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##makers must avoid misplacing the focus of policies just on short - term issues. they must instead always weigh very carefully between short - term and long - term objectives toward achieving strengthened resiliency of the overall economy. only with such resiliency, will a small open economy like thailand be able to sail through the waves of global financial turbulence in the years ahead. | policy can take care of exchange rate as long as there is no conflict with inflation. and, we have no target level for the thai baht in mind. foreign exchange market is intervened when there is too much volatility in the market. the objective is to smooth the country β s adjustment during the transitional period. looking forward, the baht movement would depend largely on external developments which i have already discussed. moreover, there are also internal drivers : large surplus in current and capital accounts. the thai stock market remains one of the most popular destinations in emerging markets for foreign investors, given its relatively low p / e ratio. during the first 7 months of this year, foreign investors became net buy about 4 billion us dollar. such inflows together with foreign direct investments have also added pressure on the currency. ladies and gentlemen, i would like to turn to the third and final part of my talk today, which is thailand β s approach in coping with the risks and challenges posed by globalization. indeed, the challenges of globalization are constantly changing. to meet these challenges from without, it is critical that the thai economy build strength from within : by continuously improving the flexibility and efficiency of its firms, the resiliency of its households, and the competitiveness of its business environment. but beyond getting the fundamentals right and strengthening them, the thai economy needs a strategic policy package that builds a system that allows for constant self - correction β one that also let the economy regain its strength quickly after a severe negative shock. that system should be underpinned by a strong link to the world economy, which will encourage innovation and efficiency. specifically, i should underscore that this approach requires policy markers to focus on achieving three key objectives, namely managing volatilities especially those emanating from volatile global capital movements ; building resiliency in both real and financial sectors ; and fostering long - term productivity improvement. looking ahead, the pressing and practical challenges we face in the near term are three - fold and indeed they are also inter - related. they are β hot money β inflows and large inflows in general, pressure for rapid domestic currency appreciation, and finally, the potential loss of monetary autonomy in the sense of independent interest rate policy. being part of the fast growing asia, thailand and its neighbors have become attractive destinations for international investors β although the more powerful underlying reason may ironically be a medium - term flight from us dollar assets since 2002. with large capital inflow | 1 |
central bankers β speeches another class of threats to financial stability emerge from sudden reversals of market sentiment regarding economic policy and institutional arrangements. this is a complex issue which i will not explore in detail today, other than to note that here too, early profits all too often feed pro - cyclical behavior, undermining market discipline. this in turn facilitates the accumulation of both private and public imbalances that are painfully difficult to unwind when financing suddenly stops. when sudden reversals occur, large costs are imposed on the real economy and the financial system, costs that are not fully internalized by the market participants that may have benefited from the boom. the often significant negative externalities associated with financial market instability suggest that regulation and prudential standards should be aimed both at limiting the frequency and extent of booms and at building a more resilient financial system, so there is less damage when the busts inevitably occur. the goal here is not to use regulation to prevent or even limit innovation, whether real or financial. many innovations have generated significant benefits for the macro - economy. for example, the internet, which lay at the heart of the tech bubble, generated myriad benefits. similarly, innovations in the financial realm have enabled businesses to limit risk and specialize in their core competencies, and households to smooth consumption. this in turn has enabled the economy to be more productive. instead, a critical objective of prudential oversight and regulation should be to enhance the system so that financial transactions of all forms reflect an assessment of risk and return by both the borrower and the lender that is as accurate as possible, recognizing that we live in an inherently uncertain world. this means that our reform efforts should be aimed at strengthening the quality of information and the system of incentives governing risk - taking by both institutions and individuals. and on those occasions when regulators judge that a systematic understatement and mispricing of risk may be occurring, we need to find better and more effective ways to actively lean against those dynamics. this includes using the bully pulpit to point out why a particular boom is likely to prove unsustainable. it also means ensuring that markets are structured so that investors with differing perspectives on the value of an asset are able to actively participate. booms tend to go further when the ability to β go short β is limited or emerges only late in the game. second, regulation needs to be oriented to establishing standards that will be appropriate throughout the cycle β for both the boom period | system. β in the u. s., some of this responsibility undoubtedly falls to the financial stability oversight council, bis central bankers β speeches which was created by the dodd - frank act. but this is a relatively new institutional arrangement and how well it will be able to perform its mission in practice remains to be determined. similarly, on an international basis, the financial stability board has undertaken an initiative to evaluate risks within the shadow banking system, but this effort is also still in a fledging stage. finally, turning to the last issue about how to deal with institutions that run into difficulty, there has been progress. in the united states, the dodd - frank act ( dfa ) gave the fdic the authority to resolve certain large systemically important financial firms, on the recommendation of the federal reserve and the fdic, and after the treasury secretary makes certain determinations in consultation with the president. among other things, dfa enables the fdic to establish a bridge institution in which critical activities could be moved so that the failure of a major institution will not unduly disrupt the provision of key financial services. dfa also authorizes the federal reserve to require that such institutions develop recovery and resolution plans β plans that must be acceptable to the federal reserve and the fdic. the need to produce such plans will likely create some incentive for rationalizing complex corporate structures and, presumably, make resolution easier to implement. but a major challenge remains in implementing resolution effectively on a cross - border basis. the legal rules and regulatory regimes differ across legal jurisdictions. so, when a multinational banking organization becomes insolvent, each subsidiary and affiliate must be resolved in multiple bankruptcy proceedings, with the prospect of inconsistent treatment and larger than necessary losses in aggregate. although the financial stability board has taken up this issue, the legal impediments to progress here are significant despite the best efforts and intentions of regulators. the difficulty in implementing an efficient cross - border resolution is one of the reasons why the largest globally active firms are being asked to hold additional capital. in conclusion, let me emphasize the importance of the mission β to reform and better regulate the global financial system so it can perform its key financial intermediation function of funneling savings from investors to borrowers even under adverse circumstances. clearly, the financial system we had in 2008 was woefully inadequate relative to this mission. both the official sector and the private sector have responsibilities with respect to the work that remains ahead. it falls on us as regulators to | 1 |
collective work carried out by all departments, particularly the economic analysis and research department, and endorsed by the bank β s decision - making bodies. in the years of the crisis the bank of greece saw a need to enhance its public discourse and increase the frequency of interventions, with a view to : β warn about major risks which although clearly looming, had not been realized by the general public and were ignored by the governments. β raise awareness of the complexity of the situation and the need to change the course of the economy, thus contributing to the formulation of policies for a more effective management of the crisis. the bank of greece β s public discourse has been enriched with new elements since the bank has sought to strengthen its role as an advisor to society, communicating directly with the public, which in that period was inundated with conflicting and inaccurate information and signals that often resulted in confusion and higher uncertainty. through its statements and its participation in the public debate, the bank of greece has aimed to present the true facts in a comprehensible manner, dispel misconceptions and misunderstandings and provide all citizens with reliable and timely information on the available options and implications thereof. it should be noted that most central banks undertook similar changes regarding their communication policies, which β in response to the conditions of the crisis β have shifted away from the traditional communication model whereby their discourse was addressed to a close circle of experts and was often cryptic. to sum up, i am convinced that greece has an abundant supply of public knowledge that can benefit our country. non - domestic knowledge should also be added, as it is bis central bankers β speeches communicated to the public by numerous reports, studies, analyses, proposals and forecasts for greece published by international organisations, think - tanks and research bodies. thus, one can safely assume that greek governments have at their disposal a bulk of knowledge that can be evaluated and used β if it is considered to be helpful β in the formulation of economic policies. the demand side let me now discuss the demand side, i. e. governments β willingness to recognize the usefulness of outside knowledge, particularly public knowledge as i have described it. experience shows that governments are reluctant in general, with perhaps one exception, the simitis government, who i am happy to see here tonight, to exploit public knowledge, even if the proposals and recommendations are potentially relevant and useful. a revealing example is the prolegomena of the present crisis : many years before 2008, many independent observers, among them | - sustainable - finance - report _ en. pdf 8 see β battle for sustainability will be won or lost in cities, deputy secretary - general tells high - level general assembly meeting on new urban www. un. org / press / en / 2017 / dsgsm1080. doc. htm agenda, un - habitat β, available at : 9 interview of yannis stournaras, governor of the bank of greece, with christos chomenidis for the newspaper ta nea, 17 / 03 / 2018, available at : www. bankofgreece. gr / pages / el / bank / news / speeches / dispitem. aspx? item _ id = 513 & list _ id = b2e9402e - db05 β 4166 β 9f09 - e1b26a1c6f1b ( in greek ) 10 world economic forum, the global risks report 2018, 13th edition, available at : wef. ch / risks2018 11 these risks are : ( 1 ) extreme weather events ; ( 2 ) major natural disasters ; and ( 3 ) failure to mitigate and adapt to climate change ( 3 ). 12 gdp contraction relative to base year gdp at constant 2008 prices. 13 ccisc ( 2011 ), the environmental, economic and social impacts of climate change in greece, bank of greece, pp. 453 β 457, available at : www. bankofgreece. gr / bogekdoseis / climatechange _ fullreport _ bm. pdf 14 Οhe vulnerability analysis is included in ccisc ( 2015 ), national climate change adaptation strategy ( nccas ), pp. 7 - 13, available at : www. bankofgreece. gr / bogdocumenten / national _ adaptation _ strategy _ excerpts. pdf 4 / 4 bis central bankers'speeches | 0.5 |
with market innovations also come risks. central banks should therefore promote the global adoption of a revised classification of economic activities that takes greater account of financial technology service providers, supporting the ifc's recommendation to revise isic at the un level. when new entrants fall outside the perimeter of regulation, it can be difficult to assess risks, including threats to resilience and financial stability. the advances in regulation can be leveraged for statistical purposes and should allow us to move forward in measuring the services offered by these non - bank or unregulated financial intermediaries. as regulation moves into focus into these areas we should develop, for instance, financial inclusion indicators based on the digital financial services offered by fintech companies. cryptoassets and digital currencies are another area where regulation can be leveraged for statistical purposes. international collaboration, data sharing, and the role of the ifc i would like to end my remarks with a call for even closer cooperation. to meet the future challenges of central bank statistics, we will need to continue fostering international cooperation, towards the harmonization of standards and the exchange of learning experiences. articulating fruitful discussions and engaging the membership of the central bank community will remain essential to achieve these goals. improved collaboration between the different bodies ( oecd ; imf ; eurostat, cemla ) is an important ingredient as well. member experiences in overcoming legal constraints to enable data exchange within and between countries will be particularly useful. official statistics provide the required information and data for credible policy making by central banks and other public institutions. moreover, official statistics are also the fundamental basis for trust by the public on the state of economic reality. fostering this public trust in an age of everincreasing complexity and diversity of data sources, and why not, fake news, remains critical. the basic duties of agreed, standardized methods and criteria, comparable across time and space, is the backbone of our profession. it will be an honor and a challenge to contribute to achieving these ambitions during my tenure as ifc chairman. | remarks on the post - pandemic landscape for central bank statistics 11th ifc biennial conference pablo garcia silva, deputy governor, central bank of chile august 25th 2022 i want to thank the organizers for the opportunity to participate in this distinguished panel, providing some remarks on the challenges we face as central banks and as providers of statistics, particularly in the environment we live today, as the pandemic recedes. central banks are keenly aware of the need to provide timely, accurate, and in - depth understandings of the changing economy. this not only to inform correctly policy making, but also to satisfy the shifting demands of society regarding the environment we live in. this inevitably implies trade - offs. operative and budgetary constraints mean that a careful balance of timeliness, accuracy, and depth needs to be achieved. the ever - expanding complexity of economic relationships, and the speed at which policies have had to adapt to very large shocks, imply in my view that compared to a not so distant past timeliness is today at a premium. the times of change we live in require us to react promptly. this, however, carries the cost that both the accuracy and the depth of data will be inversely related to its timeliness. this brings about the implication that both policy making needs to consider the implicit uncertainty of the environment, and also that statistics providers need to be candid about those uncertainties when communicating with the public. central banks have found that venturing into the digital transformation with an increasing use of big data, a process that was accelerated because of the sanitary crisis, helps ease somewhat these trade - offs. many central banks have broadened the analysis using less traditional sources derived from the so - called " open " data available on the internet. they started to apply big data techniques, such as web scraping, machine learning or text analysis, for collecting and transforming data on prices, job vacancies or retail sales, among others. as a result, it became possible to release new indicators with higher frequency and timeliness. this has contributed to a better understanding of economic phenomena, providing up to date empirical support to the implementation of monetary policy and financial stability mandates. new sources of information in our case, at the central bank of chile we have embarked in several efforts to expand and improve the data available. for the first time, starting in june, we released regional gross domestic product and household consumption on a quarterly basis, with a lag of a few months. this advance enhances data robust | 1 |
system. measures are also needed to tackle negative systemic developments resulting from the interaction of individual decisions even when well - founded β measures which aim to mitigate negative systemic effects on the stability of financial institutions. such measures would be incumbent upon the financial literacy and skills of the economic agents and, in particular, their 1 / 3 bis central bankers'speeches ability to interpret the signs that result from the intervention of the prudential authorities. as a rule, a reduced capacity to interpret this intervention creates a greater risk of a bubble developing in the market and as a consequence determines a need for more interventionist prudential measures on the credit granting side or on the savings application side, to guarantee financial stability. financial literacy and education are therefore key for financial stability and for the nature of conduct and macroprudential supervision policies. in short, to safeguard financial stability, it is not enough to monitor individual choices or to regulate the conduct of banking institutions with their customers. it is also necessary to monitor the system as a whole, to mitigate the negative externalities of individual actions, as well as the supervision of each financial institution to ensure its financial strength, in particular its capacity to absorb the risks resulting from the application of the resources entrusted to it. the relevance of financial literacy and education has increased even more with the globalisation of markets and growing sophistication of products. widespread access to banking products and services that are ever more diverse and complex and the emergence of new sales channels have all brought new risk sources. we have therefore seen, at international level, the progressive strengthening of the framework of rights granted to banking customers, a broadening of areas of intervention for conduct supervision and more intrusive action by the supervisors. the objective is to encourage the adaptation of products and services to the characteristics and needs of customers and prevent conflicts between the interests of customers and institutions. financial information and education for banking customers has also come to be seen as a structural dimension of banking conduct supervision, complementary to regulation and oversight. more informed customers and with a greater ability to understand the characteristics of banking products and services are generally more attentive and demanding. they are also better prepared to choose banking products and services more suited to their financial situation, needs and risk profile, thus contributing to the efficient operation of the market and to safeguard financial stability. banco de portugal β s conduct supervision strategy banco de portugal began exercising its conduct supervision mandate at the outbreak of the international financial crisis. we have adopted a strategy based on three | fundamental vectors of action since the beginning, which are mirrored in the themes of this conference β s panels : ( i ) firstly, banco de portugal β s strategy is based on the development of a regulatory framework that covers and regulates the conditions to market the products and services of retail banks ; ( ii ) secondly, banco de portugal is responsible for compliance with the regulatory framework applicable to the relationships between credit institutions and their customers through effective oversight and sanctions procedures ; ( iii ) and finally, but no less important, we have, since the beginning, worked hard to inform and educate banking customers. examples of this are the bank customer website, launched in 2008 and completely renewed in 2017, and the national plan for financial education, promoted with the other financial sector supervisors and which is supported by a large network of partners. 2 / 3 bis central bankers'speeches digital challenges i will end my address, as i couldn β t refrain from doing, with a reference to the challenges the conduct supervisor faces due to the progressive digitalisation of the channels used in the sale of financial products and services. the digital environment encourages the emergence of innovative products and services and new suppliers, with business models that are sometimes disruptive in comparison to traditional banking. furthermore, the dematerialisation associated with using digital channels facilitates the sale of products and the provision of cross - border banking services. regulators and conduct supervisors must therefore take on an active role in the digital ecosystem, catalysing the benefits and safeguarding against risks that may emerge. regulation and supervision should not impede innovation but they should ensure that the bank customer is protected, regardless of the channel used to carry out banking transactions. the conduct supervisor must therefore : closely accompany the technological innovation process in the retail banking markets ; reflect on the suitability of the existing regulatory framework ; develop new oversight tools and surveillance strategies to ensure that the regulatory framework is suitably complied with, that conditions for all operators are equitable and that banking customers are protected. promoting the financial literacy of bank customers is also of particular importance. that is why the development of digital financial information and education initiatives is one of our top priorities. so i invite you to get to know the campaign recently launched by banco de portugal on social networks and on the bank customer website to promote the security of young people who use digital channels. thank you all and i hope that this conference is beneficial to all those present. 3 / 3 bis central bankers'speeches | 1 |
asset prices are studied in the regular monetary policy analysis, as they affect, and are affected by, fluctuations in inflation and economic activity. higher asset prices lead, for instance, to positive wealth effects, which in turn affect households β choice between consumption and saving, and thereby total demand in the economy and inflation. on top of this, it is complicated to capture the risks in the usual forecast work as a result of large fluctuations in asset prices. for instance, it is difficult to quantify the risks linked to an unusually rapid increase in house prices and indebtedness over a long period of time. these risks may actually be beyond the normal forecast horizon, but nevertheless be so serious, if they were realised, that there is justification for taking them into account in some way. in recent years, house prices and household borrowing have increased rapidly, partly as a result of low interest rates. we have stated that we feel some concern that this development may go too far, with a risk of severe adjustments in the future. one risk is that a sharp brake in house prices could lead to households perceiving their debt burden to be too high, and that they would therefore quickly increase their saving. this could lead to a severe decline in demand in the economy and in inflation. in the considerations behind our decision on the interest rate at the beginning of the year, we considered these risks to be one reason for not postponing an increase by a few months - which i otherwise believe would have been fully possible given the forecasts we otherwise make and the precision of these forecasts. i would not like to claim that this is necessarily always the optimum means of managing this type of risk in monetary policy considerations. the relationship between credit volume and asset prices on the one hand and monetary policy and the real economy on the other hand has not yet been sufficiently mapped to be able to draw any clear policy conclusions. in addition, our experience of deregulated financial markets is still limited to a small number of economic cycles. at the same time, we cannot ignore the risks to future inflation and economic activity with which we believe that developments in the housing market are connected. as i said, the world will not come to an end in two years β time. the fact that we do not have any definite answers regarding the effects of a rapid credit boom in my opinion should not prevent us from acting in a manner that will at least not aggravate the risks. summary let me conclude by summarising my | as monetary policy is a blunt instrument and cannot affect, for instance, how growth and employment develop in the long term. in other words, the question has never been whether monetary policy should consider the real economy, but rather how this can best be done without neglecting the price stability objective. in practice, monetary policy takes the real economy into account in that we do not aim to bring inflation back on target as quickly as possible in every situation. when there is a deviation from target β which happens most of the time β our ambition is normally to return inflation to target within a time period of two years. one reason why we look ahead in this way is that monetary policy β s effects are exerted with a time lag. but the two - year horizon is also motivated by considerations to developments in the real economy. this creates some scope for trade offs in the inflation - targeting policy. let me explain. if we were only concerned with inflation, we would always want to bring inflation back on target as quickly as possible. on many occasions it would be possible to attain the target sooner than within two years. but we would then need to change the interest rate in larger stages and more often. this type of policy would risk leading to unwanted fluctuations in the real economy. this applies in particular to the situations where inflation has deviated from target as a result of supply shocks. these could be, for instance, sudden increases in companies β production costs due to soaring commodity prices and / or energy prices. the result could then be that inflation would rise above the target, while economic activity would be weak. the reverse can also occur - a fall in production costs could lead to inflation being lower than the target, while capacity utilisation was higher than is sustainable in the long term. if monetary policy were to aim at bringing inflation back on target as quickly as possible in these situations, it would further reinforce the fluctuations in the real economy. when economic developments are instead mainly driven by changes in demand, the conflict between the price stability target and the ambition to subdue fluctuations in the economy is not as clear. if, for instance, demand falls, the result will normally be that inflationary pressures also decline. an expansionary monetary policy can in this situation contribute to stabilising both inflation and activity in the real economy. there may then be justification for aiming to attain the inflation target within a shorter period than two years. of course, in practice it is not always easy to distinguish what shocks the economy | 1 |
playing its role by implementing structural reforms and contributing to a rebalancing of growth. β for the first time in its existence the euro area outpaced the united states in terms of economic growth. the euro area β s seasonally adjusted jobless rate came to 6. 9 % in 2006, thus hitting its lowest level in more than a decade. this drop is not only the result of economic activity. the labor market and welfare reforms of the past few years have also reduced structural unemployment. since the introduction of the euro in 1999, some 15 million new jobs have been created in the euro area. this is not to depict an unduly positive picture. the inflation rate for october came to 2. 6 % after being below the 2 % mark for a year. the outlook for price stability over the medium term is subject to upside risks as increased oil, commodity and food prices as well as the favorable labor market situation are likely to make higher wage settlements possible. nevertheless, there are signs that the competitive position of the euro area has improved. since 2002, productivity growth has contributed considerably to falling unit labor costs in the euro area. also, the shock resilience of the euro area seems to have improved owing to the β stability architecture β of the eurosystem. this architecture rests on three pillars : a stabilityoriented monetary policy, sustainable public finances, and growth - and competition - oriented structural policies. as for the third pillar, the lisbon strategy adopted in 2000 with the aim of creating a modern and competitive economy seems to be finally bearing fruits. however, the observed persistent divergences in unit labor cost growth and inflation in a number of euro area countries clearly point to increasing risks of further competitive losses and potentially costly real economic adjustment. since the single monetary policy cannot address inflation divergences in individual countries, it is evident that structural reforms, wage - setting processes and budgetary policies must contribute to reverse competitiveness losses in individual euro area countries. if the lessons from success stories both within and outside the euro area are applied elsewhere, the euro area as a whole will emerge as a stronger and more dynamic economy. on january 1, 2008, cyprus and malta are going to adopt the euro. let me offer my warm congratulations to governor orphanides and governor bonello for reaching this milestone. you can be proud of your countries β successful convergence process. looking ahead, the adoption of the euro will allow you to reap all the benefits of the common currency and enhance your integration | of the rba and the payments system board. 1 at the broadest level, this mandate is to help shape the payments system so that it works in the best interests of australian households and businesses. our north star is promoting the public interest. we strive to achieve this through a combination of suasion, regulation and working with industry participants to help overcome the coordination issues that can bedevil payment systems. in seeking to promote efficiency, competition and safety in the payments system, we also recognise the important role of innovation in serving the public interest. australia β s productivity growth challenges make this all the more pertinent. one can think of the new payments platform ( npp ) as a notable example of this focus ( graph 2 ). more recently, this year the rba materially raised the activity threshold beyond which securities settlement facilities must comply with the financial stability standards. it was assessed that the higher threshold struck a more appropriate balance between the public interest in the management of financial stability risks, and the public interest in avoiding excessive regulatory burden ( particularly on small enterprises ). and as i will discuss later, we also recently launched a new project with industry to examine how central bank digital currency, stablecoins and tokenised bank deposits could, along with new infrastructure arrangements, support innovation and resilience in wholesale tokenised asset markets. r e s e r v e b a n k o f au s t r a l i a graph 2 where innovation promises to not only enhance efficiency but also resilience and safety in our financial system, all the better. this recognises that we are entering a new era for operational risk β a result of rising geopolitical tension and other sources of potential disruption that include third - party vendors. for these reasons, strengthening resilience in our payment system and our financial market infrastructure is a key area of focus for the rba in its work with other member agencies on the council of financial regulators. 2 this aside, the rba is also working with the government to make sure that australia β s regulatory architecture is fit for purpose in the 21st century. this is a pressing issue given the foundational legislation setting out the rba β s powers was drafted in another era β one prior to the emergence of the digital economy that will be essential to australia β s future prosperity. if there is one message to takeaway from my remarks today, it is this β while we should recognise that australia has a world class payments system today, it would | 0 |
global financial stability. let me conclude my remarks. while the inherent strengths of islamic finance have contributed to its viability and resilience, going forward into the future, the foundations for its sustainability as a competitive form of financial intermediation will continue to be strengthened. concerted efforts are underway focusing on the further development of the islamic financial markets, the financial infrastructure, the investment in research and development to support innovation, and enhancing further the legal, regulatory and supervisory framework. tapping on the advances in technology and the development of human capital are also an important part of the development of islamic finance. finally, with greater liberalisation, effective infrastructure is also being put in place for enhancing interlinkages across jurisdictions. an important part of these developments will be for a more inclusive arrangement that would allow for greater interface with the current reform efforts being undertaken in the international financial system. our vigorous pursuit and commitment to strengthening the resilience of islamic financial industry would enhance the potential to contribute towards global financial stability and in turn enhance the prospects for global growth. thank you. | step towards realising the true value propositions of islamic finance. the future growth of islamic finance, in my view, is underpinned by three key areas. this could also lead us to defining the future of islamic finance as the β new normal β that can bring greater sustainable and equitable economic development. first, is to have a more cohesive efforts by industry players across all sectors in islamic finance to realise its virtues that uphold social justice ; equality ; economic prosperity ; and inclusivity. indeed, these are challenging and daunting expectations. however, it is only through collaboration, that the islamic finance industry could push its growth trajectory, into the next level of maturity. working in silos should be replaced by promoting a culture of collaboration. industry players should not only play a proactive role to enhance collaboration within the industry, it should also be extended beyond sectoral boundaries. in the area of product development for example, collaboration within the banking group can be explored to offer a more comprehensive range of products and gain greater scale such as the offering of microfinancing and microtakaful as a composite product. moving forward, collaboration beyond traditional sectors ; and into competitive industries, such as retail, communication and oil and gas should be advanced as it opens up and extends our outreach to form new alliances. joining forces with other industries will allow us to embark on a faster learning curve, while equipping ourselves with new skill sets. this will enable the intended business objectives and outcomes to be met within a short period of time. a recent example of such collaboration between a few domestic islamic banks is the establishment of the investment account platform. the test of the collaboration however, lies in its strength and sustainability in pursuing the intended outcomes. at the regional level, there is also potential for industry players to collaborate through the islamic infrastructure investment platform or ( i3p ) that is now still at the proposal stage. through this regional dialogue platform, collaboration may be fostered between financial institutions, regulators and ministries from apec economies with multilateral institutions and academic experts to explore measures that can expand cross - border investments by islamic financial institutions. in particular, the potential for islamic pension funds and takaful to finance infrastructure projects in apec economies can be explored. in realising the virtues of islamic finance, it also warrants islamic banks to progressively strengthen its intermediary functions. i would like to encourage islamic banks to take on a more prominent and proactive role as investment intermediaries in addition to credit | 0.5 |
emmanuel tumusiime - mutebile : improving financial literacy in uganda remarks by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the annual national secondary schools β performing arts festival for 2014 launch with a financial literacy theme β simplify money, magnify life : manage your money wisely for a better future β, kampala, 1 july 2014. * * * the state minister for primary education ; charge d β affaires, embassy of the federal republic of germany in uganda ; chairperson, uganda bankers β association ; senior management and staff of the bank of uganda present ; distinguished guests ; ladies and gentlemen. on behalf of the board of directors, management and staff of the bank of uganda, i would like to thank everyone who has come here today for this innovative 2014 annual national secondary schools β performing arts festival launch. the focus of this event is financial literacy which refers to the individual β s ability to make informed judgements and effective decisions about the use and management of their money. financial literacy is part of the broader concept of financial inclusion, which entails expanding access to financial services. we want the benefits of financial services spread more widely throughout the population to support broad based economic growth, reduce inequality and poverty. through the activities of the financial sector reform programme ( fsrp ), much has been achieved to strengthen the supply side of the financial market. indicators of financial depth point to the great strides that have been made in as far as financial sector deepening is concerned. for example, domestic credit to the private sector as a proportion of gdp increased to 10. 2 percent in 2013 / 14 from 6. 4 percent in 2012 / 13. however, with the exception of the remarkable growth of mobile money services, access to formal financial services remains relatively low in uganda ; with about 46 percent of the population having no access to bank of uganda supervised financial institutions. financial exclusion is partly the result of the high costs of serving low income customers, especially in rural areas, and partly because demand from potentially bankable customers is also low. consumer education can help to attract more economically active people into the formal banking system. the use of an infotainment programme like a music, dance and drama festival is ingenious as it delivers the message subliminally which allows for a deeper internalization by the recipient. the theme β simply money, magnify life : manage your money wisely for a better future β is a well thought out theme | as many people live a life worrying about money. financial literacy skills such as managing personal finances are essential life skills in the modern world. in this regard, i would like to thank all the organizers of this festival. in a special way, i thank the ministry of education and sports who agreed that this year β s annual festival should focus on financial literacy. i also would like extend our gratitude to the commercial banks, the german society for international cooperation ( giz ) and other stakeholders for the efforts invested in this project. the financial literacy strategy launched in august 2013 recommended the incorporation of financial literacy into the secondary school curriculum as part of the overall reform of the curriculum. curriculum reform is currently underway at the national curriculum development centre and this process involves consultations with stakeholders such as giz and bis central bankers β speeches commercial banks. one of the teaching tools that has been developed in the financial literacy strategy β s short term life span of eleven months is the β simplify money magnify life β website. the website is a teaching aid targeted at financial services and products consumers as well as suppliers by providing factual data that can be a basis of financial decision making. i thank you all and wish you a pleasant 2014 annual national secondary schools β performing arts festival. bis central bankers β speeches | 1 |
exposed by the crisis. in 2007, real time estimates from a range of international institutions β the european commission, the imf, the oecd β envisaged the euro area output gap at that time to be in the range of minus 0. 6 % to minus β 0. 2 %. according to the most recent estimates, however, we now think that the euro area output gap in 2007 was in the range of plus 2. 6 % to 3. 3 %. this shows how wrong real - time estimates can be. not only was the size of the output gap significantly mis - measured β with real - time estimates subsequently revised up by some 3 β 4 percentage points β but, more importantly, even the sign of the gap was wrong. this example is not just an aberration : large errors are inherent in the concept of the output gap. and worse still, at the critical moments when policymakers need to understand what β s see potential output from a euro area perspective ( ecb occasional paper series no 156, november 2014 ). bis central bankers β speeches happening in the economy β in the build - up to and aftermath of crises β measures of output gap are often at their least dependable. 2 so that poor track record in the run up to the crisis is one reason why i β m sceptical of finetuning. but there β s also a second one : such difficulties are only likely to increase given current trends in the economy and society β and not just in estimating potential output, but in measuring actual output too. 3 we β re living through an era where the nature of production and consumption is changing rapidly. and that has profound implications for our ability to understand the economy β or, at least, our ability to adequately measure what is actually being produced and how efficiently this is achieved. consider, for example, the difficulties that the digital economy creates for measuring labour input. as highlighted in a recent statistical study, the growth of the β sharing economy β is creating new opportunities for self - employment : people who work on a shift pattern in a retail store might spend their off - days driving an uber taxi. this kind of β micro β activity might be less simple to measure than the services of traditional taxi firms, as it may be less likely to show up in earnings data. 4 measuring investment in a digital economy is equally tricky, as much of it concerns intangible capital. we have now started classifying r & d as investment, which | , maarten dossche, marien ferdinandusse, federic holm - hadulla, john hutchinson, danielle kedan, nick ligthart, arthur saint - guilhem and roberto de santis for their contributions to this speech. [ 2 ] see also lagarde, c. ( 2020 ), β monetary policy in a pandemic emergency β, keynote speech at the ecb forum on central banking, 11 november ; lane, p. r. ( 2020 ), β understanding the pandemic emergency purchase programme β, speech at the princeton bcf covid - 19 webinar series, 22 june ; lane, p. r. ( 2020 ), β the pandemic emergency : the three challenges for the ecb β, speech at the jackson hole economic policy symposium, federal reserve bank of kansas city, 27 august ; lane, p. r. ( 2020 ), β the ecb β s monetary policy in the pandemic : meeting the challenge β, speech at the 62nd nabe annual meeting, 6 october. [ 3 ] for a full list of ecb measures in response to the pandemic, see chart 4 in lane, p. r. ( 2020 ), β the ecb β s monetary policy in the pandemic : meeting the challenge β, speech at the 62nd nabe annual meeting, 6 october [ 4 ] see also de guindos, l. and schnabel, i. ( 2020 ), β improving funding conditions for the real economy during the covid - 19 crisis : the ecb β s collateral easing measures β, blog post, 22 april. [ 5 ] see also lane, p. r. ( 2020 ), β the market stabilisation role of the pandemic emergency purchase programme β, ecb blog post, 22 june. [ 6 ] to arrive at these estimates, a suite of models is deployed. this approach reflects the uncertainty about the most appropriate model representation of the monetary transmission, which is particularly acute when the monetary impulse is imparted through unconventional tools such as asset purchase programmes. adopting such a broad - based modelling approach increases the robustness of the estimates. [ 7 ] see lane, p. r. ( 2020 ), β the ecb β s monetary policy response to the pandemic : liquidity, stabilisation and supporting the recovery β, speech at the financial center breakfast webinar organised by frankfurt main finance | 0.5 |
solve the too - big - to - fail problem have come thick and fast. at root, each has aimed to strengthen the structure of the world β s biggest banks. that is the good news. claims that they have solved the too - big - to - fail problem appear to me, however, premature, probably over - optimistic. worse, they risk sending a false sense of crisis comfort. that is the bad news. to see why such a cautious conclusion is warranted, we begin by tracking the structural evolution of the financial system over the past few decades. we then consider the three most prominent policy initiatives aimed at tackling too - big - to - fail β systemic surcharges, resolution regimes and structural reform. in the final section we consider what supplementary policy options might be necessary to ensure banking is right - sized. haldane ( 1928 ). haldane is, regrettably, no relative. bis central bankers β speeches 2. evolution of the financial system the past fifty years have seen seismic shifts in the structure, size and composition of the global financial system. these changes gave birth to the too - big - to - fail problem. chart 1 plots the ratio of banking sector assets - to - gdp, and its cross - country dispersion, for a set of 14 advanced countries over the past 140 years. 2 for the better part of a century, between 1870 and 1970, financial deepening in these countries followed a modestly upward trend. over this period, the average bank assets - togdp ratio rose from 16 % to over 70 %, or less than 6 percentage points per decade. since 1970, this trend has changed trajectory. the ratio of bank assets - to - gdp has more than doubled over the past 40 years, rising from around 70 % to over 200 %, or over 30 percentage points per decade. in other words, since 1970 financial deepening has occurred five times faster than in the preceding century. for some individual countries, the rise has been more dramatic still β in the uk, the ratio has risen five - fold. in cross - country studies, financial deepening of this type has generally been found to have a positive effect on medium - term growth ( beck and levine ( 2004 ) ). taken literally, this would suggest that the rise in banking scale over recent decades has provided a significant tailwind to medium - term growth in advanced countries. so it seemed in the pre - crisis period. but that conventional wisdom has recently | that the city is more than banking and that banking is much more than the trading of complex securities. so all of us here tonight would like to pay tribute to your work since you became lord mayor, to support your efforts to promote financial literacy, and to thank both the lady mayoress and yourself for the splendid hospitality which you have extended to us all this evening. so i invite you all to rise and join me in the traditional toast of good health and prosperity to " the lord mayor and the lady mayoress ", ian and lin luder. | 0.5 |
speech monetary policy, demand and supply philip lowe [ * ] governor address at the national press club sydney β 5 april 2023 thank you for the invitation to address the national press club once again. it is a pleasure to be here. i would like to begin by explaining yesterday β s monetary policy decision. i will also discuss the importance of returning inflation to target and the roles that both aggregate demand management and expansion of the supply side of the economy can play in maintaining low inflation. yesterday β s monetary policy decision at yesterday β s meeting, the reserve bank board held the cash rate unchanged at 3. 6 per cent. this is after interest rates were increased at each of the previous 10 meetings ( graph 1 ). the decision to hold interest rates steady this month was taken to give the board more time to assess the economic outlook and the impact of the increases in interest rates so far. graph 1 australian cash rate target % % source : rba since may last year, interest rates have been increased by 3Β½ percentage points. this is a large increase over a short period and it has been difficult for many people. the first increases were necessary to withdraw the support provided during the pandemic. and then the more recent increases have been required to move monetary policy into restrictive territory to combat the highest rate of inflation experienced in australia in more than 30 years ( graph 2 ). to be clear, the alternative to the recent interest rate increases would have been more persistent inflation and, ultimately, even higher interest rates and more unemployment. graph 2 consumer price inflation * year - ended % % - 5 - 5 * excludes interest charges prior to the september quarter of 1998 ; adjusted for the tax changes of 1999 β 2000. sources : abs ; rba the decision to hold rates steady this month does not imply that interest rate increases are over. indeed, the board expects that some further tightening of monetary policy may well be needed to return inflation to target within a reasonable timeframe. it decided, though, that it was prudent to hold rates steady this month to allow more time to assess the impact of the increases in interest rates to date and the economic outlook. the board is conscious that monetary policy operates with a lag and that the full effect of the increases to date is yet to be felt. it is also conscious that there are significant economic uncertainties at the moment. given these lags and uncertainties, the board judged that, with monetary policy now in restrictive territory, it was time to | and wisely to aptly respond to the crisis. on the monetary front, manageable inflation allowed the bsp to cut the overnight borrowing rate by 200 basis points from 4. 0 percent to a record low of 2. 0 percent. the bsp also cut the reserve requirement further to 12 percent from 14 percent, thus freeing up more funds for lending to businesses and households. on top of these conventional monetary actions, the bsp implemented unprecedented measures to squarely respond to the crisis. 2 / 7 bis central bankers'speeches we granted provisional advances worth php540 billion ( us $ 11. 2 billion ) to the national government to augment its resources for covid response. the bsp β s charter allows us to extend lifeline support to the government in times of crisis, with proper safeguards. this facility, which allows short - term financing, does not serve as a long - term source of funds for the government because they are temporary, time - bound, and capped. the bsp has also purchased government securities in the secondary market to lift market confidence. however, this activity has been scaled down, as the economy recovers. in sum, the bsp has so far injected php2. 2 trillion ( us $ 45 billion ) into the financial system, equivalent to about 12 percent of gdp ( as of june 10, 2021 ). domestic liquidity has remained ample through the liquidity - easing measures of the bsp. preliminary data show that domestic liquidity expanded by 4. 7 percent year - on - year to about β±14. 3 trillion in may 2021. bank lending growth, however, remains tepid. preliminary data show that outstanding loans of universal and commercial banks fell by 4. 0 percent in may following a 5. 0 - percent decline in april. the bsp also implemented various time - bound regulatory relief measures so banks and their customers can manage the impact of the crisis on their balance sheets and finances, and so there is more room for lending. among these are grace periods for loan payments, capping of interest rates on credit card usage, staggered booking of loan losses, counting of loans to micro, small, and medium enterprises ( msmes ) as compliance to the reserve requirement, increase in the single borrower β s limit, and higher limit on real - estate loans. meantime, on top of the time - bound regulations to help manage the impact of the pandemic, the bsp also continues the task of enhancing the regulatory environment for | 0 |
