also, the tff provides funding for three years from the date of the drawdown, so the longer an adi waits to draw funds, the later they will have to repay the money. with no pressing funding need right now, and ample alternative short - term funding at low cost, delaying the drawdown is a useful option. https : / / www. rba. gov. au / speeches / 2020 / sp - ag - 2020 - 07 - 27. html 8 / | 0.5 |
mohamed s fofana : banking developments in sierra leone statement by mr mohamed s fofana, deputy governor of the bank of sierra leone, at the launching ceremony of the new guaranty trust bank logo, freetown, 28 july 2006. * * * mr chairman, hon vice president, solomon e berewa, hon ministers, board of directors, management and staff of the guaranty trust bank ( sl ) ltd, distinguished ladies & gentlemen i am pleased to be here with you this morning at the launching ceremony of the new logo of guaranty trust bank ( sl ) limited. we are all aware that change is inevitable in a dynamic world. and that change itself is dynamic, which is why we are all gathered here today. distinguished ladies and gentlemen, a logo is a symbol or trademark designed for the clear and easy recognition of an institution by both its clients and its competitors. we in the banking industry, as indeed the nation in general, have come to identify guaranty trust bank with a particular logo in the recent past. the change from the old logo, which is two small squares flanking guaranty trust, to a new logo, which is a big orange square with a small white square at the top right side and gt bank inscribed at the bottom of the orange square, is welcomed by the bank of sierra leone. the features of the new logo, which are orange - representing passion for people and the drive for excellence, white - representing commitment to integrity and professionalism, and the squares - representing stability and dependability, are all symbols of the bank β s commitment to growth, prudent and efficient service delivery to our country, as well as customer care. mr chairman, since the guaranty trust bank ( sl ) limited commenced operations in january 2002 after the successful take over of the first merchant bank plc nigeria, it has consistently improved its performance and expanded its operations in the country ; notably with the establishment of three branches. as at 31st may 2006, guaranty trust bank β s total assets amounted to le47. 05 billion and shareholders β funds stood at le5. 84 billion. loans granted to various sectors of the economy have also gone up to le9. 16 billion. all of these are significant and commendable achievements in a short time. distinguished ladies and gentlemen, over the last couple of years, the bank has committed itself to the provision of efficient banking services to the people of sierra leone. it has introduced among other | mohamed s fofana : sierra leone stock exchange β developing the country β s financial sector opening remarks by mohamed s fofana, deputy governor of the bank of sierra leone and chairman of the stock exchange technical committee, at the inauguration ceremony of the sierra leone interim stock exchange, freetown, 27 july 2007. * * * your excellency, the president honourable vice president my lord chief justice your excellencies, members of the diplomatic corp hon minister of finance other cabinet ministers mr governor mr secretary to the president and other senior civil servants heads of financial institutions colleague setc members distinguished members of the private sector ladies and gentlemen it is my singular privilege and honour to chair this occasion. i must confess that i only agreed to perform this function under pressure from my colleagues of the stock exchange technical committee, who insisted that as chair of that committee, i am under obligation to chair this ceremony. my personal inclination was that some more distinguished personality than myself should assume this role. it is not common that such a galaxy of distinguished personalities would converge on the bank. when this happens, it is a clear indication that something out of the ordinary is in the offing, as is clearly the case today. your excellency, the inauguration of the sierra leone stock exchange, which you are about to perform, is a unique occasion in every sense. not only is this the first such institution to be established in this country, but it also constitutes the first major visible sign of the formal commencement of organised capital market operations in sierra leone. this is a landmark in our financial history as we take a crucial step towards the further extension and deepening of our financial sector, which up till now largely consists of a money market. while this occasion is significant in its own right, i would like to stress that it is part of a process, rather than an event. from this perspective, it is simply the outcome of all the planning that has taken place in the context of deliberations in the stock exchange technical committee, work done by the capital market unit of the bank, and the inputs of local and foreign consultants, especially for the preparation of legal documents for the establishment of the capital market in general, and the stock exchange in particular. sensitisation of various parties, including our parliament, the press, representatives of the business community and the university has been undertaken, and will continue on a wider scale. consultations have been held with some institutions in the public and private sectors to forge operational links in further | 0.5 |
however, in order to enhance these models, efforts are being made to develop models suitable for forecasting in real time β in particular, large factor models and var models and their applications in real time. moreover, the bundesbank is devoting considerable research activities to the further development of the monetary analysis. in particular, ongoing research projects are investigating the information content of various monetary aggregates for future inflation. outlook for the conference as you can see, topics concerning forecasting methodology are always at the top of the research agenda for eurosystem central banks. i have highlighted some aspects that lie at the heart of each and every central bank engaged in forecasting, and i have mentioned a number of issues that are particularly relevant to the state of play in the eurosystem in general and the bundesbank in particular. of course, there are still more open questions than issues resolved. but if it were the other way round, conferences like this would be superfluous. in this respect, we look forward to hearing of new approaches during this conference. i wish you stimulating discussions and a productive meeting. thank you for your attention. see, for example, the various approaches used to establish the role of money for future inflation by gerlach and svensson ( 2003 ), gerlach ( 2004 ), gerlach - kristen ( 2005 ), and hofmann ( 2006 ). | not also involve surrendering national sovereignty β because if liability and control are not in step, the basis for monetary union will be undermined. will the ecb become a superpower if, from 2014 onwards, it has responsibility not just for price stability but also for supervising europe β s 200 largest banks? let me say first of all that we at the bundesbank regard banking union in principle as a very important and appropriate step in the process of strengthening the future institutional framework of monetary union. the purpose, amongst other things, is to put in place effective supervision and a strict regulatory framework which will loosen the current close links between the risks arising in a country β s public finances and the health of its banking system. when important decisions like this are being made, careful planning should take priority over speed. in our view it is particularly important to prevent conflicts of interest between banking bis central bankers β speeches supervision and monetary policy. i do not regard this issue as having been satisfactorily resolved yet. can the planned mediation panel resolve the problem? there are to be three bodies looking after banking supervision in future, starting with the supervisory board, which will operate within the ecb and prepare decisions for the ecb governing council. the governing council will only be able to simply reject or accept these decision - making proposals β it will not be able to amend them. i find this curious : if i am to bear political responsibility, i have to be able to shape the decisions. but that is not all : if the ecb governing council rejects a proposal from the supervisory board, and one country does not agree with this decision, then a third body comes into play β the mediation panel. this mediation panel then decides by simple majority. but the panel β s decisions cannot be binding : under the relevant eu legislation the ecb governing council has to have the final say. sounds like a complex construct that makes little sense. why are things being done this way? it is an attempt, using a legal basis which is not really suitable, to erect a chinese wall between monetary policy and supervisory tasks. but it is more like a japanese wall or a room - divider. all this leads to is a very complex system in which the lines of responsibility are blurred. in my view, it would be preferable to amend the eu treaties with a view to putting in place robust separation between monetary policy and supervisory decision - making structures. isn β t such a separation at the ecb just theoretical anyway? | 0.5 |
importance of hedge funds and private equity firms and the establishment of off - balance - sheet vehicles, such as conduits, are cases in point. at the end of the day, a significant share of financial market activities was outside the focus of regulators and supervisors. this leads me directly to another issue with regard to supervision and financial stability. in my view, the constant and rapid development of new financial instruments, valuation models or legal structures poses a particular challenge to financial authorities. what we need is a speedy transfer of insights gained in international financial markets into our supervisory work. and this is one of the many reasons why central banks should be involved in supervision. the current turmoil has clearly demonstrated how important the interaction between central banks and supervisors is. thanks to its direct contact with market participants, the bundesbank has access to important details that are essential for the assessment of financial market turbulence and its impact on the german financial system. furthermore, such information is of key importance for central banks β responses to disturbances in the financial market, as we have seen with regard to the liquidity provision of the eurosystem in the money market. v statistics last but not least, i β d like to mention another factor that might increase financial transparency and thus help to reduce, at least indirectly, the risk of future financial turbulences, and that is closing some statistical gaps. an important aspect that is currently being considered by eurosystem statisticians is how credit risk transfer by banks could be covered statistically. this could include both data on the traditional β true sale β and synthetic securitisation operations as well as on transactions in credit derivatives. some additional insight might also come from more data on the so - called financial vehicle corporations issuing asset - backed and other securities in the process of securitisation. collecting data on such entities is currently under discussion in the eurosystem. moreover, it is essential to gather more information on the holders of financial assets. the bundesbank has initiated a security - by - security data collection on the holdings of the various sectors, as is also practised in some other countries of the euro area. the centralised securities database that is being developed in the escb β and that will be presented at this conference β could bring us a step forward in these endeavours at the european level. vi conclusions to sum up, let me emphasise six points. first, the current financial turbulence has revealed weaknesses in the originate - to - distribute model. it needs careful handling | the safety and integrity of payments systems, because they provide the infrastructure for transferring money in the economy. public confidence in the payments system is a closely related concern. as i noted earlier, confidence in the integrity of our basic paper payment instruments and payments systems was built up over a very long period of time. it is not surprising that society has, at times, been cautious in adopting new payment ideas. attitudes toward payments systems are often closely linked to attitudes about money, since such systems are the means of transferring money to meet a wide range of obligations. if payments systems do not work well, that can have serious consequences for the wealth, plans, and reputations of many individuals and businesses. in this context, it seems highly likely that prudent users will require new systems to earn confidence with strong evidence that these systems will meet their needs in both normal and exceptional circumstances. as we have seen, the process of building confidence can take years, and most suppliers realize that confidence is an asset to be guarded vigorously. recently payments systems have faced a number of challenges in the area of risk and risk management. for example, as payments systems such as the ach have been more widely used to make payments over the telephone and the internet, fraudulent transactions have reportedly increased. recent initiatives have apparently improved the situation, but the financial industry has continued to express concerns about fraud and the need to address it. i trust that all conference participants will focus on appropriate future risk designs and riskmanagement practices. while the risk designs of some large - value payments systems have changed significantly over the past few years, the risk designs for core retail payments systems have changed less. indeed, some of these designs continue to be based on concepts dating back to the 1970s. limited change may be the appropriate response. however, past designs and strategies should not themselves become barriers to the development of future payments systems that are more aligned with new forms of commerce and technology. another important issue in the post - september 11 environment is the degree of resilience of not only our large - value payments systems but also our retail systems. today, the mix of paper and electronic payment options helps mitigate the risk of disruptions to retail payments in the event of terrorist attacks, power blackouts, telecommunications disruptions, or similar infrastructure problems. as the united states increasingly relies on electronic payments for retail transactions, however, the financial system will increasingly need to ensure confidence in the resilience of these systems in a variety of adverse circumstances. as always | 0 |
of albania finds that the fiscal policy has been on a consolidation path during in 2016, reflected in the reduction of the public deficit and public debt. although it has injected a weak stimulus to the economy, the consolidating fiscal policy has facilitated the accommodative monetary policy pass through, by reducing the risk premia in the economy, favouring the reduction of financing costs, and increasing the space for lending to the private sector. according to reports from the ministry of finance, for the first time after six years, the public debt was reduced from 72. 7 % of the gdp in 2015, to 71 % in 2016. the bank of albania has been and is certain in the position that efforts for reducing public debt should continue. the functioning of the monetary policy pass through mechanism, and factors contributing to or preventing it, are an integral part of the work of the bank of albania. research efforts in 2016 aimed to assess the ability of the tools used for generating economic projections at the bank, as well as the understanding of the functioning of monetary transmission vis - a - vis the current challenges in the financial system. in this context, i would like to point out that the bank of albania has identified two main obstacles in the monetary policy pass through mechanism, whose solution requires broader - scale cooperation. the first obstacle relates to the high level of non - performing loans. to reduce this risk, a national action plan for reducing non - performing loans has been drafted, and is currently underway. the second obstacle relates to the high level of euroisation in the economy, which creates potential risks in the financial system and renders the monetary policy pass through more difficult. preparing a plan for reducing euroisation in our economy is a joint commitment by a number of authorities and the bank of albania is in the process of identifying measures that may be taken in this regard. amid a complex and challenging economic and financial environment, the coordination of the monetary, micro and macro - prudential policies assumes primary importance in promoting monetary and financial stability. in 2016, the bank of albania has worked with the same intensity in all three aspects, aiming at an optimum calibration for them. following, is an overview of our work for maintaining and promoting financial stability. 3. promoting financial stability and sound lending in accordance with its mandate and institutional responsibilities, the bank of albania is jointly responsible for safeguarding financial stability in albania. it communicates its assessment on the financial stability regularly, and coordinates its policies with other institutions | addressing the challenges we have faced. the positive results of our work show that we are on the right direction. nevertheless, i think that for successful institutions there is always something more to do. they are guided by the medium and long - term objectives ; they invest to enhance the professional standards and increase their capacities though the preparation, strengthening of independence, accountability, transparency and good governance. this credo of ours will be a guide for our action plans in the future. thank you for your attention! 1 this memorandum was signed by the bank of albania, ministry of finance, ministry of economic development, tourism, trade and entrepreneurship and the albanian association of banks. 8 / 8 bis central bankers'speeches | 1 |
just borrow, invest and consume and satisfy all their wants. so as i said, he would be perplexed at the current state of affairs. as things currently stand, the entire swiss government nominal bond yield curve is in negative territory ( graph 2 ). most of the german, dutch, french and japanese yield curves are also in https : / / www. rba. gov. au / speeches / 2019 / sp - gov - 2019 - 10 - 29. html 5 / 18 10 / 30 / 2019 some echoes of melville | speeches | rba negative territory. the swiss government, for example, can borrow for 30 years at an interest rate of β0. 2 per cent. if it were to issue a zero coupon security at this yield, it would mean that the buyer would give the swiss government 106 swiss francs today and receive back just 100 swiss francs in 30 years'time, with no other payments between now and then. that is remarkable. there have certainly been other periods when real bond yields were negative, but such widespread negative nominal yields is unprecedented. graph 2 it is not just governments that can borrow at negative yields. over recent times, private companies including coca - cola, orange and siemens have issued unsecured bonds with zero coupons and negative yields. it has also become common for european banks to issue covered bonds with negative yields. and in denmark, at least one bank has offered residential mortgages at a negative rate of interest : β0. 5 per cent, although after fees the effective interest rate is just in positive territory. all up, there are now us $ 14 trillion of bonds trading at negative yields around the world ( graph 3 ). and around a quarter of all government bonds globally are now trading at negative yields. back in 1938, melville would have struggled to understand this. and, today in 2019, many people also wonder how things could have come to this. in a moment, i will offer some explanations. https : / / www. rba. gov. au / speeches / 2019 / sp - gov - 2019 - 10 - 29. html 6 / 18 10 / 30 / 2019 some echoes of melville | speeches | rba graph 3 before i do so, though, it is worth pointing out than even back in 1938, melville's views about zero interest rates were contested. following melville's article, brian reddaway and richard downing published a conflicting view in the economic record with arguments that still have resonance today. [ | sector, making its macroprudential analysis very important but difficult to handle, statistically as well as conceptually. this situation presents extraordinary challenges for supervisory and regulatory authorities as highlighted in a fsb report to the g20 in october of last year, and, only recently, in the european commission β s green paper on shadow banking. the immanent concern with shadow banking is thus its lack of transparency. what are our options for the territory of shadow banking to be charted? shadow banking involves entities and activities outside the regular banking system, and statistical data collection in many parts is still quite sketchy. obviously, there is an urgent need for central banks to be given an extended mandate for the collection of data not only from banks but also from non - bank financial institutions. what can be done in the short term? as you know, there are two standard prescriptions frequently recommended as an initial remedy. the first of these is an extended analysis of flow of funds data. the second is an evaluation of counterparty information from balance sheet statistics. as regards the flow of funds, these transmit an idea of the main structures of the financial system : no more, but no less. building on this feature, the g20 data gaps initiative suggests that flow of funds information be amended by detailed sectoral accounts in the form of β from - whom - to - whom β tables, and, in fact, the imf has already presented a pilot by submitting a standardized report form, based on what they call the β balance sheet approach β. a similar project is under way in the escb with promising results. nevertheless, the critical point is that our basic statistics on financial institutions outside the regular banking system be improved. as regards counterparty information from balance sheets, these allow the mapping of exposures between the reporting institutions and financial entities elsewhere. in order to shed more light on shadow banking activities, a more disaggregated sectoral breakdown is needed. initiatives have been launched, for instance, in the context of the bis consolidated banking statistics, where we will see positions vis - a - vis β other financial institutions β being broken out separately. there also exists a considerably more ambitious attempt at collecting detailed counterparty data in some other bis surveys, notably the otc derivatives statistics, where you can find data on credit default swaps broken down, among others, into positions vis - a - vis insurance firms, spvs - and hedge funds. the problem here is that operational definitions β say | 0 |
njuguna ndung β u : kenya β s financial markets and payment systems developments remarks by professor njuguna ndung β u, governor of the central bank of kenya, at the launch of the funds settlement system for equities and corporate bonds through kepss, nairobi, 27 january 2015. * * * ms. rose mambo, chief executive, central depository & settlement corporation ; mr. paul muthaura, ag. chief executive, capital markets authority ; mr. andrew wachira, acting chief executive, nairobi securities exchange ; chief executives of the central depository agents ; chief executive, kenya bankers association ; ceos of commercial banks here present ; chief executive, kenya association of stockbrokers & investment banks ; distinguished participants ; ladies and gentlemen : i am pleased to join you today on this auspicious occasion to launch the settlement system for equities and corporate bonds through the real time gross settlement platform of the central bank of kenya, commonly referred to as kepss. at the outset, i congratulate the technical teams from the cdsc, cma and cbk that ensured the success of this process. ladies and gentlemen : we are gathered here today to celebrate another milestone in the development of kenya β s financial markets and the developments in the payment systems. as you are all aware, the financial landscape has changed considerably in kenya and the countries in the region. for the region to attract foreign investors and deepen its markets, there is need to enhance our financial markets systems and processes to meet international standards. in this regard, i wish to recognize the east african community ( eac ) financial sector development regionalization project ( fsdrp ), for spearheading an assessment of eac partner states β compliance to the international organization of securities commissions ( iosco ) objectives and principles of securities regulation, particularly principle 38 on clearing and settlement. the project assessed the levels of development of the securities markets payments and settlement system as well as existing capacity to comply with principle 38, and developed action plans for compliance with the principle of delivery versus payment ( dvp ) that formed the basis for the current developments. ladies and gentlemen : kenya β s development blueprint, vision 2030, envisages a financial sector that is vibrant and globally competitive in driving high levels of savings and financing the country β s investment needs. to achieve this goal, the clearing and settlement systems should be subject to regulatory and supervisory requirements that are designed to ensure that | had a calming effect on financial markets. the composite indicator of systemic stress ( ciss ) used by the ecb indicates that this policy response has averted a severe financial market crisis in the spring of 2020 ( figure 9 ). figure 9 indicator for systemic stress in financial markets ( ciss ). index https : / / www. ecb. europa. eu / press / key / date / 2020 / html / ecb. sp201216 _ 1 ~ 9caf7588cd. en. html 10 / 17 12 / 18 / 2020 the importance of trust for the ecb β s monetary policy source : ecb working paper no 1426. notes : ciss denotes the composite indicator of systemic stress ( 0 = no stress, 1 = high stress ). the indicator aggregates stress signals from money, bond, equity and foreign exchange markets. the latest observation is for 11 december 2020. the ecb β s crisis measures consist mainly of a new temporary asset purchase programme, tailored specifically to the pandemic crisis β the pandemic emergency purchase programme ( pepp ). in addition, the ecb provides ample liquidity to banks at highly favourable conditions, thus ensuring that they continue to lend to businesses and households in the euro area. the ecb β s crisis measures thus ensure the smooth transmission of our monetary policy measures to the entire euro area. the economic consequences of the pandemic have especially affected those countries that already had relatively high debt levels prior to the crisis and where confidence in the ecb was rather low. [ 21 ] at the beginning of the pandemic period, there was thus a concern that limited fiscal space in some euro area countries would significantly constrain the fiscal response to the crisis. these fears increased the risk of fragmentation in euro area financing conditions, which was immediately reflected in the evolution of risk premia in european bond markets. the ecb effectively countered this risk, in particular by swiftly implementing the pepp ( figure 10 ). figure 10 10 - year yield spreads of selected government bonds over german equivalents. basis points https : / / www. ecb. europa. eu / press / key / date / 2020 / html / ecb. sp201216 _ 1 ~ 9caf7588cd. en. html 11 / 17 12 / 18 / 2020 the importance of trust for the ecb β s monetary policy source : bloomberg. note : the latest observation is for 14 december 2020. complement | 0 |
plan on the financial sector are high and it will have a major impact on the innovative ecosystems of the french and european financial sectors. that is why the banque de france and the acprwill be particularly attentive, in the coming weeks and months, to your feedback, suggestions and 3 / 4 bis central bankers'speeches questions on this β digital finance package ", which is closely in line with the rationale of the ecosystem that i have just outlined. in other words, we have the opportunity to demonstrate today that the discussions held in recent years between the banque de france, the different players in the innovative financial ecosystem and other supervisory authorities, the relationships of trust established between us, the complementary expertise, the shared experiments and knowledge, have a concrete and tangible effect : that of further strengthening the dynamics of an ecosystem that is destined to count in the future of the european financial sector. * thank you for your attention. 4 / 4 bis central bankers'speeches | for a moment on the contribution that we can make, as a central bank and supervisory authority, to the development of the regulatory framework. in this area, i think it is important to recall a few principles that underpin our vision as a supervisor and central banker with regard to the changes in the regulatory framework of the financial system. first of all, i would like to stress that no regulatory framework is set in stone. we must keep an open mind, and have the necessary understanding and lucidity to adapt frameworks to technological evolutions - or even revolutions -, as well as to their challenges and associated risks. secondly, this adaptation must, in my view, preserve and consolidate two fundamentals of financial sector regulation : the financial stability objective and the principle of monetary sovereignty. in this respect, i would like to commend the ambitiousness of the european commission β s recent digital finance package and its priorities, in particular those to fight against the fragmentation of the digital single market for financial services and to address the new challenges and risks associated with the digital transformation. with regard to these risks, i think it would be appropriate for the commission to address the complex but currently unavoidable issue of the oversight framework to be applied to critical it service providers, including cloud service providers, and the equally important matter of the supervision of issuers and distributors of stablecoins, whether they be single or multi - currency coins. i will not go into detail on the commission β s proposed legislation, which still requires careful examination on our part and which will, of course, have to be improved by the negotiations that are about to get underway. i simply want to say here that the regulations β proposals aimed at critical it service providers and stablecoins include promising provisions : for the former, a dedicated framework that does not exempt financial intermediaries from their responsibilities and their obligation to use european service providers, and for the latter, a strict supervision that involves and associates national and european authorities. i would also like to stress here that the two points for attention i have just mentioned do not, in my view, overshadow any of the following : the many other initiatives announced in the action plan, the work to facilitate remote access and promote an interoperable digital identity, the provisions on cybersecurity, or the forthcoming discussions on artificial intelligence or data sharing in financial services - open finance after open banking. the message that i think is important today is the following : the stakes of this action | 1 |
is entitled, drumblair : memories of jamaican childhood, which tells the story about the house that nurtured the brilliant and artistic manleys. but to me drumblair is not only a stunning biography about a house in which rachel manley grew up with her grandparents. to me drumblair represents a deeper narrative about a larger house, the west indies federation. when edna manley β s own cousin, alexander bustamante β jamaica β s first prime minister after independence β pulled out of the just two - year old federation in 1962 and caused the collapse of self - government for the entire west indies, dr. eric williams resorted to a new political arithmetic captured in his now famous utterance β one from ten leaves nought β and went on to take trinidad and tobago on the road to independence. today, caribbean leaders must consider a new drumblair, a new house. the caricom integration model birthed in august 1973 by the leaders of the then four independent countries β dr. eric williams, michael manley, errol barrow and forbes burnham β as a consolation prize to the federation has survived for more than 40 years. this is a significant achievement. in my respectful view, however, the caricom model which seeks to connect our small island states through trade and markets, has reached its limits. we need to build a new house β a new west indian national economy β that moves beyond trade and markets to one that powerfully unites all nations touched by the caribbean sea so that we can better respond to cross - cutting challenges that threaten the region β s future. regional central banks with their powerful development mandate must orchestrate regional solutions to what are undoubtedly regional problems, especially devising a strategy to permanently exit from the caribbean β s massive public debt overhang while redefining our love - hate relationship with the international financial institutions, particularly the imf. in her second book entitled β slipstream : a daughter remembers β, rachel manley offers a deeply moving personal account of her relationship with her father both as a child and as a woman, a father who is considered the most loved and feared, cherished and reviled, cursed and worshipped, and forgiven and unforgiven figure in jamaica β s history. bis central bankers β speeches in a most discerning passage about michael manley, that i find strikingly reminiscent of the charismatic influence of dr. eric williams on trinidad and tobago, rachel manley writes β the island was living | ewart s williams : preparing enhanced insurance regulations for trinidad and tobago speaking notes by mr ewart s williams, governor of the central bank of trinidad and tobago, for the β public consultation of the draft insurance bill & accompanying regulations β, port - of - spain, 10 december 2009. * * * introduction good morning ladies and gentlemen. my role is to make a few introductory remarks to get the main discussion going. obviously we all would like this to be a serious working session and not an opportunity for speechmaking. let me start by saying how delighted i am to be with you this morning as today β s public consultation which marks the final phase of a process that started roughly five years ago. as you would recall the regulation of the insurance sector was transferred from the office of the supervisor of insurance in the ministry of finance, to the central bank in 2004. the process of preparing a new insurance act has been a collaborative approach between the central bank and a stakeholders β committee, comprising members of attic, the brokers association and other industry consultants. this collaborative approach bears testimony to the firm commitment of the central bank to ensuring that the legislation for the sector strikes the right balance between international best practices and local market conditions and circumstances. prior to april 2004, the central bank had oversight of 6 commercial banks and 15 non - banks. after the shift in regulatory authority, the bank took on responsibility for 51 insurance companies, and 256 registered pension plans. this was a major undertaking and necessitated a significant increase in staffing and infrastructural requirements, including training. the insurance sector, as you know, is a major contributor to the domestic economy. it accounts for close to $ 40 billion, second only to the $ 88 billion for commercial banks. the sector is a major repository for private savings and by covering risks and unexpected developments ; it facilitates private and public sector activity. in short, the industry is one of enormous economic and social value and critical to our developmental efforts. the legislation that underpins insurance activity in trinidad and tobago is grossly outdated. the basic act dates back to 1966 and was modified in 1980. as all of you know better than i, the insurance industry of today bears little resemblance to that of 1966 or even 1980. as i am sure you know, inadequate financial regulation or regulatory failure has been widely cited as one of the factors behind the international financial crisis of 2008 β 2009. as a consequence of this global financial crisis comprehensive reforms are underway to address the weaknesses which were exposed | 0.5 |
