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, growth rates acceleration will be conditioned by the resurgence of the private sector. in this regard, the bank of albania deems that the economic climate provides the conditions and space for even higher consumption and private investment growth. despite positive growth rates, the albanian economy is expected to remain and operate below its potential, with the demand conditioning the continuation of the negative output gap and contained inflationary pressures. on the other hand, inflation performance will continue to be under foreign prices pressure for the upcoming period as well. in the absence of unexpected developments, the effect of shock from foreign prices is expected to fade away while the effect of administered prices increase is expected to be neutralised during the third quarter of the year. therefore, inflation is foreseen to return within the bank of albania target band by the year - end. although risks about this base scenario are added as a consequence of uncertainties of the global economy, they remain balanced. * * * drawing on the information above, the supervisory council of the bank of albania deemed that inflationary pressures are, in the short term, high, but with a downward trajectory ; in the medium term they remain controlled. in the absence of unexpected shocks, inflation is expected to be within the target band of the bank of albania along the time horizon of monetary policy action. inflationary expectations of economic agents continue to be within the target range, which is essential under the conditions of the simultaneous presence of the negative output gap and high foreign prices. the bank of albania is fully committed for anchored inflationary expectations in compliance with its inflation target and stands ready to accomplish its mandate, by preventing materialisation of constant pressures on inflation. following discussions, the supervisory council concluded that the monetary conditions remain appropriate for meeting the medium - term inflation target and decided to leave the key interest rate unchanged at 5. 25 %. bis central bankers β speeches | the domestic currency demonstrated stability, slightly depreciating in effective and nominal terms in may. future exchange rate performance will be conditioned significantly by external economy balances and individuals β preferences for their financial asset portfolio structure. public sector expenditures were an important stimulus of economic activity during the first months of the year. in january β may, these expenditures were up by 10. 3 % year - on - year, while decelerated fiscal income reflected the private sector β s low demand. these developments were reflected in the budget deficit of about 1. 7 times higher compared to a year earlier. expenditure growth slowed down during the second quarter. this behaviour is expected to continue for the rest of the year, conditioned by the commitment to respect the 2011 deficit and public debt target. this fiscal policy approach is expected to be formalised in the july budget revision, which should take into consideration the public debt β s long - term stability. against the above - mentioned developments, monetary indicator analysis confirms controlled inflationary pressures originating from the domestic economy. money supply annual growth was 12. 2 % in april, staying close to its historic trend. monetary expansion reflected the accumulation of liquidity in the banking system, revealing the households β preferential behaviour towards saving. our assessments point out that monetary expansion is compliant with the private sector β s demand for real money, thus indicating controlled monetary - related inflationary pressures. the contained behaviour of the private sector about spending and investing is reflected also in a low demand for bank lending. annual growth rates of lending to the private sector ranged 10 % β 12 % in the four first months of the year, on average, only 2 percentage points higher than a year earlier. the business bis central bankers β speeches demand to cover liquidity needs was their main driver for loans, while lending to households increased by low rates. developments in financial markets speak of low risk premiums and liquidity. short - term interest rates in the inter - bank market stayed close to the key interest rate and demonstrated contained volatility. in the primary market, government securities yield surged in the last three months, in response to a higher demand of the public sector for funding. nevertheless, their curb remains lower in comparison with a year earlier, pointing to more favourable financial conditions in the economy. looking ahead, assessments and projections of the bank of albania suggest continuation of positive growth in the upcoming period. in a longer - term horizon, under diminishing external impulses to the aggregate demand and a more contained fiscal behaviour | 1 |
quasi - government authorities, and to show the way with a modest amount of central bank money. this is painstaking work. it involves such things as the development of customised bond market indexes, and efforts to remove the various small impediments that individual countries have managed, perhaps unintentionally, to put in the way of investors. as just one example, the pan - asia index fund component of the abf2 is domiciled in singapore, but listed in hong kong, the first time that has been done in asia. this involved the relevant authorities working towards mutual recognition of their respective regulatory frameworks. abf2 is a good example of the way a regional initiative can put the spotlight on local barriers to wellfunctioning local markets and exert some pressure for their removal. 2 indeed, to my mind, the value of these initiatives has been less the'integration'aspect than the progress made in enabling eight local bond markets to function more effectively for foreign and domestic investors and, not least, for the governments and other borrowers of those countries. a well - functioning local - currency bond market allows a government much more economic policy flexibility than can be experienced when tied to foreign currency borrowing. 3 and eight well - functioning, modest - sized, local bond markets amount to the same thing as a'regional market'for most practical purposes. so in terms of developing the resilience of the region to the vagaries of international markets, there is value in increasing the capacity to provide financial support once a crisis hits. but i would argue there is more value in building financial infrastructure, through the activities in type 3 co - operation, which can make national systems more resilient in the face of shocks. where to from here? what then of the future? in particular, what about steps 4 to 6? is there any serious prospect of countries undertaking these higher levels of co - operation, or more correctly co - ordination and even integration, any time soon? there have been various calls for a common exchange rate policy, usually based around targeting a common basket, though to my knowledge there is no action plan currently available. one problem is that the interests of the countries are in some respects still rather divergent, not least because of the very different levels of economic development around asia. there are a number of countries β china not least among them β whose prospective rates of productivity growth over the decades ahead will surely mean a substantial increase in their real exchange | officials, policy - makers, academics and so on to develop the sort of constructive and frank sharing of information that is really the foundation for genuine engagement. sharing of information is more than just the exchange of facts and figures ; it is learning about how other economies work, about how other policy - makers think, and about which approaches in the other countries have worked, which did not, and why. in a crisis, there must be timely sharing of market intelligence. most important, if there is ever to be any prospect of collective action in response to regional problems, there has to be a shared analysis of what the problem is. the capacity to form that sort of analysis does not exist naturally ; it has to be developed. the second degree of co - operation is having a set of arrangements to lend money in times of trouble. when one or more countries face the pressure of capital outflow, with associated downward pressure on their exchange rates, the idea is that these agreements provide a sense of mutual support which could increase market confidence. generally, such arrangements increase the availability of resources to a country under pressure, though by a limited amount. funds are usually available with conditions, at the discretion of the lender and with most of the risk remaining with the borrower. going the next step involves joint work on improving the operation of local financial infrastructure. this can be viewed as harmonisation ( i. e. as a mild form of co - ordination ) which facilitates people managing their affairs across national boundaries more efficiently. this could potentially involve everything from listing requirements, tax treatment, arrangements for supervision of financial institutions, and so on. but policies are still made at national level and it is not necessary to have a 1 / 4 goal of harmonisation per se to think this sort of work is useful : it might simply be an effective device for improving the functioning of the individual local economies. the fourth degree of co - operation would be based on some agreed common goals, most likely some sort of regional effort to stabilise exchange rates. here we are definitely talking about a form of policy co - ordination. in the pre - emu european context, there was a mutual obligation to defend regional parities. this system was silent, notably, about the situation where all european currencies rose or fell together against the dollar. in principle, this would leave monetary policy remaining focussed on domestic objectives. one can then distinguish a fifth degree, in which that constraint is dropped and it is explicit that domestic policies will | 1 |
a return to the boom. many people say that we need more β confidence β in the economy among both households and businesses. we do, but it has to be the right sort of confidence. the kind of confidence based on nothing more than expectations of ever - increasing housing prices, with the associated willingness to continue increasing leverage, on the assumption that this is a sure way to wealth, would not be the right kind. unfortunately, we have been rather too prone to that misplaced optimism on occasion. you don β t have to be a believer in bubbles to think that a return to sizeable price increases and higher household gearing from still reasonably high current levels would be a risky approach. it would surely be a false basis for confidence. the intended effect of recent policy actions is certainly not to pump up speculative demand for assets. 6 as it happens, our judgement is that the risk of re - igniting a boom in borrowing and prices is not very high, and this was a key consideration in decisions to lower interest rates over the past eight months. hence, i do not think we should set monetary policy to foster a renewed gearing up by households. we can help, at the margin, the process of borrowers getting their balance sheets into better shape. to the extent that softer demand conditions have resulted from as in 2009, the challenge is β how to ensure that the ready availability and low cost of housing finance is translated into more dwellings, not just higher prices β. see stevens, g, β challenges for economic policy β, address to the anika foundation luncheon, sydney, 28 july 2009. bis central bankers β speeches households or some businesses restraining spending in an effort to get debt down, and this leads to lower inflation, our inflation targeting framework tells us to ease monetary policy. that is what we have been doing. the reduction in interest rates over the past eight months or so β 125 basis points on the cash rate and something less than that, but still quite a significant fall, in the structure of intermediaries β lending rates β will speed up, at the margin, the process of deleveraging for those who need or want to undertake it. in saying that, of course, we cannot neglect the interests of those who live off the return from their savings and who rightly expect us to preserve the real value of those savings. popular discussion of interest rates routinely ignores this element, focusing almost exclusively on the minority of the population β just over one - third β who | to our financial stability mandate, banks are significantly exposed to high - carbon and other vulnerable companies through loans and bond purchases, which makes them exposed to transition risk. as supervisors, it falls upon us to encourage and direct banks to identify and measure climate related risks and, above all, to manage them efficiently. to facilitate this process we issued supervisory expectations already in 2020 that banks should meet by the end of this year. and in 2022, we conducted the first supervisory climate stress tests for the banking sector at the euro area level. they showed that banks have made visible progress in meeting the expectations, but also revealed a number of gaps. environmental considerations are increasingly becoming part of our annual supervisory review and evaluation process, which can ultimately affect the capital requirements we set. regarding the role of macroprudential policy, especially the possibility to set higher capital buffer requirements for exposures to carbon - intensive companies, remains a subject of ongoing debate. more details on our activities are available in the newly published medium - term climate plan of banka slovenije. ladies and gentlemen, investments made today will shape our future. with the set of activities i have presented, central banks help motivate banks to steer their financing towards greener projects. in recent years, banks in slovenia and in the euro area have increased the extent of green financial products. at the moment, these are still mainly intended for households, and their volume represents a limited share of all bank loans. within the overall green finance market, they play much smaller role than esg funds and climate and sustainability bonds. but we all aware that policy measures, which have already been adopted, need time to be fully implemented and deliver results. and new ones will eventually be added. that is why i remain optimistic that the measures we have introduced recently will help to shape the framework, which will enable us to respond to new challenges thank you for the opportunity to join you today and be part of that process. 2 / 3 bis - central bankers'speeches 3 / 3 bis - central bankers'speeches | 0 |
few aspects of understanding what's going on in markets. 1 / 5 bis - central bankers'speeches and policymakers like me aren't the only ones who are data dependent. businesses, households, journalists, and so many others rely on data to support their understanding of the world around them. capital mistake to be clear, having access to an abundance of data is a wonderful problem to have. think about the plethora of data you can pull from a terminal and the endless ways to use it. many of us have spent more hours than we'd like to admit analyzing, plotting, and running regressions on data. and while we assume that most data are " good, " there are, unfortunately, " bad " data, too. the very same terminal that gives you access to numbers that are supported by millions of transactions could also give you access to numbers that have not seen a transaction in quite some time, if ever. and it can be very hard - too hard, in fact - to spot the difference. this is dangerous. i will echo the warning of our detective friend sherlock holmes : " it is a capital mistake to theorize before one has data. " i'll go a step further and say that it is a capital mistake to theorize before one fully understands the origins of the data one has downloaded. libor no more ( but still important ) of course, the prime example of a capital mistake of this nature is libor. which, by the way, officially ended 139 days ago, not that i'm still counting. 2 3 good riddance! ok, i had to slip in one music reference, but that's all. the lesson of libor is that there are times when what we think of as strong financial market data is only a mirage. libor was one of the most widely used benchmarks in the world, underpinning hundreds of trillions of dollars - that's trillions, with a " t " - of financial instruments and contracts. we all know how that ended : libor was inherently fragile and subject to manipulation. it is astonishing to think about the entire global financial system relying on the small set of transactions underlying libor. in fact, during periods of financial market stress, libor was based on no transactions, which is what opened the door to the fraud and bad behavior we now associate with it. libor was a wake - up call. it led to the collective realization that things we think | learned that the ample reserves framework has worked smoothly with a level of reserves at least as large as we saw during summer and into early september. although temporary open market operations are doing the trick for the time being, anticipated increases in non - reserve liabilities would cause reserves to decline in coming months without further actions. based on these considerations, last friday the fomc announced that the fed will be purchasing u. s. treasury bills at least into the second quarter of next year. 7 specifically, the desk announced an initial monthly pace of purchases of $ 60 billion. these permanent purchases will, over time, bring the underlying level of reserves β by which i mean absent temporary open market operations β to a level consistent with the ample reserves framework on a sustained basis. in concert with these purchases, the fomc announced that the desk will continue temporary overnight and term open market operations at least through january of next year. 8 this combination of permanent treasury bill purchases and ongoing temporary open market operations is designed to provide effective control of the federal funds rate over the next several months. i should emphasize that all of these actions are aimed at the implementation of monetary policy and do not in any way represent a change in the stance of monetary policy. the goal is to make sure that the federal funds rate stays within the target range set by the fomc. as we move forward, we will continue to learn about demand for reserves and other federal reserve liabilities and market functioning, and may adjust the specifics of the plan as appropriate. what does all of this mean for sofr? that β s a lot on monetary policy, interest rates, reserves, and repos. but before i close, i β d like to emphasize an important point about a particularly important repo benchmark rate, and that β s the secured overnight financing rate, or sofr. sofr is the reference rate that the alternative reference rates committee ( arrc ) has selected as the preferred replacement for libor. at the same time that we saw turmoil in the repo market, we saw a temporary spike in sofr. as market participants make preparations to transition away from libor, they β re understandably watching sofr very closely. there are a few things i β d like to highlight with respect to sofr. first, a temporary spike is not surprising, given that sofr reflects rates on real - world transactions. second, the very fact that we saw a spike in sofr is an indication of how representative | 0.5 |
predecessor, governor rafael buenaventura was management man of the year in 2004 ; governor gabriel singson in 1998 ; governor jose cuisia, jr. in 2007 ; and governor jobo fernandez in 1989. another former cb governor, jimmy laya was once the president of map. for this award, and for consistently demonstrating trust in the central bank and the role it plays, maraming salamat po sa map. i cannot receive this honor without sharing it. with my wife, elma ; my children patrick and miko, eula and mia, whose support and encouragement allowed me to seek out my own true north even amidst trying times. i share this too with my grandchild zara who gives us much joy in the family. i pray that they would each continuously listen to their own internal and moral compass. with the men and women who with me, serve in the bsp with integrity, excellence and honor β members of the monetary board, officers and staff, past and present, who have ensured that the bsp stay its course, maraming salamat sa inyo. thank you all for listening. to the management association of the philippines, it is with deep gratitude and honor that i accept the award you have bestowed on me ; my family ; and ultimately, on the magnificent team that comprises the bangko sentral ng pilipinas. mabuhay at maraming salamat muli. bis central bankers β speeches | % 8 on march 30, 2009, before being raised back to the initial rate of % 18 on october 1, 2009. bis central bankers β speeches dear participants, so far i have touched on the impacts of movements in commodity prices on inflation and economic growth. now i will talk about the impact of fluctuations in commodity prices on foreign trade balances. the dependency of the turkish economy on energy imports makes the current accounts balance more sensitive to changes in commodity prices. uncertainties regarding the global economy in recent years and the exceptionally loose monetary policies adopted by advanced economies, such as the united states, japan and the euro area, foreshadow the high probability of continued excess volatility in commodity prices. in the face of these developments, we welcome the recent concrete steps, as part of the medium term program in turkey, towards reducing the dependence on energy imports by shifting to domestically produced and renewable energy sources. these measures will hopefully ease the susceptibility of the current account to commodity prices in the long run. the key question in the short - run is how to smooth out the impact of the commodity prices on the domestic economy in the short to medium term, while there is a heightened degree of uncertainty regarding financial and real factors. in turkey, ex - refinery fuel prices, in addition to the 18 percent - value added tax ( vat ), are also subject to the special consumption tax ( sct ). special consumption tax, which is not only a fixed tax but also comprises a major part of the final prices of fuel products, helps to smooth out significant fluctuations in crude oil import prices. thus, consumers are less affected by such fluctuations. esteemed guests, it seems that uncertainties regarding commodity prices will continue to be an important factor to be considered carefully in policy implementations in the forthcoming period, too. i believe that the papers presented in this conference will guide us in overcoming the policy challenges we will face along the road. thank you very much for your interest and participation. bis central bankers β speeches | 0 |
financial sector and the transmission mechanism 3. evaluating continuously the effectiveness of existing development finance initiatives such as agriculture credits and import - export guarantees 4. taking the public lead in encouraging examination of critical issues for economic development ( impact of infrastructure such as power, port and railways ) 5. leading further studies on the potential of venture capital and private public partnership initiatives for nigeria 6. cooperating with a state government to run a pilot programme in directing the financial sector β s contribution to the state β s social economic development. 3. 6 closing remarks nigeria β s economy in 2009 is like a structurally - compromised ship in a storm. this is partly due to inherent economic weaknesses such as insufficient diversification of the economy, high security risks, a complex business operating environment and inadequate infrastructure. financial sector and overall economic success will require the cbn and nigeria to do a lot of heavy lifting in many policy areas. rapid financialisation is not just a risky growth strategy ; it is also a lazy way of growing an economy. a sustainable growth path can be achieved only through substantial and fundamental economic reform. this includes ensuring that physical and institutional infrastructure is of a scale and quality required. it also calls for political will to act to reduce corruption and uphold the rule of law. i have gone into great detail to lay out clearly our vision for the banking sector and our roadmap to the future. it is indeed a great honour for me to have been given this opportunity and i can think of no better platform than this. in the next few weeks we will conclude the internal cbn restructuring exercise and also set up teams with clear targets and work streams. the reform process is on - going and happens over time. a final word to the graduating students. a university degree, and especially a doctorate degree, is the beginning of your education and not the end of it. walk into life and through life as a thirsty woman or man drinking from the fountain of knowledge. at every stage you will find your learning in a previous stage useful. over the course of your life you will discover that no knowledge is useless. guard jealously words of wisdom you come across from great men of history and you will find them good advice at some stage in your life. during the most difficult days of the ongoing banking reforms i found comfort in these short words of the roman emperor and philosopher - king marcus aurelius : β do what is right, not popular ; do what you do for others first, and for yourself second. β most important for you as | allow banks to be international, national or regional players. 18. one big lesson learned from the recent crisis is the need to review the existing rules and laws relevant to the financial industry in nigeria in line with the new financial environment and international best practice. in the wake of growth in the volume and complexity of financial transactions involving both local and foreign investors in the postreform era, the challenge is to ensure the cooperation of both the legislature and the judiciary to work closely in the enforcement of the existing laws relating to the financial system in order to engender confidence in the system. there is a compelling need to reform the laws that pertain to the mortgage sector particularly the land use act. this requires the strengthening of the primary mortgage institutions and the review of the relevant laws such as the land use act. with respect to loan recovery within the framework of the financial services industry, there is need to establish special courts that will handle cases of loan defaults, credit fraud and insider abuse - related cases promptly. the cbn is scaling through on a number of legislative reforms aimed at unlocking the bottlenecks to the smooth flow of credit to the real sector and especially to small and medium enterprises. 19. a major challenge in the liquidation of the failed financial institutions in the country is the prompt disposal of their assets for the settlement of the depositors. this calls for expedited action on the operationalization of the assets management corporation ( amcon ) as well as the revision of the necessary laws that will make it possible for both the cbn and ndic to liquidate failed institution ( s ) without prolonged litigation by the institution ( s ). 20. maintaining a safe and sound banking sector is essential, given the key role that banks play in facilitating economic growth and financing developmental projects, particularly key infrastructure, agriculture and industry. most emerging market economies have been known to use the domestic financial institutions to execute real sector big ticket projects and financial institutions in nigeria should not be an exception if we hope to achieve our developmental objectives. 21. distinguished ladies and gentlemen, let me conclude by noting that the evolving financial landscape, with benefit of hindsight, is capable of providing the platform for sustainable economic growth and development and economic resilience if all stakeholders in the nigerian economic commit to all the various reforms and initiatives being implemented as well as commit to good governance and transparency in their respective areas of operation. i have no doubt in my mind that nigeria is destined to be an economic power and a force to be reckoned | 0.5 |
donald l kohn : the us economy and monetary policy speech by mr donald l kohn, vice chairman of the board of governors of the us federal reserve system, at the university of north carolina at wilmington, cameron school of business'business week program, wilmington, north carolina, 26 february 2008. * * * when, at the end of july, i accepted tom simpson's invitation to speak to you today on the economy and monetary policy, little did i realize the challenges i would face. for one, the economy and financial markets have taken some unexpected twists and turns over the intervening seven months, and we are still in the midst of a rapidly evolving and highly uncertain situation. for another, when we set the date, i had expected that chairman bernanke would have already given our monetary policy report to the congress, and i could simply develop some of the themes he had laid out. however, that testimony will be tomorrow, and i must emphasize that the views you are about to hear are my own and not necessarily shared by any of my colleagues on the board or the federal open market committee ( fomc ). 1 several major developments are shaping current economic performance, the outlook, and the conduct of monetary policy. the most prominent of these developments is the contraction in the housing market that began in early 2006. both the prices and pace of construction of new homes rose to unsustainable levels in the preceding few years. for a time, the resulting correction was largely confined to the housing market, but the consequences of that correction have spread to other sectors of the economy. the financial markets are playing a key role in the transmission of the housing downturn to the rest of the economy. in the first half of 2007, investors became concerned about the likely performance of many subprime adjustable - rate mortgages made from late 2005 through early 2007. lenders turned away from subprime mortgages and some other investments as the magnitude of the losses on those mortgages began to emerge, as uncertainty about the ultimate size of the losses and who would bear them mounted, and as these experiences undermined confidence in a variety of other credit instruments, especially those with complex structures. those tendencies have intensified as risks of a spillover to the broader economy have risen. the increase in expected losses along with the unwillingness of investors to fund some types of credits has led to pressures on banks and other financial intermediaries as well as on prices and liquidity in securities markets. the result | arguably, these banks are now putting in place belatedly the capital that should have been devoted to these activities all along. even if we accept that there were some genuine advances towards more optimal risk sharing through the development of securitisation and its associated structures, it cannot be denied that there was a capital saving associated with the conduct of business through off balance sheet entities : banks had to put up less capital ex ante than the risks really warranted. that earlier business advantage is now being unwound as much of the credit risk comes back to the banks. it seems a reasonable bet that more capital will be required over the years ahead. these ppp weighted growth rates reflect the results from the recent international comparison program announcement on relative prices. so the us economy is in a period of adjustment, as is the banking core of the international financial system. even with the renowned flexibility of both, and good policies, this will take a bit of time. just how long remains uncertain. the global economy the question then is how much impact a period of us weakness will have on the global economy. i think it makes sense to think about the answer along two dimensions. the first is β spillovers β β essentially sequential causal connections whereby slower activity in a major country like the us affects its trading partners via reduced us demand for goods and services in international trade. this would, other things equal, slow economic activity in those trading partner countries, which in turn would slow their demand for goods and services, and so on. of course, all else may not be equal β other shocks and adjustments might be occurring in the other direction in other countries. an obvious possibility is economic policy : it may be open to policy makers in those other countries to respond to weaker us demand by running more expansionary policies at home. whether it is or not would depend on their overall macroeconomic situation and their policy regime. the second dimension is the extent of commonality in the originating event that triggers the whole adjustment to begin with. so if, for example, it were the case that a β credit crunch β occurred simultaneously in many countries, there would be a contractionary impact around the world even before any spillover effects via trade got going. obviously, that would be a much more serious situation, since policy makers in each country would be seeking to combat declining domestic demand as well as declining foreign demand. combating credit crunches in particular can be very difficult. i think we can take it as given that there will | 0 |
also in the south asian region towards financial inclusion. by 2005, micro finance institutions covered at least 35mn of some 270mn people in the south asian region and met around 15 % of the overall credit requirements of low - income families. in sri lanka, the coverage is particularly high at 60 %. the high outreach in sri lanka is based on an extensive network of community - based organizations that receive considerable government subsidies. almost all rural financial institutions in sri lanka have provided easy access to women, particularly in the villages, estates and among fishing communities. financial institutions that are directly involved in this area, are the licensed commercial banks, licensed specialized banks, micro finance institutions, cooperative rural banks, the sanasa thrift and credit cooperative movement, seeds and other non - governmental organizations. let us examine the extent to which financial inclusion for women has taken place through the existing institutional network and assess the deficiencies and gaps, although we may not be able to do a comprehensive analysis. the participation of women in credit programs as at end december 2007 is given in the following table : table iii women β s participation in the credit programmes as at december 2007 value no. of loans institution rs. mn female total 50, 804 43, 277 94, 081 1, 614 n. a. * n. a. * n. a. * n. a. * 3. sanasa development bank 321, 687 246, 896 568, 583 13, 000 43. 42 thrift & credit societies 36, 726 85, 696 122, 422 2, 816 70. 00 4. cooperative rural banks ( crbs ) 316, 142 135, 490 451, 632 8, 999. 0 30. 00 5. poverty alleviation microfinance project ( pamp ) 12, 604 39, 388 51, 992 1, 058. 4 75. 76 6. small farmers & landless credit project ( sflcp ) 8, 681 9, 350 244. 5 92. 84 11, 540 23, 081 34, 621 1, 986 66. 67 1. regional development banks ( rdbs ) 2. licensed commercial banks ( lcbs ) 7. mfis β seeds ( sks ) male % received by women na β refers to the non - availability of disaggregated data source : regional development dept., central bank of sri lanka as shown in the table, the small farmers | ajith nivard cabraal : protecting financial systems from money laundering and terrorist financing activities keynote address by mr ajith nivard cabraal, governor of the central bank of sri lanka, at the world bank workshop on capacity enhancement for anti money laundering and combating the financing of terrorism, colombo, 7 - 11 may 2007. * * * ladies & gentlemen, let me welcome you to the inaugural ceremony of this capacity enhancement workshop and extend to all overseas participants and representatives a very warm welcome to our country. i am also happy to be able today to share a few thoughts with you about the need to ensure the integrity of worldwide financial systems by protecting such systems from money laundering and terrorist financing activities. this is a challenging task as advancements in technology, especially in the financial services industry, have made it easier for criminals including terrorists to take advantage of liberalized financial markets, innovative technologies and the ease with which cross - border flows of financial transactions can take place. one of the most recent incidents in this regard is the sophistication with which, internationally active tamil tiger terrorists have successfully perpetrated a massive credit card fraud in london costing the british public, according to reports, about 100 million sterling pounds by skimming credit cards belonging to the british public. skimming has been a common technique used to raise funds for terrorists in algeria, kashmir and chechnya, and now it is clear that it is being extensively practiced in the western world too. the modus operandi in this case was said to be the β cloning β of credit cards skimmed at petrol sheds in various parts of england by the liberation tigers of tamil eelam ( ltte ) to fund its terrorist activities in sri lanka. it has been reported that about 200 independently owned petrol stations are said to be currently investigated where ltte terrorists operating under the guise of petrol shed staff have been involved. the investigations have also apparently revealed that the credit cards cloned in britain have been used to obtain funds in thailand, and some other far off parts of the world. in that context, what is important to note here is that such criminal activities could very well be happening in our own countries too, and we may be inadvertently funding terrorism ourselves. it is therefore clear that we have all got to be vigilant to ensure that these as well as other fund raising and laundering modalities are not adopted in our respective countries and to institute immediate and effective safeguards to combat them. my dear friends, this massive fraud in | 0.5 |
london summits on an action plan to strengthen the financial system. we have since been asked to oversee, drive forward and co - ordinate implementation of the action plan, and strengthen it where needed. the key message is straightforward : we need major changes. we need to build a system which is less leveraged, where capital and liquidity buffers are much stronger, where all institutions or infrastructure capable of posing significant risk are subject to appropriate oversight and safeguards, and where no institution is too big to fail. and we need a systematic effort to reverse the misalignments in incentives that came to characterize part of financial system. all this requires a regulatory and prudential framework which pays much more attention to system - wide interconnections and the health of the global financial network. we consequently need to focus much more on the difficult, but also crucially important, challenges of designing and implementing a macroprudential system of regulation. this will ensure that the financial system is a source of stability that supports the economy under stress, not a source of weakness that amplifies strains and causes major economic damage. in undertaking this collective diagnosis and drawing up a work programme, an important element of the fsb β s role has been to ensure that there is sufficient focus on key areas that cut across the responsibility of different international agencies and groupings. two good examples, high on the policy agenda, are procyclicality and compensation. there will be major corrective measures to mitigate the procyclical tendencies of the system. banks will be required to build up a capital buffer during the expansionary phases of the cycle to draw on at times of generalized difficulty. it has already been proposed to mandate a significant increase in the capital charges on trading activities and exposures to securitization instruments. the fsb β s proposals are being addressed within the framework for capital regulation, driven by the basel committee ; those on provisioning, accounting and valuation issues are taken forward by the accounting standard setters with input from the regulatory community ; those on margining practices in securities and otc derivatives markets are being pursued by the committee on payment and settlement systems and the committee on the global financial system. we are now entering a critical stage in the regulatory reform process : we have to take some difficult decisions. the basel committee will test those affecting the capital framework through a comprehensive impact assessment in 2010, and phase them in as financial and economic conditions improve. principles on compensation were | they are back near pre - crisis levels. by contrast, spending on construction has lagged behind for longer. between 2008 and 2014 it contracted uninterruptedly, weighing heavily on the overall investment - to - gdp ratio, which to date has hardly risen at all. yet even this sector has shown some signs of a revival starting last year. the signs are clearer in the residential sector, which has long benefited from tax incentives for the renovation of existing buildings, while the non - residential construction sector is still struggling to pick up and public investment has been on a trend decline since 2010. why has investment returned to growth, at least in machinery and equipment? the bank of italy β s econometric model can give us some quantitative answers. according to our estimates, 1 almost half of the growth recorded is attributable to the improvement in the credit market : the strongly expansionary monetary policy stance has recently led to a reduction in the cost of capital and fostered more relaxed supply conditions. yet the gradual improvement in demand and increased confidence on the part of firms have also contributed by one third ; if the favourable economic situation continues, then this factor β s contribution should increase. lastly, government policies to encourage spending on capital goods have also made a significant contribution, which we estimate at around one fifth of the total. as is well known, various tax incentive schemes for see the box β the trend in investment and the cyclical recovery β in the bank of italy β s annual report for 2015, 2016. investment have been set up and implemented in recent years, especially in favour of advanced technology. the results of the bank of italy β s annual business survey ( to which, as always, the bank β s regional research network has made a vital contribution ) show that in 2016 tax benefits for investment provided considerable support, and will do so to an even greater extent in 2017. we estimate that these benefits are going to boost investment by 3. 5 percentage points overall in the period 2016 - 18. the fact that they are of limited duration is also important : part of their short - term effect is that firms bring forward their spending plans. our surveys show that in 2016 investment was higher for small and medium - sized manufacturers, which had been particularly hard hit by the recession. they also indicate that investment will expand further this year : the share of manufacturing firms that plan to increase investment in 2017 was much higher than the share of those planning to reduce it. the slowdown recorded in the early | 0.5 |