line with questions discussed here in the committee on finance. this emphasises the importance of using debate and dialogue to reach new solutions. we essentially all want the same thing β to create in the best way possible the right conditions for good and sustainable economic growth. other changes the committee on finance itself has also initiated several changes that contribute to good discussions on monetary policy ( slide 4 ). one change i am thinking of is the fact that the hearing with the governor of the riksbank now takes place a couple of weeks after the monetary policy report has been published and that experts can be called in to assist the committee, if necessary. of course, it means i have to answer more difficult questions the more time you have had to prepare yourselves. but this is how it should be and something positive for all parties. i would also like to mention another new element β a change of name which was largely initiated by the committee on finance. i am referring to the measure of underlying inflation calculated as cpi adjusted for households β mortgage interest expenditure. it also excludes the direct effects of changes in indirect taxes and subsidies. this measure was previously called und1x. this name referred to the fact that it was a measure of underlying inflation, but probably appeared a little too cryptic. i remember that i may have let slip that i thought it sounded like the name of a rocket fuel during my first hearing. the new and hopefully slightly less difficult name since a week ago is cpix, where the x indicates that something has been excluded from the cpi. this takes me onto today β s second theme, namely inflation prospects, our most recent interest rate decision and our view of what monetary policy will be appropriate in the future. the economic situation and future prospects it can hardly have escaped the attention of anyone here today that we now base our forecasts on our own assessment of what future movements in the repo rate we believe will provide a well - balanced monetary policy. so before i take up the rest of the economic analysis, i shall first describe the interest rate assumption. our analysis is based partly on the increase in the repo rate of 0. 25 percentage points to 4 per cent which we decided on just over two weeks ago, and partly on the fact that the interest rate will need to be raised slightly further in the future β to around 4. 25 per cent during the first half of 2008. so how did we reach this assessment? a strong swedish economy with increased cost and inflationary pressures β¦ if we begin | widespread trading relationships. as a member of the european union, moreover, we have to observe many of the established rules and guidelines ; we also participate in the european discussion on the formation of economic policy. against this background, my talk today concerns economic policy in europe and the new conditions that accompany the euro. the single monetary policy basic features the european central bank ( ecb ) has been responsible since the beginning of this year for the single monetary policy in the euro area, with the primary objective of maintaining price stability. the general formulation of this objective has been defined more precisely by the ecb as being a year - onyear increase in the harmonised index of consumer prices ( hicp ) for the euro area of below 2 per cent. in that this definition refers to the rate of increase, it means that deflation is excluded in practice and the annual rate of change in the hicp should accordingly be between 0 and 2 per cent. the single monetary policy is based on assessments of a wide range of economic and financial indicators of inflationary pressure. a prominent position is likely to be accorded to the money supply. as a reference value for annual monetary growth, the ecb has initially set a rate of 4Β½ per cent. the combined strategy β focusing on inflation but with a reference value for monetary growth β is motivated by the great uncertainty as to how the aggregate euro economy will function initially. the ecb therefore wants to avoid having to stand on only one leg in its assessments. the ecb also states that the objective is to be fulfilled over the medium term and thereby underscores that the single monetary policy is not to parry every short - term shock. deviations from the target may be acceptable during a relatively short period. an analysis of the economic situation is published by the ecb in a monthly bulletin, which aims to β explain to the public the monetary policy decisions taken by the governing council of the ecb β. the bulletin will also consider fiscal policies, economic structures and labour market tendencies in the euro area. but the ecb does not publish either forward - looking assessments and forecasts of inflation or the minutes of decision - making meetings and the positions of individual members. press conferences with the ecb executive will be held, however, in connection with meetings of the governing council. in addition, policy will be explained continuously by executive board members in speeches and appearances before the european parliament. inflation assessment the ecb and the riksbank both have price stability as the monetary policy | 0.5 |
public debt in 2060 would total around 247 per cent of aggregate output unless changes were made to the status quo. by way of comparison : at the end of 2013, it was estimated at just under 77 %, however, to continue building up new debt would be, as kurt beidenkopf, the former minister president of saxony, once put it, β tantamount to issuing bills of exchange which my grandchildren will pay off β. it is therefore evident that there is no way around a more stringent fiscal policy and corresponding reforms to ensure that public finances remain on a sound footing. against this backdrop, the retirement age should not be lowered, but ought gradually to be lifted. in fact, it would be worth considering carrying out such a measure in future subject to certain rules, for example by adjusting the retirement age according to further life expectancy. demographic trends, the independence of monetary policy and the culture of stability ladies and gentlemen, faced with the far - reaching economic repercussions of demographic change, we must assume that it will have implications for monetary policy, too. although the bis central bankers β speeches ecb governing council defines the monetary policy for the entire euro area, meaning that country - specific developments only have an indirect influence, i would like to say a few brief words about potential monetary policy problems. there is justification in that because all the large euro - area countries will be affected by an ageing society. given the growing strain on public finances that i spoke of a few minutes ago, there is a danger that monetary policy will also experience greater political pressure to safeguard the government β s solvency. what i mean is that the central bank could be pressured into pursuing a laxer monetary policy, primarily one of low interest rates, to keep government financing costs as low as possible. in this way, an increase in the real debt burden would at least be curbed via higher inflation. in an extreme scenario, this could even lead to a situation known as β fiscal dominance β, whereby monetary policy is harnessed to the service of fiscal policy and made to subordinate its policy to the interests of government financing. price stability could suffer as a result. both theory and practice teach us that in a stability - oriented economic order, the distribution of roles should be quite the opposite. this means that the task of fiscal policy - makers is to see to sound public finances, leaving the central bank free to focus its monetary policy, with as few restrictions as possible, on its own primary | framework is needed, and how can it be achieved? that is the question as to the political foundation. at the time, the werner group recommended, in answer to those questions and after a heated debate, that economic, political and monetary integration should be implemented in parallel, in various stages. at the end of each stage, the progress made in all three areas should be scrutinised with a view to deciding, in the light of the result of that scrutiny, whether the next stage could be inaugurated. in the final stage, not only the monetary policy responsibilities but also, in particular, key economic and fiscal policy powers should be transferred to the community. but it soon turned out in the ensuing negotiations that, above all, the political leadership in france at that time was not prepared to make any such a conceptual commitment. hence virtually all that was achieved was exchange - rate cooperation in the context of what later came to be known as the β currency snake β. the more far - reaching plans for a monetary union were largely shelved again. after a number of upheavals, the bretton woods system finally collapsed at the beginning of the seventies. that collapse was accompanied by the first sharp oil - price hike. after that, some considerable differences emerged in europe between the ways individual countries weighted their economic and monetary policy objectives. one group of countries relied on an expansionary monetary policy. they hoped that such a policy would help the economy to adjust quickly to the changed conditions. another group, by contrast, took advantage of the latitude that had been gained by the ending of the linkage to the dollar to regain monetary stability relatively swiftly. thus, france, italy and the united kingdom left what was known as the β snake β in the mid - seventies. only the β little snake β ( comprising the benelux currencies, the danish krone and the d - mark ) was left as a community of stability. it was not until 1978, on the joint initiative of french president giscard d β estaing and german chancellor helmut schmidt, that the subject of wider - ranging monetary cooperation in europe was taken up again. after long discussions in the countries themselves β some of them controversial β the european monetary system ( ems ) was set up in 1979, once more with the participation of france and italy. the crucial question in the negotiations had been, in particular, whether this ems would tend to gear itself to the best stability standard or only to the average level. in the | 0.5 |
period of very low 1 / 7 bis - central bankers'speeches inflation, followed by the closing down of economies and the prospect of deflation, then the return of very high inflation from the disruption of supply chains and a war - induced energy shock and now a relatively rapid process of disinflation. i expect a fragmenting global economy undergoing significant transitions - in demography, in technology, in climate - to mean that volatility and uncertainty will reflect a new normal, posing challenges to all economic policy - maker. the changing landscape of the global financial system the reality of course is that the pace of change in our economy and financial system has been accelerating rapidly since the gfc. it has required central banks, regulators, firms and consumers to adapt, transform and evolve to meet the challenge that it poses. the singapore fintech festival showcases and highlights the sheer breadth and depth of the innovation that is happening in financial systems across the globe and give policymakers an insight into the future. since the latter stages of the 17th century, when the world's oldest central bank, sweden's riskbank was founded, price stability, mitigating crises and stabilising economies have represented a central bank's primary mandate. while change and challenge has been constant throughout the history of central banking, the challenges and changes that central banks face today are more complex, more connected and more multifaceted than ever before. we are living in a world of unprecedented innovation1, change, complexity and uncertainty. in the past five years, we have endured a global pandemic and witnessed russia's war on ukraine and its people, as well as an escalating conflict in the middle east and an increasingly uncertain geopolitical environment. the break - down of a rules - based world order, the risks posed by, at best, reduced interconnectedness and, at worst, a preference for autarky and the prioritisation of shortterm, national interests over the common good, all add to the sense that the changes we are seeing feel different, and not in a good way. at the same time as this changing geo - economic landscape, the financial system both in ireland and globally has been undergoing its own rapid change over the last number of years. in particular, technological innovation has had a profound impact across all aspects of our lives and the provision of financial services is no different. technology is a key part of the financial services landscape today. and while the change so far has | β 10. just as expansive credit conditions filled the coffers in the good years, so the unwinding of an unsustainable domestic boom is draining the coffers in much the same way and to a similar magnitude. as many of you will know, the government has already taken prompt and painful steps to readjust its spending and tax profile, most conspicuously by effectively cutting public sector pay rates. it has kept to the targets it set for net budgetary savings in 2009 and 2010. i have recently been looking more closely though at the multi - year prospects for the budget. of course it can be said, if the economy stays close to the track originally envisaged, the deficit would come close to 3 per cent by 2014. but as the imf and others have noted, the real economy, the price level and also interest rates on government borrowing, have evolved in a less favorable way. servicing of the additional debt related to bank restructuring is also a negative factor. some explicit reprogramming of the budgetary profile for the coming years is clearly necessary soon if debt dynamics are to be convincingly convergent. recent movements in the yield spread on government debt β both for ireland and for some other countries β readily demonstrate the costs that can result unless international lenders remain convinced that the budget is going to be kept on a convergent path, as indeed the government is committed to ensuring. during the 1980s ireland paid a high price in terms of borrowing costs because the markets feared much steeper exchange rate depreciation than actually occurred. an equilibrium of pessimism, with the economy struggling, and investors requiring a risk premium that imposed additional costs on the taxpayer, displaced what could have been an equilibrium of selffulfilling optimism. it is important now to re - set the fiscal path to ensure a virtuous cycle of lower borrowing rates contributing to even faster fiscal adjustment and a lower overall cost of the adjustment to society at large. while there has been an international debate on this matter for larger countries, there seems to me to be no question, for ireland and for other small financially - stressed sovereigns, but that national growth is best served by ensuring that the public finances are convincingly on a convergent path : the impact on funding costs and confidence surely more than offsets any short - term adverse impact on domestic demand from lower net public spending. other recent european examples of banks imposing costs on the budget there have been several other high profile cases in europe | 0.5 |
interest on lending. there is no doubt that the spreads of the banking system have been high, but with the growing demand for credit and liquidity constraints on the margins, banks are having to pay higher deposits rates. with growing competition, it is expected that banks will need to tighten their spreads and offer better returns to depositors, while launching efforts to reduce the administrative costs to maintain their profitability. iv. conclusion effective economic management and liberalization together have helped pakistan achieve a fair degree of economic stability, while setting the stage for economic restructuring and industrial development. however, preliminary results for fy06 outcome do highlight some short - term risks and vulnerabilities. the fiscal deficit is expected to exceed target in fy06, because of the unanticipated earthquake spending and continued stagnating of the tax / gdp ratio, despite enhanced tax collection. simultaneously, the external current account deficit will be over 4. 0 % of gdp as the trade deficit is likely to reach $ 6. 8 billion with import growth outpacing the rise in exports ( even though exports will reach new record levels ). while about one - fourth of the trade deficit stems from the rise in oil prices, the broad based growth in imports of machinery, capital goods and raw material augurs well for fresh investments and enhancement of industrial capacities. import dependence seems inevitable as pakistan needs to raise its investment levels and expand and diversify its industrial base and capacities. going forward pakistan plans to raise its investment in infrastructure and human resources, as shortcomings in these areas are now hurting pakistan β s industrial and export competitiveness. | fy05. notwithstanding the 1. 5 % rise in discount rate in april 2005, domestic demand pressures remained high as both private sector credit and government borrowings remained strong. sbp β s continued monetary tightening and government β s supply side interventions to curb shortages of key products has together helped weaken inflationary pressures ( built up since late 2004 ) with headline cpi declining from 9. 3 % on yoy end june 2005 to 6. 9 % in march 2006, and core cpi coming down from the range of 7. 0 - 8. 0 % during jun fy04 - oct - 05 to 6. 7 % by end march 2006. it is expected that the cpi inflation rate would be in the range of 7. 7 - 8. 3 percent in fy06. underlying these trends is the expectation that ( i ) monetary policy will remain tight, ( ii ) domestic fuel prices will not rise further in the remaining months of the fiscal year, and ( iii ) supply of essential products would be managed effectively. monetary policy, its conduct and transmission mechanism has also benefited from the structural transformation of the economy and the banking system, which forms a significant component of the financial system. what is appropriate to acknowledge is that the central bank β s independence in monetary management has been respected despite the resistance to interest rate hikes. and that the dividends of interest rate adjustments are visible since inflationary trends have shown a persistent downtrend since the beginning of january 2006. most encouraging is the fact that interest rate adjustment and its transmission mechanism has started to work. sbp has increased its interventions to ensure that the short term inter - bank market rates remain close to the discount rate. the higher inter - bank market rate, tight liquidity conditions and demand for credit have increased the weighted average lending rate by close to 200 bps over july - february fy06. while private sector credit remained robust, it rose by 18 % relative to over 25 % in the preceding year. overall impact of this would be more visible but for high recourse of the government to sbp financing. fiscal dependence on sbp generates inflationary pressures and deters growth of the long - term government securities market priced in line with the prevailing yield curve. iii. transformation of the banking system process of modernization of the banking system is well underway as there is no scope for complacency in pakistan after the tremors and economic losses caused by the asian financial crises in 1997 / 98. it has | 1 |
banco de espana is stepping up the efforts it devotes both to monitoring technological innovation and to anticipating its potential consequences. through a crossdepartmental working structure, various matters are being addressed in order to contribute to constructing an informed opinion and helping define the central bank β s strategic positioning. subjects under analysis are, for instance, the implications of the provisions of the new directive on payment services, known as psd2, whose partial transposition in spain is imminent, under the government β s annual regulatory plan, and to which i shall shortly refer. and there are also other topical matters, such as distributed ledger technology, β cloud β computing and the phenomenon of sovereign digital currencies. 3 / 8 against this backdrop, the aim of my address is to offer some observations as to how the new technologies are changing the traditional bank - customer relationship, and to highlight the need for banks and customers to responsibly manage this new scenario. likewise, i wish to stress the importance of financial education in this new scenario. customers have more options, but also more responsibility, and it is essential they should be aware of this. returning to the origins of the concern for the rights of bank customers. to set these observations in perspective, we might recall that concern in spain to safeguard customer rights arose in the 1980s, as a consequence of the liberalisation the industry underwent and which enshrined freedom of contract β of interest rates and commissions β at the core of its workings. accompanying this process, legislators adopted a series of measures aimed at boosting competition among banks, including most notably the enhanced comparative information with which banks must provide their customers, so that they may know the content of their rights and obligations before and once they have given their consent. however, this concern for customer rights came into being and developed in a context of maximum customer confidence towards banks and, most importantly, towards bank employees, which, in short, led to a high degree of customer loyalty to banks. during the 1990s and in the first half of the last decade such loyalty was negatively and slowly impacted by growing competition and the subsequent need to improve net interest margins. and the crisis unleashed as from 2007 saw the culmination of this deterioration and led to a significant loss of confidence by customers in banks, giving rise to a new scenario. against this background of public mistrust in banks, and the weakening of the aforementioned degree of loyalty, the new technologies add additional challenges for the industry when it comes to tending to | 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 | 1 |
. along with the tremendous growth in the branchless banking sector, the infrastructure of payment systems and branch network is also showing an increasing growth trend. the atms network has increased to 6, 232 whereas branch network has reached 11, 600. 94 percent of our branches are now real time on - line. similarly, the number of plastic cards has increased to 20 million and the number of pos machines has increased to 34, 000 units. this is a significant achievement, and this also demonstrates the opportunity to bring the benefits of this infrastructure to millions of the unbanked population. branchless banking has also proved to be an effective instrument in channelizing the government to persons ( g2p ) payments in trying times like serving internally displaced persons ( idps ), and devastating floods for the last two years. the benazir income support programme beneficiaries are also being served effectively through the same mechanism. in the coming days, this channel is expected to continue playing an important role towards the promotion of financial inclusion and the management of government to person ( g2p ) programs like salaries disbursements, pensions, bisp, watan cards, pakistan cards and tax collections services, etc. the existing branchless banking deployments can cater to the needs of over 10 million potential beneficiaries of g2p payments in pakistan. branchless banking is going to dominate the retail banking landscape in the long - term. whilst we seek to encourage the introduction of innovative instruments for payments, we also need to ensure that high levels of standards are maintained for safety, security and protection of consumers β interests. the central policy objectives of sbp are to ensure safety, soundness and efficiency of the banking system, and to protect the interest of consumers. since branchless banking is becoming a vital component of the national payment grid, it is prudent for all stakeholders to ensure that appropriate measures are in place to mitigate inherent risks associated with it like access by un - authorized persons / criminals such as hackers, money launderer, terrorist financiers etc. this can only be achieved when our technologies are robust and secured, and agents are comprehensively trained and effectively monitored by the banks. in this regard, the importance of a comprehensive agent development framework cannot be ignored. i am sure that our banks would not simply jump on the bandwagon without sufficient agent development mechanisms including their hiring, on - going training and monitoring. bis central bankers β speeches building public confidence on | branchless banking and payment system operators and service providers. right now, we are in the final stage of issuing regulations for e - money institutions. sbp is cognizant of the fact that fintechs may find certain regulations as inhibiting for their offering so we are in the process of establishing a regulatory sandbox to identify such issues and find ways of supporting and facilitating innovative ideas. ladies and gentlemen! 13. i am confident that the challenges that i have mentioned earlier will provide great opportunity and space to banks like telenor and companies like ant financials, who have great experience of transforming payments and banking landscape in china thus promoting digitization and financial inclusion. i am hopeful that based on its experience, ant financial will provide out of the box solutions for challenges being faced by the industry and consumers in pakistan. especially i expect that ant financials will bring innovative ideas to pakistan especially to assist sbp in areas like financial inclusion, digitization of payments, e - commerce, sme finance, increasing access points, partnerships with non - bank fintechs and using innovative technologies further to bring efficiency in banking and payments. 14. for my colleagues from banking industry in pakistan, i would like to say that we have to adapt to the changing realities of times. we shall take the challenge and use the opportunities provided by technology to deliver the best of best to our citizens. i expect that the financial sector will take advantage of page 9 of 10 current favorable market environment by investing in innovative technologies and product offerings to expand services and broaden access to financial services in the country. 15. i would once again like to congratulate telenor microfinance bank and ant financial for launching this initiative to facilitate cross border remittances. i am confident that ant financials will play its role in the economic development of pakistan and would further strengthen sino pak ties in the fields of banking, finance and payments. i shall ensure that state bank of pakistan would continue to extend possible support to facilitate them. thank you for your attention! pakistan zindabad. * * * * * page 10 of 10 | 0.5 |
##c should consider articulating a benchmark two - year time horizon for returning inflation to the 2 percent goal. ( two years is a good choice for a benchmark because monetary policy is generally thought to affect inflation with about a twoyear lag. ) right now, although the fomc has a 2 percent inflation objective over the long run, it has not specified any time frame for achieving that objective. this lack of specificity suggests that appropriate monetary policy might engender inflation that is far from the 2 percent target for years at a time and thereby creates undue inflation ( and related employment ) uncertainty. relatedly, the lack of a public timeline for a goal can sometimes lead to a lack of urgency in the pursuit of that goal. i believe that, if the fomc publicly articulated a reasonable time benchmark for achieving the inflation goal, the committee would be led to pursue its inflation target with even more alacrity. some might argue that this kind of time horizon is impractical. in fact, many central banks incorporate a similar timing benchmark. for example, the bank of canada typically makes its monetary policy choices so that the inflation rate is projected to return to 2 percent within two years. 2 i say β typically β β there are certainly situations in which the bank of canada chooses policy so that inflation is projected to return to target more slowly ( sometimes taking as long as three years ) or more rapidly ( sometimes as quickly as 18 months ). but it continues to treat two years as a benchmark, in the sense that it feels compelled to explain why it is choosing a different time horizon. to sum up : i β ve suggested that the fomc clarify that its inflation target is symmetric and that the committee typically seeks to achieve that target within a two - year horizon. let me emphasize that these two suggestions represent clarifications, not alterations. the framework statement, as written, is completely consistent with the formulations of price stability that i β ve proposed. however, the problem with the current statement is that it is also consistent with other interpretations of price stability ( such as a 10 - year horizon for returning inflation to the desired target ). the additional clarity in the framework statement would help the public understand the likely evolution of monetary policy. i β ve suggested that the fomc should clarify that it has a symmetric inflation objective, and a two - year horizon for achieving that objective. with those goals, it would be inappropriate for the f | ##omc to reduce its level of accommodation if its outlook is that inflation will be below 2 percent over the following two years. after all, if the fomc were to tighten policy in such a situation, it would be deliberately delaying the progress of inflation toward the 2 percent objective. such an action would weaken the credibility of the fomc β s stated two - year horizon. this conclusion about appropriate monetary policy sheds light on the ongoing public conversation about whether the fomc should begin targeting a higher range for the fed funds rate sometime in 2015. as you can see from the graph before you, inflation has been low for a long time. inflation tends to be highly persistent, and so this long stay below target suggests that it will take some time for inflation to get back to 2 percent. indeed, my benchmark outlook is that pce inflation will not rise back to 2 percent until 2018. this sluggish inflation outlook implies that, at any fomc meeting held during 2015, inflation would be expected to be below 2 percent over the following two years. it would be inappropriate for the fomc to raise the target range for the fed funds rate at any such meeting. to be clear : there is uncertainty about the evolution of the inflation outlook, and so this conclusion about the timing of lift - off is necessarily data - dependent. the language changes to the framework statement that i β ve suggested would not tell the public exactly when interest β monetary policy, β bank of canada, may 29, 2012. bis central bankers β speeches rates are going to rise. but these changes would allow the public to have a better understanding of what kind of data would engender the first interest rate increase. conclusions let me wrap up. most of the conversation about monetary policy in this country concerns what the fomc is doing β how many assets is the committee buying this month? how low is the committee keeping interest rates? these are, no doubt, important questions, especially for those in the financial sector. but i β d like to encourage more discussion of the more important question for most americans : how is the fomc doing in terms of meeting its mandated congressional goals? i hope that my remarks today about the fomc β s goals, and its communication about those goals, will be helpful in steering the conversation in this direction. thanks for listening. i look forward to taking your questions. bis central bankers β speeches | 1 |
##s has evolved rapidly since the pre - crisis era. a decade or so ago, the discussion was essentially between those who argued that monetary authorities should lean against imbalances such as asset - price bubbles and those who said that monetary policy should be reserved for cleaning up the mess after the bubble popped. before the financial crisis, the bank of canada basically straddled the two camps. on the one hand, we argued that it β s very difficult to identify an asset - price bubble, and central bankers have no comparative advantage in making this determination. like many, we questioned the wisdom of using the blunt instrument of interest rates on a bubble that could be confined to one asset class. indeed, if a bubble was particularly large and persistent, a central bank that used the cure of higher interest rates could end up causing the very economic damage it was trying to prevent. on the other hand, the bank recognized that price stability was a necessary, but not sufficient, condition for financial stability. given our keen interest in a well - functioning financial system and our macro perspective, we worked to raise awareness of stability threats. our decision to bis central bankers β speeches begin publishing our financial system review ( fsr ) in 2002 showed our early commitment to promoting financial stability. we used the phrase β global imbalances β a lot in speeches leading up to the crisis. in other words, we weren β t content to just stand on the sidelines and wait to clean up messes. the widespread and extremely high cost of the great recession made it clear just how difficult the clean - up job can be. it has been roughly seven years since the crisis, and the damage done to the global economy has left many central banks still struggling with weak growth and inflation. however, the more fundamental lesson we learned is that β lean versus clean β is a false dichotomy. it β s far too simplistic to say that financial stability threats compel central banks to choose between leaning and cleaning. in a perfect world, we would have a macroeconomic model sophisticated enough to capture the emergence and resolution of financial imbalances, along with their related impacts on the real economy. with such a model, we would be able to incorporate financial stability threats into our reaction function, if not with absolute precision, then at least as well as we incorporate other economic variables. unfortunately, we don β t live in that perfect world. a general - equilibrium model containing a grand synthesis of real and financial variables doesn β t | popular among central banks, and canada was an early adopter. under our current agreement, we aim to keep inflation around a target of 2 per cent, and we usually try to accomplish this over six to eight quarters. even in the absence of financial stability threats, the practice of monetary policy requires the central banker to deal with vast amounts of uncertainty. think of the most important aspects of a macroeconomic model β the level and growth rate of potential output, the real neutral interest rate, and the transmission of terms - of - trade shocks. none of these can be observed ; they all must be estimated. the assumptions that we make in running our models inject uncertainty throughout the policy - making process. and, since the crisis, we have also been confronted with the risk that our models have been distorted because of fundamental shifts in economic behaviour. now, on top of all this uncertainty, we have to add the uncertainty represented by risks to financial stability, a concept that is difficult to quantify. adding this whole other dimension of uncertainty complicates the practice of monetary policy by forcing us to weigh both sets of risks, the probabilities that they will be realized and the potential consequences of a policy error. so how do we manage the risks? at the bank of canada, we try to be realistic about the things we don β t know and do a thorough examination of the related risks. every time we come to a decision, there are a number of potential paths for policy that could be consistent with the inflation goal. in the process of formulating policy, we weigh these possibilities and focus on those that fall into a zone where the range of likely outcomes makes us reasonably certain that we β ll achieve the inflation target over an acceptable time frame and that financial stability risks will evolve in a constructive way. still, we know there can be times when setting policy to achieve the inflation target within the usual time frame can increase the level of financial stability risk to an unacceptable level. this would take us out of the zone where the risks are essentially balanced. because the flexibility in our framework allows it, we reserve the right to choose our policy tactics so that our actions don β t significantly worsen financial stability concerns by opting for a policy path that aims to return inflation to target over a longer time frame than normal. bis central bankers β speeches risk management, then, does not mean that the central bank will adjust policy to try to lean against every emerging financial imbalance. since we are an inflation | 1 |
face - to - face customer identity verification of new customers β identified as one of the main regulatory irritants for fintechs β while maintaining an equivalent level of security ; ( ii ) we have raised the awareness of crypto - asset service providers and assisted them with understanding the application of aml / cft rules. the traceability of blockchain technologies appears to be a useful feature for analysing the behaviour of suspicious portfolios, even though such tools require further development ; ( iii ) we have established an initial dialogue between fintechs and traditional banking players in order to improve their access to bank accounts. today, i would like to urge banks to participate, in a constructive manner, in the transformation of the financial sector, without undue concerns. fintechs are not our enemies, but key players in the modernisation of the financial sector and a catalyst for reflecting on the transformation of the banking model in order to address the needs of their customers. this is particularly the case for open banking, which is now regulated by the revised payment services directive ( psd2 ), because shared security rules are needed. i believe and hope that the difficulties of its implementation are largely behind us. moreover, if banks and fintechs did not both know how to innovate, and often innovate together, bigtechs would ultimately reap the rewards. furthermore, we take very seriously the commitments we made to you last year : we have therefore worked with you this year on the deadlines and visibility of the stages in the authorisation process of fintechs. in this context, i am pleased to announce that a fintech charter will be adopted and published before the end of the year. this charter will clearly explain, in great detail, the stages in this authorisation process, from their first contact with the acpr to their obtaining the required authorisation or registration. it will contain specific commitments on the part of the acpr, firstly in terms of the visibility of the process : the appointment of a dedicated analyst, an indication of the additional information to be provided, and an authorisation certificate to facilitate procedures with investors. secondly, in terms of deadlines : at each stage of the process, acknowledgement of receipt will be provided within two days and a response will be given on the content of the request within two weeks. the charter will also clarify our requirements regarding authorisation applications so that they can be prepared as well as possible. in order to help entrepreneurs | : β wishful thinking is one reason that monetary policy has historically been excessively inflationary β¦ to my mind, wishful thinking is as worrisome a problem for monetary policy as time inconsistency. β genuine concern for the unemployed means a recognition that sustainable reductions in unemployment require a combination of monetary stability on the demand side and microeconomic reforms such as the new deal on the supply side. as alan blinder has reminded us, we need soft hearts and hard heads, not the other way round. despite suggestions to the contrary, the mpc does have soft hearts and hard heads, and does not base its assessment of the labour market β never mind its decisions on interest rates β solely on estimates of the growth of average earnings. an assessment of the overall tightness of the labour market requires all the available data β both quantity and prices β to be analysed. the wealth and diversity of published labour statistics means it is rare for them all to point in the same direction. the mpc β s analysis of the labour market is like the construction of a jigsaw puzzle. the pieces of data are assessed alongside each other in order to build up as clear a picture as possible. no single piece of data is interpreted in isolation. and no single piece of data is, in itself, decisive. the growth of wages and salaries is an important indicator of domestically generated inflation. but this does not imply that there is some magical threshold defining β acceptable β and β unacceptable β rates of earnings growth. in the short run, the link between earnings growth and inflation is complicated by a whole host of factors, including exchange rate movements, cyclical variations in productivity and profit margins, irregular bonus payments, and one - off adjustments to tax rates and other β wedge β effects. it is true that given the uk β s historical levels of annual productivity growth of around 2 % and the inflation target of 22 %, it would be a cause for concern to the mpc if average earnings increased by much more β or much less β than 4. 5 % a year over a prolonged period without there being a corresponding change in trend productivity growth. that is not because the committee has a view about the appropriate level of pay awards. it is not our job to second - guess what businesses should or should not pay their employees. nor is it because we think earnings growth causes inflation β inflation is a monetary phenomenon. rather it is because sustained earnings growth much above or below these rates may indicate that the level | 0 |
our country β s economic growth are in your hands. we at the bsp also look forward to working with you on financial inclusion programs that will attract more filipinos to be part of the financial mainstream where money would be more widely available at prevailing commercial rates. rates that are significantly lower than the 1, 000 % a year rate in the informal sector. imagine the beneficial impact this can bring to millions of our microentrepreneurs. let us therefore continue to work together to keep the philippine economy growing and make lives better for filipinos. this is very much in keeping with the rotary club β s two mottos : β service above self β and β he profits most β¦ who serves best. β ladies and gentlemen of the rotary club of manila, together, may we have a successful, meaningful and prosperous new year! thank you for your attention. mabuhay ang pilipinas! mabuhay po tayong lahat! bis central bankers β speeches | central banks, especially the us fed. we also carefully communicated our policy intent to the market. at the same time, international oil prices started to drop. subsequently, inflation started to moderate and fall to the middle of the target range of 3 β 5 per cent inflation. we are pleased about this outcome. inflation management is a crucial function of the bsp as it provides the stability that our economy and its stakeholders need. even as uncertainties in global markets led to some capital flow reversals and depreciation pressures on the peso, we were able to maintain a strong external liquidity position. the current account sustained its surplus because remittances, receipts from the tourism and bpo industries remained strong. as a result, our gross international reserves settled at a robust $ 79. 8 billion in december 2014, providing us buffers from possible external shocks. the reserves are enough to cover 10. 2 months β worth of imports of goods and payments of services and income ; it is also equivalent to 8. 4 times the country β s short - term external debt based on original maturity and six times based on residual maturity. bis central bankers β speeches our strong external position continues to be a source of confidence for our creditors and investors. another source of strength for the philippine economy is our sound, stable and liquid banking system as public confidence has kept deposits growing to record - high levels. among others, this has sustained double - digit growth rates in lending, particularly to the productive sectors of the economy. overall, our banks have strong balance sheets, solid asset growth, low npl ratios and above - standard capital adequacy ratios as a result of good governance practices and adherence to international best practice in risk management. thus, our banking sector continues to be highly rated by third party assessors. in particular, the philippines received the only positive outlook among 69 jurisdictions assessed by moody β s, a major international credit rating agency. indeed, our banks are fully engaged with us in our efforts to help ensure that our system is sound, that its operations are aligned with international standards, and that its reach covers more of the previously unbanked or unserved areas. in 2014, we endorsed republic act 10641 that allows the full entry of foreign banks in the philippines and prepared the irr for its implementation. with the approval of the irr, additional foreign banks can now apply to operate in the philippines either as a branch or as a wholly - owned subsidiary. there are clear economic benefits | 1 |
users given ( v ) the responsibility for assessment of customer suitability and appropriateness is squarely on the market maker. there are a detailed set of requirements that the market maker needs to fulfil in this regard while selling any product to a user. as the recent experience in many countries shows, inappropriate understanding of complex derivatives by the buyers of these can have serious repercussions. the argument of caveat emptor does not really work in practice, as many countries are realising on account of huge derivative losses. it is ultimately a systemic issue and it is important, in the interest of sellers of the products as well, that sufficient suitability assessment is done before selling the product. ( vi ) all otc forex and interest rate derivatives attract a much higher credit conversion factor ( ccf ) than prescribed under the basel framework and all exposures are reckoned on a gross basis for capital adequacy purpose. the applicable ccfs were increased in 2008 since it was felt that the conversion factors prescribed under the basel framework did not sufficiently capture the market volatility of underlying variables in the indian context. ( vii ) exposures of banks to central counterparties ( ccps ) attract a zero risk weight as per basel norms. additionally, collaterals kept by banks with the ccps attract risk weights appropriate to the nature of the ccp as reflected in the ratings under the basel ii standardised approach. the latter was incorporated by rbi as ccps cannot be considered risk free entities. ( viii ) all permitted derivative transactions, including roll over, restructuring and novation are required to be contracted only at prevailing market rates. this ensures that non - market rates are not used to manipulate cash flows current and future. ( ix ) there are regulations for participation by non - residents in derivative transactions. this basically flows from the capital account management framework which places certain restrictions for participation by non - resident investors in the forex and interest rate markets. 3 4. clearing and settlement infrastructure for otc derivatives in india as early as in 2002, the clearing corporation of india ltd ( ccil ) commenced guaranteed settlement of inter - bank spot forex transactions and all outright and repo transactions in government securities, whether negotiated or under order driven systems. ccil has commenced non - guaranteed settlement of otc trades in irs / fra in november 2008, covering over 75 per cent of the market turnover. ccil also offers certain post - trade processing services like resetting interest rates and providing settlement values to | is supposed to bring into the model code books of financial service providers. we have a plethora of instances of mis - selling and customers undertaking financial contracts without understanding the risk import of such transactions leading to unforeseen volatility and unsustainable business. 13. financial literacy is also a necessary pre - condition for success in financial inclusion drive. dimensions of this issue can be gauged from the recent paper by the financial action initiative, a consortium of researchers. for the benefit of this august audience, let me quote 3 important findings of the paper : β’ 2. 5 billion adults, just over half of world β s adult population of 4. 7 billion, do not use formal financial services to save or borrow. β’ 2. 2 billion of these unserved adults live in africa, asia, latin america and the middle east. β’ of the remaining 2. 2 billion adults who are financially served, a little more than 800 million live on less than us $ 5 per day. 14. with such estimates of the dimensions of the financial exclusion problem, and the understanding that achieving financial inclusion is not possible without financial literacy, the promotion of financial literacy acquires an even greater urgency. 15. financial literacy can be promoted by bringing in wider section of public within the institutional literacy framework. such institutional initiatives would largely focus on improving literacy standards. also, all financial service providers have a moral responsibility to bring in a fair degree of transparency and fairness, more so those engaged in selling financial products and financial counseling and the ethical grid within which they are supposed to work. this initiative is no less challenging than propagating financial literacy to the members of the public. 16. hence, there is no doubt that financial literacy should be one of the key initiatives in coping with the ever - expanding horizon of risk. in rbi, we have started a unique public interface programme whereby rbi is trying to bridge the gap in understanding regulatory perspectives of some key policy initiatives. however, reserve bank or central banks or bank regulators acting alone would not be successful in meeting this extraordinary responsibility in propagating financial literacy and bringing transparency in dealing with financial services and products. wider and active participation of all stakeholders like other financial regulators, government β state & federal both β financial service providers, academia and others in civil society, is needed in this grand initiative. also we require massive global efforts and co - operation for achieving tangible results in this area. 17. i am happy to share that the whole - hearted participation by | 0.5 |
andreas dombret : current challenges facing central banks β the bundesbank β s stance speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the ahk ( auslandsaussenkammer ) world conference, berlin, 11 may 2016. * 1. * * introduction dr wansleben, mr machnig, ladies and gentlemen, before i begin, i would like to thank you for inviting me to come here and speak with you today. in germany, foreign trade has traditionally been a cornerstone of its economic success. chambers of commerce abroad make a crucial contribution to the success of german enterprises in foreign markets. you could say that, today, i am visiting the power houses of the german economy, which is why i am so pleased to be here with you in berlin. the motto of this event is : β where is the global economy heading? β the answer to this question will be put together like the pieces of a jigsaw puzzle from the various reports of the speakers at your conference, who come from all over the world. within the space of the next 20 minutes, i will try to lay down the foundations for this jigsaw by giving you an overview of the global economic situation. i will also be elaborating on the consequences that this has for monetary policy and for banking supervision in the euro area. 2. economic activity the new year got off to a bumpy start for the global economy, with the economic slowdown in china dampening the new year β s spirit right at the very beginning of the year. this was compounded by the sharp decline in oil prices at the turn of the year, which was perceived as having an increasingly detrimental impact on the global economy. furthermore, some financial market players had doubts as to whether an ever more accommodative monetary policy stance can really solve the existing problems. this explains why sentiment on the financial markets was also very nervous at the beginning of the year. the situation has, by and large, calmed down since then, however. according to the international monetary fund, the global economy will continue to recover, albeit at a somewhat slower pace than at the beginning of the year. the major industrial countries remain on a moderate growth path, even though growth in the united states and japan slowed down somewhat in the in the final quarter of 2015 and the first quarter of 2016. nonetheless, the underlying trend is still pointing upwards and developments in the labour markets are not | closely monitor this process. as supervisors, we evaluate the risks for each institution individually β but without losing sight of the financial system as a whole. in doing so, we actively seek out direct exchanges with the institutions. if an institution stabilises its earnings by taking on greater risk, this must be reflected in its overall strategy and be backed by corresponding capital. bis central bankers β speeches 5. conclusion ladies and gentlemen i have tried to give you an overview of the global economic conditions. and i have pointed out that, above all, the dampened inflation outlook and the subdued growth currently justify an accommodative monetary policy β even though there are of course side effects, which increase over time, and even though opinion may be divided on individual instruments. with that, i would like to draw my speech to a close. as the saying goes, a speaker should exhaust the topic and not the audience. thank you very much! bis central bankers β speeches | 1 |
sold. 17 another argument sometimes put forward in favour of large bond holdings is that the central bank β s purchases would increase the supply of safe assets in the economy, and that there is otherwise a shortage of such assets. 18 the riksbank β s bond purchases result in that government bonds with a specific maturity disappear from the market and are replaced by riksbank certificates with a maturity of one week. 19 the riksbank then takes over some of the maturity transformation that the market otherwise tries to achieve on its own, and helps to reduce the interest rate risk in the outstanding portfolio of government securities. this argument isn β t particularly convincing either. if it is considered important to have short maturity on the national debt in normal times, this should be dealt with when the government bonds are issued, and it is then a question for the national debt office. furthermore, the conversion from government securities to riksbank assets does not seem to increase the supply of safe assets in sweden ; the interest rate on ( short - term ) government securities is lower than the repo rate which means that the market price of government bonds is higher than the price of riksbank certificates with the same maturity. this pricing indicates, if anything, that the market prefers to hold government bonds rather than central bank reserves and hence that the riksbank β s bond purchases are reducing the supply of the safest assets. another indication of this is that the term premiums on government bonds have been very low, and probably negative, in recent years. 20 this suggests that government bonds with long maturities are not being priced with risk premiums in relation to riksbank certificates or government securities with short maturities. 7 i have now discussed arguments that could indicate that the riksbank should continue to maintain a large portfolio even in the future, and i don β t consider these arguments to be particularly strong. but does this mean that the size of the balance sheet has no significance or are there strong arguments indicating that the riksbank β s balance sheet should be small? arguments against substantial bond holdings in normal times maintaining a large balance sheet can be associated with risks, but the nature of these risks depends both on the assets held by the central banks and how these are funded on the liability side. the risks may relate to the central bank β s financial position and ability to conduct monetary policy and simultaneously fund its own operations, as well as to its reputation and possibility to safeguard its independence in monetary policy issues. plosser | and david vestin ( 2015 ), β how can government bond purchases make monetary policy more expansionary? β, economic commentaries no. 12, sveriges riksbank altavilla, carlo, giacomo carboni and roberto motto ( 2015 ), β asset purchase programmes and financial markets : lessons from the euro area β, ecb working paper series no 1864, european central bank 9 archer, david and paul moser - boehm ( 2013 ), β central bank finances β, bis papers no 71, bank for international settlement bernanke, ben ( 2016 ), β should the fed keep its balance sheet large? β, brookings, 2 september blinder, alan, michael ehrmann, jakob de haan and david - jan jansen ( 2017 ), β necessity as the mother of invention : monetary policy after the crisis β, economic policy 32, 707 - 755 costancio, vitor ( 2017 ), β the future of monetary policy frameworks β, speech, 25 may, european central bank de rezende, rafael b., david kjellberg and oskar tysklind ( 2015 ), β effects of the riksbank's government bond purchases on financial prices β, economic commentaries no. 13, sveriges riksbank. duffie, darrell and arvind krishnamurthy ( 2016 ) β passthrough efficiency in the fed β s new policy setting β, jackson hole symposium, federal reserve bank of kansas city floden, martin ( 2015 ), contribution at the monetary policy meeting in february 2015, in sveriges riksbank ( 2015 ), minutes of the monetary policy meeting, february 2015 floden, martin ( 2016 ), β the riksbank β s bond purchases affect government finances β, speech, 9 november, sveriges riksbank goodfriend, marvin ( 2011 ), β central banking in the credit turmoil : an assessment of federal reserve practice β, journal of monetary economics 58, 1 - 12. greenwood, robin, samuel hanson and jeremy stein ( 2016 ), β the federal reserves balance sheet as a financial - stability tool β, jackson hole symposium, federal reserve bank of kansas city holston, kathryn, thomas laubach and john williams ( 2017 ), β measuring the natural rate of interest : international trends and determinants β, journal of international economics, 108, pp 59 - 75 af jochnick, kerstin ( | 1 |