accounted for 38 per cent of regional gdp and our per capita income is about us $ 19, 000 compared with an average of us $ 8, 900 for the other caricom territories. the bahamas and barbados have higher per capita incomes. as we all know, the entire region was affected by global recession, some countries more than others. in 2009 β 2010, economic activity in the oecs declined by a cumulative 9 per cent. in barbados and jamaica, the cumulative decline was about one - half this amount β about 5 per cent. in these countries, the main contributing factors were the sharp fall in tourist arrivals and workers β remittances. the oecs were further affected by the impact of the clf / clico crisis ( in fact, it was baico ) and the devastation caused by hurricane tomas, particularly in st lucia and st vincent and the grenadines. bis central bankers β speeches ( the region remained in crisis in 2011. while there has been some improvement in tourist arrivals, the oecs saw another year of economic decline, albeit at a reduced rate. jamaica and barbados both reported the start of a very weak recovery ). in trinidad and tobago real gdp is estimated to have declined by 3 per cent in 2009 remained flat in 2010 and declined again in 2011 ( by just over 1 per cent ). i should note that guyana and suriname were the only two countries in the region that emerged unscathed, largely because of their gold resources which benefited from rising international prices. trinidad and tobago β s more resilient economic performance, relative to its neighbours, owes much to our energy resources and to the entrepreneurial dynamism of our private sector. these endowments are reflected, inter alia, in our stronger government finances, lower public debt, more robust foreign reserve positions, and in our dominance in regional trade. the following summary statistics paint the picture. regional governments have run fiscal deficits each year since 2000, while trinidad and tobago has run fiscal surpluses for all but two years, over the same period. the caricom region boasts of having among the most highly - indebted countries in the world, with public debt averaging around 70 per cent of gdp ( jamaica, grenada and st kitts and nevis have debt ratios of over 100 per cent of gdp ). in contrast, trinidad and tobago has a public debt ratio of 38 per cent of gdp. the relative fiscal and public debt performance are part of the story that | the rate of price increase for e. g. owner - occupied flats in copenhagen has been around 10 per cent for several years, and many buyers seem to expect that prices will continue to rise. it goes without saying that price increases on the scale seen in copenhagen in recent years are not sustainable in the longer term. during previous upswings, the housing market has been a source of macroeconomic instability and overheating of the economy. this was particularly true during the upswing in the 2000s. a contributory factor was the absence of sufficient automatic stabilisers in the structure of housing taxes. the current housing tax rules have also led to a considerable geographical spread in the rate of taxation β by which i mean the tax payable relative to the value of the property. in the danish mortgage credit system, everyone has access to loans if they can pledge sufficient collateral. marginal lending is typically provided by the banks. but there is reason to exert caution in this respect. in many cases it would be prudent for the banks to require a considerably larger bis central bankers β speeches down payment than the 5 per cent of the purchase price that will be included in the rules on good practice for financial enterprises from 1 november. more equity among the households will strengthen their resilience and the robustness of the financial sector. * * * it is important that you do not go right to the statutory limits, but only grant loans if you assess them to be sound. easier access to credit should not be a competitive parameter. for example, a variable rate mortgage loan should not mechanically be granted, even though the borrower meets the β good practice β requirements and can be approved for a 30 - year fixed rate loan with amortisation. at present this means a fixed rate of around 3 per cent. that is very low, and the variable rate may soon rise to a higher level. this should be taken into account when approving a borrower. if it is assessed that the customer may have problems servicing the loan if interest rates rise to a considerably higher level, a fixed rate loan should be granted. even when this is not required in order to observe the β good practice β requirements. total lending by danish banks and mortgage banks has been virtually unchanged over the last year. but the level is high, also when viewed relative to gdp. and it should be remembered that lending has not declined even though it rose strongly in the pre - crisis years. during that period, the economy overheated | 0 |
concern as well as interest to financial players, especially millennial investors. 11 Δ Δ the estimated financing needs to support the greening of asian economies are high. china has estimated that it will require us $ 450 - 600 billion of investments annually to achieve its green policy goals under its 13th five year plan while asean will need an estimated us $ 200 billion in green investments annually through 2030 [ 5 ]. 12 Δ Δ sustainable finance is still at a nascent stage but we are seeing increasing focus from financial institutions to develop new environmental, social and governance ( β esg β ) - related products. similarly, with increased investor demand and awareness for sustainable financial products, exchanges like yourselves can look to expand and support product owerings that will meet the needs of socially and environmentally conscious enterprises and investors. Δ 13 Δ Δ one such area of growth is in green bonds. global green bond issuance volume reached us $ 168 billion in 2018, a four - fold increase from us $ 42 billion in 2015. the asia - pacific region accounted for almost us $ 50 billion of issuance, or almost 30 % of global volumes, of which us $ 31 billion was from china. exchanges can support the listings of green, social, and sustainability bonds, as countries and corporates transition towards a low - carbon and climate resilient model. β’ to foster sustainable growth in asean, the asean capital markets forum ( acmf ) has developed the asean green bonds standards, in collaboration with the international capital market association ( icma ). Δ the standards, based on icma β s globally recognised green bond principles, seek to facilitate asean capital markets in tapping green finance to support sustainable regional growth and meet investor demand for green investments. as of october 2019, 80 such bonds from singapore, malaysia, thailand, and the philippines have been issued for renewable energy, green buildings and low carbon transportation [ 6 ]. 14 Δ Δ exchanges can also play an active role in supporting sustainable growth through sustainability reporting and integrating sustainability considerations in products that you launch. in particular, sustainability reporting is a key tool in encouraging enterprises to integrate esg considerations in their performance and value proposition to both internal and external stakeholders. Δ β’ sustainable reporting has become more important with growing concerns from consumers and investors that financial returns are achieved with integrity, backed by esg considerations. β’ in recognition of such trends, the singapore exchange ( β sgx β ) has introduced a β comply or explain β regime for sustainability reporting in 2017, where listed companies | we must act now, and we must act together, to secure a cleaner and greener future. 1 link to β ngfs glasgow declaration action β : www. ngfs. net / sites / default / files / ngfsglasgowdeclaration. pdf 2 / 2 committed to bis central bankers'speeches | 0.5 |
jean - claude trichet : interview in handelsblatt interview with mr jean - claude trichet, president of the european central bank, in handelsblatt, germany, conducted by ms marietta kurm - engels and mr andreas hoffbauer on 12 may and published on 14 may 2010. * * * handelsblatt ( hb ) : mr trichet, you intend to withdraw all of the liquidity that you are currently injecting into the markets via the purchase of government bonds. do we have to face inflation in the euro area? trichet : no, not at all. price stability is our primary mandate and over the past 11Β½ years we fulfilled our mandate successfully. we have not changed our monetary policy stance. the additional liquidity that we are providing through the purchase of government bonds will be withdrawn again. interest - bearing time deposits are an appropriate way to withdraw this liquidity. hb : what induced you to take this extraordinary step on monday morning? you had made no mention whatsoever thereof at the press conference just three days earlier. trichet : on thursday afternoon and friday, we were facing a situation that we regarded as fundamentally abnormal. that situation deteriorated abruptly, sharply and extensively. the very moment where the agreement was reached in europe to provide greece with financial support and the imminent decision of the international monetary fund ( imf ) to approve the greek standby should have contributed on the contrary to ease tensions in the markets β¦ hb : β¦ which was not the case? trichet : no, the contrary happened. the situation in a number of financial markets was hampering the transmission of our monetary policy, a monetary policy stance that we had judged to be appropriate precisely the previous thursday. that had to be put right. the exceptional circumstances demanded that we act swiftly. hb : what volume will the purchase programme have? trichet : i do not provide any figures at the moment. hb : the markets would like to know in somewhat more detail how you intend to absorb the liquidity again. trichet : allow me to repeat myself : we are not changing our monetary policy stance. we are not embarking on quantitative easing. we will withdraw the liquidity that we will inject mainly through tendering term deposits. hb : will that be possible? trichet : of course. it does not present technical difficulties. that is what we intend to do. and let me say, that what counts, is our determination and | past and implementing those lessons rigorously. i am pleased to note that considerable progress has already been achieved in making countries and the whole system more resilient to shocks. in that context, i would like to highlight transparency and the promotion of best practices, two key elements of crisis prevention. transparency is a precondition for well - functioning markets, since it facilitates better risk management and leads to strengthened market discipline. it is therefore welcome that significant changes have been introduced in a number of fields. for example, it was not long ago that the imf itself started to disclose information on its policies and to encourage increased transparency by its member countries. it is also reassuring that a large number of international standards and codes of good practice have been agreed upon, covering such different fields as transparency in fiscal policy or in monetary and financial polices, banking supervision, corporate governance, accounting and auditing. transparency in the private sector is also crucial, as recent corporate scandals have again highlighted the crucial role that accounting standards play in this respect. i consider that the progress made in the field of transparency after the asian crisis is one of the main reasons for the absence of contagion in latin america and the emerging world following the argentine crisis. i believe that enhanced transparency helps investors to differentiate better between countries and that the countries β efforts to adhere to international standards and codes are well reflected in the markets β assessment of these countries. transparency and standards and codes are not the only elements that have been implemented to improve domestic policy - making, especially in emerging market economies, and to make them more resilient to shocks. the debates about sustainable exchange rate regimes, prudent and sustainable debt management and well - sequenced capital account liberalisation are just some examples of areas where important lessons have been learnt. in addition, in response to the growing importance of financial markets, there is an increased focus in the policy advice given by the imf and the world bank on financial sector policies and on vulnerabilities in domestic financial systems. to sum up, i believe that the considerable progress made should help to reduce the frequency and severity of crises. however, we are still learning the lessons of the past, and more work will be needed in important areas. 4. crisis management despite all the efforts put in on the prevention side, it would be too optimistic to assume that there will be no further crises. however, experience has shown that timely, efficient and smooth management of financial problems and their underlying causes in a country can | 0.5 |
evidence that data difficulties account for a significant part of the decline in productivity growth as calculated by the bureau of labor statistics. 7 3. the zlb and the effectiveness of monetary policy : from december 2008 to december 2015, the federal funds rate target set by the fed was a range of 0 to ΒΌ percent, a range of rates that was described as the zlb ( zero lower bound ). 8 between december 2008 and december 2014, the fed engaged in qe β quantitative easing β through a variety of programs. empirical work done at the fed and elsewhere suggests that qe worked in the sense that it reduced interest rates other than the federal funds rate, and particularly seems to have succeeded in driving down longerterm rates, which are the rates most relevant to spending decisions. critics have argued that qe has gradually become less effective over the years, and should no longer be used. it is extremely difficult to appraise the effectiveness of a program all of whose parameters have been announced at the beginning of the program. but i regard it as significant with respect to the effectiveness of qe that the taper tantrum in 2013, apparently caused by a belief that the fed was going to wind down its purchases sooner than expected, had a major effect on interest rates. more recently, critics have argued that qe, together with negative interest rates, is no longer effective in either japan or in the euro zone. that case has not yet been empirically established, and i believe that central banks still have the capacity through qe and other measures to run expansionary monetary policies, even at the zero lower bound. 4. the monetary - fiscal policy mix : there was once a great deal of work on the optimal monetary - fiscal policy mix. the topic was interesting and the analysis persuasive. nonetheless the subject seems to be disappearing from the public dialogue ; perhaps in ascendance is the notion that β except in extremis, as in 2009 β activist fiscal policy see, for instance, mokyr, vickers, and ziebarth ( 2015 ). see byrne, fernald, and reinsdorf ( forthcoming ). inside the fed, the range of 0 to 1 / 4 percent is generally called the elb, the effective lower bound. bis central bankers β speeches should not be used at all. certainly, it is easier for a central bank to change its policies than for a treasury or finance ministry to do so, but it remains a pity that the fiscal lever seems | . the oil exporting countries have been additionally hit hard by the sharp drop in international oil prices, that not only has put significant pressure on their public finances and balance of payments, but has also derailed their long term diversification plans ; while oil prices have recovered somewhat, economic activity is expected to remain subdued for some time. the low - income countries, many already under considerable social and economic strain, are facing daunting challenges because of the crisis and are falling further behind in income convergence. their heavy debt burden, limited financing options, and little or no policy space make it almost impossible for them to meet the challenges on their own. we call on the international community to rise to the occasion in helping these countries generously through grants, concessional financing and debt relief. we support the extension of the g20 debt service suspension initiative, as well as the extension of the catastrophic containment and relief trust, and welcome the progress in securing additional resources for the poverty reduction and growth trust. we encourage all public and private creditors to participate in similar debt relief operations. the plight of fragile and conflict - affected states in the menap region, some facing refugee and humanitarian crises, calls for a timely and proportional international response. the role of international institutions β particularly the fund β has been instrumental in helping 1 / 2 bis central bankers'speeches countries to alleviate their significant financing pressures arising from the pandemic. we laud the agile response of the imf to support more than 80 members in the first few months of the crisis through its emergency and other financing facilities. the imf moved swiftly to expand and adapt its lending toolkit to the needs of the members, including through temporary increases in access limits to its emergency facilities. yet, requests by some other 20 members for emergency support are still pending for various reasons. we call upon the fund to ensure that its support is available to all members in an evenhanded manner without exceptions, and that emergency financing lives up to its name. we look forward to further refinements of the fund β s lending toolkit, including the introduction of a pandemic support facility. as the global economy is bracing for a challenging post - crisis recovery, the fund must stand ready to assist members through financial support and tailor - made as well as country specific policy advice and capacity development to ensure that the transition and the subsequent recovery proceed smoothly. this could only be achieved by a strong, quota - based, and adequately resourced imf, with the quotas | 0 |
sector to adopt such a temporary adjustment. ms. lagarde, managing director of the international monetary fund, appealed that in the current situation, the goal of the private sector cannot be only profit ; it must also be to add value, create jobs, develop the new ideas that drive an economy forward and provide stability. boosted employment and higher income from employment means more consumption and investments, higher consumer demand for goods, services and lending instruments. the private and financial sector should be accountable to the real economy : a private sector that supports employees and consumers, and a financial sector that adds values instead of destroying them. concluding, i would like to share with you an important message : the crisis came in as a global crisis and its solution should come as such. however, each country should do its homework and undertake the necessary structure reforms to overcome it. people only accept change in necessity and see necessity only in crisis β said jean monnet, regarded by many as chief architect of the european unity. thank you and success in your work! bis central bankers β speeches | shkelqim cani : the monetary programme of 2004 - its cohabitation with the fiscal policy discussion by mr shkelqim cani, governor of the bank of albania, in the parliamentary commission of economy, finance and privatizations, tirana, 15 december 2003. * 1. * * 2003 in figures the albanian economy during 2003 seems to have returned to its potential growth rates, leaving behind the deceleration of 2002. various indicators generally point out that the economic growth forecast for 2003 - of about 6 percent - is a real opportunity. developments such as : stability in the agricultural production, the positive performance in the branches of services, industry and transport, the increase of the trade transactions volume verified in the first 6 months of the year, the greater number of tourists, the stable and favourable energy situation, stability of remittances and other factors, are reliable arguments in achieving the economy growth objective. 2003 is believed to mark another year of the consumption price stability. as in the 3 - 4 previous months, the bank of albania β s expectations speak about an annual inflation rate within the target interval of 2 - 4 percent. according to the latest data, the 12 - month difference of consumption price index by the end of november 2003, marked the figure of 3. 4 percent, while the annual inflation, calculated as the average of the last twelve months, reached the level of 2. 24 percent, reinforcing thus its clear downward trend. the bank of albania - in its recent analyses - has been underlining the fact that its monetary policy has been a careful, financial, budgetary policy, where special emphasis has been given to the budget expenditures control versus the realized revenues ratio. consequently, the government β s liquidity needs, up to the present moment, have been completely covered by the banking system, and therefore, the bank of albania financing was unnecessary. under these circumstances the fiscal pressures on the monetary policy are weak. following this reasoning, it could be concluded that the move of both policies ( monetary and fiscal ) has been in harmony and in conformity with the general economic - financial development program of the country. domestic budget deficit financing from the banking system during 2003 is estimated to be almost at the same level as the one of 2002, being about 2. 2 percent of the gdp. the stable level of the internal government borrowing, facing the rapid increase of lek deposits, was another factor, which influenced the immediate reduction of treasury bills interest rates. the monetary policy | 0 |
, cpi inflation is as low as it β s been for four years. in terms of growth, the obvious question this raises is, why now? why, after throwing everything bar the kitchen sink at the economy over the past few years, has the economy started to grow only now? even more importantly, will the recovery last? having seen a few false dawns over recent years, has the recovery really taken hold this time? and what does all this mean for monetary policy. in particular, what does the mpc β s so - called forward guidance, which we announced in the summer, mean for you β the businessmen and women driving this recovery? and that β s the plan for today : to consider three key questions about the economic recovery that we β re now finally enjoying β why now, will it last, and what next for policy? securities and investment review, september 1993. bis central bankers β speeches why now? first, why now? why after several years of frustration and disappointment has the economy begun to grow? it β s hard to be certain : this time last year we were not predicting such a sharp turnaround in growth and there β s a danger of appearing to be wise after the event. but, at least with the benefit of hindsight, two developments in particular seem important in driving the turnaround : an easing in credit conditions ; and a reduction in economic uncertainty. let me say a few words about each, starting with credit conditions. improved credit availability although it β s still patchy and there β s further to go, we β ve observed a marked improvement in the ability of many companies and households to access credit over the past 18 months or so. some of that stems from a lessening of tensions within the euro area, which has helped to ease pressures on banks both sides of the channel. it β s also been aided by domestic polices, including the funding for lending scheme, a series of regulatory actions to improve the strength and resilience of our banking system and, more recently, the government β s help - to - buy policies. i fully recognise that the ability of many smes β perhaps many of you here today β to access credit at reasonable rates still remains impaired. but even here my sense is that some progress has been made. that β s the message from surveys of small businesses, from reports by the bank β s agents, and indeed that i get from my own conversations with many businesses around the country. we β re not there | a trade - by - trade basis, on the type of contract, notional value, currency, maturity, counterparties of derivative transactions. this needs somehow to extend to valuation ( s ) and collateral terms. my appeal to the us, eu and asian authorities is twofold. first, should we not have a trade repository covering securities lending β a cash market β including the way collateral is employed? we surely need to do something to lift the veil on this vital financing market and, probably, on the collateral swap market more generally. second, we need to think carefully about the purposes for which the information in trs is collected, and thus how it is stored. as well as helping to identify market abuse, which of course is a core mission of securities regulators, we need to use the information to track more generally what is going on in markets to help us spot incipient, often slow - moving threats to stability. and even though individual trade repositories are being set up to handle specific markets ( credit - default swaps, interest - rate swaps etc ), it needs to be possible to see the pattern of risk and flows across markets and products. recognising that, paris in 1974, kuala lumpur in 1983 and, most dramatically, the hong kong futures clearing house in 1987. paragraph 3. 21, report of the hong kong securities review committee, 1988. i should disclose that i was an advisor to the src and drafted much of the text submitted to the committee. bis central bankers β speeches the fsb has called for the relevant authorities, liaising with the bis committee of the global financial system, to set requirements for reporting of transactions to trade repositories that meet the needs of financial stability analysis. 18 this work needs a higher profile. firms markets are places where end - users and intermediaries meet. securities regulation affects financial firms β traders and asset managers β as both intermediaries and as users. it is important this gives proper weight to financial stability. three broad thoughts on that. regulated banks : provisions and disclosure everybody in this room and outside knows, or should know, that for much of the past quarter of a century there was a stand off between bank supervisors and securities regulators over provisioning policy. on the one hand, until they gave up in exhaustion, many bank supervisors wanted banks to set aside ( general ) provisions against losses that were implicit in portfolios but not yet manifest in arrears or other concrete measures of | 0.5 |
and detailed regulation, which would dramatically reduce flexibility and innovation in our banking system. we have, i believe, already started down the path i have described. several problems remain to be solved. any one of them could slow or even stop our progress. i have already mentioned the need to develop procedures for validating risk classifications and for converting risk classifications into risk weights on an equitable basis across banks. the challenge of reaching a consensus at basel is another obstacle. but whatever we develop, either here or on an international basis, we will be relying on the good judgment and sophistication of the nation β s examiners and on their development of the skills needed to keep pace with the activities of banks operating in the united states. cooperation but skill and good judgment are, unfortunately, not sufficient. for better or worse, supervisors and policymakers function in a multi - agency environment. we must cooperate across agencies if we are going to get the job done. most global us banks are supervised by the office of the comptroller of the currency. all bank and financial holding companies and some large banks are supervised by the federal reserve. nothing in this structure was changed by the recently enacted gramm - leach - bliley act. the challenges of supervising large, complex banking organizations raise yet again the question of how to make the supervisory structure mandated by the congress work efficiently and in the public interest. all the parties, it seems to me, must work out relationships and operating norms that serve the objective of safe, sound, and efficient financial markets. the implicit tensions among the regulators are a fact of life ; goodwill and cooperation are required if we are to carry out the law. before i proceed further, it might help if i spend a moment on the philosophy underlying umbrella supervision and distinguish this supervisory approach from direct supervision of insured depository institutions. as you know, all large and sophisticated financial services companies manage their risks on a consolidated basis, requiring, in turn, oversight of risk - taking by the consolidated entity. the consolidated, or umbrella, supervisor aims to keep the relevant regulators informed about overall risk - taking and to identify and evaluate the myriad risks that extend throughout such diversified bank and financial holding companies in order to judge how the parts and the whole affect, or may affect, affiliated banks. to fulfill its responsibility, reaffirmed by the recent legislation, the federal reserve plans to focus on the organization β s consolidated risk - management process and on overall capital adequacy. for the | to protect insured depository institutions from the risks of activities conducted by bank holding company affiliates. the law limits the extension of credit by insured depository institutions to their affiliates, and the umbrella supervisor - the fed - is charged with limiting other forms of risk exposure to the depository institutions from the bank holding company structure. clearly, there is a tension between protecting banks from such risks and avoiding the extension of bank - like supervision to affiliates. the provisions of the law dealing with the relationship between the federal reserve and the functional supervisors of certain types of nonbank affiliates - the sec, the commodity futures trading commission, and the state insurance regulators - attempt to balance these considerations. as you know, these provisions call for the federal reserve to rely, as much as possible, on the examinations conducted by the functional supervisors and on public reports to obtain information about broker - dealers, insurance companies, and futures merchants. the federal reserve may examine such functionally regulated entities only if ( 1 ) the board has reasonable cause to believe that the entity is engaged in activities that pose a material risk to an affiliated depository institution, ( 2 ) the board determines that an examination is necessary to inform the board of the entity β s risk - management systems, or ( 3 ) the board has reasonable cause to believe that the entity is not in compliance with the banking laws. we are in the process of working out satisfactory procedures with functional regulators. but it seems to me that we also must work harder to cooperate and share information among the umbrella and bank supervisors in a manner that is satisfactory to both and that minimizes regulatory burden and overlap. in principle, the relationship between the umbrella supervisor and the primary federal bank regulator could involve the relationship between the federal reserve and either the federal deposit insurance corporation or the occ. in practice, however, the key relationship for large, complex financial holding companies will be between the federal reserve and the occ because the banks in large, complex financial holding companies are either state member banks or national banks. indeed, most of the large and complex institutions likely to take advantage of the new opportunities have lead banks, as i have noted, with national charters. this relationship between the primary bank regulator and the umbrella supervisor must respect the agencies β individual statutory authorities and responsibilities. at the same time, the primary bank regulator and the umbrella supervisor need to share information that allows them to carry out their responsibilities without creating duplication or excessive burden. given the systemic risk associated with the disruption of the operations of large | 1 |