in particular on events outside the single currency area. right at the start of the year, developments in a number of emerging market economies, especially in china, were a cause of disquiet. during the year, there followed, first, 1 / 8 bis central bankers'speeches the uk referendum vote on brexit and, later, the us presidential election, neither of which necessarily produced the outcome that many were expecting. finally, in december the failure of the referendum on electoral reform brought about a change of government in italy. some of these events led to the emergence of risks that economists had hitherto seen as grounds for a possible slowdown in the economic recovery. and these decisions are contributing to a situation of quite pronounced uncertainty at present with regard to key underlying economic conditions. even so, the financial markets and the real economy have coped pretty well with these surprises. that is all the more surprising given that uncertainty is generally regarded as the enemy of longterm investment. monetary policy, which is still very accommodative in many regions of the world, may also have played a part in this quite robust performance of global economy. especially with regard to the brexit vote, the fact that even greater turbulence did not occur in the markets was probably due just as much to the prudent conduct of banks and supervisors. but events also show that the upturn in the euro area has stabilised and stands increasingly on solid ground. you will perhaps remember that the projections in march last year were assuming growth of 1. 4 % for 2016. despite the vote on brexit and the outcome of the us election, the figure in the end was as high as 1. 7 %. this means that the economy grew more quickly than production capacity. enterprises β capacity utilisation is on the rise. this is also benefiting the labour market in many euro - area countries ; in 2016 the unemployment rate for the euro area as a whole declined by almost 1 percentage point to 9. 6 %. that means it is now just a little less than 1 percentage point above its average in the pre - crisis years. latest economic indicators also point to a continuation of the economic recovery. retail sales and registrations of new cars showed a marked rise in the final quarter of 2016, for example, and the underlying trend of industrial output is clearly pointing upwards. furthermore, the eu economic sentiment indicator is currently at its highest level for almost six years. the current eurosystem projection | ##e will now provide you with more detail on the annual accounts, and then you will have the opportunity to ask any questions you might have. thank you for your attention. 1 spilimbergo a, berger h, schindler m ( eds ) ( 2014 ), jobs and growth β supporting the european recovery. international monetary fund. 8 / 8 bis central bankers'speeches | 1 |
policy in terms of unemployment is high, both in a short and long - run perspective. in practice, monetary policy has to some extent neglected the price stability objective and led to unnecessarily high unemployment. according to extensive theoretical and empirical research, monetary policy normally has little effect in the short run on housing prices and household indebtedness, compared with its effects on inflation and unemployment, and when inflation is low and stable, it has no longrun effects on housing prices and indebtedness. a tight monetary policy aimed at limiting household indebtedness then leads to inflation being too low and unemployment too high, without having a tangible effect on potential risks arising from household indebtedness. monetary policy should therefore not be used to try to influence housing prices and indebtedness. against this background, it is remarkable that monetary policy in sweden nevertheless appears to have been aimed at influencing household indebtedness in the short and long run, resulting in large costs to the real economy, despite the lack of support for this stance in both scientific research and previous experience. monetary policy should aim to stabilise inflation around the target and unemployment around a long - run sustainable rate. it should also be aimed at keeping inflation around the target on average over a longer period of time, to avoid repeating the policy than has led to unnecessarily high unemployment since 1997. the long - run sustainable rate of unemployment depends on the way the labour market functions and on structural conditions, and it must be estimated using empirical methods. these estimates should take into account bis central bankers β speeches the fact that average inflation has been lower than the average inflation expectations since 1997, to avoid a bias in estimating the long - run sustainable rate of unemployment. the problems with poorer matching, increasing long - term unemployment and a larger share of vulnerable groups on the labour market are arguments in favour of a more, not less, expansionary monetary policy so that we can bring down the high unemployment to a longrun sustainable rate. at present, when unemployment has been high over a long period of time, we need a particularly expansionary monetary policy, a large demand for labour and an inflation rate that is temporarily allowed to overshoot the target to bring down unemployment. as inflation on average has fallen below the target, an inflation rate above the target would at present also have the advantage that average inflation over a long period would come closer to the target, something that would contribute to avoiding the unneces | depends on the low mortgage rate after tax β and thus, at a given loan - to - value ratio, not the debt ratio either. see assenmacher - wesche and gerlach ( 2010 ), claussen, jonsson and lagerwall ( 2011 ) and kuttner for similar results regarding the impact of monetary policy on housing prices. bis central bankers β speeches actual inflation and thus fall if the rate of inflation falls. the long - run phillips curve, which illustrates the relationship between average inflation measured along the vertical axis and average unemployment measured along the horizontal axis, then becomes vertical and average unemployment thus becomes independent of the average rate of inflation. we can see this in figure 6, which shows unemployment along the horizontal axis and cpi inflation along the vertical axis for the years 1976 β 2012. we can see that during the 1970s and 1980s, there was no systematic relationship between inflation and unemployment. the long - run phillips curve, the long - run relationship between inflation and unemployment, could be said to be vertical. when inflation expectations are anchored, inflation and unemployment are interlinked however, from 1998 and onwards things look different ( the red observations in figure 6 ). when inflation expectations are anchored to the target but inflation varies, a systematic trade - off arises between inflation and unemployment. the black line shows an estimated long - run phillips curve for the period, a curve that is not vertical but sloping. the estimated slope is 0. 75. 10 this means that a one per cent higher average rate of unemployment is associated with a 0. 75 per cent lower average rate of inflation. this in turn means that a 0. 6 percentage points lower rate of inflation than the target from 1997 entails a 0. 6 / 0. 75 = 0. 8 percentage points higher average rate of unemployment. the average number of people in the labour force over the past 15 years has been about 4. 7 million. 0. 8 per cent of 4. 7 million is about 38 000. we can thus say that the cost in terms of unemployment of the fact that the average rate of inflation has fallen below the target is approximately 38, 000 unemployed. 11 as explained in my paper ( svensson 2012d ) the sloping long - run phillips curve is arguably relevant only when the average rate of inflation deviates moderately from inflation expectations and the target ( for example deviations less than plus / minus one percentage point ). in the case of larger average deviations it is likely that inflation expectations will | 1 |
activity and wage growth to be robust while also being consistent with price stability. the importance of business startups to our dual mandate objectives is why i have watched closely as various measures of new business formation have surged since the onset of the covid - 19 pandemic. see lisa d. cook ( 2011 ), β inventing social capital : evidence from african american inventors, 1843 β 1930, β explorations in economic history, vol. 48 ( december ), pp. 507 β 18 ; lisa d. cook ( 2014 ), β violence and economic activity : evidence from african american patents, 1870 β 1940, β journal of economic growth, vol. 19 ( june ), pp. 221 β 57 ; and lisa d. cook ( 2020 ), β policies to broaden participation in the innovation process, β hamilton project policy proposal 2020 - 11 ( washington : brookings institution, august ), https : / / www. hamiltonproject. org / assets / files / cook _ pp _ lo _ 8. 13. pdf. - 8applications for new businesses jumped to a record pace shortly after the pandemic struck the u. s. 13 the pace of applications has remained elevated above prepandemic norms all the way from the summer of 2020 to the most recent data, even though the pace appears to be cooling some this year. 14 at first, it might have seemed like these business applications were mainly being submitted by people who lost their jobs, or perhaps by an increase in β gig economy β work. there was doubtless some of that going on, but research and data since then have painted a more optimistic picture. when researchers look across areas of the country, the pandemic business applications had only a weak connection with layoffs. the surge in applications persisted long after overall layoffs fell to the subdued pace we have seen since early 2021. the applications did have a strong relationship with workers voluntarily leaving their jobs. some quitting workers may have chosen to join these new businesses as founders or early employees. and surging business applications were soon followed by new businesses hiring workers and expanding. over the last two years of available data, new firms created 1. 9 million jobs per year, a pace not seen since the eve of the global financial crisis. 15 β business applications β refers to applications for new employer identification numbers submitted to the internal revenue service. these are reported by the u. s. census bureau in the business formation statistics. an application does | ##makers, we make decisions affecting the see lisa d. cook and anna gifty opoku - agyeman ( 2019 ), β β it was a mistake for me to choose this field, β β new york times, september 30. see lisa d. cook and christine moser ( 2024 ), β lessons for expanding the share of disadvantaged students in economics from the aea summer program at michigan state university, β journal of economic perspectives, vol. 38 ( summer ), pp. 191 β 208. - 5entire economy and the well - being of every american by focusing on the dual mandate given to us by congress : maximum employment and stable prices. entrepreneurs β vital role in the economy in my years of conducting research and while at the board, i have met many inventors, innovators, and entrepreneurs who made important contributions to the economy. many of them happened to be women who were very knowledgeable, creative, and inspiring. so i want to discuss the vital role entrepreneurship and new business creation play in our economy. you might ask what interest i have in this subject, as a monetary policymaker focused closely on the dual mandate of maximum employment and stable prices. well, this topic has interested me for a long time, and i conducted a fair amount of research on entrepreneurship and innovation before joining the board. but the topic is also important precisely because of our dual mandate. to convince you of this, i will explain a few of the ways in which economists think about entrepreneurship, and how they relate to the dual mandate. the first is the most basic : for many people β many millions, in fact β entrepreneurship or self - employment is a career choice. 7 it is their preferred way of there is no single way to measure the number of self - employed individuals and related businesses, but it certainly numbers in the millions. the latest bureau of labor statistics current population survey indicates there are roughly 10 million unincorporated and 7 million incorporated self - employed individuals. separate data on businesses from the u. s. census bureau indicate that, as of 2021, there were about 25 million nonemployer and 800, 000 employer sole proprietorships ( nonemployer statistics ; statistics of u. s. businesses ), https : / / www. census. gov / programs - surveys / nonemployer - statistics. html, https : / / www. census. gov / programs - surveys / susb. html. for analysis of inconsistencies between self | 1 |
current situation is relative to previous experiences. i want to make a few points here. we expect the fed to move more gradually than on previous occasions why? first, the fed prefers to err on the side of moving slowly, and markets expect so. in part, as seen in figure 3, inflation measured as the pce core is still low compared to its level on previous hiking cycles. also, neutral rates are estimated to be very low this time, so the fed considers that monetary policy is not as expansionary as the headline fed funds rate suggests. besides, the federal reserve is very much aware of the financial stability risks of abrupt changes in rates. the term premium implicit in long term yields is very low, and the taper tandrum episode of 2013 shows that it can change fast if markets misinterpret the fed communication. the fact that in previously cycles this did not happen is good news, but a series of good output numbers in the us, a few higher β than β expected inflation prints, or a change in the strategy on how to manage the balance sheet of the fed could, trigger a significant increase in long term rates. 7 bis β based real exchange rates ; for argentina, brazil, chile, colombia, mexico, peru and venezuela. the current trajectory of the dollar / commodities / credit spreads provide mix evidence other dimensions suggest we are somewhat in between the 1994 and 2004 episodes. the dollar has strengthened in multilateral terms in the last quarters, similarly to what was seen in 1994. commodities have shown a mild upward trend. definitely smoother than their trend in 2004, but also markedly more bullish than in 1994. finally, embi spreads have decreased in tandem to what they did in 2004. indeed, capital inflows have returned massively to the region in the last few months. in other words, while commodities are not as supportive of emerging economies as they were in the previous decade, markets are showing a high appetite for emerging market debt. this suggests two things. on the one hand, there is room for a recovery in emerging economies, and markets are pricing that in. but on the other hand, this recovery will not be supported by a commodity cycle as we experienced in the 2000s, so the region is more exposed to financial shocks coming from a disorderly normalization of monetary policy in the united states. emerging economies are better prepared than in the 1990s to absorb these shocks, but we do not expect the subsidy coming from the commodity windfall. | what to expect from the fed β s monetary policy normalization? 1 sebastian claro vice β governor, central bank of chile i would like to start thanking the organizers for this invitation. let me start with a disclaimer. next monday, april 3rd, the board of the central bank of chile will present its inflation report to the senate. therefore, i will not be able in this occasion to offer a detailed discussion on the macroeconomic situation and perspectives in chile, which will be described in detailed in the report. rather, i have decided to focus on a broader issue that is relevant for chile and the region in the current scenario. during 2017, we will finally witness the process of monetary policy normalization in the united states. after almost 8 years keeping the federal funds rates essentially at zero, the federal reserve has started a gradual process of interest rate hikes. this is good news. fundamentally, the normalization of monetary policy is the natural consequence of a normalization of the us economy after the global financial crises. a normal us economy is a positive phenomenon for the world economy. however, this transition period may become bumpy. indeed, previous episodes of rate hikes by the federal reserve have not been smooth at all for emerging economies. the most obvious of these examples is the debt crisis in the early 1980s. on top of a series of macroeconomic imbalances in many latin american countries, the sharp raise in interest rates generated a strong reversal in capital flows and pressure on fx markets on the region that induced a collapse in financial markets and activity across countries. since the early 1990s, we can identify two main periods of interest rates rises in the united states, as seen in figure 1. the first one started in february 1994, and it comprised a hike of 300 bp in almost a year. the second one took place a decade later when, after a few quarters of the then historically β low rates, the fed started a process of rate normalization in june 2004, increasing almost 450 bp in about two years. 2 for the sake of this presentation, i want to offer a simple comparison on these two episodes, which in some dimensions were very similar. in particular, the cyclical position of the us economy was arguably very similar in both occasions, and the process of monetary policy normalization is pretty comparable. however, the performance of emerging markets in these two episodes was very different. indeed, overall, the process of fed funds increases in early 1994 was followed by large difficulties in developing | 1 |
, there will certainly be some impact. as regards the euro area, possible spillover effects on growth are one of the downside risks to activity that have been identified by the governing council, although the upside risks to inflation at present are also very clear. financial markets turning to financial markets, it is clear that these too have become much more integrated over time. from a position where sectors like your own have tended to have a β home bias β in asset allocation, portfolios have become much more international in nature. one consequence of this is that it has made possible the financing of ever growing global current account imbalances. this may have facilitated the rise of these imbalances, and the national spending and savings behaviour that lies behind them by, for example, a tendency to keep the cost of borrowing lower than it might otherwise be in countries with savings deficits. it has been argued that financial globalisation and, in particular, the scale and speed with which it has developed, has played a part in generating some of the excesses in financial markets which have crystallised over the past six months. however, there have also been other factors at work. i would like to turn now to comment on some of these. at this stage, the events of the past six months are well known. after a long period during which financial market conditions were extremely buoyant, global markets have witnessed a substantial and warranted repricing of risk. this follows a prolonged period when asset prices were driven to exceptionally high and unsustainable levels in many parts of the world, and inadequate attention was paid to risk. the unwinding of these excesses has generated significant turbulence in financial markets and strains in money markets. these problems reflect vulnerabilities which have been uncovered about the way risks have come to be assessed, valued and distributed in today's markets. once they surfaced, these vulnerabilities have led to a substantial degree of financial reintermediation and deleveraging. central banks have responded in a determined manner to counteract disorderly conditions in money markets. the actions undertaken since august have alleviated problems at the shortend of the interbank market. they have also helped to encourage a narrowing of the wide spreads that had opened up between longer - term rates and policy rates. while having eased back, however, concerns about credit quality and asset valuations persist. international stock markets have also been affected by the turbulence, particularly financial sector stocks. irish bank shares | was relatively difficult. however, after financial regulations were eased around the globe, many new financial products were developed specifically for households, and particularly relating to housing finance. households found it was much easier to get a loan. most loans products have worked well, though some have caused significant problems ; subprime loans in the united states are the clearest example. the level of interest rates in most developed economies in the past decade has been about half that in the decade to 1995. this structural decline in interest rates has facilitated the increase in household debt ratios because it reduced debt - servicing costs ( table 1 ). households have therefore found that they can now service more debt than used to be the case. note that there is no particular reason why household debt ratios should be the same across countries. has the rise in household debt left households over - exposed financially? in trying to judge this, there are a few considerations to take into account. first, at the same time as the household debt ratio has risen, so too have the assets held by households. some commentators might dismiss this as simply reflecting the fact that the additional debt has been used to inflate asset values. there is some basis for this in relation to housing assets but, even if we exclude housing and focus only on households β financial assets, the statement is still true. financial assets held by households have risen to the equivalent of 2. 75 years of household income, up from 1. 75 years β income in the early 1990s. second, the available data suggest that the increased debt has mostly been taken on by households which are in the strongest position to service it. for example, if we look at the distribution of debt by income, we can see that the big increases in household debt over the past decade have been at the high end of the income distribution ( graph 3 ). households in the top two income quintiles account for 75 per cent of all outstanding household debt ( graph 4 ). in contrast, households in the bottom two income quintiles account for only 10 per cent of household debt. if we look at the distribution of debt by age of household, we see that the increased debt has mainly been taken on by middle - aged households. the proportion of 35 β 65 year olds with debt increased significantly through to 2008, as households have been more inclined to trade up to bigger or better located houses, and to buy investment properties. households under 35 years of age ( i. e. the group that would typically encompass first | 0.5 |
in smaller or rural communities and zombie banks that continue to exist but have no competitive viability or exit strategy. m & a reform is currently a popular topic on the banking agency regulatory agenda with the process and standards regulators employ to review and approve transactions under intense scrutiny. recently some of the federal banking regulators have proposed or described new m & a policy approaches, with the department of justice currently reviewing how it enforces section 7 of the clayton act. 7 as regulators revisit the evaluation standards for bank m & a transactions under the statutory framework, we should consider whether the regulatory review process is fair, transparent, and consistent with applicable statutes. this should begin with an important threshold question β what are the identified shortcomings with the current process or standards, and are the proposed reforms targeted and effective to address these shortcomings? one concern that has been raised about the m & a regulatory approval process seems largely based on the misconception that a lack of application denials implies that jonathan kanter, β merger enforcement sixty years after philadelphia national bank β ( keynote address at the brookings institution β s center on regulation and markets event, promoting competition in banking, washington, dc, june 20 2023 ), https : / / www. justice. gov / opa / speech / assistant - attorney - general - jonathankanter - delivers - keynote - address - brookings - institution ; office of the comptroller of the currency, β business combinations under the bank merger act : notice of proposed rulemaking, β occ bulletin 2024 - 4, january 29, 2024, https : / / occ. gov / news - issuances / bulletins / 2024 / bulletin - 2024 - 4. html ; federal deposit insurance corporation, β fdic seeks public comment on proposed revisions to its statement of policy on bank merger transactions, β news release, march 21, 2024, https : / / www. fdic. gov / news / pressreleases / 2024 / pr24017. html. - 8standards are simply not rigorous enough, that the regulatory approval process has become a rubber stamp. this view ignores the reality of the filing process. these transactions require significant upfront and ongoing investment and commitment of resources. at the outset, this includes finding an appropriate acquisition target, conducting due diligence, and negotiating the terms of the transaction. once a target is identified, the banks must prepare appropriate regulatory filings, engage with regulators | corporation, the federal reserve, and the office of the comptroller of the currency recently passed an interim final rule to extend the applicability date of certain provisions in the recent amendments to the community reinvestment act regulations. the need for these delays to important and controversial elements of the final rule illustrates the rushed, overly complex, and unwieldy nature of the community reinvestment act rulemaking. see dissenting statement of governor michelle w. bowman, β statement on the interim final rule and final rule amending the community reinvestment act regulations β march 21, 2024, https : / / www. federalreserve. gov / newsevents / pressreleases / bcreg20240321a1. htm. michelle w. bowman, β the path forward for bank capital reform, β ( speech at protect main street sponsored by the u. s. chamber of commerce, washington, dc, january 17, 2024 ), https : / / www. federalreserve. gov / newsevents / speech / files / bowman20240117a. pdf ; β reflections on the economy and bank regulation β ( speech at the florida bankers association leadership luncheon events, miami, fl, february 27, 2024 ), https : / / www. federalreserve. gov / newsevents / speech / files / bowman20240227a. pdf ; β reflections on the economy and bank regulation β ( speech at the new jersey bankers association annual economic leadership forum, somerset, nj, march 7, 2024 ), https : / / www. federalreserve. gov / newsevents / speech / files / bowman20240307a. pdf ; β tailoring, fidelity to the rule of law, and unintended consequences, β ( speech at the harvard law school faculty club, cambridge, ma, march 5, 2024 ), https : / / www. federalreserve. gov / newsevents / speech / files / bowman20240305a. pdf. - 4embedded in these regulatory reforms, even if only in the form of a proposal, have already begun shaping the u. s. banking system. revisions to the regulatory and supervisory framework reflect policy decisions about not only the risk tolerance of regulators, but also the role of banks in the banking system and the broader u. s. economy. these policy decisions create incentives | 1 |
spreads. however, total turnover is less than that for the predecessor currencies taken together ; indeed one would be disturbed if that were not the case, since the rationale for cross trades and arbitrage between the former currencies has evaporated. that is why in most financial centres - and hong kong is no exception - dealing rooms have been slimmed down. this is the dividend in respect of resource saving which represents one of the net benefits of moving to a single currency, even though the forex traders whose skills are no longer in such demand may not see it that way. in the bond market we have witnessed the first hong kong corporate issue in euro, which generated good demand - primarily from european investors but also with significant interest from local buyers. in former times an issue of this sort in any of the parent currencies would probably have been rarer, because the individual markets lacked maturity. a significant consequence of the euro β s arrival is that there now exists a market with the potential for a critical mass of liquidity well beyond that which the individual parent currency markets ever managed to achieve. there is further evidence to support that view in provisional reports that global international bond issuance in euro this year has exceeded that of issuance in the parent currencies during the equivalent period last year, while the same comparison for non - euro european currencies shows a decline ( although i have not yet seen the formal statistics by which to confirm this ). this has been achieved despite the fact that the process of establishing the euro firmly in these markets is not yet complete. investors are still feeling their way : for example, deciding on a benchmark yield for the euro, when there is a significant spread of perceived credit risk even between member state governments, is one area where fund managers may still be finding their feet. although i am not close to it myself, it is my impression that the industrial and commercial sectors have also adapted well to the euro, although the amount of adaptation that has been required differs across individual cases. many may not be affected, but equally many may be experiencing a drift towards more quoting and invoicing in euro ; in some cases there will be pressure to do so which, on competitive grounds, they can ill afford to ignore. and there will be some who find themselves at a slight competitive disadvantage if they are bidding for business in a euroland country against a competitor from another euroland country ; previously both bidders had to take account of exchange | mr latter comments on the euro : first impressions from hong kong address by mr tony latter, a deputy chief executive of the hong kong monetary authority, at the seminar entitled, β five months of the euro : what does it mean for business in hong kong? β held in hong kong on 11 may 1999. introduction it β s probably true to say that the arrival of the euro passed without incident and almost without notice in hong kong. you might think this a somewhat ungracious statement with which to begin. but it certainly does not mean that the euro is unimportant to hong kong. what the statement tells us, first and foremost, is that the preparations for the euro by those sections of the community for which its arrival was of immediate importance - and here i refer principally to the financial sector and parts of the commercial sector - were totally successful in ensuring a smooth and hence unremarkable transition. i would like to congratulate all concerned on that achievement. at the other extreme, my opening remark could also be taken as confirmation that the arrival of the euro was of no direct importance to the man in the street, who may never even have seen a european currency ; even if he has, he will not have to confront the euro in physical form until the banknotes appear in 2002. i should like to spend a few minutes discussing two aspects of the euro. one is its impact on and implications for the conduct of financial and commercial business here, essentially at the micro level. the other relates to some macroeconomic policy aspects of the euro β s birth, which are also relevant to hong kong despite our being some 10, 000 kilometres distant. consequences for financial markets and trade as one would have expected, the wholesale financial markets switched quite rapidly to quoting and dealing mostly in euros instead of the constituent currencies, and many businesses also chose quickly to redenominate their relevant accounts, although a significant number have not yet done so. the choice is largely one of practicality and economy, rather than of economic significance, given that, formally, the parent currencies are now no more than subdenominations of the euro ; one might therefore expect people to opt quite quickly for the convenience of a unified denomination rather than to continue operating with up to eleven separate ones. so far as i have been able to ascertain, the euro is trading in foreign exchange markets just as one would expect a major international currency to trade - that is, with good liquidity and fine | 1 |
harvesh seegolam : development of financial markets and digital transformation in mauritius keynote speech by mr harvesh seegolam, governor of the bank of mauritius, at the bloomberg financial forum for the mauritius discovery series, port louis, 27 september 2023. * * * mr giuseppe netti, regional head for the middle east and africa, bloomberg members of the press ladies and gentlemen good afternoon it is a pleasure to be with you today at the bloomberg financial forum for the mauritius discovery series. at the outset, i would like to thank bloomberg for inviting me to share a few thoughts on development of financial markets and digital transformation in mauritius. this event is very timely as mauritius pursues several initiatives for the development of its financial market. digitalisation is ostensibly a game changer in a world characterised by datafication and increased connectivity. it entails a fundamental paradigm and cultural shift in the modus operandi of financial markets. the mauritian financial market has undergone a series of transformational changes over the years and is on par with modern financial markets in more advanced jurisdictions on numerous fronts : financial market legislations, instruments, institutions, and stakeholders. as you are aware, mauritius was ranked second place in subsaharan africa in the latest omfif absa financial market index. this index evaluates financial market development of 26 countries over six key pillars namely : market depth, access to foreign exchange, market transparency, tax and regulatory environment, capacity of local investors, macroeconomic stability and legal standards and enforceability. mauritius scored highly in each of these areas. this bears ample testimony to the success of all efforts spearheaded by the authorities. but we cannot rest on our laurels. more still remains to be done. we need to think outside the box. and to think big! most importantly, we need to be ready to leverage on the plethora of opportunities that digitalisation throws at us so that we may catapult ourselves in the vanguard of avant garde countries with sophisticated financial markets. as an international financial centre of repute, our jurisdiction subscribes to best practices and standards. mauritius joined the african bond indices ( ababi ) in january 2021. as you all know, the ababi is calculated by bloomberg and is administered by the african development bank. the inclusion of mauritius in the ababi index has helped to improve the overall credit quality of the ababi, the more so as mauritius is one of the only two investment grade sovereigns in africa. as | digital currency for retail and wholesale payments in mauritius. we are determined to make our country a leader in the region, where a well - regulated central bank - issued digital currency becomes a reality. i am pleased to announce that, as part of its financial literacy strategy, and to contribute to the emergence of a new breed of mauritian tech entrepreneurs, the bank will launch early next year a fintech competition. this competition will target college and university students and will serve as an incubator hub to develop apps that will benefit consumers of financial products and services. cybersecurity remains paramount for the bank. we are living in a world where cyberattacks on the banking industry are increasing and are being committed with more sophisticated tools. the bank is already monitoring the sw ift customer security programme. it is conscious that additional tools and precautions must be taken by the industry as a whole. the bank wishes to have an industry approach to this problem and proposes to come up with an enhanced cybersecurity framework for the banking industry. this framework will be based on the latest bank for international settlements and the financial stability institute standards and principles. my vision is a banking landscape where technology will redefine bank - customer interaction. i want a dynamic banking landscape without impediments for mobility, flexibility, accessibility, and security. let the future of the banking industry show the truth in the statement uttered by the great charles darwin. i quote : β it is not the strongest of the species that survives, nor the most intelligent that survives. it is the one that is the most adaptable to change! β end of quote. ladies and gentlemen, we need to own the change process of our country. whether you are from the business community or from the media, you all have a determining role to play in sketching this new economic and financial landscape. i hope that you are as eager as i am to dive into the future! on that note, i take this opportunity to convey to you, on behalf of the board of directors, staff members of the bank and in my own name, our warmest regards and best wishes for the upcoming festive period. i thank you for your attention. 5 / 5 bis central bankers'speeches | 0.5 |
10 - year bunds fell by less than 7 basis points. since then those rates have risen by about 2 basis points. the current low level of interest rates on long - term bunds is largely explained by investors that have sought safe assets in the context of sovereign debt tensions in the euro area. a third concern about low interest rates is that they undermine incentives for reform in the euro area. it is true that monetary policy decisions can have side effects β i mentioned a positive side effect earlier. yet we act for the euro area as a whole in line with our mandate, not for individual countries. if there is concern about reform incentives, we need to ask whether the framework of economic governance is being sufficiently enforced, and if not, what could be done to strengthen it. after all, ensuring sound fiscal and economic policies is ultimately the task of political authorities, not monetary authorities. economic policy in the same vein, we know that monetary policy alone cannot create a sustainable recovery. restarting growth ultimately depends on governments, business leaders and social partners working together. governments need to create the conditions that allow entrepreneurs to generate growth. there is no short cut to growth through debt. growth ultimately has to come from increasing the productive capacity of the economy β that is, through raising competitiveness and productivity. this country presents a good example of how to build solid foundations for growth. germany has competitive and innovative firms that are embedded in global value chains, notably the mittelstand. the country has enacted labour market reforms that have helped maintain price competitiveness, and that limit the impact of economic downturns on the young. and it has done this while working in cooperation with social partners, who understand that business models have to adapt to a globalised economy. in short, germany has oriented itself in a direction that in my view would benefit all euro area countries : being forward - looking, open to the world and focused on competitiveness and productivity. bis central bankers β speeches abraham lincoln famously said that β you cannot make the weak stronger by making the strong weaker β. similarly, the answer to the problems of the euro area is not to weaken its stronger economies. rather, it is to strengthen its weaker economies. and in fact, this is what we are seeing in the euro area today. most countries that lost competitiveness are regaining it. they are converging towards the most competitive countries, not vice versa. they have learned the fundamental lesson β for which germany is the model β that in a monetary union | any framework. meyer ( 2001 ) draws a distinction between a hierarchical mandate, which subordinates other objectives to the price stability objective, and a dual mandate, which places price stability and employment objectives on equal footing. like meyer, i prefer the dual mandate formulation and find it to be fully consistent with inflation targeting. formally, the dual mandate can be represented by a central bank loss function that includes both inflation and unemployment ( or the output gap ) symmetrically. here is part of a verbal reply that i made to a commenter on a paper about inflation targeting and asset prices that mark gertler and i presented at the fed β s jackson hole conference in august 1999, as published in the conference volume : β i want to correct the impression... that mark and i are somehow against lender - of - last - resort activities, which is absolutely wrong. i have studied the depression quite a bit in my career, and i think there are two distinguishing mistakes that the federal reserve made. the first was to allow a serious deflation, which an inflation targeting regime would not have permitted. and the second was to allow the financial system to collapse, and i absolutely agree with, for example, what happened in october 1987 and other interventions... one advantage of the inflation targeting approach as opposed, for example, to a currency board, is [ that ] it gives you considerably more scope for lender - of - last - resort activities. β ( federal reserve bank of kansas city, 1999, p. 145 ) bernanke ( 2003 ). gramlich ( 2000 ) made a similar observation and cited empirical evidence. particular, through two decades of effort the fed has restored its credibility for maintaining low and stable inflation, which - - as theory suggests - - has had the important benefit of increasing the institution's ability to respond to shocks to the real economy. the acid test occurred in 2001, when the fomc cut interest rates by nearly 500 basis points without any apparent adverse effect on inflation expectations. given the fed's strong performance in recent years, would there be any gains in moving further down the road toward inflation targeting? the most heated debates are said to occur on questions that are inherently impossible to prove either way, and i am afraid that this question gives rise to one of those debates, involving as it does counterfactual futures. personally, though, i believe that u. s. monetary policy would be better in the long run if the fed chose to make | 0.5 |
s liquidity management is fairly flexible and wellstructured to fulfill its lender - of - last resort role and meet both new turkish lira and foreign exchange liquidity requirement of the banking system effectively. we have acted promptly to contain the adverse effects of the global financial turmoil on the domestic economy. to ensure smooth operation of the new turkish lira money markets and to contain the potential volatility in short term interest rates, the monetary policy committee, judging that inflation will display a more rapid fall than envisaged before, has lowered the borrowing rates by 50 basis points and the lending rate by 100 basis points on november 19, 2008. this allowed the margin between the lending and borrowing rates to be reduced by a further 50 basis points. we are also aware of the significance of foreign exchange liquidity in the banking system and progressively put into effect necessary measures in order to get through this period with minimal damage. to that end, we have resumed our role to act as an intermediary in the fx deposit market as of 9 october 2008, and later doubled the transaction limits to 10. 8 billion usd. during times of confidence breakdowns among the participants of the financial markets, central banks can serve as a blind broker to intermediate in the foreign currency lending market. in this fx deposit market, banks can post their bids for foreign exchange without disclosing their identities. it also acts as a market of last resort as the banks can borrow directly from the central bank. along with the above - mentioned measures, we have also extended the maturity of the fx deposit borrowed by the banks from one week to one month, and reduce the lending rate from 10 percent to 7 percent for usd and 9 percent for euro in the fx market. needless to say, as the high level of volatility in global financial markets prevails, the central bank of turkey will sustain its vigilance and will stand ready to take additional measures prudently within its means in order to ensure the smooth functioning of the financial system. dear colleagues, in the last part of my speech, let me say a couple of words about the current financial turmoil. this recent episode provides a good example of how, in a financially integrated environment, a country specific shock can spill over rapidly to seemingly distant markets and countries. the problems, which started in sub - prime mortgage markets in the united states, have spread to the whole financial system all around the world and reached a point that threatens the global economic stability. this shows | that countries share not only benefits of financial integration but also the risks associated with it. in my opinion the most important lesson that we should derive from the current turmoil is the need for a global lender of last resort mechanism. in addition, with the cooperation of local and international authorities an early warning system should be constructed so that the fragilities in the international financial system would be identified and necessary and sufficient measures to fix them would be taken beforehand. in this context i believe that effective and efficient risk management and re - regulation will be the cornerstones of the new global financial architecture where the financial intermediation should not let the direct relationship between lender and borrower to be cut completely under various forms of effective risk diversification and securitization. sound domestic policies for a healthy banking sector are necessary but not sufficient for addressing contemporary challenges of the global world. in this respect, improving policy coordination at the regional and international level is a must. only then, we would be able to attain the optimal level of international financial regulatory rules and guidelines together with adequate tools that would match the complex nature of the international financial markets. with this consensus in mind, g - 20 leaders at their summit in mid november, agreed upon an important set of principles on reforming the international financial architecture. we strongly support the promotion of these principles that include strengthening transparency and accountability, enhancing sound regulation, promoting integrity in financial markets, reinforcing international cooperation and reforming international financial institutions. we must lay the foundation for reform altogether to ensure that a global crisis, such as this one, does not occur again. thank you. | 1 |