put in place by central banks are aimed to ensure the soundness and efficiency of the system and the protection of the interest of depositors and investors. before proceeding further, i would like to touch some aspects of the regulatory framework instituted for the islamic banking industry in malaysia. in malaysia, we have embarked on the concept of dual banking where the islamic banking system operates in parallel with the conventional banking system. in our context, the islamic banking system comprises the islamic banks and the conventional banks offering islamic banking products and services. in this regard, the main challenge to the regulator is to formulate a regulatory framework for islamic banking that is in line with syariah principles. our approach is two - fold, firstly to adopt the existing international regulatory standards where it complies with syariah, and secondly to develop a separate regulatory framework to address the unique characteristics of islamic banking. as far as the first approach is concerned, the islamic banks and the conventional banks with islamic windows observe similar international standards as well as the prudential and supervisory concerns such as the basel concordat on minimum rwcr of 8 %, statutory reserve requirement, corporate governance standards, risk management standards, financial disclosure and know your customer policy. they are also subject to similar supervision, surveillance and monitoring by the central bank. these policies have been implemented efficiently as most of these requirements, if not all, are not against the injunctions of syariah. the second approach refers to the implementation of islamic banking within the conventional set - up. bank negara malaysia has advocated for the β bank within a bank β concept for the conventional banks with islamic windows to enable the islamic banking divisions in the conventional bank to provide the strategic focus and autonomy, maximise synergy for economies of scale and capitalise on cost efficiency. these measures would also act as a firewall to ensure strict compliance to syariah. to achieve this objective, we have made it mandatory for the conventional banks to establish a dedicated islamic banking division within the bank, create and observe a minimum islamic banking fund, opening separate clearing account with the central bank to facilitate effective separation in the payments system as well as to have a separate accounting disclosure. having these policies and infrastructure in place, we have been able to operate the dual banking system in a structured and systematic manner. ladies and gentlemen, although the regulations are in place, close oversight and updated statistical reporting, supported by close monitoring through the early warning system, are necessary as measures to avoid banking failures. the global | zeti akhtar aziz : corporate governance and aspects of the regulatory framework instituted in malaysia special address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the 2nd seminar for central banks and monetary agencies on aaoifi β s accounting standards, kuala lumpur, 29 may 2002. * * * assalamu ` alaikum warahmatullahi wabarakatuh and good morning malaysia is indeed honoured to host this annual seminar organised by the accounting and auditing organization for islamic financial institutions ( aaoifi ) for central banks and monetary agencies on aaoifi β s accounting standards for islamic financial institutions. since its establishment in 1990, aaoifi has made a significant contribution in formulating and issuing accounting and auditing standards for islamic financial institutions. the standards issued by aaoifi have contributed towards the improved quality of financial statements and reporting methodology of islamic financial institutions. aaoifi has also issued standards on the role of syariah committees as well as the code of ethics that should govern the accountants and auditors of islamic financial institutions. undoubtedly, efforts by aaoifi have accelerated the pace of transparency and corporate governance of islamic financial institutions globally. ladies and gentlemen, a well functioning and efficient banking system is vital for achieving robust economic performance. within the context of the economy, the banking institutions perform the important function of mobilising funds that are channelled to productive investments thereby generating economic activity. in performing their intermediation function of channelling funds between the savers and investors, depositors need to be assured of the safety of their deposits and the efficiency in the manner in which the funds are mobilised and channelled to productive investment. through their extensive branch network, and now through internet banking, banking institutions are able to efficiently reach an extensive customer base nationwide. as a custodian of public funds, maintaining integrity and confidence in the banking sector is vital towards ensuring the stability and soundness of our financial system. the trust of the public in banking institutions is inspired by the confidence in the safety and security of deposits, and that these funds will be professionally managed. banking business involves risks and these risks need to be rigorously managed if public confidence in the banking system is to be secured. these risks involves credit risks, market risks, sovereign risks and foreign exchange risks, to name a few. there is therefore no room for negligence. this emphasize that the business of banking is too important to be left to self regulation. the regulatory framework | 1 |
facility has a cap on individual use of $ 30 billion, and from september 22, 2014, through december 16, 2015, on rrp operations were subject to an overall size limit of $ 300 billion. these issues are discussed in joshua frost, lorie logan, antoine martin, patrick mccabe, fabio natalucci, and julie remache, β overnight rrp operations as a monetary policy tool : some design considerations, β federal reserve bank of new york staff reports, no. 712, february 2015. 10 financial firms can also issue very short - term commercial paper or certificates of deposit, but these instruments can also create stability concerns. 11 importantly, in considering the stability of a bank β s deposits, the lcr distinguishes between operational and non - operational deposits. banks must hold up to 25 percent of the value of operational deposits in high - quality liquid assets, in order to withstand a 30 - day stress environment. the liquidity requirement for non - operational deposits is less favorable β up to 100 percent β making it more expensive for banks to hold such deposits. 12 12 the federal reserve has also increased its supervisory focus on the liquidity of large banks in particular with the comprehensive liquidity analysis and review. 13 see marco cipriani, gabriele la spada, and philip mulder, β investors β appetite for money - like assets : the money market fund industry after the 2014 regulatory reform, β federal reserve bank of new york staff reports, no. 816, june 2017. 14 mmfs are open - ended mutual funds that invest in money market instruments. unlike other mutual funds, mmfs have traditionally allowed their investors to redeem shares at a fixed net asset value ( nav ) of $ 1 per share under most circumstances. this characteristic makes mmf shares very similar to bank deposits ( although they are not insured ). mmfs are regulated by the investment company act of 1940, which restricts their holdings to shortterm, high - quality debt. the industry can be divided into two main segments : i ) government mmfs invest in 8 / 10 bis central bankers'speeches treasuries and agency debt and can only lend to the private sector through repos collateralized by treasuries or agency debt ; ii ) prime mmfs can also invest in private unsecured debt. tax - exempt funds represent an additional, smaller segment, which invest mainly in municipal and local authorities β debt. tax - exempt funds are regulated in the same way | ##er of last resort β capacity is particularly important when the precautionary demand for liquidity increases substantially, because it is precisely at these times that private provision of liquidity declines. the financial crisis of 2008 provides a striking example of this ability. as shown in figure 1, the federal reserve doubled the size of its balance sheet in a matter of weeks in september 2008 to meet the extraordinary demand for liquidity as private sources of liquidity dried up. 1 / 10 bis central bankers'speeches on the liability side of the federal reserve β s balance sheet, the increase in liquidity was matched by increases in bank reserves and treasury deposits through this extraordinary period. 7 the treasury deposits were funded by an increase in bill issuance, hence the amount of officiallyproduced, safe and money - like assets in the financial system increased by around $ 1 trillion in a few weeks. 8 of course, since investors are aware of the central bank β s unique ability to quickly supply safe and money - like assets in non - normal times, their incentives to monitor risks in normal times may be reduced. the moral hazard raised by this awareness may be addressed through regulation and supervision. further, the central bank needs to take care that its provision of money - like assets in normal times does not crowd out the private financial system or exacerbate run behavior in stressful times. 9 private provision of money - like assets the private sector plays an important role in the provision of money - like assets. for instance, banks create money - like assets in the form of bank deposits. similarly, nonbank institutions, such as money market funds ( mmfs ), can also provide money - like assets. however, private provision of money - like assets can increase the risk of financial instability. in order to provide money - like assets, financial institutions generally engage in maturity and liquidity transformation, transforming longer term assets into callable liabilities that are runnable. 10 thus, although in normal times investors may perceive these privately produced assets as safe and liquid, a sudden shift in investor perceptions can amplify instability in periods of market stress. to the extent that the private sector does not incorporate the social cost of runs on private callable liabilities, too much private money can be created in normal times, generating a role for public sector intervention. the main way the public sector can mitigate the risks associated with the excessive private supply of money - like assets is through regulation and supervision. by reducing the fragility of | 1 |
for monetary policy. we no longer have the luxury to look primarily to the flow of goods and services, as conventionally estimated, when evaluating the macroeconomic environment in which monetary policy must function. there are important β but extremely difficult β questions surrounding the behavior of asset prices and the implications of this behavior for the decisions of households and businesses. accordingly, we have little choice but to confront the challenges posed by these questions if we are to understand better the effect of changes in balance sheets on the economy and, hence, indirectly, on monetary policy. | i am pleased to say that with regard to the technical aspects of the changeover, cyprus is on the right track. numerous tasks involving many different areas of expertise have either been completed or are being completed : the selection of the designs for cypriot euro coins, the printing and distribution of notes, and the preparation and translation of comprehensive campaign material to make the people of cyprus familiar with the visual appearance and security features of the euro banknotes and coins, as well as with the modalities of the cash changeover. unquestionably, a well - informed public is crucial for the successful introduction of the new currency. drawing on the positive experience of previous changeovers, such as that of slovenia at the beginning of this year, various communication channels are being used. there are ten different publications in greek, turkish and english ; 350, 000 information leaflets are currently being distributed to all cypriot households ; media seminars have been organised. in all of this, we have paid particular attention to vulnerable groups. i personally was particularly impressed by the β talking cards β. following consultations with associations for the blind, we developed an audio file which allows visually impaired people to receive the relevant information on the cash changeover and the euro. the information campaign has been very intensive, not only in terms of financial and human resources, but also in terms of coordination efforts among all relevant parties, including the central bank of cyprus, the ecb, the cypriot ministry of finance and the european commission. after the changeover, we will evaluate the campaign, and i expect that the countries seeking to join the euro area at a later stage will be keen to learn from cyprus β experience. in the remainder of this year, some final preparations are still necessary. the delivery of coins, minted by the bank of finland, and the delivery of banknotes, provided by the bank of greece from the eurosystem stock, has started. and in a week β s time starter kits for the public will be distributed. the dual circulation of the cyprus pound and the euro will last one month. afterwards the euro will be the sole legal tender in cyprus, but cyprus pound coins can be exchanged for two more years and banknotes for ten more years at the central bank of cyprus. finally, let me reassure you that we are taking the concerns of the people of cyprus very seriously as regards possible unwarranted price increases in the context of the euro changeover. we have to monitor the situation carefully to ensure that prices are converted | 0 |
bank of new york liberty street economics ( blog ), november 25, 2011. 18 warren buffett β s letter to berkshire hathaway inc. shareholders, february 25, 2017. 6 / 6 bis central bankers'speeches | and maturity transformation, must no longer escape our vigilance. all countries are moving in that direction. in europe, following the de larosiere report, we are creating a european systemic risk board. in the united states, it has been proposed that the federal reserve will become the future systemic supervisor. in france, the government has decided a reform where insurance and banking supervision will be merged under the umbrella of a β systemic β college under the auspices of the banque de france. clearly, the move towards macro financial supervision means that central banks will have to assume additional responsibilities. history tells us that the missions of central banks have taken major turns following financial crises. second, regulation will become more global. emerging market economies might feel that they are not part of the problem since they did not play a role in starting the crisis ; but they are major actors and are part of the solution. henrique mereilles sitting at the table next to me is truly a sign of times, a sign clearly underlined by the increasing role of g2o and the recent expansion of the fsb. international standards in the field of prudential rules have already paved the way for an international level playing field. i strongly hope that basel ii can soon become a truly universal standard and framework for banking supervision. beyond prudential rules, it is of the utmost importance that convergence be achieved in accounting standards if only for level playing field reasons. finally, improved coordination between supervisors through supervisory colleges for all systemic actors ( not just banks ) will be a significant progress. the objectives of financial regulation have shifted. it remains important to increase the resilience of the financial system. we need to ensure that intermediaries build, over time, stronger capital and liquidity cushions, especially for trading activities. the basel committee has been very active and currently is devising proposals. but our main priority is to reduce procyclicality in our financial systems. stronger capital and liquidity cushions must be built in good times and drawn down in bad times. the essential contribution however will come from a change in our provisioning rules. the objective is to build automatic and β through the cycle β stabilizers in a transparent way and according to a rule based system. i believe there is a lot to learn from the spanish dynamic provisioning approach. finally, nothing will work if we do not address the issue of incentives. in a market based economy, incentives determine the behaviours of agents. regulators must aim at creating an | 0 |
##or countries. obviously, it is not always easy to find a majority of voters ( taxpayers ) willing to shoulder the financial liabilities of another country. it seems that the citizens in the eu still do not identify themselves strongly enough with the β still relatively young β project of european integration to fully support unlimited supranational financial assistance to individual member states. in the end, we are still dealing with sovereign democracies in the eu and in the euro area. the heterogeneity of income levels within the euro area creates additional obstacles. solidarity among eu nations continues to be limited. as a result, in contrast to inter - regional transfers that we see in a number of fiscally federal countries, the eu seeks to overcome the present divergences in the euro area by providing loans subject to strict and controlled conditions, which supplement the general system of eu regional and structural funds. to the recipient countries this might seem to be an infringement of important aspects of their political independence. however, i do not see a credible alternative to the procedures developed in the context of specific aid programmes. but this leads us to the broader problem of the political legitimacy of eu and euro area action during the crisis, e. g. with regard to the role of external control of fiscal policy decisions by national parliaments or decisions regarding the operational structure of instruments like the efsf and the esm. of course, all these problems are part of the age - old question of how to combine relatively short - term election cycles with the need to ensure sustainable long - term economic growth. one traditional way of dealing with this problem is, for instance, requiring a two - third majority for certain decisions. in the eu, this is the case by including certain provisions in the eu treaty that are extremely difficult to change. in this context the ecb can be seen as the most independent central bank in the world, as its independence is enshrined in the eu treaties. however, in the current institutional structure of the eu it is still unclear as to who has the mandate β and obligation β to take binding decisions in economically difficult times like the ones we are currently experiencing. the current crisis has shown the need for close cooperation within the eu, but also a tendency of re - nationalization of important aspects of crisis management, where a number of actions are based on intergovernmental arrangements rather than community law. bis central bankers β speeches this is not the place to discuss these problems in more detail. but | overcome the dominance of national interests and create an even more strongly integrated eu. the debt crisis also reminds us of the importance of maintaining financial stability. banking crises have a strong potential for seriously harming the real economy. in order to reflect their probability and, if they occur, their negative real impact, the provision of sufficient liquidity and an adequate capitalization of the banking sector as well as mechanisms to facilitate the liquidation of insolvent banks are key. the first requirement has to be met through backstop facilities by the central bank while the second and the third issues have to be addressed through financial market regulation and supervision. ladies and gentlemen, i have certainly not been able to cover all aspects relevant in the context of the debt crisis or to do justice to the complexity of the issue at hand. but this is the very reason why we need this conference. i am confident that the broad diversity of speakers β ranging from representatives of academia and international institutions to policy advisors and decision - makers β will be able to provide a broad picture of the relevant issues, possible trade - offs and options for solutions. bis central bankers β speeches | 1 |
klaas knot : monetary - fiscal policy mix in the euro area - lessons learnt and the way forward introductory remarks by mr klaas knot, president of the netherlands bank, at the european central bank policy panel at the annual congress of the european economic association, rotterdam, 27 august 2024. * * * thank you very much for inviting me. this panel touches upon a topic that i believe will always lie at the forefront of policy discussions, especially in the light of our experiences from the recent past. i will start my remarks by recalling the policy responses to the global financial crisis and the covid pandemic. because i think these events have taught us important lessons not only about the appropriate monetary / fiscal policy mix, but also about the fiscal policy design both at the national and at the union level. when the euro was introduced, the common belief was that national fiscal policy should focus on stabilising national business cycles and that monetary policy was the appropriate instrument for stabilisation at the euro area level. this thinking changed when interest rates fell for an extended period and were approaching their effective lower bound, thereby limiting the effectiveness of monetary policy. this increased the importance of fiscal coordination among member states. this came to the fore for the first time during the global financial crisis. during the global financial crisis and the subsequent debt crisis in the euro area. the monetary / fiscal policy mix was suboptimal, both at the national and the european level. monetary policy was quite accommodative throughout that period, there is little doubt about that. its intended stimulus could have been reinforced by a countercyclical fiscal stance. that would potentially have allowed a faster economic recovery without having to rely so excessively on loose monetary policy. however, this is not what happened. throughout most of the debt crisis, most governments pursued tight fiscal policies. this reflected choices that are understandable at the national level, as some countries had little choice but to undergo fiscal consolidation, but it was not conducive to economic recovery at the european level. had monetary and fiscal policy moved in tandem, the recovery could have been quicker. but this would only have been possible if public finances had been on a sound footing throughout the euro area. unsustainable debt levels and fiscal deficits spinning out of control make it difficult to implement the right monetary / fiscal policy mix. the monetary / fiscal policy mix was more effective during the pandemic. again, the ecb conducted a very acc | 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 | 0.5 |
banca d β italia and suerf workshop β the effectiveness of monetary policy in a low interest rate environment β welcome address by daniele franco senior deputy governor of the bank of italy rome, 18 november 2020 i am happy to welcome you all to the banca d β italia and suerf β s joint workshop on β the effectiveness of monetary policy in a low interest rate environment β. as you may know, we had scheduled this workshop to take place in june, but we had to postpone it, because of the pandemic. we also had to move to a virtual setting and rely on video connections. the workshop addresses issues that are now at the top of policymakers β agendas around the world. the pandemic has led to the worst recession in recent history, and the scars that it will leave on the global economy are likely to prolong the low interest rate environment. monetary policy is playing a key role in supporting the recovery and its contribution will remain fundamental in the coming years. the discussion on strategies, targets and tools remains open. today and tomorrow, we will have the opportunity to embark on a wide - ranging debate on the challenges ahead. in my remarks today, i will touch upon a few of them. to begin with, i think we can all agree that the pandemic crisis has further exacerbated the effects of some ongoing long - term trends. some of these trends have already been in place since the great financial crisis and its aftermath. i am mostly referring to the drop in the natural rate of interest1 and to the subdued inflation dynamics. these trends are due to structural changes in macroeconomic relationships and imply a need both to reassess theoretical frameworks and to review the monetary policy strategy and tools. in this respect, the first session deals with monetary policy strategy in such a low interest rate environment. this of course calls into question the issue of the appropriateness of the current inflation target, which is indeed one of the main items on the table in see ex multis neri, s. and gerali, a. ( 2019 ), β natural rates across the atlantic β, journal of macroeconomics, 62. the eurosystem β s monetary policy strategy review. i will not comment further on the strategy review, since it is still ongoing. another important theme in the β post - pandemic β environment will be the interaction between fiscal and monetary policy. as we know, fiscal policy worldwide was boldly expansionary | mario draghi : challenges of surveillance and coordination introductory comments by mr mario draghi, governor of the bank of italy and chairman of the financial stability board, at the vith international symposium of the banque de france on β which regulation for global imbalances? β, paris, 4 march 2011. * * * the recent crisis has greatly raised our awareness of two processes that have been shaping the world economy : first, the growing interconnections between economies, that make the global system vulnerable even to local shocks ; second, the move towards a multi - polar setting in which no single dominant politico - economic power exists and new subjects, such as the fast - growing emerging economies, are coming to the fore. both processes are a reflection of fundamentally benign developments, such as free trade, free capital movements and the spreading of technological innovation which have brought enormous benefits to the world economy. however, as the crisis has forcefully shown, the potential for inherent instability is greater ; and the damage that may result from this instability is too large to ignore. in the past decades, after the end of the bretton woods regime, weak forms of policy cooperation prevailed. in terms of the international monetary arrangements in place, it was a β non - system β. for a long time, stronger forms of international policy coordination were deemed unnecessary : many theoretical and empirical analyses in the 1980s converged to show that any gains from such macroeconomic coordination were likely to be of modest size. however, we may now need to revisit that fairly sceptical conclusion. in the new global environment, policies ( and policy errors ) in individual economies can have substantial spillover effects. moreover, the costs of uncoordinated policies may increase in a non - linear fashion if those policies lead to large systemic breakdowns. in my view there is one main, simple lesson we should take from the crisis : if we want to preserve the gains brought by open, competitive markets on a global scale, we need stricter and more effective international cooperation. the common response to the crisis was a quantum leap forward in international economic relations. with a coordinated, prompt and synchronous set of policy measures we managed to avoid the worst consequences for the global financial system and the world economy. as the situation improves, it would be naive to think that we can now go back to the previous loose coordination. there continue to persist underlying β fault lines β ( to use the words of raghuram rajan ) that | 0.5 |
what that intends to do is to assist companies, which are going to be affected by liberalization to become more competitive, and also to assist workers, whose jobs have been threatened, to re - train. now, i β ve talked on smes, for export promotion. there are four areas where they require support. 1. training ; 2. in - puts, including technology ; 3. access to finance ; and 4. marketing. invariable the biggest challenge is marketing. to get them to produce output that they can sell in the domestic market and abroad. so one challenge is really how we link our smes into international supply chains, either through larger companies, or directly. we really need to think in terms of linking up our smes to supply chains. the government has already taken some decisive measures to overcome the short - comings of the export sector. with some improvement in the performance in the export sector, so far, there are signs that the initiatives are favourable. since march, we have now seen an improvement in export numbers. we β ve got numbers up to may β in march april and may the numbers have shown an up - turn in export revenue. hopefully that will gather momentum. i think with the gsp - plus kicking in, and hopefully, a more stable macro - environment, export growth will continues. page 16 of 17 as i said, sri lanka cannot attain 6 - 7 % growth on a sustained basis without transformation of its export performance. nor can we overcome the constraints associated with our external debt burden without significantly enhanced non - debt creating foreign exchange receipts, generated, inter alia, by increased exports. so, export transformation is crucial for both boosting growth and employment, as well as to stabilize our vulnerability stemming from our external debt. the performance of the easl will be a key determinant of the future prosperity of all sri lankans. thank you very much. page 17 of 17 | by the payments council on future payments : http : / / www. payyourway. org. uk / wp - content / uploads / 2012 / 10 / pay - your - way - 2025 - future - ofpayments. pdf bis central bankers β speeches as a result of the digitalisation of information, communication and commerce, payments β and in particular remote payments β are no longer perceived on a stand - alone basis. rather, they have become part of some increasingly long and complex value chains. users will above all want these value chains to seamlessly integrate e - commerce, social media and retail payments. in e - commerce, buying and paying with one click is easier than having to navigate from the merchant website to the bank online application and entering payment data, passwords, tans and so on. interestingly and unsurprisingly, the companies that dominate the digital world β the internet β big five β, namely apple, google, microsoft, amazon and facebook β are all offering payment services or considering doing so. 2 these payment services are incorporated seamlessly into their digital ecosystems and thus potentially have a global reach. their business case is clear. they provide the services free of charge to retail clients ( but not to merchants ), expecting to achieve indirect returns through increased customer loyalty, acquisition of customer data ( big data ), analysis of purchasing behaviour and personalised advertising. this is the big challenge for the incumbents in the market. however, the market pie in retail payments innovation in europe has not been sliced up and shared out yet. incumbents can still have an impact, provided they are far - sighted enough to realise that the challenges of digitalisation cannot be met by merely considering the internet and the smartphone as an additional channel for retail payments. while the new service providers and competitors should not be underestimated, let β s not forget the comparative advantages that banks can offer. data and operational security is one. many users are worried about some practices of the international providers in the digital sphere. confidence in the security of transactions is β and will remain β the basis for any kind of relationship between payment service provider and user. believe it or not, payment service users still trust their banks. against this background, the role of the regulators in general and central banks in particular has not changed that radically. the main concern of central banks is to maintain confidence in money by fostering safe and efficient retail payment systems. however, the issues that need to | 0 |
supply shock could have an adverse impact on expectations and hence the medium - term inflation outcome. we have seen it recently. as the global economy recovered from recession in 2009, commodity prices, particularly food and oil prices rebounded raising headline inflation in many countries. however, headline inflation soon moderated in many advanced economies, as inflation expectations remained well anchored, besides significant negative output gap. of course it is difficult to measure and interpret inflation expectations in a developing country like ours. however, the rbi β s quarterly household inflation expectations surveys conducted in select urban centres suggest that inflation expectations in india have remained elevated in double digits for quite some time now. 3 the broad consensus in policy analysis is that while one could look through the first round direct impact of supply shock induced inflation, policy should respond to the second round effects so that the inflation process does not get generalised. β β¦ the direct role of monetary policy in combating food price pressures is limited, but in the face of sustained high food inflation, monetary action may still be warranted to anchor inflation expectations. β 4 to sum up, the nature and composition of food inflation has changed in the recent years. as per capita income has increased the demand for food has shifted towards protein, fruits and vegetables. as supply response has not been adequate, there have been price pressures. in addition, the agricultural sector experienced cost - push both in terms of increasing price of material inputs and labour. let me conclude with some thoughts on the way forward so that the food economy does not pose a major constraint on the path of non - inflationary growth that could be sustained over the medium - to long - term. first, there is substantial wastage of agricultural produce, particularly perishables like fruits and vegetables which needs to be minimised by improving the supply chain logistics by setting up cold chains and processing facility at producing clusters. second, there is a need to further liberalise agricultural trade by modifying agricultural produce marketing committee ( apmc ) acts by state governments and even exempting perishables like fruits and vegetables from the provisions of apmc to give wider access to both producers and traders for better price discovery. please see http : / / www. rbi. org. in / scripts / publicationsview. aspx? id = 15423 for the latest results of the inflation expectation survey of households. subbarao, d., ( 2011 ), β the challenges of food inflation β, presidential address at the annual conference of the indian society of agricultural | marketing at hyderabad, november 22. bis central bankers β speeches third, over the medium term supply can be improved in a non - inflationary manner by augmenting productivity. one important way of productivity expansion is through greater mechanisation. however, dominance of small size of land holdings puts a constraint on the choice of technology. hence contract farming and leasing of farmland while protecting the ownership rights of small landholders should be facilitated to enhance production and productivity. fourth, from the demand side dispensation of social welfare benefits through cash transfer would help not only in rationalising demand for food products but also in containing the distortionary effect on the labour market resulting in a more economic use of the labour supply. finally, while the major policy actions to augment food supply may not be in the domain of monetary policy, it may have to perform a careful balancing act so that a sharp action does not choke off supply response and a weak response hardens inflationary expectations. thank you once again for your kind attention and for inviting me to deliver this prestigious lecture which has been a privilege. bis central bankers β speeches | 1 |
difference in terms of cash flow and liquidity management. another advantage is the finality of instant payments, which is particularly useful in e - commerce and other situations where goods or services are only delivered against the payment. clearly, instant payments will become an alternative for cash, which also offers finality, and for credit cards in an online environment. more strategically, instant payments are reason to develop a new payment infrastructure. this may provide the basis for service enhancements and value - added services. the combination of instant payments and psd2 also offers new opportunities. new services will be offered online, by banks and non - banks, and payments will be settled in a few seconds, which is what consumers and retailers expect in today β s increasingly digital word. traditional obstacles in terms of time and space are gradually being removed. payment markets will become fully integrated! conclusions i want to end with this positive outlook in mind. payment integration clearly contributes to greater efficiency and economic growth. which is why we must continue our efforts. rather than the previous metaphor on european integration, i prefer what jacques delors said : β europe is like a bicycle. if it doesn β t move forward, it will fall over β. i find this perspective much more appealing, not only because i β m dutch and we cycle everywhere. it shows that economic integration needs momentum. moreover, innovation needs to be stimulated by other means than just striving for integration. legislation and regulation can be helpful, central banks can provide guidance, like the erpb did with instant payments. they can also stimulate cooperation between market participants and public authorities, which can further innovation. this brings us back to the overarching theme of the conference. i hope that today β s program and the panel discussion will shed new light on the various issues in payments and payment innovations. i would like to encourage you to use this opportunity to actively participate in exchanging views. i wish all of you another day of lively and productive discussions! so let β s make the organizers proud, and ensure this tenth edition is one of the most memorable conferences of the year. | conference has only further matured. it has grown both in audience and in breadth of topics. and this year β s program is, once again, testimony to that. i wish you all an inspiring two days. 1 national bank of the republic of north macedonia, accessed on 7 december 2021, rnm fintech survey final report clean 211220. pdf ( nbrm. mk ) 3 / 3 bis central bankers'speeches | 0.5 |
anita angelovska bezhoska : shaping payments innovation speech by ms anita angelovska bezhoska, governor of the national bank of the republic of north macedonia, at the 15th conference on payments and market infrastructures, ohrid, 29 - 30 june 2023. * * * your excellences, dear ms. van dijk, distinguished speakers, ladies and gentlemen, it is always a privilege and a pleasure to address you at our traditional conference on payments and market infrastructures. an event, organized in collaboration with the dutch central bank, a successful partnership that lasts for fifteen years. therefore, this year we mark an important anniversary. and i have no doubts that celebrating this occasion, while contemplating on the cutting - edge payment innovations, will be much more memorable in the surrounding of the iconic beauty of ohrid, a city whose breathtaking architecture speaks of creativity and innovations of past civilizations. as the dutch writer, a friend of the city of ohrid said, " in fact, it is worth going from paris to the balkans just to see ohrid. what a magnificent location on that steep hill! and the town, an extraordinary mixture of customs and centuries... ". creativity or using original ideas to create something new, and innovations, which is introducing new things, are more than ever features of our societies. the ongoing fast wave of digitalization is having wide - ranging effects on many segments of our lives. it has been transforming public and private services, making them more accessible and convenient to consumers, contributing to higher inclusion. more broadly, it means improving the wellbeing of economies as finance, knowledge and data become more widely available. particularly rapid are technological innovations in financial services, with the payment industry being at the forefront. current and future trends in payments innovations and implications for central banks will be the focal point of my address. innovations in payments rest on three main pillars ( world bank, 2022 ). the first one relates to the changes of the links between payments and accounts. for example, for a long time, access to payment services was dependent on access to bank account. the so - called pre - paid concept ( e - money ) broke the exclusive link between payments and bank accounts. the second pillar rests on the changes in the way payments are processed ( payment systems ) β we observe proliferation of fast payments, distributed ledger technologies, qr codes, digital ids etc. and the third pillar relates to the changes in the way consumers interact with | payments with growing accumulation of customers data and tools for analysis. innovations along these three pillars are redefining business models of payment providers with far reaching effects on the very structure of the payments market. this means, entrance of non β banking providers, stronger competition, costs reduction and real time payments as a new " must have " feature in payment services. seems that banks as incumbents have also benefited from competition pressures, modernizing and sophisticating their payment infrastructure. in fact, digitalization of banking is not a new phenomenon. it has been here for more than 30 years, although this last wave is of unprecedented scale. yet, the market is transforming, which is also visible through the 1 / 4 bis - central bankers'speeches change in the revenues sources of banks. according to mckinsey global payments report, payments revenues of banks are declining, as standardization, technology and regulatory pressure for open banking allows for new entrants and pressures on profit margins. the consequence of this payments overhaul is shift from cash, checks and paperbased credit transfers to digital payments, especially contactless and fast payments whose value and volume reached historically highest levels. according to red book statistics, in the last decade the annual average number of digital payments per person increased from 179 ( 2012 ) to 332 ( in 2021 ). in a similar vein, the global world bank findex database, points that the percentage of adults who made / received digital payments increased from 44 % in 2014 to 64 % in 2021. these trends are evident in the macedonian economy as digital payments per person more than tripled during the last seven years. in addition to more convenient, cheaper and faster payment services, digitalization has been conducive to rising financial inclusion. in 2021 compared to a decade ago, the percentage of adults holding a bank account increased globally from 51 % to 76 %. in the macedonian case, this indicator is set above the global average at 85 %, compared to 74 % ten years ago. apparently, we do see fast and profound changes in the financial industry that inevitably affect central banks in many ways. on the one hand, we operate, regulate, supervise and oversee payment systems that are important for the overall financial stability, the transmission of monetary policy, and for the confidence in the currency, eventually. as innovation in finance does not only bring benefits but risks as well, central banks must ensure that risks are contained and do not impair financial resilience and traditional mandates of central banks. on the | 1 |
to membership, if not for good but at least for the foreseeable future, the situation will worsen further, as i have described already. i think this would be very unfortunate. | the similarities also outweigh the differences now. this is perhaps not so surprising. greater independence leads to a natural increase in demands for central banks to clearly explain and account for their actions. it is also natural that it should be possible to assess these actions. to this end, those who appoint the executive board at the riksbank and at the ecb have the opportunity to attend important board meetings. both institutions are also accountable to their respective parliaments. however, there are also a number of differences. for instance, our target is more precise and we regularly publish inflation reports containing forecasts that show how our analysis work develops and changes over time. we also publish separate minutes of our monetary policy discussions. neither monetary policy theory, nor its practical implication is written in stone. changes occur over time. in this spirit the ecb has been reviewing its monetary policy operations over the past year. the enlargement eastwards will entail a new, formative stage. i would gladly work actively to achieve increased clarity and transparency within the ecb if the result of the referendum is a β yes β vote. is a national stabilisation policy necessary? the risk that sweden could end up in a different situation from the rest of the euro area, and that this would cause serious economic policy problems, has been strongly highlighted in the swedish discussions, much more so than in other countries where the monetary union has been discussed. the reason for this is, of course, the severe crisis that occurred at the beginning of the 1990s, with the collapse of the krona in 1992, which had such a tangible effect on the lives of many in sweden. in my opinion, there is a tendency to overestimate the risks that developments in sweden will differ substantially from the rest of the world and require unique stabilisation policy measures. when we have differed from other countries previously - such as during the crisis years of the early 1990s - this has usually been the result of conducting a different economic policy ; of not having control over inflation or focussing on stability, as the core emu countries did. however, there now appears to be a consensus that economic policy should be aimed at long - term stability and that this policy should stand firm. at the same time, i do not think that a relatively similar development in interest rates in sweden and the euro area in recent years is sufficient argument against the need for a national stabilisation policy. while it is true that the instrumental rates have developed similarly to one | 1 |
, substantially above the level of required reserves, has kept very short - term interest rates practically at zero percent, with some minor fluctuations if any. considering that the effects of the quantitative easing policy are coinciding with the effects of short - term interest rates being at practically zero percent, a change of the policy framework itself does not imply any major change in the policy effect. if the trend toward positive year - on - year growth in the cpi becomes firmly established, real short - term interest rates will effectively decline, providing powerful stimulus to economic activity and prices. the level and the time - path of interest rates under the subsequent two processes will certainly depend on economic activity and price developments. if it is judged that upward pressure on prices continues to be contained and the economy follows a sustainable and balanced growth path, this is likely to give the bank latitude in conducting monetary policy. the bank conducts monetary policy to realize the sustainable growth of the japanese economy under price stability. at present, the economic recovery is continuing and the environment influencing prices is beginning to change. if the year - on - year rate of change in the cpi registers zero percent or higher on a sustainable basis, that will mark a sort of milestone toward realizing such a goal. the bank will continue to conduct monetary policy appropriately in accordance with the changes in economic and price conditions to provide support from the financial side for the good performance of the japanese economy over the long term. appropriate monetary policy is also important from the perspective of financial market stability. for example, long - term interest rates have remained stable in the united states in part because of market confidence that the appropriate conduct of monetary policy by the federal reserve will maintain price stability into the future. in japan as well, as noted in the outlook report, together with the maintenance of appropriate monetary policy, the bank's explanation of its thinking on the conduct of monetary policy in detail will contribute to smooth formation of prices in financial markets. closing remarks chubu is a region that has taken advantage of its manufacturing strengths, vigorously developed private - sector business activities, and pulled the japanese economy forward. such originality and inventiveness based on private - sector initiatives will be of the utmost importance for the japanese economy to realize sustainable growth. in that sense, i look forward to the further remarkable development of the chubu region. | oecd area where economic growth has been vigorous. during the first half of this year exports of goods, measured in current prices, rose 9 per cent compared with the same period in 2003. swedish exports have also benefited in part from the revival in the it and telecommunications sectors. however, robust growth in exports is not unique to sweden ; average export growth in the eu has been roughly as strong during the first half of this year. another positive signal is that a pickup in investment, which the riksbank and other forecasters have been waiting a long time for, seems to have begun. this was a major contributory factor to our more positive outlook for the swedish economy at the latest monetary policy meeting in august. since the monetary policy meeting in august, the government and its collaboration parties have announced proposals, intended to be presented in more detail in the budget bill, which may entail a more expansionary fiscal stance in the period ahead. these proposals include cutting income tax for households, abolishing inheritance and gift tax, lowering wealth tax and increasing support to local governments. in total, this is estimated to provide a stimulus of just over sek 20 billion in 2005 and 2006. how large the impact of this will be on economic growth and inflation is not so easy to forecast. this is partly dependent on the extent to which households save their increased incomes. using traditional rules of thumb it could entail a few tenths of one per cent higher gdp growth in both 2005 and 2006. as things stand, therefore, there is reason to expect growth to average above 3 per cent in the coming two years. in spite of the fact that the economy has performed fairly well for almost two years, developments in the labour market so far have been weak. even though the demand for labour is still low, the situation is nonetheless judged to have stabilised somewhat. the historical pattern is for employment to lag behind a change in output somewhat. it is common for economic upswings to begin in manufacturing, which then results in a rise in manufacturing employment. gradually, there is also an increase in output in the services sector, which boosts employment in that sector. our judgement is that this will also be the case this time. at the same time, it is important to remember that a process of structural change has been underway in the swedish economy for some time, where jobs in the manufacturing sector have been replaced by jobs in the private services sector. this development, too, is likely to continue in | 0 |