##s that may embed opaque, concentrated climate - related risks. sudden realizations of climate - related risks could cause rapid shifts in investor sentiment and shocks to asset prices, including to real estate prices in specific geographic locations. 15 federal, state, and local authorities are implementing policies to support transparency in climate - related risk associated with real estate to allow property owners, lenders, and investors to make better - informed investment decisions. updated flood maps, coastal resilience programs, and managed retreat from flood - prone areas can see, for example, christopher flavelle ( 2019 ), β as wildfires get worse, insurers pull back from riskiest areas, β new york times, august 20 ; and matt sheehan ( 2020 ), β renre could pull back in florida if rates stay low, says ceo, β reinsurance news, february 7. the federal housing finance authority recently issued a request for input on natural disaster risk to the housing finance system ; see federal housing finance agency ( 2021 ), β fhfa issues rfi on climate and natural disaster risk management at the regulated entities, β news release, january 19, https : / / www. fhfa. gov / media / publicaffairs / pages / fhfa - issues - rfi - on - climate - and - natural - disasterrisk - management - at - the - regulated - entities. aspx. - 8reduce the extent of hidden climate risks. while such transparency is vital, financial system vulnerabilities could arise even in transparent markets β for example, through aggregate common exposures to climate risk. finally, climate - related physical risks are increasing financial burdens on local, state, and federal finances. increasing physical damage to localities necessitates higher expenditures to repair damage from extreme weather and fire events and to build resilience to growing climate threats. pullbacks in insurance coverage, the need to relocate or bolster infrastructure, and increased provision of service in the wake of disasters increase burdens on state, local, and federal finances. these rising burdens could place strains on municipal financing markets over time, particularly in areas of geographically concentrated climate risks, and create some risk of a cascade effect if a shock causes investors to pull back from similar exposures. new approaches and new tools we are building the requisite institutional capacity and knowledge to deepen our understanding of these risks and vulnerabilities. the new fscc is a systemwide committee | criteria and obtain credit. mature smes face declined uncertainty in their operations. with sufficient credit records and relatively transparent information, creditors and investors are in a better position to grasp internal information of these smes, and the smes have the capacity to provide sufficient collateral. in this context, these enterprises usually are quality customers that financial institutions compete for. their loans would grow rapidly. the most successful smes may become large enterprises, thus being able to access direct financing. these enterprises may raise funds by issuing bonds or stock shares, thus facing little constraints in obtaining financing. smes are a big group of customers. to differentiate among smes and corresponding financing channels could actually enhance the allocation of social resources. the central bank shall provide credit guidance for commercial banks from a more macro perspective. in this process, commercial banks shall strengthen loan management, enhance its efficiency, and discover and foster potential customers. with the rapid development of the financial market, the direct financing channel of large enterprises would be further explored, and its share increased. commercial banks will face challenge in terms of their customer structure. hence, it is urgent for commercial banks to discover and foster stable customers from the bunch of smes. credit market and capital market mainly differ in the fact that there is a one - to - one negotiation between commercial banks and their customers. hence, commercial banks are in a better position to get management information, make judgment on risks and price the loans. therefore, commercial banks can tailor their products for smes according to their financing needs at various stages. meanwhile, commercial banks shall have a long vision to explore the potential of customers and help smes quickly transit from starting stage towards mature stage. ii. appropriately price lending risks with smes lending rate is actually the price of credit products. the pricing of credit products mainly includes cost of capital and risk premium. the pricing capacity of chinese financial institutions is generally weak. one reason is that there have been many administrative restrictions where many prices were determined by the government. financial institutions had no pricing power and no experience to autonomously determine the price. moreover, financial institutions had no incentive to make autonomous pricing duce to the institutional weaknesses. chronically, there has been a perception that we shall provide preferential interest rate for the industries and areas we would support. in general, banks β lending to large customers is like wholesale business and that to smes is retail. loans to smes are usually featured by small amount, many batches and sophisticated procedures. according to a survey | 0 |
on the size of the gse balance sheets, we put at risk our ability to preserve safe and sound financial markets in the united states, a key ingredient of support for housing. financial instability coupled with the higher interest rates it creates is the most formidable barrier to the growth, if not the level, of homeownership. huge, highly leveraged gses subject to significant interest rate risk are not conducive to the long - term financial stability that a nation of homeowners requires. | and we look forward to expanding our horizons in this respect. conclusion i wish i could conclude this wrap - up with a list of the three or four things we could do to immediately unlock small business lending. but the problems are numerous and complex and they will require creativity and persistence to solve. just because the solutions are hard to find does not mean that we shouldn β t keep trying. finding solutions to small business financing issues is not only an important component of the economic recovery, it is also important to the restoration of communities that have been hard - hit by foreclosures and job losses. what we have accomplished is a good beginning. we have identified some specific credit gaps and generated some ideas to tackle them. we have brought together a network of people with different perspectives and resources but a shared commitment to improving credit conditions. and we have sparked numerous research projects to further understanding of the current and ongoing credit needs of small businesses. if we continue to work together, i am sure that we can alleviate some of the problems that small businesses face. the more we do now, the better prepared our small businesses and lending institutions will be when economic growth and consumer demand pick up. thank you, again, for your participation today. | 0.5 |
now represents 30 per cent of the stock of housing loans ( compared with 18 per cent a decade ago ). 4. the main reason that debt has risen is that households can afford to borrow more in a low interest rate environment like the past decade than in a high interest rate environment like the previous two decades. allied to this is the fact that in a low inflation environment, the real value of the debt is not eroded as fast as it was in a higher inflation one. so each household that takes out a loan can borrow more at the start of the loan, and will run down the real value of the loan more slowly than formerly was the case. analysis published by the reserve bank of australia ( rba ) last month shows that these two related explanations could account for an approximate doubling in the debt to income ratio when their effects had fully worked through the system. see β recent developments in housing : prices, finance and investor attitudes β, rba bulletin, july 2002, β innovations in the provision of finance for investor housing β, rba bulletin, december 2002, β housing equity withdrawal β, rba bulletin, february 2003, and β household debt : what the data show β, rba bulletin, march 2003. see rba bulletin, march 2003, op cit. in principle, this would not be completed until the last loan taken out before the fall in interest rates was paid off, i. e. 25 years. but in practice it would be a lot shorter because on average mortgages are paid out or refinanced well before maturity. 5. financial deregulation and the associated increase in competition among lenders has also played a role by making loans cheaper, easier to obtain, particularly to investors, and providing innovations such as home equity loans and redraw facilities. 6. over 70 per cent of households either own their homes outright or are renting and therefore have no housing debt. owner - occupied housing debt is concentrated in about 30 per cent of households, as it has been for decades, but that 30 per cent have considerably higher debt levels now. 7. for those households with mortgages, there is a pronounced pattern in the debt to income ratio and the debt - servicing ratio over the life cycle. both these ratios peak in the 35 - 40 year age group and decline thereafter, usually to zero. 8. other measures of household balance sheet health such as the debt - servicing ratio and the gearing ratio show considerably less of an upward trend than the | not to rise despite the improvement in economic conditions. nevertheless, the risk of the economy falling into a vicious circle of declining prices and deteriorating economic activity seems to have further decreased, since the strength of the corporate sector and the robustness of the financial system have been enhanced. based on this outlook and assessment of risks, we have decided to maintain the current basic thinking regarding the conduct of monetary policy, employed since the termination of the quantitative easing policy in march 2006. the bank adjusted the level of the policy interest rate in july 2006 and in february 2007. adjustments were made in view of the outlook for the economy and prices, with the bank judging that sustained economic growth would continue with a virtuous circle of production, income, and spending in place, and that consumer prices would be likely to increase moderately in the long run in line with the " understanding of medium - to long - term price stability. " based on this assessment, we have been realizing the idea of " adjusting the level of interest rates gradually in the light of developments in economic activity and prices. " with inflationary pressures weak, the pace of adjustment has been slow and the accommodative financial conditions ensuing from very low interest rates have been maintained. the bank's basic thinking in this regard will remain the same in the conduct of future monetary policy. in sum, while confirming that japan's economy remains likely to follow a path of sustainable growth under price stability in light of the aforementioned " understanding " and assessing relevant risk factors, the bank will adjust the level of interest rates gradually in accordance with improvements in the economic and price situations. concluding remarks lastly, i would like to touch upon the bank's communication of information concerning the conduct of monetary policy. the bank will continue to explain carefully to the public its assessment of economic activity and prices and its basic thinking on the conduct of monetary policy in line with the " new framework for the conduct of monetary policy, " through, for example, the outlook report. in relation to this point, there are voices that call for the bank to communicate information on the specific time schedule of a policy change, but we neither believe it possible nor consider it appropriate to do so. the bank considers that there are two key pieces of information that it should provide, namely, its assessment of economic activity and prices, and its basic thinking on the conduct of monetary policy. taking into consideration such information provided by the bank, market participants carry out transactions based on their views regarding economic activity and prices | 0 |
european firms to non - european firms, even as the total proportion of u. s. lending accounted for by foreign banks has remained roughly constant in the last few years. fr y - 9c, ffiec 002, fr 2886b, ffiec 031 / 041, fr y - 7n / s, x - 17a - 5 part ii ( sec form 1695 ), and x - 17a - 5 part iia ( sec form 1696 ). dodd - frank wall street reform and consumer protection act, pub. l. no. 111 - 203, 124 stat. 1376 ( 2011 ). sections 165 and 166 apply to all foreign banks with $ 50 billion or more in global consolidated assets and a u. s. banking presence of any size. more than 100 foreign banks operating in the united states would meet this threshold today ( source : fr y - 7q ). whether such a bank with relatively small u. s. operations should be subject to the same prudential requirements as those with u. s. operations in excess of $ 50 billion is an open question. sec focus reports. bis central bankers β speeches international and domestic regulatory response since the crisis, important changes have been made to strengthen international regulatory standards. the basel iii capital and liquidity frameworks are big improvements, and the proposed capital surcharges for systemically important firms will be another important step forward. but these reforms are primarily directed at the consolidated level, with little attention to vulnerabilities posed by internationally active banks in host markets. the risks associated with large intra - group funding flows have remained largely unaddressed. managing international regulatory initiatives also has become more difficult, as the number of complex items on the agenda has increased. and despite continued work by the financial stability board, challenges to cross - border resolution are likely to remain significant. for the foreseeable future, then, our regulatory system must recognize that while internationally active banks live globally, they may well die locally. quite apart from the need to act pragmatically under the circumstances, it is not clear that we should aim toward extensive harmonization of national regulatory practices related to foreign banking organizations. the nature and extent of foreign banking activities vary substantially across national markets, suggesting that regulatory responses might best vary as well. for instance, the importance of the u. s. dollar in many international transactions can motivate foreign banks to use their u. s. operations to raise dollar funding for their | . some of these reform proposals have attracted intense international debate generating divergent views on these issues. a broad consensus however is emerging on the need to raise both the quantity and quality of regulatory capital, strengthen liquidity rules and improve market transparency. there also seems to be agreement for the extension of regulatory tools to address pro - cyclicality in the financial system through the creation of counter - cyclical capital buffers, dynamic loan - loss provisioning and greater alignment of incentives with long - term goals. this consensus reflects the objective of avoiding having incentives that would encourage the material build - up of leverage and the excessive appetite for risk. other measures under consideration include the implementation of non - risk - based leverage limits to contain the build - up of leverage in the banking sector and the strengthening of the supervisory framework and the arrangements for dealing with oversight on crossborder financial groups and for resolution. implications for islamic finance islamic finance does not exist in isolation and as it becomes an increasingly important component of the global financial system, it will inevitably be impacted by the changing global landscape of financial regulation. this is particularly the case as its growth gains momentum both in terms of number of services providers and in terms of business volume and as its internationalisation process continues. the global call for improved regulation and increased oversight will thus intensify the efforts that have already been undertaken to strengthen the financial regulation for islamic finance. let me now focus my remarks on four major implications of the changing global financial regulatory landscape for islamic finance β first, particularly in financial systems in which islamic finance is being developed alongside the conventional financial sector in a dual system environment, ( which is the case for most ifsb member countries ), there will be a need to ensure that the reforms are undertaken in parallel. the concern is that there would be insufficient attention given for islamic finance and consequently, the tendency for broad - brush application of regulatory measures intended for conventional finance on islamic finance. in developing the appropriate regulatory framework for islamic finance, it is not uncommon to leverage on the established wisdoms of prudential regulation for conventional finance to achieve regulatory efficiency particularly in a dual system environment. whilst it may be envisaged that it is not necessary to reinvent the wheel, it should not override the importance of addressing the specificities of islamic finance where necessary. such a prudential regulatory design that takes into account the unique mix of risks associated with shariahcompliant instruments would enhance the effectiveness of the regulatory outcomes intended for islamic finance. although there | 0 |
rafael buenaventura : raising the bar on consumer banking service speech by mr rafael buenaventura, governor of bangko sentral ng pilipinas ( central bank of the philippines ), at the bank marketing association of the philippines β ( bmap ) 30th anniversary of upgrading bank - marketing practice, makati city, 26 august 2004. * * * introduction distinguished officers and members of the bank marketing association of the philippines ( bmap ), follow bankers, ladies and gentlemen : good evening. i am deeply honored to take part in this celebration, marking bmap β s 30th year of upgrading bankmarketing practice in the country. this year β s theme of β customer service in the marketing mix of financial products β rightly emphasizes the importance of banks β clients in influencing an institution β s success. consumer banking over the last couple of years, the philippine banking system has experienced strong growth in consumer banking services. credit card receivables for example, grew by an average 25. 2 percent annually from 2000 to 2003. this has allowed more ordinary people without access to credit to now have access and on clean basis. however, this growth has also come with a price in the form of increased volume of bad accounts. many of the problems were traceable to the fact that some new cardholders did not really understand the obligations and responsibilities that came with them. as a result, past due credit card accounts rose an average 40. 4 percent, a pace much faster than the new ones granted. the number of credit card - related complaints also rose dramatically. it is in this regard that we should work hand in hand in channeling more efforts towards customer education and protection. for its part, the bangko sentral ng pilipinas ( bsp ) issued various regulations geared towards protecting both the industry and the public. for instance, in 2002 we issued circular no. 349 which significantly tightened rules on credit card and other lending operations by requiring banks and their subsidiary credit card companies to ascertain that cardholders are capable of fulfilling their commitments and by setting credit limits based on their net take home pay. moreover, the bsp took a more proactive stand by creating the consumer education committee in january of this year to help improve basic financial literacy. i commend bmap together with the credit card association of the philippines ( ccap ), the bankers association of the philippines ( bap ), the chamber of thrift banks ( ctb ) and the | governor salceda to the csf movement. we also look forward to learning much from your csf as you start implementation of this empowering collateral - free credit program for micro, small, and medium enterprises. mabuhay ang albay! mabuhay ang mahal nating bansang pilipinas! maraming salamat sa inyong lahat! | 0.5 |
lower income households bore the brunt of job losses and wage cuts in the last recession. 6 while the concentration of over indebtedness was in households where the head was born in the 1970s and 1980s. 7 this group cut their spending to prioritise debt repayments and in some cases sought debt resolution through insolvency arrangements. 8 there was a sharp rise in market income inequality. 9 however, by one measure, disposable income inequality was more stable over the period, illustrating the heavy lifting by taxes and transfers in ireland. compared with other oecd members, the taxes and transfers system here results in the greatest difference between market and disposable income inequality as measured by the gini coef cient. 10 however, i recognise that measuring inequality is a challenge, and one that tasc and others here this evening spend considerable time on. and while using one number is a blunt measurement, it does enable a comparison across countries. furthermore, income is but one type of inequality, wealth inequality is another. when last measured in 2013, ireland was placed in the middle of our european peers. however, since the 1980s the level of wealth inequality had substantially increased. we know from surveys we conduct with the central statistics of ce ( cso ) that indebtedness plays a key role in the net wealth distribution, or inequality. 11 at the central bank we are used to looking at areas of macroeconomic vulnerability, while tasc and other groups are i understand, in the main, focused on inequality, social vulnerabilities and change. it is important to remember that these vulnerabilities intersect. a core part of what we do aims to build resilience of households and businesses and ensure the stable provision of credit. against this backdrop, let me now turn to borrowing and indebtedness in the context of the mortgage rules we have in place. research shows that when crises follow periods of high leverage or excessive lending and borrowing the recoveries are slower and the recessions are deeper. 12 excessive credit growth independent of incomes can have a severely negative effect on household welfare. the recent crisis in ireland was testament to that, and as i just noted, it affected different groups in different ways. a decade on, households are recovering from the crisis. the number of households in arrears continues to decline and the economy is nearing full employment. yet, the legacy remains. in comparison to our european peers, ireland ranks fth comparing ratios | particular importance are the export of chemicals and related products ( accounting for 78 % of irish exports to germany ). machinery and transport equipment was another double - digit ( 11 % ) export share. germany was the 4th largest provider of foreign direct investment ( fdi ) inflows into ireland in 2020, accounting for 3 % of all fdi flows into ireland. and 160 german foreign affiliate firms accounted for over 34, 000 jobs in ireland, and over β¬10bn of turnover, with substantially greater involvement in trade activities ( both imports and exports ) than domestic firms. 5 since 2010, irish goods and services exports to germany have grown by an annual average of 10. 3 %. over the same period, german exports to ireland grew by 5. 2 %. events like today are important to reinforce that relationship. in my first speech as governor of the central bank of ireland, back in 2019, i spoke about resilience through some of the big changes we as a society are facing, in particular the changing financial system, technological change, and climate change. what i really want to talk to you about today, is not beheadings and patronage ( as interesting as this history may be! ) but to pick - up on some of these transitions. the transition of the financial services ecosystem the financial services ecosystem is under fundamental transition. the digitalisation of banking and payment services through technology - led change is transforming both the sector and the consumer experience. a range of new entrants are entering the market and new and incumbent business model are shifting to mobile and online delivery. getting this transition right will be key to ensuring the sector serves the needs of consumers and the economy into the future. across europe we are seeing, for example, the rapid evolution of traditional banking services being provided to consumers, the transformation in the electronic payments area, including the emergence of, and consumer demand for, instant payments. we are seeing new challenger banks targeting the more attractive aspects of traditional financial service provision. the development of new business models and product categories are being driven by the advent of open banking or new cloud - based and blockchain - based technologies. we are seeing a range of structural changes taking place from sector consolidation through m & a and the outsourcing of other cash - related activities to third parties. we are seeing the ever - increasing role of data and data - analytics in financial services provision. and we β re seeing the pivot to a net zero carbon economy where banking has an important role to | 0.5 |
command trust from investors and the public. for these reasons, the reputable credit agencies have still reaffirmed their positive assessment of the thai economy. indeed, the recent economic conditions have underscored the importance of preserving sound macroeconomic fundamentals in order to create resilience in the face of unexpected shocks. domestically, the recent economic slowdown has put some small businesses and indebted households under financial strains. loan quality has deteriorated somewhat, with npl increasing slightly as a result, but these risks have been contained to specific sectors. the banking system and corporate sector remain strong and have coped with the slowdown well, owing to their improved risk management policies. externally, like many emerging markets, thailand faced a couple episodes of capital flow volatility in recent years. the economy, however, has withstood these challenges reasonably well. for instance, during the β taper tantrum β in may 2013 and our own political unrest towards the end of 2013, thai baht had swung by more than 10 percent in a year, fluctuating from 30 baht per us dollar to 28 and back to close to 33 baht. despite this volatility, market reactions ( in terms of outflows ) have been relatively dampened. foreign participation in the thai bond market decreased from a peak of 13 percent to the current level of around 10 percent of total outstanding public sector bond. the strong local institutional investor base was able to pick up from where foreigners left. despite foreigners exiting the thai bond market, total portfolio outflows last year ( 2014 ) amounted to a mere 1 percent of our international reserves. a flexible exchange rate, a relatively balanced external position and a modest external exposure, altogether acting as the first line of defence, contributed to the success. the bank of thailand is also equipped with comprehensive policy tools, along with ample international reserves, that can be used as a backstop to deal with disruptive capital flows and to examples of anti - corruption measures are 1 ) the construction sector transparency initiative ( cost ) which promotes transparency in state enterprise projects and 2 ) integrity pacts which oversee purchase plans of government and state enterprise projects. among the big projects already implemented are 1 ) suvarnabhumi airport phase ii 2 ) the blue line metro extension, and 3 ) bangkok ngv bus purchase plan. total corporate debt / total corporate equity. bis central bankers β speeches safeguard financial stability. in fact, these are our multiple lines of defence available at our disposal. | and other properties owned or acquired ( ropoa ) s to various jvas with real estate developers. at present, ropoa still accounts to 46. 0 percent of the banking system β s overall level of npas. at present, there are 4 microfinance - oriented rural banks and 158 rural banks engaged in some level of microfinance with a total loan portfolio of p2. 3 billion catering to a total of 441, 963 borrowers. recently allowed the selective 6 lifting of moratorium on bank branching to facilitate the expansion of financial services in underserved areas. under circular no. 505, we foresee, among others ; the growth of bank microfinancing to benefit rural folks with greater access to formal banking services that in turn, mobilizes savings and investments. moreover, we foresee an accelerated consolidation process in the banking industry in the next 3 years. this will be brought about by ( 1 ) a stronger regulatory framework that will hasten the exit of weak banks, hopefully on a voluntary and market - based basis ; ( 2 ) the increasingly stronger competition by new foreign investors coming in, in existing banks ; and ( 3 ) the rigorous technical demands posed by modern banking and finance standards. all these changes will dramatically transform the competitive environment. down the road, we see a banking landscape characterized by a handful of main banks complemented by an abundance of smaller banks that serve various well defined market niches. final note in closing, let me call on this generation of the family behind rang - ay bank to transform these reform initiatives into opportunities and further stretch your vision over the next years to come. with your wealth of experience, rang - ay can lead in turning the heavy flywheel of remaining reforms for the rural banking industry. i trust that rang - ay will harness its core expertise, geographic advantage and strong ties with the community in promoting a safe, sound and responsive banking system. let us all work together in keeping the wheels of change turning. agyamannak ( thank you ) and happy anniversary! prohibition on bank branching remains in the cities of makati, mandaluyong, manila, paranaque, pasay, pasig and quezon including the municipality of san juan. | 0 |
norman t l chan : hkma fintech day speech by mr norman t l chan, chief executive of the hong kong monetary authority, at hkma fintech day, hong kong, 11 november 2016. * * * my, george, julia, frank, herman, albert, distinguished guests, ladies and gentlemen, 1. it gives me great pleasure to welcome you all to this hkma fintech day, which is part of the fintech week. today we have a great gathering with speakers and participants from diverse background of the financial and technology sectors, including banks, stored value facility ( svf ) operators, fintech firms, fintech investors, regulators and many others. i am sure the discussions today both on and off the stage will be extremely interesting. 2. the event today is organized by the fintech facilitation office ( ffo ) of the hkma together with our three strategic partners : the applied science and technology research institute ( astri ), cyberport and the hong kong science and technology parks ( the science park ). as you are aware, we set up the ffo in march this year with the mission to facilitate the development of fintech in hong kong. 3. in the last few months, the ffo has organized many activities to bring together users and solution providers of fintech, so as to build an ecosystem to promote the adoption of new technologies in the banking sector. the ffo will continue to develop this collaborative platform together with astri, cyberport and the science park. in a few moments the hkma will be signing a memorandum of understanding with each of them to formalize the framework of cooperation. 4. now i would like to report on the latest progress of four major fintech projects launched by the ffo earlier. first, following my announcement of the launch of the cybersecurity fortification initiative ( cfi ) in may, the ffo has been making very good progress in developing the three pillars of the cfi. a three month industry consultation of the first pillar of cfi, the cybersecurity resilience assessment programme, was completed in august, with positive responses from the banking sector. taking into account the comments received, the ffo is finalising the assessment programme and will announce the detailed framework next month for implementation by banks in hong kong. regarding the second pillar of the cfi, the cybersecurity intelligence sharing platform, again good progress is being made. the computer platform will be in | issues, as : the difference between needs and desires ; where does money come from and for what does it serve ; the right management of money and savings, etc. this package may be used in free classes ; classes dedicated to school projects ; or in intra - subject projects. all that i mentioned above, makes clear that the bank of albania assesses that financial education should start at an early age. this affirmative sentence constitutes the philosophy of our programmes. the bank of albania aims at building up the communication bridges, awarenessraising and financial knowledge empowering to the new generation. they should gradually acquire the necessary knowledge, abilities, position and behaviour to take sound financial decisions and be able to deal with emergency situations, like the current one we are experiencing. concluding, i would like to thank all participants and collaborators of the bank of albania in all its educational initiatives and programmes, and particularly for the global money week. absolutely, such themes as planning personal finance may not be quite attractive to new age groups, nevertheless being aware of their importance and impact on the life of everyone, it is crucial that our institutions never stop their efforts to bring them to the attention of the young people. this is what we have tried to achieve through the activities and competitions that will take place during gmw 2021, and which i kindly invite you to attend. i sincerely thank you for your contribution and i wish a successful performance to all participants! 2 / 2 bis central bankers'speeches | 0 |