. and following this conference, the bank of thailand will embark on the process to articulate our medium - term plan to increase competitiveness of financial institutions, improve people access to financial services, ensure financial system sustainability, and take this opportunity to systematically correct problems which remain unresolved by financial reform implemented thus far. ladies and gentlemen our financial institutions must be the sources of our national strength and should be the main instrument in our development. in the past five years, significant and comprehensive reform of our commercial banking system has been achieved, with financial stability being restored ; corporate governance, strengthened ; competition within domestic banking system enhanced with the entrance of new competitors. at the same time, new financial services such as e - banking and other innovative instruments such as smart cards are on the offer to customers giving them more choices of financial services with greater qualities. we are therefore at this point ready to move forward to the next step β to articulate our vision for the future of commercial banking and financial services in thailand, taking into consideration powerful forces from the rapidly globalized international financial markets and the emerging financial landscapes within the region. ladies and gentlemen the new financial sector master plan must be realistic and address the fundamental problems that we have. i see no role for the plan to strive to be a financial center or to develop the financial sector for its own sake. thailand has a dual economic structure, with the modern industrial sector overlaying with the more traditional sectors outside bangkok which employed more than half of our population. thus, we should concentrate on improving the efficiency and stability of our domestic financial institutions to best serve our real sector. and our vision for thai commercial banking and financial services β if it is to be useful β must consist of two parts within a single integrated framework : one for our main banking activities and the other for those in rural areas. as we look at cross - country experiences on commercial banking and financial system inquiries, we were drawn toward the experiences of australia, canada, and south african. the south african β s standard bank has been quite innovative in using new technologies to reduce cost of providing banking services to the urban poor who were formerly thought of as un - bankable. similarly, the canadian financial services taskforce put much emphasis on β ensuring highest standard of quality and services to consumers, regardless of their income, and regardless of where they live ; urban or rural, and also to individual businesses, whether they are large or small β. on the other hand, the emphasis of the australian financial system inquiry | m r pridiyathorn devakula : commercial banking and financial services - our vision for thailand speech by m r pridiyathorn devakula, governor of the bank of thailand, at the conference on β modernizing our financial system : challenges for the new millennium β, bangkok, 23 january 2002. * * * your excellencies distinguished guests ladies and gentlemen, i would like to take this opportunity to welcome all of you to our conference on " modernizing our financial system : challenges for the new millennium ". i would also like to express our deep appreciation for the distinguished speakers who came all the way from australia, canada, hong kong, and south africa to share with us their expertise and knowledge on this very important topic. and, of course, to the world bank, our co - host, for help organizing the conference. our financial crisis in 1997 and its subsequent impacts highlighted the lesson of critical importance that dynamic and strong domestic financial institutions are vital to sustainability of development and growth. over the past 20 years, financial sector has been one of the major forces that support our progress and financial services share in our gdp has grown from a mere 3 percent to roughly 8 percent. it is the fifth largest industry in term of value added to our gdp, and currently employing more than 300, 000 of our workforce. nevertheless, despite such favorable development, there are some concerns : - first, in term of competitiveness of our financial institutions, there is room for improvement. the international institute for management development in its well - known wor l d competitiveness report ranked our competitiveness position in finance for the year 2001, 44th from the top 49 countries in the world. - second, in term of financial service availabilities, there are still some people lacking adequate access to the mainstream banking activities, particularly those in the rural area and those with low - income in the urban area. recent statistic reveals that 54 districts in thailand have neither branches of commercial banks nor those of specialized financial institutions. - third, there are inherent weaknesses within our system. we are overly dependent on commercial banks as the main channel of financial intermediaries with bank loans accounting for 70 percent of external funding in thailand, comparing to 20 percent in the us. although large corporate and the royal thai government have recently turned to capital market as their alternative sources of financing, bank loans remains dominant, making the economy particularly vulnerable to changes in commercial banking sector. these are the issues that we will be focusing on today | 1 |
have the findings of the review that is currently underway of the processes and procedures. it would seem reasonable to me to await this before embarking on another major assessment. ladies and gentlemen, before i close, let me make a couple of brief remarks on the nexus between financial integration and financial stability. you are undoubtedly aware that only a few weeks ago, we witnessed the largest ever loss incurred by a hedge fund, 6. 4 billion us dollars, suffered by the usbased fund amaranth advisors. fortunately, there was little market disruption. i mention this, because this episode should serve as a solitary reminder that the channels through which financial innovation, development and integration can potentially affect the financial system β s resilience are manifold, diverse, and complex. one could expect financial integration to affect financial stability in two directions : on the one hand, there is an increased risk of contagion and a larger exposure to common shocks ; on the other hand, there are more opportunities for funding as well as for risk - sharing and risktransfer. the net effect is difficult to gauge. in my view, it is likely to be positive for the stability of the financial system. what is certain, however, is that, in the case of banking strains, the likelihood that they will remain confined within domestic borders is less in comparison with the past. therefore, it is necessary for the supervisory framework as well as for the arrangements for financial stability in the eu to be able to cope effectively with the management of a possible crisis of crossborder banking groups. these issues are a central main topic of discussion at the moment in the policy - making circles in the eu and, indeed, globally. in europe, a lot of progress has been made in clarifying the roles of, and the procedures to be followed by, the competent authorities ( central banks, banking supervisors and ministries of finance ) in crisis situations. in addition, the degree of preparedness of the authorities to manage a situation of stress can be enhanced through crisis simulation exercises. however, there are other areas, such as deposit insurance schemes and the winding - up of financial institutions, where there is room for regulatory intervention at the eu level. reflections on possible legislative proposals in this regard are underway. the general conclusion from all these observations is that any future modification to the supervisory framework should follow a holistic approach, carefully considering all the implications of any such change for all the components of the financial safety net. the stakes are indeed high, as | jean - pierre roth : economic prospects for 2005 in a subdued european environment summary of a speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the β les rencontres au chateau β meeting, sierre, 22 february 2005. the complete speech can be found in french on the swiss national bank β s website ( www. snb. ch ). * * * although the swiss economy expanded by almost 2 % in 2004, this was not sufficient to reduce unemployment significantly. hopes for an improvement in this respect are thus focused on this year. however, they might unfortunately remain unfulfilled once again. at the end of 2004, there were already signs of a slowdown in growth caused by the weak dollar and persistently high oil prices. these factors also played a key role in the national bank's decision to leave interest rates unchanged. overall, the international economy developed in line with expectations during the first two months of 2005 : the us and asia saw further growth, while europe was confronted with increased difficulties. the us economy is burdened with high budget deficits and the current account deficit. in asia, the chinese economy is booming, whereas japan is still struggling to find its way back to the growth path. the monetary situation in asia, too, appears less than stable. in europe, the economic environment presents a rather dim picture. germany, italy and the netherlands are expected to see rather modest growth, while the outlook for france is more upbeat. the uk is the exception : since the mid - 1990s, the country has emerged as the growth model for europe. for switzerland, the sluggish development in europe is especially regrettable, as the swiss export sector usually serves as the engine for economic recovery. all in all, switzerland's export industry is well positioned to benefit from higher demand from abroad. switzerland has been able to reduce its production costs per unit in the past few years, and the swiss franc even depreciated slightly versus the euro since the launch of the single currency. as regards domestic demand, consumer sentiment remains satisfactory overall, but this should not be expected to stimulate growth decisively. while construction activity is robust, it has lost some of its momentum. investment in equipment is still brisk, and the recent modest slowdown should not last too long. on the whole, the swiss economy is still on its growth trajectory, but it lacks stimuli from abroad. this situation is the same as the one underlying the | 0 |
##cussions on the labour market. compared with other countries, the impact on employment in italy is mitigated by the freezing of layoffs and ample recourse to wage supplementation, which has affected around 7 million workers so far, almost half of all private sector payroll employees. labour market participation has decreased by almost 300, 000, discouraged by the worsening economic outlook and the restrictions on mobility and production that remain in some sectors. against this backdrop, the unemployment rate ( which declined to 8. 4 per cent in march, almost 1 percentage point lower than in february ) does not provide a full picture of the true impact of the epidemic. the fall in economic activity has reduced new employment opportunities, affecting above all young people entering the labour market for the first time, seasonal workers, fixed - term employees, and apprentices. it is having a greater impact on the jobs traditionally performed by self - employed workers and on undeclared labour, which is still too widespread in our country. in the short term, social safety nets are countering the impoverishment of large portions of the population and a widening of economic differences, the governor β s concluding remarks annual report 2019 banca d β italia increased by the greater presence of low - income workers in the most affected sectors. limits to the availability of liquid financial assets among lowerincome households can amplify the consequences of the shock, leading to a significant increase in the number of households unable to maintain an acceptable standard of living. the recession and the measures adopted to mitigate its consequences are having a strong impact on public finances. for 2020, the government β s macroeconomic outlook envisages a deficit of 10. 4 per cent of gdp and an increase of 21 percentage points in the debt - to - gdp ratio, to 156 per cent. such a burdensome debt legacy requires full awareness of the scale of the challenges ahead. italy β s economy must find the strength to break free from the inertia of the past and to restore a capacity for growth that has been stunted for too long. despite the deep wounds inflicted by this crisis and the lingering effects of the previous ones that have yet to be absorbed, there will be no shortage of opportunities in the future, and italy has the means to exploit them. returning to the path of development the pandemic and the recession have opened up extremely uncertain scenarios that make it very difficult to map out what form future equilibriums will take. uncertainty is another reason to | the task of maintaining an equitable representation of shareholders over time and will strengthen the ibrd legitimacy as a global player. the formula should reflect global economic weights and the contributions to the bank β s development mission. rewarding support to this mission is essential to building up adequate incentives for future contributions. any discussion of future resource needs to be preceded by a thorough conversation on the future positioning of the bretton woods institutions. a long - term vision of the role of multilateral financial institutions β and of the wbg in particular β needs to take into account the importance of engaging in the financing of global public goods and the benefits of cross - border integration. this requires the promotion of regional cooperation efforts. we should at the same time recognize that official development assistance represents only a small portion of global financial flows for development. the role of the wbg in enhancing the use of domestic resources β through technical assistance β should be intensified, and ifc and miga should bis central bankers β speeches strengthen their efforts to catalyze private sector capital into development projects. the time is ripe for updating the ida financing model. 3. a partner in climate change financing as we approach the cop21 meeting in paris, where decisions need to be taken to step up international action on climate change, we envision an important role of the wbg as a key partner in both promoting the transition to a β greener β economy and alleviating the impact of climate change on developing countries. this effort requires financial resources that largely exceed those available to development institutions and calls for combining limited public resources with larger private sources of capital. the wbg is strategically positioned to contribute to this effort. the problem of climate change falls in the domain of global public goods and posits complex intergenerational questions. as a global financial organization, the world bank is well - suited to address both these issues. furthermore, as a multi sector development agency, the bank should make use of its expertise in a broad array of policy areas to provide sound evidence that climate - smart projects are good development projects. 4. a sustainable development organization we welcome the substantial increase in wbg commitments. it is now time to deliver with an effective implementation of wbg projects. large, transformative development solutions require a focus on results and appropriate fiduciary and safeguards policies to manage risks. the ibrd should focus on financing long - term structural projects, even if the shift toward investment lending is likely to reduce the growth of the ibrd | 0.5 |
, gaining the public β s understanding of the bank β s policy intention may strengthen the process. the tax effects are irrelevant for the consensus forecasts data for six to ten years ahead. bis central bankers β speeches while the bank has been increasing its efforts to promote communication, i believe there is still room for further enhancement of communication practices. the results of various surveys showed that there are differences among households, firms, as well as market participants and economists in their understanding of the qqe framework and their views on achievability of the 2 percent target. in this regard, the bank could consider communicating more effectively with targeted approaches that take these differences into account. for example, the bank needs to review published documents to include clearer language and explanations. increased contact with a range of social groups and local communities in collaboration with the bank β s 32 branches and 14 local offices, as well as more effective use of the media and its web site, would likely be effective in reaching out to firms and the general public. on the other hand, for market participants and economists, increased dialogues to explain forecasting methods and the bank β s view backed by analytical output would be a powerful tool to enhance understanding of the bank β s conduct of monetary policy. a successful example of such communication practices was seen during april - july 2013, when the jgb market became unstable. the bank responded by holding several dialogues with market participants, which led to the adoption of a flexible operational framework and helped to stabilize the market. all such enhanced communication efforts are considered to be essential steps to achieving the 2 percent target in a stable manner. this brings me to the end of my speech. thank you very much for listening. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | to come, we are turning again to many of the same voices we heard from earlier to learn how the covid pandemic has affected your communities and what lies ahead. 1 / 1 bis central bankers'speeches | 0 |
which it should be designed to avoid any excessive accumulation of risk during good times and prevent binding capital constraints from adding to deflationary pressures during bad times. it is important to better outline the relative role of monetary policy and financial regulation for price and financial stability, both in terms of strategies and institutional design. in today's integrated financial world, international coordination at appropriate level seems desirable for policies to be effective in this respect. in europe, the organisation of banking supervision at quasi purely national level contrasts with financial market integration and the existence of cross - border financial institutions. the current crisis raises all these challenges much more strongly than before. i am convinced that academic research in these domains will be boosted in the near future and that new and clarifying insights will result from this work. i sincerely hope our conference can help stimulate research in these directions. | guy quaden : new views on firms β investment and finance decisions opening address by mr guy quaden, governor of the national bank of belgium, for the national bank of belgium conference, brussels, 27 - 28 may 2002. * * * ladies and gentlemen, i am really pleased to welcome you here at the national bank of belgium 2002 conference. my wish, one of my wishes, since i have become governor, and it is shared by the members of our board, is to stimulate the scientific co - operation between the bank and the academic community and more in particular the belgian academic community in a modus operandi of mutual respect and independence. two years ago, the national bank of belgium organised a conference on β how to promote economic growth in the euro area β to celebrate its 150th anniversary. on that occasion, i announced that the bank would call an international conference every two years to encourage the debate between academics and professional economists working in central banks and in other policy making institutions. at that time, the bank also decided that a joint research project between its own economists and belgian academic researchers would precede the conference. the project started in march 2001 and ends with the current conference where the results of the research are presented. the bank requested the belgian academic community to express its interest in participating in the joint research project by submitting a proposal concerning the content of an analysis on one or several sub - items of the general project, preferably with an empirical content making use of available panel data from firms β balance sheets and other sources. all in all we received nineteen proposals from the academic community. since at this conference also foreign speakers are invited, we were forced to select a limited number among the proposals we received. this selection was based on a number of criteria but, especially, on their compliance and coherence with the overall research project. allow me to explain the reasons that have led to the particular choice of the topic of the conference. everybody will acknowledge that investment is a key variable in economics. capital accumulation not only plays a pivotal role in determining the process of long - run economic growth, as was clearly evidenced by our previous international conference two years ago, but it is also an important driving force of business cycles. although investment represents a relatively minor fraction of gdp, a major part of output fluctuations is driven by firms β investment behaviour. for the conduct of monetary policy, it is, therefore, crucial to understand the mechanisms that drive an essential component of the interest sensitive expenditures, and more in | 0.5 |
of financial institutions β risk management framework for addressing the year 2000 problem ( hereinafter simply β the problem β ). 1 on august 19, 1997, the checklist was also distributed to financial institutions to help them in their own evaluation of their action plans. the checklist emphasizes the significance of each financial institution β s understanding and awareness of the problem, and calls for the commitment of each institution, including the top management, to its action plans. in proceeding with the action plans, each institution is advised to fully assess the effects of the problem, carefully arrange the scheduling of the plans, and complete renovation and testing prior to the implementation of the action plans. the checklist also stresses the importance of other matters including ( 1 ) the monitoring of the progress as to the implementation of the action plans, ( 2 ) the scrutiny of legal responsibilities of outside vendors, and ( 3 ) the establishment of contingency plans. 1 many computer operating systems and applications use six - digit codes for dates - - date fields - - comprising two digits for the year, two digits for the month, and two digits for the day ( for example, december 31, 1999 reads 991231 ). with such a coding system, the code for the year 2000 will be β 00, β which may be interpreted as the year 1900, not 2000. this will cause errors in date - sensitive calculations and other issues. such problems are referred to as the year 2000 problem. if measures are not taken to address the problem, normal operations of financial institutions will be disrupted, which would lead to disturbances in payment and settlement systems nationwide, the effects of which may spread to other industries. * * * nb this review is available on the bis worldwide web site ( http : / / www. bis. org ) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ | learn from iliesa β s hard work, courage, determination and achievements to continue to strive for the best. you can achieve the most difficult of tasks if you set your mind to it. you are fiji β s future. if you have the will to do so, you will surely succeed. take that lesson from iliesa. we believe that this is the highest level of recognition that we at the reserve bank can give someone. what better way than to be featured on our fijian currency, be known to the rest of the world and promote fiji to the rest of the world. on behalf of the board, management and staff of the reserve bank of fiji, i once again congratulate iliesa on his magnificent gold medal win at the london 2012 paralympic games and wish him well for the future. i also extend my sincere appreciation and gratitude to you all for taking time out to celebrate this occasion with iliesa. vinaka vakalevu and god bless fiji! bis central bankers β speeches | 0 |
of public works contracted in the donan area has recently picked up as well. on the other hand, domestic private demand, namely, business fixed investment and private consumption, has continued to weaken amid persisting sluggishness in corporate profits and the worsening employment and income situation. looking at the june tankan ( short - term economic survey of enterprises in japan ) released earlier this month, firms'fixed investment plans for fiscal 2009 decreased by almost 20 percent year on year. regarding private consumption, sales of electrical appliances have increased and the number of new passenger - car registrations has recently picked up. however, sales at department stores and supermarkets have continued to be on a declining trend. outlays for travel have also continued to decline. as these developments show, a sharp drop in exports since last autumn and the subsequent decrease in production have started to adversely affect domestic private demand with a lag. at present, a recovery in exports and production and the weakness in business fixed investment and private consumption seem to be in a tug of war. b. the outlook for japan's economy i would now like to move on to the outlook for japan's economy. as i mentioned earlier, there are currently both upward and downward pressures in japan's economy. regarding which will prevail, the bank's baseline scenario projects that the upward pressure will outweigh the downward, leading the economy to start recovering from the latter half of fiscal 2009. global financial markets are expected to regain stability and overseas economies to start to recover, and in japan the aggressive fiscal and monetary policy measures are likely to have positive effects. in addition to an increase in exports, business fixed investment and private consumption are therefore expected to be on a gradual recovery path. stock prices have continued to fluctuate, but appear to have picked up from the sluggishness observed some time ago. the nikkei 225 stock average has recently been around 9, 500 yen, up by more than 30 percent compared with early march when it recorded the lowest level since the bursting of the bubble. according to the economic watchers survey and consumer confidence survey, the pessimism of firms and households regarding economic conditions has subsided since this spring. the june tankan also showed that business sentiment, especially of manufacturing firms, has stopped deteriorating. these survey results seem to basically reflect recent signs of a leveling out of the economy and expectations of positive effects from various policy measures. nevertheless, the question whether the degree of improvement in | paper form but also its electronic form. government agencies from singapore are working with the chongqing port and logistics office to conduct a pilot to digitalise bills of lading, including the mtbl, using tradetrust. tradetrust is an interoperable framework to support the exchange of electronic documents. it uses distributed ledger technology to allow trade actors to establish the authenticity of a digital document. if we can scale the use of tradetrust within the cci - ilstc, banks will be able to use these electronic documents for trade financing and we can effectively eliminate the risk of 1 / 3 bis central bankers'speeches fraudulent mtbls. more broadly, the greater use of electronic trade documents will make verification checks easier, reduce the incidence of fraud and human error, and ultimately lower costs. but to achieve this, all stakeholders need to adopt digital tools and upgrade their trade practices. we need close collaboration among government agencies and private sector players. there are promising signs of progress. root ant, a singapore fintech firm has signed an agreement with the bank of china ( boc ) to serve as the trade financing platform on the singapore side, enabling traders, logistics companies, and boc β s branches to exchange electronic trade documents under the cciilstc for trade financing purposes. i look forward to more of such digital trade pilots bearing fruit over the next couple of years. collectively, these will transform how trade is conducted on the cci - ilstc. our second focus area is green finance. china and asean will require significant green financing to make our transition to a more sustainable future. it is estimated that to achieve carbon neutrality, china will require more than 500 trillion rmb or us $ 78 trillion in green and low carbon investments over the next 30 years. asean will require some us $ 2 trillion in green investments over the next 10 years. as an international financial centre, singapore has made serving asia β s transition towards sustainability through green finance a key priority. singapore can play an important role in supporting china β s green financing needs. there is a deep green financing and investor pool based in singapore looking for green assets in asia. during 2017 to 2020, domestic and foreign corporates have successfully issued us $ 8 billion of green, social and sustainability linked bonds in singapore. how can singapore and chongqing work together to mobilise green financing and investments in a safe, sound, and orderly manner? let me offer four suggestions. first, we must help corporates understand the value of green | 0 |
10 years. we believe that by partnering with the indian institute of banking and finance, new programs and new initiatives can be developed in future. c ) advanced academic and management development programs β the ksms has responded to new demand - driven capacity needs of the financial services sector by introducing advanced academic and management development courses, including the following programs : ( i ) a masters degree in banking and finance through a grant from the african capacity building foundation ( acbf ) ; ( ii ) postgraduate diploma in financial management in collaboration with moi university targeting the eastern and southern africa region ; ( iii ) academic programmes through a collaborative agreement with the jomo kenyatta university of agriculture and technology, targeting the financial services and other related disciplines ; and lastly, bis central bankers β speeches ( iv ) a multilingual diploma in business sciences and islamic financial services approved by the ministry of higher education. ladies and gentlemen : moving forward, cbk and the industry players are in the process of developing a national strategy for financial education and consumer protection in kenya as another avenue of taking financial inclusion to the next frontier. the starting point for financial education is at the level of individual players β the agents for disseminating the knowledge. i would like to commend the indian institute of banking and finance for organizing annual conferences like this which present an opportunity for banks to not only share experiences but to also exchange ideas on innovations and other emerging issues that require bank staff to prepare themselves to handle. this is an important platform to also inform the regulators the emerging challenges and opportunities not only for growth but further improvements on capacity for growth. i urge other similar institutes such as the kenya institute of bankers to embrace the idea as an avenue to bring together hr practitioners and policy makers in the banking sector to share ideas on innovations that require proactive hr training and development. this is an important avenue to transform institutions and create capacity for growth. successful banks are those that proactively prepare their staff to cope with the ever evolving trends in the global financial scene. with these few remarks, let me wish all participants of the 11th bank human resources conference, fruitful deliberations and a joyous stay in kenya. thank you. bis central bankers β speeches | opening remarks to the bank of england β independence β 20 years on β conference remarks given by mark carney, governor of the bank of england bank of england β independence β 20 years on β conference, fishmongers β hall, london 28 september 2017 all speeches are available online at www. bankofengland. co. uk / speeches welcome to this conference marking 20 years of independent monetary policy making in the uk. we are here because long and varied experience has shown that price stability is the best contribution monetary policy can make to the public good. high inflation hurts the least well off in society the most. it distorts price signals, inhibits investment, and ultimately damages the economy β s productive capacity. equally, deflation imperils growth and employment, and, in the extreme, leads to financial ruin and economic collapse. the happy medium is low, stable and predictable inflation. a little inflation greases the wheels of the economy, and it gives monetary policy space to deliver better outcomes for jobs and growth when shocks hit. recognising the value to society of price stability is one thing, delivering it is quite another. the bad old days prices were anything but stable during the 1970s and 80s. with the collapse of bretton woods in 1971, uk monetary policy lost its nominal anchor. there followed a series of botched experiments, with targets for incomes, monetary aggregates and the exchange rate. the costs of such failures were enormous, with prices rising by 750 % in the twenty - five years to 1992, more than over the previous two hundred and fifty years. unemployment was high and growth volatile. the inflation target rose from the ashes of the erm debacle twenty five years ago this month, marking the point when price stability became the unambiguous objective of uk monetary policy. the new framework was a success, though only a partial one. that β s because, with interest rate decisions still made by the chancellor, it wasn β t fully credible. experience teaches that political control of monetary policy decisions suffers from time inconsistency, in which policymakers promise low inflation, then go for faster growth and ultimately achieve neither. conversely, welfare can be improved if governments first choose the preferred rate of inflation and then delegate operational responsibility to the central bank to achieve it. all speeches are available online at www. bankofengland. co. uk / speeches the uk framework for monetary independence so it was in 1997 when gordon brown boldly gave the bank of | 0 |
the risk of our getting burnt. 5 / 5 bis central bankers'speeches | mojmir hampl : theory lagging behind practice speaking points by mr mojmir hampl, vice governor of the czech national bank, for the central bank of malaysia ( bank negara malaysia ) conference β the future direction on monetary policy frameworks and strategies in emerging market economies β, kuala lumpur, 21 may 2014. * * * ladies and gentlemen, thank you for your kind invitation to this conference. it is an utmost pleasure to be here today and to speak in front of such a distinguished audience. the issues being discussed here are important and i will echo many of the points already raised. it seems to me that we all to some extent share a feeling that there are many good questions, but sometimes we don β t have that many good answers to them. and because i don β t either, i will use the standard escape tactic of those who find themselves intellectually in dire straits β if you don β t have a smart answer yourself, use a quote by someone really smart and you might look smarter. so i will begin with one of the famous quotes by albert einstein : β in theory, theory and practice are the same. in practice, they are not β. yes, exactly. and it is true not only in physics, but also in the areas of monetary policy and financial stability. in theory we central bankers believe we can control inflation, or the sustained growth of the general price level. but in practice we tend to say that there are prices that are beyond the control of monetary policy, that are somehow disconnected from the conduct of monetary policy, or that are β completely different β. real estate prices, asset prices etc. interesting, isn β t it? and conversely, in practice we know what financial instability looks like and what it is. but in theory we haven β t created a rigorous operationalised theoretical system for achieving financial stability, or even for defining financial stability. there is no single, universally accepted definition of financial stability, as quantifiable as the definition of price stability. and what is worse, many believe there will never be one. again, quite interesting. so this, in my eyes, is the first constraint we face. at least in the area of financial stability, theory lags behind practice. inflation targeting is a formalised, practical and handy system, while β financial stability targeting β is not, despite huge steps forward recently. and i can β t resist dreaming of a day when we have a system in the financial stability area that | 0 |
##oquence in several fora β including the g30 conclaves. in my brief address today, i will make a few observations on india β s prospects for growth with stability in both short and medium terms, by highlighting a few important aspects. during the discussion that follows, we could interact on the major focus, as well as specifics, that is of interest to the gathering today. short - term prospects for policy purposes, real gdp growth has been estimated to be in the range of 8 to 8. 5 % for the year 2008 - 2009 ( year ending march 2009 ). there are several reasons why this expectation is realistic. over the last five years, the indian economy has expanded on an average at 8. 7 percent per annum. in fact, gdp growth was 9. 6 percent in 2006 - 2007 and has moderated to an estimated 8. 7 percent in 2007 - 2008. this moderation is partly attributable to preemptive monetary policy actions that sought to dampen excessive demand pressures, while continuing with enabling environment to enhance supply - side responses in terms of investments. while there is a growing importance of global factors, india β s growth is mainly driven by domestic demand and supply factors. gross domestic savings continue to be around 35 % of gdp and available evidence points to continued increases in productivity. the realisation of the expected growth in the current year assumes normal monsoons and a slow - down in global growth by not more than what is currently assessed. monetary policy in india accords appropriate priority for price stability in recognition of its significance for the large segment of the poor who have no hedge. further, the policy recognizes that high growth benefits the poor with a lag, while inflation adversely affects them instantly. hence the current high - level of inflation is totally unacceptable, especially in terms of impact on inflation expectations. the monetary policy, however, reckons the complexities of the current bout of inflation. accordingly, the recent emphasis is on liquidity management with option to take recourse to all other measures, as necessary, so that demand pressures are contained consistent with supply - side responses from the markets and from the central and the state governments. the annual policy plans for a reduced rate of money supply in the range of 16. 5 to 17 % in 2008 - 2009, while correspondingly placing growth of non - food credit at around 20 %. as per indications, the currently elevated level of the wholesale price index may start moderating noticeably as monetary | issuance and external review cost of green bonds and loans, and concessionary tax treatment on the interest income and trading profits derived from eligible debt instruments. finally, a vibrant and competitive climate finance ecosystem needs to be supported by data, talent, and awareness. we are working with other regulators and the industry to improve data accessibility and analytics capability, and nurturing talent through a green finance training scheme and regulator - approved knowledge framework. as a responsible investor and major global asset owner, the hong kong monetary authority ( hkma )'s exchange fund has been leading by example by integrating sustainability into our investment strategy and prioritising green investments over others with a similar long - term risk - return profile. we have been investing in green, social, and sustainability bonds since 2015 and increased the number of esg - themed mandates in our externally managed portfolios. additionally, we seek to collaborate with like - minded 2 / 3 bis - central bankers'speeches investors and international organisations to promote esg standards in the investment process. in closing, given the limited amount of time today, i could only briefly touch on two key themes in the broader opening up of china's capital markets. at the hkma, we are continuously working with mainland authorities and the industry towards new policy breakthroughs to better serve global investors and support the development of onshore markets. i warmly welcome your views and ideas on ways to further strengthen the connectivity between china's and hong kong's financial markets. thank you, and i wish today's conference a great success. 3 / 3 bis - central bankers'speeches | 0 |
##90 fy2000 fy2015 0. 0 0. 4 0. 8 1. 2 1. 6 2. 0 2. 4 competition index ( p - mc ), % pts 0. 0 0. 4 0. 8 1. 2 1. 6 2. 0 2. 4 competition index ( p - mc ), % pts note : 1. z - score is an indicator that measures a financial institution's business stability and is defined as the ratio of a financial institution's lossabsorbing capacity to the volatility of profits. 2. the left - hand chart shows the cumulative effects of markup ( p - mc ) changes on the z - score, by using the following estimated equation : z - score = ( 30. 18 Γ ( p - mc ) οΌ 11. 52 Γ ( p - mc ) 2 ) / ( 1 οΌ 0. 84 ). 3. the shaded area indicates the range over which a decline in the competition index ( p - mc ), suggesting more intense competition among financial institutions, leads to a decline in the z - score and hence lowers a financial institution's business stability. 4. density in the right - hand chart is estimated by using the gaussian kernel function. 5. for details, see the april 2017 issue of the financial system report. natural rate of interest and deposit and lending margins chart 13 natural rate of interest and nominal interest rates decomposition of deposit and lending margins % % lending spread ( a - b ) loan interest rate ( a ) deposit spread ( b - c ) market interest rate ( b ) deposit and lending margins ( a - c ) deposit interest rate ( c ) natural rate of interest - 2 - 2 cy 85 cy 85 note : 1. loan interest rate is an average contract interest rate on short - term loans outstanding. aggregate of domestically licensed banks. market interest rate is the 1 - year government bond yield. latest data as at the july - september quarter of 2017. 2. natural rate of interest is estimated following laubach and williams ( 2003 ). latest data as at the april - june quarter of 2017. source : bloomberg ; ministry of finance ; boj. chart 14 number of bank accounts per capita : international comparison number of settlement accounts ( excluding savings accounts ) based on internationally comparable statistics 3. 5 3. 0 number of accounts ( * ) 2. 5 2. 0 1. 5 1. 0 0. 5 italy germany france u. k. netherlands belgium | the commercial banks, in terms of areas of operation. the dfis do not hold any competitive advantage over banks and hence the compulsion to tag institutions as dfis to enable them to pursue development finance, no longer exists. i feel that commercial banks are in a perfect position to fulfill the objectives which were originally intended for the dfis. 27. your institution has inherited the soul of a dfi from idbi limited. what is required is a transformation in the mindset of the employees to see through this period of transformation. i strongly believe that rather than seeking any reversal of status for your institutions as a dfi, the management and the unions of idbi bank should look ahead to the future. as responsible unions, you have a very constructive role in motivating the employees of your institution. rather than resting on past laurels, you have to gear up to face the future. the achievements over the past 50 years should only be used for drawing inspiration and motivation for the hard work that you have to do in the next 50 years. as employees, all of you have to update yourselves with the latest skills, technology, etc. to be able to deliver up to the optimum level. the management and the unions have to collectively strive to ensure that the impressive legacy that the institution has inherited is sustained even in its new avatar as a commercial bank. there is enough scope for commercial banking in the country, if the interest for new bank license despite some of the onerous requirements on capital, financial inclusion, psl is anything to go by. the need for the bank is to identify the available opportunities and apply your collective might towards attaining it. idbi is a well reputed brand which does not need any introduction. going forward, you must look to leverage upon your brand and broaden your customer base before new banks poach them. 28. you may have to unlearn and relearn few new things to succeed in the even more competitive business environment that is likely to unfold shortly. it is imperative for the top management and for the employees to work collectively for the progress of your institution. i am sure the able leadership of the united forum of idbi officers and employees would ensure that the staff is motivated to handle new challenges and the institution can retain its glorious tradition in perpetuity. 29. i thank you for inviting me on this occasion and giving me a patient hearing. i wish you all the very best for all your future endeavors. bis central bankers | 0 |