transactions. they are in a position to take a strategic or longer - term view of the comparative or competitive advantage of their individual banks as well β 8 β as identify areas of portfolio weaknesses and the costs / benefits of various kinds of services and products offered by them. they also have the opportunity to study from their vantage point and from a practical angle the working of the financial system and various improvements needed to strengthen the financial intermediation function. however, for bank economists to be able to perform these functions, it seems that some reorientation of the role that is assigned to them is necessary. there is also a need for some β attitudinal β change on the part of economists themselves. those who work in the commercial banking sector have to be prepared to accept operational responsibility, to work in the field, and to familiarise themselves fully with the commercial aspects of their bank β s work. their work has to be operationally relevant, and it must contribute to the financial soundness of bank β s operations. this is possible if bank economists also have branch - level experience and experience of working in non - economic departments with line responsibility. at present, the role of economists in our banking sector seems to be too narrowly defined. they are viewed as keepers of data, particularly macroeconomic data, and undertake periodic review or analysis of macroeconomic trends in the economy. they are seldom involved in undertaking any operational work or in developing strategic policy choices or even in treasury or foreign exchange functions. all over the world, with deregulation and globalisation of the financial sector, the role of economists in the banking sector has been changing and becoming more and more focussed on the analysis and valuation of the risk associated with various alternatives, particularly in emerging economies that are subject to greater volatility in the financial sector. in india, however, the role of economists has been somewhat slow in changing. it may perhaps be useful for this conference to initiate a process of discussion on the various issues and to reassess the role that members of this distinguished body can play in pushing forward the process of reform in our country. the challenges ahead are gigantic, but they are also exciting. given the determination, i have no doubt that india can have one of the most vibrant financial systems in the world. i would like to acknowledge with thanks the help of shri m. s. mohanty and shri partha ray of the reserve bank of india in the preparation of this lecture. * * * | . issue to contemplate is whether this can be done in a short term or even in the medium term. 9. then would it be fair to assume that a combination of above two would be a more realistic goal to pursue for quite some time to come considering the dimension of the work involved? would it also be fair to assume that pursuing only one of the above or even both but with varying emphasis would not serve the purpose? 10. leaving this broader issue for wider discussion, let me now turn to the various initiatives taken in past few years in respect of poverty alleviation / financial inclusion / employment generation etc. priority sector lending 11. efforts are also underway to reorient the priority sector lending guidelines to serve today β s growth and inclusion agenda. an internal working group at rbi has revisited the existing guidelines and suggested revisions for ensuring channeling credit to segments that get crowded out in the absence of specific targets. these include small and marginal farmers, micro enterprises and the weaker sections while broadening the scope to include other underserved categories of national priority, such as agriculture infrastructure, social infrastructure, renewable energy, exports and medium sized enterprises. financial inclusion plan 12. let me briefly highlight what rbi has been doing for mainstreaming the marginalized sections of the society and for ensuring an equitable growth in the country. rbi has been relentless in its pursuit of achieving universal financial inclusion by following a structured and planned approach. as i mentioned earlier, the focus is not only on ensuring access to financial services and products but also taking efforts to address issues emanating from the demand side through financial literacy initiatives. phase ii of the financial inclusion plan is currently under operation which seeks to connect all the 600, 000 plus villages in the country to banks either through a brick and mortar branch or a bc agent by the end of the year. pmjdy 13. to say that government β s pmjdy scheme has been a success would be a massive understatement. one must admire the vision and intent behind the program. lot of efforts bis central bankers β speeches has gone into opening the bank accounts and most households have been connected to the formal financial system. the need of the hour now is to ensure that services are easily accessible to the account holders, are cost - effective and service efficient & most importantly the accounts remain active. for the account to remain active, the holders would need income and benefits to flow into them. focus should also be placed on inculcating savings habit among the | 0.5 |
the past million years ). more recently the dasgupta review6 in the uk states how severe the risks linked to biodiversity loss are and how complex the interactions between human actions and nature are. the scientific community actually tells us that these ecological risks are interconnected and should not be addressed in silo. for example, the concept of one health developed by several international organisations suggests that human, animal and environmental health are interconnected and can only be addressed jointly. in its final declaration of the global health summit in rome ( may 21 ), president mario draghi stated : 7 β the rome declaration rightly emphasises the importance of pursuing a one health approach β and here i β m coming to climate β, to preserve human, animal and environmental safety. this is the key priority of italy β s g20 presidency. the scientific expert panel has stated how most infectious diseases are caused by pathogens that are derived from animals. their emergence is largely driven by deforestation, wildlife exploitation, and other human activities. effective environmental action can help to defend animal welfare and ultimately mitigate the risk of new health threats. when pursuing a common strategy to prevent future pandemics, we must uphold our commitment to limit environmental damage and tackle the climate crisis. see : https : / / www. ngfs. net / sites / default / files / media / 2020 / 09 / 03 / ngfs _ charter _ final. pdf ipbes ( 2019 ). the global assessment report on biodiversity and ecosystem services. accessible at : https : / / ipbes. net / global β assessment dasgupta ( 2021 ). the economics of biodiversity : the dasgupta review. hm treasury. accessible at : https : / / www. gov. uk / government / publications / final β report β the β economics β of β biodiversity β the β dasgupta β review see : https : / / www. governo. it / node / 16923 the sustainable development goals offer a useful set of targets to achieve this overarching objective, starting with the cop26 conference, that β as i think i said before β we are co β chairing with the united kingdom. β as regards health aspects, i am sure that mario monti, chair of the pan european commission on health and sustainable development launched by the who β europe, 8 who had already made several proposals in march 2021, will go into more depth when he takes the floor. the scientific community estimates that 60 % of known infectious diseases and | conference " the internationalisation of the euro and the creation of the eu capital markets union " - paris, 16 june 2023 the euro as a complementary asset in a more multilateral system speech by francois villeroy de galhau, governor of the banque de france page 1 sur 6 ladies and gentlemen, it is a great pleasure for me to be with you today for this conference on the internationalisation of the euro and the creation of the eu capital markets union. i would like to warmly thank the robert triffin international ( rti ) association and the european league for economic cooperation, and more particularly bernard snoy, for their invitation. i will begin by discussing the monetary policy decisions taken yesterday by the governing council ( i ), before getting to the heart of the matter of today's conference. powerful forces are pushing for greater diversification within the international monetary system ( ii ). the euro must now play its full international role, in order to assert itself as a complementary anchor towards the " creative frontier " that a truly multilateral international monetary system ( ims ) would one day represent ( iii ). i. monetary policy we decided yesterday a 25 basis point increase, in line with the slower pace adopted early may. and our future decisions will be data driven, meeting by meeting. hence nobody should rush to a premature conclusion about our calendar nor about our terminal rate, and the latest market volatility seems somewhat excessive. let me stress two elements in this direction : β’ we are data driven, we are not forecasts driven. and recent data show that even if we are obviously still far from the inflation target, our monetary policy is at work, and is working : inflation has peaked in the euro area, core inflation has declined for the second consecutive month, and there are several other signs that underlying price pressures are softening. according to yesterday β s inflation forecast, which is a rather cautious one, inflation should be at 3 % in the euro area by the end of this year, and at 2 % by 2025 : we are confident that we will deliver on our inflation target in the next two years. β’ we have already shown our determination on interest rates through this overall 400 basis point increase. we obviously covered most of the page 2 sur 6 ground, and we are clearly in restrictive territory on all maturities : the key issue now is the transmission of our past monetary decisions, which is proceeding forcefully to financial conditions but could take up to two years for its full | 0.5 |
each employee, the rules create significant administrative problems and may conflict with state privacy requirements that restrict access to information concerning an employee's salary. although the rules also allow a bank to pay referral fees in the form of " points " in a bonus program, the rules require that any points awarded must not only be nominal, but also must be the lowest amount awarded for any product or service covered by the bonus program. thus, for example, the points awarded for a securities referral could not exceed the amount of points awarded for a safe deposit referral, even if the points awarded for the securities referral were nominal in amount. failure to address all exceptions or adopt cure or leeway periods the interim final rules also fail to address the scope of a majority of the exceptions to the definitions of " broker " and " dealer " that were adopted in the glb act. given the fact that the board believes that many of the sec's interpretations of the scope of the exceptions it has chosen to address do not comport with the unambiguous words of the glb act and the legislative intent of the congress, we are concerned about the manner in which the sec will interpret the other exceptions. the board fears that if the sec does not adopt rules concerning the scope of all of the exceptions, it will aggressively interpret some of the exceptions through enforcement actions and no - action letters, without banks and other members of the public having the opportunity to comment on these interpretations. the interim final rules also fail to provide any cure or leeway periods to banks that are attempting in good faith to comply with the exceptions when they discover that some of their securities transactions do not comply with the exceptions due to inadvertent errors or unforeseen circumstances. given the complexity of the exceptions, it is expected that banks that are attempting to conform their securities activities to the exceptions will identify some securities transactions that do not meet the terms of the exceptions. in some circumstances, banks will not even be able to confirm that their securities transactions will comply with an exception at the time they are conducted. for example, banks will not be able to confirm that they meet the " chiefly compensated " standard in the trust and fiduciary exception until they review all of their compensation earned at the end of the year. for these reasons, the board believes that the sec must provide banks that have adopted policies reasonably designed to comply with the exceptions a reasonable period of time to cure any inadvertent or unforese | banking issues and trends. let me pause here for a moment and say that improving communication doesn β t necessarily mean that the federal reserve and the csbs members will always agree. we won β t, and perhaps we shouldn β t. a diversity of views can be a strength. a robust discussion requires a thorough analysis of differing views, which leads to a more informed understanding of issues. this healthy give and take is the fourth reason for better communication : it leads to better outcomes. i will cite one example that i know is on the minds of many of you β the rulemaking process the agencies are currently engaged in on the community bank leverage ratio ( cblr ). here is an excellent example of where it makes good sense to consult closely. i know you have a lot of knowledge and expertise to bring to bear on this issue, which helps explain why congress has required the agencies to consult with the states. as you know, the fed and the other agencies are now gathering and evaluating comments on the cblr and getting feedback on this interagency proposal. so, now is a good time to re - engage. i am committed to re - engaging with you on the interagency proposal and ways we might be able to improve it. i am eager to hear your thoughts. i have one more reason for better communication, but first i will give you an idea of what i have in mind for that consultation. the formal means by which csbs and others comment on a rulemaking is important, but i think we would also all benefit from more informal, and more frequent contact. if you have an issue, if you have something to say, just pick up the phone. it is also my intention to be on the road a lot, visiting federal reserve districts and talking to bankers, consumers, and community groups. when i come to your state, i hope to see you, and i promise to make time to talk. 3 / 4 bis central bankers'speeches my final reason for better communication brings me back to a point i made at the outset : the united states needs a strong community - banking sector. we need strong community banks because they help support strong communities. strong communities are the building blocks of a strong nation. they provide safety, education and economic opportunities, and help define the values we hold dear. community banks are vital to the success of communities. they help us save and plan for a better future. the credit they extend helps preserve farming as a way of life for american | 0.5 |
too. with bond prices falling and many investors caught off guard, there appears to have been little appetite for taking long positions in bonds. for what it β s worth, the current level of bond market volatility is not exceptionally high. indeed, it has been unusually low over the past year. so these market movements are a rather welcome development insofar as they help to foster risk awareness. what this episode illustrates most of all is that central banks currently have a significant impact on capital markets, as they have become the dominant market player. yet they are not fully in control of long - term interest rates, try as they might in striving to fulfil their monetary policy mandates. bis central bankers β speeches but this episode also shows that the financial system was able to cope with these market movements. the ultimate goal of qe is to accelerate inflation in the euro area and to bring the inflation rate into line with our definition of price stability. according to this definition, euro - area inflation should be below but close to 2 % over the medium term. you don β t need me to tell you that i was, and i still am, one of the sceptics regarding purchases of sovereign bonds in the euro area. having outlined my arguments on many occasions, for example at a city of london event in february, i will be brief today. in a nutshell, i had my doubts about the need for a large - volume qe programme and, against this backdrop, i see risks and unintended side - effects that might outweigh the benefits in terms of an accelerated normalisation of inflation. while the current inflation rate is significantly below our target, this was driven mainly by a positive supply - side shock caused by lower energy prices. as there were no signs of secondround effects, the risk of deflation was very low indeed. so, an acceleration of the inflation rate was already in the cards, with or without qe β with qe, certainly faster. this benefit had to be traded against the risks : central banks are set to become the euroarea member states β biggest creditors. when governments become accustomed to the favourable financing conditions, this could dampen their willingness to consolidate their budgets and implement structural reforms. and it could make governments more keen to try to prevent the ecb from terminating its ultra - easy monetary policy. at the end of the day, this could jeopardise central bank independence, undermining our ability to maintain | rates, at least for the euro area. it is monetary policy that, over the medium to long term, pins down trend inflation. globalisation through increased trade with labour - abundant economies will affect only relative prices. it is a well - known fact that, for the aggregate price level and its rate of change, relative price effects have no ultimate influence. of course, globalisation might have contributed to the observable decline in cross - country trend inflation as positive price shocks have created an environment in which some central banks could use β the opportunistic approach to disinflation β. but this does not seem a convincing explanation for the bulk of industrial countries. moreover, the increase in trade volumes relative to gdp is a process that was already under way in the 1970s and 1980s. at the same time inflation rates during this period were substantially higher than today. finally, even the immediate relative price effects of trade with emerging economies are not as benign for inflation in industrial countries as is commonly assumed. the rapid industrialisation of economies like china and india has led to sharply rising commodity demand from these countries. this demand has contributed markedly to the increases in oil, food and raw material prices over the past couple of years. it is difficult to estimate the net effect of these different terms - of - trade shocks on the overall price level in industrial countries. but, in my view, there are no reasons to assume that the overall outcome has been one of a more benign inflation outlook. while this more sceptical view was often disputed still some months ago, the current inflationary pressures in industrial countries arising from energy and food prices have certainly raised the awareness that the price effects of globalisation have been anything than a one - sided blessing. taken all together, there are growing reasons for exercising caution with regard to the popular globalisation story of inflation. in other words, in my view, the real effects of globalisation on the inflation process are an issue that should be of some interest for monetary policymakers. but, at the end of the day, the importance commonly attached to globalisation forces is less clear than popular views often assume. the decline in trend inflation worldwide is better explained by monetary policy in many countries being geared towards price stability, which is enhanced by the increasing independence of central banks in achieving their goals. this point β and the immediate implications for monetary policy β can also be illustrated with an eye on macroeconomic theory. here, in modern macroeconomic models inflation dynamics are captured by ( | 0.5 |
derick latibeaudiere : the effect of oil prices β the case of the importers presentation by mr derick latibeaudiere, governor of the bank of jamaica, at a round - table discussion during the meeting of latin american network of central banks and finance ministries, washington dc, 19 - 20 october 2006. * * * the sustained increase in oil prices since 2002 has been of tremendous concern to us in jamaica, and it is with a great deal of relief that we welcome the most recent indications of a reversal of the trend. the increases in oil prices since 2002 has been the most β shocking β since the first major oil price jolt in the early 1970s - much beyond anything that we had anticipated. the situation in jamaica in the 1970s was much different from what it is today. back then, there were significant structural weaknesses in the economy, which greatly increased the country β s vulnerability to external shocks. the impact of the 1973 oil shock uncovered some of those weaknesses and made the situation much more difficult to manage. indeed, the difficulties that we experienced following the 1973 oil shock contributed to jamaica β s first borrowing experience with the imf and were to a large extent responsible for the significant increase in inflation that continued to endanger our economy for the next two decades. things have changed since that time. the jamaican economy has undergone significant structural and other changes and the macroeconomic fundamentals are now much better. inflation has moderated and is now much less inimical to our economy. in addition the central bank has built a reasonable reserve cushion to help us deal with shocks of this nature. notwithstanding this, jamaica like most other oil importing countries has felt the adverse effects of the persistent increases in oil prices. this has been particularly noticeable at the pumps and in our electricity rates. but despite the cumulative negative impact, the economy has remained relatively buoyant over the last two years. it is indeed true that some of the very factors that influenced the sustained increases in oil prices were also the factors that contributed to the increased investment, the growth in tourism and the demand for bauxite that jamaica has been experiencing. these factors relate to the acceleration in world economic growth and the demand for commodities including oil, which contributed to the sharp increases in oil prices over the last four years. for me the real concern is the effect that the increases in oil price has on inflation and also on the balance of payments. the price of oil has risen on an annual average basis by approximately 20. | 0 per cent between 2002 and 2005 - significantly higher than the annual average increase of 12. 0 per cent between 1998 and 2001 and much more than the increases that we experienced in the 1980s and early 1990s. increases in oil prices have a direct impact on inflation. the price of crude oil immediately impacts electricity and gasoline. in jamaica, electricity prices are not subsidized and therefore increases in the price of oil are passed directly to the consumer via a tariff formula that immediately adjusts the electricity rates. transportation accounts for the largest proportion of refined fuel sales by the domestic refinery. the consumer basket measured by the cpi only includes public transportation, ( bus fares ) and therefore a large segment of the major gasoline consumers are not included in the cpi. bus fares are also administratively determined and implemented with a lag. therefore the changes in oil prices are fed through to the cpi more slowly. in the case of cooking gas and related products these items carry relatively small weights in the jamaican consumer basket. consequently, although the prices are adjusted in line with the increases in external oil prices, the impact on inflation has been correspondingly small. this brings me to the impact of the increases in oil price on measured inflation in jamaica. for the four fiscal years prior the start of the oil shock, domestic inflation averaged approximately 8. 0 per cent per year. for the four years after the oil shock, inflation accelerated to an average of 14. 0 per cent per year. an examination of the trend in jamaica β s inflation could, a priori, suggest that the acceleration in jamaica β s inflation was a result of the oil shock. the evidence shows, however, that the increase in inflation over this period was related more to increases in food prices than to increases in energy related prices. the economy suffered a range of weather related shocks that caused food prices to increase significantly over this period. therefore, the dramatic increase in oil prices was not the main factor contributing to the increase in jamaica β s inflation for that period. the effect of the sustained increase in oil prices would, however, have directly impacted those persons in the higher income groups who would not be included in the cpi. the increases in the price of oil were felt most acutely in jamaica β s current account. the cost of fuel imports jumped from 6. 7 per cent of gdp in fy2001 / 02 to about 15. 0 per cent in fy2005 / 06. in this context, the deficit moved from a sustainable average of 5. | 1 |
continues to actively reach out to support smes through the provision of financial planning and risk management services, and the promotion of financial literacy alongside similar initiatives by financial institutions. public - private partnerships between the association of banks in malaysia and bank negara malaysia have also worked successfully to encourage improvements in customer service levels and the turn - around time taken to process sme financing applications. these initiatives have yielded tremendous payoffs to the national economy. malaysia also ranked in first place in the world in 2009 in the category of access to credit by the world bank in their β doing business 2010 report β. international and regional cooperation in a global economy, efforts to support smes must also address frameworks for facilitating trade, payments and financing beyond national borders. effective regional and international collaboration can add significantly to enhance further the long term contribution of smes to the economy. the endeavour by apec in the establishment of the apec sme working group in 1995 has provided an important collaborative platform for policymakers and private sector leaders to come together in designing regional strategies for sme development. under this working group, policies have been developed to improve the business environment for smes, build sme management capabilities, enhance access to markets, promote innovation, enhance access to financing and encourage sustainable business practices. successful projects implemented in 2009 include the replication of business counselor training programmes across the region and the development of strategies for enhancing the competitiveness of small trading houses and exporters. under the memorandum of understanding entered into by various apec financial institutions dealing with smes in 2003, many more financial institutions have benefitted from increased trade facilitation, transfer of knowledge, expanded cross - border growth opportunities and information sharing. conclusion let me conclude my remarks. the importance of smes in apec economies is clear. however, while their large numbers make them important to the economy, it is their potential that places them at the centre of the economic transformation agenda. support for sme development requires cohesive and cross - cutting strategies which encompasses the collective efforts of the financial sector, the governments and smes themselves. in the global economy, common strategies that are well coordinated across borders would facilitate the participation of smes in the globalisation process. the ultimate goal is to promote entrepreneurship and develop an environment favourable to smes that will allow them to become more competitive in both the domestic and international markets. in closing, i would like to congratulate the association of banks malaysia for hosting this event and encouraging wider international dialogue on important developments affecting | management solutions and the expansion into regional production networks. such support for the growth of smes can bring substantial benefits to financial institutions as smes evolve into larger corporations. role of the government while the economy is powered by private initiatives, governments have a critical role in providing an enabling environment for private enterprises to thrive. in most economies which have a successful sme sector, the government has had a major role in coordinating the support and in strengthening the capacity of smes and providing an enabling environment for smes to thrive. in malaysia, a comprehensive approach has been adopted by the government. in 2004, the national sme development council ( nsdc ) was established by the government to formulate broad policies and strategies aimed at creating an enabling environment for the comprehensive development of smes across all sectors. the council, chaired by the prime minister is the highest policy making body for sme development in malaysia and brings together more than 15 ministries and 60 agencies under a coordinated national strategy. to implement the policies of the council, the sme corporation malaysia ( sme corp ), a specialised government agency, was established in october 2009 to ensure the effective implementation of sme development programs under three broad strategic thrusts : strengthening the enabling infrastructure, enhancing capacity and capability of smes and enhancing access to financing. for the year 2010, a total of 354 programs, with a financial commitment of rm6. 02 billion is being implemented to develop high performance and resilient smes. to strengthen the financial infrastructure for smes, bank negara malaysia has implemented wide ranging measures. the restructuring and consolidation of the banking sector following the asian financial crisis as well as the financial reforms and capacity building efforts taken over the years, including enhancing corporate governance and strengthening risk management practices, had strengthened their capacity to provide more diversified financial services to smes. the deregulation of the financial sector including the new interest rate framework allowed for flexible pricing to reflect the risks and it also promoted increased competition in the financial system. encouraging banking institutions to establish advisory units to support smes also reinforced increased access to financing. these have been reinforced by the establishment of the credit guarantee corporation to provide credit guarantees to smes to facilitate their access to financing from financial institutions. an sme credit bureau and the central credit reference information system ( ccris ) complements the infrastructure that is in place for sme financing by collating vital credit and transaction information that enable smes to build their credit reputation from a wide range of informational sources. the bank also | 1 |
the local entity. in this regard, i would like to emphasise the importance of the independent nonexecutive director ( ined ), and i am conscious that some of you here today will be ineds or aspiring ineds. the ined is an important role in delivering challenge at board level, providing independent and objective perspectives and specific expertise. in fast growing firms with a high level of ambition, such challenge is valuable β and dare i say vital. protecting your customers funds i would like to spend a little more time on another basic expectation β namely that firms will first and foremost focus on protecting their customers'funds. and indeed, as many of you will know, this has been a specific supervisory focus of ours in the payments and e money sector β and will remain so for the years ahead. that you must keep your customers'money safe and segregated should not be news to anyone. and that it is a fundamental responsibility to safeguard the funds you have been entrusted with should go without saying β and is precisely what your customers assume and expect but unfortunately it does have to be said, with our supervisory experience pointing to continued instances of firms failing to comply with basic statutory obligations around protecting users'money. as we have communicated before, and hope we have made clear, we have no tolerance for weaknesses in safeguarding arrangements β and expect firms to prioritise protecting and safeguarding their customer's funds. to repeat, this means we expect : firms to have robust, board approved, safeguarding risk management frameworks in place which ensure that relevant users'funds are appropriately identified, managed and protected on an ongoing basis. this includes the clear segregation, designation and reconciliation of users'funds held on behalf of customers. firms should be proactive in ensuring that the design and operating effectiveness of their safeguarding frameworks is tested on an ongoing basis. 4 / 8 bis - central bankers'speeches they must notify the central bank immediately of any safeguarding issues identified. and take mitigating and corrective measures immediately to ensure that users'funds are safeguarded where, in exceptional circumstances, issues are identified. they must also investigate and remediate on a timely basis the underlying root cause of the safeguarding issue ( s ). 6 these messages on governance, risk management, safeguarding, and resilience are not new. indeed our supervisory expectations and priorities for the fintech sector have been broadly constant over the last few years. 7 constant as they are fundamental ; un | organizations. accordingly, to enhance risk sensitivity without increasing regulatory burden, staffs of the agencies are drafting an advance notice of proposed rulemaking suggesting possible targeted adjustments to our existing regulatory capital rules. this advance notice will be published close to the publication of the basel ii notice of proposed rulemaking so that the industry and others can view the proposals side - by - side. we expect that the comments we receive on each of the proposals will help us refine the proposals and identify competitive issues between the alternatives. in closing, i would like to underscore our commitment to maintain an ongoing dialogue with all members of the banking industry - regardless of their potential basel ii status - and to continue providing equal information to all parties interested in basel ii implementation. this pertains to the entire scope of basel ii - including the proposed u. s. rule, the qualification process, home - host issues, and potential competitive effects. if we can improve on the manner in which we carry out those tasks, please let us know. | 0 |
, we have to accept that there is no one - size - fitsall solution. this is something we are keenly aware of as we develop our regulatory approach on green and sustainable banking. while we base this approach on international best practices, we also take into account local conditions, recognising that banks in hong kong come in many shapes and sizes, and that their progress in green and sustainable banking varies considerably. we will be flexible, proportionate and inclusive in developing and applying regulatory requirements. it will take time for the less prepared banks to build capacity to address climate - related issues ; we are ready to work with them to help them catch up. at the same time, the fast - movers or market leaders are encouraged to make the most of the work they have already done. building capacity 28. the three transformations β in fintech, cross - border banking, and green finance β are still quite new for hong kong β s banking sector. making the most of the opportunities they bring will require changes to work flows and risk management practices by banks, as well as adjustments in our regulatory approach. above all, these changes require a wide spectrum of skills, both specialised and general. this summer, hkib, hkab4 and the hkma have jointly undertaken an exercise to take stock of potential talent gaps in the banking industry. 29. that exercise found gaps in three key areas : technological and data skills ; banking knowledge β especially about the greater bay area ; and specific β soft β skills, such as creativity and adaptability. it is, perhaps, no coincidence that these are the very skills needed for managing the three transformations i have described, and for leveraging on the opportunities they offer. shortages in expertise are a worldwide challenge, so we cannot rely on the importing of outside talent alone. developing the skill sets required takes time and effort. over the next few years, our banks, our professional associations and our education institutions will have to devote substantial resources to talent development in these areas. 30. we are now working with the industry to narrow the gaps in capacity. the solutions include the reskilling of existing staff through continuing professional development. importantly, banks need to invest in new talent capable of capitalising on the changes already in progress, and equipped for the challenges that lie ahead. to this end, the hkma will be working with the universities and the other stakeholders to make sure they are aware of the knowledge and skills needed by the banking industry, so that graduates are | such as deafness. the need to devote special attention to diverse perspectives goes beyond ensuring a workplace free from any form of direct or indirect discrimination. it entails reflecting the diversity of the societies we serve. a better understanding of the various needs and experiences in our society helps us to design better and more inclusive policies. in our work on a digital euro, we are seeking to develop a digital means of payment that leaves no one behind. * * * allow me to conclude by reiterating that thorough accountability β as illustrated by your monetary dialogue with madame lagarde and the regular exchanges you had with mr 4 / 5 bis - central bankers'speeches panetta on the digital euro β strengthens both the ecb's legitimacy and the efficacy of its policies. should i be appointed as an executive board member, i would always be willing to engage in dialogue with this honourable committee. this commitment to regular reporting is consistent with the bank of italy's tradition : this year, for instance, i have addressed the italian parliament on several occasions. it would be a privilege for me to join the ecb's executive board, to contribute my experience and commitment to the ecb's mission. it would be an honour to receive your support and serve the citizens of europe that you represent. thank you for your attention. i look forward to your questions. 5 / 5 bis - central bankers'speeches | 0 |
start by explaining why banks have capital. banks play a critical role in the economy by connecting those seeking to borrow with those seeking to save. 2 a bank lends to its customers, including individuals and businesses, based on its assessment of the customer β s creditworthiness. a bank β s depositors benefit from having bank accounts that allow them to easily make payments to others and to maintain a balance of money in a safe and liquid form. a healthy banking sector is central to a healthy economy. the nature of banking, however, along with the interconnectedness of the financial system, can pose vulnerabilities. even if a bank is fundamentally sound, it can suddenly be threatened with failure if its customers lose confidence and withdraw deposits. 3 this inherent vulnerability can pose risks to the entire economy. in the 19th and early 20th centuries, before the creation of the federal reserve and the federal deposit insurance corporation ( fdic ), banking panics were frequent and costly to the economy. 4 based on this experience β and similar experiences around the globe β many countries employ deposit insurance and other forms of a safety net to kashyap, rajan and stein ( 2002 ) describe the dual role that banks play in the economy, providing liquidity to both households and businesses. fama ( 1985 ) notes that banks are special on both the asset and liability side of the bank β s balance sheet. see the bank run literature developed by diamond and dybvig ( 1983 ) and others. jalil ( 2015 ) concludes that β major banking panics either caused or amplified nearly half of all business cycle downturns between 1825 and 1914. β bernanke ( 1983 ) shows that bank failures did economic harm during the great depression. - 3protect depositors and banks. 5 but offering this protection, shielding depositors and banks from risk, can have the perverse effect of encouraging risk - taking, creating what is called β moral hazard. β supervision and regulation β including capital regulation β provides a critical counterbalance, to ensure that banks, not the taxpayers, internalize the costs to society of that risk - taking. the impact of inadequate supervision and regulation was starkly revealed in the global financial crisis, as banks and their functional substitutes in the nonbank sector borrowed too much to fund their operations. 6 while nearly all were β adequately capitalized β in theory, many were undercapitalized in practice, since their capital levels did not reflect future losses that would | new set of hypothetical financial and economic conditions and updates to the banks risk profile. lastly, the stress test can potentially counteract actions by a bank to β optimize β against the capital regime β for instance, lowering its risk - weighted assets without reducing its risk. 21 in this way, the stress test β along with strong supervision β can serve as a check on excessive bank risk - taking. as i β ll return to in a moment, we are focused on ensuring the stress test results feed directly into the capital buffer for large firms. the stress capital buffer is floored at 2. 5 percent, which aligns with the capital conservation buffer applicable to smaller firms. greenwood et al ( 2017 ). - 12 that stress testing remains forward - looking and effective at requiring banks to have capital to cushion losses from emerging risks. a final prudential requirement β a long - term debt requirement β complements the regulatory capital regime. unlike regulatory capital β which helps a firm absorb losses as it continues operations through times of stress β long - term debt becomes especially relevant once a firm has already entered bankruptcy or resolution. at the point of resolution, equity can be written off and certain long - term debt claims can be written down to absorb losses. the remaining debt claims can be effectively converted to equity to provide flexibility to the bankruptcy court or resolution authority in managing the firm β s path through resolution. in particular, this equity can be used to help the firm continue critical operations as its operations are restructured, wound down, or sold, in order to minimize disruptions to the larger financial system. long - term debt requirements were initially applied to global systemically important banks ( gsibs ). the board and the fdic are currently considering whether the costs of a resolution of a large, non - gsib may also justify the imposition of long - term debt requirements on such firms as well. 22 role of stress testing in the forward - looking regime as i β ve said before, it is critical that our capital regime is forward - looking. and while the stress test is the most risk - sensitive and dynamic component of our regulatory capital framework, history has taught us not to become complacent or to shed our humility. in an environment of ever - changing risks, stress tests can quickly lose their relevance if their assumptions and scenarios remain static. let β s not forget that for some https : / / www. federalreserve. gov / newsevents / pressrelease | 1 |
latest available data published by the imf in its annual report provide an indication of the share of the euro in worldwide official reserves at the end of 1998, just before its formal introduction. at that time, of the total worldwide official reserves for which a currency breakdown is available ( sdr928 billion ), 17 % were held in the euro legacy currencies, compared with a share of 71 % for the us dollar and 6 % for the yen. 2. factors affecting the future international role of the euro the international role of the euro is likely to evolve gradually in the future. even the us dollar required a very lengthy process to gain its present status, which took several decades and was fully completed only in the 1950s. growing importance of the euro as an international currency could develop differently as emu represents a one - off regime shift and as the emergence of a global financial market could speed up the internationalisation of the euro. a first prerequisite for a significant use of the euro by foreign agents is confidence in the stability of its purchasing power in the long run. this is the primary objective of the eurosystem. in this respect, the value of the euro is based on domestic price stability and on the medium - term orientation of the eurosystem β s monetary policy. other factors will also play a role. one important aspect is the possible future enlargement of the euro area. four eu countries have, for different reasons, not yet adopted the euro. without elaborating on that, let me simply state that i am confident that they may join in the coming years. if and when this happens, the economic and financial size of the euro area would be further enhanced, providing new impetus to the international role of the euro. a greater challenge is the potential accession of new countries to the european union. negotiations are currently being conducted with six countries. negotiations with another six candidates will start soon. when joining the eu, the new member states will have to comply with all the requirements set out in the acquis communautaire which relate to economic and monetary union ( emu ). therefore, following their accession to the eu, the new member states will also β in a second step β become members of erm ii and will β in a third step, if and when the maastricht convergence criteria are met β adopt the euro. the accession process entails that, over time, the exchange rate and monetary policies of candidate countries will become | march 2021 ecb staff macroeconomic projections for the euro area, which foresee annual real gdp growth at 4. 0 per cent in 2021, 4. 1 per cent in 2022 and 2. 1 per cent in 2023, broadly unchanged compared with the december 2020 eurosystem staff macroeconomic projections. 1 the risks surrounding the euro area growth outlook over the medium term have become more balanced owing to better prospects for the global economy and progress in vaccination campaigns. however, downside risks remain in the near term, mainly related to the spread of virus mutations and the implications of the ongoing pandemic for economic and financial 1 / 4 bis central bankers'speeches conditions. euro area annual inflation has picked up over recent months, mainly on account of some transitory factors. headline inflation is likely to increase in the coming months, but some volatility is expected throughout 2021 reflecting the changing dynamics of the idiosyncratic factors which are currently pushing inflation up but which can be expected to fade out early next year. underlying price pressures are expected to increase somewhat this year due to current supply constraints and the recovery in domestic demand. nevertheless, we judge that these pressures will remain subdued overall, also reflecting low wage dynamics and the past appreciation of the euro. once the impact of the pandemic fades, the unwinding of the high level of slack, supported by accommodative fiscal and monetary policies, will contribute to a gradual increase in inflation over the medium term. survey - based measures and market - based indicators of longer - term inflation expectations remain at subdued levels. while our latest staff projection exercise foresees a gradual increase in underlying inflation pressures, the medium - term inflation outlook β with projected annual inflation at 1. 5 per cent in 2021, 1. 2 per cent in 2022 and 1. 4 per cent in 2023 β remains broadly unchanged from the staff projections in december 2020 and below our inflation aim. the ecb β s monetary policy stance and effectiveness against this background, preserving favourable financing conditions over the pandemic period remains essential to reduce uncertainty and bolster confidence, thereby underpinning economic activity and safeguarding medium - term price stability. let me further elaborate on our assessment of financing conditions. this is defined by a holistic and multifaceted set of indicators. it is holistic because we consider a broad array of indicators, spanning the entire transmission chain of monetary policy from risk - free interest rates and sovereign bond yields to corporate bond yields | 0 |
yiu - kwan choi : launch of the cmu bond price bulletin remarks by mr yiu - kwan choi, deputy chief executive of the hong kong monetary authority, at the signing ceremony for the launch of cmu bond price bulletin, hong kong, 9 january 2006. * * * it gives me great pleasure to welcome you all to this signing ceremony for the launch of the cmu bond price bulletin. we are pleased to see the launch of the bulletin. this, we believe, will be a useful tool to help promote the retail bond market in hong kong. as you know, financial infrastructure development has always been a priority item on the hkma's policy agenda. a robust financial infrastructure is important in maintaining the stability and integrity of the monetary and financial systems and in strengthening hong kong's status as an international financial centre. over the years, we are proud that, with the support of banks and other financial institutions, the hkma has built a sophisticated financial infrastructure that meets the best international standards. having said that, we are conscious that there is always scope to further strengthen our financial infrastructure to take account of the latest technology and market developments. it was precisely for this reason that the hkma conducted a comprehensive review last year on financial infrastructure development in hong kong. the launch of the bulletin is one of the recommendations arising from this review. the objective is to provide retail investors with convenient on - line access to information on bond products and bond prices. we believe that the launch of the bulletin will help to raise product awareness and improve price transparency, thereby helping to promote the development of the retail bond market in hong kong. the bulletin is developed by the central moneymarkets unit of the hkma. we are delighted to have eight major banks, which are present here today, to be the price providers. thanks to their support, indicative bid / offer prices of over 200 bonds of different currencies issued by both public and private sector entities will be available on bulletin. investors may access the bulletin later today for bond information. the website address is https : / / www. cmu. org. hk. the bulletin also provides direct hyperlinks to the price providersaβ¬β’ websites to facilitate investors to approach the price providers for trading. relevant transaction charges imposed by individual price providers are also posted on the bulletin. retail investors can easily gain access to, and conclude trades with, the price providers in a convenient, secure and efficient manner. we are thankful to banks and potential users for | their valuable comments during the development of the bulletin. we will monitor the usage and feedback to gauge whether there is scope for future expansion. we would welcome feedback from users and would endeavour to improve the bulletin on a continuous basis. other banks interested to join as price providers are welcome to approach the hkma for further information. i hope that in time, the bulletin will become a popular portal through which retail investors could easily navigate and shop for the bonds that will suit their investment needs. thank you. | 1 |
it does not seem appropriate for policy makers in korea, in analyzing their policy directions, to use the estimates of the taylor rule, with its time series also including normal times. concerns similar to these have recently been raised at the fomc meeting. these debates are expected to continue in the processes of qe tapering and interest rate normalization. please refer to jeremy stein, β incorporating financial stability considerations into a monetary policy framework β, march 21, 2014. bis central bankers β speeches to be more specific about policy concerns by looking at an example, the biggest challenge in crisis management is that while it is difficult to find measures minimizing type i errors in policy implementation, this process unintentionally create type ii errors frequently. since the costs of a type 1 error of not foreseeing a crisis coming could be politically lethal, particularly in an environment of deepening globalization, we cannot help but be conscious about the probability of tail risks evolving into systemic risk. we can therefore easily make a type ii error, of sending the wrong signals, by talking about the issue of tail risk even when the chance of a crisis arising is not so high. and if such errors accumulate, the subsequent social costs cannot be ignored. further, given the self - fulfilling psychological effects of a type ii error, the adverse effects cannot be downplayed. although the cost may not be very evident right now, as a policy decision - maker and an economic expert this is an issue that one cannot but feel considerable intellectual burden. the most outstanding phenomenon of the global financial crisis has been the surge in global liquidity, which is an aftereffect of quantitative easing. it is very natural that abundant liquidity brings about changes in prices and amplifies the degree of market volatility. in carrying out policies in an open economy system, especially for a small open economy, low volatility in foreign exchange rates play a very important role. as trend of globalization progresses, the importance of foreign exchange rates is becoming ever greater. 9 judging from our experience, foreign exchange rates have been proven to over - shoot, markets to overrespond and therefore policy authorities are often observed to have the tendency to overreact. this means that there is an immanent risk of maximization of type ii errors. a case in point is implementing a policy without considering how much the potential growth rate has declined. i do not think that i need to emphasize the importance of the gdp gap again here, | devote continuous efforts to becoming world number ones in their own positions. one cannot become a leading organization by work of others. we should be at least as good as other central banks. in a leading organization those in the higher ranks are very busy, while in an organization that lags behind the opposite is true. i would like to stress once again that only when we are equipped with the latest weapons can we protect the national interests in an environment of global competition. as one of a central organization of our nation, please remember that there is no greater purpose of our foundation than contributing to the development of our national economy. it is our pride to bring central bank closer to the citizens. only the determination to walk to less traveled road would ensure success. the last four years can be expressed as having been tumultuous. i hope that the fire that i have lit inside you keeps flaring on, and i believe that competent executives, director generals, and team heads will lead this organization well with their experiences accumulated so far. i also look forward to your initiatives so that the bank of korea can take off even further. i began my farewell address by citing a line from general macarthur, and i would like to conclude by citing again some other words that he said : β old soldiers never die, they just fade away. β i would like to just fade away now as a regular citizen, keeping in mind the precious connections that i have made with all of you. thank you. bis central bankers β speeches | 1 |