david dodge : monetary policy choices : the canadian experience remarks by mr david dodge, governor of the bank of canada, to the chambre de commerce france - canada and les canadiens en europe ( france ), paris, 12 march 2002. * * * it is a great pleasure to be with you today here in this wonderful and historic city. canada and france share important links that cannot be weakened by time. there was, of course, a vibrant french presence in north america long before there was a country called canada. the french contribution to canada is not restricted to language alone. canada's legal and political institutions, as well as our culture and way of life, retain a clearly visible french influence, and will continue to do so. obviously, our economies and the economic links between our countries have come a long way over the years. the chambre de commerce france - canada was established just after the second world war. the chambre has played an important role in reinforcing commercial ties between our two countries that reflect the historical and cultural links already in place. les canadiens en europe is another organization that seeks to strengthen the many ties between us. today, france and canada are both members of the g - 7 β partners at the forefront of the global economy. the strong links between our two countries are also reflected in the close working relationship between the bank of canada and the bank of france. since becoming governor of the bank of canada last year, i have been pleased to continue this relationship. i am happy to be working once again with jean - claude trichet, the governor of the bank of france. bank of canada staff regularly attend the annual seminars hosted by the bank of france. and i hope we will continue to strengthen the working relationship between our two institutions. over the years, both canada and france have had to make decisions about the framework guiding monetary policy. the authorities in the two countries have made choices that reflect the differences in our economies. today i'd like to talk about some of these choices, and what they have meant for our countries. as well, i will give you a brief update on canada's current economic situation and outlook. inflation targeting in the early 1990s, most of the world's central banks found themselves facing a common problem. they needed to make sure that their economies did not return to the high and volatile inflation seen in previous decades. further, they were looking for a way to keep inflation expectations under control. in general, central banks did a good | job with this. certainly the bank of france was successful in the early 1990s in building credibility as an inflation - fighting central bank. at that time, the bank of canada and the government of canada had come to a shared appreciation of the damage that inflation can do. so they made an important decision in early 1991. they announced a joint agreement to adopt explicit inflation - control targets. the agreement has been very successful in giving canada low, stable, and predictable inflation. it has been renewed three times β most recently for five years until the end of 2006. today, both the bank of canada and the european central bank are working to strengthen the economies in their jurisdictions. we both want to promote stable growth and rising living standards. and, importantly, we agree that promoting low and stable inflation is the best means to those ends. there are similarities between our inflation - control systems. for example, we both focus on inflation, and we both aim for price stability over the medium term. but there are also some differences that i want to highlight for you today. the bank of canada aims for price stability through its inflation target of 2 per cent. on the other hand, the european central bank has an inflation ceiling of 2 per cent, as measured by the harmonized index of consumer prices. this may look like a subtle difference, but it is important. for the bank of canada, 2 per cent is the midpoint of our 1 to 3 per cent inflation - control target range. it is a target, not a ceiling. our focus on that midpoint makes it clear that we run monetary policy in a symmetrical way. that is to say, we pay equal attention to any significant movement away from 2 per cent β whether above or below. when demand is strong, it can push the economy against the limits of its capacity to produce. this will tend to raise future inflation above its target midpoint. in these circumstances, the bank will raise interest rates to cool off the economy, and return inflation to the target. but this process also works in the other direction. when demand is weak, as we saw in 2001, this means that future inflationary pressures are likely to ease. so the bank will lower interest rates to stimulate the economy, absorb economic slack, and return inflation to the target. by working in a symmetrical way in response to surprises in demand, our inflation - targeting system helps to smooth the peaks and valleys of the business cycle. this promotes sound, and generally less variable, economic growth | 1 |
on russia, but clearly this is not something that can be achieved in the short term. the surge in inflationary pressures apparent in the march data partly reflects the increase in commodity prices associated with the war, but also the delayed effects of the acceleration in intermediate costs in the preceding months on the prices of other goods and services, and the scarcity of certain products as a result of the road hauliers β strike. the impact of the increase in energy costs is highly uneven across groups of agents. in the case of households, those with low incomes are most affected. in the case of productive sectors, the impact is naturally greater on the more energy - intensive ones. a second channel, that is also very significant, is the impact of the war on household and business confidence, given the extraordinary uncertainty surrounding the duration and course of the war. this, in turn, introduces uncertainty over the behaviour of the incomes of these agents, which means they tend to postpone their consumption and investment decisions. the sharp decline in the consumer confidence indicator in march ( the largest decrease in the historic time series, which goes back to july 1986 ) gives an indication of the magnitude of these effects. this fall suggests that the increase in uncertainty may have begun to adversely affect household spending decisions. the results of the latest edition of the banco de espana business activity survey ( ebae ) suggest that the war has begun to worsen the expectations of non - financial corporations regarding their turnover and also the duration of the global supply chain problems, which is now estimated to be longer. third, the invasion of ukraine will affect the spanish economy through the trade channel, the direct impact of which is assumed to be moderate, as bilateral trade flows with the countries at war are relatively limited. in 2019, the last year before the pandemic, spanish goods exports to russia and ukraine represented only 1. 6 % and 0. 3 % of the total, respectively. russian tourism, meanwhile, accounted for 2. 2 % of total spending by foreign tourists. however, the indirect effects on spanish trade flows may be significant. the war will particularly affect central and eastern european countries, which are more exposed to ukraine and russia, and, therefore, the growth of spanish export markets. further, the invasion is having a negative impact on the global supply chains for certain productive processes, with signs of a worsening of bottlenecks, after the partial improvement in the fourth quarter of 2021, although the lockdowns in china to check the | of payment service providers under the psd2 directive is conducted by the two financial supervisors jointly with the data protection and competition authorities. in the future, we may even have to move towards joint, centralized supervision in newly formed entities. and by centralized i mean not only across financial subsectors, but also across the financial and non - financial sectors. that may be the case for supervision of cloud providers. in order to prevent fragmentation and duplication in cloud supervision, we should consider a new european horizontal cloud supervisor that would have a mandate regarding the resilience of cloud providers and their compliance with privacy rules. the board of this horizontal cloud supervisor could consist of representatives of the esas, the european data protection board enisa, and possibly other relevant supervisors. this, of course, will not happen overnight. over the next few years we have to work to make cloud supervision under dora as effective as possible. but i think the centralization option is something to keep in mind when we will review the dora framework in a few years time. as the financial sector transforms, the stakes β and gains β from cooperation are high. as financial regulators and supervisors, we have a responsibility to make sure that we can continue to deliver on our mandate to safeguard financial stability. we want no holes in the global financial safety net, however much it gets stretched and reshaped. so let's live up to that responsibility and take the first steps now. so that people can drive to the afore conference or elsewhere three years from now, knowing that their money, in whatever shape, is safe. and that as finance proceeds further into the digital age, we continue to have a stable and efficient financial system that works for all. 4 / 4 bis - central bankers'speeches | 0 |
dimiter kostov : the world of finance is becoming more it address by mr dimiter kostov, deputy governor of the bulgarian national bank, banking department and fiscal services department, before the participants in the 14th financial it forum β the world of finance is becoming more it β, sofia, 19 april 2012. * * * ladies and gentlemen, on behalf of the bulgarian national bank, i have the honour to congratulate you with the opening of the 14th financial it forum. this forum has established itself as an annual opportunity to share experience and ideas, and to view the prospects opened to the financial sector by the information and communication technologies. these results are undoubtedly owing to the organizers of the event, but what is of no less importance is your interest to it. from the point of view of the business, times are still hard for financial intermediation. in the conditions of volatile international financial markets and an unstable economy, the bulgarian banking system is coping well with the challenges and remains stable. the levels of capital adequacy and liquidity remain high. irrespective of the increased impairment costs the banking system continues generating positive results. it is of no little importance, too, that in these conditions the banking system managed to preserve and even to slightly increase its loan portfolio. in the recent three years the economic activity in the country has contracted by about 3 percent, while the loan portfolio not only did not contract, but grew by about 8 percent. the results achieved indicate that in this difficult macroeconomic environment the banking system has not only preserved its reliability, but has continued to perform its economic role of financial intermediary. another positive trend is especially worth noting, prompted by this forum. banks are not focusing only on coping with current issues and obstacles. regardless of the difficulties, banks are putting much thought and effort into developing and implementing new business solutions and products based on the opportunities offered by the information and communications technologies. new solutions are sought not only in the area of good management of risks and business processes, but also in developing new services and sales channels. i would not allow myself to give examples from the experience of one or another bank. the forum will provide plenty of opportunities to find this out for yourselves. i will use as illustration of my words the payment infrastructure. the connectivity achieved by the operator of the main retail payment systems in this country in the past year, presently makes available to the bulgarian banks the so - called sepa connectivity to several thousand banks in the european union | the ecb exercises control over the implementation of all ssm guidelines and standards in the bnb β s work, including with regard to the supervisory review and evaluation process and on - site supervisions. the ecb is conferred specific direct powers towards less significant institutions, in relation to the process of license issuance and revocation, approvals of acquisition and disposal of classified holdings in credit institutions, the issuance of general recommendations, guidelines and instructions, planning and carrying out of on - site inspections, including assuming at any given point in time of direct supervision over less significant institutions. for the purposes of supervision of less significant banks, a structure has been set up with the ecb β s ssm, in which the bnb participates. within this structure, the issues of supervision over less significant institutions of the ssm participating member states are discussed. the participation in the single supervisory mechanism also includes providing the ecb with all the information needed for the performance of the ecb β s tasks, including information subject to banking and professional secrecy. the ecb collects fees for conducting its supervisory activities and this principle will accordingly apply to the banks in bulgaria. 2. participation in the single resolution mechanism the participation in the srm follows from the participation in the ssm. the srm extends to all banks that operate in the ssm participating member states and has as its objective the application of effective and uniform resolution rules and equal resolution financing conditions within the banking union. this function is carried out by a specialised eu agency β the single resolution board ( srb ), which performs its tasks and exercises its powers in close cooperation with the national resolution authorities. the srb is a collegiate body composed of permanent ( executive ) members and one member designated by each participating member state, representing its national resolution authorities. subject to the nature of the issues to be addressed and resolved, srb holds meetings in plenary session, executive session and extended executive session formats. the plenary session meetings are attended by the permanent members and all representatives of the participant member states. decisions in the plenary session are taken by a simple majority vote, each member having one voting right. the extended executive session meetings are attended by the srb permanent members and the representatives of the participating member states, where the banks, in respect of which the relevant decision is taken, are established. the decisions of the executive session, attended by the srb permanent members, are adopted by consensus and where this is not possible β by simple majority of the | 0.5 |
real estate investments. while us property prices dropped by 2 % in 1929 and 4 % in 1930, they are currently falling at a rate of 17 %. 3 never before have so many assets been wiped out worldwide in the space of a few months as they were this year. chart 1 shows the β fever curve β of the money market, i. e. the difference between the three - month libor and the three - month ( t ) ois rate ( tom - next / overnight indexed swap ). this difference reflects the credit and liquidity risk premium on unsecured money market trades. it is a barometer of the health of the money market and, in the broader sense, also for that of the financial markets in general. the five crises in the comparison are the stock market crash of 1929, the oil crisis of 1973, black monday in 1987, the bursting of the it bubble in 2000, and the current crisis. in each case, we look at price performance in and around the index β s highest recorded level prior to the crisis, which does not necessarily coincide with the onset of the turmoil. the highest levels were reached on 3 september 1929 ( black tuesday was on 29 october 1929 ), on 11 january 1973 ( oil crisis ), on 25 august 1987 ( black monday was on 19 october 1987 ), on 14 january 2000 ( it bubble ), and on 9 october 2007. for annual data and the case - shiller composite 20 index, cf. robert j. shiller, irrational exuberance ( 2006, 2nd edition ). these financial losses alone will continue to have a major impact on the real economy for some time to come, owing to the fact that their full effect is not generally felt immediately. despite the historic disruptions in the financial markets, this is not the 1930s. the main differences to back then being the decisive way in which monetary and fiscal policy reacted and the far - reaching government intervention aimed at bolstering the financial system. as a result, the financial markets have been able to continue functioning, albeit to a much lesser extent. yet the extraordinary circumstances pose a huge challenge to all market participants, not least to central banks. both the swiss national bank β s ( snb ) monetary policy strategy and its instruments have been thoroughly put to the test. over the past few months, several observers have remarked that the snb β s monetary policy had occasionally slipped from its control. we do not share this view. while it cannot be ruled out | overall strategy for structural reforms in the labour market, the social security systems and fiscal policy. despite some shortcomings, a major portion of the reforms now being implemented are in line with our proposals. i would like to stress the enhanced flexibility of the labour market that has now been accomplished. fixed - term contracts can be used more extensively when setting up a new business. dismissal - protection rules have been eased for small businesses, thus lowering a major hurdle to new recruitment. incentives to work in the low - wage sector have been increased by reducing the period of entitlement to transfer payments from 18 to 12 months in most cases. furthermore, the crafts code has been deregulated to enable more people to set up their own business. germany has begun to cut back subsidies such as tax breaks for commuters or new home - owners. in the statutory health insurance system, patients now share the costs of any treatment they seek. over - use of what, up to now, have been regarded as β free β health care services might thus be contained to a certain extent. 3. 2 unfinished reform business there is a lot of unfinished business on the german reform agenda. but, at least, germany has made a start. our partner states in europe and elsewhere are taking note of this. now is not the time to take a rest, as we still have a long way to go before the german economy has truly regained its former dynamism. we need to build on the newly acquired momentum for reform. there has to be a further improvement in the supply side conditions, red tape has to be cut back, and setting - up a business has to be made easier. the labour market would clearly benefit if employers and employees were allowed to depart from the terms of centralised wage agreements provided jobs can be secured in that way. a general broadening of the scope for non - centralised wage settlements at the individual company level might also help to improve labour market flexibility. non - wage labour costs have reached a level that acts as a major impediment to employment and economic growth. the rapid ageing of the population will put the systems under further pressure unless they are reformed speedily and thoroughly. in order to contain the cost dynamics in the health care system without compromising quality, higher levels of competition and transparency are needed on the supply side. insurance contributions have to be made separate from employment contracts. funding of the pension system must be broadened. as benefits paid out in the pay - as | 0 |
##dence β or β interconnectedness β between financial institutions and between markets. this β interconnectedness β reflects a variety of direct and indirect linkages in the financial system and it involves institutions and markets that are regulated as well as those that are not subject to sufficient, or any, regulatory oversight. this second category includes not only hedge funds but also off - balance sheet financial entities, such as structured investment vehicles, as well as the securitisation market, and the market for credit default swaps ( cds ). in this respect, two points are relevant for the design of the regulatory policies. first, the size of some of the non - bank financial institutions and the overall magnitude of the activities of the β non - bank, non regulated sector β have become significant and can pose systemic risks. second, and as a consequence of the first, the β interconnectedness β of all institutions and markets implies that it is the β collective β behaviour of all that determines endogenously systemic risk and its potential impact on the real economy. a third lesson is that the increasing financial integration in europe and globally has important implications for the cross - border distribution and propagation of systemic risk and the appropriate institutional setting for the prevention and management of a crisis. more specifically, the regulatory framework and the supervisory arrangements in europe must be broadly compatible with those in other large economic areas, notably the united states and vice versa. and within the eu, the growing presence and significance of cross - border financial institutions ( the largest 43 cross - border banking groups in the eu accounted for 76 % of total eu bank assets at the end of 2007 1 requires the strengthening of the paneuropean character of supervision. a fourth and final lesson that i want to stress is that effective crisis prevention and management call for close cooperation and efficient information exchange between the supervisory authorities in various jurisdictions as well as between the central banks, whose tasks include the safeguarding of financial system stability, and the supervisors of individual institutions. the effectiveness of such cooperation, which is relevant both within countries, and across borders, crucially hinges on the exchange of relevant information in a timely manner. what broad conclusions can we draw from these lessons, and more generally from the recent experience, for supervisory policy? although the severity of the ensuing problems has differed across institutions and countries, overall the crisis revealed that micro - prudential supervision in many cases proved inadequate to identify, in a timely manner, the nature and size of accumulating risks and to impose | timetable β. it is therefore essential that a suitable mechanism is in place to ensure that the required supervisory or regulatory actions are implemented in an effective and timely manner. no reflection on the appropriate macro - prudential framework for europe would be complete without due consideration of its international dimension. this global financial crisis has underscored the importance of concerted policy responses globally. the early identification and assessment of risks and vulnerabilities, the issuance of risk warnings, and the adoption of the related macro - prudential policies should be key responsibilities in a reformed global framework for financial oversight, in which the imf and the fsf should play a key role, but all relevant parties, including the new eu macro - prudential supervisory body, should be closely involved. our european framework should fit in, and be compatible with the global approach to be adopted. iv. conclusion in conclusion, let me emphasise that the establishment of the proposed eu body responsible for macro - prudential supervision, the effective performance of its tasks, the efficient translation of its risk assessments and macro - prudential policy recommendations into appropriate policy measures will require addressing a number of legal, institutional and organisational issues. one such issue is the institutional relationship and fruitful collaboration between the european systemic risk council and the envisaged european system of financial supervision. we should all contribute to addressing these issues in a constructive and timely manner, for the strengthening of macro - prudential supervision in europe is an important and urgent policy objective. thank you very much for your attention. | 1 |
unfortunately that will also mean lower employment in the banking industry. page 11 of 14 as they adopt electronic banking technologies, key challenges for banks will be to ensure that these new technologies can deliver the same quality of, and access to, services for their customers as the more traditional technologies and that the risks entailed in electronic banking are fully understood and can be managed effectively. in particular, banks must ensure that their electronic systems can be safeguarded against cyber - attacks, both to protect the integrity of individual customer β s accounts and to prevent threats to the financial safety of the bank itself. the adoption of electronic banking has implications for bank regulation and supervision, which in uganda has traditionally focussed on banks β management of credit risk. page 12 of 14 in future, operational risks arising from electronic banking are likely to become of greater significance as potential threats to the financial soundness of banks and their ability to command the confidence of their customers. bank regulators need to strengthen their capacities for monitoring the security of banks β it systems. to conclude, i believe that the future of the banking industry in uganda is bright. in terms of productivity, the adoption of international best practises and its use of modern technology, banking is one of the leading industries in uganda. banking also operates in a macroeconomic and prudential regulatory environment, which provides scope for investment and innovation while, at the same time, safeguarding the interests of depositors and the safety and soundness of the financial system. page 13 of 14 consequently i am confident that banks will be able to meet successfully the challenges that they face, and in doing so, continue to contribute to the development of the ugandan economy. finally i would like to wish you all the best for the rest of this conference. thank you for listening to me. page 14 of 14 | me start with asia. in hindsight, it is evident that those leveraged economies could not provide adequate profitable opportunities at reasonable risk in the 1990s to absorb the surge in capital inflows. that surge reflected in part the diversification of the western equity markets β huge capital gains to a sector of the world which was perceived as offering above average returns. together with distortions caused by a long - entrenched government planning ethos, the flood of investment resulted - - some would say inevitably - - in massive deadweight losses. as activity slowed, burdened by fixed - cost obligations that were undertaken on the presumption of continuing growth, business losses and nonperforming bank loans surged. the capital of banks in asian economies - - especially when properly accounted for - - eroded rapidly. as a consequence, funding sources dried up as fears of defaults rose dramatically. in an environment of weak financial systems, lax supervisory regimes, and vague assurances about depositor or creditor protections, the state of confidence so necessary to the functioning of any banking system was torn asunder. bank runs occurred in several countries and reached crisis proportions in indonesia. uncertainty and retrenchment escalated. in short, the slowing in activity in asia exposed the high fixed costs of a leveraged economy, especially one with fixed obligations in foreign currencies. failures to make payments induced vicious cycles of contagious, ever rising, and reinforcing fears. it is quite difficult to anticipate such crises. every borrower, whether a bank or a nonbank company, presumably structures its balance sheet to provide a sufficient buffer against the emergence of illiquidity or insolvency. the scramble by borrowers to protect their balance sheets when this buffer is unexpectedly breached can lead to a surge in the demand for liquidity that in turn produces a run on the financial system. at one moment, an economy appears stable, the next it is subject to an implosion of fear - induced contraction. in this context a preventive effort to lessen the probabilities of such crises arising - for example, by bolstering the financial system β s buffer through more capital or improved bank supervision - - may not in itself further insulate a country from crisis if financial institutions, now faced with a lower cost of capital or lower spread on their debt, leverage away the increased buffer. indeed, one form of moral hazard is that an initially sound financial system that attracts low risk premia could | 0 |
trade execution and price discovery in fx https : / / www. mas. gov. sg / news / speeches / 2021 / riding - the - growth - momentum - in - asia 3 / 11 12 / 02 / 2021 " riding the growth momentum in asia " β keynote speech by ms jacqueline loh, deputy managing director ( markets & development ), β¦ during asian trading hours, a move that will bring about better execution, lower cost of trading, and greater transparency for market participants. key global and regional sell - side and buy - side players, as well as e - trading platforms, have anchored their regional pricing and matching engines here, and have seen early successes. global liquidity providers that have completed the set - up of their pricing and trading engines in singapore provided feedback that trade - fill ratios have improved, from about 80 % to near 100 %. notably, when fx market volatility reached multiyear highs in march last year amidst the covid - 19 pandemic, the robust e - trading infrastructure in singapore was able to tide regional market participants over the storm, with relatively good execution. we seek to enhance singapore β s value proposition as a full - service international fund management and domiciliation hub. the variable capital companies ( vcc ) framework provides fund managers with a wider suite of investment fund vehicles and potential cost savings from centralising fund management and domiciliation activities, whilst providing new business opportunities for fund managers, service providers and fund advisors. the vcc has seen strong industry adoption, with close to 200 vccs set up in its first year, for a diverse range of traditional and alternative investment strategies. in the bond markets, singapore β s strong ecosystem of buy - side and sell - side institutions, alongside professional service providers, provides a robust gateway for international capital to be channelled to asian borrowers. to strengthen our value proposition as asia β s leading bond centre and building on the success of the asian bond grant scheme [ 10 ], we launched the global - asia bond grant scheme [ 11 ] in 2020, which defrays issuance - related expenses for companies with an asian nexus. in particular, a new funding tier for jumbosized issuances was introduced, with a doubling of the maximum grant amount from s $ 400, 000 to s $ 800, 000 per issuance for these issuances. in insurance, we aim to be a global capital for asian risk transfer, [UNK] a wide spectrum of risk financing solutions that | balances have significantly improved. crucially, the public debt - togdp ratio has started to decrease at euro area level. moreover, programme countries have rebalanced their current accounts, not only via demand compression but increasingly through genuine gains in competitiveness. to be sure, we cannot afford to be complacent. debt levels and unemployment are high and unevenly distributed, and the nascent recovery remains weak and uneven. we also need to restore trust in the banking sector, which is key to improving lending conditions to the real economy. in this regard, the comprehensive assessment of euro area banks will be crucial. β’ moreover, with the new governance framework the member states have taken key steps towards internalising economic and financial spillovers within emu. this has entailed a shift of the balance of competences upwards : the central level has been substantially strengthened to make the euro area more stable and resilient. fully enforcing the new rules of the game will however be the crucial test. at this stage, the implementation of the new macroeconomic framework has been somewhat disappointing in non - programme countries, notably regarding country - specific recommendations. it is more satisfactory on the fiscal side, but it will be essential that fiscal discipline is also fully enforced in good times, so that countries have enough fiscal space when the next crisis comes. the credibility of the new governance framework crucially hinges on the enforcement of our commitments, today and tomorrow. to this end, we need to improve effectiveness and legitimacy within the euro area. as i mentioned before, while economic policy - making is increasingly shared between the european and the national level, each level should be in a position to deliver on its own mandate. and citizens should be able to identify who is responsible for what. only with a more efficient and legitimate decision - making will we be able to properly enforce the governance framework ; only then will emu be genuinely β fit for purpose β. this brings me to the political dimension of the β fitness test β. looking beyond the crisis : a broader political perspective on euro area governance the four presidents β report identified β political union β as one of the four building blocks of a genuine emu. it put forward a number of proposals. some of the momentum behind the discussions on these proposals has been lost. it is not up to the ecb to promote them. but we would welcome policy - makers restarting the discussion and not shying away from ambitious proposals. i see several possible options to enhance effectiveness and | 0 |