the economic and the monetary side. as i said yesterday, on behalf of the governing council, our monetary policy stance is still on the accommodative side and the medium term outlook for price stability remains subject to upside risks. i said that at the same time, the financial market volatility and reappraisal of risk i have described this situation in an earlier intervention. see j. c. trichet ( 2005 ), β monetary policy and β credible alertness β, β speech delivered at the panel discussion β monetary policy strategies : a central bank panel β at the symposium sponsored by the federal reserve bank of kansas city, jackson hole, wyoming, 27 august. of recent weeks have led to an increase in uncertainty. given this high level of uncertainty, it is appropriate to gather additional information and to examine new data before drawing further conclusions for monetary policy in the context of our medium term oriented monetary policy strategy. that being said, our β constant steady alertness β, and determination to act in the future whenever it is necessary makes no doubt in the mind of observers. by acting in a firm and timely manner we will ensure that risks to price stability over the medium term do not materialise and that medium term inflation expectations remain firmly anchored in line with price stability. particularly in times of high financial market volatility this continued solid anchoring of inflation expectations is one of the most precious assets on which we can draw to rebuild and consolidate the confidence which ultimately will itself permit the return to a normal functioning of the financial markets. i thank you for your attention. | lorenzo bini smaghi : tommaso padoa - schioppa β economist, policymaker, citizen in search of european unity speech by mr lorenzo bini smaghi, member of the executive board of the european central bank, at a conference in memory of tommaso padoa - schioppa, european university institute, badia fiesolana, 28 january 2011. * * * francesco papadia coordinated the preparation of the speech with contributions by ignazio angeloni, ettore dorrucci, mauro grande, gabriel glockler, francesco mongelli, francesco papadia, pierre petit, massimo rostagno, daniela russo, pierre van der haegen, chiara zilioli. it is an honour for me to deliver this speech today in honour and memory of tommaso padoa - schioppa. this speech has been prepared by a group of colleagues who immediately volunteered to contribute as soon as they learned that i had been invited to give such a speech. they were colleagues of tommaso during his time at the ecb and i am very pleased to be their porte - parole today. tommaso padoa - schioppa had a very rich and complex personality, which i can β t sum up in a few minutes or a few paragraphs. so i β ll talk about him as an economist, a policy - maker and a citizen. the leitmotif in all these areas of tommaso β s life was a kantian quest for european unity, a mission to which he dedicated his professional and private life. the economist if there is one trait that stands out throughout tommaso β s career, spans all his activities and engagements, all his speeches and books, it is the energy and determination with which he pursued his convictions and causes. once tommaso started β owning β a new idea, he would relentlessly seek out all its implications and communicate it to all possible fora and audiences until the impossible became possible, and the inconceivable started making sense. he always did so with rigour, but also with a very personal flair ; some called it the β tps style β. tommaso defined himself as a β practitioner β, a policy - maker, but his action was always deeply and unambiguously grounded in economic thought. at the same time, he shared keynes β view that practical men are often slaves of some defunct economist. | 0.5 |
##nk the role and set - up of monetary policy after the crisis. where are we headed? and how do we get there? i see three main elements of monetary policy after the crisis. for the monetary policy framework, the crisis has shown that the monetary analysis can play an important role in signaling financial imbalances and vulnerabilities. it is an important input in a strategy of β leaning against the wind β. for the operational framework for monetary policy, it is crucial that after the crisis we will return to the principles that guided the framework before the crisis. in particular, we need to return to a clear and transparent separation principle between monetary policy stance, on the one hand, and liquidity management, on the other hand. finally, there is a clear need for a sustainable institutional framework for the euro area. this framework will need to center on budgetary discipline and sound economic governance. in the long - run, as a closing piece, i see joint financing through euro bonds as the only sustainable solution to self - fulfilling liquidity / solvency problems in individual member states and domino - effects / contagion between euro area member states. how do we get there? in a transition to a post - crisis monetary policy, it is important to exit gradually from unconventional and conventional instruments that are being used during the crisis. in this phase, communication will play a very important role. and fiscal and prudential policies need to play a primary role in addressing problems that originate in the fiscal and financial spheres. let me conclude. as stan fischer said in a recent tinbergen lecture in utrecht, the big question monetary authorities face in these times is β what do you do if policymakers that should tackle problems do not act sufficiently? my answer is that monetary policy cannot solve the crisis, since it is rooted in fiscal policy and the vulnerability of the banking system. all monetary policy can do is to buy time, at the cost of stretching its mandate to the limit, if not beyond. bis central bankers β speeches | policy decisions through liquidity management. with these principles in mind, let me turn to the monetary policy responses to the crisis. at a very general level, the ecb used conventional tools β an aggressive easing of the policy rate β to counter deflationary pressures and unconventional tools, which aimed at restoring a well - functioning transmission mechanism. these policies were pursued in four phases. 1. between july 2007 and the fall of 2008, the ecb responded to disruption in interbank markets by expanding its liquidity provision to commercial banks. 2. between the fall of 2008 and end - 2009, as the financial crisis escalated and turned from a liquidity crisis into a solvency crisis, the ecb lowered its policy rate in quick steps to an unprecedentedly low level. in addition, it also employed a range of unconventional tools β such as fixed - rate full - allotment at the weekly tenders, longer - term refinancing operations. bis central bankers β speeches 3. the third phase extends from end - 2009 to mid - 2011. as the macroeconomy rebounded and financial market conditions improved in late 2009, the ecb started a gradual exit from its unconventional measures. when the sovereign crisis hit euro area bond markets in the early months of 2010, the eurosystem responded to an increasingly dysfunctional monetary transmission mechanism, by activating a special markets program ( smp ). 4. when the sovereign crisis intensified in august 2011, the gradual exit from unconventional was stalled. also, additional unconventional measures were taken to support the monetary transmission mechanism. these policy responses went a long way in supporting the ecb β s goal of price stability, and to address problems in the monetary transmission mechanism. at the same time, these measures β and the smp in particular β entailed a number of risks. as i mentioned in earlier speeches and interviews, i see four main risks. first, these measures tended to reduce pressure that markets exerted on governments to pursue fiscal discipline. second, treading further along the path of interventions in government bond markets implies increasing risks of monetary financing of fiscal debt. third, purchases of assets in markets under stress implies a financial risk for the eurosystem β s balance sheet, which may eventually lead to fiscal transfers. fourth, there is a risk that the eurosystem will enter political waters, which will make the conduct of monetary policy more difficult. with our experience during the crisis and the connected risks in mind, we need to rethi | 1 |
strong set of rules and respect for those rules. and things have gone very well for germany since the second world war. but this strict approach also has a weakness in times of crisis, particularly when a fast and flexible reaction is required. the reaction to the financial and sovereign debt crisis could have been quicker, and more flexible. that is my personal view. we have learned from the crisis and are in the process of fixing monetary union. but a few more steps still need to be taken. most of all, we need much closer coordination of fiscal policy β and a stabilisation fund that can absorb sudden significant shocks. and the banking union is not yet complete. french president emmanuel macron wants to eliminate those very shortcomings and thereby change the fundamental features of the euro area. his plans include a common european budget, a european finance minister and a common deposit insurance scheme for european banks. can you understand that the german government is resisting many of these plans? i think one of the reasons for hesitation on the part of many european governments is that the euro area is currently going through a phase of very robust economic growth. when times are good, it β s always difficult to undertake reforms, because there doesn β t seem to be any need. in the past, significant eu reforms were always decided on at the height of a crisis. but that also makes them more expensive. will it take another euro crisis before we have a banking union? you β d think that the banking union would be the easiest of these reforms. what we need most of all here is to introduce a common european deposit insurance scheme, so that the savings of bank customers are protected at the european level if a bank fails. that would further strengthen confidence in the euro, because our money essentially consists of bank deposits. right now, germany is balking at the idea of this kind of mutualisation β not least because many italian banks are still harbouring masses of bad loans on their balance sheets. nobody in this country wants to be liable for that. how can this problem be 2 / 4 bis central bankers'speeches solved? it β s already being solved. we have started to considerably reduce levels of what are known as non - performing loans in the euro area β by more than β¬300 billion since 2014. this reduction has come about as a result of the pressure exerted by ecb banking supervision. and that pressure will remain strong. there β s another point on which germany stands more or less alone against most other | central bank of kenya euromoney kenya conference financial inclusion 2. 0 : expanding kenya β s digital financial ecosystem tuesday 9th may 2017 welcoming remarks by dr. patrick njoroge governor of the central bank of kenya good morning! 1. it is my pleasure to warmly welcome all delegates to this inaugural euromoney kenya conference. i am particularly pleased to extend a special welcome to those delegates who are visiting our country for the first time. i hope you will enjoy the excellent kenyan hospitality, and that you will find time to visit our national heritage sites within the city before you return to your respective countries. 2. i wish to salute the co - hosts of the conference β euromoney conferences, and the kenya bankers association. i also wish to acknowledge the other institutions that have sponsored and supported the conference : the co - sponsor, kenya commercial bank ; the africa regional partner, african development bank group ; and the supporting organizations, oracle and integrated payment services ltd. ( ipsl ). 3. the theme of this conference β financial inclusion 2. 0 : expanding kenya β s digital financial ecosystem β provides an excellent opportunity for the policymakers, thought leaders, bankers, investors, and entrepreneurs, all gathered here today as distinguished speakers and participants, to deliberate on the economic environment in africa and the outlook for the financial sector. the sessions will also offer insights on the strategic challenges and opportunities facing digital finance in the region. 4. as is well recognized, kenya has leveraged mobile phone technology and made remarkable strides in financial inclusion. a decade ago, kenya was characterized by high poverty incidences and high levels of financial exclusion. with the adoption of mobile financial services and agency banking, among other innovations, financial access has increased from 26. 7 percent in 2006 to 75. 3 percent in 2016. while this is remarkable, the question at hand remains how to expand the digital financial services ecosystem beyond basic money transfer, savings, and micro - credit. we are equally aware that there are still barriers to financial access that hinder 17. 4 percent of population from accessing the ( formal or informal ) financial system. further, we very much recognize that financial access does not necessarily translate to better living standards β but a journey of a thousand miles starts with a single step. 5. for kenya, current innovations have mainly addressed the issue of convenience of financial products and services to the general public. as a regulator in the financial sector, our focus now is to enhance the usage of the existing financial innovations as well as | 0 |
fatos ibrahimi : general introduction on regulatory impact assessment and first practical application opening speech by mr fatos ibrahimi, deputy governor of the bank of albania, at the workshop β general introduction on regulatory impact assessment and first practical application β, organized in cooperation with the convergence program of the world bank, tirana, 31 january 2008. * * * ladies and gentlemen, it is indeed a great pleasure to open the workshop on the β general introduction on regulatory impact assessment ( ria ) and first practical application β as part of the ria knowledge transfer program to be delivered by the convergence program of the world bank. this workshop marks the beginning of the activities of the special projects initiative ( spi ) albania that was launched on january 19th in bari in the presence of governor fullani, the president of the puglia region nichi vendola, the high - ranking representatives from the central bank of montenegro and the banking associations of the respective countries as well as the representatives from the convergence program of the world bank, which promotes and manages the spi albania project. the spi albania will build upon the positive outcomes of the similar projects carried out in bulgaria and romania. its nature of a public - private partnership constitutes the most important characteristic of this project which will aim at the acceleration of the financial sector modernization in albania by fostering a close dialogue and cooperation between the regulatory authorities and market participants in our country. in this context, the bank of albania remains fully committed to contribute to the successful implementation of this project by continuing to engage in a fruitful and continuous cooperation with the representatives of the banking system in accordance with the nature of this project. the development of the evidence - based policy analysis skills in compliance with the eu β s β better regulation β approach will constitute the cornerstone of the spi albania activities. these capacity - building activities will aim at acquainting the staff of the albanian regulatory and supervisory institutions with the necessary expertise that will enable them to draft the impact assessments of the regulatory acts proposed by the respective authorities by employing the main tools and methodologies necessary for the evaluation of costs and benefits as well as for the preparation of the market failure analysis. it should be emphasized that the albanian institutions are not quite familiar with the techniques of regulatory impact assessment and therefore trainings such as this one are more than welcome. following the adoption of the new banking law in december 2006 and its entry into force in june 2007, which represented a further alignment of the albanian banking legislation with the eu acquis | , the bank of albania is currently in the process of reviewing the regulatory framework which will ensure the appropriate implementation of the said law. in this framework, the preparation of the respective impact assessments for each proposed regulatory amendment in close consultations with the market participants remains one of the objectives of the bank of albania in the near future. these new analytical tools will certainly improve policy - making by placing a greater emphasis on the clarification of costs related to the enforcement and implementation of the adopted regulatory acts through the conduct of the respective cost - benefit analyses. at the same time, the use of these assessment techniques will enhance the transparency of policy - making by ensuring a better communication of the regulatory and supervisory authorities with market participants. let me conclude by thanking mr. bossone and mr. brogi from the convergence program as well as ms. wesseling from the committee of european insurance and occupational pensions supervisors for being among us today. it is my deep conviction that their presentations will prove to be highly beneficial and insightful to all participants. i wish you a fruitful and interesting workshop. thank you. | 1 |
work, volcano, translated into spanish. i will also point out that volcano was her winning entry back in 2004, which goes to show that entering and winning the fcle has legs. moreover, as we continue to innovate and digitise, the orange economy presents opportunities for leveraging technology. e - books, audiobooks, and online platforms can 1 / 2 bis - central bankers'speeches amplify our voices even more, reaching audiences far beyond our shores and turning creativity into a sustainable livelihood for our artists. tonight, i extend my heartfelt congratulations to all of this year's finalists and winners. to those who may not walk away with an award, let me encourage you : the act of putting your work out into the world is itself an achievement. perseverance, discipline, and a commitment to your craft will bear fruit. to all writers here tonight, i say this : you are custodians of our stories, ambassadors of our culture, and architects of our identity. keep writing, dreaming, and daring. the fcle exists because of you and for you. to our dedicated committee, which as i mentioned earlier, is led, and ably so, by dr. yvonne weekes, your vision and hard work continues to instrumental in the competition's success. your efforts ensure that the fcle continues to uphold its high standards and remains an inspiration to barbadian writers. and to you, the audience, thank you for showing up for these artists and their work. your encouragement helps fuel their creativity and strengthens our literary culture. may we all remember that by supporting the arts, we are investing in a richer, more vibrant future for barbados β one where our stories are not just told, but celebrated. so, as we honour the finalists and winners of this prestigious award, let us also commit to championing our writers and the creative sector as a whole. let us recognise that investing in the arts is not a luxury but a necessity for national development. as we look to the future, i am confident that the frank collymore literary endowment will continue to thrive, offering a platform for exceptional talent and fostering a deeper appreciation for the written word. here's to another year of literary brilliance and to the enduring power of storytelling. congratulations once again to our winners and participants. thank you, and enjoy the rest of the evening. 2 / 2 bis - central bankers'speeches | orientation of monetary policy, i have reached the conclusion that the current monetary policy stance is appropriate at the present juncture. v ladies and gentlemen, let me now try to summarise the main features of the interdependence between monetary policy and financial markets : Β· central banks need well - functioning financial markets. they work as the crucial link between monetary policy - setting and its ultimate goal, price stability. disintermediation further heightens the importance of financial markets in the transmission mechanism of monetary policy. therefore, monetary policymakers need to analyse structural changes in financial markets thoroughly. Β· central banks acquire information about the expectations of financial market participants by monitoring financial market prices. they cross - check their own forecasts against these data. Β· finally, in order to avoid misperceptions of the policy stance in the markets, there has to be a consistent communication policy. with capital markets integrating and habits in the fields of finance and investment changing, as central bankers in the euro area we have now entered a period of heightened uncertainty. the ecb has opted for a monetary policy strategy that anchors the markets β expectations of future price stability. the twopillar approach to assessing the outlook for prices is appropriate in times of structural change, as it is not only credible, but also highly flexible. financial markets therefore have a reliable partner in the eurosystem β one that is well equipped to meet current and future challenges. | 0 |
number of important measures. one of these is the treaty on stability, coordination and governance in the economic and monetary union. this treaty, which is due to become effective on 1 january 2013, comprises a fiscal compact. its main component is anchoring the commitment to enact laws, requiring budgets of member states to be at least close to balance in structural terms. nevertheless, structural adjustments are needed not just for public finances but also to address macroeconomic imbalances. both areas remain the preserve of national governments. the process of implementing necessary policy measures at the national level has already begun in some countries. labour markets have been deregulated, and institutional impediments to competition have been eliminated. some signs of success are already emerging in the export sectors of crisis - hit countries. the budgetary situation has also improved. markets, however, are not yet fully convinced that these efforts will be sustained. but one thing is clear : although the first steps have been taken, further extensive consolidation measures and structural reforms are very much necessary. the eurosystem responded to the crisis by cutting interest rates and launching non - standard monetary policy measures. it provided, for the first time, three - year liquidity in two longer - term refinancing operations. another non - standard measure, the securities market programme, has been the subject of debate. we at the bundesbank continue to believe that purchases of government bonds by the eurosystem reduce pressure on governments of countries that are in the markets β spotlight to consolidate their budgets and embark on structural reforms. by no means, they should become the β new normal β. through these measures, monetary policy is increasingly strained. it makes a world of difference whether it is the eurosystem or a stand - alone central bank, like the bank of japan, that is using its balance sheet as a tool to combat a crisis. in the eurosystem β s case, balance sheet measures and the risks of losses related to them have an important implication. they involve shifting burdens from the taxpayers of one member state to those of another. such bis central bankers β speeches burden - sharing, however, is the task of democratically elected fiscal policymakers and not of monetary policy. there is no quick fix for the european sovereign debt crisis. however, the measures already taken by some countries are steps in the right direction. if this direction is maintained, if the segregation of monetary policy from fiscal policy is upheld and once a decision is taken on the monetary | . furthermore, from 2008 on a revised enterprise taxation will be valid. i don β t want to keep secret, that there is still some way to go, however. just to mention one or two examples : some 25 % of the new jobs in germany are temporary, whereas only 4 % of the labour force stock is temp - work. this shows the need for further amendments of the labour market flexibility. another example is the german deficit. from my point of view we are right now in a good position to go for a balanced budget and we are still a good way off. concluding remarks let me conclude : a monetary union does not automatically lead to a high decree of competitiveness and good economic performance, but the remove of the β veil of exchange rate β puts the finger on the root of the matter, i. e. the structural weaknesses of a country. taking all this together, germany is a classic example of how market - related adjustments can work and be effective under the rules of a monetary union. | 0.5 |
who hold the bonds till maturity. even banks investing in sdls are averse to trading because of the valuation norms which facilitate nudging up of the price of sdl in banks β books and insulation from market risks offered by htm dispensation. with an objective to ensure banks β bond portfolios reflect their current market valuation, it has been decided that the sdls should be valued based on observed prices. this measure could potentially discourage passive investment by banks and improve trading volumes in sdl. the market is also devoid of market - makers providing two - way quotes, thereby impacting liquidity. risk asymmetry in sdls following the recommendations of the 12th finance commission, government disintermediated from the borrowings of state governments from fy06 onwards. it was expected that a rise in the volume of market borrowings would enhance the scrutiny of the states β fiscal health, and superior fiscal management would be incentivized through lower borrowing costs. however, the cut - off yields of sdls issued by states in any given auction remain narrowly clustered, despite large variations in the state governments β fiscal performance. a closer look at the data indicates that there has been no significant difference in inter - state spreads, which on an average have been between 5 - 7 bps. states with better fiscal parameters have expressed view that the market is not providing any incentive for better performance on fiscal front. the issue pertaining to risk asymmetries across states have been receiving policy attention as can be seen from observations in two reports viz., the economic survey 2016 - 17 and the frbm review committee report, 2017 headed by shri n. k. singh. i ) the economic survey 2016 - 17 stated that greater market - based discipline on state government finances is missing, as reflected in the complete lack of correlation between the spread on state government bonds and their debt or deficit positions. it was observed that there is a flat relationship between the spread and the indebtedness of states therefore states are neither rewarded nor penalized for their debt performance. β ii ) the frbm review committee report titled β responsible growth : a debt and fiscal framework for 21st century india β published in january 2017 stated that despite sdl borrowing rates being market determined, it is felt that risk asymmetries across states are not adequately reflected in the cost of borrowings. the report observed that few well managed states with good fiscal performance have expressed that they are not adequately compensated for better management of | hinted at possible conflicts between some of these objectives. finding the right balance between them is clearly the goal of financial sector policy and regulation, but this is not the place to go into that set of issues. i shall now try and provide a brief description of how both the idea of deposit insurance itself and the way in which it is provided relate to the five broad objectives of financial sector development. the role of deposit insurance deposit insurance has clearly been around for a long time and its utility as an instrument of trust and confidence in the financial ( or perhaps more narrowly in the banking ) system has rarely been in question. rather, the question that now faces us is whether it can be expanded and re - structured to address a greater variety of requirements that the financial system now has. these are issues that will obviously be discussed during the technical sessions of this conference and i look forward to being informed of the significant points that emerge from them, both for my own education and as inputs into the shaping of strategies for dicgc. here, i will confine myself to a few illustrations of how deposit insurance fits into the broader financial development framework. with regard to efficiency, the existence of insurance is perhaps less important than the way in which it is structured. deposit - taking financial institutions, particularly those servicing a large number of relatively small accounts can obviously be mandated to buy insurance. but, this will impact their operating costs, which depositors will bear to some extent. one way of encouraging overall efficiency is to differentiate insurance premiums between institutions based on some objective measure of the riskiness of their loan and asset portfolios. this will help to bring about a better alignment between the cost of funds and the portfolio risks across the deposit - taking financial sector. stability is clearly the objective with the most direct connection with deposit insurance. by providing depositors with the assurance that at least some of their money is safe no matter what happens to the institution, it provides a huge incentive for people to use the system, with consequent benefits for the economy as a whole. but, the viability of any insurance scheme is based essentially on the premise that claims will originate from only a small proportion of the insured population at any given time. a crisis is a situation in which virtually the entire population will make claims at the same time. from a welfare perspective, the core objective of protecting depositors β interests becomes even more paramount in such a situation. however, from the perspective of resources, the cost providing full insurance against catastrophic | 0.5 |
- fited from the stream of human capital from the mainland. on the other, the negative consequences that it is claimed arise from free movement are issues that numerous β brexiteers β in the run - up to the referendum have cited as reasons why they believe the uk should leave the european union. for some, eeamembership is regarded as the equivalent of jumping from the frying pan into the fire. many other forms of cooperation are therefore also imaginable, including established models such as the wto framework. for banks, a situation in which the uk were to become a third country would allow for a spectrum of outcomes, depending on what is negotiated. at the lower end of cooperation, an ordinary third country status would require uk banks and banks from foreign countries to obtain licenses for their branches in any given eu country. also, working capital would be required as a basis for supervision β i may ascertain this at least with respect to germany. this should indeed give incentives to banks from third countries to establish subsidiaries in only one eu country and in this manner avoid the need to acquire more than one license in the eu. bis central bankers β speeches even so, the ordinary third country statues may significantly interfere with the current business models of banks. for those foreign banks that currently use their uk subsidiaries as a hub for the european market, the uk serving as a third country would compromise their business models in the eu. certainly, there would still be room for further bilateral agreements. thus, german authorities could grant exemptions to foreign institutions. for banks with a british license, a more favourable supervisory treatment is conceiv - able. supervision might even be performed in a manner akin to if the uk were an eea member. but this hinges upon several requirements. most importantly, the uk would have to follow the internationally approved canon of supervisory policies. if this were the case, eu members would want to protect themselves against any form of regulatory arbitrage. also, this would require substantial, political willingness on both sides. however, such political goodwill might suffer if and when brexit goes ahead. we will have to wait and observe. generally speaking, we cannot make reliable predictions about the future legal framework for banking across the channel. planning uncertainty is bound to be costly. businesses on both sides of the channel are unable to make any longer - term plans as long as these conditions haven β t been clarified. on the other hand, location shifting takes time and encourages banks to react | ##rse has the potential to become such a bridge. clearly, the leave vote poses new challenges for the corporate governance of the merger : the parties concerned need to find a governance structure which balances all reasonable interests β even at the expense of synergies. furthermore, i am convinced that, in the medium term, euro clearing cannot take place to the existing extent in london β frankfurt would be the more appropriate alternative. the referendum commission set up by deutsche borse and lse is now being put to the test in terms of its ability to work calmly, and needs to keep in mind the economic rationale of the proposed merger which has gained greater credence through the brexit vote. but uncertainty following the brexit decision is much less due to economics and much more due to politics. indeed, almost all the economic consequences are associated with political uncertainty. as we all know, economic uncertainty is a product of political uncertainty. the fact that the mechanics of leaving the eu are laid down in article 50 of the treaty of the european union is well - known to most people by now, but it only governs the negotiation process without changing the complexity of its nature in any way. clearly, the practical implications of a brexit depend to a large extent on what will be agreed upon in brexit negotiations. and this is also true with respect to banks on both sides of the channel. many institutions have shaped their business models in accordance with the cooperative financial framework in the eu. european banks based on the continent operate in the uk market and have branches in london. the city of london is also home to a great number of non - european institutions which use the passporting regime of the eu to conduct business in any other eu country, making london a hub for the entire european banking market. so what could happen with respect to the passporting regime once the negotiation period has ended? one thing is clear : it will very much depend on politics. in the event that the united kingdom decides to remain a member of the european economic area ( eea ), not a great deal would change for banks and enterprises on both sides of the channel. eu rules for banking super - vision equally apply to members of the european economic area. current supervisory powers would likewise remain unaffected. naturally, eu membership does not only cover free trade. it also means applying the full body of eu legislation, a key component of which is freedom of movement. on the one hand, financial institutions in london have bene | 1 |
karnit flug : the israeli economy β a macroeconomic perspective main points of a lecture by dr karnit flug, governor of the bank of israel, at the supreme court, jerusalem, 6 august 2015. * * * the israeli economy is an open economy that is greatly affected by developments abroad. this is reflected in the growth rates in the economy, which are very much in line with those abroad. the effect of activity abroad is mainly reflected through international trade, which affects demand for israeli exports, both goods and services. goods exports are in a virtual standstill, against the background of the virtual standstill in global trade, which declined slightly in 2013 and recovered slightly during 2014. in contrast, services exports have performed better than global trade. the labor market is in good condition. the unemployment rate is very low and this, alongside the continuing trend in the labor force participation rate, with new participants finding employment, reflects an increasing trend in the employment rate. the development of real wages per employee post indicates a moderate increase in recent years, and acceleration in the past year. monetary policy the bank of israel β s policy acts to achieve the bank of israel β s targets as set out in the law. the main target is achieving price stability, meaning meeting the inflation target, and subject to that, support for the other economic targets, chiefly growth and employment, and support for financial stability. in recent months, the inflation rate has been below the target, and in the past 12 months, prices have declined by 0. 4 percent, mainly due to a decline in fuel and commodities prices. in contrast, one - year forward inflation expectations are at the lower bound of the target range β 1. 0 percent. since the beginning of the year, the shekel has appreciated, which has contributed to lower prices, following a number of months of depreciation in the last few months of 2014. the appreciation also makes it difficult for israeli exporters to compete in the global market, and our estimation is that the shekel is appreciated relative to equilibrium levels. against the background of these developments β which are also affected by developments in the global economy β the bank of israel lowered the interest rate to the historically low level of 0. 1 percent, and purchased foreign exchange. the budget and the fiscal aggregates the government has recently been dealing with the finishing touches of the budget. the proposed budget for 2015 and 2016, which was approved by the government, includes deficit targets of 2. 9 percent | to corrupt public officials and the staff of financial institutions. hence the fight against money laundering is also the fight against corruption. money laundering is also used to support terrorist activities, because these activities require money which must be moved about in a clandestine manner. organised crime often has transnational characteristics, and criminals have no qualms about moving funds across international borders to suit their own ends. criminals seeking to launder money look for weak links in the global financial system. they find jurisdictions with weak or non - existent anti - money laundering legislation attractive, because such jurisdictions allow them to move money about and conceal their illegally acquired wealth without fear of detection. the failure to enact anti - money laundering legislation weakens our country β s capacity to combat financial crime, corruption and terrorism. bis central bankers β speeches the international community has made the fight against money laundering a priority. the financial action task force on money laundering ( fatf ) β an inter - governmental body β was established in 1989 to set standards and promote the implementation of legislative and other measures to combat money laundering. the fatf works closely with regional bodies, which include the eastern and southern africa anti - money laundering group ( esaamlg ), of which uganda is a member. i regret to say that uganda is now the only one of the 14 members of the eastern and southern africa anti - money laundering group which has yet to pass anti - money laundering legislation. unsurprisingly, this does not impress our friends and colleagues in the region, who perceive uganda as a weak link in the fight against financial crime. if we continue to delay enacting anti - money laundering legislation, uganda will also risk being added to the fatf β s list of β high risk and non cooperative jurisdictions β, which will undermine international confidence in the integrity of our financial system. this will be very damaging for our economy, as i β m sure that you will appreciate. the anti - money laundering bill which is currently before parliament was prepared by uganda β s anti - money laundering committee. the legislation is based on the international standards on combating money laundering and the financing of terrorism which are issued by the fatf and are generally referred to as the fatf 40 recommendations. as such the proposed legislation is in line with best practise in the rest of the world. given the transnational nature of money laundering, i don β t think that uganda should settle for anything less than the standards which are in force elsewhere in the world. we have | 0 |