our rupee which could appreciate on the back of a weakening dollar. the problems confronting the euro area still persist. china is having problems with inflation, and it is currently having recourse to outsourcing to vietnam and cambodia. so, internationally, there are major concerns. despite this, the general view is that during the second quarter, the situation will improve and there will be recovery at the global level. there are concerns over food and commodity prices, as well as energy prices. you are probably aware that at the last opec meeting, no consensus was reached to increase production. and if demand in the global economy is too high and oil production does not increase, it may result in a hike in oil prices. the good thing is that saudi arabia has indicated its intention to continue to increase production unilaterally. if the global recovery for the second quarter is much stronger than the first quarter, there is a risk that food and commodity prices start going up again β we must be prepared for a further increase in food and commodity prices. a positive note was that, when the fao index rose, there was no corresponding increase in the prices of the foodstuffs that mauritians tend to consume, namely, dairy products, cereals and rice. but if there is recovery, there is a risk that food and commodity prices and oil prices might go up again β which will represent a new source of inflation for us. this brings us to the need of exercising control over rising prices in mauritius β we welcome government β s initiative to set up l β observatoire des prix. this is an excellent initiative indeed. but l β observatoire des prix alone will not solve the problem of rising prices. it is a tool among many others, just like monetary policy is a tool among many others. in the case of l β observatoire des prix, it must be supported by greater efforts geared towards making changes in the consumption pattern of people and those that determine prices, in other words, changes in consumer behaviour and price - setting behaviour. the two must go together, otherwise l β observatoire des prix would not contribute towards keeping inflation at reasonable rates. we hope that l β association des consommateurs and other efforts in the field of financial education would lead to changes in consumption patterns through better informed consumers. some people have expressed concern that there might be in mauritius what is called stagflation. stagflation had made the | yandraduth googoolye : how african countries can play an active role in the belt and road initiative remarks by mr yandraduth googoolye, governor of the bank of mauritius, at the financial connectivity thematic forum on " how african countries can play an active role in the belt and road initiative ", beijing, 25 april 2019. * * * excellencies good morning and thank you for giving me the opportunity to address such an eminent audience. last october, at the official opening of the belt and road international financial exchange and cooperation seminar organised by the bank of china, i had stressed on africa β s eagerness to be part of china β s vision to enhance cooperation and connectivity among countries that will be part of the belt and road initiative. africa is endowed with considerable human capital, millions of acres of arable land and a myriad of natural resources. therefore, ladies and gentlemen, the combination of china β s capital, technology, market, enterprises, talents and experiences and africa β s abundant resources, huge demographic dividend and great market potential should create economic wonders. testimony to africa β s willingness to support the belt and road initiative is member states of the african union endorsement of β agenda 2063 : the africa we want β, a roadmap for structural economic transformation over a fifty - year time scale. whilst the initiative will undoubtedly enable a smooth flow of goods and services against efficient mechanisms of payment flows, africa must also see to it that adequate and timely resources are geared towards the modernization of financial market infrastructures as well as to the opening and promotion of free trade areas. these will be instrumental in supporting the expansion of the trade corridor between china and africa and in upholding cross - border e - commerce. ladies and gentlemen, a key target of the initiative rests on financial integration and cooperation. besides enhancing financial regulation cooperation, it will increase the scope and scale of bilateral currency swaps and settlements as well as the issuance of bonds in chinese yuan. it is, therefore, to the advantage of countries across africa to encourage commercial equity investment funds and private funds to participate fully in the construction of key projects stemming from the belt and road initiative. the initiative will also push forth an additional currency of choice and set the rmb among the reserve currencies for african countries. a currency that can be used, not only for trade between africa and china, but also for intra - african commercial flows. african central banks and other regulatory entities must fully embrace the crucial | 0.5 |
. and to do that, we need to further improve the regulatory framework in the coming years. i will argue that the financial system is in much better shape than a decade ago, but important risks still remain. i will argue that international regulatory authorities firstly need to maintain strict micro - and macroprudential regulation ; secondly, must seek further improvements in policy implementation ; and thirdly, should adapt to risks shifted outside their perimeter. 2. causes of the crisis and policy responses let me briefly recall the financial, economic and policy circumstances which allowed the global financial crisis to develop. causes of the crisis in the decades before the crisis, the global financial system changed profoundly. this was the result of deregulation, increasing competitive pressures on banks and increasing financial globalization. these trends have led to a greater role for market finance and a stronger interconnectedness within the financial system. during the same period, the macroeconomic environment underwent important structural changes. this happened on the back of accelerating globalization, the emergence of new players like china, and technological progress. against this background, large global flows of savings and investments 1 see b. bernanke ( 2009 ). reflections on a year of crisis. speech at the federal reserve bank of kansas city's annual economic symposium, jackson hole, wyoming. 21 august. the same remarks were delivered at the brookings institution, on 15 september 2009. pushed down long - term interest rates, in the united states and other advanced economies. 2 accommodative monetary policies further allowed for financial risk - taking. it has been argued that the β great moderation β allowed a leverage build - up that ultimately threatened financial stability and hence macroeconomic stability. 3 in the regulatory policy sphere, a widespread trend towards deregulation loosened the reins on risk - taking in the financial sector. microprudential supervision was not well equipped to address this increased risk - taking. in addition, macroprudential orientation of regulatory policy addressing systemic risk was almost completely absent at that time. in this environment, misaligned incentives prompted widespread risk - taking in the financial system. in combination with high economic growth, important imbalances developed. when the crisis erupted, banks did not have sufficient capital to absorb losses and authorities were not adequately prepared to handle failing banks. the imbalances spread almost instantaneously across the global financial system, as a result of the interconnectedness of financial institutions and markets. these patterns are not specific to the global financial crisis, as | such analyses should be evidence rather than sentiment based, and focused on better rather than less regulation. the global financial crisis has also shown that international co - operation is key in developing effective regulatory policies. the global financial sector is closely integrated, and national or regional developments create external effects that directly and indirectly affect financial stability in other jurisdictions. 17 developing a common approach creates a level playing field between jurisdictions which prevents regulatory arbitrage. the post - crisis reform agenda, but also the creation of a single supervisory mechanism in europe are important examples of successful international cooperation after the crisis. 16 e. cerutti, s. claessens and l. laeven ( 2017 ) the use and effectiveness of macroprudential policies : new evidence. journal of financial stability. 17 for a discussion of how regulatory arbitrage results from the increasing international integration of banking systems, see o. jeanne and a. korinek ( 2014 ) macroprudential policy beyond banking regulation. financial stability review, banque de france, 18., empirical evidence on this type of regulatory arbitrage is reviewed in g. galati and r. moessner ( 2018 ) what do we know about the effectiveness of macroprudential policy. economica. unintended consequences the third question relates to unintended consequences of regulatory reforms. a main concern here is the potential of shifting risks outside the regulated sector as new rules come in. as charles goodhart forcefully argued, prudential policy faces a β boundary problem β : β¦ effective regulation can penalize financial intermediaries within the regulated sector compared to those just outside, leading to substitution flows towards the unregulated. 18 for example, when it comes to what we now call non - bank financial intermediation ( formerly known as shadow banking ) the growth of total assets in recent years has been higher than in traditional banking. it is true that since the crisis, efforts by the g20 and the fsb have resulted in better insight into non - bank intermediation. yet there are still important questions about potential systemic risks originating from the unregulated sector and how these risks could interact with those emanating from the regulated sectors. 6. conclusion let me conclude. the global financial crisis was a sobering experience that presented an existential threat to financial stability. the potential disruptive effects to the financial sector and the economy at large called for exceptional measures. in those turbulent times, the monetary, regulatory and supervisory | 1 |
source and nature of the disturbances and their expected persistence. it also depends on whether energy price shocks fuel inflation via second - round effects on other prices and wages, for instance through inflation expectations. failing to respond to secondround effects, we may risk persistent overshoots of our inflation target and ultimately, a deanchoring of inflation expectations. on the other hand, wrongly interpreting temporary movements in energy prices as persistent, we could have larger output losses in the short term and may even increase inflation volatility. moreover, changes in relative prices, for instance due to higher carbon prices, are effective signals that push the transition in the right direction. an appropriately flexible and forward - looking monetary policy would help those necessary changes in relative prices to feed through. but flexibility must not come at the expense of a loss of credibility. in periods of structural change and large uncertainties, such as those created by climate change, well - anchored inflation expectations remain as important as ever. references aastveit, k. a., bjΓΈrnland, h. c., & cross, j. l. ( 2023 ), β inflation expectations and the pass - through of oil prices β, the review of economics and statistics, 105 ( 3 ), 733 β 743. aastveit, k. a., bjΓΈrnland, h. c., & thorsrud, l. a. ( 2015 ), β what drives oil prices? emerging versus developed economies β, journal of applied econometrics, 30 ( 7 ), 1013 β 1028. auclert, a., monnery, h., rognlie, m., & straub, l. ( 2023 ), β managing an energy shock : fiscal and monetary policy β, unpublished manuscript. baumeister, c., & hamilton, j. d. ( 2019 ), β structural interpretation of vector autoregressions with incomplete identification : revisiting the role of oil supply and demand shocks Β», american economic review, 109 ( 5 ), 1873 - 1910. bjΓΈrnland, h. c., larsen, v. h., & maih, j. ( 2018 ), β oil and macroeconomic ( in ) stability β, american economic journal : macroeconomics, 10 ( 4 ), 128 β 151. bloom, n. ( 2009 ), β the impact of uncertainty shocks β | , econometrica, 77 ( 3 ), 623 β 685. bloom, n., bond, s., & van reenen, j. ( 2007 ), β uncertainty and investment dynamics β, the review of economic studies, 74 ( 2 ), 391 β 415. chan, j., diz, s., & kanngiesser, d. ( 2022 ), β energy prices and household heterogeneity : monetary policy in a gas - tank ", unpublished manuscript. coibion, o., & gorodnichenko, y. ( 2015 ), β information rigidity and the expectations formation process : a simple framework and new facts β, american economic review, 105 ( 8 ), 2644 β 2678. davis, s. j., & haltiwanger, j. ( 2001 ), β sectoral job creation and destruction responses to oil price changes β, journal of monetary economics, 48 ( 3 ), 465 - 512. fornaro, l., & wolf, m. ( 2023 ), β the scars of supply shocks : implications for monetary policy β, forthcoming journal of monetary economics. hamilton, j. d. ( 1983 ), β oil and the macroeconomy since world war ii β, journal of political economy, 91 ( 2 ), 228 β 248. hamilton, j. d. ( 1996 ), β this is what happened to the oil price - macroeconomy relationship β, journal of monetary economics, 38 ( 2 ), 215 β 220. hamilton, j. d. ( 2003 ), β what is an oil shock? β, journal of econometrics, 113 ( 2 ), 363 β 398 hamilton, j. d. ( 2011 ), β historical oil shocks β, nber working papers 16970, national bureau of economic research, inc. kilian, l. ( 2009 ), β not all oil price shocks are alike : disentangling demand and supply shocks in the crude oil market β, american economic review, 99 ( 3 ). mork, k. a. ( 1989 ), β oil and the macroeconomy when prices go up and down : an extension of hamilton β s results β, journal of political economy, 97 ( 3 ), 740 β 744. nakov, a., & pescatori, a. ( 2010 ), | 1 |
mandates that will take effect for financial institutions next year, the data catalogue, improvements in climate governance, and ongoing work to advance capabilities in climate risk management, scenario analysis, and stress testing. we are by no means where we need to be on all these fronts, with much, much more that we need to do. but we are encouraged by the step change we have seen across financial institutions in recognising the importance of climate actions in their business and risk considerations. over the coming decades, we will see one of the biggest economic transformations globally, driven by the race towards net zero. the development of credible transition plans represents a crucial further step towards enabling banks to meet the financing needs for this transformation. you might say this is really where the rubber hits the road - turning climate ambition into action. i urge banks to approach transition plans thoughtfully - by understanding the impacts of climate change on the bank, setting interim and long - term science - based targets, working closely with existing and new customers to identify and support concrete climate actions and critically, taking a strategic view of transition planning through a clear enterprise - wide strategy and wellintegrated governance and operational framework for financing transition. let me end by noting just two more things that need to be said. first, with much at stake, transition plans cannot be static. already today, financial institutions are facing a challenge to steer their customers towards prioritising climate actions, given other seemingly more pressing priorities arising from challenging economic conditions. we can and should expect such challenges to persist going forward amid new shocks that may come. transition plans need to be able to adapt to unexpected changes to assumed scenarios with the aim of enabling banks to stay the course towards meeting climate targets. the default position in such circumstances cannot be to adjust targets, but rather adjusting strategies. 3 / 4 bis - central bankers'speeches second, financial institutions must take individual responsibility for advancing climate actions, and in this light, a heavier responsibility must surely rest with the largest firms β like maybank and other large domestic banking groups. so your leadership matters greatly and is not only seen, but will increasingly be judged by stakeholders and counterparties against higher expectations. on that note, let me commend you for this initiative, for climate actions are never taken in isolation, and opportunities like this to cultivate a shared vision and alignment of purpose are so essential to our journey. thank you. 1 institute of international finance 2 global green growth institute, ilo, world bank, department of statistics | malaysia ( dosm ), bnm estimates 3 " esg insights from malaysian smes : building a better future together " by alliance bank in partnership with un global compact network malaysia & brunei ( ungcmyb ) and sme corporation malaysia ( sme corp ) 4 oecd 2022 guidance on transition finance 4 / 4 bis - central bankers'speeches | 1 |
the only way for asset prices was upward. abundant liquidity and financial complexity provided respectively the driving force and the landscape underlying both the process of financial leveraging and its eventual unwinding. the weaknesses unearthed include, as a third and essential element, financial players β incentive structures. strictly speaking the purpose of the financial system is to write, manage and trade claims on future cash flows for the rest of the economy, a purpose that increasingly fell victim to a game for fees, short - term profits, and arbitraging regulation. indeed, most remarkably ex - post, the β shadow banking sector β did not have to set aside capital against the risk of things going wrong, as eventually they did when euphoria turned into sobriety. the mechanics of the unwinding process are by now also well understood. following one substantial shock to a single market segment ( the us sub - prime related credit ), the process of adjusting risk positions in the financial sector was hindered by a β in some cases complete β breakdown in the price discovery process across instruments owing to the lack of understanding of the distribution and magnitude of risks underlying the various financial instruments. in turn, the unprecedented system - wide dry - up of liquidity driven by reductions in position - taking by major financial intermediaries fed back into the overall uncertainty, thus escalating measured risk and frustrating the very same efforts towards risk reduction. indeed, the magnifying glass turned against those with business models most heavily relying on it, who found themselves confounded by the sheer magnitude and speed of the confidence implosion. that this set of institutions extends well beyond the banking sector, is yet another reminder of the magnitude of the challenge that lies ahead. the response of the central banking community to the liquidity problems the eurosystem makes a clear distinction between setting the monetary policy stance to maintain price stability and its liquidity decisions taken in the course of implementing this stance. this distinction serves to isolate signals of the monetary policy stance from the noise introduced by liquidity movements and volatility in very short term rates. since the onset of financial tensions in august 2007, the actions of the ecb have remained in line with this principle. in both β normal β and β turbulent β times, the primary aim of the eurosystem β s open market operations is to keep the overnight rate as close as possible to the minimum bid rate. during the recent period of turbulences some institutions, even if solvent, had difficulties in accessing | be attributed to two factors : disagreement across point forecasts and uncertainty around individual point forecasts. 6 uncertainty, which is calculated by first taking the standard deviation of each dealer β s distribution and then averaging these individual uncertainties, provides a sense of how confident respondents are about their individual point forecasts. based on this calculation, the uncertainty around dealers β expectations for the size of the soma portfolio at the end of 2014 is large. in fact, at around $ 500 billion it is almost as large as the entire size of the large - scale asset purchase program announced in november 2010 or the mep announced in september 2011. moreover, this uncertainty has not changed significantly since the start of the purchases in september 2012. the dispersion around individual point forecasts likely reflects uncertainty about both how the economy will evolve and how the fomc will adjust its purchases in response to changes in the economic outlook or changes in its understanding of the efficacy and costs of the policy. disagreement among dealers about the likely amount of purchases is measured as the standard deviation across their average forecasts for the size of the soma portfolio at the end of 2014. in the january survey, disagreement was about $ 250 billion, significantly lower than its level in october. investors β disagreement and uncertainty about the overall stance of monetary policy will reflect their views on the future evolution of both the federal funds rate and the soma see, for example, question 8 in the january 2013 survey of primary dealers. the measures of forecast uncertainty and disagreement discussed here are based on rich and tracy and wallis ( 2004, 2005 ). bis central bankers β speeches portfolio. one way to get a sense of the overall level of policy uncertainty is to convert the soma portfolio into β fed funds equivalents β. 7 with this translation, it is possible to estimate the hypothetical level of the federal funds rate that would provide a similar amount of monetary policy accommodation as both the actual level of the federal funds rate and the size of the soma portfolio. figure 2 shows the disagreement and uncertainty around this measure of policy uncertainty 12 months in the future. disagreement about current policy is quite low relative to the past few years, which likely reflects the effect of forward guidance on expectations about the federal funds rate and the relatively low disagreement about the size of the portfolio that i mentioned earlier. uncertainty, on the other hand, is relatively high and larger than the amount of disagreement. since there is very little uncertainty about the level of the federal funds rate one year from now, | 0 |
fall in non - performing loans, which would have been unthinkable if we had kept rates higher. it is certainly easy to blame the ecb, but the truth is that the level of the interest rates is not the main problem for many banks. the problems are, rather, the need for some business models to evolve in directions that strengthen banks β capacity to successfully face competition, as well as tougher regulation. also in spain, the squeeze on unit margins is not only due to low interest rates, but is also the result of competition. part of this may also be due to the fact that the banking sector in the euro area has not undergone sufficient consolidation. the new measures are improving liquidity conditions for the banking sector, but can they provide solutions to its capital needs? our measures have had a positive impact on banks β profitability and thus, indirectly, on their capital positions. for example, the relatively favourable lending conditions enable them to reduce their funding costs. as i said, the new tltros will reinforce these beneficial effects on banks β profits. more than in the past, when our long - term liquidity operations were positive mainly for banks ( including of course spanish banks ), the new tltros will benefit both banks and the real economy. bis central bankers β speeches do you think the new refinancing operations ( tltros ) will be welcomed by the banking sector? we believe that the new tltros will be even more favourable than the previous series and will be successful in helping to ease financing conditions. even if the banks don β t turn to us because they don β t want to be overly dependent on the ecb, knowing that they have this option will give them sufficient comfort to keep credit flowing to the economy on attractive terms. the ecb β s actions have also provoked criticism from political circles, particularly in germany. how far can the ecb go without political backing? it β s our belief that we have a lot of political support in europe. our policies are dictated by decades of monetary thinking and best central bank practices. the deutsche bundesbank has been the champion of this thinking and these practices. central bank independence and low and steady inflation are written into the german founding law. in my opinion, the alternatives proposed by those criticising us are not very credible. if we raised interest rates now, it would no doubt abort the recovery of the economy and compromise the achievement of our objective. and what β s your assessment | . so as things stand right now, there is no reason to worry about the euro area recovering in 2015 and 2016. mind you, all these factors are short - term. one possible concern is the ability to boost the potential growth of the euro area, which has been hit hard by the crisis. that β s more a long - term issue, though. aren β t you afraid that one of the effects of qe will be to create price bubbles for certain assets? does the ecb have the means to combat these side effects? our actions do have an impact on asset prices ; you just have to look at the way markets have risen since the public asset purchases started. we monitor risks to financial stability very closely : tommaso padoa - schioppa used to say this was in central banks β dna. but let β s not forget that the objective of monetary policy is price stability. financial stability involves different tools. as far as we are concerned, it β s a question of bank regulation and β macroprudential β tools. there is one effect you didn β t mention : this policy cuts governments β interest rate costs and potentially gives them room for fiscal manoeuvre again. that is not our objective. monetary policy serves to guarantee price stability and support the productive economy. where countries have room for fiscal manoeuvre, lowering rates bis central bankers β speeches increases the scope that can be used to support growth, particularly by increasing investment. where countries do not have this room for manoeuvre, such as france, my advice would be to use the lower rates to lend credibility to debt reduction, rather than to increase spending or cut taxes. however, that β s not a matter for the ecb to decide. it β s the european commission that is the guardian of the fiscal policy framework in the euro area. would you say that qe is helping immunise the euro area against the risk of an exit by a member state, even if this is not its objective? i wouldn β t put it like that. it is certainly reducing the risk of contagion in the euro area, but the context right now is very different from 2012. the problem for countries such as portugal, spain and ireland is no longer an exit from the euro area, far from it. their main concern now is how to capitalise on the return of growth in order to step up the reduction in unemployment and return to normal as quickly as possible. i am | 0.5 |
hospital ward upgrades ; involvement with senior citizens ; the wows cancer initiative, just to name a few. and yes the name hfc cropped up recently pitching in to reward fiji β s first olympic champion, iliesa delana. in addition to all this, hfc has introduced products to support the reserve bank β s initiatives towards export and import substitution and flood rehabilitation. i am told that there are a few more innovative products in the pipeline to be launched soon. i commend the board and management of hfc for their empathy and support of nation building initiatives, not only in terms of the facilities i have mentioned, but also in our financial inclusion initiatives. the fiji economy ladies and gentlemen, please allow me say a few words about our economy. you would be aware that our latest forecast has growth pegged at 2. 7 percent this year, the strongest for some time. the forecast is currently being reviewed by the macroeconomic policy and technical committees as we gear up for the 2013 national budget announcement. however, all indicators are generally moving in line with expectations. real sector growth has been broad based. while some sectors are exhibiting lower growth than forecasted, others are exceeding forecasts. investment is picking up and consumption is strong. there are extremely positive signs that we are on the cusp of strong economic growth going forward. this is underpinned by the ongoing reforms by government, including the fiscal measures put in place in the 2012 budget, which are fueling the positive sentiments. our key threats are any deterioration to global growth which could impact on our trading partners, hikes in commodity or oil prices and of course natural disasters. bis central bankers β speeches in terms of the reserve bank β s twin statutory objectives, inflation is trending down ; the year - end inflation forecast remains unchanged at 3. 5 percent, and foreign reserves are comfortable at just under $ 1. 6 billion or the equivalent of 5 months of retained imports. given this scenario, our monetary policy stance remains accommodative. concluding remarks coming back to the business at hand, it is investment like hfc has put in place here today, that will fuel and drive the increasing positive sentiment in the economy. there have been a number of new investments noted in this city and we certainly hope the trend will continue. i would like to again thank isikeli for his kind invitation. i reiterate my thanks to the board, management and staff of hfc for their support and cooperation with the | . it is therefore pleasing to know that fiji is keeping up there with the global trend. what is fijiclear? what is fijiclear? fijiclear enables the processing of payments to be done as and when they happen β hence the term β real time β. it is an electronic way of making payments within a country and getting immediate settlement of those payments. in simple terms it means that instead of waiting for several days for funds to be available for use, the receiving party or beneficiary will have funds in their account within one business day or in some cases almost instantaneously. similarly, the party making the payment is assured of safe and immediate delivery of those funds. the key elements of fijiclear are speed, certainty, reliability, safety and security, convenience and cost. the system is for the transfer and settlement of fiji dollar denominated funds only. it enables payments instructions to be processed and settled individually and continuously throughout the working day. all settled transactions are considered as final and irrevocable. thus the receiver will be able to use the funds immediately without being exposed to the risk of the funds not being settled. this is in contrast to the previous manual system which operated on a deferred net settlement system, where payments are processed throughout the day but the actual entries are only affected at the end of the day. benefits fijiclear there are a number of benefits of using fijiclear. i had pointed out already the wider benefits to the economy and the financial system. to the payee i. e. the person receiving money, the benefits include : β’ funds are credited into the account straight away. so there is no waiting of 3 - 7 days for funds to be cleared when using a cheque ; β’ there is time savings as one does not have to physically visit a bank to deposit cheque ; β’ there is no uncertainty of any dishonoured cheques with the associated charges and loss of income ; β’ immediate crediting of account means that any overdraft limit is reduced and hence lower interest charges ; β’ immediate crediting of funds will help in cash flow ; and β’ reduced overhead or staff cost as there is less paper work. there are also benefits to the payer i. e. those making the payment : β’ there is less risk of transporting cheques ; β’ there is savings in time and charges ; and β’ there is better business relationship with creditors. i therefore strongly encourage businesses as well as individuals to use this modern | 0.5 |
for the median income family. this less rosy perspective on the current state of the economy was suggested by several members of congress during the recent oversight hearings on monetary policy. i think the point is an important one and i agree that we should not let the recent favorable performance of inflation, unemployment and equity prices distract our attention from the importance of confronting a slow average rate of increase in living standards and lingering social problems that both reflect and are exacerbated by a widening in income inequality. however, other than through its pursuit of its legislative mandates of price stability and maximum sustainable employment, monetary policy cannot make a major contribution to the resolution of these problems. monetary policy, in particular cannot remedy increases in income inequality, raise the trend rate of increase in living standards, or combat inadequate opportunities for upward mobility out of poverty. it is, as always, important that we carry out our traditional responsibilities well, accommodating the maximum sustainable growth and achieving the maximum sustainable level of employment. but we cannot do more. regularities the second challenge is to explain why performance has been so favorable, at least in terms of inflation and unemployment. before exploring explanations of the puzzle, i want to focus on common features of cyclical expansions. in doing so, i will focus on cyclical expansions that have not been dominated by dramatic external shocks, such as the two episodes that were marked by steeply rising world oil prices - - first in the early 1970s and again in the late 1970s and early 1980s. while even these expansions share many of the patterns i emphasize later, their endings are dominated by the effects of the powerful supply shocks and policy responses to the shocks. expansions, by definition, begin with considerable economic slack, inherited from the previous recession. the economy typically makes a rapid transition from declining output ( the definition of recession ) to above - trend growth. in a loose way, trend growth refers to the growth in the economy β s productive capacity. when growth is above trend, production is expanding faster than the economy β s - 4productive capacity and, as a result, resource utilization rates rise. rising capacity utilization rates and falling unemployment rates are thus a typical feature of an expansion period. the natural dynamic of an expansion is for above - trend growth to continue until demand overtakes capacity, despite the best efforts of policy to avoid cyclical excesses. the end of the story is particularly important. expansions do not die of old age or lethargy, a spontaneous weakening | economic outlook from historical forecast errors ( pdf ), β financial and economic discussion series 2007 β 60. washington : board of governors of the federal 1 these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. 2 the analysis of forecast errors presented here uses data from 1986 to 2015 from the federal reserve bank of philadelphia β s november survey of professional forecasters. for more on the construction of forecast errors, see reifschneider and tulip ( 2007 ) and board of governors ( 2014 ). 3 the short - term interest rate used in this analysis is the three - month treasury bill rate. 4 annual data on cyclically adjusted federal deficits can be found in table c - 2 of the congressional budget office ( 2016, p. 126 ) report the budget and economic outlook : 2016 to 2026. the analysis takes a three - year centered moving average of the cbo β s estimates of the cyclically adjusted federal deficit, which can be quite volatile from year to year, and compares this average for the year prior to the new administration to the average in the sixth year of the new administration. 5 for example, see table 3 in the congressional budget office ( 2015, p. 6 ) report estimated impact of the american recovery and reinvestment act on employment and economic output in 2014. 6 see brainard ( 2015 ). 7 see laubach and williams ( 2015 ). for the most up - to - date laubach - williams estimates of the natural rate of interest, a concept closely related to the neutral rate, see www. frbsf. org / economicresearch / files / laubach _ williams _ updated _ estimates. xlsx. also see the most recent median estimates of the real neutral rate from the new york federal reserve bank β s survey of primary dealers ( www. newyorkfed. org / markets / primarydealer _ survey _ questions. html ) and survey of market participants ( www. newyorkfed. org / markets / survey _ market _ participants. html ). for estimates of the real neutral rate based on the summary of economic projections, see bongard and johannsen ( 2016 ). 8 for an analysis of macroeconomic behavior near the zero lower bound, see evans and others ( 2015 ). 9 see cucuru ( forthcoming ). 10 for estimates of the effect of exchange rate changes on inflation and gdp growth, see gruber, mccall | 0.5 |
alan greenspan : the economic outlook testimony of mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the joint economic committee, us congress, washington dc, 9 june 2005. * * * chairman saxton, vice chairman bennett, and members of the committee, i am pleased to appear once again before the joint economic committee. over the past year, the pace of economic activity in the united states has alternately paused and quickened. the most recent data support the view that the soft readings on the economy observed in the early spring were not presaging a more - serious slowdown in the pace of activity. consumer spending firmed again, and indicators of business investment became somewhat more upbeat. nonetheless, policymakers confront many of the same imbalances and uncertainties that were apparent a year ago. our household saving rate remains negligible. moreover, modest, if any, progress is evident in addressing the challenges associated with the pending shift of the baby - boom generation into retirement that will begin in a very few years. and although prices of imports have accelerated, we are, at best, in only the earliest stages of a stabilization of our current account deficit - a deficit that now exceeds 6 percent of u. s. gross domestic product ( gdp ). a major economic development over the past year has been the surge in the price of oil. sharply higher prices of oil imports have diminished u. s. purchasing power. the value of petroleum imports rose from 1. 4 percent of nominal gdp in the first quarter of 2004 to 1. 8 percent in the first quarter of this year. the alternating bouts of rising and falling oil prices have doubtless been a significant contributor to the periods of deceleration and acceleration of u. s. economic activity over the past year. despite the uneven character of the expansion over the past year, the u. s. economy has done well, on net, by most measures. real gdp has grown by 3. 7 percent over that period, the unemployment rate has fallen to 5. 1 percent, and core personal consumption expenditure prices have risen a historically modest 1. 6 percent. but the growth of productivity, though respectable at 2 - 1 / 2 percent over the year ending in the first quarter, is far less than the extraordinary pace of 5 - 1 / 2 percent during 2003. excluding a large but apparently transitory surge in bonuses and the proceeds of stock option exercises late last year, overall hourly labor compensation has exhibited | only loosely connected local markets. thus, while investors can arbitrage the price of a commodity such as aluminum between portland, maine, and portland, oregon, they cannot do that with home prices because they cannot move the houses. as a consequence, unlike the behavior of commodity prices, which varies little from place to place, the behavior of home prices varies widely across the nation. speculation in homes is largely local, especially for owner - occupied residences. for homeowners to realize accumulated capital gains on a residence - a precondition of a speculative market - they must move. another formidable barrier to the emergence of speculative activity in housing markets is that home sales involve significant commissions and closing costs, which average in the neighborhood of 10 percent of the sales price. where homeowner sales predominate, speculative turnover of homes is difficult. but in recent years, the pace of turnover of existing homes has quickened. it appears that a substantial part of the acceleration in turnover reflects the purchase of second homes - either for investment or vacation purposes. transactions in second homes, of course, are not restrained by the same forces that restrict the purchases or sales of primary residences - an individual can sell without having to move. this suggests that speculative activity may have had a greater role in generating the recent price increases than it has customarily had in the past. the apparent froth in housing markets may have spilled over into mortgage markets. the dramatic increase in the prevalence of interest - only loans, as well as the introduction of other relatively exotic forms of adjustable - rate mortgages, are developments of particular concern. to be sure, these financing vehicles have their appropriate uses. but to the extent that some households may be employing these instruments to purchase a home that would otherwise be unaffordable, their use is beginning to add to the pressures in the marketplace. the u. s. economy has weathered such episodes before without experiencing significant declines in the national average level of home prices. in part, this is explained by an underlying uptrend in home prices. because of the degree of customization of homes, it is difficult to achieve significant productivity gains in residential building despite the ongoing technological advances in other areas of our economy. as a result, productivity gains in residential construction have lagged behind the average productivity increases in the united states for many decades. this shortfall has been one of the reasons that house prices have consistently outpaced the general price level for many decades. although we certainly cannot rule out | 1 |
matured by the end of the programme, and had already been largely replaced by additional gilt purchases. the cumulated dividends are not the profits on the portfolio, even before funding costs. depending on such factors as the yield curves at the date of issue and purchase, and the maturity of the gilts ; the dividends and market prices of the gilts are connected. see the dmo website for more information on changes in gilt prices : http : / / www. dmo. gov. uk / documentview. aspx? docname = publications / investorsguides / pig201204. pdf & page = in vestor _ guide / guide. eventual exit strategy at this time, it is not clear whether the next step with the asset purchase programme is most likely to be to sell the assets back or to buy more. the bank is prepared for either but it might be particularly helpful to set out in advance a few thoughts on the eventual exit strategy. after purchasing Β£200bn of assets in just under a year, the mpc paused its programme of asset purchases in february 2010. the bulk of the medium - term impact from the asset purchases should come from the stock of purchases not the flow. there will be approximately Β£200bn extra money stimulus in the system, until the mpc decides to withdraw it ( or to increase it ). when the time does come to unwind the purchases, the mpc will face a number of difficult decisions. first, it will have to decide at what point monetary policy should be tightened. that decision will, as with any decision to expand the purchases further, be judged on a month - bymonth basis, taking into consideration developments in the economy, and the outlook for our mandated target, cpi inflation. as the governor said in june 13, when the mpc does want to tighten policy, it is most likely to raise interest rates first. gilt sales would be started later and conducted in an orderly programme over a period of time. that would leave bank rate as the active or β marginal β instrument of monetary policy. second, the mpc will have to decide how fast to sell the gilts. again, that would depend on the outlook for inflation at the time, so we cannot commit now to any particular scale or pace. but it is not in the interests of the uk economy to generate unnecessary volatility in the gilt market. we will therefore be working closely with the dmo 14 | so as to plan any extra sales operations that would be needed, with the intention of creating minimum disruption to the market consistent with meeting the mpc β s desired exit path. a portfolio of Β£200bn of gilt purchases has a market value which constantly varies as market prices change. currently there is a large β mark - to - market β positive accounting position, given the increase in gilt prices since the programme ended. but for the public sector as a whole such fluctuations wash out : the ( gilt ) assets held by the bank are the liabilities of the government and fluctuations in the value of one exactly offset the other in terms of the public sector β s notional balance sheet. nevertheless, once all the assets have been sold, the asset purchase facility may end up with a cash deficit and i want to make a few points about that possible outcome. in conducting the buying operations, it was in part an intended policy objective that we would push up gilt prices and hence lower long - term interest rates. when we sell the gilts back to the market, we will be tightening policy by pushing up on interest rates and hence necessarily making gilts cheaper. the net effect will depend on the path of interest rates relative to those expected at the time of each buying operation but, given the policy objective, the result of the sales programme could easily be a cash deficit. but i want to emphasise that such an outcome would not mean that the public finances have been made worse off. the ongoing dynamic effects of the programme will have been to make it cheaper for the government to issue its debt in the interim. more importantly, over the lifetime of the programme, it would have delivered great benefits to the public purse by stimulating the economy and avoiding deflation : the increase in taxes received as a result of higher nominal gdp should be an order of magnitude larger than any financial deficit on the purchases themselves. to genuinely assess the impact on the taxpayer, one would have to take these and other factors into account. the counterfactual story will never be known precisely but the speech available at http : / / www. bankofengland. co. uk / publications / speeches / 2010 / speech437. pdf. the dmo β s objectives include : β to conduct its market operations, liaising as necessary with regulatory and other bodies, with a view to maintaining orderly and efficient markets and promoting a liquid market for gilts. β see page 31, β debt and reserves management report, | 1 |
a bit unfamiliar to many. 14. over time, it has become apparent that these innovations, in particular the technologies and business innovation underpinning them, are here to stay and will naturally develop in a healthy financial system like hong kong β s. they have the potential to improve efficiencies, reduce intermediary cost and promote innovation. 15. digital innovations encompass a wide spectrum of products and services beyond the commonly - known crypto - currencies. defi, given its composability feature, can inspire innovation in finance. take tokenised green bonds as an example. we concept - tested the idea with the bis innovation hub last year and are adopting it for an actual issuance later this year. when both bond and cash are tokenised and brought on - chain, all bond lifecycle events like asset servicing, trading and redemption can happen more efficiently in a distributed manner. it could even make possible real - time tracking of the green impact. 16. in addition to traditional financial assets, the blockchain technology also allows fractionalisation of asset ownership in art, real estate or other assets, creating new forms of financial intermediation. with radical open - mindedness, we can use technological innovations to make financial markets more complete and bring benefits for the real world. 17. now, wearing my hat as a regulator, a β radically open mind β does not mean that financial stability falls by the wayside. the use of digital innovations needs to be complemented by a clear approach to money laundering and financial risks. we continuously work with banks to achieve this. we also ensure that consumers and investors understand the risks associated with investments in these still - largely unregulated products. 18. to do this we need to put in the right guardrails. the basic principle is β same activity, same risks, same regulation β, such that digital assets performing similar functions to traditional products should be subject to similar regulations. this is exactly what we and other regulators in hong kong are doing. 19. the hkma is putting in place a risk - based and proportionate regulatory regime for payment - related stablecoins. the sfc is introducing a framework to regulate digital asset trading platforms. we have issued guidance to banks on what they need to watch out for if they wish to offer crypto - or defi - related services, whether for account opening or custodial services. 20. these guardrails will provide a solid foundation with a clear set | norman t l chan : master β s degree 2009 β 2010 graduation ceremony speech by mr norman t l chan, chief executive of the hong kong monetary authority, at the chinese university of hong kong master β s degree 2009 β 2010 graduation ceremony, hong kong, 17 december 2010. * * * professor wong, professor lee, faculty members, graduates, ladies and gentlemen, it is a great honour to be invited to speak at today β s graduation ceremony. i am so happy to see so many fine men and women graduating today. all of you have made well earned accomplishments that make your parents and families feel very proud. on this joyful day, it is clearly a time for celebrations and photograph - taking with families and friends. however, some of you may, when you have a few quiet moments of your own, ask yourselves these questions : what would i become in 10, 20 or 30 years β time? have i chosen the right field or career? what does it take to succeed and make a name in the society as so many of my cuhk seniors have done before me? these are very pertinent questions and certainly i did ask myself these questions when i attended my own graduation ceremony in the cuhk some 34 years ago. in talking about successful people, i am sure all of us have our own idols. but very few people will disagree with me if i refer to bill gates as a prime example of success. we all know who bill gates is and how he set up the most profitable software company called microsoft. bill gates is now the richest man in the world and is spending most of his time doing charity work worldwide. bill gates is clearly an idol for lots of people, old and young, and a symbol of great success. but how come bill gates has become so successful? many say he is a genius, both in computer programming and in doing business. but is it that simple? i have just recently come across a book written by malcolm gladwell, who has referred to an interesting thesis called the 10, 000 hours rule. to understand this thesis, you have to look closer at bill gate β s life. no doubt bill gates is very clever and is extremely talented in computer programming. however, what made him so special as distinct from so many other equally clever and talented people in the past three to four decades is that by the time gates dropped out from harvard in his sophomore year in mid - 1970s to set up his little backyard software company, he already had | 0.5 |
for comparison, over the four years following the trough of the 2001 recession, total government employment rose by more than 500, 000 jobs. most recently, the strengthening economy has improved the budgetary outlooks of most state and local governments, leading them to reduce their pace of fiscal tightening. at the same time, though, fiscal policy at the federal level has become significantly more restrictive. in particular, the expiration of the payroll tax cut, the enactment of tax increases, the effects of the budget caps on discretionary spending, the onset of the sequestration, and the declines in defense spending for overseas military operations are expected, collectively, to exert a substantial drag on the economy this year. the congressional budget office ( cbo ) estimates that the deficit reduction policies in current law will slow the pace of real gdp growth by about 1 β 1 / 2 percentage points during 2013, relative to what it would have been otherwise. 1 in present circumstances, with short - term interest rates already close to zero, monetary policy does not have the capacity to fully offset an economic headwind of this magnitude. although near - term fiscal restraint has increased, much less has been done to address the federal government β s longer - term fiscal imbalances. indeed, the cbo projects that, under current policies, the federal deficit and debt as a percentage of gdp will begin rising again in the latter part of this decade and move sharply upward thereafter, in large part reflecting the aging of our society and projected increases in health - care costs, along with mounting debt service payments. to promote economic growth and stability in the longer term, it will be essential for fiscal policymakers to put the federal budget on a sustainable long - run path. importantly, the objectives of effectively addressing longer - term fiscal imbalances and of minimizing the near - term fiscal headwinds facing the economic recovery are not incompatible. to achieve both goals simultaneously, the congress and the administration could consider replacing some of the near - term fiscal restraint now in law with policies that reduce the federal deficit more gradually in the near term but more substantially in the longer run. see congressional budget office ( 2013 ), the budget and economic outlook : fiscal years 2013 to 2023 ( washington : cbo, february ). bis central bankers β speeches monetary policy with unemployment well above normal levels and inflation subdued, fostering our congressionally mandated objectives of maximum employment and price stability requires a highly accommodative monetary policy. normally, the committee | current account sustainability and relative reliability β, nber international seminar on macroeconomics. hausmann, ricardo, and federico sturzenegger ( 2007 ). β the missing dark matter in the wealth of nations, and its implications for global imbalances β, economic policy, vol. 22, pp. 469 - 518. gourinchas, pierre - olivier, and helene rey ( 2007 ). β from world banker to world venture capitalist : the u. s. external adjustment and the exorbitant privilege β, in r. clarida ( ed. ), g7 current account imbalances : sustainability and adjustment. chicago : university of chicago press, pp. 11 - 55. | 0.5 |