practices. this resulted in an underestimation of the risks involved and the capital buffers that were necessary. the ensuing turmoil in the financial markets that followed was increasing illiquidity in the financial markets and the subsequent breakdown in the functioning of the markets. as this continued, it has translated into stress and insolvencies in the financial sector. in both crises, this precipitated a sudden pull back in bank lending. the ensuing credit crunch magnified further the damaging impact on the economy. in asia, the economic contraction was severe in the range of minus 7 % to 13 %. in the current financial crisis, however, the spillover impact of the effects on the economy has yet to be fully felt. in the asian financial crisis, it ran its full course with the rapid price adjustments in most asset markets taking place within a period of just over a year. in asia, there was limited potential to reduce interest rates in an environment that was vulnerable to capital outflows. the focus of policy in asia was therefore on the resolution of the banking sector and to restore the functioning of the intermediation process. in most of the crisis affected economies in asia, this strategy produced positive results and growth resumed within twelve to eighteen months. financial crisis and islamic finance in the midst of the unfolding of the global financial crisis, it is useful to review the foundation and structures of the islamic financial system to assess its resilience in withstanding the impact of the current and future crises. in taking into account the dynamics of the crisis and the potential implications for islamic finance, two important dimensions are key in undertaking the assessment. the first key dimension highlights the inherent ability of islamic financial system to deal with the test of such crisis. islamic finance is well - supported by two essential features which serve as pillars to islamic financial transactions. firstly, islamic finance encourages business and trade activities that generate legitimate profits, subject to an explicit requirement of materiality and validity of the transaction. this requirement ensures that the funds are channelled into real financial business activities, reinforcing a close link between financial and productive flows. this reduces the islamic financial system from over exposure to risks associated with excessive leveraging and imprudent risk taking. in islamic financial transactions, money is not a commodity, but a medium of exchange, a store of value and a unit of measurement. money represents purchasing power and cannot be utilised to increase the purchasing power without any productive activity. secondly, islamic finance encourages business transactions | adnan zaylani mohamad zahid : re - inventing payments - the future of financial services keynote address by mr adnan zaylani mohamad zahid, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the malaysian e - payments excellence awards ( meea ) 2019, kuala lumpur, 31 july 2019. * * * it is my pleasure to be speaking here today, at such an exciting time for our payments landscape. malaysia β s progress in migrating to e - payments has been promising. in less than a decade since 2011, we have reduced cheque usage by half to 101 million in 2018. e - payment acceptance points such as point - of - sale ( pos ) terminals have more than doubled to 16 terminals per thousand inhabitants in 2018. more merchants are also accepting qr payments with over 400, 000 registrations recorded to - date. meanwhile, e - payment transactions have almost tripled to 125 transactions per capita in 2018. at the same time, new business models are emerging. we estimate that 40 % of fintechs in malaysia are in payments or payment - related services β making it the largest segment. the ewallet space has been particularly vibrant, contributing to rapid growth in mobile payments. from 2017 to 2018, mobile payment transaction volume had increased twenty - fold from just below two million transactions to over 34 million transactions within a year. keeping these developments in mind, allow me to share three broad priorities in taking malaysia β s payments journey to greater heights. greater scope to enhance inclusivity and quality of e - payment adoption the first priority is to improve the quality of our e - payment migration to be more inclusive, broadbased and sustainable. the good progress so far means that malaysia has a solid foundation for more widespread adoption of e - payments. e - payments are increasingly prevalent, with adoption picking up across a wide range of use cases. a wider network of merchants is also increasingly open to accepting e - payments as a possible driver of efficiency gains and revenue growth. importantly, these encouraging developments have been contributed, in part, by the market reforms and incentive structures implemented since 2013. these measures have corrected market distortions and facilitated the pooling of industry resources to continuously enhance the payment infrastructure and services. nonetheless, there are opportunities for more inclusive and broad - based adoption. studies have shown that cash usage is still prevalent with more than 80 % of malaysians reportedly using cash in a majority of their everyday spend | 0.5 |
information readily available on their mobile devices. the quest for efficiency in statistical reporting and compilation as we have seen, data - whether micro data or aggregate variables - are an essential ingredient for analysing and designing economic policies. but at the same time, reporting data are not free. this always means a burden on reporting agents. and i think that the responsibility of all of us as authorities is to minimise that burden and establish the mechanisms which ensure data collection is as efficient as possible and smooth the ensuing interactions with agents to check data quality. in a sense, collecting micro data may help reduce the reporting burden on economic agents ( such as banks, investment funds, non - financial companies, etc. ) if they are able to replace other aggregate requirements imposed by the authorities. moreover, these requirements may sometimes change over time, thus demanding a continuous and costly adaptation of the agents β reporting schemes, including complex it developments. but, in any case, data collection imposes short - term costs on agents. public institutions should be sensitive to their demands to establish an efficient system to collect information, avoiding overlaps and harnessing synergies. in order to tackle this issue there are already some data - sharing mechanisms in place across statistical institutions. indeed, the special relationship between ine and the banco de espana in the national accounts and balance of payments fields is a good example. yet more can probably be done both at the national and international level. on the international front there are good practices we can explore. a case in point is that in portugal, where non - financial companies have a sort of single window to report the data required by the main portuguese authorities ( tax agency, national statistical institute, mercantile register, central bank ). in particular, our neighbour has been able to build a single data platform to which every authority can subsequently resort to obtain the information they are entitled to access. i have seen that in the spanish national statistical plan ( pen ) for next year there is a reference to a project setting up a β sistema integrado de informacion de las empresas β, which i think is along the same lines. it could then contribute to significantly reducing firms β reporting burden in the future. as concerns financial information, we should also be open to more efficient financial reporting and statistical production at the banco de espana and the escb level. the banco de espana is very much committed to this goal. in fact, we already have a strategy to simplify and rationalise regulatory | their relationship with customers. they alter consumer demands, with consumers now seeking flexible, immediate and personalised interaction anywhere and at any time. they also lower the entry barriers to the business, as the extensive networks of branches to capture and retain customers that characterised traditional banking no longer seem necessary. i consider that, as regards technological innovation, it is more fitting for the moment to talk about evolution rather than revolution, and that not all technological initiatives exert the same influence on banking business and nor do they necessarily constitute projects that enter into direct competition with banks. but there are indeed technological innovations that are acting as a catalyst for firms that may come to compete with banks in specific segments. and one segment where this may have a greater impact, and specifically alter the bankcustomer relationship, is that of payment services. bank customers and technology : the payment services segment. allow me to illustrate the changes emerging in this segment with a brief reference to the new directive on payment services, known as psd2, as i previously mentioned. 4 / 8 one of the most notable aspects of this directive is that it definitively institutionalises the activity of the so - called third - party service providers, or tpp. the directive acknowledges the right of holders of a payment account to expressly authorise a third - party entity, provided it is duly authorised, to order payments on their behalf and / or to consult certain information associated with this account. in the first instance, we are talking about what are known as β payment initiation service providers β, while in the second case they are called β account information service providers β. the latter offer users the possibility of gaining consolidated knowledge of the situation of the payment accounts the users have with different entities, thereby helping them with their financial planning. conversely, payment initiation services arise as an alternative to the use of cards, for the payment of purchases made in e - commerce environments. they are consequently characterised by providing payment beneficiaries with the security that payment has been initiated correctly, acting as a spur for expediting the delivery of the good or service. with the emergence of tpp, psd2 makes it possible to dissociate administrative tasks β proper to the opening, maintenance and management of an account β from those others which generate revenues for banks thanks to the existence of those accounts. in this way the traditional role of banking as a single, or main, payment services provider is diluted. tpp are now legally authorised to gain access to banking | 0.5 |
klaus liebscher : challenges for the eurosystem β s monetary policy contribution by dr klaus liebscher, governor of the oesterreichische nationalbank, to the panel discussion on monetary policy, 28th economics conference of the oesterreichische nationalbank, held in vienna, on 15 june 2000. * * * ladies and gentlemen! central bankers are used to acting under uncertainty - in fact, this is a major rationale for their existence. the eurosystem - i. e. the ecb and the euro area national central banks - has undergone and, i believe, successfully passed - a special test on β monetary policy under uncertainty β in managing the transition to emu and in conducting monetary policy during the first one and a half years of the euro area β s existence. indeed, emu represents a major regime shift, with a number of associated uncertainties, such as data uncertainties, uncertainties about the monetary transmission mechanism across the euro area, uncertainties about the economic structure of the euro economy as it is adapting to the new, more competitive environment, and, last but not least, uncertainties about the interaction between the various economic policymakers. ladies and gentlemen, let me contribute six observations to the issue of our panel discussion which were obviously similar. the first observation relates to the role of monetary policy in a situation when the economy is possibly entering a new era. some proponents of the new economy claim that monetary policy should be relaxed to β give growth a chance β. now, while i certainly have sympathy with economic policies supporting economic growth, employment and welfare, i think this categoric claim is beside the point. monetary policy should always and unambiguously - with or without a β new economy β - pursue its primary objective of maintaining price stability. a stable anchor for price expectations is particularly important in a period of heightened uncertainty. it is common wisdom by now that, by credibly sticking to price stability, monetary policy serves growth best. indeed, it has been argued - and i would subscribe to this assessment - that the low inflation of the 1990s was among the contributing favorable framework conditions which laid the ground for the recent emergence of dynamic entrepreneurship and innovation in the united states. in addition, the highly competitive and far less regulated market structure of the us economy has contributed substantially to new businesses and new technologies. this does, however, not mean that monetary policy should be blind and ignorant vis - a - vis the changes brought about by a | central banks are mostly government institutions or publicly owned companies, their capital is mostly limited by domestic laws. in cases of substantial balance sheet growth, existing rules might not fit anymore. at such times the financial reporting framework might have to provide possibilities for new appropriate solutions. one such solution might be for recapitalisation by domestic governments after losses, or for potential future losses, to be made mandatory, however such requirements are often difficult to get approved by parliament and by public opinion. designing the adequate level and composition of the capital of a central bank is a sensitive challenge. one has, among a number of other internal and external factors, to take account of the central bank β s legal environment, the relationship to the government, and its special tasks, like lender - of - last - resort function, or a fiscal agent - function vis - a - vis the state. in any event, a central bank β s capital must be sufficient to maintain its independence from the political sphere, and to provide a buffer for the inevitable price volatility resulting from the current investment environment. the individually adequate balance for each central bank between a suitable accounting framework, profit distribution rules and the ability to hold or reserve adequate amounts for loss coverage is the key for financial independence. when you apply the accounting rules to arrive at the annual financial result, you are then confronted with the question of applying rules for the distribution of profits. these rules can be classified in six general legal profit and loss schemes according to a recent ecb study on profit distribution and loss coverage of central banks ( by werner studener and his colleagues ). the study, based on the experience of 57 central banks that provided data for the ecb analysis, confirms what the bis found in 2013, namely that there is no one - size - fits - all solution for central banks, neither for the level of capital and financial buffers nor for profit distribution and loss coverage ; nor, indeed, for recapitalisation rules. however, there is evidence that these topics are interconnected and a set of guiding principles have been identified, which help to find an individual balance. 2. commercial banks and corporates as i said earlier, financial reporting is a key issue, not only for central banks, but for all kinds of businesses and, of course, commercial banks as well. modern historians agree that the invention of double entry bookkeeping in the fifteenth century was a major driver for modern economic pursuit and capitalism, as it first introduced the maxim β increase your equity | 0.5 |
on an increase in non - mining and non - residential investment ( mainly machinery and equipment ). while mining investment will eventually return to positive territory during 2018, the gradual adjustment in residential investment is expected to continue during the following quarters ( figure 5 ). figure 5 real annual contribution to gfcf ( * ) ( percentage points ) other non - mining - 4 - 4 housing - 8 - 8 mining - 12 - 12 - 16 - 16 ( * ) for sectoral gfcf, variations of the 2008 benchmark compilation are used. since total gfcf is expressed using the 2013 benchmark compilation, annual variation of other gfcf is adjusted for consistency purposes. estimations for 2015 and 2016 based on available information from listed companies ( fecu ), capital goods corporation surveys, chilean chamber of construction and national accounts by institutional sector. for 2017 and 2018, central bank projection models and sectoral sources are used, including investment plans and capital goods corporation surveys. source : central bank of chile. 9. the labor market continues to gradually adjust and could become a drag on consumption. wage employment declined by 2 % annually in the moving quarter that ended in february, and annual wage growth moderated. in addition, the number of hours worked declined, at a time when an increasing number of workers suggest their workdays are shorter than desired. in any case, this has not translated into an increase in open unemployment, due to flexibility in the chilean labor market : the unemployment rate is still low from an historic perspective. in fact, despite being more precarious, self - employment has acted as a significant buffer to the loss of dynamism in wage employment ( figure 6 ). figure 6 job creation by category wages ( * ) ( annual change, percent ) ( annual change, percent ) wage 15 8 self - employment 7 nominal 7 - 3 - 5 - 6 - 10 0 real ( * ) both the nominal and the real correspond to the average of the annual variation of irem and cmo. source : national statistics institute ( ine ). 10. domestic financial conditions remain favorable, particularly in terms of interest rates. notwithstanding, credit volumes have decelerated with respect to previous years, as a result of overall subdued demand. despite some increase in recent data, arrears ratios are still low, a clear sign that slower growth has not affected the financial health of companies and households. 11. the evolution of the local stock market has caught some attention lately, since the | what to expect from the fed β s monetary policy normalization? 1 sebastian claro vice β governor, central bank of chile i would like to start thanking the organizers for this invitation. let me start with a disclaimer. next monday, april 3rd, the board of the central bank of chile will present its inflation report to the senate. therefore, i will not be able in this occasion to offer a detailed discussion on the macroeconomic situation and perspectives in chile, which will be described in detailed in the report. rather, i have decided to focus on a broader issue that is relevant for chile and the region in the current scenario. during 2017, we will finally witness the process of monetary policy normalization in the united states. after almost 8 years keeping the federal funds rates essentially at zero, the federal reserve has started a gradual process of interest rate hikes. this is good news. fundamentally, the normalization of monetary policy is the natural consequence of a normalization of the us economy after the global financial crises. a normal us economy is a positive phenomenon for the world economy. however, this transition period may become bumpy. indeed, previous episodes of rate hikes by the federal reserve have not been smooth at all for emerging economies. the most obvious of these examples is the debt crisis in the early 1980s. on top of a series of macroeconomic imbalances in many latin american countries, the sharp raise in interest rates generated a strong reversal in capital flows and pressure on fx markets on the region that induced a collapse in financial markets and activity across countries. since the early 1990s, we can identify two main periods of interest rates rises in the united states, as seen in figure 1. the first one started in february 1994, and it comprised a hike of 300 bp in almost a year. the second one took place a decade later when, after a few quarters of the then historically β low rates, the fed started a process of rate normalization in june 2004, increasing almost 450 bp in about two years. 2 for the sake of this presentation, i want to offer a simple comparison on these two episodes, which in some dimensions were very similar. in particular, the cyclical position of the us economy was arguably very similar in both occasions, and the process of monetary policy normalization is pretty comparable. however, the performance of emerging markets in these two episodes was very different. indeed, overall, the process of fed funds increases in early 1994 was followed by large difficulties in developing | 0.5 |
- border group, is likely to facilitate the negotiations to share the public costs incurred if and when required. therefore, bis central bankers β speeches we support the overriding policy objective of the new eu framework for bank recovery and resolution proposed by the commission. although the implementation of the new resolution regime in the eu could already reduce the fiscal costs of bank failures, i believe that explicit arrangements should also be put in place to ensure that in the future the financial sector bears the burden of possible crises to come. as part of a credible resolution framework, bank levies ( possibly accumulated in resolution funds ) could possibly be considered. however, a levy on banks should be seen as a complementary tool in the set of instruments aiming at increasing the loss absorbency of systematically important banks β notably capital and liquidity surcharges, and contingent capital. the financial stability board is currently exploring several options, in particular on contingent convertible capital and bail - in debt instruments. to this end, i welcome the fact that the european commission is considering bank levies and bail - in in its plans for the future eu crisis management framework. the ecb stands ready to further contribute to the challenging work that is still ahead of us in the development of this framework. i would like to take the opportunity of today β s meeting to address another topical issue : the finalisation of the proposed eu regulation for otc derivatives, central counterparties and trade repositories. we would welcome if the draft report of your committee on this significant legislative initiative took account of the important role that central banks play for ensuring the stability and efficiency of market infrastructures. central banks have proven their relevant role during the financial crisis and we would thus welcome that their contribution to financial stability be fully reflected in the new regulation. this means that the central banks would be adequately involved in the new eu framework for central counterparties ( ccps ) and trade repositories. they would cooperate with supervisors in the authorisation and the ongoing risk assessment of infrastructures, technical standard - setting and decisions regarding the recognitions of third country central counterparties and repositories. regarding the arrangements for cooperation and information - sharing among authorities, the commission β s proposal of colleges provides, in our view, a set - up that is preferable to bilateral contacts between those authorities and esma. iii. eurobonds let me now say a few words on the other subject you suggested : so - called β eurobonds β. the ecb is not | war ii. in 1948, they were enshrined in the universal declaration of human rights. the famous five recognized the importance of economic rights much earlier than that, and worked to put in place laws that extended these rights to women. for example, louise mckinney, henrietta muir edwards, and emily murphy helped to establish the dower act in 1917, which granted alberta women property rights in marriage. and nellie mcclung spent much of her political life fighting for mother β s allowances, better public health services, and improved property rights for married women. now, in canada, we have created a society where most of us can take for granted our right to earn a fair wage and provide for our families. but we should not underestimate the importance of macroeconomic policies, frameworks, and institutions that support the standard of living that we enjoy. for example, low, stable, and predictable inflation means that our salaries and our savings aren β t eroded by rising prices, nor will our economy be devastated by deflation as it was in the 1930s. good monetary policy means that we can plan for the future with confidence. a sound financial system means that we can conduct financial transactions with equal confidence. a secure currency means that we can use cash with confidence that bank notes will be readily accepted, and without fear of being stuck with a counterfeit bill. at the bank of canada, we are always mindful of our commitment to canadians - to contribute to the economic well - being of this country. part of that commitment is to communicate our objectives openly and effectively and to stand accountable for our actions. the famous five and therese casgrain remind us of the tremendous influence that individuals can have on society. as louise mckinney said, and i quote, β the purpose of a woman β s life is just the same as the purpose of a man β s life - that she may make the best possible contribution to the generation in which she is living. β we each have a responsibility to contribute to the society in which we live. as a public institution, the bank of canada takes this responsibility seriously. we know that by fulfilling our economic role in canadian society - by giving canadians confidence in the value of money - we make an important social contribution as well. the bank of canada will continue to promote the economic well - being of canada and canadians. that is our commitment to you. tonight, we celebrate the commitment of five individual canadians to the advancement of human rights in our | 0 |
prices in sweden. but over the past year the trend has levelled off, and the krona has even weakened slightly so far this year ( see figure 5 ). the development of the krona is therefore probably mainly a partial explanation for the earlier low inflation, and is less so now. a further explanation for the low inflation in sweden is that the uncertain economic climate in the wake of the european debt crisis has meant that companies have not been able to pass on cost increases to consumer prices in the same way as before. moreover, their margins have been squeezed by the stiff competition. 2 this picture is confirmed by the preliminary results of the survey we made together with the national institute of economic research, where we asked 1, 500 companies in mainly the services, retail and construction industries what factors have significance for their pricing. 3 but inflation in sweden has repeatedly been lower than both the riksbank and market analysts have expected ( see figure 6 ). i consider it very important that we continue to carefully analyse the reasons for the low inflation, both in sweden and abroad. an interesting question is what role global and domestic factors respectively will play for inflation in individual countries, something that the bis discusses in its most recent report. 4 the bis points out the structural effects of globalisation and increased world trade that have increased competition and may have contributed to squeezing prices in many parts of the world. household indebtedness has been considered in the monetary policy decisions as you know, i and my colleagues on the executive board have also discussed the high level of household indebtedness at monetary policy meetings in recent years, as it could comprise an article in the july monetary policy report, β why is inflation low? β describes the possible reasons for the low inflation in sweden. we will return to our analysis of the questionnaire in the early autumn. see β 84th annual report, 1 april β 31 march 2014 β, bank for international settlements, 2014. bis central bankers β speeches a risk to the economy in the longer run. swedish household debt has risen very substantially since the mid - 1990s. even if the increase in indebtedness, measured in terms of debt in relation to disposable income, has slowed down in recent years, the level is still very high in a historical perspective ( see figure 7 ). the development of household debt is linked to the development of housing prices, which is not so strange as housing purchases as largely financed through loans ( see figure 7 ). a | consideration. as i see it, there are also clear signs that economic activity is about to improve, and the conditions are therefore right for stabilising inflation around 2 per cent by means of a smaller cut in the repo rate. moreover, the smaller repo - rate cut is more in line with our earlier actions, which was reflected in the market expectations of a 0. 25 percentage repo - rate cut. i do not think one should surprise economic agents unnecessarily, and our actions should as far as possible be predictable and long term. i would like to emphasise that there is, on the whole, consensus among the executive board with regard to economic developments and monetary policy. as i have said before, it is a question of a difficult balancing act, and it is natural that there will be some minor differences of opinion on the assessments. one of the reasons why we have an executive board consisting of several members is that different assessments and approaches can be tested against one another, which should ultimately lead to better decisions. in addition to the agreement on economic developments and the direction for monetary policy, there was also broad unity among the executive board that household indebtedness is a risk that needs to be managed. the low interest rates mean that there is an increased risk that the economy will not develop in a way that is sustainable in the long run. there are thus now even greater demands for measures within other policy areas to deal with household indebtedness and developments on the housing market. macroprudential policy plays an important role in this context. welcome framework for macroprudential policy β it improves the conditions for managing household indebtedness one message i have conveyed time and time again β including in my august speech last year β has been that a framework for macroprudential policy would facilitate the monetary policy deliberations. 8 more accurate tools could be used to manage household indebtedness ( see the lower half of the diagram in figure 8 ), at the same time as monetary policy could to a greater extent focus on the inflation target within the normal forecast period ( see the upper half of the diagram in figure 8 ). one must bear in mind that the inflation forecasts in the figure are calculated on the basis of the current reporate paths. in july, the repo - rate path was lowered substantially, and without this downward revision to the path, the forecast for inflation would have been even lower. see also my speech β | 1 |
andreas dombret : challenges for financial stability β policy and academic aspects dinner speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the joint conference of the deutsche bundesbank, the technical university dresden and the journal of financial stability, dresden, 17 january 2013. * * * 2012 : an β annus horribilis β or an β annus mirabilis β or neither? your magnificence professor muller - steinhagen, mister state minister doctor beermann, ladies and gentlemen : the turn of the year gives me the chance to relate my discussion of some of the future challenges for financial stability to a resume of the previous year. please allow me to do this from a european perspective and let me start with a seemingly innocent question : will 2012 go down in history as an β annus horribilis β or rather as an β annus mirabilis β, or neither? the answer to this question is less trivial than it appears at first. let β s look to the origins of the words β annus horribilis β and β annus mirabilis β. to see this please note that the originator of the β annus horribilis β, queen elizabeth, used it to describe her feelings about the year 1992. at the time, her majesty was talking about, among others, the fire at windsor castle, but one might also read it as a comment about what happened in the financial sector in 1992 when the markets forced the uk to leave the european exchange rate mechanism. more recently, the queen β s remarks sound as a comment about the financial and economic development of 2012. please also note that many people use the metaphor of a large - scale fire to explain the economic term of a β systemic β event. thus her majesty is worth quoting in more length : β 1992 is not a year on which i shall look with undiluted pleasure. in the words of one of my more sympathetic commentators it has turned to be an β annus horribilis β. i suspect that i am not alone in thinking it so. indeed i suspect that there are very few people or institutions unaffected by the last months of worldwide turmoil and uncertainty. β according to various measures 2012 was a year of considerable systemic tensions. indeed, the indicators were approaching β but did not quite reach β the sad levels seen in the second half of 2008 and in the first half of 2009 β which was without doubts a very difficult period in the | , moral suasion, the endeavour to stabilise their own respective sovereigns or simply strategic considerations. in an economy in which the sovereign defaults, banks are likely to default, too. thus, the domestic banks have an incentive to invest in sovereign β s bonds and earn the yield mark - up if things go well. what happens in the event of a joint sovereign - bank default is not relevant for them. this undermines market discipline for governments and reduces their incentive to carry out necessary structural reforms. on the other hand, banks, which can obtain unlimited cash against sovereign collateral from the central bank, are protected from discipline from investors who provide funding. large sovereign bond exposures might also harm the real economy. rises in sovereign risk are transmitted into reduced bank lending. banks that were highly exposed to strained european sovereign debt have reduced their lending to the private sector. bis central bankers β speeches thus, the current regulatory treatment is incompatible with the principle of individual responsibility ; the market interest rate no longer reflects the riskiness of the investment. i am aware that banks as well as governments are afraid of rising funding costs as a result of ending the regulatory privileges afforded to sovereigns. the argument goes, moreover, that such a regulatory move risks considerable market turmoil. i do not think that this argument should keep us from doing the right thing. no market participant would judge a french bond to be as risky as a greek one : the riskiness of each is reflected in their prices. investors believe that sovereigns differ in terms of riskiness. so no one should be surprised when the regulatory treatment accommodates this fact. if additional capital requirements for european banks were imposed to cover sovereign exposures, the extra capital would be almost negligible on aggregate β albeit with substantial differences between banks. other measures, such as the inclusion of sovereigns in the large exposures regime might lead to more substantial repercussions, but these would be manageable if introduced over a transition period β which undoubtedly has to be granted. when it comes to funding costs for governments, a healthier banking system with better diversification would pose less of a burden on states. the contingent liabilities of the government would shrink which β all other things being equal β would reduce the risk of investing in sovereigns and, eventually lower the sovereign bond yields. the current regulation β s assumption that government bonds are risk - free has been dismissed by recent experience. the time is ripe to address the regulatory treatment of sovereign exposures. | 0 |