is of course possible that commodity prices will slow down as a result of weaker international economic activity. but the emerging economies β demand for commodities will probably remain as an underlying, long - term driving force that pushes up inflation. it is perhaps this international pressure on commodity prices and the risk of contagion effects on other prices and on wages that will be the first major test for the lowinflation policy. how should monetary policy react in general? what consequences will this have for monetary policy? one thing it is important to remember is that the rising commodity prices are examples of changes in relative prices. a relative price is the price of a particular product or group of products in relation to other prices. what has happened in recent years could be described as a global increase in the relative price of energy and commodities, such as food, in relation to manufactured products. inflation is due to long - term monetary policy, not relative prices changes in relative prices play an important role for how resources are allocated in a market economy. an increase in a relative price is a signal that resources have become scarce in a particular area in relation to other areas. it is therefore often profitable to invest there. it is exactly this type of market mechanism that appears when interest in mining increases and optimism rises in the parts of sweden suffering from depopulation. in a corresponding manner, high food prices provide an incentive to begin cultivating previously unused land around the world. there is thus reason to believe that the higher relative price will in the long term increase the supply of commodities, which will then better match the demand for them. however, the adjustment may take time. it remains to be seen whether supply will increase sufficiently to keep an even pace with world market demand. it is therefore difficult to predict how long relative commodity prices will continue rising. but what is fundamental from a monetary policy perspective is that changes in relative prices do not in themselves constitute inflation. inflation refers to general price levels, or the average of all prices, rising over time. the general price level is measured with some broader measure of prices, such as the consumer price index, cpi. monetary policy cannot and should not counteract changes in relative prices. but what central banks can govern in the long term is the way inflation develops. a change in relative prices can occur when there is low inflation as the price increases on the goods that become relatively more expensive are compensated for by low price increases or even falling prices on other goods. the same relative price change can occur with | they affect households β purchasing power. a price impulse can gain a foothold and have long - lasting effects on inflation regardless of where it originates. and the central bank must parry long - lasting effects, whether the impulses come from wages, food prices, oil or something else. the outlook is far from certain β¦ in the forecast we published just over two weeks ago we assume that the rapid commodity price rises are partly temporary and that they will subside in the future. we are also expecting the krona to be strong. this will contribute to inflation falling. but of course this is uncertain, not least for the reasons i took up earlier this morning. if the international price impulses were to become stronger and longer lasting than expected, inflation would of course be higher. but as i see it, it is not impossible that the international price rises will instead be lower than expected. this would push down inflation more quickly. one possible reason for this would be if international economic activity slows down more quickly than anticipated. we have highlighted these risks in earlier reports. a further factor, which in my opinion contributes to the uncertainty in the assessment, is the increased interest in portfolio investment in commodities. if the expectations of future return on such investments alter, it could contribute to a more sudden slowdown. and this would gradually affect consumer price inflation. it is also possible that such an effect β that capital is withdrawn and invested in other assets β has contributed to the price of wheat falling more rapidly recently. with regard to movements in the commodity markets since the previous forecast, prices have moved in slightly different directions. pricing in different forward markets currently gives a slightly divided picture of what direction prices will take. the oil price has risen more than expected and forward rates imply that it may remain at a higher level. at the same time, the world market price for certain foods and metals has fallen in recent weeks, for instance, the price of wheat, meat and aluminium. however, the price of some other foods, such as rice, has risen recently. β¦ but we must nevertheless take a stance but regardless of whether the international price impulses are temporary or more lasting, they must not be allowed to push up inflation permanently! in my opinion, the risk of this has increased in that inflation expectations have risen during the autumn. according to prospera β s survey in april, however, expectations have fallen slightly. the national institute of economic research β s consumer tendency survey also indicates that households β inflation expectations have been | 1 |
yet its smooth operation is essential to the wellbeing of the new zealand economy. banks play a key role in directing funds from individuals who wish to save to individuals who wish to borrow. the system works because people have confidence that funds deposited in banks will be available to them in the future, and that those funds will retain their buying power through time. the reserve bank has a central role in providing the regulatory framework for institutions that wish to describe themselves as β banks β. we register banks and we monitor their compliance with a comprehensive financial disclosure regime, required minimum capital adequacy ratios, and limits on the loans they can make to related parties. our framework emphasises the role of bank directors in ensuring that banks effectively manage their risks, and on the role of the market in strengthening incentives for prudent management. this helps to promote a sound banking system. however, no banking system is without risk. depositors still need to make their decisions carefully. banks in new zealand are not guaranteed by the government or the reserve bank. there is no mandatory deposit insurance in new zealand. i mentioned that an efficient financial system needs to have mechanisms by which money can be stored. this is so people can access their money when they need it, without their savings having eroded in value. ensuring that money holds its value is the primary purpose of monetary policy. indeed, by statute the governor of the reserve bank is required to use monetary policy to keep the buying power of the new zealand dollar broadly stable over time. maintaining price stability does not mean keeping the price of each and every item the same. i am charged to maintain a stable overall level of prices, but individual prices are always changing. some things, like computers, will probably continue to get cheaper, while some other things may continue to get more expensive, like martinborough pinot noir. but the overall buying power of people β s savings is intended to remain broadly constant over time. in the current policy targets agreement, i am specifically directed to attempt to achieve trend inflation outcomes between 1 and 3 percent. why is this the primary objective of monetary policy? both economic theory and hard experience suggests that money holding its value over time helps an economy achieving its potential. stable money is not a silver bullet, and on its own it can achieve little. however, stable money is one of the building blocks of a successful economy. yes, i could use monetary policy to engineer temporary economic growth. by lowering interest rates i could encourage people to borrow and spend | a least regrets approach to uncertainty : hawks, doves and the white heron ( he kotuku ) by christian hawkesby, assistant governor written with ashley dunstan and ngarimu parata text finalised 15 september introduction for a long time it has become common for followers of monetary policy to categorise central banks as β hawks β or β doves β, and for their decisions to be seen as β hawkish β for signalling higher interest rates or β dovish β for signalling lower interest rates. in aotearoa, new zealand, our equivalent bird life are the kahu ( the harrier hawk ) and the kereru ( the wood pigeon ). but when it comes to making monetary policy decisions under uncertainty, it may be that the kotuku ( white heron ) provides a much more fitting metaphor. in maori culture, there are two whakatauki ( proverbs ) involving the kotuku that capture how its behaviour must change depending on the environment, outlook, risks and uncertainties : β’ β tapuwae kotuku β refers to taking β considered steps β. β’ β he kotuku rerenga tahi β is loosely translated as β a white heron β s flight is seen but once β, and can also be interpreted more generally as a call that β once ready, open your wings and commit to flight β. in this speech, i would like to : β’ outline the types of uncertainties that we face when navigating monetary policy decisions. β’ introduce a risk management approach to bring together these uncertainties into our decision making. β’ illustrate how we applied this β least regrets β approach over the past 18 months in response to the threat to our mandate from covid - 19. β’ reflect on what we have learnt about the economy over the past 18 months during covid - 19, and how this influenced the outlook for monetary policy published in the august monetary policy statement ( mps ). β’ return to the kahu ( harrier hawk ), kereru ( dove ) and kotuku ( white heron ) to relate this all back into a metaphor for our least regrets approach, and how this helps us navigate uncertainty. however, first, let β s start at the beginning, with the bank β s purpose and mandate, which ultimately guides all our monetary policy decisions. a least regrets approach to uncertainty : hawks, doves and the white heron ( he kotuku ) purpose, mandate and monetary framework our purpose at | 0.5 |
one key element for the diffusion of innovations is the availability of adequate human capital, especially in view of the markedly knowledge - intensive nature of the current innovation process. a highly skilled and well - trained workforce is not just a productivity driver per se. it is a necessary condition both for the adoption of new technologies in the first place, and for the effective unfolding of their effects on firms β productivity. β’ supporting investment in human capital is therefore another crucial policy aim. the education system needs to provide students with a continuously updated set of skills ; to make them alert and adaptable to knowledge - based innovation ; and to enable them, ultimately, to make the most of the fast changing demands of the labour market. designing an effective education system, including lifelong learning opportunities, and providing the right incentives to teachers and students alike, should also therefore be very much on everybody β s agenda. designed by the printing and publishing division of the bank of italy | charles i plosser : systematic monetary policy and communication speech by mr charles i plosser, president and chief executive officer of the federal reserve bank of philadelphia, at the economic club of new york, new york city, 24 june 2014. * * * the view expressed today are my own and not necessarily those of the federal reserve system or the fomc. highlights β’ president plosser gives his views on the economy and the fomc β s most recent policy decisions. he also discusses the benefits of rule - like, systematic behavior in the design and conduct of monetary policy and how this behavior combined with greater transparency leads to more effective communication. β’ president plosser explains how a detailed monetary policy report could promote the fomc to conduct policy in a more systematic manner, which he believes will lead to better decisions and better economic outcomes over the longer run. when policymakers deviate, it would require that they explain why. β’ president plosser uses five widely recognized simple rules to explore their implications for the future path of policy and highlights the real uncertainties that policymakers face making policy. introduction thank you, roger ferguson, for that kind introduction and congratulations on your term as chairman of this august organization. you have continued to deliver the great programs and speakers that so many have come to expect from the club. as many of you know, this is the centennial year for the federal reserve. in the spirit of such an anniversary, my hat goes off to the economic club of new york, which has been around for 107 years. what a great and storied history you have, and it is an honor to be here. i should note that congress created our decentralized central bank 100 years ago. that decentralized structure is one of our great strengths, but it requires that i begin with the usual disclaimer that the views i express are my own and do not necessarily reflect those of the federal reserve system or my colleagues on the federal open market committee ( fomc ). in my remarks this morning, i want to discuss the benefits of rule - like, systematic behavior in the design and conduct of monetary policy. such behavior, combined with greater transparency, leads to communication that is more effective. this, in turn, helps the public understand the fomc β s strategies, individual policy decisions, and the likely path of policy. i will go one step further and illustrate how the fomc might take a step toward a more systematic policy | 0 |
sheila m β mbijjewe : launch of the 2016 finaccess household survey speech by ms sheila m β mbijjewe, deputy governor of the central bank of kenya, at the launch of the 2016 finaccess household survey, nairobi, 18 february 2016. * * * 1. i am delighted and honoured to join you today at this launch of the key findings of the 2016 finaccess household survey that also marks the 10th anniversary of the finaccess surveys in kenya. 2. policy goal : the creation of a vibrant, efficient, stable and globally competitive and inclusive financial system to drive savings and investments necessary to achieve our development agenda as outlined in kenya β s vision 2030 is crucial. β’ there cannot be meaningful financial sector development if finance is not accessible and inclusive. β’ financial inclusion in terms of access, usage, quality and welfare remains one of the priority areas for the government. 3. financial inclusion landscape : i am pleased to be part of this financial inclusion agenda of improving the measurement, understanding, tracking progress and its dynamics overtime. this has been done mainly through undertaking finaccess suite of surveys since 2006. 4. key findings : the results we are releasing today reflect developments in the wider economy, infrastructural facilities, technological innovations, financial sector developments, policy and regulatory reforms as well as financial markets innovations. i am delighted to announce that kenya has made a lot of progress towards the kenya vision 2030 financial sector development agenda. in terms of financial inclusion, we have far exceeded the government target to increase the proportion of the population with access to finance to over 70 % by 2018 under the second medium term plan, 2013 β 2018. β’ the proportion of adult population using formal financial services rose to 75. 3 % in 2016. β’ the rural - urban formal financial access gap has narrowed since 2006. β’ kenyans are increasingly using a combinations of a variety of financial services providers and new innovations reflecting the importance of a diversified financial system with 59. 7 % of the adult population using two or more types of financial services providers compared with 18. 8 % in 2006. bis central bankers β speeches 5. there is need to foster appropriate and proportional regulation and supervision of the different financial services providers to enhance access to a broader mix of providers and products that meet the needs of different consumers. with this growing demand from consumers for a diverse mix of products and innovations, the financial sector requires an enabling environment to foster innovations to the changing | informal remittances channels to migrate to the use of this reliable, albeit convenient platform to send money home. ladies and gentlemen, in view of the important role of the remittances in our economy, an overriding policy objective for the central bank is to lower costs through competition facilitated by the entry of international money transfer services providers. this will enhance service delivery and enable users of such services obtain competitive remittances rates at substantially reduced unit costs. in this regard, central bank has issued and continues to issue permits to all applicants seeking to enter the international money transfer services market under the legal framework spelt out in the cbk act section 33 a, subject to meeting the set conditions. the safaricom mobile based international money transfer service has been granted with a permit pursuant to this policy objective. at this juncture, i would like to reiterate that while the central bank welcomes innovative products, it evaluates all such products to ensure safety and efficiency concerns are adequately addressed. the central bank has the necessary capacity to properly evaluate and appraise technology driven financial services to ensure they meet international standards. services that involve partnerships with commercial banks have to adhere to the existing prudential and statutory banking sector requirements. we will work closely with commercial banks and other service providers to increase awareness and enlarge the frontier of services. the central bank is also cognizant of the fact that international remittances platforms could be used as money laundering channels. part of our evaluation therefore involves subjecting applicants to a through scrutiny of their aml compliances programmes not only in kenya, but also in the sending jurisdictions. in this regard record keeping and β kyc β requirements must be adhered to as part of the approval conditionality. ladies and gentlemen, the subject of migrant worker remittances and their socio economic significance both for the sending and receiving countries has become a popular topic for governments, payment systems experts and other public policy makers. international remittances bring with them substantial welfare gains to the receiving countries and have huge developmental potential. the world bank estimates that recorded remittances by some 200 million migrants from developing countries reached us $ 283 billion in 2008, up from us $ 265 billion in 2007, while unrecorded flows through informal channels could even be higher. as a share of gdp, remittances constitute about 2 % of gdp. these numbers are almost equivalent to the foreign direct investment ( fdi ) flows, and may | 0.5 |
rounded sense of judgement. and i hope that this will play at least some small part in strengthening the resilience of your institutions. and in closing, i look forward to interacting with you all as well. thank you very much. 4 / 4 bis - central bankers'speeches | ##s market discipline and is a precondition for the establishment of early warning systems for credit institutions, markets and supervisors. the basle committee has initiated important provisions for improving transparency at the international level. key - words in this context are the improved disclosure requirements for derivative transactions and the recommendations on appropriate public reporting of merchandise transactions. as mentioned before the need of greater transparency is not limited to banks β information policy. the business of other market players, and their role in different markets, must become really transparent, too. at the european level, the main issue in the next few years will be meeting the growing needs of banking supervisors and credit institutions for information on the borrowers of banks in other european countries. it will be necessary to further step up the co - operation that has prevailed for a number of years between the credit registers already existing in the eu ( in austria, belgium, france, germany, italy, portugal and spain ), and to foster the construction of such systems for reporting cross border loans in other eu countries. as part of such european co - operation between credit registers, it is intended to make that information, which has hitherto been exchanged only for prudential purposes, accessible to the lending banks as well in future. in my opinion the need for a central credit register is not limited to the european level. an international credit register and the publication of aggregated figures could play an important role in making existing risks in the global financial markets more transparent. vii in emu, too, capital standards as a protection against loss will remain the cornerstone of banking supervisory provisions. an adequate capital base both in terms of quantity and quality stabilises not only the institutions themselves but also the banking system as a whole. in this context, the capital adequacy directive lays down an eu - wide foundation, which relates to market risks. in the course of the further development of the directive, banks were given the option, as an alternative to the prescribed standard procedure for computing the required capital backing of market - price risks, of using their own risk - management models, subject to certain conditions. by thus modifying their instruments, european banking supervisors have responded swiftly to the changes in the markets, and have shown themselves to be consistent with market economy principles and close to the market as well. in addition, this new quality of supervision is geared more closely to individual business practices and a bank β s risk situation. the european capital provisions are based on the basle capital standards adopted in 1988. | 0.5 |
citizens. the governing council is monitoring wage negotiations in the euro area with particular attention. indexation of nominal wages to the consumer price index should be avoided. finally, further rises in oil and agricultural prices, continuing the strong upward trend observed in recent months, as well as increases in administered prices and indirect taxes beyond those foreseen thus far pose upside risks to the inflation outlook. the monetary analysis confirms the prevailing upside risks to price stability at medium to longer - term horizons. annual m3 growth, although declining somewhat in december, remained very vigorous at 11. 5 %, whereas m1 growth continues to moderate, reflecting the dampening impact of higher interest rates. broad money dynamics in recent quarters are likely to have been influenced by a number of temporary factors, notably the flattening of the yield curve, which may have supported some substitution into monetary assets. overall, taking these special factors into account, a broad - based assessment of the latest data confirms that the underlying rate of monetary expansion remains strong. this conclusion is supported by the sustained expansion of loans to the domestic private sector, which grew at an annual rate of 11. 1 % in december. although the growth of household borrowing has moderated further over the past few quarters, reflecting the impact of higher key ecb interest rates since december 2005 and cooling housing markets in several parts of the euro area, the growth of loans to non - financial corporations has remained very robust. bank borrowing by euro area non - financial corporations was 14. 4 % higher at the end of december 2007 than a year earlier. for the time being, there is little evidence that the financial market turbulence since early august 2007 has strongly influenced the dynamics of broad money and credit aggregates. in particular, according to the available data, increased financial market volatility has not led to substantial portfolio shifts into monetary assets, as was the case between 2001 and 2003. notwithstanding the tightening of credit standards reported in the bank lending survey for the euro area, continued strong loan growth suggests that the supply of bank credit in the euro area has not been significantly impaired by the financial turmoil thus far. further data and analysis will be required in order to obtain a more complete picture of the impact of the financial market developments on banks β balance sheets, financing conditions and money and credit growth. to sum up, a cross - check of the outcome of the economic analysis with that of the monetary analysis confirms the assessment that there are upside risks to price stability over the medium term, in a context of very vigorous | the improved economic conditions and wage moderation, the number of people employed and labour force participation have increased significantly. consumption growth should therefore continue to contribute to economic expansion, in line with real disposable income, and investment growth should provide ongoing support. that said, uncertainty about the prospects for economic growth is unusually high and the risks surrounding the outlook for economic activity have been confirmed to lie on the downside. risks relate mainly to a potentially broader than currently expected impact of financial market developments on financing conditions and economic sentiment, with negative effects on world and euro area growth. further downside risks stem from the scope for additional oil and other commodity price rises, concerns about protectionist pressures and the possibility of disorderly developments due to global imbalances. with regard to price developments, according to eurostat β s flash estimate the annual hicp inflation rate was 3. 2 % in january 2008, compared with 3. 1 % in december 2007. this confirms the continued strong upward pressure on inflation in the short term, stemming mainly from strong increases in commodity prices, in particular oil and food prices, in recent months. looking ahead, the annual hicp inflation rate will most likely remain significantly above 2 % in the coming months and moderate only gradually in the further course of 2008. this confirms our expectation of a protracted period of temporarily high rates of inflation. moreover, it is important to stress that the moderation in the rate of inflation which is embedded in the december 2007 eurosystem staff macroeconomic projections is based on the assumption that the recent rises in commodity prices will be partly reversed, in line with futures prices. more fundamentally, the projections assume that recent oil and food price dynamics and their impact on hicp inflation do not have broadly - based second - round effects on wage and price - setting behaviour. risks to this medium - term outlook for price developments are confirmed to lie on the upside. these risks include the possibility that stronger than currently expected wage growth may emerge, taking into account high capacity utilisation and tight labour market conditions. furthermore, the pricing power of firms, notably in market segments with low competition, could be stronger than expected. at this juncture, it is therefore imperative that all parties concerned meet their responsibilities and that second - round effects on wage and pricesetting stemming from current inflation rates be avoided. in the view of the governing council, this is of key importance in order to preserve price stability in the medium run and thereby the purchasing power of all euro area | 1 |
hoarded cash and deposits ; as a result, the corporate sector has registered a financial surplus. indeed, during the deflation that lasted for some 15 years, firms restrained their business fixed investment and accumulated cash and deposits. consequently, the total amount outstanding of cash and deposits held by the corporate sector reached as high as about 230 trillion yen. this is nearly half of japan β s gdp. at the initial phase of getting out of deflation, firms finance their credit demand for working capital and business fixed investment with their cash at hand. moreover, increasing cash flow will be used to repay debts ; thus, none of these lead to a situation where lending by financial institutions simply increases. a pick - up in lending will only start once firms are no longer able to finance their credit demand for inventory investment or business fixed investment with their cash at hand. moreover, during the process of overcoming deflation, stock prices will rise significantly and the markets β expectations regarding future interest rates will also go up. under such circumstances, more firms will decide to raise long - term funds from the capital market by issuing new stocks and bonds rather than borrowing short - term funds from banks. this is another reason for the lackluster performance in lending that exists for some time during the initial stages of overcoming deflation. more recently, a typical situation was seen during the recovery phase at the beginning of the 2000s. at that time, bank lending decreased rather than increased for some time after the economic recovery gradually gathered steam, although one needs to take note that the disposal of non - performing loans was well under way and this led to a decline in bank lending. recent developments since end - 2013 show that lending by commercial banks has increased year - on - year and the pace of increase has picked up. compared with the economic recovery phase of the early 2000s, the pick - up in lending during the current economic recovery phase is actually stronger than originally anticipated. d. time horizon of the qqe and further easing next, i will explain the time horizon of the qqe and then touch on the issue of the possibility of further easing. this is a question that has received considerable attention quite recently. bis central bankers β speeches after exchanging views with a range of people, i was left with an impression that there is a misunderstanding that the bank will start tightening monetary policy soon after it achieves the price stability target of 2 percent. this might be due to the fact that the message to β achieve 2 percent in two years β was | - vis the rest of the world, but its income balance has stayed positive thanks to a positive return differential between its external assets and its liabilities. for some economists, this is the result of the transformation of the united states from world banker to β venture capitalist β with a β leveraged β position, where fixed - income domestic currency liabilities finance riskier foreign assets taking the form of equity and direct investment [ gourinchas and rey, 2005 ]. the greater ability to issue domestic currency liabilities has another important implication from a macro - financial stability perspective. to the extent that external liabilities are mainly in domestic currency, whereas external assets are denominated in foreign currency β as in the case of equity and foreign direct investment, and often also debt securities β issuers of international currencies tend to have a β long β position in foreign currency. as a result, fluctuations in exchange rates tend to produce counter - cyclical valuation effects on net external assets. when the exchange rate appreciates, foreign currency assets shrink in domestic currency terms and as a share of gdp. conversely, following sharp devaluations β often associated with economic and financial stress β the foreign currency - denominated assets grow in domestic currency terms and liabilities are unaffected, improving the overall investment position when it is more needed [ lane and milesi - ferretti, 2005 ]. as an example, after the currency crises in both 1949 and 1967, sterling β s status as an international currency β with most of the large overseas liabilities still denominated in pounds β allowed the united kingdom to cushion somewhat the impact of the devaluations [ cairncross and eichengreen, 2003 ]. the issuance of an international currency could potentially also have significant implications for the implementation of monetary policy. let β s consider the experience of the euro over the past ten years in that regard. on the one hand, it has been essential for the euro area to have its own monetary policy in order to face idiosyncratic shocks and focus on the maintenance of domestic price stability. this result would not have been possible without the introduction of the euro and the creation of a large internal economic and trade area free of exchange rate risk. on the other hand, the external demand for euro - denominated assets may affect domestic monetary aggregates, complicating their relationship with inflation over the long run. recent ecb staff research shows that it is necessary to place money demand in the | 0 |
guy debelle : remarks on liquidity address by mr guy debelle, assistant governor ( financial markets ) of the reserve bank of australia, to the australasian finance and banking conference, sydney, 17 december 2013. * * * thank you to fari for again organising a good conference. today i will make a few points about liquidity. i have spoken about this on a number of other occasions, but one year out from the basel iii liquidity regime becoming fully operational, it is timely to do so again. 1 why do we have liquidity regulation? the fundamental answer is that banks engage in maturity transformation. they borrow short and lend long. this is a service which society values. there is a demand for banks to provide liquidity services. depositors place their savings with a bank but want to be able to withdraw some part of their funds at short notice. a corporate treasurer wants to have the company β s funds in an account where they can be accessed quickly to meet the needs of the firm. at the same time, we prefer to have our loans for substantially longer periods of time. it would be particularly inefficient and bothersome if we had to renegotiate our home loan on a monthly basis. more importantly, it would be very difficult to make any sort of long - term planning or investment decision if there were no long - term loans available. this desire for liquidity on the one hand and long - term lending on the other is intermediated by the financial sector and the banking sector in particular. but the maturity transformation this entails exposes the banking sector to liquidity risk. if all the depositors wanted their money back in a hurry, the bank would not be able to meet that obligation without either calling in their loans, which may be contractually impossible, or trying to sell them. the latter is often practically impossible to do at short notice, or even if it is possible, may only be able to be carried out by selling the assets ( such as loan portfolios ) at fire - sale prices. neither of those outcomes is socially desirable. fire sales run the risk of generating contagion to other financial institutions as the price of the asset falls, as they may well hold that same asset too, and / or may use it as collateral in transactions themselves. fire sales also limit the ability of the institution making the sale to make good on its obligations. so there are externalities to the asset that is being sold, as | reinvestment act is broad and deep. commenters across the board applauded the significant volume of cra loans and investments that have supported lmi households and communities, as well as the benefits households and communities have realized from the cra β s focus on local retail financial services, small business lending, and community development lending, investments, and services. and they asked that the three banking agencies work together toward a joint rulemaking proposal so that cra policies can be clearly and consistently applied across agencies. second, there are some good ideas about how to modernize the procedures for setting the area in which the agencies assess a bank β s cra activities while retaining the core focus on place. this is not a simple challenge, and this morning β s panel identified some promising solutions to the challenge of modernizing the definition of assessment areas to keep up with changes in banks β business models. i appreciated the panelists β insights on how to balance the importance of place with various business models, including to reflect the extensive use of digital channels and other changes in the banking industry. the public comments we have read so far suggest 1 / 3 bis central bankers'speeches general agreement that there is a need for an update β but not a complete overhaul β of assessment areas through a balanced package of reforms. we have heard general support for assessment areas that reflect each bank β s business model, recognizing that branch - based assessment areas work for many banks but that additional or different assessment areas may be appropriate for others. third, we have received helpful input on tailoring cra regulations to banks of different sizes and business models. many of the comments we reviewed expressed support for retaining different performance tests for different types of banks, including the strategic plan option. we also heard this at the regional roundtables, where banker participants ranged from small community banks to large internet - only banks. it was clear that cra regulations cannot be one - size - fits - all. fourth, we have heard some good suggestions for ensuring that any modernization of assessment areas should keep in focus the goal of encouraging banks to seek out opportunities in underserved areas, including in this morning β s panel on assessment areas. the concern about cra hotspots and credit deserts was echoed in the comment letters, and several commenters offered helpful suggestions for addressing this problem going forward. and the need to create incentives for cra capital to reach underserved communities was a theme we heard in our regional roundtables from both bankers and | 0 |
will be operated by a public entity, the eurosystem, t2s can be relied on to operate in a fair way and on a not for profit basis. furthermore, more from a central banker β s perspective, more effective post trading structures β as achieved by t2s β will contribute to global resilience of financial markets and hence constitutes an important element to safeguard financial stability. moreover, t2s will contribute to lower cost of capital, hence contributing to the general growth in financial markets and overall economic growth. let me add that post trading costs in the us are at much lower levels than in europe. therefore, we need to make europe more competitive in the global financial market, and t2s is an important contribution in this regard. thanks to efforts made by hundreds of experts from over 80 european institutions and from the eurosystem over the last year, the governing council of the ecb has been able in the last few weeks to invite the european csds to express their support for t2s. we distributed to the european csds detailed user requirements, an economic impact analysis, a description of governance for the next project phase, and a presentation on harmonization efforts in the context of t2s, which are all the outcome of a transparent and constructive consultation process, cooperating with csds and market users. let me just point to a few elements of the economic impact study which you can also find on our website. the analysis concludes that the costs of settlement can reduced substantially from 73 cents a csd charges on average today to 32 cents per transaction under t2s. these costs can be even further reduced if more csds decide to join the t2s project. these numbers represent only the narrow business case and do not capture β of course β the full dynamic impact of t2s arising from enhanced competition in a single market for security settlement. let me stress that while one can be skeptical about the precise numbers i just mentioned, but we should definitely not be skeptical about the overall benefits of a more competitive and more integrated european financial market. t2s has been developed in a pure harmonization spirit which excludes β of course β specific functionalities supporting local practices. this does not mean that t2s prevents csds from supporting local practices ; it will however give those concerned β including legislators and regulators β an opportunity to consider whether their preservation is in the long term interests of the relevant economy. we have worked with the t2s stakeholders to identify | for complacency β. while we can be pleased to have got so far so fast, we need to keep up a fast pace. we are ready to start the next phase of the project immediately after the β hopefully β positive decision of the governing council in order to meet the next milestone : defining the next level of the detail in the form of the general functional specification. this will make it possible for t2s to be live no later than 2013. ladies and gentlemen, on behalf of the eurosystem, let me conclude by thanking the distinguished representatives of the banking sector for their contribution to the successful completion of the work done so far, and by asking for your continued support and cooperation. thank you very much. | 1 |
as to place the global recovery on a sustainable path. in spite of large cross currency movements, misalignments continue to persist in the face of the continued global imbalances. in this context, further easing of monetary policy and stronger structural reforms in the euro area have assumed critical importance. despite the limits set by the growth and stability pact on the permissible extent of fiscal expansion, cyclical expansion may be fully allowed, at least, to neutralise the impact of shortfall in revenue realisation in the face of an economic slowdown. if the sources of global growth are not diversified across regions and if countries continue to rely on the us demand to increase their exports and thereby grow faster, the case for us depreciation would become stronger. rebalancing of growth dependence, therefore, would be critical to contain volatility in key exchange rates. several emerging market economies have been contending with the challenge arising from current account surpluses and pressures on the exchange rate to appreciate. large reserve accumulation by some asian emerging market economies, in a way, reflects their lack of confidence in the international financial architecture. the improved reserve position of emerging market economies will surely provide β self insurance β, giving the necessary flexibility for exchange rate management. as the duration of the global slowdown becomes more prolonged, fiscal and public debt problem of many countries could intensify further. fiscal adjustment, though necessary, would have to be weighed carefully and is best calibrated with the pace of global recovery. against the backdrop of several adverse developments including severe drought, uncertain global environment and considerable hardening of oil prices, the indian economy performed reasonably well during 2002 - 03. the growth rate of the indian economy at 4. 3 per cent, though lower than expected, was one of the highest in the world. this indicates the growing resilience acquired by the indian economy over the years. with a good monsoon so far this year, a strong recovery in agricultural output is expected. the output for the industrial sector is expected to be reinforced by the renewal of agricultural activity, the abiding strength of export growth and the improved environment for new investments as indicated by a surge in the production of capital goods and non - oil imports. overall, the economy is expected to perform much better in the current year. the growth process would be facilitated by benign inflationary conditions, adequate liquidity coupled with soft interest rates and strong external sector. as a result of various structural reforms, the indian financial system is increasingly | ' s strong actions have helped bring the economy much closer to our 1 / 4 bis - central bankers'speeches goals. imbalances between supply and demand in the economy have mostly dissipated, even as the economy and employment have continued to grow. and inflation, as measured by the personal consumption expenditures ( pce ) price index, has declined from over 7 percent in june of 2022 to just 2 - 1 / 4 percent in the latest reading. there's still some distance to go to reach our goal of 2 percent, but we're definitely moving in the right direction. the data paint a picture of an economy that has returned to balance, or in a word that the english majors in the room may appreciate, " equipoise. " in light of the progress we have seen in reducing inflation and restoring balance to the economy, the fomc decided at its most recent meeting to lower the interest rate that it sets. simply put, this action will help maintain the strength of the economy and labor market while inflation moves back to 2 percent on a sustainable basis. moving to price stability i'll go further into our policy decision and what it means for the economic outlook in a minute. but first, i'll give more details about each side of our dual mandate, starting with inflation. i'll use an onion analogy that i have found useful over the past two years to demonstrate how inflation's three distinct layers are normalizing at different rates. 2 the onion's outer layer represents globally traded commodities. as the economy started to rebound from pandemic shutdowns and demand began to soar, inflation surged, then rose further when russia invaded ukraine. since then, supply and demand have come into balance, and these prices have generally been flat or falling. the middle onion layer is made up of core goods, excluding commodities. demand for goods rose sharply as the economy emerged from the pandemic downturn - just as global pandemic - related supply - chain disruptions significantly hampered supply. but, as seen in the new york fed's global supply chain pressure index, those supply pressures have eased, and core goods inflation has returned to pre - pandemic norms. 3 the inner onion layer comprises core services. although this category is taking the longest to normalize, the disinflationary process is well underway here too. for example, measures of underlying inflation that tend to be heavily influenced by core services inflation today average around 2 - | 0 |