the us economy was not in as bad a shape as thailand has experienced in the past four years. at that time, japan, europe and the middle - eastern economies were strong and contributed certain capital flows into the us economy. but now, under current world economic conditions, where every country has its own problems to solve, we know well that we cannot expect foreign investors to help us clear this npl mess, so we have to help ourselves. i do not see why we cannot do it. and we will do it. back to the economic forecast for next year. one important source of growth in 2002 will be fiscal spending, and the projected central government deficit of 224 billion baht or 4. 4 percent of gdp strikes a good balance between improving the economic infrastructure, raising external competitiveness, and fostering economic recovery. it is very important, however, that the fiscal stimulus program meets its spending target. safeguarding the recovery would require timely as well as effective disbursements of the 58 billion baht emergency spending plan. the proposed reduction in the corporate tax rate for companies seeking listing in the stock market as well as those already listed, and the postponement of the restoration of the vat rate until september 2002 will further set the stage for more support in the revival of domestic demand. additional stimulus will come from the 71. 3 billion baht village fund designed to boost investment and facilitate job creation in rural areas. it is important to emphasize that the planed increase in fiscal spending does not compromise the government β s commitment to fiscal discipline. total public debt will remain below 60 percent of gdp while debt service ( principle and interest ) will account for less than 16 percent of the budget. in regards to monetary policy, the inflation targeting framework gives the bank of thailand sufficient flexibility to respond quickly to fast changing domestic and external developments. with inflation remaining subdued and likely to remain contained in the range of 1. 5 - 2. 5 percent for 2002, the emphasis in the near future will be to strike a proper balance between domestic growth and external stability. while the current stance of monetary policy under the inflation targeting framework with emphasis on external stability is accommodative and appropriate given current conditions, the bank of thailand is constantly monitoring developments and will move decisively should circumstances change. in light of the information currently available, and against the background of the bank of thailand β s long - run goals of price stability and sustainable economic growth, i believe that the risks at present are weighted mainly | narrowly defined targets. this would help retain precious room for manoeuvre. and it would allow central banks to pay more attention to slow moving trends that have first order economic impact, including more systematic considerations of the financial cycle. the bottom line is that an essential pillar in monetary policy frameworks going forward is to keep a sharp focus on the medium term, grounded in a realistic view of what monetary policy can and cannot deliver. monetary policy cannot fine - tune inflation, let alone economic activity within narrow ranges. it can only provide the monetary preconditions for sustainable growth, but cannot itself be the engine of growth. it is important to build on these insights for inflation targeting to successfully evolve in the years ahead. 4 / 4 bis - central bankers'speeches | 0.5 |
mar guΓ°mundsson : the work of the monetary policy committee opening remarks by mr mar guΓ°mundsson, governor of the central bank of iceland, at an open meeting of the parliamentary economic affairs and trade committee on the work of the monetary policy committee, reykjavik, 17 november 2014. * * * the last meeting between representatives of the monetary policy committee ( mpc ) and the parliamentary economic affairs and trade committee took place on 5 march 2014. at that time, inflation had recently fallen below target, while short - and long - term inflation expectations were still above it. by now, inflation has been below target for nine months and is expected to be at target well into 2015, at least. the main difference in the situation now versus that in march is that inflation expectations have fallen back towards the target and, by some measures, are quite close to it, particularly short - term expectations. the big picture is that the economic recovery is now well enough advanced that spare capacity is disappearing. there still appears to be a sizeable current account surplus, although it has diminished since last year. the surplus covers net capital outflows and significantly more, as the central bank has bought foreign currency on the market for the equivalent of 95 b. kr., or 5 % of gdp. according to the bank β s forecast from early november, gdp growth is projected to measure just under 3 % this year and then rise to about 3Β½ % in 2015 before easing back to 3 % in 2016. this level of growth is expected to exceed the growth potential output, giving rise to a positive output gap, particularly in 2015. other things being equal, this will contribute to higher inflation. gdp growth in 2014 β 2016 will be driven by domestic demand, both private consumption and investment, and the contribution from net trade will be negative for the entire period. as a consequence, the sizeable current account surplus we have seen in 2013 and 2014 will shrink rapidly next year and give way to a small deficit by 2016. this is cause for concern in and of itself, and we hope that this forecast will not materialise, as iceland needs to maintain a current account surplus in the next several years as it focuses on putting its external debt onto a more solid footing and building up fx - reserves that are not financed with foreign loans. economic policy and economic incentives would then have to centre on improving the outlook for the current account balance. according to the forecast, which extends until end - 2017, inflation will be at | ? let β s not forget that the risk of deflation was averted, and that risk was extremely dangerous. inflation has indeed been below the objective for some time, but behind this there are structural changes for which we don β t yet have a full explanation. is this damaging the institution β s credibility? no. we would have had a credibility problem if deflation had taken hold. the question is why wage increases are not passing through to price inflation. this is one of the legacies of the crisis a decade ago. what is christine lagarde β s biggest challenge? on the one hand, the severity of the economic slowdown. we expect growth to be slightly above 1 / 3 bis central bankers'speeches 1 %, but with downside risks. in the financial sector, the greatest challenges are banks β very low profitability, risks stemming from low rates and the assets managed by the funds industry, which have grown considerably. the ecb β s policies have had the undesired effect of redistributing income. they have had a certain negative effect on savers and have potentially pushed up asset prices, but they have also had a positive effect in the form of economic growth, job creation and wage increases. according to our calculations, the net effect has added 2 percentage points to growth. as a result of the ecb β s actions, the situation in europe is nothing like it was ten years ago. there has been criticism of the ecb becoming more political and less technical with christine lagarde and you at the helm β both of you are former ministers with no central banking experience. monetary policy must be just another element that has a place within economic policy. it β s good to have experience in other areas. central bankers have sometimes been working in an ivory tower. christine lagarde β not to mention myself β is well versed in the euro area β s mechanisms. the ecb β s decision - makers need to understand the context, make sound choices from among the alternatives and communicate appropriately. ms lagarde will do this extremely clearly. internal criticism, resignations, partisan leaks to the press β¦ divisions within the ecb seem to have flared up in recent weeks. strangely, there β s sometimes more politics going on inside a central bank than in governments. seriously though, the 25 members of the governing council should try to build a consensus. and when a decision is made, it must be embraced. that isn β t happening right now | 0 |
bank of japan β s monthly report of recent economic and financial developments1 bank of japan, communication, 17 / 12 / 98. the bank β s view2 the economic deterioration in japan has moderated somewhat, mainly as a result of the increase in public investment. with respect to final demand, business fixed investment has been declining significantly, and housing investment continues to be sluggish. private consumption, as a whole, shows some weakness. meanwhile, net exports ( exports minus imports ) are basically on an upward trend, and public investment has started to increase considerably. reflecting this development of final demand and some progress in inventory adjustments, especially in those of durable goods, the decline in production has been slowing. corporate profits continue to worsen, and employment and household income conditions have deteriorated as the ratio of job offers to applications has recorded a historical low and winter bonuses are expected to decrease. financial conditions are improving in some firms with the effects of the policy measures taken by the government and the bank. nonetheless, firms apparently cannot remove their anxiety about fund - raising conditions. consequently, corporate and household sentiment remains cautious, and a recovery has not been observed in private demand. with the implementation of the government β s comprehensive economic stimulus package and recently launched emergency economic measures, the economy is likely to be underpinned mainly by public investment towards [ = during? ] the first half of fiscal 1999. furthermore, the bank β s monetary and financial measures and the government β s measures to alleviate the credit crunch are expected to take effect gradually. nevertheless, an immediate self - sustained recovery in private demand is hardly expected since corporate profits and household income are deteriorating and the constraints from corporate finance are likely to persist for some time, owing to cautious lending attitudes of private banks. moreover, attention should be paid to the effects of the appreciation of the yen since early autumn and the uncertainty in financial and economic developments abroad. to lead japan β s economy into a steady recovery, it is important to prepare an environment where firms and households can regain confidence in japan β s economic future by, for instance, promptly restoring the stability of the financial system. with regard to prices, reflecting the expansion in the output gap, wholesale prices are on a downtrend, and corporate service prices are weakening. consumer prices have increased slightly above the previous year β s level, owing to the rise in prices of perishables. excluding this effect, however, consumer prices basically continue to be weak. as for the outlook, the economic deterioration is | likely to moderate, mainly as a result of the increase in public investment. nonetheless, distinct narrowing in the output gap is hardly expected for the time being as private demand remains sluggish. furthermore, the continued decline in wages and the appreciation of the yen since early autumn are likely to exert downward pressure on prices. hence, the decline in prices, especially in wholesale prices, may somewhat accelerate in the future. this report was written based on data and information available when the bank of japan monetary policy meeting was held on december 15, 1998. the bank β s view on recent economic and financial developments, determined by the policy board at the monetary policy meeting held on december 15, as the basis of monetary policy decisions. turning to the financial markets, japanese banks are successfully raising foreign currency funds necessary to cover a huge shortage at the year - end. reflecting this, the japan premium and euroyen rates have peaked out, and the market β s anxiety, which had previously intensified, is gradually settling down. in the meantime, market interest rates on instruments maturing after the fiscal year - end ( march 1999 ) are on an upward trend, suggesting continued concern of market participants over liquidity risk. yields on long - term government bonds have rebounded since late november. although stock prices considerably recovered after hitting the recent bottom in october, they have recently softened again. the yield spread ( the government bond yield minus the expected earnings on stocks ) remains extremely small or negative, reflecting market participants β continued cautious outlook on the future of the economy. with regard to corporate finance, firms are further seeking to secure ample on - hand liquidity in fear of more difficulties in raising funds, especially toward the end of this fiscal year when the large - scale redemption of corporate bonds is scheduled. meanwhile, private banks are continuing their cautious lending stance. in these circumstances, various policy measures seem to have prevented serious credit shrinkage : the enhancement of [ the? ] credit guarantee system [ s? ] contributed to a recent increase in loans to small and medium - sized firms ; and the bank announced the introduction of new measures, in addition to the continued ample supply of funds, to facilitate firms β financing activities. fundamentally, however, firms are still under severe fund - raising conditions. how corporate financing conditions towards the year - end and the fiscal year - end develop, and how such developments influence business activities and the whole economy, continues to warrant careful monitoring. | 1 |
central bank to effect payment is generally regarded as risk free, service is assured even in extraordinary times of global and domestic crises, while using the central bank as a hub ensures that payment systems β participants are not forced to rely on actual or potential competitors for payment. these arguments that were compelling at the dawn of central banking are most likely to ensure that modern payment systems continue to have a determined impact upon monetary policy and a positive influence upon the stability of the financial system as whole. thank you for your attention. bis central bankers β speeches | ##s β ongoing deleveraging. low growth and elevated public sector debt also leave a number of euro area countries vulnerable to higher funding costs. furthermore, threats stemming from rising protectionism around the globe, and high political uncertainty within europe, may amplify potential corrections of sovereign bond risk premia. these risks notwithstanding, market - based indicators of stress in the euro area sovereign bond markets have remained relatively contained in 2019, and debt sustainability concerns have remained country - specific. looking ahead, as growth prospects moderate it is imperative that fiscal buffers are rebuilt in countries where government debt still is too high. a prolonged period of low economic growth also poses challenges for euro area banks. over the past ten years following the great financial crisis, funding strains and subsequently hampered bank intermediation capacity related to low bank profitability have figured prominently in our risk assessments. the low growth and inflation environment will probably exert downward pressure on the risk - free rate component of bonds across maturities. as a result, profitability stemming from the maturity transformation business may come under renewed pressure β not least as retail household deposits tend to be bound at zero. furthermore, should downside risks to the economic outlook materialise, higher loan loss provisions may further compress bank profitability. accommodative monetary policy has greatly supported bank profitability in past years. in fact, conventional and unconventional measures have improved the quality of credit overall, thereby 2 / 6 bis central bankers'speeches reducing provisioning needs. our measures have also increased the demand for loans, which has more than offset the negative effect of compressed margins. furthermore, structural factors are also weighing heavily on euro area banks β profitability. in an environment where cyclical factors may exert further downward pressure on bank profitability, banks would need to step up their efforts to overcome structural challenges. such measures may include cost reductions β including lower staffing costs and streamlining of branch networks, enhanced digitalisation β implying initial, one - off large - scale investments, revenue diversification and the reduction of the stock of non - performing loans in the six countries where levels are still high. a number of regulatory and policy measures could help to improve the institutional setting in which the banking sector operates and facilitate banks β efforts to adjust their business models. such measures should include completing the banking union ( in particular the establishment of a european deposit insurance scheme ), the subsequent removal of the remaining non - harmonised national options and discretions, and making progress with the capital markets union | 0 |
in fact, we are a unique federation where the boundaries of existing provinces are redrawn and new provinces are created, to accommodate aspirations, while remaining strictly within the provisions of the constitution. we have several national languages in which governments β businesses are conducted. every currency note that you see in india has the denomination written in seventeen languages with different scripts. in brief, independent india believes firmly, in dialogue, accommodation and assimilation of multiple identities of people. these characteristics enable the indian people and the indian corporates to live and work harmoniously alongside other nationalities. india β s record as a responsible nation in honouring its commitments is well known. specifically, independent india has never reneged on its monetary obligations to the rest of the world and has not sought any noticeable rescheduling of its payment obligations. in 1991, we had a liquidity crisis in currency, mainly due to the war in iraq and the breakdown of trade with ussr, but we preferred to pledge gold, initiate a massive import compression and start a reform process with assistance from the imf and the world bank. the entire burden of crisis and adjustment was successfully borne by the domestic economy. in the current environment of financial turbulence, and also a possible unwinding of macro imbalances, india plays a stabilising role with a modest current account deficit in most of the recent years, at around one per cent 1 of gdp, and a market determined exchange rate. india has not been contributing to the global macro economic imbalances, though it has a stake in how the issues get resolved in the near future. currently, there is a debate on the role of sovereign wealth funds. india is in receipt of investments from several of them either directly or indirectly, and hence, is interested in the current debate. for its part, the country β s foreign exchange reserves amounting to about us $ 300 billion continue to be managed by the reserve bank of india, typically as per mandate similar to those of other central banks around the world and consistent with the imf guidelines. however, the indian corporates, based on account of their own commercial judgements, take investment positions and merge or acquire other undertakings in other countries. public policy neither provides incentives nor disincentives for such market based initiatives by the indian corporates. india β s external sector has displayed considerable strength and resilience since the reforms in 1991 β despite several domestic as well as global political events and supply shocks in food and fuel. interestingly, | , consequently, a more significant slowdown in economic activity. however, in contrast to the quarantine imposed last year, this time supply will be more affected than demand, which could increase pro - inflationary pressures. what is more, a more protracted global price surge than currently expected will put pressure on domestic prices. other pro - inflationary risks also remain important. they include : a sharp deterioration in terms of trade, capital outflows from emerging markets and an escalation of the military conflict with russia. what will the nbu β s monetary policy stance be in future? as set forth in the baseline scenario, with a view to bringing inflation back to its 5 % target, the nbu will keep its key policy rate no lower than 8. 5 % at least until q3 2022 rather than until q2, as was expected in july. the key policy rate will be cut more gradually in 2022 than forecast before. the key policy rate is also expected to stand at 7. 5 % in late 2022, as opposed to 6. 5 %, as predicted in the previous forecast. 2 / 3 bis central bankers'speeches if the said or any other pro - inflationary risks materialize, the nbu stands ready to raise its key policy rate and deploy other monetary tools. it could decide to do so even during the december meeting. thank you for your attention! 3 / 3 bis central bankers'speeches | 0 |
caleb m fundanga : brief summary of economic and financial developments in zambia speech by dr caleb m fundanga, governor of the bank of zambia, at the official launch of standard chartered bank crossroads branch, lusaka, 25 september 2007. * * * the chairman of standard chartered bank zambia, mr george sokota members of the board of directors of standard chartered bank zambia the managing director of standard chartered bank zambia, mr. tom aaker distinguished guests members of the press and may i simply say ladies and gentlemen i am very pleased to be here today to officially open the new crossroads branch of standard chartered bank zambia. mr. chairman, as i have stated at various fora before, it is important for banks in zambia to take the lead in implementing actions, which contribute to the development of the financial infrastructure and support the development of our economy. as you may be aware, ladies and gentlemen, we would like banks to : β’ open new branches, such as this one, to enhance convenience for our people to access banking services, thereby improving financial service delivery and empowering our citizens ; β’ provide loans to the productive sector to support economic activity, such as mr. sokota just described ; and β’ invest in latest state of the art technology, such as standard chartered β s new electronic branch banking platform. i must hasten to mention, however, that in striving to meet these demands, banks must always comply with the regulations as stipulated in the banking & financial services act of 1994 as amended in 2000, to ensure the safety of customers β deposits and stability in the financial sector. any activities by banks, which do not meet the minimum standards provided for in the law, will invite close scrutiny and possible sanctions from the bank of zambia to bring the banks in line with the legal framework. mr chairman, following implementation of sound macroeconomic policies, the economy is relatively stable as shown by various indicators : β’ inflation is under control ; β’ the kwacha is stable ; and β’ interest rates are going down, although not yet as low as we would like them to be. the cost of borrowing has remained high in spite of the progress that has been made in the monetary and fiscal management of our economy. this high cost has, in turn, stifled the growth of the productive private sector, in particular the small and medium enterprises ( sme ) sector, which should be the engine of economic growth of our country. i therefore, appeal to all banks operating in zambia to show more commitment to the growth | caleb m fundanga : the new k10, 000 banknote in zambia opening remarks by dr caleb m fundanga, governor of the bank of zambia, at the official launch of the new k10, 000 banknote, bank of zambia, lusaka, 16 june 2008. * * * β’ members of the press β’ official from commercial banks present β’ ladies and gentlemen i wish to welcome you all to the bank of zambia. the objective of this press briefing is to announce the introduction of the new k10, 000 banknote in our economy. the new k10, 000 banknote will be put into circulation as early as this week. by showing you the new k10, 000 banknote first, we expect that you will, in turn, help us to inform the public about this new banknote. in order for us to help you understand the new k10, 000 banknote, we have produced posters and will make a short power point presentation. the posters are showing the main public recognition and security features of the new k10, 000 banknote. let me from the outset inform you that although we are calling it a new k10, 000 banknote, most of the features on the banknote are still the same as those on the current k10, 000 banknotes. the differences can best be detected by comparing this new k10, 000 banknote with the current k10, 000 banknotes in circulation. ladies and gentlemen the new features on the k10, 000 banknote are as follows : on the front of the banknote β there is a new bright silver demetallised holographic lead representing a fish eagle. this has replaced the old hologram of the head of a fish eagle. on the back of the banknote β the area around the value numeral, k10, 000 in the right top corner, is printed with a special ink which shifts colour from copper to green when angle of view is changed. these are the two changes that have been made to the k10, 000 banknote. all other features are basically the same. the reason for the introduction of these two features is mainly to enhance the security of the banknote. the bank of zambia would further like to inform the public that the new k10, 000 banknote and the current circulating k10, 000 banknotes shall circulate side by side. the new and current banknotes will therefore all be legal tender. the current k10, 000 banknotes will | 0.5 |
gent sejko : money and banking in albania, from antiquity to modern times opening address by mr gent sejko, governor of the bank of albania, at the first conference of the museum of the bank of albania β money and banking in albania, from antiquity to modern times β, tirana, 14 june 2017. * * * dear professor picard, dear academics, professors and researchers, dear guests, it is a special pleasure for me to welcome you to the first conference of the museum of the bank of albania. this is a special event, which brings together academics, researchers, and experts of central bank and currency museums, to establish a new bridge of communication and cooperation that will help us to take further our work at the museum. in our short experience in museum management, we have learned that it is very essential to cooperate with other institutions responsible for the administration of cultural heritage, as well as with scientists and experts that study and preserve them, and tell their history. also, with the support from the ministry of culture, centre for albanian studies and institute of archaeology, we have today the museum of the bank of albania, whose collection displays unique and impressive items. the systematic work of our distinguished archaeologists and of the dedicated central bank employees over the years has helped in materialising the efforts for presenting the history of the albanian currency, from the axes of the hoard of torovica, to the first coins struck in dyrrhachium, to those in circulation throughout various historic periods, up to modern days. through over 30 exhibits and 5 educational rooms in the museum, we show interactively the ancient history of our currency. the permanent exhibition in the lower floor displays collections from monetary systems that have existed in our territories over the past two thousand years. they are part of the numismatic collection of the bank of albania and the albanian institute of archaeology. we have selected and studied them meticulously in a close and long process of cooperation with archaeologists, numismatists, historians and ethnologists in albania. i take this opportunity to thank them for their valuable contribution. our museum, however, is not just a money museum. it is also the museum of the central bank, which considers financial education as an essential objective. the public needs to be informed in order to be able to make judicious and sound financial decisions, which, in turn, contribute to financial stability. that is why we have dedicated the upper floor of the museum to financial information and | ardian fullani : recent economic and monetary developments in albania speech by mr ardian fullani, governor of the bank of albania, at the press conference on the monetary policy decision of the bank of albania supervisory council, tirana, 28 december 2011. * * * today, on 28 december 2011, the supervisory council of the bank of albania reviewed and approved the monthly monetary policy report. based on the analysis of albania β s latest economic and monetary developments and following discussions on their performance outlook, the supervisory council of the bank of albania decided to leave the key interest rate unchanged at 4. 75 %. the supervisory council deemed that the actual monetary conditions are appropriate to meet the inflation target over the medium run and provide the necessary monetary stimulus and to support economic activity in albania. ( let me now proceed with an overview of economic developments and main issues discussed at today β s meeting. ) * * * inflation rate in november was 2. 9 %, slightly down by 0. 1 percentage points from the previous month. most of inflation in november was formed by higher prices of processed foods and non - food consumption goods, whereas other items of the consumer goods basket had low inflation rates. recent months were characterised by progressive reduction of inflationary pressures on the economy. on the supply side, prise rise slowdown for main products in international markets and national currency stability were reflected in dampened imported inflation. moreover, the cancelling out of direct administered price increase effects contributed to lower inflation rates during this period. on the demand side, below - potential growth of the albanian economy and under - utilised capacities in the labour and capital markets were reflected in limited pressures on production costs and ultimate prices in the economy. furthermore, the bank of albania β s positive experience on inflation control and its reliable monetary policy have contributed to controlling inflation expectations and mitigating transmission of supply shocks on headline inflation. overall, this trend is expected to continue in the period ahead. the absence of direct data on real economy indicators makes a comprehensive analysis of the albanian economy difficult. our judgement is thus based on indirect data, which proxy developments in various sectors of the economy, as well as information filtered from monetary indicators, fiscal indicators, external sector indicators, and businesses and consumer confidence surveys. the analysis of these indicators supports the assessment for positive - but - below potential performance of the albanian economy in the second and third quarters. economic growth was also supported by external demand and public sector demand, whereas private consumption and investments continued to be sluggish | 0.5 |
few β market - makers β do so. third, therefore, the rules and infrastructure supporting the financial system need to help it withstand stress. accounting and valuation policies is one such area, now being debated. another is the trading and clearing platforms themselves. the authorities must do what they can to encourage the industry to focus on whether more wholesale market activity could and should be conducted across central trading and clearing platforms rather than otc. in the past, intermediaries have tended to be doubtful about this. but it is plausible that the system would have been somewhat more resilient if β vanilla β products had been subjected to the minimum standards, greater pre and post - trade transparency, and centrally set margin requirements that accompany transacting across central infrastructure. the underlying point here is that the bodies providing such central infrastructure have a clear interest in effective system - wide risk management and stability, and can be monitored by the authorities. for the authorities internationally, the moral of the story is that they must take an interest, from a systemic perspective, in the regimes which govern, and drive changes in, the structure and behaviour of the financial system. that means maintaining that interest during peacetime, not just a necessary rush of activity after crises occur. in setting the rules of the game, the authorities need to strike a trade off between risk and efficiency. we could reduce the risk in the system by stifling innovation. but in order to choose to tilt the balance towards innovation and efficiency, the authorities need to be confident that they have regimes that, amongst other things, ( i ) are effective in mopping up the mess, and ( ii ) do not create bad long - term incentives. orthodoxy is to cut off incipient systemic stress at the pass : intervene early, and decisively, but leaving losses with the private sector and afterwards rejigging the structure of the system to contain the implications for future behaviour. for that, tools are needed. in very broad terms, this is precisely what the special resolution regime for banks and improved deposit insurance proposed by the uk authorities are about. they are tools the authorities need to contain the disruption caused when bank failures occur and so to make such individual firm failures tolerable. but we also need policies for containing systemic stress more generally ; and, if possible, for heading off the risk of systemic problems in the first place. like others, in speeches i have identified three elements in that armoury : monetary policy ; central bank liquidity policy ; and policies | % target. but that hasn β t been achieved at the expense of consistently high interest rates, and weak growth and employment, as many people feared that it would be. in fact nominal interest rates have been as low they β ve been for 40 years ; the overall economy has grown without interruption quarter by quarter - at an average annual rate of 2ΒΎ %, which is comfortably above its long - term trend ; the number of people in employment has risen fairly steadily - and is still close to its all - time high, while the rate of claimant count unemployment has fallen from 9. 6 % to 3. 1 % - the lowest its been for more than 25 years. and what β s true for the uk economy as a whole is broadly true for every region of the uk, including the north west region. total output in the north west increased year by year from 1992 to 1999 - the latest number i have - though at a somewhat slower annual average rate than in the uk as a whole, at around 1ΒΎ %. the number of people in employment in the region rose by about ΒΌ million from the end of 1992 to over 3. 1 mn in the past two years. and the rate of claimant count unemployment fell from over 10 % to 3. 5 % - still somewhat above the rate for the uk as a whole, but again the lowest rate for over 25 years. but i β m well aware that you don β t have to look far beneath the surface to see that at the sectoral or individual business level things are a lot more uncomfortable than these aggregate figures might suggest. to a degree that β s always going to be true. competition - at both the national and international level inevitably means the expansion of some sectors or businesses at the expense of others. yet it is a necessary driver of the increasing economic efficiency and higher sustainable growth rate that we need to satisfy our aspirations for improving living standards. but the stresses we β ve seen within our economy in the past few years go well beyond normal competitive pressures. for the most part they originate abroad, with, first, the asia crisis and its aftermath in the late 1990 β s, happily substantially offset, as far as the uk was concerned, by strong growth in the united states, but then last year by the sharp, synchronised, slowdown into negative growth in most of the world β s major economies. although the pressures were not confined to manufacturing, and were not uniform within manufacturing, manufacturing was hit harder than | 0.5 |
for greater collaboration with others. in this regard, i would like to see greater collaboration between cartac and other like - minded regional institutions such as the university of the west indies, cemla and the ccmf. in closing, i wish to remind you all that this meeting is taking place the day before two successive national holidays, corpus christi and indian arrival day. the timing is therefore opportune for you to experience some of our country's religious and cultural heritage and to partake in our delicious indigenous cuisine. i thank you and wish you all a very productive meeting. bis central bankers β speeches | collapse of the insurance subsidiaries of the cl financial group is perhaps the most widely cited example of the systemic importance of these cross - border financial groups. cartac has already done some good work in assisting in the drafting of financial sector legislation by bringing a wider international perspective. the centre β s assistance to the central banks in producing a regional financial stability report is anticipated to be of great benefit in assisting the region to diagnose financial vulnerabilities and develop corrective strategies ex ante to forestall potential future crises. one aspect that is often unheralded is cartac β s work on macroeconomic statistics. indeed, many countries have severe institutional problems that inhibit the gathering, accurate processing and timely dissemination of data, creating a weak base for policy design. in a difficult and sometimes frustrating environment, cartac has been able to help in providing bis central bankers β speeches consultants and training local staff to improve statistics on consumer prices, the balance of payments and national accounts. trinidad and tobago considers itself a strong collaborator of the institution and wholeheartedly supports its work and vision. for our part, we have benefitted from technical assistance / consultancy support in the financial sector as well as fiscal and debt management. we continue to receive support to strengthen the price and balance of payments statistics and just last week we hosted a consultant who is assisting us to develop and implement a plan to rebase our quarterly gross domestic product estimates. our semi - annual bank stress testing exercises, which we have done over the past two and a half years, was developed with a cartac consultant, who earlier this year revisited our shores and worked with us on upgrading the test parameters and methodology. staff at the central bank and at government ministries gained valuable training on macroeconomic issues and policy design. this is a cartac contribution which we consider extremely important in helping to develop the capacity of our future policy makers. we also commend cartac for organizing the summer internship program β we have had the good fortune of having some excellent interns and we will continue to participate in this initiative. as with any technical assistance program, we recognize that sustainability must be a major objective. as we discuss the recent activities of the centre and the way forward during today β s proceedings, we should keep constantly in mind the need to develop programs in a way that would progressively transfer the knowledge and expertise to recipient countries. in this way cartac β s contribution would be all the more durable. moreover, we should utilize as far as possible the avenues | 1 |
time could have had disastrous results. in between those two meetings were some of the darkest hours of the financial crisis. on september 7, the treasury department placed fannie mae and freddie mac into conservatorship, essentially putting the government in charge of the mortgage giants. on september 15, lehman brothers filed for bankruptcy protection. a day later, a prominent money market mutual fund β broke the buck β β that is, its share price went below $ 1 β sparking fears that no investments were safe as the financial crisis rapidly spread around the globe. that was the same day we made the loan to aig β not exactly a lot of time to ease into a new job. we realized that if we didn β t act rapidly, the panic that we saw in financial markets β the worst in 80 years β could quickly trigger a global depression. in fighting the crisis, the fed acted as a first responder of sorts using a wide range of tools, including lowering interest rates ; maintaining a steady flow of dollars to meet demand abroad ; providing liquidity to sound institutions to support faltering financial markets ; and providing emergency loans to specific, troubled institutions whose failures would have had disastrous consequences for the financial system and the economy. later, the fed created additional programs to unlock lending, the lifeblood of the u. s. economy. while the economy today is by no means nearly as strong as we β d like it to be and some parts of the financial system are still not functioning smoothly, the forceful actions by the federal reserve in the fall of 2008 helped prevent the apocalyptic scenario that we all feared. i β d like to explain how we acted swiftly, responsibly, and effectively in response to the financial crisis. lowering interest rates during more normal times, the federal reserve β s policymaking is focused on short - term interest rates, our main tool for steering the economy. the fed influences the costs of borrowing to buy everything from cars to condos to computers by controlling short - term interest rates. interest rates can be lowered to stimulate borrowing and spending when demand is otherwise weak or raised to damp demand and curb inflation. before i arrived, the fed had already responded to the weakening in the economy by aggressively lowering its federal funds rate target from 5 - 1 / 4 percent in september 2007 to 2 percent. two percent is extremely low for interest rates, but as the financial crisis intensified and the economic outlook grew more dire in the fall of 2008, the fed continued to cut rates. | their financial positions. some progress is being made on this front. saving rates are up noticeably from pre - crisis levels, and household assets have risen, on net, over recent quarters, while debt and debt service payments have declined markedly relative to income. 1 together with expected further easing in credit terms and conditions offered by lenders, stronger balance sheets should eventually provide households the confidence and the wherewithal to increase their pace of spending. that said, progress has been and is likely to be uneven, as the process of balance sheet repair remains impeded to some extent by elevated unemployment, lower home values, and limited ability to refinance existing mortgages. household finances and attitudes also have an important influence on the housing market, which has remained depressed, notwithstanding reduced house prices and record - low mortgage rates. the overhang of foreclosed properties and vacant homes remains a significant drag on house prices and residential investment. in the business sector, indicators such as new orders and business sentiment suggest that growth in spending on equipment and software has slowed relative to its rapid pace earlier this year. investment in nonresidential structures continues to contract, reflecting stringent financing conditions and high vacancy rates for commercial real estate. the availability of credit to finance investment and expand business operations remains quite uneven : generally speaking, large firms in good financial condition can obtain credit in capital markets easily and on favorable terms. larger firms also hold considerable amounts of cash on their balance sheets. by contrast, surveys and anecdotes indicate that bank - dependent smaller firms continue to face significantly greater problems in obtaining credit, reflecting in part weaker balance sheets and income prospects that limit their ability to qualify for loans as well as tight lending standards and terms on the part of banks. the federal reserve and other banking regulators have been making significant efforts to improve the credit environment for small businesses, and we have seen some positive signs. in particular, some of the reduction in household debt burdens is the result of defaults and writedowns rather than higher saving. banks are no longer tightening lending standards and terms and are reportedly becoming more proactive in seeking out creditworthy borrowers. although the pace of recovery has slowed in recent months and is likely to continue to be fairly modest in the near term, the preconditions for a pickup in growth next year remain in place. stronger household finances, a further easing of credit conditions, and pent - up demand for consumer durable goods should all contribute to a somewhat faster pace of household spending | 0.5 |
, have been shaped by development strategies adopted over the period. bank of ghana is no exception and the bank β s policies and activities have been shaped by changing political and economic conditions over the years. in the foundational years, the bank of ghana ordinance ( no. 34 ) of 1957 clearly defined the role of the bank to suit the prevailing circumstances which characterized optimism and aspirations associated with the country β s attainment of independence. consequently, the bank of ghana pursued proactive policies to foster the credit system, creating financial institutions as growth - promoting vehicles, while exercising the fundamental responsibilities of currency management and acting as the government β s banker. since then, the bank has epitomized and embraced new thinking on monetary policy formulation, driven by those privileged to serve the bank at the highest level β some of whom are with us here now. 6. ladies and gentlemen, it has been sixty years and the bank is now operating in a different statutory and macroeconomic context. to respond to changing domestic conditions and developments in central banking and monetary policy globally, the bank of ghana act 2002, act 612, which was passed to bestow operational independence on the central bank, was amended in 2016 to further reinforce and re - focus its policies and mandate on price and financial stability. these two pieces of legislation marked a paradigm shift in the bank β s operations and would continue to define the role of the bank of ghana going forward. 7. on monetary policy formulation and implementation, the bank officially adopted inflation targeting framework a decade ago, with the monetary policy rate as the main policy tool. over the past decade, the framework has helped lower inflation volatility. prior to the implementation of the framework, inflation was highly volatile and hovered above 40 percent, but has since declined significantly and edging closer to the medium - term target of 8Β±2 percent. the it framework introduced some clarity and transparency into the monetary policy formulation and helped anchor inflation expectations. 8. this aside, ghana is a small open economy and hence vulnerable to adverse developments in the global economy, especially in the international commodity markets. these vulnerabilities transmit to the domestic economy through the trade and financial sectors, posing major challenges to the macroeconomic fundamentals. for instance, the past decade has witnessed significant turmoil in the global economy with rippling effects on international commodity and financial markets. because of the openness of the ghanaian economy, such global shocks ultimately pose challenges to macroeconomic stability, which is a necessary condition for growth. such | welcome address delivered by dr ernest addison governor, bank of ghana at bank of ghana 60th anniversary lectures and exhibition at kempinski hotel, accra on august 18, 2017 your excellency, the president of the republic of ghana, your excellency, the vice president of the republic of ghana, distinguished invited guests board of directors colleagues and staff ladies and gentlemen 1. i deem it a great pleasure and honour to welcome you all to this important ceremony which climaxes the celebration of 60th anniversary of the bank of ghana β a significant milestone which is intertwined with the rich history of ghana β s independence. this indeed calls for both celebration and sober introspection. before i proceed any further, let me say that we are privileged to have h. e. president nana addo dankwa akufo - addo to grace the occasion. your excellency, we very much appreciate taking time off your busy schedule to come. we also recognize the presence of h. e vice president alhaji dr. mahamudu bawumia, the speaker of parliament, rt. honorable prof. aaron mike ocquaye, and the chief justice, her ladyship sophia akuffo. 2. i would also like to take this opportunity to recognize governors from sister institutions on this continent : governors from bceao, kenya, lesotho, mauritius, guinea, mozambique, and deputy governors from south africa, botswana, nigeria, sierra leone, and zambia. and finally, i also acknowledge the presence of former governors and deputy governors, who in various ways provided invaluable services to the bank of ghana and shaped this unique course of history. 3. your excellency, the chosen theme for this anniversary celebrations, β celebrating 60 years of central banking : achievements, challenges & prospects β, creates a platform for sober reflection on our past and what was achieved, and where we are heading as a central bank. we have a series of planned events which chronicles the evolution of the bank of ghana, including a high - level symposium on emerging issues that directly affect the bank β s operations. we have also put in place an exhibition of old currencies, documentation and pictures to capture the bank β s nostalgic memories. 4. your excellency, in line with the theme for the anniversary, we highlight some achievements as well as challenges faced in the execution of our mandate of price stability. 5. the historical roles of central banks in most developing countries, including ghana | 1 |
donald t brash : central banks and financial system stability in an uncertain world address by dr donald t brash, governor of the reserve bank of new zealand, to belgian financial forum, antwerp region, brussels, on 6 june 2000. * * * introduction i am very pleased to be here in antwerp this evening, and to have the opportunity of sharing with you some of the reserve bank of new zealand β s views on promoting financial system stability. everybody in this room is confronted with uncertainty in their daily interface with financial markets. for those of us who are central bankers or bank supervisors, the task is to guide the dynamic, complex and unpredictable processes in financial markets towards outcomes that meet the policy preferences of our country. for the reserve bank of new zealand, our task is to deliver price stability and a sound and efficient financial system within a liberal economic policy paradigm. the uncertain world that we operate in can be highlighted by the relatively frequent and unpredictable episodes of financial instability experienced over the past couple of decades. since 1980, over two - thirds of imf member countries have experienced at least one serious banking - sector difficulty. in some countries, bank losses nearly or completely exhausted the banking system β s capital. in some countries, financial collapses have required significant fiscal expenditure to resolve. and, as we all know, national financial crises have been transmitted to other countries, threatening not only the economic well - being of those countries but also the stability of the international financial system as a whole. oceans of ink have been spilt in analysing the causes of these crises. most detached observers seem to agree that the underlying problems can be traced to certain fundamental weaknesses, weaknesses which clearly varied from country to country, but which have included poor quality credit analysis by banks and other financial institutions, politically - directed lending by banks, the end of an asset price bubble ( typically real estate ), sharply increased real exchange rates in a pegged exchange rate situation, distorted incentives in financial markets, and a lack of transparency in financial markets. the widespread incidence and significant economic cost of financial sector problems have prompted calls for concerted international action to promote the soundness of financial systems. these calls have strengthened considerably over the last couple of years. the basel committee has been at the forefront of this effort with the release of the core principles and proposals for a new capital accord. the imf is making evaluation of financial supervision and regulation part of its annual country reviews, and the world bank is emphasising the strengthening of financial infrastructure as | systemic and through - the - cycle view of prudential regulation. this reduces the risk of spillover from the financial sector to the real economy. soundness is not easily translated into a single, quantifiable benchmark against which performance can be monitored. the academic literature and various countries β prudential reforms since the gfc suggest there is a wide range of views on the optimal quantity and quality of capital for a banking system. indeed, the literature generally suggests that β optimal β capital is not only higher than regulatory minimums, but can also span quite a wide range. the literature is therefore helpful in pointing to the direction that regulatory capital should travel, but not the destination. we are naturally cautious in how we think about risk to the banking sector. we operate in the uncertain : the origin of the next crisis is unknown. and as alluded to earlier, a banking crisis would have significant costs for ordinary new zealanders that would persist for years, in terms of economic output, public debt, employment and welfare. there is a good argument that there are soundness and efficiency gains to be made by requiring banks to hold more capital β within reason. more capital would help deliver both greater certainty, and higher expected output ( before and after a crisis ). this is illustrated by figure 5, where the level of financial stability is measured on the x axis and the expected output is measured on the y axis. at some point more certainty comes at a cost, though this may be justifiable if we desire greater certainty. however based on the literature and the views of other regulators it would seem that we are a long way from that trade off. some will argue that certainty comes at a price β that share capital is a more expensive form of funding than debt. there is a debate as to how high that price really is. and we need to weigh those private costs against the social costs of a crisis. figure 5 a framework for thinking about our policy goal output financial stability low high the question remains, how much certainty do we want, how risky do we want our financial system to be in the long - term? goldilocks returns with the same question what level of financial stability is too risky, too safe, or just right? to answer this we need to think about our risk tolerance for crises. stress tests one input into informing the reserve bank β s risk tolerance is stress testing. we ask banks to consider what would happen in the event of a severe but plausible hypothetical scenario | 0.5 |