gane simbe : financial inclusion in the solomon islands speech by mr gane simbe, deputy governor of the central bank of solomon islands, on the occasion of the anz gomoney launch, honiara, 12 september 2013. * * * thank you for the opportunity to take part in this event to mark the official announcement of the launch of anz gomoney or mobile money banking service in solomon islands, which will go live on monday 16th september, 2013. it is a historical event because it is the first mobile phone banking service to be officially launched publicly in solomon islands. on behalf of the central bank i congratulate anz on reaching this milestone. and while i have this opportunity, i as the chair for the pacific islands working group on financial inclusion, also extend the working group β s congratulations to anz, for the successful launch of anz gomoney in two countries, which are members of the pacific islands working group as well. let me take a few minutes to make three observations why we at the central bank of solomon islands are excited about the launching of this service ; and what we believe, means to the people of solomon islands, especially those in the rural areas. firstly, we see the launch of anz gomoney, as part of the progressive achievements towards the financial inclusion policy that the central bank and governments present and past ; would like to see, being realized in the solomon islands. cbsi applauds anz β s active commitment to bring financial services to the people. anz has used many different models of financial services delivery to the rural populations : brick and mortar branches ; use of mobile banking trucks to reach the rural communities and installation of solar powered atms to help customers β access financial services. but the operational cost of these models has been prohibitive and cannot be sustained. however, in recent years anz has been active in financial literacy and is also member of the financial inclusion taskforce in solomon islands. we are excited that with 80 per cent of population now having access to mobile phone networks services in the country, anz has taken this opportunity offered by the mobile phone network infrastructure to introduce anz gomoney using the branchless banking model. anz β s appointed merchants and agents throughout the country will now be part of the financial delivery system in solomon islands. then secondly, we are interested in the launch of this banking service because of cost savings the anz gomoney will give to anz β | s rural clients. many of our teachers and public servants living in remote parts of country have spent a good part of their income in travel cost and time wastage to access banking services. this wastage of money and time could end if the new service is available in their communities. the impact of such savings can benefit and improve the living standards of people living in rural communities. thirdly, the launch of anz gomoney marks another challenge not only for anz but also for the cbsi. this is the education of the users on use of these electronic or digital banking services. i learnt that anz has already embarked on educating its clients ahead of this launch, but our people must be taught the values that they get from the use of these new financial service platforms. we want to encourage active use of the service ( both customers and traders ) to realise the benefits of capital investments. with these few remarks ladies and gentleman once again, we in the central bank of solomon islands congratulate anz on this occasion and we wish anz gomoney a successful launch on monday, 16th september 2013. bis central bankers β speeches | 1 |
closely monitoring inflation expectations and the inflation situation more generally. to address these developments, the federal reserve has moved in two main areas. to help relieve the pressures in the interbank markets, the federal reserve β among other actions β recently introduced a term auction facility ( taf ), through which prespecified amounts of discount window credit can be auctioned to eligible borrowers, and we have been working closely and cooperatively with other central banks to address market strains that could hamper the achievement of our broader economic objectives. in the area of monetary policy, the federal open market committee ( fomc ) has moved aggressively, cutting its target for the federal funds rate by a total of 225 basis points since september, including 125 basis points during january alone. as the fomc noted in its most recent post - meeting statement, the intent of these actions is to help promote moderate growth over time and to mitigate the risks to economic activity. a critical task for the federal reserve over the course of this year will be to assess whether the stance of monetary policy is properly calibrated to foster our mandated objectives of maximum employment and price stability and, in particular, whether the policy actions taken thus far are having their intended effects. monetary policy works with a lag. therefore, our policy stance must be determined in light of the medium - term forecast for real activity and inflation, as well as the risks to that forecast. at present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt. at the same time, overall consumer price inflation should moderate from its recent rates, and the public's longer - term inflation expectations should remain reasonably well anchored. although the baseline outlook envisions an improving picture, it is important to recognize that downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated, or that credit conditions may tighten substantially further. the fomc will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks. | ##equacy assessments or by our supervisory view of those institutions'risks and how well those risks are managed. as has long been the case with our capital rules, we expect that adjustments to the capital framework will be made over time to address industry and market developments, any potential shortcomings in the rule identified in our review and analysis during implementation, and new and improved techniques of risk management. next steps for bankers completion of the basel ii rulemaking process means that banks adopting the new rule must also gear up their efforts. of course we recognize the substantial work that bankers have undertaken over the past several years to prepare themselves for basel ii. but, understandably, they have had to wait for completion of the final rule to see how the agencies would articulate certain requirements β some of them quite detailed. therefore, it would seem that bankers need to read the rule very carefully and take time to understand how their own bank will be able to meet its requirements. as stated in the final rule, and as the u. s. agencies articulated several years ago, the key instrument in the qualification process is a bank's implementation plan. this written implementation plan, approved by a bank's board of directors, must describe in detail how the bank complies, or intends to comply, with the rule's qualification requirements. specifically, the plan must describe how the bank intends to address the gaps it has identified between its existing practices and the qualification requirements set forth in the rule for the advanced approaches, covering all consolidated subsidiaries. the implementation plan also must include objective, measurable milestones β including delivery dates β and a target date when the bank expects its advanced approaches to be fully operational. the bank must establish and maintain a comprehensive and sound planning and governance process to oversee implementation efforts, and must demonstrate to its supervisor that it meets the qualification requirements. banks subject to the final rule on a mandatory basis, the core banks, have up to six months to adopt an implementation plan. of course, banks may always submit their plans earlier, and i understand that a number of core banks are working toward that goal. this deadline for submission of plans by core banks is intended to prevent delays in starting implementation efforts. however, the final rule provides flexibility and gives banks adopting basel ii ample time to fully meet the qualification requirements once they have adopted an implementation plan. specifically, a bank's plan may include developmental goals for full implementation for up to thirty - six months from the effective date of the final rule | 0.5 |
above, it is evident that the five banks accounted for a disproportionate component of the total exposure to capital market and oil and gas, thus reflecting heavy concentration to high risk areas relative to other banks in the industry. 4. the huge provisioning requirements have led to significant capital impairment. consequently, all the banks are undercapitalized for their current levels of operations and are required to increase their provisions for loan losses, which impacted negatively on their capital. indeed one is technically insolvent with a capital adequacy ratio of ( 1. 01 % ). thus, a minimum capital injection of n204, 94 billion will be required in the 5 banks to meet the minimum capital adequacy ratio of 10 %. 5. the five banks were either perennial net - takers of funds in the inter - bank market or enjoyed liquidity support from the cbn for long periods of time, a clear evidence of illiquidity. in other words, these banks were unable to meet their maturing obligations as they fall due without resorting to the cbn or the inter - bank market. as a matter of fact, the outstanding balance on the edw of the five banks amounted to n127. 85 billion by end july 2009, representing 89. 81 % of the total industry exposure to the cbn on its discount window while their net guaranteed inter - bank takings stood at n253. 30 billion as at august 02, 2009. their liquidity ratios ranged from 17. 65 % to 24 % as at may 31, 2009. ( regulatory minimum is 25 % ). it is important to note that at least three of the banks are systemically important ( accounting for more than 5 % of assets and deposits in the banking system ) and together the five banks account for 39. 93 % of loans, 29. 99 % of deposits, and 31. 47 % of total assets as at may 31, 2009. given the extent of the asset quality problem leading to liquidity stresses, and the variety of stress points on the banks'balance sheets, failure to act to secure the financial health of these banks will clearly place the system at risk. the central bank has a responsibility to act to protect all depositors and creditors and ensure that no one loses money due to bank failure. the bank also needs to move decisively to remove this principal cause of financial instability and restore confidence in the banking system. consequently, having reviewed all the reports of the examiner | according to statistics released by the oecd, the labor force participation rate of women aged between 25 and 54 in japan was 75. 3 percent in 2017 ; this figure is higher than that for the united states - - which is 72. 1 percent - - and the average of the g - 7 countries - - which is 73. 5 percent, with france at 75. 2 percent, germany at 80. 0 percent, and the united kingdom at 78. 1 percent. currently, the issue surrounding working women in japan is not the labor force participation rate itself, but the scarcity of opportunities for women to develop their career at work, given that many women work as part - timers or non - regular employees. however, without entry into the labor market in the first place, women cannot create career plans. i believe that, as the number of working women increases, more women will become regular employees, enabling them to develop their career ; in fact, in 2016, the ratio of women in managerial positions in establishments with 30 employees or more in japan increased, according to the fiscal 2016 basic survey of gender equality in employment management ( available only in japanese ) released on july 28, 2017 by the ministry of health, labour and welfare. chart 2 shows real purchasing power parity gdp per working - age person. as can be seen in the chart and the accompanying table, since the introduction of qqe, japan's growth rate has been the highest among the g - 7 countries, and has also been notably higher than during the preceding decade from 2002 to 2012. this means that those who want to work are increasingly able to work. chart 2 real ppp gdp per working - age person of major economies 90, 000 international dollars as of 2011 introduction of qe end of qe introduction of qqe japan united states 80, 000 united kingdom germany 70, 000 france italy 60, 000 canada 50, 000 40, 000 cy 30, 000 note : annual figures for working - age person are obtained by linear interpolation of data for every five years. figures for germany through 1990 are those for west germany. real gdp is converted by purchasing power parity ( international dollars as of 2011 ). sources : imf, " world economic outlook database " ; united nations, " world population prospects : 2017 revision. " average growth rate of the real ppp gdp per working - age person ( % ) united states united kingdom period japan germany france italy canada 2. 3 1. 7 | 0 |
temporary factors, but there is also some indication that both import and export volumes are responding to the depreciation of the rand and the weaker economy. how global headwinds, including china β s slowdown may alter this outlook, remains to be seen. as you know, the sarb targets inflation within a flexible framework, which allows for temporary breaches of the target being tolerated under certain circumstances. the inflation forecast has been somewhat erratic, impacted by the combination of a weaker exchange rate on the one, hand and falling oil prices on the other. however, the rand exchange rate remains the one of the biggest upside risks to the inflation outlook. the zar has fluctuated in a range of between r11. 30 and just over r14, 00 against the us dollar since the beginning of the year, depreciating to a historic low of r14. 16 against the us dollar, but more recently we have seen some correction. on a year - to - date basis, the rand is almost 12 per cent weaker against the us dollar. this is in the mid - range of other ems currencies, some of which have depreciated by over 30 per cent ( such as brazilian real ) and others by around 3 per cent ( such as the indian rupee ). the most recent inflation forecasts point to an average inflation rate of 4. 7 per cent in 2015. temporary breaches of the target are expected in the first quarter, and again in the final quarter of 2016. much of this is due to base effects. for 2017, inflation shows a slow downward trend. the sarb monetary policy committee ( mpc ) remains on a gradual normalisation path and is of the view that monetary policy remains accommodative. the mpc has to achieve a fine balance between realising its core objective, and not unduly undermining growth in the shortterm. while we have raised the policy rate in july 2015 by 25 basis points, bringing the cumulative increase in the policy rate since the first upward move in january 2014 to 100 basis points, in real terms monetary policy remains accommodative as pointed out in our recent mpc statement, released in september 2015. the current environment requires policy makers to remain vigilant and to carefully analyse incoming data, and not hesitate to act if the risks of a more persistent breach in the inflation target materialise and inflation expectations become unanchored, thus posing a threat to inflation outcomes | daniel mminele : south african monetary policy amidst an uncertain and volatile global economic backdrop address by mr daniel mminele, deputy governor of the south african reserve bank, at the economist annual investment agenda conference, johannesburg, 20 october 2015. * * * good morning ladies and gentlemen. thank you to the economist for the invitation to deliver the welcome keynote address at β the investment agenda johannesburg 2015 β. the first part of the title of the investment agenda, β no man is an island β, is taken from a poem of john donne. to quote a little further from that poem : β no man is an island, entire of itself ; every man is a piece of the continent, a part of the main β¦ β this expression can be related not only to our personal lives, but lends itself particularly well to the world of financial markets and economics. each part of the economic and financial system, while separate, is driven by similar factors with many interdependencies. for example, the global financial crisis of 2008 / 09, started off as a crisis in the housing sector, but quickly broadened to money markets and other areas of the financial sector. in addition, the crisis was not contained but spread from the us to other advanced economies ( aes ) and ultimately to emerging markets ( ems ). it had serious ramifications for economic growth, employment and inflation, and ultimately elicited strong responses from both fiscal and monetary authorities. some have argued that these responses sowed the seeds of other crises, citing the european sovereign debt crisis, and more recently, the increasing talk of a possible em crisis on the back of a credit crunch fears as capital flows decelerate or reverse. in my remarks today, i would like to delve a little into the global economic environment, particularly as it pertains to monetary policy as a source of financial volatility and the more recent developments in china and how this is impacting on africa. i will then conclude with a few remarks on monetary policy in south africa against this backdrop. global monetary policy monetary policy has been one of the dominant topics in financial circles over the past few years. the current nuance of concern is how the conduct of monetary policy in aes is influencing financial market developments and the spillover effects to ems. i am sure you have been inundated with information on this topic. however, please indulge me a little since, after all, it is a source of substantial uncertainty and vol | 1 |
eddie yue : opening remarks - hong kong monetary authortity - dubai financial services authority joint climate finance conference opening remarks by mr eddie yue, chief executive of the hong kong monetary authority, at the hkma - dubai financial services authority ( dfsa ) joint climate finance conference, hong kong, 16 september 2024. * * * ian [ johnston, chief executive of the dubai financial services authority ( dfsa ) ], colleagues from the dfsa and friends joining us in - person and online, good morning and good afternoon. greetings and introduction welcome to the inaugural hkma - dfsa joint climate finance conference. it was in the summer of 2023 when ian and i talked about having a joint conference together. ian has always been a very active contributor to the global dialogue on sustainability, and his visions for climate finance resonated a lot with me. we quickly came to an agreement that we should have a mechanism where key stakeholders in hong kong and dubai can meet regularly to discuss our shared challenges in scaling climate finance, explore and pilot innovative solutions, and coordinate a regional response to net - zero. and now, here we are, just over a year since our discussion, at the inaugural joint conference. let me first take this chance to express our appreciation for ian, dfsa colleagues and our industry friends who all help make this meaningful initiative happen. importance of collaboration our concerted efforts speak volumes about the growing recognition of collaboration between public and private sectors, financial institutions and corporations, and international organisations and local communities. none of us, by acting alone, can move the needle on decarbonisation. our collaboration needs to extend beyond borders as well. climate change is a global challenge that requires a global response. hong kong and dubai, as the sustainable finance hubs in asia and the middle east, can do and should do more together. collaboration between hong kong and dubai when it comes to climate finance, hong kong and dubai have a lot in common. we are the key gateways between east and west ; both with very vibrant sustainable bond markets ; encouraging technology adoption, actively participating in global standardsetting and fully committed to local alignment. 1 / 2 bis - central bankers'speeches more importantly, we both are very proactive in taking the initiative. in the race against climate change, we cannot afford to wait until we have a perfectly robust approach. the like - minded need to join hands and embark on the sustainable finance journey knowing that there will be hurdles or | even setbacks along the way. we also need to be inclusive and make sure no one is left behind, especially those from regions and sectors where the need for economically viable and credible decarbonisation solutions is the most acute. that is why the theme of today's conference is transition finance. although most of us can agree that transition finance is critical in reaching the net - zero goals, how to do it, and how to do it right, is still very much under debate. despite the immediate challenges in labelling, collecting data, and building metrics, i have confidence that hong kong and dubai, working hand - in - hand, can chart a new path ahead. and this would require some fresh thinking as well. for example, we as financial regulators need to look beyond our traditional mandate and take up the role as an enabler of facilitation for such collaboration. it is on us to create a conducive environment, where honest, difficult but necessary conversations among diverse stakeholders have to take place. we also need to arm the market participants with the right tools and incentives to develop and test innovative solutions ; and lay the groundwork in infrastructure to facilitate cross - border climate fund flows. ian and i will share more of my thoughts in the coming session, and i look forward to an open and constructive exchange of views with you all. closing today's conference is just a first step in our building of a " net - zero asia aβ¬ β middle east corridor ". i hope the speakers'sharing today will catalyse a lot more fruitful discussions down the road. with that, may i invite ian and teresa [ ko, senior partner, hong kong, freshfields bruckhaus deringer and co vice chair, ifrs foundation ] to join me on stage for the fireside chat to kick - start our event today. thank you very much! 2 / 2 bis - central bankers'speeches | 1 |
forces that had been restraining the economy during the preceding several quarters. the collapse of final demand that accelerated in the latter part of 2008 left many firms with excessive inventories of unsold goods, which in turn led them to cut production and employment aggressively. this phenomenon was especially evident in the motor vehicle industry, where automakers, a number of whom were facing severe financial pressures, temporarily suspended production at many plants. by the middle of this year, however, for more discussion, see ben s. bernanke ( 2009 ), β on the outlook for the economy and policy β, speech delivered at the economic club of new york, new york, n. y., november 16. inventories had been sufficiently reduced to encourage firms in a wide range of industries to begin increasing output again, contributing to the recent upturn in the nation β s gross domestic product ( gdp ). 2 although the working down of inventories has encouraged production, a sustainable recovery requires renewed growth in final sales. it is encouraging that we have begun to see some evidence of stronger demand for homes and consumer goods and services. in the housing sector, sales of new and existing homes have moved up appreciably over the course of this year, and prices have firmed a bit. meanwhile, the inventory of unsold new homes has been shrinking. reflecting these developments, homebuilders have somewhat increased the rate of new construction β a marked change from the steep declines that have characterized the past few years. consumer spending also has been rising since midyear. part of this increase reflected a temporary surge in auto purchases that resulted from the β cash for clunkers β program, but spending in categories other than motor vehicles has increased as well. in the business sector, outlays for new equipment and software are showing tentative signs of stabilizing, and improving economic conditions abroad have buoyed the demand for u. s. exports. though we have begun to see some improvement in economic activity, we still have some way to go before we can be assured that the recovery will be self - sustaining. also at issue is whether the recovery will be strong enough to create the large number of jobs that will be needed to materially bring down the unemployment rate. economic forecasts are subject to great uncertainty, but my best guess at this point is that we will continue to see modest economic growth next year β sufficient to bring down the unemployment rate, but at a pace slower than we would like. a | duvvuri subbarao : frontier issues on the global agenda β need for global cooperation inaugural address by dr duvvuri subbarao, governor of the reserve bank of india, at the indian council for research on international economic relations / inwent / german development institute ( icrier / inwent / die ) conference on β policies for growth and financial stability beyond the crisis β the scope for global cooperation β, mumbai, 27 october 2010. * * * 1. first of all, my thanks to the organizers of this conference β icrier, the german development institute ( die ) and inwent β for inviting me to inaugurate this conference on : β policies for growth and financial stability beyond the crisis β the scope for global cooperation β. having just returned from a meeting of g - 20 finance ministers and central bank governors in korea over this weekend, i am deeply sensitive to the value of generating a wider debate on issues that the world has to grapple with as we emerge out of the crisis. 2. the focus of this conference on global cooperation is particularly relevant. everyone now has her / his list of lessons of the crisis, and one item common on almost every list is the lesson that today β s macroeconomic problems cannot be resolved without global cooperation. the crisis has taught us that no country can be an island and that economic and financial disruptions anywhere cause ripples, if not waves, everywhere. the crisis also taught us that given the deepening integration of countries into the global economic and financial system, uncoordinated responses will lead to worse outcomes for everyone. 3. when the history of this crisis is written, the london g - 20 summit in april 2009 will be seen as a clear turning point when the leaders of the world showed extraordinary determination and unity of purpose in combating the deepest economic crisis of our generation. sure there were differences, but they were debated and discussed and compromises were made without eroding the end goal β that is to end the crisis. 4. the priority task today is to calibrate the exit from the crisis driven accommodative policies and put the world on a sustainable growth path. global cooperation is as vital for managing this recovery as it was for managing the crisis. there is a growing apprehension though that the vaunted unity that the g - 20 had shown during the crisis is dissipating and that its resolve to foster globally optimal solutions is weakening. when all the details | 0 |
to earn a return on their capital. in this context, i would like to refer to the banks'profits. it is quite natural to regard the banks'profits in nominal terms of billions of shekels, but one should also examine the banks'profits in relation to their capital, in other words, one should look at their return on capital. in these terms, the return on capital for the israeli banking system is not particularly high, and even low in international comparison. the return on capital for the banking system in 2005, for example, was 14. 5 percent, compared to an average 15. 4 percent globally. finally i would like to ask the knesset to push forward with government - sponsored legislation on the supervision of banking fees by the supervisor of banks as soon as the bill is presented, which i hope will be soon. this is an important bill, and every effort should be made to have this legislation passed. | david klein : the changing exchange rate regime - background, policy and implications ; the case of israel speech by mr david klein, governor of the bank of israel, at the euro - mediterranean seminar, eurosystem and mediterranean country national central banks, organised by the bank of italy and the european central bank, naples, 14 - 15 january 2004. * * * the exchange rate regime is an important component of macro - economic policy. after experiencing a period of sluggish growth and rapid inflation in the β 70s and the first half of the β 80s of the last century, israel changed its economic strategy. in a series of agreements with the european union and the united states, all barriers to international trade were removed. unilaterally israel removed those barriers on trade with other countries as well, and cemented all these changes in a number of agreements in the framework of the wto and by accepting article 8 of the imf articles of agreement. furthermore, in the β 90s and the first few years of this decade, israel gradually abolished all exchange controls. the concept behind this economic strategy was that a small economy like that of israel, can exhaust its growth potential only by being open to the world. as a result of this basic strategy, the central bank, which was its main promoter, had to overhaul its policy to maintain price and financial stability. the change entailed replacing the exchange rate by an inflation target as the nominal anchor. to do that a few steps had to be implemented simultaneously : first, to render the exchange rate regime more flexible. we realized that removing exchange controls would make it difficult, if not impossible, to maintain a fixed exchange rate. this meant moving from a fixed exchange rate regime through a horizontal exchange rate band, to an upward sloping diagonal band, to an ever - widening band and, finally, to a floating exchange rate regime. the gradual approach was required to give time to an inter - bank foreign currency market to develop, including the creation of financial instruments, traded and over the counter, to hedge against the exchange rate risk. second, in order to go along with the lifting of the foreign exchange controls, the central bank and the government had to implement an extensive deregulation of the domestic money and capital markets. this meant abolishing numerous directed credit facilities, and extensive commercialization of government debt in the framework of capital market reform. third, working with inflation and price stability targets required shaping of appropriate monetary policy instruments. in this context we scraped the | 0.5 |
increases the intensity of supervision, for the groups in scope. as such, ring - fencing will remain a focus for the pra β as well as for the banks themselves β in the coming years. how will the next crisis be different? financial crises generate significant and persistent costs. the bank of england has estimated that the costs of crises amount to 75 % of gdp on average. 1 the previous crisis resulted in the government providing Β£65 billion of capital to rbs and lloyds to prevent them failing and disrupting the provision of vital banking services to their customers. since then, a comprehensive regulatory reform package was developed β which in large part has now been implemented β to reduce the likelihood that such a crisis could happen again. brazier, a., ( 2016 ), β a macroprudential approach to bank capital : serving the real economy in good times and bad β, speech available at https : / / www. bankofengland. co. uk / speech / 2016 / a - macroprudential - approach - to - bank - capital - serving - the - real - economy - in - good - timesand - bad. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx in 2010 the government established the independent commission on banking ( icb ) to make recommendations to improve financial stability and competition in the banking sector. the icb recommended that the core retail banking operations of uk banking groups should be ring - fenced from any international or investment banking activity in their groups. the icb argued that if retail banking operations had been ring - fenced prior to the crisis, this would have reduced the likelihood that the banks would have needed government support. the icb β s recommendations formed the basis of the banking reform legislation passed by parliament in 2013. this set out the core banking activities which must sit in a ring - fenced bank, as well as the β prohibited β activities that must be separated from the ring - fenced bank or stopped altogether. the legislation also specified the degree of separation required. ring - fenced banks must have the capability to make decisions independently of their groups and should not be operationally dependent on group entities which undertake prohibited activities. ring - fenced banks must also have sufficient financial independence and have their own capital and liquid resources. any exposures to the rest of the group must be limited and on commercial terms. all large uk banking groups β defined as | do you expect it to be next year? the estimate for this year is about 7 percent, and for the next year it is somewhat higher. in which direction will the interest rates on loans and deposits move next year? the downward trend is likely to continue, although at a slower pace. the european central bank reduced the basic interest rate to 0. 75 percent in order to stimulate the economic growth. the national bank of the republic of macedonia maintains it at 3. 75 percent. why not reducing it down to 1 percent in our country, too, which will reduce the interest rates on loans as well? in a highly euroized economy as the macedonian, it is necessary to motivate economic agents to demand denars, not euros. therefore, interest rate parity on denars and euros must be kept at an appropriate level that stimulates the demand for denars. in the last three years we have reduced that parity from 8 percent to only 3 percent. further reduction is a process that depends on the resilience of the economy. macedonia will have to save more what are your expectations for the macedonian economy in 2013, which is expected to be perhaps more difficult and more turbulent than this year? what, according to you, will be the biggest economic challenges and problems next year? it will be another year full of uncertainty for the world and especially for the european economy. thus, the export demand for macedonian products is unlikely to improve. so, we cannot expect that to boost economic growth. however, our expectation for the economic growth in macedonia is to be much better than this year, driven by diversification of the production into new export - oriented facilities that started to work this year, or will start to work in the next year, as well as infrastructural facilities for which funding has already been secured from foreign sources. both politicians and economists globally are of a divided opinion in terms of the economic policy that should be conducted in order to emerge from the crisis. some advocate austerity, others encourage spending to stimulate growth. which policy you prefer and think is right for macedonia? according to me, those are β false β discussions. if a country has a room for increased spending, certainly now is the time to stimulate the economy. but unfortunately, there are not many such countries worldwide. developed economies were spending more than they could afford for years, and now they do not have any room for fiscal stimulus left. it is easy to say that now you have to | 0 |