. the possibility of a slowdown in china poses further risks, not only to the growth recovery in the advanced economies, but also to emerging markets in general. trade and investment linkages with china have increased markedly in recent years, and a slowdown could adversely affect these trends. an important channel of transmission of a slowdown is already being felt by commodity exporters through the impact on commodity prices, particularly industrial commodities. the nature of the reaction function of the chinese authorities and possible stimulus packages is still uncertain. complicating the outlook are the challenges faced by the chinese banking sector, in particular the shadow banking sector, which has the potential to reinforce the slowdown. more positively, the outlook for the advanced economies appears to be improving, but already some doubts have arisen regarding the strength of the recovery following a generally disappointing first quarter. from a south african perspective, although the recovery in the uk appears to be sustained, we are particularly concerned about the slow pace of recovery in the rest of europe, which remains an important destination for our manufactured exports. the outlook for emerging markets, by contrast, has deteriorated in recent months, and there is a risk that a generalised slowdown in these economies could undermine the recovery in the advanced economies. how has south africa fared against this challenging backdrop? following the initial announcement by the us fed regarding possible tapering, the rand was one of the currencies most negatively affected. the rand was at around r9, 00 against the us dollar at the beginning of may 2013, and depreciated to around r10, 00 against the dollar following the initial tapering announcement. it then followed a volatile depreciating trend, reaching its weakest point of r11, 39 against the dollar immediately after the january mpc meeting. since then it has followed an appreciating, but volatile trend, to reach a recent high of around r10, 50 in early april. we expect this pattern of volatility to continue, as the hesitant move towards us monetary policy normalisation proceeds, with markets being overly sensitive to any data coming out of the us. for example, last week β s non - farm payrolls data came in slightly lower than expected. this disappointing news for the us was seen as good news for emerging markets, and the rand, along with the brazilian real, appreciated by over one per cent in response. underlying these volatile movements in the exchange rate was the changing pattern of capital flows. during 2012 | achieving sustainable optimum economic growth and development. recent improvements in the current account of the balance of payments, the firmer exchange rate of the rand, the increased inflow of foreign capital, and the rise in official foreign exchange reserves, provide sufficient evidence to the effect that the serious danger of a collapse in south africa β s external economic relations a year ago has been successfully averted. moreover, there are encouraging, although as yet still only tentative, signs, emanating from both the production and the expenditure sides, that the economy recovered slightly during the second quarter of 1997. this preliminary indication is also confirmed by some hopeful signs that the inflationary pressures which arose from the economic imbalances experienced last year are now subsiding. at the same time, however, the overall financial situation still provides reason for concern, particularly in view of the continued high rates of increase in bank credit extension and in broad money supply. for reasons that will be explained in more detail below, the monetary authorities must persist with their vigil against the threat of overall financial instability that can only lead to stagflation in due course. there are many examples in the world today, both among industrial and emerging economies, where this lesson is again being learnt the hard way after years of reluctance to apply appropriate but unpopular short - term disciplinary monetary policies in a timely fashion. the reserve bank is not prepared to consider any short - term expediencies and implement monetary policies that will in the long term lead to serious disruption of financial stability. the country just cannot afford unsound monetary policies for short - term gain. such policies would gradually undermine the value of the rand and lead to an eventual collapse of the financial system, with serious adverse implications also for the level of real economic activity. recent economic developments the reserve bank β s annual economic report released this morning serves as a background to the following brief summary of major economic developments over the past twelve months : a year of economic consolidation the pattern of developments in real economic activity over the past twelve months can best be described as the outcome of a necessary process of consolidation after three years of positive growth. the rate of expansion in gross domestic product reached a seasonally adjusted and annualised rate of 31Β½ per cent in the second half of 1996, but then slowed down to only 1 per cent in the first half of 1997, indicating a lower rate of growth for the full calendar year of 1997 compared with that experienced during any one of the past two years. during the first | 0.5 |
, and that they are able to pay for other obligations on top of this commitment. to this end, at the individual level, we need to put emphasis on the value of financial literacy and financial education. for example, the credit counseling and debt management agency recently launched the β rumahku β portal to help potential borrowers in malaysia to understand the financial commitments associated with owning a house. it also helps them to understand their capacity to meet these commitments. so far, more than 3600 people have completed the modules and a substantial number of them, one in five, have decided not to proceed with the purchase. this points to two things. firstly, the module is successful in nudging participants to reassess their existing financial obligations before they can take on more than what they can handle. secondly, it reinforces the need to continue pushing for financial education. individuals need to know their capacity, and what they can afford before undertaking a commitment of this magnitude. we have established that every individual needs to play their part to ensure that they are fully aware of and are able to undertake the commitment of buying a house. however, the responsibility does not reside with the buyers alone. industry players in the private sector also 1 / 3 bis central bankers'speeches have a role to play to support the national agenda of affordable homes. as one of the core players in the housing market, developers have a significant role to play. in providing the supply of homes for the public, developers should seek to provide homes at an affordable price point. using international affordability metrics, houses in malaysia are considered to be β seriously unaffordable β with a median multiple of five times. this, in turn, affects home ownership. take the latest data of unsold residential properties of about 171, 000 units. about 74 % of them are priced beyond what ordinary malaysians can afford. it is, therefore, imperative for developers to adjust their product offerings and consider bringing their costs down. one of the ways would be to seriously explore leveraging on more advanced and cost - efficient construction technology, such as industrialised building system ( ibs ). as cost of construction remains one of the major determinants of house prices, increasing efficiency and lowering costs can lead to a more inclusive housing market. beyond considerations for price points that reflect greater affordability for the buyer, developers also have the responsibility to build houses that cater to the modern needs of the public. aspects of quality, sufficient amenities and safety must | alone. adequate housing is about access, which can be achieved not only through outright ownership, but also through the ability to rent a decent home at affordable prices. the overriding policy priority should not be ownership at all costs. we need to learn from the global financial crisis on the importance of a sustainable housing market. 2 / 3 bis central bankers'speeches policymakers need to protect the interests of the public and the stability of the economic and financial system. it is also in the interest of the public that they do not buy homes that they cannot afford and fall into financial hardship, which will have detrimental consequences to socioeconomic stability. more broadly, we need to remember that one of the best ways to achieve the affordable homes objective is to promote employment opportunities and income growth for the people. this will strengthen their economic capability and financial position for home ownership. to some extent, we have observed some encouraging trends, including the fact that house prices are now growing more in line with income growth. another important avenue for policymakers is the exchange of information and ideas. through the sharing of experiences, especially with policymakers from other countries, we are able to learn and explore new frontiers. platforms such as this contribute to the rich marketplace of ideas that will spur us to think of innovative policies and effective ways to implement them. tackling the issue of affordable housing requires us to be creative, proactive and holistic in our solutions. this will require collaboration and commitment from all parties involved ; policymakers, the private sector, developers and the public at large. it will not be easy, but it is necessary for us to build a better future not just for our families, but for our future generations. 3 / 3 bis central bankers'speeches | 1 |
important for commodity producers to accumulate macroeconomic and fiscal space during periods of high commodity prices, so that countercyclical macroeconomic policies are feasible during price slumps. this requires saving a significant share of the resource revenue earned during price booms, and avoiding accumulating substantial liabilities which will have to be repaid from uncertain future resource revenues. most of the commodity producers in the region failed to build adequate policy buffers during the commodity price boom and, as a consequence, have no option but to implement fiscal retrenchment during the current price slump, which exacerbates the contraction in demand and output. the second lesson pertains to the need to avoid becoming over - dependent on commodity exports for foreign exchange earnings and public revenues. the east african economies have begun to diversify their economies away from primary commodities. this is shown in figure 5 for uganda. the share of primary commodity exports, proxied by sitc categories 0 β 3 and 9, has fallen from over 90 percent of total merchandise exports in 2002 to less than bis central bankers β speeches two thirds in 2015. in contrast, the share of processed commodities ( sitc categories 4, 5 and 6 ) and manufactured products ( sitc categories 7 and 8 ) has risen from 8 percent to 35 percent over this period. this diversification could be put in jeopardy if hydrocarbon production drives up the real exchange rate and renders existing export industries uncompetitive. real exchange rate appreciation is not caused by oil production per se, rather it is determined by the magnitude of additional domestic spending which revenues from oil production make possible. the key to avoiding damaging real exchange rate appreciation when oil starts to be produced in commercial quantities is the careful management of the public spending out of oil revenues. if oil revenues allow a large and rapid expansion of public spending, uganda will risk suffering all of the negative consequences of the resource curse which have afflicted other oil producers in the region. finally, i want to emphasise the importance of building strong institutions. institutions are crucial for macroeconomic management, and especially so in commodity producing economies. empirical research from around the world has shown that whether or not commodity producers actually derive benefit from their natural resources, or instead suffer from a resource curse, depends on the quality of their economic governance, which in turn depends on the strength of their institutions. strong institutions are also important to create a business environment, characterised by transparent and predictable rules and regulations, competitive markets and a level playing field | a timely manner seems beneficial because it reduces asymmetric information and uncertainty in financial markets. information about the financial stability framework and public evaluation of national balance sheets against the yardstick on international codes and standards offers investors an opportunity to assess risk better and arrive at more informed decisions. moreover, greater clarity about financial stability policy potentially simplifies the task of monetary and fiscal policy by establishing clear lines of responsibility and objectives. in an environment of greater trust, effective communication by the central bank facilitates greater flexibility to act by various agents in the economy. over the last few decades, it has been widely recognized that the maximum degree of independence for central banks, together with a clearly defined mandate, is the best way to ensure time consistency in the implementation of monetary policy and therefore guarantee stable prices. consequently, the 1995 constitution of uganda has granted the bank of uganda full independence in the pursuit of its mandate. in a democracy, transparency and accountability are the quid pro quo for that independence. in other words, it is the duty of independent central banks to be transparent, accountable and to communicate. the bou is made more accountable by clearly explaining our objectives and decisions to the general public, media, parliament and to the professionals in the financial markets. but transparency is not only a duty for the central bank. it is clearly also in the bank β s interest to embark on an effective communication as it contributes considerably to the efficiency of its policies. this helps to anchor the inflation expectations of the financial markets and the public. through efficient communication we can reduce inflation uncertainty and the costs associated with such uncertainty for consumers and investors. therefore it has immediate economic benefits for society. we achieve this by being clear about our definition of price stability and by being transparent in our actions. the economic agents and public need to be convinced that the central bank β s monetary policy decisions are consistently focused over time on achieving the announced aim. in a market - based economy the central bank can directly influence only short - term interest rates through its monetary policy instruments. however, consumption and investment decisions, and thus medium - term price developments, are to a large extent influenced by longer - term interest rates, which depend on private expectations regarding future central bank decisions and future inflation. it is important that these developments in longer - term rates support the objective of maintaining price stability over the medium term. this in turn requires that the central bank is regarded as credible and predictable. a central bank which does not succeed in communicating the principles underlying its monetary policy and is | 0.5 |
thomas jordan : monetary policy and the business cycle summary of a speech by mr thomas jordan, chairman of the governing board of the swiss national bank, at the 75th anniversary celebrations of the kof swiss economic institute, zurich, 23 september 2013. the complete speech can be found in german on the swiss national bank β s website ( www. snb. ch ). * * * monetary policy contributes to the prosperity of an economy by ensuring price stability in the medium and long term. this makes it possible to put resources to more efficient use, from an economic point of view, and also promotes investment and, with it, long - term growth. price stability also helps to avoid undesirable distribution effects. households with lower incomes derive particular benefit from this. monetary policy can be used to dampen cyclical fluctuations. however, it is not suitable for short - term fine - tuning of the economy. from the point of view of the business cycle, the goal of monetary policy must rather be the reduction of larger risks and the alleviation of extreme situations. an example of one such measure is the minimum exchange rate, which the swiss national bank ( snb ) set on 6 september 2011 to halt the swiss franc's upward trend, thus averting a deflationary spiral and warding off the danger of a serious economic crisis. monetary policy decisions are always subject to uncertainty. it is therefore of key importance that the snb has a sound decision - making basis. to this end, it uses a variety of models and empirical approaches, and also conducts its own surveys. in addition, the snb analyses economic indicators for switzerland and abroad, and follows the assessments and forecasts of other institutions. kof swiss economic institute at the swiss federal institute for technology zurich ( eth ) is without doubt the best - known for economic analysis. it makes a significant contribution towards understanding the swiss economy with its regular data surveys ( for example, the survey of companies it has been systematically conducting since 1955 ), as well as its economic forecasts and special analyses. in doing so, kof fulfils an important role for the snb's monetary policy and, ultimately, for the greater good of our country. for this reason, the snb has been connected with the kof swiss economic institute since its beginning in the 1930s. both institutions maintain a stimulating exchange of information and ideas to this day. with high - quality economic analysis closely linked to scientific research, kof swiss economic | institute will continue to make a valuable contribution in future - to ensure an even better understanding of the swiss economy. bis central bankers β speeches | 1 |
at the end of this year will be 26 % higher than the previous year. this growth rate is 3. 7 % lower than the average annual growth rate during the period under the β eighth fiveyear plan β. secondly, price increases have slackened noticeably. during the period from january to october, retail prices have risen by 6. 4 % as compared to the same period last year. it is expected that the growth rate for the whole year will be around 6. 5 %. thirdly, the economy continues to grow at a relatively high rate. during the period from january to september, gdp rose by 9. 6 %. it is anticipated that the annual growth rate will exceed 9. 5 %. fourthly, our foreign reserves continue to grow. as at the end of october, our foreign reserves reached us $ 98. 8 billion. we are certain that our reserves will exceed us $ 100 billion by the end of the year. the trade surplus is estimated to be over us $ 100 billion this year. there is also us $ 40 billion of foreign direct investment. the supply of foreign exchange exceeds demand and the exchange rate of the renminbi remains stable. moreover, the renminbi has become fully convertible in the current account. our experience proves that we are right in adopting an appropriately tight financial and economic policy. our ability in performing macro - economic operations has improved greatly and our achievements are recognised internationally. despite the foregoing, several major problems remain to be solved. the percentage of financial revenues in gdp is still falling. the asset quality of banks still needs to be improved. the basic elements of the agricultural sector remain relatively weak and it is unlikely to have any improvement in the operational efficiency of state - owned enterprises in the short run. in view of the current economic situation, the focus of economic and financial reforms in the coming year will be placed on promoting the reform of the economic system and changing the pattern of economic growth. we will continue to adopt an appropriately tight financial and monetary policy. further efforts will be made to adjust the structure of the economy so as to foster new areas of economic growth. in order to ensure steady growth of the national economy, efforts will also be made to develop domestic as well as overseas markets. based on the above considerations, it is desirable that next year β s target annual gnp growth rate should be set at 8 - 9 % while the retail price increase be contained at a level below 6 %. in order to achieve these targets, the | , account for 80 % of china β s energy consumption. by 2060, this ratio is expected to fall below 20 %. china β s financial institutions have invested heavily in carbon - intensive assets, and the risk of asset price adjustment caused by the green transition must be closely monitored. ladies and gentlemen, friends, looking forward, i believe we have to make progress in the following areas. first, we must mobilize public and private funds to support the green economy in line with market principles. it is estimated that by 2030, china will need to invest 2. 2 trillion yuan per year to reduce carbon emissions, and this amount will further grow to 3. 9 trillion yuan from 2030 to 2060. government funding alone is far from enough. we need to encourage more private capital 1 / 2 bis central bankers'speeches participation. to do this, we need to lay the groundwork on two fronts. one is about information disclosure. the pbc plans to set up a mandatory disclosure system with uniform standards, and promote greater information sharing between financial institutions and companies. we will also strengthen international coordination under the g20 framework. the other is about green finance taxonomy. the pbc is about to finish revising the green bond catalogue by removing fossil fuel projects. we are also working with international counterparts to harmonize taxonomies. central banks have a role to play in providing policy incentives. the pbc plans to launch a support toolkit to provide low - cost funds for carbon emission reduction. the pbc will also support green finance through a host of measures ranging from commercial credit ratings, deposit insurance rates to collaterals for open market operations. second, we must evaluate the potential impact of climate change on financial stability. it will take 70 years for the eu, 45 years for the us, and about 30 years for china to move from carbon peak to net zero. the time is shorter and the curve is much steeper for china. it means our financial institutions are faced with grave risks and should begin their green transition right away. the pbc is looking at the possibility of including climate factors in financial stress tests, and gradually incorporating climate risks into the macro - prudential policy framework. the pbc is reviewing green loan and green bond performance of financial institutions on a quarterly basis. the financial institutions are encouraged to evaluate and manage their environmental and climate risks. third, we must let the carbon market play its role of price discovery. china β s national emissions trading system will be | 0.5 |
years. simply plotting the unemployment and inflation data ( figure 8 ), it can be observed that there is now less inflation for a given level of unemployment and less apparent responsiveness of inflation to changes in unemployment. however, it is also clear that the overall relationship between unemployment and inflation has been quite weak and that other causal factors, both international and domestic, have been playing an important role. 5 6 / 12 bis central bankers'speeches source : stats nz, rbnz. chart excludes volatile cpi observations affected by the new zealand gst increase in 2010. the measurement of economic slack is becoming more difficult. total potential output β or capacity β is not directly observable and it may be that the increasing flexibility and mobility of labour is causing us to understate our measures of capacity. we will increasingly need to refer to a range of labour market indicators in addition to unemployment when assessing the extent of slack in the labour market. there is not much doubt that an increase in international labour mobility has also affected wage inflation in new zealand. in some of the traditional non - traded sectors like construction there is now greater scope for employers to meet skill shortages through international hires, even though recent stretch in the construction industry has seen wage costs increasing for certain occupations and skills. on a national scale, we have experienced ongoing high levels of inward migration. over the past 3 years, the population has grown by around 6 percent, of which less than a third is from natural growth. an increasing share of the inward migration has been on work visas ( figure 9 ), thus contributing to higher productive capacity. in this way, emerging excess demand for labour has been moderated on the supply side as a result of increased international labour mobility. 7 / 12 bis central bankers'speeches with the new zealand economy becoming generally more integrated with the global economy, we are likely to see less variability in measures of economic slack and also less variability in labour costs, consistent with a flattening of the philips curve. new zealand has always been a price taker for goods traded in the international markets. it now appears that, with labour mobility and globalisation effects, we are increasingly a price taker in β non - traded β goods and services ( figure 10 ). for example, suppliers of education and tourism services are now operating in increasingly competitive international markets. they are facing international competition for their services and also for their labour inputs. both sectors have been growing as a share of gdp. 8 / 12 bis central bankers'speeches | grant spencer : low inflation and its implications for monetary policy speech by mr grant spencer, deputy governor of the reserve bank of new zealand, to the institute of directors, auckland, 5 december 2017. * * * thank you to the institute of directors for inviting me to speak here in auckland. today i will discuss the low inflation environment we are experiencing here in new zealand and in many other countries. to start, i would like you to think about the mobile phone in your pocket, because it represents some of the global trends i will refer to. it is a symbol of how manufacturing has become global, how costs of production have been lowered, particularly for technology - based goods and services, and how we are now connected to global markets through digital devices and the internet. these are themes i will return to. since the global financial crisis in 2008 we have seen persistently low inflation both internationally and at home. inflation has surprised on the downside relative to forecasts from economic models ( figure 1 ). and it has persisted in recent years despite falling unemployment rates here and in most of the advanced economies. this global pattern is depicted in figure 2. 1 / 12 bis central bankers'speeches source : oecd, rbnz calculations. scatter plot shows 2017 data1 in response to very weak activity and low inflation following the gfc, many central banks allowed their policy interest rates to fall to zero and below, and injected significant stimulus through quantitative easing. despite the persistent application of very easy monetary policy and a recovery of demand in the major economies, inflation has been slow to move up towards central bank targets ( typically 2 percent p. a. ) in new zealand we avoided zero policy interest rates and quantitative easing, but have also maintained a very easy monetary policy stance since the gfc. if this low inflation is a global phenomenon, we need to consider global factors to understand the potential causes. in the initial post - gfc period, the clear common driver was weak demand as households and firms restricted spending and consolidated their positions in the wake of severe financial stress. however, with the persistence of low inflation as activity recovered, we also need to consider broader supply - side factors, such as the changing pattern of production across the world and the impact of digital technology. we need to consider how these global factors and also domestic developments might be affecting the shape of the new zealand economy and the pricing behaviour of individuals and firms. i will first talk about some of the key global supply - side trends that have | 1 |
far more complicated than in this simple illustration. three of the shocks shown in figure 2 delivered ongoing pressure to the economy. even the relatively short - lived large inflow of migrants in 2002 / 03 had ongoing impacts. the housing stock cannot be increased as quickly as the changes in migrant flows. consequently, house prices rose and, even after the boost to population subsided, continued to rise beyond all forecasters β expectations. higher house prices in turn stimulated a large construction boom which put further pressure on resources. private sector credit started to expand well in excess of the nominal growth in the economy ( figure 5 ). in line with conventional wisdom, we put relatively less weight on credit data than on interest rates. 6 had we had a higher weighting on credit growth data, our view of the persistence of pressure on resources would likely have been stronger much earlier in the boom. the academic consensus on monetary policy used to be that there was no independent information for monetary formulation in money and credit numbers over and above that available in interest rates. see for example, gali, j ( 2008 ) monetary policy, inflation, and the business cycle : an introduction to the new keynesian framework, princeton university press, princeton. while this view was never completely accepted at the reserve bank of new zealand ( bollard, a ( 2005 ) β housing debt, inflation and the exchange rate β address to the employers and manufacturers association ( northern ) agm ) ) money and credit aggregates were never very prominent in the formulation of monetary policy. one of the processes we changed following the global financial crisis was to formally present information on monetary and credit aggregates to the monetary policy committee to assist with the production of the bank β s forecasting in its monetary policy statement. bis central bankers β speeches figure 5 excess of domestic credit growth over nominal gdp growth source : statistics new zealand, rbnz calculations monetary policy in new zealand is also complicated by exchange rate issues. in a small open economy the inflation target is a complement to a floating exchange rate regime. during the boom period expectations of tight monetary policy to offset the excess demand pressure probably contributed to the persistently high exchange rate throughout the period, causing considerable discomfort and worries about the sustainability of parts of new zealand β s tradable sector. after the global finance crisis there are new challenges for monetary policy to deal with. the current recovery in the business cycle, both in new zealand and in other advanced economies, is proving weaker than historical precedents. our forecasting frameworks | that does not mean that there is a particular formula or set of institutional arrangements that can readily be picked up and transplanted. no doubt, the bank of thailand is bringing its own perspectives to these issues, and adapting the experience and practice of others to find structures that best suit local conditions. i wish them well in that endeavour. references bernanke, ben s ; laubach, thomas ; mishkin, frederick s ; posen, adam s 1999. β inflation targeting. lessons from the international experience β. princeton university press. brash, donald. 1999. β inflation targeting : an alternative way of achieving price stability β. a speech delivered on the occasion of the 50th anniversary of central banking in the philippines. reserve bank of new zealand bulletin, vol 62 no 1. king, mervyn. 1999. β the mpc two years on β, lecture delivered to queen β s university, belfast. reddell, michael. 1999. β origins and early development of the inflation target β. reserve bank of new zealand bulletin, vol 62 no 3. sherwin, murray. 1999. β inflation targeting : 10 years on β. paper delivered to the new zealand association of economists conference in rotorua. reserve bank of new zealand bulletin, vol 62 no 3. sherwin, murray, 1999. β strategic choices in inflation targeting : the new zealand experience β. paper delivered to an imf and central bank of brazil seminar on inflation targeting. stevens, glenn. 1999. β six years of inflation targeting β. address to economic society of australia. svensson, lars e o 1997. β inflation forecast targeting : implementing and monitoring inflation targets β. european economic review, vol 41. | 0.5 |
on the assumptions that a second wave of covid - 19 will not occur on a large scale and that a resultant reinstatement of the strict public health measures will not take place, but these assumptions entail uncertainties. difference from the global financial crisis before i move on to the next topic, i would like to explain the difference between the current shock and the global financial crisis in 2008. at the time of that crisis, the nature of the problem was that, triggered by the bursting of the global financial bubble, major financial institutions abroad went bankrupt successively and the functioning of the financial system declined significantly. what made the problem worse was a vicious cycle in which a decline in the functioning of the financial system led to deterioration in the real economy, which in turn affected stability in the financial system in the form of an increase in non - performing loans. in contrast, the current shock is caused by the spread of covid - 19. this is the same situation as experienced with the global financial crisis, in that a decline in demand and weak production activity affect corporate financing and that developments in financial and capital markets can easily become unstable due to increasing uncertainties over the outlook for economic activity. however, the big difference between then and now is that the financial system has maintained its stability on the whole this time. since the global financial crisis, efforts have been made internationally to enhance the robustness of the financial system, and thus financial institutions have considerable resilience in terms of both capital and liquidity. because the financial system is stable, the bank's and the government's measures to support financing through private financial institutions can work effectively. under these circumstances, although financing, mainly of firms, has been under stress, the environment for external funding, such as bank borrowing and the issuance of cp and corporate bonds, has remained accommodative ( chart 6 ). issuance spreads for cp and corporate bonds expanded temporarily but have narrowed of late, and the year - on - year rate of increase in their amount outstanding has continued to be at a relatively high level. that in the amount outstanding of bank lending also has registered the highest growth in about 30 years. at the time of the global financial crisis, with the amount outstanding of cp and corporate bonds becoming lower than the previous year due to the strengthening of investors'risk aversion, downward pressure on the real economy from the financial side intensified amid the situation of banks'cautious lending attitudes. however, such developments have been avoided this | time. it is expected that stability of the financial system will not be hampered significantly and the economy will be supported from the financial side. that said, it is necessary to closely monitor future developments because, if the real economy deteriorates for a prolonged period, this could affect the financial system and the vicious cycle that i mentioned earlier could start operating. price developments now, i will explain price developments in japan ( chart 7 ). the year - on - year rate of change in the consumer price index ( cpi ) for all items less fresh food is likely to be negative for the time being. with economic activity remaining at a low level due to the impact of covid - 19, it is expected that prices of goods and services that are sensitive to economic activity will be pushed down. crude oil prices, which declined significantly compared to a while ago, are projected to push down the cpi through energy prices. that said, when excluding the effects of energy prices, the inflation rate has remained marginally positive thus far. the inflation rates for food products and daily necessities that are sold at supermarkets have increased at relatively high levels. although those for some items such as charges for accommodations have shown a relatively large decline, firms'price - setting behavior that aims at stimulating demand through price reductions - - as seen during the deflationary period in the past - - is not observed widely at this point. from a somewhat long - term perspective, with the economy improving, downward pressure on prices is projected to wane gradually and the effects of the decline in energy prices are likely to dissipate. under these circumstances, the year - on - year rate of change in the cpi is expected to turn positive ( chart 5 ). in the latest outlook report, the forecasts of the majority of the policy board members for the cpi are in the ranges of minus 0. 6 to minus 0. 4 percent for fiscal 2020, 0. 2 to 0. 5 percent for fiscal 2021, and 0. 5 to 0. 8 percent for fiscal 2022. thus, the year - on - year rate of change in the cpi is likely to increase gradually. that said, it is unlikely that the inflation rate will approach the price stability target of 2 percent with momentum during the projection period since rapid recovery in demand can hardly be expected. thus far, i have explained the baseline scenario of the outlook for prices, but i would like to note that it is difficult to assess the impact of covid - 19 on | 1 |
of mauritius threw his weight in the game and gave the kick - start for an innovative approach of treasury management. the domestic money and foreign exchange markets wherein millions of us dollars are traded today started right then and there. it β s in the best interests of our financial industry and, by extension, to the economy as a whole that these two markets grow healthily at a sustainable gait, without which the effectiveness of monetary policy transmission mechanism is seriously impaired. one of the most important contributions made by the bank of mauritius in the past seventeen years finds its roots in a fundamentally important amendment to the bank of mauritius act in 2004. the dual licensing regime, one for offshore banking and the other for domestic banking, introduced in 1988 before the launching of offshore banking in mauritius in 1989, was done away with ; it was replaced by a single banking license regime. the removal of the regulatory wall between offshore banking activities and domestic banking activities was a turbo - charged enabler of the widening and deepening of the domestic money and foreign exchange markets. isn β t awesome that the foreign exchange reserves of the bank of mauritius have gradually risen to a record level of about us $ 5 billion despite consequential declines in export proceeds over the past 6 / 7 bis central bankers'speeches several years? no importers, no mauritian travelling abroad, no student studying abroad has had any problem of foreign exchange for ten years unlike it often used to be in the past. the mauritian economy has had ten years of enduring stability in the domestic foreign exchange market. we often take this for granted and insult the man, the institution that gave the country this precious gift of stability. that stability, indeed a very rare gift to any economic system for so long a time, ought to have been taken full advantage of for purposes of durable social and economic development. there are risks of instability in the offing that hopefully will be effectively tackled by the bank and other agencies in the years ahead. thus far, the bank has taken the stand that if the risk - taking behaviour of financial institutions cannot be regulated perfectly, it must impose some kind of prudential ratios to curb the volume of transactions. otherwise the bank would commit the same fallacy as gun control opponents who argue that β guns do not kill people, people do β. as we are unable to regulate fully the behaviour of gun owners, we have no choice but to restrict the circulation of guns more directly. in an ever changing technological environment, new risks, new | facing numerous challenges throughout the 1970s. the external economic environment was far from being hospitable to countries in a state of under - development. the breakdown of the bretton woods system had given rise to serious disturbances. the unprecedented oil price shocks of 1973 and 1978 had 3 / 7 bis central bankers'speeches unleashed destabilizing forces the world over. authorities were learning for the first time since the end of world war ii how to cope with a situation never seen before and resolve new problems posed by the two traumatizing events. the world economy had dipped into its worst economic recession since the end of the post - world war ii. stagflation, a state of high inflation rates and no growth, characterized the world economy. governments and central banks the world over were having a very hard time resolving problems never known before. in mauritius, recurrent strikes by trade unions, demands for higher wages and salaries, recurrent inclement weather conditions, high inflation rates fueled by high prices of oil and high unemployment rates were certainly not ideal conditions for a take - off to self - sustained growth. it was a decade of restlessness and crises in many respects. admittedly, the economy did however undergo meaningful transformation. policy mistakes were made. right policies would have lessened the pains economic adjustment later. there are great lessons that all of us need to draw from the policy mistakes of the past. if we don β t learn from our experience, we β ll never learn at all. i was dismayed to see how the honest economist became a lonely voice of reason, and thus, a very valuable voice, but ignored most of the time arrogantly rather than nonchalantly. ultimately, society, in particular the less privileged class, paid the price of the policy mistakes and arrogance of the charlatans. it cannot but be appropriate β indeed very appropriate β at this juncture of my address this evening, to underline that the then bank of mauritius act had an abhorrent sentence that read as follows : β the minister may from time to time give such directions to the bank as, after consultation with the governor of the bank, he considers necessary in the public interest. β even where directives were not formally issued, the bank was required to seek the nodding approval of the minister on many policy matters. obviously, the bank was not an independent organization. having gone through the trials and tribulations in the field of monetary policy making for years and spent a greater part of | 1 |
fourth, supervisory expectations for business continuity planning and disaster recovery are longstanding. in general, the supervisory process focuses on a bank's risk - management and governance process, rather than mandating specific technical or operational standards. as institutions have expanded their use of integrated systems to support business operations, the potential for single points of failure has increased. in response, the banking supervisors have issued more detailed guidance on contingency planning, including managing information technology risk, information security, outsourcing, and network management. examiners regularly assess the adequacy of business continuity plans. moreover, the integration of information technology reviews into safety and soundness examinations and our evolving and expanding definition of the elements of operations risk are resulting in a more comprehensive approach to assessing the completeness and adequacy of business resumption plans. lessons learned from 9 / 11 even when performing well in a crisis, one always has lessons to learn and to incorporate into one's planning. if we are to strengthen the overall resilience of the financial system, institutions will need to develop internal business - resumption standards and define their recovery targets in a fairly consistent manner. decisions made by an individual institution may affect not only its own safety and soundness but also the safety and soundness of other institutions and, indeed, the very functioning of the financial markets. as a result, we believe that coordinated discussions about sound practices for business continuity involving industry participants and regulators are an important part of our response to the events of 9 / 11. the federal reserve, along with several other financial regulators, met with a number of the larger financial firms in february to discuss how 9 / 11 has affected their thoughts about business - resumption planning. our discussion group agreed that the focus of business continuity plans should be the smooth functioning of the financial system, particularly for firms that perform core functions in the wholesale and retail markets. moreover, the group recognized, more keenly than before 9 / 11, the inter - dependence of financial system participants, wherever located. the group also agreed that planning assumptions about the scope and duration of operational disruptions need to be broadened. the group came to several other conclusions that i would like to highlight : β’ business resumption plans need to be expanded to provide for wide - scale and regional events. they also should take into account the loss or inaccessibility of staff. β’ obvious vulnerabilities are associated with the current geographic concentration of market participants and some of their | 81 billion into the government securities markets. we also loaned approximately $ 46 billion from the discount window - typical levels are around $ 100 million. and, to address the collateral needs of foreign financial institutions doing business in the united states and to meet the demand for dollars abroad, we executed a series of agreements to do currency swaps, if needed, with the european central bank, the bank of england, and the bank of canada totaling $ 90 billion. the market reacted positively to the statements that we issued inviting banks to discuss with their regulators temporary balance - sheet issues arising from the market disruptions and encouraging banks to work with customers affected by 9 / 11. the agencies also are busy at all levels updating emergency communication protocols and reviewing and improving strategies for communicating with financial institutions directly and with the public in times of crisis, when effective communication is particularly necessary. as we saw during 9 / 11, that being prepared and able to provide accurate and timely information to the public is critical to maintaining public confidence in the financial system. supervisors, in encouraging banks and other market participants to strengthen business - resumption plans, still have much to learn from financial institutions and experts in business - continuity planning. we have much less experience in modeling and predicting these operational risks than we have for understanding credit or market risk, and some threats may be too idiosyncratic to be modeled at all. nevertheless, we are continuing our efforts to learn how financial institutions are applying the lessons they learned during 9 / 11 to their own business - resumption plans and are encouraging awareness and participation by senior management. our supervisory plans for the rest of the year and for 2003 are being revised to emphasize business resumption, particularly for large banking organizations. we are talking to institutions about the robustness of their contingency plans and encouraging them to ensure that the planning process includes participation from all relevant areas of their organization and includes expanded scenarios that take into account the effects that might flow from sudden, external events. but, we are stopping short of imposing detailed regulatory standards. as best practices emerge to address the new paradigm, we may find it appropriate to expand supervisory guidance so as to obtain the appropriate level of overall resilience for the financial system. i expect we will come to some conclusion about the need for additional guidance over the next few months. however, i feel strongly that any such guidance should resist taking an overly prescriptive approach. business resumption planning is not a " one size fits all " task. | 1 |