norwegian economy. employment is rapidly rising and unemployment has exhibited a marked decline. there are signs of higher wage growth and expectations of rising inflation. at the same time, the krone exchange rate has depreciated from strong values. β’ the interest rate path presented in inflation report 3 / 06 will provide a reasonable balance between the objective of bringing up inflation towards target and the objective of stabilising developments in output and employment, conditional on the information currently available to norges bank. β’ monetary policy influences the economy with a lag. over several years, interest rates have been considerably lower than what norges bank considers to be a neutral level. the interest rate may gradually be raised to a more normal level at a somewhat faster pace than envisaged earlier, although it is unlikely that rates will be raised at every monetary policy meeting. based on norges bank β s current assessment, the interest rate will thus continue to be raised in small, not too frequent steps if economic developments are broadly in line with projections. β’ the sight deposit rate should be in the interval 3ΒΌ - 4ΒΌ per cent in the period to the publication of the next inflation report on 15 march 2007, conditional on economic developments that are broadly in line with the projections. new information may reveal aspects of economic developments that indicate that the norwegian economy is moving on a different path than projected. on the one hand, major shifts in trade patterns, strong competition, weaker global growth or a stronger krone exchange rate may result in low inflation. on the other hand, low real interest rates or a further depreciation of the krone may lead to a higher - than - projected rise in output and inflation. projections are uncertain. disturbances in the economy will affect interest rate developments. this reduces the uncertainty about developments in prices and output. monetary policy cannot fine - tune economic developments, but it can prevent the largest effects from occurring when the economy is exposed to disturbances. in some situations, it may be appropriate to guard against particularly adverse developments. in the baseline scenario, the interest rate is gradually raised to a more normal level. norges bank continuously assesses the effects of interest rate changes and other new information concerning economic developments. thank you for your attention. | siden 1900 ( the norwegian credit market since 1900 ) samfunnsΓΈkonomiske studier no. 19, statistics norway, oslo. see also mykland, knut ( ed. ) cappelens norgeshistorie, vol. 13 page 86. for further discussion of parity policy and norges bank β s role, see ecklund, gunhild j. ( 2008 ), pages 46 - 51 and 67 - 71 : β creating a new role for an old central bank : the bank of norway 1945 - 1954 β, series of dissertations 2 / 2008, bi norwegian school of management, oslo. this link to gold was not as strong as when the obligation to redeem in gold applied. under the bretton woods system, countries whose public finances were in disequilibrium, or who allowed inflation to rise for other reasons, had to let their exchange rate depreciate against the dollar. when the exchange rate against the dollar fell, the value of money measured in gold decreased. the post - war period was marked by the strong conviction that the economy could be finetuned by the coordinated use of instruments decided at a centralised level. the value of the krone was pegged to the dollar and to gold while a policy of low interest rates was accompanied by an ample credit supply. this was possible in a highly regulated economy. the positive attitude to regulation probably stemmed from the period of rationing and centralised government during world war ii. the system had functioned reasonably well and a regulatory apparatus was already in place. 21 internationally, there was widespread desire to stabilise economic developments, originating in theories published by john maynard keynes in the early 1930s. this was part of the background for norwegian politicians β ambition to fine - tune the economy in norway. the works of a. w. phillips 22, published in 1958, also supported this view. according to phillips, a country could apparently choose between low unemployment and low inflation. this menu option is often referred to as the phillips curve. and what kind of β option β was that? unemployment is real, while inflation is only changes in an index! by formulating the question in this way, the choice was obvious. this analysis had a considerable impact on economic policy. the global economic situation became difficult into the 1970s, with low growth and high inflation in norway and other countries. the us and european authorities opted to pursue an active counter - cyclical policy rather than combat | 0.5 |
variable does not seem to be such a great challenge for us, compared to the issues discussed above. looking at the prospects and having in mind the country β s strategy for expeditious accession to the euro area, however, this is a macroeconomic variable which faces the country with the greatest challenges. the inflation criterion, as defined in the maastricht treaty ( this is not the place to deal with the issue how good this definition is ), is very strict and requires a purposeful policy going beyond the monetary and fiscal policies. in bulgaria β s case, under the currency regime of fixed exchange rate and extremely conservative fiscal policy, untapped prospects should be sought in encouraging competition and improving the business climate, thus ensuring to the economy the flexibility to respond to exogenous changes ( including with regard to the prices of raw materials ) and enabling supply to react more promptly to increases in demand ( both domestic and external ). in the past year, inflation reached 6. 5 % under the strong proinflationary impact of the increase in the prices of energy resources ( direct contribution of 1. 0 % in the overall price increase ). in addition, the largescale floods resulted in an unexpected increase in foodstuff prices ( contribution of 2. 6 % in the overall price increase ). this year, inflation is expected to decline to 6. 0 %. the slow process of decreasing inflation is mainly determined by the harmonization of indirect taxes with the minimum levels in the eu, pursued early in the year. as the change in indirect taxes and administered prices has a direct effect on domestic inflation, their catching - up adjustment should be effected before the years during which they will be used as basis for evaluation of compliance with the maastricht criteria β i. e. before 2008. from this perspective, earlier timing of harmonization of some excise taxes is a step to facilitate significantly the performance on the inflation criterion, as it would eliminate the proinflationary impact of an increase in these taxes in the years in which such evaluation will be made. in conclusion, i would like to sum up that, in the light of the rapid change in the structure of our economy, the stable macroeconomic policy pursued by the government and the bnb, and the prospects for eu membership, the concerns, expressed in the leaflet for this conference, of possible overheating of the economy and the risks this entails for its stability, seem rather exaggerated. the | of instant credit transfers in bgn. currently, we report that through the borika ad blink service practically 100 % of customer bank accounts in the country are accessible for instant payments in bgn, which are executed within 10 seconds, 24 hours a day, 365 days a year. as i already said, in the coming year a number of challenges are expected on various fronts, but then again they provide opportunities for the sustainable development of the financial sector as a whole, with which the payment systems in the country will be integrated into the corresponding systems and infrastructures of the euro area. the mentioned projects are essential for the country's financial infrastructure, especially in terms of digitisation and cyber resilience processes, as they will become a foundation for further development of innovations in the sector. the realisation of the stated goals and the prevention of the analysed risks could not be possible without the joint efforts of the regulator and market participants through fruitful cooperation, smooth communication and strong motivation to achieve results. i wish you success in the new, challenging year 2024, as well as fruitful discussions in a spirit of partnership and cooperation. 4 / 4 bis - central bankers'speeches | 0.5 |
challenge is to stay on this path to create the fastest possible rebound in growth and job creation. this entails building a genuine banking union with a strong single resolution mechanism ; it entails finding new ways to support structural reform implementation, for instance through so - called reform contracts ; and it entails deepening our political union to ensure full legitimacy in the eyes of citizens. all this requires effort and determination to achieve β but it is well within our reach. bis central bankers β speeches | muhammad bin ibrahim : raising performance standards and improving consumer protection in the malaysian insurance industry speech by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the insurance and takaful industry annual dinner 2013, kuala lumpur, 15 november 2013. * * * it is my great pleasure to join all of you this evening at the insurance and takaful industry annual dinner 2013. this is indeed a significant and unique gathering as we have the whole of the insurance and takaful industry represented here tonight. the collective wisdoms of those present in this hall tonight, if harnessed well, could significantly alter the insurance landscape towards a more diversified, efficient, and competitive industry. we are facing an increasingly complex business environment characterised by rapid advancements in technology, more discerning consumers and mounting competition, that necessitate the industry to adapt and continually innovate to remain competitive and relevant. of importance is for the industry to remember that the fundamental of insurance is premised on safeguarding consumers β interest against financial loss when things go wrong. consumers β interest is always at the heart of the matter. my remarks this evening will touch on some regulatory changes that have taken place, in response to the changing operating environment. my remarks will have strong focus on consumer protection. the financial services act and the islamic financial services act 2013 which came into force in june this year has provided the bank with statutory duty to foster fair, responsible and professional business conduct amongst financial service providers. such regulatory developments mark an important milestone in modernising malaysia β s financial sector which goes beyond the mandate of preserving financial stability. these laws ensure a robust financial consumer protection regime. the new legislations provide explicit powers for the bank to set and enforce standards on business conduct for financial service providers that ensure financial consumers are treated fairly. the laws also specifically prohibit financial service providers from engaging in unfair or deceptive business conduct including making false, misleading or dishonest representations, and tied selling. it is important to highlight that the new legislation also provides enhanced protection in respect to consumers β pre - contractual disclosure obligations in consumer insurance contracts. among others, an insurer or takaful operator must pose specific questions to consumers for its underwriting purpose. the legislation also sets out various remedies that an insurer may rely on depending on the type of pre - contractual misrepresentation made by the consumers. changes were also introduced under the new laws to deliver a more efficient regulatory regime for insurance and takaful intermedia | 0 |
kicked in, and energy is now fading, has moved now in may and is in slightly negative territory. but labour, and wages in particular, is playing a significant role as a driver of inflation. it's quite extraordinary because there have been more people employed, the average hours have been up, wages are increasing β we had 5. 2 % growth for the first quarter in the compensation per employee β, and the output is where it is : stagnant. so, there is an issue of unit labour cost β in other words, productivity β which clearly has an impact on inflation as well. we will continue to really monitor and dissect as well as we can this entire enigma of the labour market β which is, as i said, playing a critical role. it's especially important because many services which are playing a large part in our economy are labour - intensive, and wages in that respect play a key role. that is partly, by the way, the reason why we have β i was going to say upgraded, but it's not upgraded β, but why we have increased our projection for core inflation in both 2023 and 2024. my first question : i was a bit surprised by how strong this revision of the core inflation projection was. could you elaborate a bit on the reason? is that all due to wages, wage expectations, or are there other reasons behind that? my second question is about the decision today. was it unanimous? could you maybe give us a bit of a flavour about the discussion? on the first one, our revision to core inflation β i've started answering already in the previous question β, a lot of it is attributable to the unit labour cost. that's a large chunk of the revision. the rest is what you have in the monetary policy statement, which is past upward surprises. so, it's a different starting point, which is informed by data that came in after the last projection that we made in march. the latest data that we had in terms of inflation was from january. now, things obviously changed between those january data and the may data that we have incorporated because we cut off on the 23 may1. i think that's a small part of it. the large part of it is the unit labour cost. you asked me about the decision and the atmosphere. i have to tell you that it was quite a harmonious discussion and a very good and thorough economic discussion. as | euro is providing a positive impetus in the euro area economy. the economic and financial environment of the euro area is changing in many ways and the euro is having a beneficial impact. euro area economies are gradually becoming more interdependent, as evidenced by the following facts : a. there is clear evidence of a significant increase in both intra - and extra - euro area trade in goods since the launch of the euro. exports and imports of goods within the euro area rose from about 26 % of gdp in 1998 to around 32 % in 2006, and intraeuro area exports and imports of services increased from about 5 % to almost 7 % of gdp over the same period. the introduction of the single currency, as well as greater price and cost transparency, have promoted cross - border trade. the completion of a single market for services will also further facilitate trade in services. in addition, the rate of increase in extra - euro area exports and imports exceeded that in intra - euro area trade, rising from about 24 % of gdp in 1998 to almost 33 % in 2006. over the same period, extra - euro area exports and imports of services grew from about 8 % of gdp to almost 10 %. external factors, such as more sustained growth in world gdp than in euro area gdp, rising global trade integration and a sizeable increase in trade with the new eu member states, are also playing an important role. b. another area i would like to mention is foreign direct investment ( fdi ), which also includes merger and acquisition ( m & a ) activity. fdi accumulates over time and thus makes an important contribution to reshaping europe. intra - euro area fdi has grown considerably and is catching up with extra - euro area fdi. between 1994 and 2004, the stock of intra - euro area fdi grew from almost 14 % of euro area gdp to around 24 %. on the other hand, the stock of extra - euro area outward fdi have grown somewhat less rapidly over the same period, rising from 22 % to 30 % of euro area gdp. in particular, emu has been associated with a sharp increase in crossborder m & as of the manufacturing sector among euro area countries. conversely, the service industry has thus far benefited less from european financial integration. this also illustrates that more has to be done to remove the existing barriers to trade in services. c. the euro is acting as a catalyst towards a single market in financial services. to illustrate this, i | 0.5 |
are serving the housing needs of the neighborhoods and communities in which they are located. a second is to help government officials target public investment to promote private investment where it is needed. a third purpose is to provide data to assist in identifying possible discriminatory lending patterns and facilitate the enforcement of anti - discrimination laws, such as the equal credit opportunity act. today β s hearing is intended to serve as a venue to discuss whether or not the 2002 revisions to regulation c provided useful and accurate information about the mortgage market, to gather information that will help assess the need for additional data elements or improvements, and to identify emerging issues in the mortgage market that may require additional research. as i said earlier, we are also interested in any comments on the implementation of the hmda elements of the regulatory reform legislation. we have gathered this morning an impressive array of panelists representing a broad spectrum of vantage points, and we look forward to their comments. this input, together with the input of the preceding hearings and written comments submitted from the public, will be carefully weighed as we consider changes to regulation c. | elizabeth a duke : opening remarks at the public hearing on potential revisions to the home mortgage disclosure act opening remarks by ms elizabeth a duke, member of the board of governors of the federal reserve system, at the public hearing on potential revisions to the home mortgage disclosure act, washington dc, 24 september 2010. * * * good morning. on behalf of the board of governors of the federal reserve system, i β d like to welcome everyone to the last of our series of public hearings held to discuss changes to the home mortgage disclosure act ( hmda ). the knowledge and feedback we have gained from these hearings will help us to assess the adequacy of current mortgage data, examine the need for additional data, and explore possible changes to regulation c, which implements hmda. i β d like to thank our colleagues at the federal reserve banks of atlanta, san francisco, and chicago for hosting the first three hearings. our series of hearings kicked off just as congress passed regulatory reform legislation earlier this summer. the dodd - frank act provides for some changes to hmda data collection and submission, and we look forward to hearing from our panelists and members of the public about the implementation of these changes. the new law also transfers authority for hmda rulemaking from the board of governors to the new consumer financial protection bureau ( cfpb ). all information gleaned from these hearings will inform our own work for the time that we continue to have rulewriting authority. when that authority transfers to the cfpb, be assured that we will hand over the most current thinking about changes to regulation c. over the course of these hearings, we have heard from key players in the home mortgage market : lenders and other market participants, academics and researchers, consumer advocacy and community development organizations, data experts, regulators, and other public officials. although they play different roles, we believe that all share a common goal : to ensure that the mortgage market is responsible, transparent, efficient, and serves the needs of consumers and market participants alike. clearly, the recent mortgage crisis has highlighted the potential ramifications of a mortgage market that is not functioning well. hmda data do not create the market or solve all market problems, but they do help us understand what is happening in the market. the time is certainly ripe for reviewing and revising the data elements, standards, and reporting formats. hmda has three purposes. one is to provide the public and government officials with data that will help show whether lenders | 1 |
norm for monetary policy and as the nominal anchor for the economy, that is, a means of anchoring inflation expectations so that they do not drift away. the idea was that a fixed exchange rate for the krona would mean that inflation in sweden was adapted in the long term to inflation in the countries with currencies to which the krona was pegged. confidence in the fixed exchange rate would mean that the expectations of inflation in sweden would largely be the same as the expectations in the countries to which we were thus linked. but in sweden, as in many other countries, it proved impossible to prevent inflation soaring with a fixed exchange rate regime. other countries which tried to control inflation by means of targets for the money supply also faced problems. the riksbank announced its inflation target in january 1993, after the krona had been allowed to float earlier in the autumn with a great hullabaloo. the bank then announced that the target for monetary policy would be to hold the annual change in the consumer price index at 2 per cent. the target would formally apply with effect from 1995. in this way sweden became one of the first countries to choose to formulate its monetary policy in terms of an explicit inflation target. despite being aware that it would be difficult to attain the target exactly, the riksbank chose to formulate the target with a specific figure for inflation. one of the most important reasons for this was to try to create an anchor around which inflation expectations could be stabilised. clarity and openness were guiding principles for the inflation - targeting regime right from the start, and i believe that this has played an important part in building up confidence in the inflation target. this culture has therefore continued to permeate the riksbank β s activities. it is also important so that the riksdag, which is our principal, can evaluate the bank and require accountability from us. this motive became particularly important when the new wording of the sveriges riksbank act gave the riksbank an executive board with an independent position in 1999. why 2 per cent? the new wording of the sveriges riksbank act applying from 1999 changed the objective for the riksbank β s activities to maintaining price stability. the previous act contained a more general formulation that the riksbank was responsible for β foreign exchange and credit policies β. when the new wording was produced, it was pointed out in the preliminary work that in principle the act could be very | inclusiveness is not only an antidote to inequality, it is also a powerful driver of economic development and resilience. that is why we need to pursue inclusive growth. in labour markets, o. bandiera, a. kotia, i. lindenlaub, c. moser and a. prat, β meritocracy across countries β, nber wp no. 32375, 2024. w. dauth, o. schlenker and s. findeisen, β organized labor versus robots? evidence from micro data β, iza dp no. 19192, 2024. l. lagos, β union bargaining power and the amenity - wage tradeoff β, iza dp no. 17034, 2024. c. lipowski, a. salomons and u. zierahn - weilage, β expertise at work : new technologies, new skills, and worker impacts β, zew dp no. 24 - 044, 2024. j. m. barrero, n. bloom and s. j. davis, β the evolution of work from home β, journal of economic perspectives, 2023. this means tackling the barriers that have long marginalized certain groups, including migrants and women. the literature has increasingly recognized the important role of immigrants in the economy β in particular their contribution to innovation, labour market fluidity and female participation β and has found that their skills are primarily complementary to those of natives. 7 another important aspect, that has received less attention, is the impact of highskilled immigration on firms. a paper on this topic, to be presented tomorrow, demonstrates the positive impact of high - skilled migration on firm performance and employment. 8 regardless of how important these aspects are, we cannot avoid mentioning the host of challenges posed by the ageing of advanced societies, a particularly pressing concern in italy. the political debate has often focused on illegal immigration, but awareness is growing that a proper management of migration flows is important to counter the decline in labour force caused by ageing. another part of the solution to the ageing problem must come from increasing labour force participation. policies in this area are also essential, and involve, inter alia, promoting female participation in the labour market ( another pressing concern in italy ). regarding the study of gender gaps, we are honoured to have as our second keynote speaker professor claudia olivetti, a leading economist in this important field. | 0 |
commodity prices. in canada, the economy remains overheated and clearly in excess demand. tight labour markets have shown only modest signs of easing. job vacancies have come down a little but remain elevated, the unemployment rate is near historic lows, and many businesses continue to report labour shortages. 2 / 3 bis - central bankers'speeches but, as i said, higher interest rates are working to help the economy rebalance. household spending has moderated. demand for furniture and appliances has decreased, and housing market activity and prices have declined substantially. as pentup demand diminishes, spending on services should ease. higher rates are also expected to continue to slow business investment, and weaker foreign demand will weigh on exports. putting this together, we expect growth in canada to stall through the middle of this year before picking up later in the year. we project that, on an annual average basis, growth in canada's gross domestic product will slow from about 3Β½ % in 2022 to about 1 % in 2023 and 2 % in 2024. lower energy prices, improved global supply chains and slowing demand should bring inflation down significantly this year. we expect cpi inflation to fall to around 3 % in the middle of this year and reach the 2 % target in 2024. needless to say, there are risks around this projection. the biggest near - term risk is that global energy prices could increase, pushing inflation up globally. we're also concerned that if inflation expectations remain elevated in canada or increases in labour costs persist, inflation will not come down as quickly as we have forecast. overall, we view the risks around our inflation forecast as balanced, but with inflation still well above our target, we continue to be more concerned about the upside risks. if these upside risks materialize, we are prepared to raise interest rates further. i want to leave you with a few key messages. the decline in inflation since the summer is welcome relief for the many canadians who are struggling to keep up with the rising cost of living. but at more than 6 %, inflation remains too high. to combat inflation, the bank of canada responded forcefully, raising its policy interest rate from 0. 25 % a year ago to 4. 50 % today. it's working. we are turning the corner on inflation. we're still a long way from our target, but recent developments have reinforced our confidence that inflation is coming down. and we are committed to getting inflation all the way | by more than the bank had expected, with more muted price pressures across a wide range of goods and services, consistent with the unexpected increase in excess capacity. bis central bankers β speeches β’ total cpi inflation has also been lower than anticipated, reflecting developments in core inflation and weaker - than - projected gasoline prices. β’ total cpi inflation is expected to remain around 1 per cent in the near term. it is expected to rise gradually, along with core inflation, to the 2 per cent target in the second half of 2014 as the economy returns to full capacity and inflation expectations remain well - anchored. β’ despite the reduction in global tail risks as a result of a series of actions by european and american authorities, the inflation outlook in canada is still subject to significant risks. β’ the three main upside risks to inflation in canada relate to the possibility of stronger - than - expected growth in the u. s. economy, higher canadian exports and renewed momentum in canadian residential investment. β’ the three main downside risks to inflation in canada relate to the european crisis, more protracted weakness in business investment and exports in canada, and the possibility that growth in canadian household spending could be weaker. β’ overall, the bank judges that the risks to the inflation outlook in canada are roughly balanced over the projection period. β’ reflecting all of these factors, the bank, on 23 january, maintained the target for the overnight rate at 1 per cent. β’ while some modest withdrawal of monetary policy stimulus will likely be required over time, consistent with achieving the 2 per cent inflation target, the more muted inflation outlook and the beginnings of a more constructive evolution of imbalances in the household sector suggest that the timing of any such withdrawal is less imminent than previously anticipated. with that, tiff and i would be pleased to take your questions. bis central bankers β speeches | 0.5 |
steven vanackere : one year after the 2023 market turmoil - outlook for banks and key supervisory take - aways keynote speech by mr steven vanackere, vice - governor of the national bank of belgium, at the european association of cooperative banks ( eacb ) high - level roundtable on the occasion of the eurofi conference, gent, 21 february 2024. * * * distinguished guests, ladies and gentlemen, thank you for the opportunity to deliver this speech at the welcome dinner of the eacb high - level roundtable. i thought it might be a good idea, one year after the banking turmoil of march 2023, triggered by the failure of several us banks and of credit suisse, to give you my perspective on the current outlook for eu banks and more specifically on the lessons to be learnt from this global turmoil. last year, the combination of slow growth, high inflation, and a historically very rapid increase in monetary policy interest rates resulted in unrest in the financial markets, with significant impact on the banking sector. 1. the higher rates reduced the market value of fixed - rate, long - term assets and implied unrealised losses on banks'balance sheets. 2. they increased banks'funding costs and created expectations of higher interest rates on deposits, which added to worries about of a potential more volatile behavior of this stable funding source. 3. they impact the debt burden of households and corporates, especially in jurisdictions with more short - term maturity or variable rate loans. against this background, the quality of banks'credit portfolios and their interest rate and liquidity risks became important points of attention. investors viewed with suspicion the impact of interest rate increases on the profitability and solvency of financial institutions. in the united states, this led to an abrupt and large - scale outflow of deposits from several medium - sized regional credit institutions. these banks had a number of specific vulnerabilities in common, such as a business model focused on a single economic sector or activity ( e. g. start - ups in the tech sector, services related to crypto - assets or banking services for of high net worth individuals ) and a large share of uninsured deposits. even more importantly, inadequate management of interest rate and liquidity risks forced these institutions to recognize large losses in the profit and loss account, undermining depositor confidence. earlier deregulation under the trump administration no longer subjected these banks to the basel minimum standards. finally, it was recognized that | the level of ambition of fund surveillance and the cooperation of its members to a higher level than that exists now. today β s conference should advance our ambition. cfr. for instance the interview of professor reinhart published for the attention of the imf staff in november 2009. cfr. for instance raghuram rajan, fault lines, page 215. | 0.5 |
political conflicts and concerns about a leadership vacuum in the state governance are further intensifying instability in the financial and foreign exchange markets. this year, the conditions surrounding our economy are expected to be more challenging than ever. externally, the implementation of the new us administration's protectionist trade policies could make exports more difficult as global trade contracts. 1 / 7 bis - central bankers'speeches the continued economic boom in the united states may lead to a slower - than - expected rate cut by the federal reserve, potentially prolonging the volatility in exchange rates for some time. additionally, global economic conditions, such as in china and europe, are not favorable. the domestic situation is even more serious. while household debt trends have stabilized due to the strengthening of macroprudential policies, continued rate cuts could develop into a risk factor. thus, constant monitoring with vigilance is required. if uncertainty persists due to political developments, this may intensify the negative impact on the economy, overlapping with already challenging external conditions. given the unprecedented rise in political and economic uncertainties, monetary policy needs to be managed with flexibility and agility in response to changing circumstances. we expect to see more trade - offs between policy variables such as inflation, growth, the exchange rate, and household debt. therefore, the bank of korea will continue to flexibly determine the pace of rate cuts in the future while closely examining the development of internal and external risk factors and the resulting changes in economic movements based on incoming data. however, in the current situation, it is hard to stabilize the korean economy by monetary policy alone. recently, the international attention shifted beyond the turmoil in the financial and foreign exchange markets to whether the nation's control tower of governance can regain stability. it is of the utmost importance that the leadership in governance remains stable, as a prolonged government vacuum in the midst of political conflict can have a negative impact on the country's credibility and directly or indirectly contribute to the overall shock to the economy. as emphasized in the recent report of the bank of korea, minimizing the negative impact of political uncertainty requires building confidence that the economic system, including monetary policy, operates independently and properly without being affected by political processes ( bank of korea, 2024a ). the evaluations may differ depending on political interests, but acting authority choi sang - mok has made a difficult but unavoidable decision based on economics rather than politics to prevent a loss of external credibility and a government vacuum | . this decision will mark the starting point of signaling domestically and internationally that our economic system will continue to function normally, independent of political processes. it is time for the parties to work together to ensure the stability of the nation's leadership. my dear colleagues, while maintaining a flexible approach to monetary policy in the short term, some of us in the bank must also reflect on why the trade - offs between monetary policy objectives have increasingly deepened to the point of constraining the policy. let us take exports as an example. concerns are growing about sluggish export growth as a major factor in the economic slowdown of the year, despite exports reaching an alltime high in terms of value last year. the underlying reason lies in the lack of diversification in our export structure, which remains heavily reliant on a few flagship products, such as semiconductors and automobiles. this concentration has made the overall export performance closely tied to the cycles of specific industries and therefore 2 / 7 bis - central bankers'speeches highly volatile. in addition, china, as a latecomer, has rapidly caught up with us in our major industries. in contrast, we have failed to develop new industries which can drive our future export growth. a stark illustration of this challenge is the comparison of the top 15 companies by revenue in korea and in the united states : over the past decade, seven new enterprises entered the u. s. list, whereas korea added only two. and among them, only one seems to be grown through emerging industries, which means that, in effect, there were almost no new entries. schumpeter's concept of " creative destruction, " which he identified as the major driving force of capitalism, emphasizes destruction as much as creation. the birth of innovative companies inherently involves the exit of those that fail to innovate. the lack of emerging companies and industries in korea raises a critical question : have we avoided addressing the social conflicts that accompany the process of creative destruction under the disguise of pursuing stability? currently, there is significant discussion about increasing corporate value, so - called value - up program, to revitalize the stock market. measures such as raising dividend payouts and improving corporate governance are undoubtedly important. however, it is more essential that new companies lead the stock market through competition and the process of creative destruction, much like how the " magnificent seven " companies now drive the u. s. stock market. at least in the economic sector, we must lift the regulations that | 1 |
forward. 8. the surge in capital flows into some emes even as the crisis is not yet fully behind us has seen the return of the familiar question β the advisability of imposing a tobin type tax on capital flows. both before and after the crisis, there are examples of countries, notably chile, colombia, brazil and malaysia, which have experimented with a tobin tax or its variant. even as there are some lessons to be drawn from the country experience, on the aggregate, it does not constitute a sufficient body of knowledge for drawing definitive conclusions. 9. critics of tobin tax contend that the tax is ineffective, is difficult to implement, easy to evade and that its costs far exceed the potential benefits, and all this because financial markets always outsmart policy makers. supporters of the tax argue that if designed and implemented well, the tax can be effective in smoothing flows and that evading controls is not such a straight forward option as efforts to evade require incurring additional costs to move funds in and out of a country which is precisely what the tax aims to achieve. 10. in india, given the overall thrust of policy, we are quite agnostic on the choice of different instruments. the stereotype view is that we have an express preference for quantity based controls over price based controls. a critical examination of our policy will show that this view is mistaken. for example, on bonds we impose both a limit on the amount foreigners can invest as well as a withholding tax. similarly, our policy on external commercial borrowing employs both price and quantity variables. we have not so far imposed a tobin type tax nor are we contemplating one. however, it needs reiterating that no policy instrument is clearly off the table and our choice of instruments will be determined by the context. 11. the recent crisis has clearly been a turning point in the world view on capital controls. the asian crisis of the mid - 90s demonstrated the risk of instability inherent in a fully open capital account. even so, the intellectual orthodoxy continued to denounce controls on capital flows as being inefficient and ineffective. the recent crisis saw, across emerging economies, a rough correlation between the extent of openness of the capital account and the extent of adverse impact of the crisis. surely, this should not be read as a denouncement of open capital account, but a powerful demonstration of the tenet that premature opening hurts more than it helps. 12. notably, the imf published a policy note in | legislator do? offer a chance, but the chance should be used. a person should believe that the chance is not only a dead letter, a quota. evidence is needed that the chance is real. but these are only successful examples. examples at all levels. because society is led by the best, but society also needs the average ones whom we must promote. let us not forget that official state policies also play a role in the division of responsibilities of both parents. it is not only that state policies aim to equalise the cost of labour for men and women. they can affect, often indirectly, the companies β decisions on who to promote more or more frequently. in serbia, the state guarantees a year of paid maternity leave for the first and second child. the leave can be used either by the mother or the father. for the third and fourth child, this period is two years. unfortunately, sometimes policies that seem neutral at first sight in fact widen the gap between men and women. for instance, some universities introduce the possibility for men to go on maternity leave. some men use such leave to write books and carry out research, and not to look after the baby. in this way, they ensure advantage over other colleagues. i do not wish to generalise, i β m just giving examples. what is the situation in serbia? from a legal perspective, citizens of serbia enjoy gender equality guaranteed by the constitution. through generations, a lot has been done to raise social awareness about the fact that there are no special women β s rights, but the obligation of society and each individual to consistently respect the basic human rights. in serbia, women make up 56 % of students who enrol in universities, and as much as 58 % of those who graduate. women take a lead in phd studies as well, whereby they have an educational advantage over men in serbia. 2 / 3 bis central bankers'speeches women in government institutions in the government of the republic of serbia, the situation today is much more favourable. women take five places β including the president of the government and four ministerial positions. the number of women in government institutions is increasing as well. one third of the total number of mps in the serbian assembly are women, which is almost five times more than ten years ago. in serbia β s financial sector as the central bank governor, i can say that i am proud that women in serbia are dominant in the financial sector. women in serbian banking make up the majority of employees, though they are | 0 |
adnan zaylani mohamad zahid : review and outlook of the malaysian financial market speech by mr adnan zaylani mohamad zahid, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the financial market association of malaysia 2024 annual dinner, kuala lumpur, 29 november 2024. * * * it is an honour and privilege for me to be here tonight. let me first extend my heartfelt congratulations to ppkm and the organising committee for putting together this much anticipated annual event. i always look forward to this dinner. besides being highly entertaining, it's a time to catch up with friends and colleagues in the market in a different setting, as well as allowing me to share some thoughts on our financial markets. we are, after all stepping into the final month of the year, so this is a good time as any for us to reflect on the year and to prepare ourselves for the challenges and opportunities that lie ahead. financial market review β resiliency of the ringgit i recall a year ago, at this dinner, expressing somewhat, a'cautiously optimistic'view on the ringgit for 2024. this was on the back of an expected end and turnaround in the fed hiking cycle. well, the first half of the year saw ringgit come under pressure, trading at historical low levels, driven by global uncertainties surrounding us policy rates, china's growth trajectory and ongoing geopolitical risk in europe and middle east. these factors created a highly challenging environment. for us, this marked only the second time that malaysia has faced negative interest rate differentials compared to the us. the wide interest rate differentials had shaped the behaviour of investors, corporates, exporters, importers and the broader public. we saw increased interest among investors and the public to allocate funds to foreign currency assets. exporters preferred to retain earnings in foreign currencies, while importers front - loaded their purchases taking advantage of the forward discounts on the exchange rate. similarly, some corporates were observed expediting the repayment of foreign currency debt to reduce their debt servicing cost as well as their exposure to exchange rate risk. these conditions led to the ringgit trading under pressure in the first half of 2024. since then, we have turned the corner. firstly, the coordinated actions by bnm and the government in encouraging income repatriation and conversion among the glics and glcs played a crucial | , for example, allowing merchants to enhance profitability by selling goods and services online, or indeed driving exports. however, the benefits go hand in hand with new risks and invites new thinking on how to preserve fundamentals such as consumer privacy and security, as well as how to preserve monetary and financial stability. amidst this background, we must consider how policy - makers can best support the development of a fintech ecosystem, but doing so in a safe manner. how are we as a regulator embracing these challenge? like many other central banks, we have already embarked on a digital journey. considering our role in the oversight of the financial system and preserving financial stability, we must look forward and anticipate emerging trends so that we can react proactively. accordingly, we have widened the list of the strategic objectives of the national bank that now explicitly incorporate support of technological progress and financial innovations, as well as financial literacy as important tool for protection of consumers in the fintech environment. regulators cannot control nor predict what innovation will look like in the future. however, given the benefits it brings, regulators can contribute to the development of a fintech ecosystem by creating an enabling environment for the entry of new products or 2 / 4 bis - central bankers'speeches new players into the financial services market. usually, regulation is seen as a significant challenge for fintech - led transformation. in this context, together with the ministry of finance, we have put a lot of effort to significantly update payment services regulation, which is currently going through a legislative approval process. the new legal framework for payment services embodies objectives that seek to foster innovation while ensuring a level playing field for all players, including newcomers. an important step in the same direction are efforts for digital identity verification of consumers that has a significant potential to drive greater levels of financial inclusion and financial accessibility. regulators can enable, encourage and support innovations in financial services, by providing regulatory certainty and clarity. considering this, in the national bank we established the so - called " innovation gateway ", to serve as a central point of contact and communication channel between innovators in the financial industry, the central bank, and other relevant authorities. to better understand the fintech state of play in our economy we conducted the first national survey and prepared a feasibility study, which clearly underline the opportunities and benefits that fintech can bring to our country, as well as the barriers that need to be overcome for further development. the main conclusion of the feasibility study that follows the survey | 0 |
stephen s poloz : opening statement before the house of commons standing committee on finance opening statement by mr stephen s poloz, governor of the bank of canada, before the house of commons standing committee on finance, ottawa, ontario, 6 june 2013. * * * introduction the bank of canada β s commitment to canadians is to promote the economic and financial welfare of our country. one way we do this is to communicate our objectives openly and effectively and stand accountable for our actions. so i thank you for the opportunity to come before you this morning to share the bank β s perspective. kindly note that today is day four on the job for me β i trust you will forgive me if there are any details i haven β t yet become familiar with. that said, i look forward to hearing your views and taking your questions, and i will answer them to the best of my ability. the common denominator that ties together all of the bank β s work is confidence. through our actions and our words, what the bank of canada delivers is confidence in our currency ; confidence in our role as fiscal agent for the federal government ; confidence in our banking system ; and confidence in the value of money. this is familiar ground to all of us here today. i don β t propose to delve into the details of the bank β s functions. rather, i will discuss the current context in which we are operating and how that is influencing the bank β s work of delivering confidence. in short : what are the challenges that we are facing? and, how do they affect the business of the bank? today's global context it is now almost six years since the start of the global financial crisis. given the near - collapse of the global financial system and the dramatic plunge in global demand, it β s perhaps no surprise that we haven β t yet returned to normal economic conditions. the global economy continues to struggle. most advanced economies are still facing credit stresses and record - low interest rates. many central banks continue to use unconventional means to provide stimulus, and governments are doing everything they can to manage their respective debt situations. clearly, the global economy is still in recovery. global economic activity is expected to grow modestly this year before strengthening over the following two years. but this is not a recovery in the usual sense. it β s more like a postwar reconstruction. it will require sustained and focused efforts to rebuild global economic potential. allow me to talk about how, in this context, the bank of canada | and investment capabilities. 13. last but not least, financial system can act as a blood - vein that nurtures the economy. we might not realize the necessity of having a healthy blood - vein system in our body. but if there is a blockage, one could experience a detrimental malfunction of the brain, and stroke may occur. the same applies to our economy ; efficient and accessible financial system will ensure smooth and solid transformation of the economy. at this juncture, financial institutions are a key in keeping the efficacy and health of the financial system in check. on one hand, financial prudence through enhanced risk supervision and management will provide a strong backdrop for improvement in financial system. on the other hand, the favorable financial system should also be underpinned by financial inclusion, which is analogous to having the blood - vein reaches all organs in our bodies. as i previously pointed out, increasing access to financial services will bolster economic dynamism where vast financial opportunities can be better tapped by private sectors. ladies and gentlemen, 14. to end my remarks today, allow me to reiterate that these key enablers will be necessary to support the areas of transformation for the gms. and on the prospect of the gms going forward, i would like to leave you with the vision of mr. lee kuan yew who viewed singapore as computer hard drive, and the foreign talents being the megabytes of storage capacity added to the computer. the computer will thus never hang given its enormous storage capacity. likewise, the increasing interconnection among the gms countries can help expand production potential and economic opportunities by utilizing each other β s spare capacity. i am therefore convinced that the conference today will also help generate more megabytes to our storage, which would help smooth our journey of transformation towards the sustainable growth of the region. thank you. bis central bankers β speeches | 0 |
in this regard, i am worried about two current shortcomings : the reach of title ii β s one - day stay on the close out of qualified financial contracts is incomplete and does not extend to contracts governed by non - u. s. law with nonu. s. counterparties. the placement of the parent company into receivership may be treated by these counterparties as an event of default due to the presence of a parent guarantee or other cross - default provisions triggered by the parent - level insolvency. unless market participants make the appropriate contractual changes that will ensure that the placement of the parent company into title ii will not trigger the close - out provisions of over - the - counter derivatives and other qualified financial contracts that are outside the reach of title ii β s u. s. application, foreign counterparties to a sifi will tend to exercise this right bis central bankers β speeches whenever it is in their individual economic interest to do so. this would create significant difficulties. such actions could greatly complicate the operations of the firm during a time when it is already under considerable stress and could propagate stress more broadly in financial markets. there are two main courses of action for addressing this concern, and they are not mutually exclusive. first, existing derivative contracts need to be amended and future contracts need to provide that the parent β s entry into the title ii proceeding does not trigger the close out option. second, legal changes need to be implemented abroad so that the one - day stay that applies to qualified financial contracts governed by u. s. law is enforceable against those contracts governed by foreign law. only by making these changes can we avoid the potential for disruptive close outs. i strongly encourage the ongoing efforts to address this critical issue. a second issue with respect to title ii resolution on a cross - border basis is that we cannot be certain how foreign authorities will react when the parent holding company is put into the title ii proceeding. while the u. s. authorities have been in discussion with our colleagues abroad to enable the coordination needed for a smooth cross - border resolution process, uncertainties remain regarding the circumstances under which host authorities may either choose to take or be required to take actions such as unilateral β ring - fencing β that might disrupt the implementation of the single point of entry approach. thus, we need to continue to work with foreign regulators to iron out any issues ahead of time to remove these uncertainties so that the resolution regime will work well for global | sabine lautenschlager : cyber resilience - a banking supervisor's view statement by ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the single supervisory mechanism, at the high - level meeting on cyber resilience, frankfurt am main, 19 june 2017. * * * this week i learnt that the first computer virus dates back to 1971. it spread via the arpanet, which was a precursor of today β s internet. the arpanet connected about two dozen universities and government hosts in the united states. the virus had been written for experimental purposes and was not malicious. it just displayed a simple message on infected computers : β i β m the creeper : catch me if you can β. things are a bit more complex today, and the outcome of cyber incidents much worse : they can disrupt business, cost a lot of money and destroy reputations. and indeed, the potential for damage is great, as so much relies on it and so much happens online β the financial sector is a case in point. as you all know, banks have always been attractive targets for criminals. although the damage has been limited so far, we banking supervisors take cyber risk very seriously. and we insist on banks doing the same. cyber risk has been a priority for ecb banking supervision from day one. in 2015, we established a working group that had three goals. first, to get an overview of how supervisors deal with such risks both at national and international level. second, to get an overview of how prepared banks are for cyber risk. and third, to propose to the supervisory board a strategic direction and a dedicated work plan on cyber risk. we have learnt a lot over the past two years. and we have used it to address this risk from several different angles. for us, one of the first steps was to establish a cyber incident reporting framework. we conducted a successful pilot phase in 2016. and now we will implement a long - term solution for all those banks that we directly supervise. as from this summer, they will be required to report all significant cyber incidents. this will help us to assess more objectively how many incidents there are and how cyber threats evolve. it will also help us to identify vulnerabilities and common pitfalls. in addition to our ongoing supervision we also perform thematic reviews on cyber security and it outsourcing. these reviews help us to assess the risks | 0 |