( 2021 ). businesses surveyed could respond as having deferred payments to more than one type of creditor, meaning that the total number of smes that deferred payments to either trade creditors or landlords is between 7 and 14 per cent. 3 please see the β nfc resilience β section of recent financial stability reviews from the central bank for more on this. 4 more details on scarp are available from the department of enterprise, trade and employment, here. 5 greenwood et al. 6 mcgeever et al. ( 2021 ) show that between 2016 and 2019, the number of liquidations of insolvent businesses was typically between 1, 500 and 2, 000. 3 / 3 bis central bankers'speeches | of scale associated with the nfb model are sufficiently high that the industry structure would tend toward oligopoly, or even monopoly. that is, too much franchise value might be created. in that event, there would be significant additions to the cost side of the proposal β s ledger, in the form of the price and quantity effects that result from non - competitive industry structures. regardless of the eventual structure of the industry, nfbs essentially would be monolines, with highly correlated risk exposures. they could be particularly vulnerable to funding difficulties in times of deteriorating credit conditions. yet by the terms of the g - m proposal, they apparently would not be able to hedge interest rate or other risks. g - m propose giving nfbs access to the discount window to forestall liquidity problems and runs on the nfbs, presumably in the same way that deposit insurance stopped runs on traditional banks. here again though, the analogy is not a perfect one. while banks and their depositors are assured that the federal deposit insurance corporation will keep the latter whole in the event of the former β s failure, the federal reserve does not make binding commitments to lend to any institution and actively discourages reliance on the window for regular funding. a third question about the g - m proposal arises because of the significant changes in current law and practice that would be required were the proposal to be adopted. the prohibition on abs holdings by anyone other than nfbs is the obvious and major example. but there are several others : in addition to the possibly problematic features of discount window lending in general for the proposal, the federal reserve has traditionally opened the window to nondepository institutions only in particularly stressed conditions. under the dodd - frank act, any use of credit ratings in federal regulations will be prohibited, an obvious complication to the g - m proposal. this part of dodd - frank has accelerated and expanded the efforts already underway at the federal banking agencies to lessen regulatory reliance on ratings. in truth, it may pose no greater challenge for the g - m proposal than for many existing capital rules. 4 the relative dormancy of these markets is also due in part to the limited supply of the loans needed to feed the securitization process. for a discussion of some of the issues raised in the context of capital requirements, see board of governors of the federal reserve system ( 2010 ), β advance notice of proposed rulemaking regarding alternatives to the use of credit ratings in the risk - based | 0 |
turn to the second pillar for financial sector development, namely markets. markets the development of the financial sector cannot be envisaged without the promotion of strong, well - functioning and deep financial markets. significant progress has been achieved in positioning the domestic stock market on the international financial arena. the stock exchange of mauritius ( sem ) is endowed with a state - of - the - art trading infrastructure and, as a result of its good performance, was the second african exchange after the johannesburg securities exchange ( jse ) to attain membership status of the world federation of exchanges ( wfe ) in november 2005. moreover, in about a month, on 1 october 2008, the mauritius stock exchange is scheduled to join the dow jones wilshire global index. in 2007, market capitalisation in us dollars on the sem increased by 70 per cent year - onyear, with non - residents β gross inward investment in the equity market registering a record high. the remarkable track record of the sem should induce the private sector to take better advantage in securing long - term funding. the amendments brought in 2007 to the securities act 2005 could give a boost to securities trading on the stock exchange. there is significant room for improvement with regard to development of fixed income markets, which have remained rather shallow and illiquid despite recent interest from foreign investors. traditionally, fixed income markets are important channels through which public and private institutions avail of financial resources for medium - and long - term projects. bond markets also constitute good investment opportunities for long - term investors such as pension funds and insurance companies. there have been a few bond issues lately β including one launched by the european investment bank β and this should be encouraged for the benefit of all stakeholders. in the light of limited success experienced with the secondary trading of treasury bills on the stock exchange of mauritius, the bank of mauritius is currently undertaking a review of the primary dealer system. the central bank is also working on the issue of benchmark bonds in collaboration with bankers. a commodity exchange, named global board of trade ( gbot ), is scheduled for launch in mauritius in january 2009 with the collaboration of financial technologies india ( fti ) ltd. this commodity exchange, which intends to trade commodities and derivative products in metals, oil and agriculture, shall take the mauritian financial system a step further by enabling better enterprise risk management and financial planning. mauritius will also seriously need to contemplate the development of full - fledged currency futures in the near future β that would assist in formation and | may opt to exclusively conduct islamic banking or offer islamic financial products through a window. through the finance act 2008, non - bank deposit taking institutions have also been authorized to offer shariah compliant financial products. islamic banking in mauritius should become a reality in the near future. a proposed insolvency bill seeks to amend and consolidate the law relating to insolvency of individuals and companies and the distribution of assets on insolvency and related matters. moreover, a netting and intermediated securities bill provides for the validity and enforcement of close - out netting arrangements and giving effect to the hague securities convention on the law applicable to certain rights in respect of securities held with intermediaries. with a view to promoting mauritius as a reputable and clean financial centre, the bank of mauritius reviewed its guidance notes on anti - money laundering and combating the financing of terrorism ( aml / cft ) in july 2008 in the light of recommendations made in the report on the evaluation of the aml / cft regime of mauritius by the financial sector assessment program ( fsap ) mission of the imf / world bank. technological infrastructure the technological infrastructure β exchanges and systems used to clear and settle market trades or cash obligations β plays a critical role in the development of the financial sector. with the advent of modern technology, payments, clearing and settlements are effected in real - time. the bank of mauritius launched in december 2000 a real - time gross settlement system with guaranteed finality of payment known as the mauritius automated clearing and settlement system ( macss ). ongoing efforts have since been made to modernise the payments system. recent initiatives include the port - louis automated clearing house ( plach ) set up in 2002, which performs netting on cheque data that are sent to the clearing house by electronic means and the settlement at each clearing cycle on the macss. the bank of mauritius is currently working on a cheque truncation project, whereby clearing and settlement of a cheque will be done through images of cheques instead of physical cheques. the stock exchange of mauritius also operates a central depository system ( cds ), which allows for delivery versus payment of stock exchange transactions on a t + 3 rotating basis via the macss. at a cross - border initiative level, the bank of mauritius is also participating in the comesa regional payment and settlement system ( repss ) which will allow cross border payments between comesa countries. the objective is two - fold : to reduce costs of transactions | 1 |
would like to briefly touch on the medium - to long - term economic issues confronting japan. there is concern that the covid - 19 shock we are facing will remain for a long time as scarring effects. 16 in japan, after major shocks such as the bursting of the bubble economy and the gfc, their effects lasted for a prolonged period as sort of hysteresis effects ; people's sentiment deteriorated and the growth rate suddenly decelerated ( chart 14 ). it is important to avoid such " scarring effects " on the economy as much as possible in order to create a situation where japan's economy will return to a sustainable growth path without any sudden deceleration once the impact of covid - 19 subsides. therefore, the top priority is to overcome the crisis as swiftly as possible ; at the same time, it is also important to strengthen the growth potential while making the most of lessons learned from this crisis. while covid - 19 has had a significant impact on social and economic activities, this also could be an opportunity to reform the economic structure that will strengthen the growth potential. in fact, there have been various efforts to use information and communication technology ( ict ) in such areas as telework and online medical care. it is essential to see how society as a whole can make the most of the harsh experience of covid - 19. active investment, particularly in human capital, is necessary in order to strengthen the growth potential. 17 while the leading role in this regard falls on the private sector, the public sector will actively support their efforts. in this regard, central banks can provide liquidity through lending but cannot spend money. it is the private sector and the governments that can spend as for concern over the impact of covid - 19 on people's sentiment, see eichengreen, b., " an infrastructure inoculation for america's recovery, " project syndicate, january 13, 2021, https : / / www. project - syndicate. org / commentary / us - economic - recovery - biden - infrastructure - plan - bybarry - eichengreen - 2021 - 01. 17 a delay in japan's ict investment is discussed in wakatabe, m., " japan's economy and monetary policy, " speech at a meeting with business leaders in saga, september 2, 2020, https : / / www. boj. or. jp / en / announcements / press / koen _ | various platforms that are relevant and practical for the community and link well with the global community. the second order effect of enhanced access to nancial services is, therefore, a structural shift to higher economic and growth potential for the region ( for both individuals and businesses ) and, thus enhanced contribution to national economic prospects. in the context of today β s theme, where the economic essence of being rural does not connote backwardness, but involves a transition to encompass meaningful alternative economic activity that entails income earning opportunities, impactful production and employment creation. in the eld of economic studies, this will be de ned as a shift in the production frontier. for example, while still producing sh, it is with better methods / equipment, knowledge, larger production, trade with the rest of the world, it is sustainable and renewable, and positively impacts social welfare, over the long - term. as a third element, the prospective transition and structural shift of economic activity would ideally be more aligned to global production and performance attributes in terms of value chains, expectations on quality, standards and productivity. this, therefore, underpins prospects for maintenance and expansion of external markets, including tourism fi fi fi fi fi nance projects, asset acquisition, working capital, facilitating timely services, agriculture and other industries, resonating very well with the export - oriented development strategy that anchors the nation β s economic recovery and transformation plan and the vision 2036 growth trajectory objectives. enhanced access to nancial services, therefore, plays a key role in this regard. i am pleased, in this regard, to observe that in the advent of the covid - 19 challenges, absa, together with other banks participated meaningfully in alleviating the adverse impact. for example, absa helped 48 businesses through their restructuring of loan facilities amounting to p419 million. in addition, absa bank participated in the government covid - 19 loan guarantee scheme ( administered by beci ) introduced to support eligible businesses with access to credit from banks to shore up business operations, whereby up to now, it has supported eight businesses with loans amounting to p41. 5 million. for emphasis, and to broaden this to the national context, i need to observe that, indeed, in the long - term and especially as diamond revenues decline, covid - 19 pandemic has illuminated the realisation that, the current development model, primarily based on government spending, is likely to be constrained by scal sustainability realities, reinfor | 0 |
rates and spreads, and that they will continue to do so. i view fluctuations in term money market rates of the magnitudes seen recently as normal parts of market functioning during a period of structural change. wholesale dollar funding, though more expensive, has remained readily available both in the united states and abroad. importantly, there are no signs of worsened counterparty concerns among banks, and spreads in the fx swaps market in dollar and other advanced - economy currency pairs have tightened in recent months, demonstrating that foreign firms that wish to obtain dollars by providing foreign currency effectively as collateral can do so on reasonable terms. that said, i do recognize that capital flows to emerging market economies have diminished in recent months. but, this shift appears to be largely driven by divergence in nearterm growth momentum, which has supported the dollar and triggered some pullbacks in portfolio flows and reduced borrower demand, and not by general dislocations in the availability of short - term dollar funding. we will continue to monitor developments in u. s. and global dollar funding markets closely, as we always do. in this regard, our ongoing dialogue with fellow central bankers, including through meetings such as this one, provides us with very valuable insight and perspective. as part of the new york fed β s ongoing engagement in and commitment to the region, we are pleased to be partnering with bank indonesia on a joint central banking forum, which will take place prior to the 2018 annual meetings of the international monetary fund and world bank group in bali in october. this forum will highlight economic and monetary policy developments in the united states and emerging markets as well as geopolitical and technological trends and their implications for central bankers. we hope that you and members of your delegation will be able to join us for this event. concluding remarks to conclude this discussion : i remain highly confident that the fomc β s framework for the normalization of the stance of monetary policy β both in the overnight market and in the balance sheet β will continue to proceed smoothly, without unnecessary surprise, disruption, or volatility in financial markets. the monetary policy implementation framework continues to provide the fomc with excellent control over overnight money market rates, and has proven its ability, including recently through the technical adjustment, to flexibly respond to new developments. although term money market rates have fluctuated recently in response to a variety of drivers, these markets continue to act as a deep and liquid source of wholesale funding to firms around the world while appropriately incorporating the f | five years, the fed and, dare i say, many other central banks have become much more interventionist. i do not think this is a particularly healthy state of affairs for the central banks or our economies. the crisis in the u. s. has long passed. with a growing economy and the fed β s long - term asset purchases coming to an end, now is the time to contemplate restoring some semblance of normalcy to monetary policy. in my view, the proper role for monetary policy is to work behind the scenes in limited and systematic ways to promote long - term growth and price stability. but since the onset of the financial crisis, central banks have become highly interventionist in their efforts to manipulate asset prices and financial markets in general as they attempt to fine - tune economic outcomes. this approach has continued well past the end of the financial crisis. while the motivations may be noble, we have created an environment where β it is all about the fed. β market participants focus entirely too much on how the central bank may tweak its policy, and central bankers have become too sensitive and desirous of managing prices in the financial world. i do not see this as a healthy symbiotic relationship for the long term. if financial market participants believe that their success depends primarily on the next decisions of monetary policymakers rather than economic fundamentals, our capital markets will cease to deliver the economic benefits they are capable of providing. and if central banks bis central bankers β speeches do not limit their interventionist strategies and focus on returning to more normal policymaking aimed at promoting price stability and long - term growth, then they will simply encourage the financial markets to ignore fundamentals and to focus, instead, on the next actions of the central bank. i hope we can find a way to normalize the role of monetary policy to one that is less interventionist, less discretionary, and more systematic. i believe our longer - term economic health will be the beneficiary. bis central bankers β speeches | 0 |
reserve bank would prefer to see senior management actively demonstrating or providing evidence of compliance to directors. reviewing requirements in the reserve bank β s corporate governance policy ( bs14 ) related to, for example, tenure limits for independent directors, limits on directorships and requirements on banking experience. reviewing bs10 to require banks to undertake on - going suitability assessments of their directors and senior managers. the reserve bank will also be providing greater clarity on the definition of β senior manager β for the purposes of the current non - objection process. insurer disclosure 8 / 11 bis central bankers'speeches overview of disclosure regime public disclosure of information also forms an important part of the market discipline pillar for the insurance sector β a sector the reserve bank assumed responsibility for in 2010 under the insurance ( prudential ) supervision act ( ipsa ). section 4 ( e ) of ipsa defines disclosure in the public interest : β the desirability of providing to the public adequate information to enable the public to make [ their own ] decisions β. the insurer public disclosure regime is based on accounting and audit standards ( enforced by the fma as is the case for registered banks ). for example, the financial reporting act requires all insurers to produce audited financial statements within four months of the financial year - end. these financial statements are available from the companies office website, while some insurers also publish them on their own website. licensed insurers are also subject to additional disclosure requirements imposed by ipsa and reserve bank standards and guidelines. under ipsa most licensed insurers must have, and disclose on its website, a financial strength rating prepared by an approved rating agency to policyholders before issuing and renewing insurance policies. the reserve bank also publishes these financial strength ratings on its website. overseas insurers must disclose the existence of any overseas policyholder preference if one exists. licensed insurers must also disclose their financial strength ratings to policyholders before entering into or renewing a contract of insurance. as part of reserve bank solvency standards, insurers are required to disclose solvency positions and regulatory capital information in their financial statements and on their website. ipsa requires that actuarial information contained in financial statements is reviewed by the licensed insurer β s appointed actuary and subject to a separate report which is included in the financial statements. guidance material on governance creates an additional expectation on insurers tied to the disclosure of governance arrangements to shareholders, policyholders and other stakeholders. imf f | extremely difficult to identify, price, allocate, and manage with accuracy. 1 https : / / www. bis. org / review / r151009a. pdf 2 https : / / www. rbnz. govt. nz / research - and - publications / speeches / 2019 / speech2019 - 07 - 11 # fn7 ; https : / / www. rbnz. govt. nz / about - us / the - journey - of - te - putea - matua - our - tane - mahuta in the jargon, β market failure β is rife. we simply do not know the true scope and scale of the environmental risks we take on during our daily economic activities. likewise, many of the material costs of our economic decisions are β externalised β, that is, borne by others including future generations. there is no obvious market or price for selling climate risk, and hence no personal reward for managing it. and market participants often take a short - term, myopic, view in their decision making, pushing longer term problems to the never - never. what this means is that we will never have perfect information on the risks of climate change. however, firms β disclosure on how they identify and manage climate change risks greatly assist to sharpen our focus. after all, it is what gets measured that generally gets managed. and it is far often better to imperfectly measure something than ignore it completely. what we already know is that climate change holds far - reaching implications for new zealand β s financial system. these implications include physical impacts such as sea level rise and drought. for example, the national institute of water and atmospheric research ( niwa ) estimates $ 12. 5 billion of property is already exposed to extreme coastal flooding in new zealand, and that each 10cm of sea level rise puts another $ 2. 4 billion of assets at risk. 3 climate change also implies transition impacts - such as β flight shame β or a shift to plantbased protein that will pose unique challenges for our highly concentrated export economy. agriculture is already staring down the challenge of a triple whammy : emission pricing, changes in consumer demand, and more extreme weather. the reserve bank β s climate strategy our climate strategy at the reserve bank has three avenues : incorporating the impact of climate change into our core functions ; managing our direct impact on the climate ; and leading through experience and collaboration. firm disclosure of climate risks assists all three avenues. disclosure will | 0.5 |
independently of the local conditions to the risk of a higher level of unemployment. it is consequently of particular importance for all countries to achieve a high degree of wage flexibility in order to improve the ability of their labour markets to adjust to such shocks. secondly, national policies should aim at improving long - term growth prospects by, on the one hand, affecting positively labour utilisation and, on the other, improving labour productivity growth. structural policies can increase labour utilisation by addressing labour supply incentives that are inherent in tax and benefit systems. high average and marginal tax rates and high unemployment benefits impact negatively on the incentives to engage in paid employment or on the choice of the number of hours to work. early retirement policies also have a significant negative effect on labour supply and, hence, on the participation and employment rates. growth in labour productivity should be supported by policies that aim at promoting innovation and technological change. for that purpose, policies should focus on allowing the efficient functioning of entrepreneurial activities, removing for instance entry restrictions and improving labour market adaptability. speaking in front of elected representatives, i know that the successful implementation of structural reforms requires constant explanations and well targeted communication in order to convince the citizens about their beneficial effects on growth and job creations ; i fully understand the difficulty of this task and can only encourage all responsible parties in these communication efforts. conclusion i am fully aware that this is indeed a very demanding list of tasks. but this is in our view the only way ahead. there is indeed enormous work to be done by all of us. and i would like to stress β by all of us β. we have, the eurosystem, the european commission, the national governments, and the european and national parliaments, a shared responsibility in ensuring a smooth functioning of emu, by improving the integration and flexibility of its markets. some differences in economic performances across countries or regions have existed and will continue to exist in the future, as it is the case in the us and in other any areas. 317 millions d β europeens ont decide de partager aujourd β hui un destin en commun. la monnaie unique n β est pas seulement une formidable reussite et le symbole puissant de l β unite de l β europe dans un monde en voie de transformation rapide. la monnaie unique nous reunit plus profondement, plus intimement que le debat public europeen ne le suggere par | governments prevent discretionary policy measures from contributing pro - cyclically to the business cycle. structural reforms it is in the area of structural reforms where national policies can make the most significant contribution to facilitating the working of adjustment mechanisms in individual countries and to improving long - term growth and employment prospects as well as to addressing undesirable growth underperformance in some countries. in this regard, the lisbon process has raised the awareness among european countries that structural reforms are decisive for remaining competitive in an increasingly global economic environment. the integrated guidelines outlining reform and policy priorities as well as the setting - up of national reform programmes are suitable instruments to lead the way to a wellfunctioning internal market as well as to better functioning national markets. in this respect, we appreciate the inclusion of a special euro area fiche into the integrated guidelines, highlighting the particular reform necessities of countries that participate in the euro area. let me briefly elaborate in more detail on these important issues. first, the focus must be on structural reforms enhancing economic flexibility. this should help to better absorb shocks and thereby improve the working of adjustment mechanisms in individual countries. in the context of emu with a single monetary policy, the later the necessary national policy measures are taken to make the economies more flexible, the larger the potential costs can be in case of adverse shocks. how to enhance economic flexibility? there are many factors that may help to increase flexibility within the euro area. first, the single market needs to be completed in order to stimulate price flexibility by fostering competition and open product markets, e. g. in the services and network industries. this requires that existing barriers to labour and capital mobility within the euro area are removed. in this respect, measures aimed at protecting domestic industries or employees against competition are only counterproductive as they delay the necessary adjustment. now that slovenia has entered it the euro area, it is decisive that its labour force is granted full access to the labour markets of all euro area countries. as i have already stressed in several occasions, it is abnormal that there are labour restrictions as regards slovenian workers in a number of economies that are members of the euro area. economic flexibility can also be promoted by removing the institutional barriers to flexible price and wage setting mechanisms, in particular by easing product market regulations and employment protection legislation. specifically, as regards wage setting, nominal and real wages should adjust to help absorb shocks. wage setting must reflect firms β different situations rather than being defined homogenously across sectors or countries | 1 |
deferred pension scheme members : the younger, not yet retired individuals. they bring several additional risks for insurers including much greater uncertainty in the longevity risk, as assumptions have to be made over a much longer period of time, together with risks stemming from policyholder options, such as cash commutation, flexibility on retirement age and transfers outs [ 6 ]. this appetite is supported by reinsurers, who provide both pricing expertise and capital. secondly, the disruption in the uk gilt market last autumn resulted in some pension schemes being overweight in illiquid assets [ 7 ] as gilt values fell significantly, and schemes sought to reduce their leverage under liability driven investment strategies [ 8 ]. we see insurers increasingly developing solutions to accept illiquid assets as part of the bpa premium, as pension schemes may be reluctant to dispose of these assets in the open market, potentially at a large discount. this requires significant due diligence, and we are seeing insurers seeking more advice from third party specialists such as property valuation experts both for illiquid asset valuation and to calibrate adequate market value haircuts. alternatively, we have seen deferrals of premiums incorporated in deals giving pension schemes time to dispose of such assets in an orderly fashion [ 9 ]. these premium arrangements can be complex and potentially capital intensive due to the increased uncertainty they can create. the pra welcomes innovations in this market as insurers seek to better support their clients. at the same time, we want insurers to understand the additional risks and uncertainties when accepting premium that includes such assets. even if firms use external expertise to price or manage these deals, boards remain accountable for the decisions taken. they need to understand the basis for advice from third parties and to challenge the advice robustly. straightforward questions need good answers : are these risks within appetite? have the bespoke features of the deal been considered over the full lifetime? how has the inherent uncertainty present been captured within the decision - making process? as noted in our 2023 supervision priorities letter [ 10 ], we are carrying out a thematic review to assess whether bpa writers β risk management processes are keeping pace with their growth ambitions and expanding risk appetites. a reliance on third - party capacity the second area is the use of third - party capital and asset origination capacity, known as funded reinsurance, to support these large new business transactions that are both capital - intensive and put | additional supervisory measures announced in the solvency uk package. the combination of existing and new tools will bolster the role of boards and firms β senior managers owning their decisions. and, through improved disclosure, we will support market discipline to empower broader stakeholders. should those prove insufficient, we will not shy away from highlighting areas of market - wide concern or taking the necessary supervisory actions. my resolve is strong : a healthy and sustainable life insurance market is a long - term value creator for the whole economy. it is in everybody β s interests to work together to ensure a dynamic vibrant industry for years to come. one that serves the needs of, and provides protection for, customers, and makes the strongest contribution it possibly can to investment in the wider uk economy. i would like to thank alwin luchmaya, sejal haria, alan sheppard, stephen walton, igor brkic, jemima ayton and tapasya bhandari, for their assistance in preparing these remarks. thank you. 1. four rs : creating the conditions for long - term sustainable growth in the life annuity sector β speech by charlotte gerken | bank of england 2. ppf7800 index march 2023 update 3. risk transfer report 2023 - hymans robertson 4. pension trustees : the planning puzzle | charles stanley ( charles - stanley. co. uk ) 5. defined benefit bulk annuity market favours full scheme transactions as funding levels improve ( xpsgroup. com ) 6. report of the member options working party - actuarial profession 7. illiquid assets throw uk pensions off balance - risk. net 8. asset managers cut debt in pension scheme investing strategies | financial times ( ft. com ) 9. shifting up a gear β wtw 10. insurance supervision : 2023 priorities ( bankofengland. co. uk ) 11. who β s concentrating? trends in the life insurance sector and the need for strong reinsurance and investment risk management β speech by charlotte gerken | bank of england 12. why private equity sees life and annuities as an enticing form of permanent capital | mckinsey 13. uk pensions implosion could end with a deals boom | financial times ( ft. com ) 14. buy - in and buy - out volumes Β£10 - Β£12bn in the first half of 2022 - hymans robertson 15. bulk annuity provider esg index - wtw ( wtwc | 1 |