charles c soludo : promoting effective and efficient customer service delivery the role of the central bank of nigeria branches opening address by professor charles c soludo, governor of the central bank of nigeria, at the 26th annual controllers β conference of the central bank of nigeria, held at the central bank of nigeria head office, abuja, 30 march 2005. * * * ladies and gentlemen it is my pleasure to welcome our branch controllers and guests to abuja on this occasion of the 26th annual controllers β conference. i wish to use this opportunity to congratulate the organisers of this unique conference which serves as a platform for interaction among the branch controllers and currency officers, and the head office staff. more importantly, as the link between the head office, the banking and host communities, this forum affords you a golden opportunity to continually update your knowledge on the recent developments in the bank and the economy, generally, as well as on the practical aspects of your assignments, so you can become better ambassadors of the bank in your respective jurisdictions. the theme of this year β s conference, promoting effective and efficient customer service delivery : the role of the cbn branches, is auspicious in the light of the on - going re - engineering and restructuring programme in the bank - the project eagles. the acronym eagles, as you all know, stands for efficiency, accountability, goal orientation, leadership, effectiveness, and staff motivation and is a key component of the comprehensive reform programme of the nigerian financial sector. a strong and an efficient cbn is critical for a stable and sound financial system. on july 6, 2004, i unveiled a 13 - point reform agenda for the banking sector, which included the recapitalization of the deposit money banks and their consolidation through mergers and acquisitions. the agenda is a preemptive and proactive measure to prevent a systemic crisis and collapse of the banking industry, and permanently stop the boom and burst cycles that have characterized the history of the industry. more fundamentally, the reforms are aimed at ensuring a sound, responsive, competitive and transparent banking system, appropriately suited to the demands of the nigerian economy and the challenges of globalization. i am pleased to note that so far the reform programme has received an overwhelming support from the operators, international community and other stakeholders. in our consolidation effort, 16 banks are already sure to make the new capital requirement compared to only 2 banks as at 6 july 2004. it is also good news that fresh funds are flowing into nigeria in response to the emerging investment | that is part of the global change, and which is strong, competitive and reliable. it is a banking system which depositors can trust, and investors can rely upon. evolving such a banking system is a collective responsibility of all agents in the nigerian economy. everyone has a role to play. on the part of banks, the challenges are enormous. we recognize that banks and their owners are primarily in business to make profit, and we are conscious of the need not to jeopardize this key driving motivation for innovation and entrepreneurship. however, we all know that banking system occupies a unique position in every economy and that is why it often attracts more than a casual regulatory attention. our industry in the 21st century must have a moral face and live up to some modicum of social responsibility. capitalism must have a social face and a human soul to be sustainable. this is the lesson of world history. it is in this context that we view with serious concern the spate of frauds, ethical misconduct, falsification of returns by the banks to the central bank, unprofessional use of female staff in some banks in the name of β marketing β, etc. collectively we can stop these misconducts and give the system a new face. banks are also expected to imbibe best - practice corporate governance, improve on self - regulation, enhance the capital base, institute it - driven culture, and seek to be competitive in today β s globalizing world. diversification of the productive base of the economy remains a fundamental challenge of economic management, and banks will increasingly be challenged to become more innovative in their intermediation function, and especially to increase financing to the productive sectors. the regulatory authorities, on their part, would further streamline the regulatory framework and strengthen the supervisory capacity to ensure a sound and efficient system. it is not enough to have a vision, we must act now. accordingly, let me share with you some of the preliminary thoughts on the major elements of the reforms by the cbn in this first phase of the banking sector reforms. we welcome your comments and suggestions before we finalize them. some of the key elements might include : ( i ) requirement that the minimum capitalization for banks should be n25 billion with full compliance before end - december 2005 ( that is, 18 months notice rather than 12 months normally given in many countries ). β’ only the banks that meet the requirement can hold public sector deposits, and participate in the das auction by end 2005. β’ publish | 0.5 |
##banks. salient near - term risks let me illustrate how these vulnerabilities factor into my views on the resilience of the financial system. i will walk through how potential near - term risks could interact with current conditions in the united states. i will cover both domestic and international risks in a way that is closely aligned with the discussion in the fsr. 6 in recent outreach, as summarized in this figure from the fsr, contacts were particularly focused on the persistent inflationary pressures leading to further monetary tightening, the potential for significant losses on cre and residential real estate, the reemergence of banking - sector stress, and market liquidity strains and volatility. based in part on the outreach survey the federal reserve bank of new york conducts that informs the discussion in the fsr. see section 5 and the box β survey of salient risks to financial stability β in board of governors of the federal reserve system ( 2023 ), financial stability report ( washington : board of governors, october ), pp. 47 β 48, https : / / www. federalreserve. gov / publications / files / financial - stabilityreport - 20231020. pdf. - 8as i said earlier, the banking sector has stabilized since the period of acute stress earlier this year, and the system as a whole has ample capital and liquidity to withstand shocks. i continue to monitor the system for signs of renewed stresses. i also support seeking public comment on federal banking agencies β basel iii endgame proposal on bank capital requirements. in addition, nbfis have become an integral part of the financial system and are increasingly interconnected with the banking sector. it is crucial for relevant authorities to implement stronger oversight and appropriate prudential requirements for nonbanks. this is especially important amid concerns that proposed higher capital requirements for large banks could cause some bank activities to migrate to the more lightly regulated nbfis. it would be the most effective and balanced way to enhance the stability of the entire financial system. internationally, inflationary pressures persist in advanced foreign economies and could pose risks to the global financial system. energy prices have increased notably in recent months, potentially forcing businesses to pass on renewed cost pressures to customers. an unexpected increase in policy rates abroad could lead to heightened volatility in financial markets, strains in market liquidity, and an adjustment in asset prices. higher interest rates, particularly if they persisted, could be a binding constraint on the debt - servicing | capacity of foreign households, businesses, and governments. collectively, these factors could lead to pronounced losses among global financial intermediaries and a consequent reduction in the credit supply. in china, a further slowdown in economic growth could worsen financial stresses. many chinese firms, especially in the property sector, are struggling to service very high - 9debt burdens. local governments are also facing increasing fiscal strains. stresses originating in china could spill over to other emerging market economies ( emes ), particularly those highly dependent on trade with china or on credit provided by chinese entities. the spillovers could trigger significant capital outflows from emes, which may already be more susceptible to external shocks given generally heightened debt levels. given the size of its economy and financial system, financial stress in china could be propagated to global markets more broadly through disruptions to economic activity, deterioration of risk sentiment, and a sharp appreciation of the dollar. last but not least, a worsening of global geopolitical tensions, including those involving russia, the middle east, and china, could lead to broad negative spillovers to global markets. russia β s ongoing war against ukraine continues to weigh on many economies in a variety of ways, including sustained disruptions to regional trade in food, energy, and other commodities. the conflict in the middle east could generate further risks to energy and financial markets, as well as a worsening of global humanitarian and migration challenges. more broadly, escalation of geopolitical tensions could lead to lower economic activity and increased fragmentation of global trade flows and financial intermediation, raising financing and production costs and contributing to more sustained supply chain challenges and inflationary pressures. the global financial system could be affected by a pullback from risk - taking, declines in asset prices, and losses for exposed businesses and investors. i will conclude by saying that we must remain vigilant to potential shocks that could exacerbate vulnerabilities in the global financial system. thank you for inviting me to speak here. i look forward to participating on the panel. financial stability : resilience and challenges lisa d. cook member board of governors of the federal reserve system central bank of ireland november 8, 2023 the views expressed here are my own and do not reflect those of the board of governors or the federal open market committee | 1 |
encouraging to note that banks have already disbursed rs 326 billion during the first 9 months, which is 65 % of the target of fy 14 - 15, and is 28 % higher than the same period last year. it is also heartening that the portfolio quality of banks agri portfolio has also improved over the recent period. i believe that the banks would be able to further improve the portfolio quality of agri - lending by using innovative lending models supported with their experience curve. 9. it has been through the collaborative efforts of all stakeholders that the banks have improved their actual agri disbursement to financing requirements ratio from 37 % to 53 % over the last 5 years and we are working to improve it even further so that more and more farmers can free themselves from the shackles of exploitative informal credit. in order to make it happen, sbp has taken initiatives to promote agri - financing to bring depth, inclusion, efficiency and stability into the system : β’ innovations in agri - financing are being promoted by adoption of value chain and warehouse receipt financing through constant guidance and pilot projects. β’ enhanced risk management through crop and livestock loan insurance schemes and credit guarantee schemes, to help banks venture into providing financing to farmers, particularly the smaller ones. β’ sbp has been extensively involved in capacity building of farmers through offering financial literacy programs and financial service providers, through engagement of local and international experts who are helping the financial service providers to tailor their approach for improved service delivery and increased profits. distinguished guests! 10. yes state bank views positively at the recent increasing momentum, but we should not lose sight of the fact that our long journey in agri - credit market has just started. in this context, i feel we will be wrong if we say that rs. 500 billion is a big target. let us not forget that this is only 53 % of our credit demand. bis central bankers β speeches 11. going forward, the most critical challenges are inclusion of majority small and marginalized farmers, addressing geographical imbalances and financing to non - crop activities, which will lead to enhancing the share of agri credit in banks β advances. sbp is committed to continue its efforts to deliver real benefits to the farming community and it is hoped that with the joint efforts of policy makers and the industry, agri - financing would soon emerge as a sound, scalable and sustainable business segment for banks in pakistan. 12. in the end i would like to sincerely thank fao for | future, and that it would be highly unusual for a central bank to take pre - emptive action to shocks that have not yet materialised. proponents, on the other hand, argue that global warming causes exceptionally large and partly irreversible changes to our economies. global emissions are not projected to fall over the next 40 years even assuming that all currently planned climate policies are implemented ( chart 10 ). chart 10 climate risk scenarios : projections of carbon emissions and global warming ( emissions of co2, gigatonnes per year ) source : climate action tracker, warming projections global update ( projections : december 2019 ). in the absence of a faster acceleration towards a low - carbon economy, it would be a question of when rather than if climate change will affect price stability. the effects on potential growth and financial stability could be so large that it would leave central banks with few options to fulfil their primary mandates. proponents therefore argue that such exceptional risks require central banks to be forward - looking to reduce both the probability and severity of future shocks to inflation. under our secondary mandate, the ecb has the obligation β indicated by the legal term β shall β β to align its monetary policy measures with the general economic policies of the eu, as long as this does not prejudice our price stability objective ( chart 9 ). this implies, among other things, that if the ecb is faced with two policy options that are equally effective with respect to its primary objective, it must choose the one that is better aligned with the eu β s economic policies. purchases of corporate bonds vividly demonstrate this principle. given the high priority that european policymakers attach to climate protection, if purchases of two bond portfolios are deemed to provide a similar degree of monetary accommodation, but one of them has a lower carbon footprint, then the ecb should purchase the portfolio with the lower footprint. that is, the ecb is free to choose the instrument β in this case, asset purchases β but it needs to calibrate its use in line with the objectives set out in the treaty. in addition, the treaty specifies that environmental protection requirements must be incorporated into the definition and implementation of the ecb β s monetary policy β the β integration obligation β ( chart 9 ). any policy action on the part of the ecb must also respect the general provisions of eu primary law, including the principles of proportionality and an β open market economy β. these principles impose additional constraints on the ecb β s potential actions in the | 0 |
inflation was higher and broadly as projected. international inflation has also declined markedly and moved closer to inflation targets. many central banks have cut their policy rates. the market expects further rate cuts ahead, but fewer rate cuts than previously. since the previous monetary policy meeting, the krone has been slightly weaker than assumed. we set the policy rate based on conditions in the norwegian economy, but as a small open economy, we are affected by international developments. the new us administration has announced trade policy changes, but it remains uncertain which measures will be enacted. should tariffs be raised, global growth will likely slow, but the implications for price prospects in norway are uncertain. the committee will have received more information about economic developments ahead of its next monetary policy meeting in march when new policy rate forecasts will also be presented. 2 / 2 bis - central bankers'speeches | ida wolden bache : policy rate will likely be reduced in march introductory statement by ms ida wolden bache, governor of norges bank ( central bank of norway ), at the press conference following norway's announcement of the policy rate, oslo, 23 january 2025. * * * presentation accompanying the speech chart 1 : policy rate kept unchanged at 4. 5 percent norges bank's monetary policy and financial stability committee has decided to keep the policy rate unchanged at 4. 5 percent. norges bank is tasked with keeping inflation low and stable. the operational target is inflation of close to 2 percent over time. we are also mandated to help keep employment as high as possible and to promote economic stability. we have raised the policy rate significantly to tackle high inflation. since december 2023, the policy rate has been held at 4. 5 percent. the interest rate has contributed to cooling down the economy and to dampening inflation. the current outlook suggests that inflation will return to target without a large increase in unemployment. inflation fell further towards the end of last year and has moved closer to target. at the same time, the rapid rise in business costs is likely to contribute to stoking inflation ahead. the committee is concerned with the risk that if the policy rate is lowered too quickly, inflation could remain above target for too long. on the other hand, the committee does not want to restrain the economy more than needed to stabilise inflation around 2 percent. the committee judges that a restrictive monetary policy is still needed, but that the time to begin easing monetary policy is soon approaching. if developments turn out as we now envisage, the committee will reduce the policy rate in march. we have not made new forecasts for this monetary policy meeting but have assessed new information about economic developments against the forecasts presented in december. chart 2 : unemployment is little changed growth in the norwegian economy picked up slightly in 2024. activity has been lifted by high public demand and large investments in the petroleum industry. at the same time, housing construction has shown a sharp decline. unemployment has risen somewhat from a low level in recent years. in recent months, unemployment has changed little in line with our december projections. chart 3 : inflation has moved closer to target 1 / 2 bis - central bankers'speeches inflation has fallen markedly over the past year, and in december inflation stood at 2. 2 percent and was lower than expected. however, excluding energy prices, which fluctuate widely, | 1 |
##urer and the customer. ultimately, we all should recognize that it is the interests of the customers, which is at the heart of it. jack ma of alibaba, aptly said it, β customers should be number one. β the challenge presented upon you today, is to embrace the digital economy and not lose sight of this. on that note, let me once again thank piam for the opportunity to share some thoughts with you today and i wish you a productive convention ahead. 4 / 4 bis central bankers'speeches | and productivity. in this regard, time and effort saved from less handling of cash and cheques can be directed to more productive tasks such as to increase sales, even by usage of whatsapp. second, increasing your digital accessibility to prospective clients. for a long as i am aware, the agency force has always dominated the insurance distribution 2 / 4 bis central bankers'speeches channel. in 2017, there was a total of over 56, 000 agents constituting a market share of approximately 63 %. irrespective of whether in general or life insurance, the agency force has traditionally been the physical point of contact and engagements with clients. but, with the internet and improved access amongst a growing number of the malaysian population, online insurance solutions will not only become more viable, but also easier to adopt. in this, the agency force cannot afford to stagnate. other industries with heavily digitalised services, like the air travel, hospitality and retail sectors, have elevated the digital literacy of the malaysian population and improved their appetite for efficient delivery and transparent pricing of services. in this sector, there remains significant untapped demand for general insurance products as a whole. the low penetration rate of 1. 4 % for general insurance, which is measured in terms of premiums as a share of the nation β s gross domestic product, is actually symptomatic of this. thus, agents who move quickly to improve their digital outreach will have a first mover β s advantage and are likely to gain a growing group of digitally literate malaysians. thirdly, conducting robust suitability assessment for customers. one thing worth emphasising repeatedly is this ; financial services offered must be suitable to the needs of the customers. while the bank β s guidelines on product transparency and disclosure attempts this by stipulating the β rules of the game β, we look to insurers and the agency force to β play β according to these rules and seek out ways to achieve the outcome of ensuring consumers obtain financial services that are suitable to their needs. agents should develop their individual capacity to analyse customer requirements to identify their needs and develop risk profiles to match them with suitable products or combinations of products. for example in the case of motor insurance policies, agents should create awareness on optional add - on covers that are available and underwriting factors that will affect motor insurance premiums. appropriate profiling of a customer can be crucial in helping agents identify customised product recommendations efficiently. finally, perhaps i should bring your attention to | 1 |
##evu / naitasiri, namosi / serua, nadroga / nadi, bua / macuata, cakaudrove and fly - in fly - out operations to taveuni and kadavu. apart from various deposits products, the rural program also includes small and micro loans to communities in rural and outlying areas. the government and the reserve bank have supported this initiative of anz from the beginning and are pleased to see that more and more rural areas are being serviced through anz rural banking. we encourage various businesses and government agencies, including nltb, to use these services when they wish to make payments such as royalties, land rent etc. financial literacy programs organised by the united nations development program ( undp ) have been conducted in conjunction with anz rural banking in these rural areas as well since october 2004. atms atms provide a very convenient way of doing banking. customers can access their bank accounts to make cash withdrawals or credit card cash advances and check their account balances as well as topping up their mobile balances. with more and more atms being installed around the country, the need to go to a bank for cash has reduced dramatically. i am told that people in fiji use atms more than in many other countries. this is seen from the frequency of use of each atm in the country. as of today, there are 151 atms in fiji. of that total, anz has 70 atms or 46 percent of the total. this is an excellent achievement for anz in fiji! the location of this atm in nasese is going to service a rapidly growing part of suva. we hope that this will lessen the queues at the atms in suva. fijiclear while we are on the topic of access to money, i would like to take this opportunity to say a few words about fijiclear. fiji β s electronic payment system is called fijiclear. this system went live on 30 august 2007 and was launched on 16 october 2007. fijiclear allows people to make and receive payments electronically on the same day through a commercial bank anywhere in fiji. fijiclear has been in operation for almost a year but for some reason many of our people are not using this very easy and efficient payment system. there are a number of benefits of using fijiclear. to the payee i. e. the person receiving money, the benefits include : β’ funds are credited into the account | the customers. westpac again has been at the forefront of such developments. one product that we are keen to push is the export finance facility where eligible exporters can access bank loans at low interest rates. unfortunately, for some reason, it has not been used much by exporters and the banks. westpac came to us suggesting some changes to the facility and i thank them for the initiative. we have therefore introduced most of the changes that they suggested and we hope that these changes will make the facility more attractive and facilitate the growth in exports β which we sorely need to improve our balance of payments position. i encourage you to talk to your bank commercial bank or the fiji development bank about this facility. there were two cabinet decisions recently that pose considerable interests to the industry. we heard that cabinet has approved the establishment of a financial services ombudsman scheme. there are several countries like new zealand and australia that has such a scheme and we can learn from their experiences in the operation and the funding of their ombudsman. when properly set up, this ombudsman scheme should help both customers and bankers settle disputes in a timely and efficient manner. we have also heard that cabinet has also approved the establishment of a financial services commission. we certainly look forward to government discussing this rather complex issue further with all stakeholders. westpac nakasi let me turn to the branch that we are opening this evening. i am pleasantly surprised at the development happening in nakasi. i know the locality very well as i used to live here in the early eighties. in fact, the apartment that we stayed in was at this very site that this complex has been built. there was only the gulab supermarket and cinema at that time. now, we have major supermarkets and shopping centers that have set up in this area. i am sure that this growth will continue into the future. i am therefore pleased that a commercial bank has decided to establish a branch in this busy part of the suva - nausori corridor. it makes good business sense for westpac to establish a branch here. westpac is the only bank branch for kilometers in any direction. your customers must be glad that they don β t have to travel far towards suva or nausori for their banking services. i am told that this is a fully - fledged branch which offers a dynamic business centre complete with an interview room and a separate business teller β s area. the new branch will cater not only for businesses, but also residents | 0.5 |
largely driven by increased domestic demand, and further spending on infrastructure to address present shortfalls and facilitate economic expansion. imf has projected asia to grow by 5. 7 % in 2013, and 6. 0 % the following year, exceeding the outlook for the global economy. 5 growth in asia over the medium term will be supported by continued urbanisation, favourable demographics and increased intra - asian trade and investment. second, multilateral islamic finance agencies are making steady headway in addressing issues that contribute to some fragmentation of the islamic finance industry. work by the ifsb in setting international standards and best practices for the industry is providing greater uniformity of regulatory environment for islamic financial players globally. the international islamic financial markets ( iifm ) is collaborating with isda and industry players to develop standardisation of islamic financial products, documentation and related processes that will facilitate cross - border islamic hedging, risk management and money market activities. efforts by the accounting & auditing organisation for islamic financial institutions ( aaoifi ), islamic β the new silk road : asia and the middle east rediscover trade and investment opportunities β, research department, kuwait china investment company ( kcic ), january 2011. ibid. β economic growth moderates across middle east β, imf survey, may 21, 2013. β world economic outlook β, imf, april 2013. bis central bankers β speeches development bank and malaysia β s international shariah research academy ( isra ) in research and fostering dialogue between shariah scholars from various jurisdictions are also narrowing the differences in views on shariah issues in finance. as work on all these fronts progress, this will encourage greater interest internationally to participate in cross border financing and investment activities. the prospects for cross - border islamic finance are already very bright. we are beginning to see cross border sukuk issuance within asia, as well as between middle east and asia. as early as 2010, malaysia β s khazanah issued a s $ 1. 5b sukuk in singapore, while japan - based nomura issued 2 - year $ 100m sukuk in malaysia. last year, taking advantage of favorable currency swap rates, singapore listed companies natural resources and golden agri tapped the malaysian ringgit ( mr ) sukuk market. in the last two years, two gcc firms, abu dhabi national energy company and kuwait - based gulf investment corp issued mr sukuk in malaysia. there is considerable scope to issue more | with the dynamism that has characterized this industry in the last decade. together, you have achieved much ; but you should not rest on your laurels. we still have a long way to go in terms of reaching out to many more of our entrepreneurial poor. the challenge for rural banks, therefore, that are at the forefront of our microfinance movement, is to further widen and deepen the reach of microfinance to liberate our industrial entrepreneurial poor from poverty. this challenge can be surmounted by strong and vibrant banks that are committed to continuously upgrade their capacity, uphold performance standards, and adhere to best practices at all times. key areas of governance, efficiency, risk management, sustainability and quality of operations should be continuously developed and strengthened. this should lead to sound and well - managed institutions that can take advantage of market opportunities while adequately managing associated risks. in this regard, mabs banks seem well positioned to take on this challenge. anchored firmly on your commitment to sustainable microfinance, we have seen how your policy of zero tolerance to delinquency, emphasis on adequate internal controls and investments in systems and human capacities have resulted in positive gains for your member banks. on the part of the bsp, we will continue to look at ways in which banks can have a wider scope for their microfinance operations. we will remain responsive to the changing demands of the industry by maintaining a positive enabling policy and regulatory environment for microfinance. in addition, we will continue with our major reforms toward a more robust financial system and in fostering greater competition aligned with international standards within our banking sector. our regulations will continue to focus on critical areas of strengthening board and institutional governance, improving bank β s balance sheets and upgrading risk management systems. we at the bangko sentral look forward to continuously working with rbap to achieve our common goal of local economic development by creating opportunities for entrepreneurship, nourishing local enterprises and building prosperity in the countryside through microfinance. thank you all and good morning. mabuhay ang microfinance! | 0 |
alone in absorbing goods and resources from around the world to feed its economic expansion. the extent of the strong worldwide demand, particularly the demand for commodities coming from the emerging powers of china and india, has fuelled canadian and australian growth and also has reminded us of just how closely intertwined countries have become. canada has traditionally been known for its net exports of non - energy commodities. minerals and lumber continue to be important commodity exports for us. however, over the past decade, thanks to plentiful oil and gas reserves and sharply higher prices for oil and natural gas, we are now increasingly known for our energy riches. similarly, australia's reserves and exports of minerals, uranium, and coal are among the largest in the world, and demand for those commodities helps to shape the views of global markets about your country. as well, we're both major exporters of grains, traditionally among the top three in the world. as such, i can certainly understand and sympathize with your farmers who are suffering the effects of drought. with such strong world demand and interest directed towards our commodities, it's perhaps a good time to pause for a moment and reflect on how we might try to strengthen the global trade and financial systems that we rely on so much. world commodity markets are subject to ups and downs. the movements in commodity prices and our exchange rates can pose serious economic challenges for firms and workers. in turn, central bankers and governments must design policies that allow businesses and workers to react rapidly to changing economic circumstances. the healthy, steady prosperity of our two economies is a testament to domestic policies that are working to encourage flexibility, and thus facilitate adjustment. policies to encourage flexibility on the domestic front, it seems that both canada and australia have been on the right track - and we both have the economic record to demonstrate that! in terms of monetary policy, both the bank of canada and the reserve bank of australia have embraced a policy of inflation targeting backed by a floating exchange rate. for over a decade, both the reserve bank of australia and the bank of canada have concentrated on maintaining low and stable inflation. inflation targeting helps to preserve confidence in the future value of money and, in that way, anchors inflation expectations. this helps business in making appropriate investments, by maximizing the clarity of the signals that are sent by prices. controlling inflation is also crucial to maintaining the confidence of markets at home and abroad. central banks pursue inflation targeting by adjusting interest rates with the goal of keeping total supply | ##sch, yves ( 2017 ), β digital base money : an assessment from the ecb β s perspective ", speech at the farewell ceremony for pentti hakkarainen, deputy governor of suomen pankki β finlands bank, european central bank, 16 january. 14 hayek, f. a. ( 1974 ), β the pretence of knowledge β, nobel memorial lecture, 11 december. published american economic review, 79 ( 6 ) : 3 - 7, 1989. 9 / 9 bis central bankers'speeches | 0 |
yes β. since that forecast was completed things have gone in different directions. the prospect for external demand has somewhat weakened and so too has the oil price. there are mixed messages relating to tightness in the labour market, but earnings growth has so far remained reasonably well contained - as it must continue to do. on the domestic demand side, private consumption growth has remained stronger than we had supposed, while the growth in private investment has been weaker ; meanwhile it is not clear that underlying public sector demand has β at least yet β picked up as rapidly as planned. the exchange rate has fallen, and so, too, have market interest rates. i would not venture to suggest how these β and all the other developments we look at β will influence our next forecast in february ; and it would be pointless to anticipate possible future policy decisions. i would be surprised if they radically altered the broad prospect of relatively steady progress over the next two years. but i can assure you of one thing : if the prospect β or the balance of risks around it were to change significantly β either in the context of our february forecast or subsequently β we will promptly react to that change. despite the fact that we left interest rates on hold again last week, we have certainly not gone to sleep! we cannot guarantee that we will always remain as close to the symmetrical inflation target as we have been in recent years β the uncertainties as i have explained are too great for that degree of confidence. but that remains our aim. and i will be happy to report back to you again at your next dinner. let me, mr president, just conclude by congratulating you and the chartered institute on your achievements β not just over the past two years though i do congratulate you on that, especially, if i may, on your introduction of your new chartered banker qualification. but i congratulate you more broadly on your achievements over the whole 125 years since your foundation. and let me invite all your guests now to rise and to join me in wishing you well over the next 125 years. ladies and gentlemen, please join me in a toast to the continuing achievements of the chartered institute of bankers in scotland. | independent shadow banks even where a shadow bank is not de facto or de jure part of a banking group, many are fundamentally dependent on banks β through committed lines of credit. anyone running a maturity mismatch is exposed to liquidity risk β liabilities being called before assets fall due or before they can be sold in an orderly way. banks can provide insurance against such liquidity risk because their deposit liabilities are money ; they can lend simply by expanding the two sides of their balance sheet simultaneously, creating ( broad ) money. but, for the system as a whole β ie taking a macroprudential perspective β providing committed lines to shadow banks is riskier than providing such lines to non - bank businesses. shadow banks are liable to call on their lines just when the banking system is coming under liquidity pressure itself. that should be reflected in regulatory policies on banks β liquidity exposures. i suggest that : the draw - down rate assumed in the basel 3 liquidity coverage ratio should be higher for committed lines to financial companies than for lines to non - financial companies. that is, banks should hold more liquid assets against such exposures. without a policy of that kind, there will be a strong incentive for maturity - transformation to be undertaken off bank balance sheets but with an umbilical cord back to the banking system. it should apply not only to vehicles used for securitisation but more generally. money funds money funds do not use committed lines of credit from banks. claims on money funds have, in effect, become monetary assets in the hands of savers. in parts of the world, especially the us, they are treated like current accounts. given the restrictions on their asset holdings, they resemble narrow banks, in mutual - fund clothing. but for a normal mutual fund, as an open - ended investment vehicle, the value of investments in it fluctuates with the value of the vehicle β s asset portfolio. by contrast, most money funds hold themselves out as offering par under any circumstances ; when they β break the buck β, they must unwind. their investors run at that prospect ; and so the funds themselves are flighty investors. compared to most types of shadow banking, money funds do not borrow β in the usual sense. but by promising par, they are in effect incurring debt - like obligations. and they can be exposed to leverage. at least in the run up to the crisis, some invested in levered paper, some of it in | 0.5 |
joachim nagel : welcoming speech aβ¬ β lithuanian evening welcoming speech by dr joachim nagel, president of the deutsche bundesbank, at the lithuanian evening, frankfurt am main, 4 july 2023. * * * check against delivery 1 introduction ladies and gentlemen, dear lithuanian - german friends, since croatia adopted the euro at the beginning of this year, lithuania has already become only the second - youngest member of the euro area. before lithuania joined in 2015, the bank of lithuania and the bundesbank signed an agreement on the acquisition of euro banknotes. 132 million banknotes were brought to lithuania from the bundesbank's vaults. 1 maybe some people took this as a symbolical birthday present, though a hefty one, weighing 114 tonnes! when the euro changeover was successfully completed, yves mersch, then a member of the executive board of the ecb, said : it is not only an enormous logistical achievement, but it is also a significant milestone for lithuania, strengthening the ties between the country and its european partners, and highlights the continued attractiveness of the euro. 2 since then, the eurosystem central banks have been working hand in hand as an anchor for price stability in the euro area. through times of low inflation, and now, when fighting inflation that is far too high. together with your neighbours estonia and latvia, your country has been the hardest hit in the euro area. the baltic countries suffered inflation rates above 20 %, which was more than twice as high as the euro area average. inflation has fallen from these peaks and is expected to ease further. the latest figures for june are : 5. 5 % in the euro area, 8. 2 % in lithuania, 6. 8 % in germany. like a beetle plague destroying the harvest, inflation harms our prosperity. beetles are useful in nature. but they should not get out of hand. on the governing council, we are acting in unison to get a grip on inflation. we will do what is necessary to bring it back to 2 %. to ensure a timely return to price stability, we are working together constructively. we can all learn from each other not only in the field of monetary policy, but also in other areas of central banking. i noted with great interest, for instance, that the bank of lithuania recently received a global award for financial market development : for its fintech newcomer programme. 3 so on the governing council, we all benefit from each other's expertise. | from december assumes that the euro - area economy will grow by 1. 7 % this year and by 1. 6 % in each of the next two years. although the forecast is currently undergoing its scheduled revision by the ecb staff, i do not expect the previous picture to change very much. however, from my vantage point the cyclical downside risk has recently tended to diminish. the german economy, too, with capacity utilisation perceptibly higher than that of the euro area, remains in good shape. employment once again hit a new all - time high last year. thanks, above all, to healthy domestic demand, gross domestic product was up by 1. 8 % after adjustment for calendar effects. the economy looks set to remain on an upward trajectory this year and the next, with domestic demand again providing the primary impetus. the bundesbank β s economists expect calendar - adjusted growth to come to 1. 8 % in 2017 and to dip slightly in the years after that. however, this positive economic outlook should not blind us to the fact that the longer - run outlook for growth in germany is sub - par. what i am thinking of here, for example, is that, in the coming years, the number of persons going into retirement will surpass the number of young people 2 / 8 bis central bankers'speeches entering the job market. in isolation, this will cause weaker growth. that, too, is why the oecd is projecting that, until 2060, germany will grow more slowly than any other major industrial country. the robust upswing and rising capacity utilisation will also drive up price pressures. according to the december projection, the euro area will see inflation rise to an average of 1. 3 % this year, followed by 1. 5 % next year and 1. 7 % the year thereafter. to repeat : that was the december projection. since then, inflation has risen even more strongly than expected, recently hitting 1. 8 %. and for full - year 2017, the inflation forecast will probably be lifted perceptibly. in germany, where the effect relative to the december forecast is likely to amount to one - half percentage point, some have therefore already spoken of β the return of inflation ". this increase in prices, however, is attributable mainly to higher oil prices β since the end of november, oil has become significantly more expensive. at the beginning of the past year, its price had been exceptionally low | 0 |