so requires that the nbu operate in conjunction with you : banks, businesses, government agencies, the expert community, and the media. we can now talk about the challenges that lie ahead and how we can best meet them β in a joint effort. i wish you an interesting and fruitful discussion! 3 / 3 bis central bankers'speeches | 2018. we will continue to work to ensure price and financial stability as a foundation for sustainable economic growth. we begin the year 2019 with a revolutionary currency liberalization the likes of which ukraine has never seen. in less than a month, the law on currency and currency operations and our new currency regulation will go into effect, significantly easing currency transactions for households and businesses. the new legislation is going to actually work in practice rather than remaining just words on paper. but with extended freedom comes extended responsibility. the more liberal the conditions that financial market participants, businesses, and households enjoy, the more attention we at the nbu have to pay to financial stability. 2 / 3 bis central bankers'speeches thus, we should devote the current year to the next important step without which no financial stability is possible within either the banking sector or the entire financial system. and by this i mean the β split, β which is something that stands to shape the future of the nonbank financial sector. it is not for nothing that the planned adoption of the bill on the β split β by the rada has become one of the structural milestones in the new program of cooperation between ukraine and the imf as a prerequisite for strengthening the financial sector. the new law will bring the nonbank financial market in alignment with european standards, enhance the quality of financial companies β operation, protect financial service consumers, and encourage the arrival of new international players in this market by creating the right conditions. in addition, 2019 should become an important year for a further recovery in lending. despite the progress made over the past two years, banks have yet to become fully operational, especially as regards working with large corporate borrowers and making mortgage loans to households. a more active recovery in lending is currently impeded by the high level of nonperforming loans. the market is waiting for the verkhovna rada to consider and adopt a bill on asset resolution activities that has been prepared by the ebrd. the new law will pave the way for the operation of asset resolution companies and ensure the creation of an adequate competitive environment in ukraine β s secondary market for loans. in addition, significant institutional risks are still there, and the reform of the judiciary is still pending implementation. completion of the reform would ensure the strict observance of laws and protection of creditor rights. it goes without saying that we cannot, on our own, travel all the way to a sustainable economy and a developed and stable financial system. doing | 1 |
me touch on banking sector development : the banking sector recorded strong growth in the year to september 2007 against a backdrop of buoyant economic conditions. the highlights of the sector β s performance in the year to september 2007 were as follows : β’ the sector β s total assets expanded by 20 percent while deposit liabilities increased by 18 percent during the period. the increase in the deposit base was attributed to aggressive marketing campaigns for new deposits by some institutions and rapid expansion of branch network of banking institutions. the banking sector remained well capitalised with capital and reserves increasing by 22 per cent as a result of fresh capital injection and retention of profits. β’ as at september 2007 gross non - performing loans declined to 12. 7 % of total loans compared with 22. 7 % in 2006. the sharp reduction in the level of non - performing loans was attributed mainly to write - offs against provisions held and recoveries by some of the banks during the period under review. additionally, the resolution of non performing assets by the government in one of the leading banking institutions contributed greatly to this reduction in npls. β’ pre - tax profit for the nine months period ending september 2007 increased by 36. 4 per cent to stand at ksh 26. 6 billion compared with ksh 19. 5 billion in september 2006. the improved profitability was attributed to an increase in interest income on loans and advances, government securities and non - funded income, all attributable to the vibrancy in the sector. mr. chairman, allow me to commend your members for the excellent performance in the banking sector. on our part, we remain committed to fostering a stable market based financial system as mandated by law. we will continue to develop and enforce a legal and regulatory framework that fosters a safe, efficient and accessible financial system. you will agree with me that a sound financial system is indeed a catalyst for the high economic growth that the country needs to move to new development frontiers. let me also salute the commercial banks for the various innovative niche products introduced during the year. it is only through such new products that we can counter the β negative innovation β that saw the proliferation of pyramid schemes in 2007. at the cbk, we are consulting with other market players including the banking sector with a view to conducting sensitization and awareness programmes to enlighten kenyans about these unscrupulous schemes. one conclusion we have arrived at in cbk is that once barriers to entry and transaction costs of maintaining bank accounts are | credit. but above all this credit must be destined to productive sectors of the economy to make a difference to an allinclusive growth. with these few remarks, ladies and gentlemen, it is now my distinguished honour to declare the metropol crb consumer and sme bureau scores officially launched. thank you. bis central bankers β speeches | 0.5 |
eastern european countries of achieving eu membership after a thorough transformation and rapid growth of living standards undoubtedly holds a lot of recommendations and lessons for the south eastern european countries. these countries had similar, maybe even more advanced starting positions than the other transition countries, but south eastern europe is now lagging far more behind in terms of progress towards the eu. however, we should bear in mind that the main reason for this is definitively the political instability and war conflicts in the region, which understandably prevented faster economic transformation and reforms. luckily, it appears that political support for eu accession and the determination to pursue eu membership, including all the necessary economic and political reforms, are strengthening. in analyzing the economic developments in the region of south eastern europe, some notable differences with the cee countries appear. south eastern europe has much lower pace of reforms and lower growth rates. related to this, capital inflows in the region have been much smaller and have shown a much bigger dispersion among countries, ranging from 834 usd per capita in albania to 3, 932 usd per capita in croatia, cumulatively in the period 1989 - 2007. 12 credit expansion has been high, but has still to reach rates and length of the one seen in more advanced transition countries. consequently, there have been less demand pressures as well as comparatively lower inflation than in the other countries, although inflation has been rising recently. exchange rate regimes in the region are various, ranging from currency board in bosnia and herzegovina to almost free float within inflation targeting in serbia. what is common is that during the transition process all these countries dedicated particular attention to their exchange rate regimes and they were mostly using fixed rates, which reflects their high trade openness and their efforts to establish strong monetary authority. regardless of the exchange rate regime, the real exchange rate appreciation in the countries in the region has been considerable, although maybe a bit lower when compared to the new eu member states. as a result, these countries have been suffering from competitiveness loss as well. this can be clearly seen in the movement of their current account deficits, which are considerable in all of these countries. for instance, current account deficits in 2007 range from 3. 1 % of gdp in macedonia to 36. 2 % of gdp in montenegro. 13 however, seeu source : ebrd transition report 2007 : november update and nbrm calculations. data pertain to fdi. data for 2007 are estimates. source : ebrd transition report 2007 : november | commitment to growing a well - regulated fund management industry, this makes singapore an ideal vantage point for asset managers to understand asia and to manage pan - asian investments. so it leaves me now to congratulate salt on its inaugural asian leg of the salt conference. i wish all of you a fruitful conference ahead. thank you. preqin / global arc study of asian institutional hedge fund investments 2012 bis central bankers β speeches | 0 |
by more than the bank had expected, with more muted price pressures across a wide range of goods and services, consistent with the unexpected increase in excess capacity. bis central bankers β speeches β’ total cpi inflation has also been lower than anticipated, reflecting developments in core inflation and weaker - than - projected gasoline prices. β’ total cpi inflation is expected to remain around 1 per cent in the near term. it is expected to rise gradually, along with core inflation, to the 2 per cent target in the second half of 2014 as the economy returns to full capacity and inflation expectations remain well - anchored. β’ despite the reduction in global tail risks as a result of a series of actions by european and american authorities, the inflation outlook in canada is still subject to significant risks. β’ the three main upside risks to inflation in canada relate to the possibility of stronger - than - expected growth in the u. s. economy, higher canadian exports and renewed momentum in canadian residential investment. β’ the three main downside risks to inflation in canada relate to the european crisis, more protracted weakness in business investment and exports in canada, and the possibility that growth in canadian household spending could be weaker. β’ overall, the bank judges that the risks to the inflation outlook in canada are roughly balanced over the projection period. β’ reflecting all of these factors, the bank today maintained the target for the overnight rate at 1 per cent. β’ while some modest withdrawal of monetary policy stimulus will likely be required over time, consistent with achieving the 2 per cent inflation target, the more muted inflation outlook and the beginnings of a more constructive evolution of imbalances in the household sector suggest that the timing of any such withdrawal is less imminent than previously anticipated. with that, tiff and i would be pleased to take your questions. bis central bankers β speeches | mark carney : summary of the latest monetary policy report opening statement by mr mark carney, governor of the bank of canada and chairman of the financial stability board, at the press conference following the release of the monetary policy report, ottawa, ontario, 23 january 2013. * * * good morning. tiff and i are pleased to be here with you today to discuss the january monetary policy report, which the bank published this morning. β’ while the global economic outlook is slightly weaker than the bank had projected in october mpr, global tail risks have also diminished. β’ the economic expansion in the united states is continuing at a gradual pace, restrained by ongoing public and private deleveraging, global weakness and uncertainty related to fiscal negotiations. β’ europe remains in recession, with a somewhat more protracted downturn now expected than in october. β’ growth in china is improving, though economic activity has slowed further in some other major emerging economies. β’ supported by central bank actions and by positive policy developments in europe, global financial conditions are more stimulative. β’ commodity prices have remained at historically elevated levels, though temporary disruptions and persistent transportation bottlenecks have led to a record discount on canadian heavy crude. β’ in canada, the slowdown in the second half of 2012 was more pronounced than the bank had anticipated, owing to weaker business investment and exports. β’ caution about high debt levels has begun to restrain household spending. β’ the bank expects economic growth to pick up through 2013. β’ business investment and exports are projected to rebound as foreign demand strengthens, uncertainty diminishes and the temporary factors that have weighed on resource sector activity are unwound. β’ nonetheless, exports should remain below their pre - recession peak until the second half of 2014, owing to a lower track for foreign demand and ongoing competitiveness challenges, including the persistent strength of the canadian dollar. β’ consumption is expected to grow moderately and residential investment to decline further from historically high levels. the bank expects trend growth in household credit to moderate further, with the debt - to - income ratio stabilizing near current levels. β’ relative to the october mpr, canadian economic activity is expected to be more restrained. following an estimated 1. 9 per cent in 2012, the economy is expected to grow by 2. 0 per cent in 2013 and 2. 7 per cent in 2014. the bank now expects the economy to reach full capacity in the second half of 2014, later than anticipated in october. β’ core inflation has softened | 1 |
hand, as i mentioned earlier, from a somewhat longer - term perspective it clearly will have positive effects on japan β s economy by reducing income transfers. in assessing the degree of achievement of the price stability target, what is important is not to focus on monthly fluctuations in specific indicators but to examine a wide range of indicators in a forward - looking manner. for example, it is important to examine whether various economic entities such as firms and households will in fact form business plans or adapt their behavior toward consumption based on the assumption of around 2 percent inflation. more generally, it is important to examine whether people β s medium - to long - term inflation expectations β which, under the deflation that lasted for over 15 years, are said to have consistently remained lower than those in the united states β are projected to be reanchored at around 2 percent, comparable to the level in the united states ( chart 12 ). it should be noted, however, that medium - to long - term inflation expectations are not tied to specific economic indicators, and thus are difficult to measure. it might be possible to retroactively acknowledge developments in such expectations as changes in the intercept of the phillips curve. however, one should be careful in assessing a real - time measurement β even if it can be done β with the estimation bias taken into consideration. after all, it seems that whether or not people β s medium - to long - term inflation expectations have changed or will change can only be judged qualitatively by, for example, behavioral patterns of various economic entities. in this regard, let me give an example of wage negotiations this fiscal year. many firms raised their base pay for the first time since the lehman shock. this was attributed not only to the government β s initiatives to realize wage increases, such as the setting up of three - way discussions among the government, employers, and labor unions, but also to efforts both by employers and labor unions. specifically, as economic conditions changed, as seen in the rise in the inflation rate, both sides gave renewed attention to the ultimate goal of achieving wage increases that are in line with price increases β which had been almost forgotten under deflation β and this was reflected, albeit partly, in the actual wage increases. in light of this, qqe can be assessed as exerting certain effects. obviously, if asked whether wage increases observed thus far are enough to re - anchor people β s medium - to long - term inflation expectations at 2 percent, i | minister andrew fisher opened the first savings account. initially, the functions were limited to commercial ones. over many years, the commonwealth bank slowly acquired central banking functions. as with many central banks, war financing brought the bank to prominence in the 1914 β 18 conflict. the note issue, initially a function of the treasury, was transferred to the bank in the 1920s. in the 1920s and early 1930s, further legislative attempts were made to strengthen the commonwealth β s role as central bank. at least one federal treasurer ( theodore ) made the case for a pure β central reserve bank β. but major progress was not made until an inquiry after the great depression outlined the intellectual foundations for the conduct of the modern central bank. the 1937 royal commission β s findings led in due course to major legislative change, culminating in the commonwealth bank being given explicit macroeconomic policy goals in the 1945 act. the charter given to the commonwealth bank in that act obliged it to conduct policies as to best contribute to : a. the stability of the currency of australia ; b. the maintenance of full employment in australia ; and c. the economic prosperity and welfare of the people of australia. they are the same words that are set in stone in the foyer at 65 martin place today. the same legislation, i might add, abolished the bank β s board, in favour of a system that effectively made the governor the sole decision - maker. the board was re - instituted in 1951 and today β s board in fact is the continuation of that board, with the same mix of internal and external members. yet the commonwealth bank was still also a commercial bank. various arguments were made, including by the governor of the day, as to why it was acceptable, even desirable, for the central bank both to regulate, and to compete with, the private banks. but by the late 1950s, the opposition of the private banks was intense, and our position as poacher and gamekeeper was no longer tenable. and so, at least 30 years after the discussion began about the merits of having a separate institution dedicated solely to central banking, the reserve bank of australia was established to continue the central banking activities, while the commercial functions were placed in the commonwealth banking corporation. interestingly enough, whereas in the 1930s the labor party was inclined to move ahead with developing central banking and the conservative parties had resisted it, in 1959 it was a conservative government that introduced legislation to create the reserve bank and the labor opposition voted against it. so, both parties have | 0 |
will hence not come under pressure from across the atlantic to tighten monetary policy any time soon? i doubt that ms yellen fits into all the slots that people put her in. at the fed, too, decisions are taken by a committee. ms yellen is highly experienced and has an excellent professional and academic background. the good cooperation with the ecb will be continued. we, as the ecb, will fulfil our mandate in line with our established strategy for the euro area. bis central bankers β speeches | some creditor countries this is challenging. it is difficult to ask voters in a country where average public sector wages are around β¬1000 per month, like in estonia or slovakia, to lend to a country where those wages are on average around β¬3000. the same holds true for emerging countries outside the euro area who participate in the financial assistance for greece via the imf. some of those even went through very painful but ultimately successful adjustment programmes themselves ; take brazil for example. if those countries help nonetheless, it is reasonable that, in return, they expect greece to stick to its promises. not because of any desire to control the greek economy. but because solidarity has to go both ways, and a precondition for solidarity is solidity. getting the programme back on track so my point is this : the new government should not lose precious time looking to avoid or loosen the programme. it should instead focus on how to maximise the effectiveness of reforms. and the key to this is much stronger programme ownership. we know from experience in latvia, ireland and portugal that ownership is a crucial ingredient for success. the new government, with a sufficient majority in parliament, has an opportunity to do this from β day one β. this would give the single biggest boost to growth by removing the uncertainty that is paralysing the economy. concretely, this means β’ identifying measures to close the large fiscal gap in 2013 β 14 ; β’ making up for delays in tax administration reform ; β’ resuming the stalled privatisation process ; β’ implementing the legislated labour market reforms ; and β’ revitalising reforms to liberalise product and services markets, starting with the full liberalisation of the closed professions and the complete implementation of the business friendly greece action plan. bis central bankers β speeches in other words, restoring confidence in greece has to begin at home. and to do this effectively, authorities have to make the case more strongly for reform. they have to be clear that it is not for the troika, or for any european leader, but for the good of greece and its future. this is a sine qua non for greece to restore fiscal sustainability and competitiveness. 2. what the rest of the euro area can do to restore confidence restoring confidence for the euro area is, of course, now a bigger challenge than resolving the greek crisis. other member states and the european institutions also have an important role to play. measures in other member states many euro area governments have avoided dealing with problems | 0.5 |
ecb governing council's monetary policy decisions are therefore just as relevant to the swiss franc zone as financial market regulation and the institutional stability of european monetary union. before i delve deeper into these topics, i would like to lay out three core talking points. 1. first, european monetary policy has ventured deep into uncharted territory, and there is a growing risk of it being subjugated to fiscal policy. in what is admittedly currently a difficult monetary policy environment, risks must not be underestimated, nor should the capabilities of monetary policy be oversold. 2. second, in order to stabilise monetary union over the long run, its institutional framework needs to be reformed. the balance between actions and liability for their consequences needs to be restored. bis central bankers β speeches 3. third, significant progress has been made in financial market regulation ; our banking system is thus more robust today than before the financial crisis. however, the regulatory agenda has not yet been fully concluded for the banks and shadow banks alike. 2. monetary policy in the euro area let me begin with monetary policy. as you know, at its meeting nearly two weeks ago, the governing council of the european central bank ( ecb ) adopted an even more accommodative monetary policy stance. the move that gained the most public attention was the renewed cut in the ecb's policy rates. the main refinancing rate is now at 0 %, and the interest rate on deposits with the eurosystem was cut further to the current level of - 0. 40 %. but on top of that, the governing council also adopted a rather extensive package of measures : beginning in june, the eurosystem will be providing a further set of targeted longer - term refinancing operations ( tltros ) with which banks can acquire liquidity for a term of four years at extremely favourable conditions β usually at the 0 % main refinancing rate throughout the entire term. banks that grant additional loans β except for loans for house purchases β will even get something back : in the most favourable case, the difference between the main refinancing rate and the deposit rate in effect at the time of allotment. in addition, the volume of monthly bond purchases was raised from β¬60 billion to β¬80 billion. the idea here is to also purchase, within this overall volume, non - financial corporate bonds issued in the euro area. at the same time, the governing council | not mean " sometime in the distant future ", nor does it mean " as fast as possible and at all costs ". the term " medium run " thus consciously contains a certain degree of vagueness over the precise time horizon. this gives monetary policy the flexibility it needs to respond appropriately to a myriad of different types of macroeconomic shock. monetary policy would surely be unable to cope with the expectation of always being able to guarantee an inflation rate of just under 2 %, for alongside the justified desire to steer inflation back towards the 2 % mark, monetary policy must also keep in mind that there are risks associated with the protracted low - interestrate policy and the non - standard monetary policy measures. one expression of this is that the ecb governing council is having to fend off increasingly absurd demands β such as showering the population with " helicopter money ". ladies and gentlemen telling you lots and lots about the risks and side - effects of monetary policy would probably be akin to " carrying coals to newcastle ". you all know that an ultra - accommodative monetary policy brings with it long - term risks to the stability of the financial system. bis central bankers β speeches first, because of the mounting risk of financial market bubbles. this is why some euro - area member states have now also taken what are known as macroprudential measures in order, for instance, to counteract excesses in real estate markets. of course, whenever such financial stability risks are looming, this represents a challenge, above all, to macroprudential policy. and a stability - oriented central bank should not seek a trade - off between monetary stability and financial stability ; this will soon lead to monetary policy arbitrariness. however, a monetary policy which is intended to ensure longer - term price stability cannot completely ignore these risks, for at the end of the day, financial stability risks generally also threaten price stability β as was clearly shown by the financial crisis. second, because profitability in the banking sector can take a hit, the severity of which rises the longer the period of low interest rates persists and the flatter the yield curve is. as central bankers, our concern here is naturally not the profits generated by the banks per se ; instead, it is the banks'ability to transmit monetary policy stimuli. and this capability is not independent of capital adequacy, as the latter plays a major role in shaping banks'ability to cushion shocks. it is all the more important, | 1 |
, but also the players in those markets. the technical aspects of escb membership represent a special challenge for small acceding countries like malta. the domestic financial markets in most of our countries are small and less liquid that those of existing eu members, and typically less sophisticated. and yet, upon membership we will be expected to function on the same level as the long - standing and, in most cases, larger members of the system. ensuring that the transition takes place with the least possible disruption has entailed a comprehensive reform of institutions and operating systems. for example, a real time gross settlement payment system ( rtgs ) has been put in place instead of the existing payment infrastructure. the standards of the securities settlement system have been upgraded to a fully escb - compliant β delivery versus payment β system, which ensures the risk - free transfer of collateral and, where necessary, of securities. cross - border payment systems have been adapted to ensure that they meet today β s β straight through processing β standards. similarly, with regard to statistics there has been an overhaul of methodologies and databases. the development of systems capable of delivering the quality - assured statistics necessary for the successful participation in emu has understandably been a priority of the reform process. but the challenge of emu extends beyond the bank β s operational framework. for example, while we aim to participate effectively in the operational structures and decision - making bodies of the escb alongside much larger central banks, we only have some 250 people to perform the tasks involved. we are, therefore, undertaking a critical analysis of each of the bank β s areas of operation in order to devise ways of coping with the increased workload. the development of new skills in work areas that will become key to the bank β s operations as a member of the escb is another objective. the bank β s management structure, too, is being reviewed. the policy - making process has been reinforced in order to respond to the growing need to analyse issues and take decisions in a more timely fashion. line management has been strengthened and authority delegated more extensively to allow the managerial and technical staff to dedicate more time to escb - related activities. it has additionally been felt necessary to introduce a more efficient and rapid exchange of information across the bank, particularly information acquired through participation in escb committees and working groups. while it is helping the bank to become a more focused and efficient institution, effective participation in the escb undoubtedly represents a heavy claim on its limited human | the correlation between business cycles is indeed endogenous in a monetary union, as our trade with the euro area intensifies. in addition, differences in productivity levels between malta and the euro area in the traded goods sector appear to be minor, which suggests that the balassasamuelson effect is unlikely to be strong. similarities are also to be found in the financial system. for example, the degree of financial intermediation in malta is comparable to that of the euro area, and the long - term interest rate is well within the maastricht reference value. further evidence that the economy seems well prepared to join a monetary union is the fact that nominal wages have been sufficiently flexible to carry the burden of adjustment implicit in a fixed exchange rate regime. the absence of extended periods of high unemployment in the face of significant adverse developments suggests that labour markets have been able to adjust. indeed, unemployment in malta has been less volatile than in the euro area. the exchange rate peg has also been a valuable nominal anchor, restraining price increases. in fact, inflation has averaged just 2. 4 % in the past five years ( 1. 3 % in 2003 ), indicating a considerable measure of nominal convergence with our major trading partners, and with the euro area in particular. taken together, these features of the maltese economy suggest that the likelihood of experiencing an asymmetric shock is small ; and they lead us to believe that the exchange rate peg provides a suitable framework for joining erm ii and that the country should be able to adopt the euro sooner rather than later. we are also aware, however, that the peg will have to be maintained during the lira β s passage through what is essentially uncharted territory. professor eichengreen β s words of admonition to last november β s east - west conference here in vienna readily come to mind, β β¦ prescribing bands for the new eu members for an extended period is the worst form of macroeconomic malpractice. bands are fragile and difficult to manage. their fragility is clear from europe β s own experience in 1992. β in order to ensure a smooth transition towards, and through erm ii, therefore, it will be necessary to convince the markets that erm ii is indeed a natural culmination of the lira β s currency basket regime. in this regard, given our track record and assuming a strong national commitment to the convergence process, our strategy should also benefit from the added credibility which | 1 |
the past at other defining moments in the history of our union. thank you for your attention. bis central bankers β speeches | the balance sheet of the banking sector itself. only the latter shows the interaction with the real economy. and this is captured by monetary data and bis central bankers β speeches credit data which, as i have mentioned, are still very subdued. you can rest assured that the governing council will use all the instruments at its disposal to counter possible upside risks to price stability should they materialise. we also hear concerns that the eurosystem is exposing itself to excessive risks. i would like to underscore that the expansion of our balance sheet is being managed with extreme prudence. we continually review collateral eligibility and our risk control framework. furthermore, the application of conservative risk control measures, such as haircuts, in all monetary policy operations protects the soundness of the eurosystem β s financial position. let me conclude this point by recalling that all non - standard measures are temporary in nature. moreover, liquidity support cannot substitute for capital or for sound fiscal and structural policies that bring about sustainable growth and stability in the european economy. dealing with macroeconomic imbalances in a currency union now, i would like to discuss the second topic selected for our exchange of views, namely macroeconomic imbalances in the euro area. of course, divergences of economic developments are a normal feature within a monetary union. such divergences can also be observed on the other side of the atlantic. but they should not become of a persistent and structural nature. unfortunately, very large imbalances were allowed to accumulate over recent years in several european countries. these imbalances stemmed from different sources : insufficient fiscal discipline, financial excesses, failure to implement structural reforms especially, but not exclusively, in the labour and product markets and significant competitiveness losses. all of this necessitates urgent and resolute adjustment. clearly, it cannot be the responsibility of the ecb to address these imbalances. from the perspective of monetary policy, our primary objective is to maintain price stability in the euro area as a whole. for that purpose, the ecb continuously monitors all relevant information from the countries and various business sectors of the euro area. but the monetary policy stance of the ecb has to be focused on the entire euro area. it cannot address divergences among individual euro area countries. that is the task of governments : they must undertake determined policy actions to address major weaknesses in the fiscal, financial and structural domains. we note that progress is being made in many countries. these measures need | 1 |
side to the past 17 months is not easy, but the crisis has given us a unique opportunity to see the big picture and consider our place in it. this is a historical inflection point, and this generation of students is in a position to turn its lessons into profound tools of change. and i hope some of you will use those tools in public service. the students here today are the policymakers and legislators of the future. your teachers are the ones with the daunting task of preparing you for that future. you will see the world differently than your predecessors. you have been forced, sooner than most people, to consider what in life is truly important. you have seen a world upended, but you have also seen a world that is rapidly changing β sometimes more in one week than some of us have experienced over the course of decades. i hope this will cause you to think about how you want to make your mark, knowing that things do change, and sometimes they change quickly. this is an extraordinary time, and i believe that it will result in an extraordinary generation. as long 1 / 2 bis central bankers'speeches as we continue to have extraordinary educators to guide them there. education is the foundation of our economy, indeed, of our society. teachers have always been tasked with nurturing and overseeing our most valuable national resource. it is the highest call within the higher calling of public service. i want to thank all of the teachers β those here today and the rest across the country β as well as the parents and students who have come together to make it through the past year and a half. thank you, and i look forward to your questions. 2 / 2 bis central bankers'speeches | acknowledging there are arguments in both directions. this brings me back to the question : is inflation targeting still appropriate? the short answer is yes, but it is important to be clear what this means in practice. inflation targeting can mean different things to different people. it comes in different shapes and sizes. some versions require a central bank to focus on inflation alone and set monetary policy so that the forecast rate of inflation is equal to the target. but inflation targeting does not need to be rigid like this. in my view, an inflation targeting regime should consist of the following four elements. 1. the inflation target should establish a clear and credible medium - term nominal anchor for the economy. a high degree of uncertainty about future inflation hurts both investment and jobs. the economy works best if there is a degree of predictability. most people can cope with some variation in the inflation rate from year to year. but dealing with uncertainty about what inflation is likely to average over the medium term is more difficult. inflation targeting plays an important role in reducing that uncertainty by providing a strong nominal anchor. 2. the inflation target should be nested within the broader objective of welfare maximisation. it is worth remembering that inflation control is not the ultimate objective. rather, it is a means to an end. and that end is the welfare of the society that we serve. i sometimes feel that as some central banks sought to establish their credentials as inflation fighters they overemphasised the importance of short - run inflation outcomes. and this has been difficult to walk back from. some central banks have been concerned that if they gave weight to other considerations, the community might doubt their commitment to inflation control. so, it became all about inflation. but central banks have a broader task than just controlling inflation in a narrow range. they play an important role in preserving macroeconomic stability and thus the steady creation of jobs. also, their decisions affect borrowing and asset prices and thus financial stability too. central banks have to determine how to balance these considerations when making monetary policy decisions. this means it makes sense for inflation targeting to be embedded within the broader objective of maximising the welfare of society. 3. the inflation target should have a degree of flexibility. this is not to say that the target itself should be flexible ; this would diminish its usefulness in providing a medium - term anchor. rather, some variation in inflation from year to year is acceptable and indeed unavoidable. how much variation is too much is difficult to know | 0 |
government services plays a crucial role in facilitating digital trade and finance. by digitising government services, we can make government processes easier, more efficient and accessible. for instance, importers and exporters will find it much easier to lodge trade documents with the government through the one - stop online platform called trade single window. 1 / 4 bis - central bankers'speeches the government is also spearheading the development of hong kong's digital economy by setting up the digital economy development committee last year, and it brings together industry experts, relevant academics and government officials for discussion and strategy formulation. the committee is now conducting studies on issues such as digital infrastructure and digital transformation of enterprises, and it will put forward its recommendations early next year. to accelerate digitalisation, it is also imperative to provide open access to government data. a government - led data sharing initiative will be launched by the end of this year, which will not only enhance data sharing among government departments, but also open up more types of government data for banks to access through the hkma's commercial data interchange, or cdi as we call it. for instance, the companies registry is set to become the first government data source to be connected to cdi later this year, providing banks with more streamlined access to corporate information of registered companies for know your customer ( kyc ) purposes. building upon the foundation laid by the government's work to drive digitalisation, the second element focuses on enhancing cross - border collaboration. in an interconnected world, collaboration is essential for unlocking the full potential of digitalisation and data. at the hkma, we recognise the importance of fostering strong cross - border partnerships, especially in the area of data sharing. by establishing secure frameworks for data exchange and building digital trade corridors, we can promote trust and facilitate seamless transactions, enabling businesses to expand their global reach and capture emerging opportunities. for instance, under a recently signed memorandum of understanding, we are exploring the possibility of connecting cdi with the sme financing platform developed by the abu dhabi global market, hoping to facilitate cross - border trading by addressing potential pain points in cross - border banking services. if successful, i hope this could be the start of more data linkages with our trading partners. speaking of banking services, let us turn our attention to the third element β digitising banking processes, which is vital in enhancing efficiency and reducing friction in trade and finance. by streamlining banking processes in areas such as credit approval and know your | customer ( kyc ), we can enable businesses to access financing more efficiently, minimise duplication of effort and improve customer experience. we are committed to leveraging technology to transform banking operations. for instance, by enabling more direct access to commercial credit reference data through cdi, we can enhance the speed and accuracy of credit assessments conducted by banks, facilitate smoother trade financing, and support the growth of businesses across various sectors. the fourth element centres around digitising supply chain and manufacturing platforms while connecting these isolated digital networks. the digitisation of supply chain and manufacturing platforms is essential to optimise operations and drive productivity gains. by embracing technologies such as the internet of things, blockchain and artificial intelligence, we can create a seamless flow of information, goods and services across the entire value chain. we can also enhance visibility and traceability throughout the supply chain by integrating and connecting siloed digital networks. this will enable businesses to collaborate more effectively, reduce costs, improve inventory management and respond more swiftly to changing market conditions. to achieve this synergy, we are also exploring the possibility of connecting cdi with the supply chain 2 / 4 bis - central bankers'speeches platform developed by the fung group, hoping to further digitise trade and trade financing through the use of innovative technologies. finally, the fifth element that i would like to talk about focuses on exploring more advanced digital payment options. as digital trade continues to evolve, it is crucial to embrace innovative payment solutions. by exploring innovations such as programmable money and smart contracts, we can help businesses reduce transaction costs, mitigate risks, and develop new business models. programmable money can enable automated and secure transactions with preset conditions, while smart contracts can ensure trust, efficiency and transparency in transactions. at the hkma, we are actively exploring payment innovations such as central bank digital currencies at both wholesale and retail levels through project mbridge and project e - hkd. these advanced payment options have the potential to further enhance hong kong's competitiveness in the global marketplace. now that i have introduced all five elements in digitising trade and finance, it is important to note that they are not isolated, but rather interconnected and mutually reinforcing. at the hkma, we are working hard to connect these key components through cdi, with a focus on achieving interconnectivity and interoperability. digitalisation of government services and open government data provide the foundation for enhanced collaboration and more seamless | 1 |
news conference on new banknotes berne, 3 september 2019 thomas jordan introductory remarks by thomas jordan ladies and gentlemen i too welcome you warmly to this presentation of the new 100 - franc note. the issuance of this final note brings the ninth banknote series β an important and complex project β to a close. over the next few minutes i β d like to look back at some of our experiences, review the results and, finally, make a few observations about the future of cash. work on the new banknote series began over 14 years ago. on 2 february 2005, the snb published a press release announcing that it was preparing a new series inspired by the overarching theme β switzerland open to the world β. in november 2005, the results of the design competition were presented to the public, and at the beginning of 2007, the snb tasked manuela pfrunder with carrying out the graphic design work. this decision marked the beginning of a 10 - year adventure. the development of the new banknotes was shaped by stringent quality standards on both the design and production fronts. throughout the process, dialogue and exchange were required between all the involved parties to ensure that these standards were met. thanks to this team effort, the ninth series β culminating in the last denomination, the 100 - franc note β is now complete. an ambitious start β¦ in 2005, we started with the ambition of creating a banknote series that was highly innovative across the board : - we wanted to achieve significant technological advances in terms of both materials and printing. - at the same time, we wanted to break new ground in the designs. we wished to move away from individual personalities or achievements and depict an overarching theme instead. page 1 / 4 berne, 3 september 2019 thomas jordan news conference on new banknotes - and finally, we wanted to reduce the size of the notes. this would make them fit more easily into people β s wallets, as well as rendering them more suitable for machine processing. - we did not, however, make any changes to the denominations and consciously retained the tried - and - trusted colour palette. β¦ and the associated challenges this set of requirements pushed the limits of what was technologically possible. we at the snb and our partners had to jointly overcome a succession of challenges. the most important difference between the eighth and ninth banknote series is in the materials used. thanks to the new substrate durasafe, we were able to integrate new and complex | ladies and gentlemen, on behalf of the snb, thank you for all the work you do. we broke new ground with respect to informing the public as well, introducing β swiss banknotes β β an augmented reality app with which users can explore the new series. we are page 3 / 4 berne, 3 september 2019 thomas jordan news conference on new banknotes convinced that this innovation has helped to make the design and security features of the banknotes more accessible, especially to younger generations. so what happens to the eighth - series notes now? the old banknotes remain legal tender until further notice and can thus continue to be used for making payments. the snb plans to announce the recall date for the eighth - series notes in the course of 2020. from the recall date onwards, the old notes lose their status as legal tender and can then only be exchanged at the snb or one of our agencies. the future of cash in the digital age i would like to finish by looking to the future. the digital transformation taking place in our economy is also affecting developments in the payments arena. as part of its statutory mandate, the snb must not only ensure the supply and distribution of cash but also facilitate and secure the operation of cashless payment systems. a well - functioning payment system is critical for our economy. technological progress is also changing customers β expectations and needs in terms of cashless payments β for instance as regards speed and user - friendliness. in this area too, the snb is a participant in innovation. specifically, we are ensuring that swiss interbank clearing ( sic ) β our country β s powerful infrastructure for transacting cashless payments in swiss francs β continues to work quickly and efficiently and thus remains as attractive as possible. promoting and ensuring both the supply of cash and the smooth functioning of cashless payments is no contradiction. the various payment methods satisfy the differing needs of our population. our latest survey on payment methods, published in may 2018, showed that the public β s use of β and affinity for β cash remains high. it also confirmed that the swiss population like to be given the choice between paying cashless or paying with notes and coins. banknote circulation in our country has increased steadily in recent years. cash is used and valued for a variety of reasons, and not just out of habit or reluctance to adopt new technology. cash can be used everywhere and is less dependent on technical infrastructure. cashless payments are likely to become more important over time. i am nevertheless | 1 |
bank of japan β s may review of monetary and economic trends in japan bank of japan, monthly economic review, 20 / 5 / 97. japan β s economy continues on a moderate recovery trend despite some fluctuations caused by the rise in the consumption tax rate, with private demand showing underlying firmness. with respect to final demand, public - sector investment has decreased, and housing investment has declined, reflecting the reversal in the stepped - up demand which took place ahead of the rise in the consumption tax rate. however, net exports have continued to rise and business fixed investment is increasing steadily. despite the reversal in the stepped - up demand caused by the consumption tax rate hike, the recovery in personal consumption has not been hindered, given the moderate but firm recovery in labor market conditions and income formation. in these circumstances, industrial production has been firm to recover the level of inventories which declined owing to the temporary surge in demand ahead of the rise in the consumption tax rate. meanwhile, prices have stopped declining, and growth in monetary aggregates has continued at around 3. 0 per cent. with regard to personal consumption, outlays for travel have continued to increase moderately. with respect to goods, sales particularly in expensive goods surged in march 1997 ahead of the rise in the consumption tax rate, followed by a decline in april as its reaction. passenger - car sales recorded buoyant two - digit growth year - to - year for six consecutive months between october 1996 and march 1997, but showed a two - digit decline year - to - year in april. although sales of electrical appliances, as well as sales at department stores and supermarkets, rose significantly in march 1997, april figures available for department stores in tokyo are significantly below the previous year β s level. however, the recovery trend in personal consumption do not seem to have been hindered, as labor market conditions as well as household income formation are improving steadily, albeit moderately. among leading indicators of business fixed investment, machinery orders have increased steadily. construction floor area has also continued to recover moderately. with respect to housing investment, housing starts in terms of the seasonally - adjusted annual rate reached a significantly high level in the fourth quarter 1996, partly reflecting the stepped - up demand ahead of the rise in the consumption tax rate. later, they declined as the surge in demand reversed. regarding public - sector investment, the amount of public works contracted has quite recently picked up somewhat, reflecting orders included in the supplementary budget for fiscal 1996. however, public - sector | banks have opened branches. 10. one of the more recent reforms is the licensing of credit reference bureaus. the credit information sharing mechanism is now fully operational and as a result we expect to subsequently see a reduction in costs as banks pass the resultant benefits to their customers. 11. as a researcher, i would like at some point in future when doing my economic analyses on the kenyan economy, to find a very significant β obama effect β on kenya β s growth and development. that β obama effect β together with a renewed political leadership able to undertake political and social reforms supported by a superior law β the constitution β will be noticed in our econometric studies in future. but this will only be realised if all of you in this room and elsewhere scale - up your investments in kenya. finally, distinguished guests, ladies and gentlemen, i conclude by wishing you fruitful discussions. thank you. | 0 |
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