end, the target ( and therefore midpoint ) was changed to 1 - 3 percent in the 2002 pta. recent bank research has found that this change was accompanied by an immediate increase in long - run inflation expectations ( lewis and mcdermott, 2016 ). the 2002 pta also made the medium - term focus of monetary policy explicit, and firmly embedded the flexible approach ( see, for example, hunt, 2004 ). it changed the target from β 12 - monthly increases β to β future cpi inflation outcomes β¦ on average over the medium term β. this medium - term focus has been an enduring feature of ptas to this day. the bank 15 the mci was a weighted summation of the exchange rate and short - term interest rate, with weights reflecting each variable β s medium - term effect on aggregate demand and thus inflation. the mci was used to identify the overall stance of monetary policy and to communicate the likely direction and extent of change in stance going forward. ref # 7482042 v2. 2 has interpreted this target to mean that it should set policy in order for inflation to remain or settle comfortably within the target band in the latter half of a three - year horizon ( bollard and ng, 2008 ). during the mid - 2000s, economic developments reignited concern about the monetary policy framework. although new zealand had been one of the faster - growing oecd economies since the early 1990s, this growth had been accompanied by the emergence of macroeconomic imbalances : a relatively large current account deficit, high house price inflation and household indebtedness, and a real exchange rate that had risen to levels sometimes regarded as unjustified by medium - term fundamentals ( rbnz, 2007b ). in early 2007, the government requested another inquiry into the monetary policy framework. the bank reiterated that there was no compelling evidence to suggest that these features had arisen from the design of the monetary policy framework. we recognised that with the benefit of hindsight, we had been slow to fully recognise the strength of demand and housing market pressure on inflation over the cycle. however, this was a feature of having to operate policy under uncertainty ( rbnz, 2007a and chetwin and reddell, 2012 ). we noted that solutions to new zealand β s imbalances were likely to lie in other policy domains, and suggested several β supplementary stabilisation instruments β. 16 following the review, the government decided not to make any changes to the rbnz | us extremely efficient at producing some things that we are effectively banned from selling to many of the consumers of the world. thus for example, although we are one of the world's largest cheese exporters, and have developed a range of sophisticated cheeses in recent years, we are limited to a tiny quota of about 0. 6 per cent of the us cheese market. if new zealand producers want to sell butter to japan, they find that japan has limited total butter imports, from all sources, to less than 2, 000 tonnes each year, with sales beyond that tiny quota facing a tariff of more than 500 per cent. our distance from world markets and a resource endowment which favours the production of goods which face major obstacles in international markets are facts of life. to make matters worse, we have compounded matters by creating some of our own obstacles to economic growth. for example, as a country we squandered a large amount of capital investing in projects of very low or negative value in the late seventies and early eighties, most as a result of strong government encouragement β the clyde dam, nz steel, and the synthetic petrol plant to name just three. scobie and mawson, op. cit. towards higher living standards for new zealanders : briefing to the incoming government 1999, the treasury. second, because of very high effective rates of protection in many parts of the manufacturing sector, we probably squandered even more capital over several decades by investing in industries where new zealand had no prospect of ever being internationally competitive. ( many studies have suggested that economic growth tends to be fairly closely correlated with the degree of openness of the economy, and, while new zealand is now a very open economy, that was not true until about a decade ago. ) third, we have paid a high price for years of encouraging investment in real estate while discouraging investment in plant and equipment β the result of the interaction between a period of high inflation and a tax system based on the assumption that prices are stable, plus perhaps the bitter memories of the 1987 share - market crash. fourth, we have paid a high price for not encouraging the acquisition of education and skills β the result of decades of protection for industries requiring only a modest level of skill and, perhaps, a welfare policy providing benefits of unlimited duration. fifth, we have paid a high price for tolerating an education system which produces too many people with inadequate literacy and numeracy skills, unable to fill the | 0.5 |
andrew bailey : defining the objectives and goals of supervision speech by mr andrew bailey, deputy governor of prudential regulation and chief executive officer of the prudential regulation authority at the bank of england, at the new york fed conference β defining the objectives and goals of supervision β, federal reserve bank of new york, new york city, 18 march 2016. * * * first of all, many thanks to the new york fed for organising a conference on supervision of banks. this sounds a strange thing to say in one sense β not in another because the gratitude is genuine β but strange in the sense that surely supervision is such an important part of what we do that we shouldn β t be particularly surprised at the idea of having a conference on it. but in my experience, it is surprising how little time we spend being more reflective about supervision. i want to start with some important definitions. frequently, and mistakenly, β supervision β and β regulation β as terms are used interchangeably. that β s wrong. regulation is to do with the framework of rules and guidance that put the structure around the objectives that as authorities we are usually given in statute. in the uk, the pra has a primary objective in terms of the safety and soundness of firms we authorise to do business, and safety and soundness are expressed in terms of the stability of the financial system. there is then a rulebook that tells us what safety and soundness means. that β s the framework of regulations. supervision is about how we use it in practice. for me, two critical elements of supervision are that it is forward - looking, and it requires the use of judgement. sounds obvious, but sadly hasn β t been consistently done well in the past, with bad consequences. supervision is therefore a skill β in fact it β s quite a few skills. the essence of the job is to understand risks in firms, and where necessary to step in and do a number of things : point out risks, or their significance when the firm seems to have failed to notice β through either lack of awareness or intent ; or point out that while the firm may have identified the risk, it has failed to understand or calibrate its significance. this leads me to a couple of important points. first, our assessment of risks can differ from firms because our objective represents the public interest, and there is an externality in the risk in question which affects the public interest in ways that do not register with a definition of private interest. | up of ideas which had accommodated inflation. historians have suggested that burns himself was not innocent in this respect, but the point is that there was a role for broad ideas which enabled the accommodation of pernicious inflation. it was dressed up as enthusiasm for growth and societal change which was ultimately unsustainable. we saw similar traits before the financial crisis, with the consequence that supervision was supressed. the whole thrust of the post - crisis changes in my view is to make supervision less pro - cyclical β not to aim off in the good times, but also not over - compensate the other way in the bad times. a third thought in this respect is that we underestimated the importance of system - wide risks and macro - prudential policy. supervision β and particularly large complex firm supervision cannot be remote from macro - prudential policy. to be honest, while i think we have made some progress breaking down the barriers, we still have a long way to go to integrate micro and macro prudential approaches. douglas elliott has made the point that we entered the crisis at a point in the history of economic policymaking where we had abandoned all macro tools other than the use of interest rates, the price of money. this was fairly unprecedented. we had lost confidence in quantitative tools in monetary policy, and the role of reserve money had been diminished. we had very little in the way of bank liquidity policy, of which holdings of reserve money are an important part. the experience of the crisis tells us that we have to keep working hard to re - develop these tools and to knit large firm supervision into the picture. in my experience, it doesn β t happen naturally. this brings me to the fourth and final thought on supervision. it was absolutely essential and natural that the immediate reaction to the crisis was to re - build regulation and supervision in respect of the core prudential all speeches are available online at building blocks, which are solvency ( capital ) and liquidity ( funding ). and, we had work to do, and still have, to get these core elements into better shape. and the work of interpreting these standards will never stop because the precise forms of risk taking will evolve. but, when i have stepped back and looked at the causes of the crisis in firms, another thing stands out. in the uk, i don β t think we saw a major prudential failure of capital and liquidity which did not have a governance and management story at is root | 1 |
also typical for financial services, or the banking sector as such, due both to state regulation ( such as compulsory cashless transfers above certain thresholds ) and to the markets and technological progress ( such as credit cards, smooth money transfers, contactless payments etc. ) all this is happening on - line in small steps, incrementally, and all this means banks might in bad times be seen as utilities, much less resolvable due to the complex services they provide, than in the past. and the complexity of the services of a utility is sometimes visible only very shortly before its potential collapse. so β utilities β providing products with incrementally increasing dependence will be able to exit the market in a much more complicated way, if at all. the same applies to the financial sector, all the more so if we go down the road to a lesscash economy ( which is, of course, a slightly different concept than a cashless economy. and i do not believe we will ever achieve a cashless economy completely spontaneously ). and this is something we should take into account in the future, as it will further complicate balancing the vertices of the banking triangle, or the banking trilemma i mentioned earlier. thank you for your attention. bis central bankers β speeches | mojmir hampl : the trilemma of the banking sector speech by mr mojmir hampl, vice governor of the czech national bank, at the czech national bank and omfif central bank meeting β central banking in central and eastern europe : policy making, investment and low yields β, prague, 7 june 2016. * * * ladies and gentleman, good morning, first of all let me express my gratitude for the kind invitation to speak at this event. my special thanks go to our departing governor miroslav singer and to david marsh for the energy β i would almost say nuclear energy β he constantly invests in the omfif and its events and publications, which has made the omfif what it is now. reading the omfif daily commentary has become an almost indispensable part of my working day, i have to say. looking at the impressive list of distinguished participants at today β s meeting, i intuitively started asking myself : what really unites us? what do we share regardless of whether we come from the east, west, north or south, or here from prague for that matter? and i am pretty certain that from the financial or monetary point of view there is at least one important thing. in all our countries we have not only central banks, but also commercial banks operating in a system of elastic money, i. e. private banks as entities that also create money. and we all share the same desire. we want our monetary and financial systems to be stable, not only throughout the economic cycle, but also across cycles. and what we also share is that we are still very much uncertain about how to achieve this goal perfectly. one, rather harsh expression of this uncertainty of ours, is the adage popular among some policy - makers. as financial stability is hardly a quantified ( or maybe even quantifiable ) goal, some in the community grumble that central banks targeting inflation are delivering price stability, while central banks targeting financial stability are delivering just financial stability reports. yes, this is really a bit too strong statement, as we all know, explicitly or implicitly, that the banking sector faces a trilemma β or an impossible trinity of a kind, if you will. banks can never be simultaneously : 1. perfectly safe, 2. perfectly efficient and 3. always free of moral hazard it is like in the area of public health care. this complex system also cannot simultaneously achieve three goals perfectly and be : 1 | 1 |
the need for resilience in the face of disruption : regulatory expectations in the digital world introduction good morning ladies and gentlemen. it is a pleasure to be here at the financial centre summit and i thank finance dublin for inviting me to speak todayi. we have entered a new era in the world of financial services. technology change, as evidenced by the description of a fourth industrial revolutionii, is more than just an enabler for conducting business in a faster, smarter, or cheaper way, for better managing costs, or for gaining better analytical insights. it is a revolution that is completely transforming the playing field for financial services firms. opportunities and risks abound. the competitive landscape is changing, with new entrants, new business models, a race by incumbents to invest in developing the necessary capabilities, and in many cases the potential for a fundamental disruption in the value chain of traditional financial services firms and sectors. moreover, it is becoming ever more evident that data, and the harnessing of it, is the new currency of this new digital ageiii. all this brings more complexity into the system, and complexity brings risk. financial services firms and whole sectors face the challenges of : needing a clear vision for the future in a radically changing world ; having a sufficiently flexible strategy and building the necessary capabilities for thriving in it ; and be able to manage the significant transition risks along the way. and throughout, financial services firms will need to ensure that they are sufficiently focused on their customers, and serving them in a sustainable way. so today, i am going to talk about some of these opportunities and challenges. i will cover : page | 1 the need for resilience in the face of disruption : regulatory expectations in the digital world - the importance of understanding the role technology plays in value chains and the implications should something go wrong ; - the need to get the basics right when it comes to it ; - the criticality of taking a data - centric view to understand key assets, and thus how to protect them ; and - the responsibilities of the senior management and boards of financial services firms to own these critical risks and to build resilience in their firms to be able to withstand, absorb, and recover from technology - related risks. in covering the above, i will also summarise how the central bank is continuing to evolve its approach to regulation and supervision in the context of technological change. the implications of the digitalisation of financial services β artificial intelligence and exponential increases in computing power are forcing | agriculture sector from the crisis. finally, over the years, india has built an extensive network of social safety - net programmes, including the flagship rural employment guarantee programme, which should protect the poor and the returning migrant workers from the extreme impact of the global crisis. rbi's policy stance going forward, the reserve bank's policy stance will continue to be to maintain comfortable rupee and forex liquidity positions. there are indications that pressures on mutual funds have eased and that nbfcs too are making the necessary adjustments to balance their assets and liabilities. despite the contraction in export demand, we will be able to manage our balance of payments. it is the reserve bank's expectation that commercial banks will take the signal from the policy rates reduction to adjust their deposit and lending rates in order to keep credit flowing to productive sectors. in particular, the special refinance windows opened by the reserve bank for the msme ( micro, small and medium enterprises ) sector, housing sector and export sector should see credit flowing to these sectors. also the spv set up for extending assistance to nbfcs should enable nbfc lending to pick up steam once again. the government's fiscal stimulus should be able to supplement these efforts from both supply and demand sides. when the turn around comes over the last five years, india clocked an unprecedented nine per cent growth, driven largely by domestic consumption and investment even as the share of net exports has been rising. this was no accident or happenstance. true, the benign global environment, easy liquidity and low interest rates helped, but at the heart of india's growth were a growing entrepreneurial spirit, rise in productivity and increasing savings. these fundamental strengths continue to be in place. nevertheless, the global crisis will dent india's growth trajectory as investments and exports slow. clearly, there is a period of painful adjustment ahead of us. however, once the global economy begins to recover, india's turn around will be sharper and swifter, backed by our strong fundamentals and the untapped growth potential. meanwhile, the challenge for the government and the rbi is to manage the adjustment with as little pain as possible. | 0 |
. at that time, a general increase in incentives for first home buyers ( for both new and existing dwellings ), and the support provided for a time by lower interest rates, led to a sharp run - up in construction in new south wales, queensland, victoria and western australia ( graph 10 ). further evidence that the supply of land is not the whole story can be found by looking across different regions within the states. if supply has been the critical constraint, we might have expected construction trends to have been very different across inner and outer parts of cities and the regional areas beyond the cities. for example, development in the outer suburbs tends to be on greenfield land, while development in the inner suburbs tends to be higher - density dwellings on brownfield land. however, for victoria at least, the pick - up in building activity in 2009 and 2010 was relatively broad based across these different areas ( graph 11 ). for new south wales, it does appear that there was a larger and more sustained pick - up in approvals in the inner and middle regions of sydney, than in outer sydney and the rest of the state. this may have reflected some limitations in access to land on sydney β s fringes, but nonetheless, there was a relatively rapid pick - up in approvals in 2009. even so, this doesn β t mean that supply - side issues have not had an important bearing on the housing sector. this point was made in research published in one of the bank β s bulletin articles last year. 5 many public reports and the bank β s own liaison with industry participants pointed to a range of supply - side impediments in the australian housing market. these included the length and complexity of the planning process, the provision and funding of infrastructure, land ownership and geographical constraints, as well as the challenges for development within those city regions that are already well developed. while these factors may impose some constraints on the cost and responsiveness of new supply, it is less clear that they have been restraining the level of new construction more so now than in the past. one way that is often used to assess the possible outlook for dwelling construction is to compare the number of dwellings that have been built over a period of time with a measure of what is termed β underlying demand β. the notion is that if we can assess the prospects for the average number of people living in each household, then we can gauge the strength of β underlying demand β by looking at what β s happening to population growth. the problem | with this sort of analysis is that the average number of people in each household changes over time in response to a range of things, including the cost of housing. over the 20th century, demographic and social factors, such as a declining birth rate and rising separation rate, were accommodated by growth in the dwelling stock outpacing that of the population. in other words, there was a downward trend in the number of people in each household ( graph 12 ). a very similar change was also evident across advanced economies. however, over the past decade or so, these trends have abated and we β ve seen the average household size stabilise. indeed, the higher level of house prices and rents ( relative to see hsieh w, d norman and d orsmond ( 2012 ), β supply - side issues in the housing sector β, rba bulletin, september, pp 11 β 19. bis central bankers β speeches incomes ) may have been somewhat of a constraint on household formation and therefore demand for new housing. this leads me to what i think is arguably a better way to judge the strength of demand versus supply, which is to look at what prices and rents have been doing. what this suggests is that demand has shown some signs of strengthening relative to supply. in particular, housing prices are no longer declining relative to incomes ( graph 13 ). also, the rental market appears to be relatively tight. vacancy rates have been quite low since 2006 in comparison to the average since the early 1990s, and ( with a small delay ) this has led to rents rising relative to incomes and remaining relatively stable at around levels seen during previous cyclical peaks ( graph 14 ). the growth in rents has also meant that conditions for investors have become more favourable, with ( gross ) rental yields increasing across the capital cities. our liaison with the housing industry confirms that demand for new housing has been more positive over recent months. at the same time, however, our contacts note that conditions still remain relatively subdued in most states. in particular, they report that prices for the construction of new dwellings have been held down in response to weak demand, with discounting still reported across the market, including for new developments. not surprisingly, developers have found a lack of buyer urgency during the earlier period of declining dwelling prices. in addition, they note instances of some earlier sales made off the plan falling through ahead of settlement, apparently due to caution by lenders regarding valuations and strict lending practices for new developments. summary let | 1 |
caleb m fundanga : a brief look at corporate governance in zambia speech by dr caleb m fundanga, governor of the bank of zambia, at the launch of corporate governance guidelines for banks and non - bank financial institutions, lusaka, 28 november 2006. * * * β¦ the chairperson of the bankers association of zambia ; β¦ the chairperson of the institute of directors ; β¦ the chief executive officers of banks and non - bank financial institutions ; β¦ deputy governors, bank of zambia ; β¦ representatives of professional bodies ; media colleagues ; β¦ distinguished invited guests ; β¦ ladies and gentlemen. i wish to welcome you all to the launch of the corporate governance guidelines for banks and nonbank financial institutions, in particular, deposit taking non - bank financial institutions. as you all may be aware, the recent debacle of corporate scandals has resulted in the resurgence of interest in good corporate governance. these scandals have not been restricted to large businesses in the us or europe, but have surfaced in emerging economies as well, with equally devastating effects. this, together with concern about our environment and globalisation, has played an important role in this resurgence of interest in how companies are managed, directed and controlled. here in zambia, the collapse of a number of banks in the mid - 1990 β s has largely been attributed to poor corporate governance. some characteristics of this included dominant key shareholders, poor transparency and inadequate disclosure. consequently, the imf / world bank financial sector assessment program ( fsap ) undertaken in 2002 revealed the need to enhance financial stability in zambia by ensuring that the financial sector was adequately guided by corporate governance practices which conformed to international best practices. ladies and gentlemen, in order to guide this process, among other things, in 2004 the government approved a comprehensive five - year financial sector development plan ( fsdp ) that positioned good corporate governance as one of the pillars for promoting financial system stability. today β s launch, therefore, is a culmination of an extensive consultative process during which the bank of zambia engaged the banks and non - bank financial institutions, and other key stakeholders in round table discussions. local auditing firms, the world bank, ifc and the imf also contributed immensely to the production of these guidelines. in addition, the development of the guidelines took into account the standards set by the basel committee on banking supervision and the unique characteristics of the zambian business environment within which institutions operate and the many valuable lessons we have learnt along the way. the above notwithstanding, these guidelines only define the | minimum standards that the bank of zambia expects banks and non - bank financial institutions to adhere to. therefore, banks and nonbank financial institutions alike are expected to strive for the highest standards possible at all times. ladies and gentlemen, it should also be stressed that these guidelines are to be treated as a living document and thus subject to review to incorporate new developments as they emerge. to this end, the bank of zambia will ensure that the committee that has been spearheading the development of these guidelines become a permanent one and meet every so often to make the necessary changes in an inclusive manner. accordingly, you are all urged to forward any contributions you wish to make on an ongoing basis. ladies and gentlemen, allow me now to welcome and thank mr mervin king for graciously agreeing to officially launch the guidelines. mr. king is internationally renowned for his work on corporate governance, and in particular for his work on the king committee of south africa which issued its first report in 1994. the king report, along with the cadbury report of the united kingdom and the sarbanes - oxley act of the united states have become key references on the subject and it is for this reason that we feel both proud and honoured to have mr. king with us today. it is now my honour and privilege to call upon mr. king to launch the corporate governance guidelines. mr. king! | 1 |
important to take a step back and explain some of the key factors that my colleagues and i at the federal reserve consider in reaching our policy decisions. the fed has what we call a β dual mandate, β which are two goals set by congress : maximum employment and price stability. with these goals in mind, our focus is understanding developments that affect labor markets, inflation, and economic growth. but we also collect and analyze enormous amounts of other information, both in the form of data and reports from members of the communities we serve, to help us assess the state of the economy and inform our decision - making. the economic outlook i β ll start off with the most common measure of the overall economy : gross domestic product, or gdp. i expect inflation - adjusted, or real, gdp to rebound sharply this year. indeed, with strong 1 / 4 bis central bankers'speeches federal fiscal support and continued progress on vaccination, gdp growth this year could be the strongest we β ve seen in decades. such a robust rebound would be very welcome after the toughest period for the economy in living memory and a winter where the pandemic has been particularly severe. the resurgence of covid - 19 over the past few months caused consumers to pull back on spending, resulting in significant job losses in some sectors β especially in leisure and hospitality. in past recessions, we have typically seen a decline in manufacturing jobs, while the service sector β establishments like hotels, bars, and restaurants β was not affected to the same extent. but the pandemic has flipped the script in that regard. indeed, this time, both the manufacturing and housing sectors have rebounded sharply since last spring, while much of the service sector remains depressed. the pandemic has had a truly devastating effect on employment. overall, as of january of this year, we are down nearly 10 million jobs from the pre - pandemic level, a greater shortfall than we saw even at the worst point of the aftermath of the great recession. locally, we β ve experienced considerable strain, given that much of new york city β s economy hinges on the leisure and hospitality industry. job losses have been dramatic : new york was hardest hit at the start of the pandemic, and almost a year later the data still show a city under stress. while national employment was 7 percent below pre - pandemic levels at the end of 2020, employment in new york city was 12 percent lower. 1 i hope that as workers return | this area is slow and with current set - ups we are not going to get far without having the main reserve currency country on board. this raises the question that i will turn to next : in the absence of global ( or regional ) reforms, what will individual soes have to do in order to reap the benefits of cross - border financial integration in safe manner? in order to answer this question, we need to understand how cross - border financial integration affects the ability of soes to preserve both monetary and financial stability. 1 first, a simple theory. if we have a world made up of one very large country and several very small countries, with full cross - border financial integration ( in the for a more expanded version of what follows, see my published work, in particular gudmundsson ( 2008 ) and gudmundsson ( 2016 ). economic sense of these terms rather than the legal one ), and assume that relative risk premia are constant, then long - term interest rates in the small countries will be pegged to long - term rates in the large one. this, of course, is an β unrealistic β theoretical simplification. but it gives us a reference point to start to think about these issues, and it indicates the direction we might be heading in as global financial integration progresses. in this type of world, the small countries could still have independent monetary policy of a sort, provided that they have a flexible exchange rate regime. they could pick their own inflation targets and set their own short - term rates that would affect economic activity in the short run and inflation in the long run. in this case, monetary policy works mostly through the exchange rate channel. if exchange rates are β well behaved β and the financial sector is sufficiently regulated and supervised, then a floating exchange rate and β keeping your own house in order β is sufficient for independent monetary policy and financial stability. the problem is, however, that exchange rates are sometimes far from being smooth reflections of underlying fundamentals. the evidence suggests that foreign exchange markets exhibit excess volatility and that exchange rates diverge from fundamentals for protracted periods. in some sense, the existence of carry trade can be construed as evidence of this, as it involves betting that interest rate differentials are not fully compensated by exchange rate movements ; i. e., that uncovered interest rate parity does not hold, except at long horizons, and then often through sharp and disorderly corrections. this, in turn | 0 |
enjoys solid growth with low inflation, a sound fiscal position and a competitive financial system. financial markets are booming. although some were anxious about the possible outcome of handover to china ten years ago, fortunately, this anxiety proved unfounded. looking ahead hong kong seems to make constant efforts toward a more prosperous future, and seems never to be tempted towards complacency. a good example would be the fostering of renminbi - related financial business through issuances of renminbi bonds in hong kong, while maintaining a currency peg to the u. s. dollar. hong kong is blessed with an enviable geographic advantage, being located in the centre of a rapidly - growing asia. hong kong is also rich in the most important production factor for any industry, namely talented human resources like all of you here at this reception. this is, i believe an indispensable strength of hong kong. how hong kong develops further as an international financial centre is of enormous interest to everyone. finally, i thank again all our guests for your friendship and co - operation. recently, everyone in the asian financial markets is talking about the " unwinding " of the so - called yen carry trades. however, there will definitely be no " unwinding " of the 50 - year - long good relationship between hong kong and the bank of japan. i am fully convinced the co - operation and mutual trust between us will accumulate further. thank you. | , borrowing from financial institutions allows a firm to invest more in r & d and capacity expansion than would be possible using only its cash reserves. housing loans and credit cards enable households to consume and invest more than the amount of cash at hand. savings in a bank account generate interest income. access to financial services such as these leads to more efficient business development and active consumption, thereby promoting overall economic growth of the country. financial inclusion would also enhance the effectiveness of monetary and fiscal policy. regarding monetary policy, as most of the interest rates of borrowings and savings by firms and individuals are based on policy rates, central banks can affect their behavior by changing policy rates. this would improve the effectiveness of monetary policy and help smooth the economic cycle in the long run. enhanced access to financial services would also increase the effectiveness of fiscal policy. for example, ensuring a means to transfer money to every individual would allow policy makers to design subsidization programs that are targeted at a specific segment of society. this would make possible a finer - tuned redistribution policy. in addition, tax collection would become more effective. in advancing financial inclusion, it is necessary to develop both " hard " and " soft " infrastructures. hard infrastructures typically include telecommunications, such as the internet and mobile phones. soft infrastructure includes for example the active use of fintech, which, in addition to improving financial literacy, would be effective in broadening the range of financial services available. in the short run, the introduction of state - of - the - art asli demirguc - kunt et al., " the global findex database 2017 : measuring financial inclusion and fintech revolution, " world bank group ( 2018 ). 2 for example, see : thorsten beck, asli demirguc - kunt, and ross levine, " finance, inequality and the poor, " journal of economic growth, vol. 12 ( 1 ), pp. 27 - 49 ( 2007 ). fintech might lead to so - called leapfrogging. this refers to the phenomenon where the convenience of services is drastically enhanced by taking advantage of new technologies even before services based on older technologies have become entrenched. for example, mobile payments spread rapidly in china in just a few years. providing payment services via mobile phone does not require conventional physical infrastructure such as branch and atm networks that were considered indispensable in providing broad access to financial services. china not only enjoys improved access to banking services but has also saved on | 0.5 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.