research and working with market participants and regulators on ways to increase transparency in canadian markets, with due regard for liquidity, equitable access, and fair play. together with price transparency, these are the ingredients that help to create efficient, well - functioning markets. it is important that we get transparency and regulation right. but we also need to devote the appropriate time and effort to making the most of whatever rules we write, including existing ones. this means focusing on a range of smaller initiatives that can enhance efficiency. for example, provincial and territorial legislatures need to make the uniform securities transfer act a priority. such an act would provide a sounder legal basis for the holding and transfer of rights in securities that are held in book - entry form, and would replace the current patchwork of legal rules in this area. another initiative is the canadian capital markets association β s focus on trade - matching to support progress towards straight - through processing. there β s one more area where it is absolutely critical for canada to continue to improve, and that is enforcement. there is a widely held perception that canadian authorities aren β t tough enough in punishing fraud and enforcing insider - trading and other rules. that β s why it is encouraging to see that steps to toughen enforcement are being taken, by provincial securities commissions, by the investment dealers association, by law - enforcement agencies, and by the federal government. these kinds of steps to improve enforcement must continue. conclusion let me conclude. to improve the economic and financial welfare of canadians, we need an efficient financial system. the bank of canada has been contributing to this goal by enhancing canadians β confidence about the value of their money and by reducing risks to the safety and stability of the financial system. our financial system review is part of this effort. but the effort must extend far beyond the central bank. i β ve raised some issues today that i think are critical to enhancing the efficiency of our financial system. none of these issues are new. they have been studied and analyzed thoroughly. but while canada has been studying and analyzing, the rest of the world has been acting. it β s time for us to act, too. we have to get on with the job of improving efficiency. the future health of our economy and the prosperity of canadians depend on it. 4 / 4 | as well as the supervisory bodies, to take remedial measures to increase resilience, as necessary. in addition, given their system - wide perspective, central banks can monitor and evaluate unintended consequences of regulatory standards on the financial system and real economy, especially with respect to market functioning and the availability of credit. fourth, by contributing to the monitoring of systemic risk and the development of macroprudential measures. as noted, most central banks do in - depth analyses of financial vulnerabilities. they also often investigate possible remedial measures to mitigate the vulnerabilities and they share their work with other agencies responsible for macroprudential oversight. the mechanisms for doing this differ according to the macropudential policy framework in each jurisdiction. valuable aspects of the analyses by central banks include monitoring for the impacts of financial innovation and possible instances of risky regulatory arbitrage, as well as the identification of data gaps. bis central bankers β speeches again, because of a central bank β s system - wide perspective and analytical capacity these contributions are essential for the formulation of appropriate macroprudential policy. such policy initiatives come in all sizes, but let me give you an example of what we did here in canada. in the immediate aftermath of the crisis, household debt and house prices resumed growing faster than disposable income in response to lower interest rates and the recovering economy. the department of finance and a number of agencies, including the bank of canada, worked together to mitigate this growing systemic vulnerability. the bank β s analysis of household debt and house prices helped inform the regulatory changes that were adopted. the federal government tightened rules for government - supported mortgage insurance, including increasing minimum down payments. for its part, canada β s bank regulator, the office of the superintendent of financial institutions, released new guidance on mortgage underwriting and mortgage insurance that implemented enhanced global standards. these measures were successful in slowing household credit growth and they complemented the bank of canada β s accommodative monetary policy by better targeting the stimulus to the most creditworthy households. to further enhance our contribution to macroprudential oversight in canada, we have two aspirations : 1. to develop a framework for system - wide macro - level stress tests that integrates different sectors of the financial system β banking, insurance and investment funds β as well as financial markets and financial infrastructures. 2. to improve our models to better understand the interactions between monetary and macroprudential policy. | 0.5 |
##ary consolidation may require an additional effort to control primary spending. the collaboration of regional and local government is vital in this connection, as they are responsible for major spending components such as public investment, health and education. this consolidation strategy should, moreover, be compatible with an improvement in the quality of public finances, since that is essential for raising incentives and for helping overcome the shortfalls in education, innovation and productivity. but when you are part of a monetary union, the most valuable economic policy instrument is, as our own experience indicates, the deepening of reforms in order to increase the responsiveness of supply and the adaptability of the business and productive sectors to the major changes the economy is undergoing, such as globalisation and population growth. specifically, the dynamism and flexibility injected into the labour market by the aforementioned phenomena of immigration and growing female participation need to be accompanied by the development of a more appropriate institutional framework, without forgoing the unquestionable achievement of good industrial relations. despite the progress achieved by labour market reforms in recent years, the need remains to better tailor collective bargaining arrangements to the different industry - and firm - level requirements and to reduce the costs associated with permanent contracts. these measures should be complemented by others aimed at improving the quality of the labour factor, by giving greater priority to educational policy in order to redress the secondary education deficit, adapt university courses to new demands and promote effective continuous training for workers. improving the efficiency of the economy likewise requires increasing investment in physical and technological capital, fostering innovation, pushing through privatisation where appropriate and stepping up the pace of the processes undertaken in recent years to heighten competition. the infusion of competition is particularly relevant in industries pivotal to spreading gains in efficiency to the rest of the economy, such as the network industries, the telecommunications market, the energy sector and rail transport. some of these liberalising measures are detailed in the national reform programme so that, irrespective of the need to design other new measures, it would be advisable to apply this programme more resolutely. also, advantage should be taken of the transposition of the services directive to define a more straightforward and competitive regulatory framework for these activities. education, innovation, market liberalisation and, broadly, all reforms geared to increasing productivity are of the utmost importance looking ahead to the long term. in recent years the welfare of spanish citizens has been increasing thanks to better use of the labour factor. this is worth celebrating since for a | differences include most notably so - called national discretions and options. on one hand, the new framework provides for a gradual transition to the new capital requirements, in line with the basel iii accord. the regulation gives countries some discretion in setting the pace of convergence towards the new requirements, which may give rise to temporary differences in the treatment of some specific aspects. for instance, a country may decide to bring forward the application of the new capital conservation buffer, initially envisaged for 2016, or the deduction of certain capital components. moreover, the regulation provides for a series of national options that might give rise to permanent differences in the treatment of specific aspects. it is logical that the ssm should work to achieve a degree of harmonisation, seeking to restrict national options of a permanent nature. it is perhaps less logical to take steps in the case of temporary discretionary arrangements, which by their very nature must disappear within a few years. different accounting practices, especially as regards provisioning, also significantly affect the uniformity of capital figures and should be a supervisory concern. it is thus reasonable to expect the ssm to contribute to convergence in the interpretation of international accounting standards. and it is essential that the ssm should strive equally to revise the calculation of riskweighted assets. that will call for a detailed review of the risk models used by banks and the adoption of corrective measures should unjustifiable deviations be detected. macroprudential policy macroprudential policy, insofar as it seeks to identify systemic risks, prevent them and increase the industry β s resilience, has an important role to play. the very nature of these risks is global in dimension, meaning that coordination between the various authorities with responsibilities in this field is needed. at the same time, it should be borne in mind that while the risks may be considered common to the euro area as a whole, their impact and intensity vary from country to country. this heterogeneity not only depends on the characteristics of each country, but also on the particular juncture of the financial cycle. for example, at present certain euro area countries evidence risks associated with excessive real estate market prices, while in others this risk is not discernible. macroprudential policy thus requires a coordinated approach by the various institutions, and at the same time attention must be paid to considerations of a national nature. in a monetary bis central bankers β speeches union like the euro area, the heterogeneity | 0.5 |
nor shamsiah mohd yunus : aiming high - navigating the next stage of malaysia's development keynote address by ms nor shamsiah mohd yunus, governor of the central bank of malaysia ( bank negara malaysia ), at the world bank's aiming high webinar series, 27 may 2021. * * * the economist magazine recently published an article comparing the welfare of citizens across countries, based on a survey of various aspects of well - being. the title of the article was β money really can buy happiness and recessions can take it away. β it maintained that citizens in highincome countries felt better off about their current life situation, have money for food, and access to good and affordable housing nearby. quality of life is also better due to less tangible factors such as corruption not being widespread, feeling safe when walking alone at night, feeling well rested and having helped a stranger in the past month. implicit in these findings is the idea that economic growth should go hand in hand with greater welfare. more than the dollars and cents of becoming wealthier, it is the improvements in the quality of life that countries aspire to achieve. and so, i was heartened to read in the world bank β s aiming high report that malaysia is likely to transition to a high - income economy between 2024 and 2028. this panel discussion is thus very relevant to our situation, now more than ever. for malaysia, the journey to become a high - income economy will not be easy. in the past three decades, only a handful of countries have managed to achieve that status, and importantly, to sustain their position. in fact, the road to becoming a high - income economy is more difficult today, as countries are confronted with challenges and uncertainties like never before. according to the oecd1, the present landscape has β new rules, new environmental constraints, new technologies and more competition β. we will need to adapt to these changes, while managing other shocks that may come our way. what we don β t want is for the economy to take one step forward, only to be pulled two steps back. along these lines, allow me to share four points on how malaysia can more confidently transition towards a high - income economy. an economy centred on innovation my first point is on putting innovation at the centre of our economic development. malaysia has come a long way. from being a commodities - based economy, we have diversified into high - end manufacturing and | , the whole country has a part to play in this mission. even the bank, where we β ve put the management of climate risk, as a top priority. government that is agile and forward - looking my final point is on changes to the state β s capacity. in the time of change and modernisation, how we approach the government β s role in innovation must also evolve. let me be clear. it is not that the government should play no role in the economy, but rather, it might be timely for some new thinking about the role of government in the economy, and how it works with the private sector. 3 / 4 bis central bankers'speeches after all, as moving forward requires the economy to consider not just cutting edge, but also bleeding edge ideas and technologies, we need to start thinking about novel and unconventional approaches. several questions spring to mind. first, how should the government take calculated policy risks, while managing policy failures? in building pathways to high income, ambitious industrial policies, or β moonshot strategies β, will play a key role. with any policy however, there would be uncertainty and possibility of failure. development economist, dani rodrick, called for effective industrial policy to be less on the ability to pick winners, but on knowing when to cut losses. too low a failure rate could also mean that we are playing it too safe. the objective, hence, should not be to avoid mistakes, but to minimise the cost of mistakes. this will require the government to build its capacity to account for and quantify the associated risk within the decision framework. only then can we make smarter, more intelligent bets to get the most bang for the buck. second, how can the government learn and execute better? focus should be as much on process and governance, as it is on the outcomes. while we have achieved leaps and bounds in economic development since our independence, past reforms also provide important lessons in areas where we must strive to do better. we have had roughly 60 - 70 blueprints and masterplans over the years ; not all have been executed to their maximum potential. let us identify the gaps and shortfalls and move forward from there. we must also hone the public sector β s ability to make incremental improvements and course corrections, as much as sweeping reforms. after all, correction mechanisms are what make governments smarter. third, a strong and sustained focus on protecting and promoting the qualities of efficient and effective public institutions must define our path to becoming | 1 |
its own high levels of savings to support investment. the financing cost for corporates and smes will also be higher because of the round - tripping of funds. this, i think is a fair and important point, because greater reliance on the region β s own savings will help reduce the volatilities associated with capital reversals that we have seen in the recent months. the third is the concern that, despite rapid growth, the role of asian financial institutions remains small. their participation in the region β s finance, especially cross - border finance, is not at par with the flows of savings that need to be intermediated. the challenge here is to promote greater roles of asia β s own financial institutions without compromising the open, competitive, and level playing field that has been the hallmark of the region β s financial markets. the fourth observation is the concern about the attendant risk associated with increased financial flows and integration. with increased flows, the region β s financial markets are susceptible to greater risks and spillovers from the international financial markets. the issue then is whether a better system is needed to help mitigate and manage these risks. and the fifth is the concern about the region - wide benefits of the efforts we are doing on financial market development and integration, given the vast diversity of the economies and markets in the region. ideally, regional financial development should be a win - win situation. nonetheless, the uneven pace of development and unbalanced focus could risk hallowing out the region β s financial system. and if this happens, it could sow a seed for future instabilities. i think these observations and concerns are important, and in a way they point to the issues that should be addressed in our next step of financial reform. and it is in this context that i see the world bank flagship study on east asian financial markets to be timely. and from what i heard this morning, significant benefits and insights can probably be gained from this study, and be useful to our future works in the region. i also have a number of specific remarks and views to make on the aspects of east asian financial markets to be discussed in the next sessions. but for the benefit of time, i think i should leave them for later opportunity. for now, let me close by saying a little bit about the role of policy. government policies, in my view, have played an important role in the current development of east asian financial markets. the key policy, of course, has been the implementation of | financial sector reform which has resulted in a much improved financial system, especially the banking sector. policies have been directed at developing the region β s capital markets too, especially the bond market. policy coordination has also been strengthened to increase regional financial integration and to develop a policy coordination framework that can help the region deal better with the likelihood of a crisis. i am referring here to the cmi or the chiang mai initiative and its surveillance process. but while policies have been important, the process of financial market development in east asia has essentially been left to the market, in the sense that the process is basically a market - driven one. but on account of what is perceived to be a slow progress, question arises whether policy should do more. my view is that the process should continue to be market - driven and not policy - driven. but there are areas that government policies can do more, especially on issues that involve efforts on a region - wide basis. in this context, future efforts at policy coordination should start by setting out a clear and concrete medium - term goal, then followed by a few but concrete and specific issues to be addressed or projects to be executed. a case in point is the development of a shared regional financial infrastructure such as linking the clearing and payment systems, harmonizing minimum regulations on cross - border investment flows, and developing a shared facility to promote greater flows of investment information. this type of specific efforts and projects would be easier to win region - wide political commitment and support. another suggestion is that, for the market - based approach to work efficiently, we may need to engage more formally the cooperation of the private sector. on this, i think east asia can learn a lot from the experience of the eu in engaging the private sector in planning and reviewing major financial initiatives. specifically here, i am thinking of the giovannini group of private experts, established in 1996, which has done at least four useful reports for the eu commission. their inputs have helped the eu in introducing the necessary directives. my last point is on the role of ifi β s such as the world bank. in recent years, in a good way, we have seen active involvement of all major ifi β s in the region β s financial market development. they contribute to research, ideas, technical assistance, policy advice, and funding. some are even involved as market participants. i am thinking here of the world bank, the adb, and the imf. but while their efforts are good, well - | 1 |
##omc post - meeting statement began to include more direct, but still qualitative, forward guidance regarding the future path of the federal funds rate. 5 notably, this forward guidance did not reference explicit outcomes or specific timelines that would guide the fomc's future policy decisions. evidence suggests that the shift toward more transparent communication by the fomc in the early 2000s, including its use of forward guidance, allowed financial market participants to better anticipate changes in the stance of monetary policy, which were then reflected in broader financial conditions. 6 the 2008 financial crisis significantly altered most assessments of the costs and benefits of providing more explicit forward guidance. with the federal funds rate remaining at near - zero levels for several years after that crisis, the committee had to look for new tools to change its policy stance and affect financial conditions. explicit forward guidance and large - scale asset purchases quickly emerged as the two main new tools of monetary policy. in a way, explicit forward guidance was seen as providing monetary policy accommodation when the current setting of the federal funds rate could not. 7 by providing guidance on specific outcomes that would need to be achieved before the fomc would consider raising the target range for the federal funds rate, the committee could help reduce uncertainty regarding its future policy decisions and keep longer - term interest rates low as the economic recovery progressed. 8 in addition, with the risks to the outlook generally seen as tilted to the downside in the years that followed the financial crisis, using explicit forward guidance to signal a " low for longer " policy was not seen as posing significant risks to the committee's credibility, because short - term interest rates were generally expected to remain unusually low during those years. i should note, however, that even then, low - for - long policies did raise some financial stability concerns, such as those related to reach - for - yield behavior. in addition, the outcome - based forward guidance employed by the fomc in the years following the financial crisis explicitly recognized the possibility that inflationary pressures could emerge. it incorporated a version of an " escape clause " in its forward guidance that would prompt a reconsideration of the policy stance should such inflationary pressures emerge. in particular, in its december 2012 statement, the committee noted that it expected the target range for the federal funds rate to remain at 0 to 1 / 4 percent for " at least as long as the unemployment rate remains above 6 - 1 / 2 percent, inflation between one and two years ahead is | have hit the stock market hard since last fall, and declines in equity wealth could begin to show through more forcefully to consumption spending. all in all, i think it is too early to have a strong conviction that the economy is reaching the end of this period of quite slow growth. as the fomc noted yesterday, the risks remain toward economic weakness. conclusion our announcement yesterday was part of an ongoing effort to communicate with the public at large and with markets. this desire to be transparent has led, in the last several years, to numerous changes in the procedures of many central banks. i do not know what future changes, if any, might be called for, but i am confident that central banks will continue to look for ways to make certain that their objectives and policies are clear. thank you for your attention. | 0.5 |
certainly, recent experience in south africa suggests that the recovery in the rand over the past year has been an important factor in containing inflation. in part this recovery has reflected the general weakening in the dollar, and factors such as higher commodity prices have also been an influence. but the currency's recovery has also been an important channel by which monetary tightening worked its way through to the economy. if the relationship between interest rates and exchange rate movements were predictable, the effectiveness of the exchange rate transmission channel would be helpful to monetary policy. but in practice this relationship remains rather inscrutable. moreover, the fact that emerging market currencies are subject to volatility resulting from shifts unconnected with the country itself, such as the recent substantial adjustments by the dollar and the euro, means that movements in the exchange rate can have impacts on domestic monetary conditions that can be both large in their effects and impossible to anticipate. of course, it can always be argued that in these circumstances the central bank should try to moderate movements in the exchange rate in greater or less degree. but the instruments available, for example through capital controls or official intervention, if maintained for any period, do not have at all an encouraging track record and may have counter - productive side - effects by impeding desirable structural adjustment or actually increasing exchange rate volatility. the appropriate remedy is to stick to the fundamentals, focusing monetary action determinedly on low inflation while taking into account impacts from the exchange rate as one amongst a range of relevant influences. but it needs to be recognised that these impacts may be particularly significant for emerging market economies. a further distinctive feature is more straightforward, but can easily be overlooked - that policy - makers in emerging market economies tend to have less information available to them about developments in the economy. this is essentially a form of resource constraint. it applies to statistics, where relevant series may be available less frequently, or in less comprehensive or disaggregated form, or simply less reliable. in south africa, what was in origin a relatively minor distortion in the compilation of the cpi produced a downward revision, when it was discovered, of nearly 2 percentage points in the 12 - month rate of inflation. this at least had the merit of being a rare example of a good news shock. such events are not unique to emerging market economies : the uk and others have experienced problems with important statistical series from time to time. but diverting scarce resources to statistical compilation is inevitably a problem in an economy where the | samos system amounted to only r9 billion. this resulted in a liquidity efficiency of 5, 5 per cent. more recently, during 2014, the average values of rand trades that were settled in the cls system on a daily basis amounted to r411 billion. to settle these trades, the average daily liquidity requirement that needed to be paid into the cls system through the samos system amounted to only r8. 7 billion. this resulted in a liquidity efficiency of 2, 1 per cent. thus, in the ten years of south african participation in the cls, the average daily value of transactions settled has increased fivefold, with only a 40 per cent increase in pay - in values. from these statistics it is evident that while our market is benefiting from the risk bis central bankers β speeches management mechanism provided by the cls system, there are also huge benefits that we gain from the liquidity efficiency. among the many things highlighted by the global financial crisis was the realisation that there are certain critical, systemically important systems in the international payment and settlement environment which deserve special attention going forward. the cls is one of them, and in this vein we in south africa remain committed to building on our good relationship with the cls and other fellow regulators as well as relevant international bodies, such as the committee on payments and market infrastructures ( cpmi ), to ensure the we continue to strengthen the system further so as to reduce the potential for systemic disruption and financial instability. as you may be aware, we are also actively engaged in implementing cross - border settlement arrangements and systems within the southern african development community ( sadc ), and our experiences from working with the cls are proving quite useful. to our stakeholders in the south african national payment system, the cls group, and, last but not least, my colleagues at the south african reserve bank and other regulators, all the best for the next ten years and more! bis central bankers β speeches | 0.5 |
read the information they give you, and make sure you know everything about the terms of your loan. and shop around for the best deal. in addition to thinking carefully about the initial loan decision, it is important to periodically re - evaluate your debt position. sometimes the best way to invest your new savings is to pay down high - cost debt. another way to save money is to refinance your mortgage into lower interest rates. through the government β s β home affordable refinance program β, borrowers with mortgages through fannie mae or freddie mac can refinance their loans even if they owe more than the home β s current value. interest rates and mortgage underwriting are changing continually so i urge you to investigate this option on a regular basis. if you are unable to refinance your debt due to credit problems or if you are struggling signe - mary mckernan, caroline ratcliffe, and katie vinopal ( 2009 ), β do assets help families cope with adverse events? β the urban institute, http : / / www. urban. org / uploadedpdf / 411994 _ help _ family _ cope. pdf you β ve earned it! what the earned income tax credit can do for you can be found at www. stlouisfed. org / community _ development / assets / pdf / eitc - brochure. pdf american council on education, june 2005. bis central bankers β speeches to make payments, i encourage you to work with a non - profit housing counselor or debt counselor to identify possible solutions. conclusion it has been my pleasure to share my thoughts with you on this important topic. as you plan for your financial future, please keep in mind that planning is a process. you have taken the important first step in this process simply by being here to learn more about tools and resources available to help you and your family. but putting those tools to use is not necessarily easy. i know from first - hand experience that understanding the basics of nutrition doesn β t make it any easier to stay on a diet. but i also know from experience that making a plan and sticking to it brings real success whether in the form of a healthier lifestyle or in the form of a more secure financial future. and as i said at the outset, as we all work to improve our individual financial stability, we will ultimately build a stronger economy. i wish you all great success. bis central bankers β speeches | gazi ercel : the role of the euro from the turkish standpoint speech by mr gazi ercel, governor of the central bank of the republic of turkey, made during the 6th international financial and economic forum, held in vienna on 9 november 2000. * * * ladies and gentlemen, i would like to thank the organizers of this conference for inviting me to share my thoughts on the euro β s role as seen from the turkish point of view. of course, the introduction of the euro is affecting not only the economies that are members of the european union but also non - member economies that have close links with members. these include emerging market economies much of whose trade and financial transactions is with european union members. those whose external debt is largely denominated in european union currencies will be affected the most. even though turkey is not yet a member of the european union, it has close ties with countries that are. not only does turkey carry on a large volume of foreign trade with eu members, it is also the only candidate for membership that has entered into a customs union with the eu, signed at the end of 1995. turkey β s close relationship with eu countries and the present role of the euro in the turkish economy are illustrated by the following : β’ europe is turkey β s largest trading partner. in 1999, 54 % of turkish exports - $ 14. 3 billion - and 53 % of turkish imports - $ 21. 4 billion - went to or came from eu countries. β’ about 54 % of turkey β s official reserves consists of euro - 11 currencies and the euro itself. β’ the foreign exchange deposits belonging to turkish workers in other countries and held in the central bank of turkey amount to about 11 billion euros, almost 93 % of which is in the form of deutsche marks. β’ our external debt totals about us $ 106 billion, 34 % of which consists of euro - 11 currencies and the euro itself. β’ since 1 january 2000 the turkish treasury has borrowed via bond issues in the international capital markets a total us $ 7. 5 billion, 37 % of which is denominated in euros. β’ during the last five years, 60 % of direct foreign investments in turkey came from europe. β’ of the 9. 3 million foreign tourists who visited turkey during the first ten months of this year, 5. 1 million came from europe. given the breadth and depth of turkey β s relationship with the european union, it is no wonder that the euro and the | 0 |
and much learning. 5 / 5 | - sectional heterogeneity in income and wealth, the so - called heterogeneous agent models, or bewley - huggett economies. the main takeaway from these earlier models is that one could rationalize the low observed real interest rate, inconsistent with representative agent models with complete markets, in a model in which households have precautionary savings motives to insure against income shocks. in this framework, the degree of income uncertainty and credit constraints shape wealth inequality and imply a real interest rate in equilibrium that better resembles that in the data. another key development was the widespread increase in access to large - scale microdata, which helped the profession to evaluate existing economic theories and build better economic models. microdata has been a cornerstone to the inclusion of heterogeneity into macroeconomic models, as it allows a deeper understanding of individual behaviors. without it, theoretical models could not be adequately tested. for 2 / 5 bis - central bankers'speeches example, the work by benjamin garcia, mario giarda, and carlos lizama that will be presented in this conference combines location - based microdata on credit and debit card transactions with income surveys to show that fiscal policy programs that focused on lower - income regions are associated with larger consumption responses, as predicted by models of heterogeneous agents with liquidity constraints. these theoretical and empirical advances in the literature were complemented by the improvement of computational capabilities. these gave rise to the recent development of the so - called heterogeneous agents new keynesian model or hank model, which incorporated important features that improved the standard new - keynesian - model'fit to the data and introduced new transmission mechanisms of monetary policy. one of the main lessons from these models is that the direct effects of monetary policy on consumption, the so - called intertemporal substitution channel, can be very small compared to its indirect effects on income, which are shaped by general equilibrium forces that depend on the characteristics and behavior of households. another important recent theoretical development is the model of heterogeneous firms and financial frictions, which alters the way we think about the transmission of monetary policy. while the empirical evidence suggests small effects of monetary policy on aggregate investment, the use of disaggregated data allowed us to observe that investment of firms with " good " financial conditions reacts strongly to monetary policy but not so the investment of financially constrained firms. therefore, the effect of monetary policy depends on the distribution of firm | 0.5 |
purchases amounting to β¬60 billion. the purchases will commence in march and, in principle, it is intended that they will be carried out until september 2016, although the governing council of the ecb has given itself the option to continue to make purchases if the path of inflation is not consistent with its aim of achieving inflation rates below, but close to, 2 % over the medium term. the programme requires that, to be eligible for purchase, securities must be at least investment grade, or if not, that their issuers are under an eu - imf financial assistance programme. these conditions are similar to those applied in the requirements for collateral to be eligible for monetary policy operations and those envisaged, in august 2012, in the announcement of the sovereign bond purchase programme known as outright monetary transactions ( omts ). of the additional asset purchases, 12 % will be purchases of bonds issued by european institutions and the other 88 % will be purchases of bonds issued by central governments and agencies of countries in proportion to their shares in the ecb β s capital key. the national central banks will purchase the bonds issued by european institutions and most of the domestic bonds, the ecb purchasing 8 % of the latter. according to our preliminary estimates, the purchases of spanish government debt will amount to some β¬100 billion over the time horizon considered. the agreement reached means that, in the hypothetical event that losses arise from these operations, the national central banks would assume the risks of their purchases of government bonds, while the risk of the purchases of the bonds of european institutions and of sovereign bonds by the ecb would be shared by all the members of the eurosystem. monetary policy leeway in a very low inflation environment let me now comment briefly on two matters of importance in the current context : the leeway available to monetary policy in a very low inflation environment and the different cyclical moment of monetary policy in the main developed economies. the particularly low inflation rates and the prospect that they will remain at similar levels for a prolonged period reduce the scope for monetary policy to bring the financing conditions of the economy into line with its cyclical position when that position is characterised by notable weakness. conventional monetary policies based on setting short - term nominal interest rates reach their lower bound when rates approach 0 %. at that point, any additional monetary stimulus would require non - standard measures designed either to shape agents β expectations as to future bis central bankers β speeches interest rate behaviour or to change the size and composition of the central bank β | of banks. more consistent use of instruments is also desirable for a more level playing field among european banks. in the case of non - banks, this macroprudential toolkit is still in its infancy, but pension funds, insurers and investment funds are now playing a greater role in the financial system. improvements to the framework are therefore desirable, particularly for investment funds. this concludes my introduction. 3 / 3 bis - central bankers'speeches | 0 |
. but i notice that today β s generation takes the success of the european union and the euro as a given. we have to explain that if we have had peace, stability and prosperity over the last 66 years, it is not by chance, but because of europe. sz : germany and france could begin by having a joint finance minister in order to liven things up. trichet : ( laughs ) do you think they are already ready for that? sz : what will you be doing in november? trichet : i will think about that on 1 november. until then, i am sufficiently occupied and not thinking about the future. sz : sleeping, reading, writing a book? trichet : i will certainly have more time when i finish on 1 november. 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, at the press conference following the release of the monetary policy report, ottawa, 18 april 2012. * * * good morning. tiff and i are pleased to be here with you today to discuss the april monetary policy report, which the bank published this morning. the profile for global economic growth has improved since the bank released its january mpr. europe is expected to emerge slowly from recession in the second half of 2012, although the risks around this outlook remain high. the profile for u. s. growth is slightly stronger. this reflects the balance of somewhat improved labour markets, financial conditions and confidence on the one hand, and emerging fiscal consolidation and ongoing household deleveraging on the other. economic activity in emerging - market economies is expected to moderate to a stillrobust pace over the projection horizon, supported by an easing of macroeconomic policies. commodity prices remain elevated owing to improved global economic prospects, supply disruptions and geopolitical risks. in particular, the international price of oil has risen further and is now considerably higher than that received by canadian producers. if sustained, these oil price developments could dampen the improvement in economic momentum. overall, economic momentum in canada is slightly firmer than the bank had expected in january. the external headwinds facing canada have abated somewhat, with the u. s. recovery more resilient and financial conditions more supportive than previously anticipated. as a result, business and household confidence are improving faster than forecast. the bank projects that private domestic demand will account for almost all of canada β s economic growth over the projection horizon. household spending is expected to remain high relative to gdp as households add to their debt burden, which remains the biggest domestic risk. business investment is projected to remain robust, reflecting solid balance sheets, very favourable credit conditions, continuing strong terms of trade and heightened competitive pressures. the contribution of government spending to growth is expected to be quite modest over the projection horizon, in line with recent federal and provincial budgets. the recovery in net exports is likely to remain weak in light of modest external demand and ongoing competitiveness challenges, including the persistent strength of the canadian dollar. the bank projects that the economy will grow by 2. 4 per cent in both 2012 and 2013 before moderating to 2. 2 per cent in 2014. the degree of economic slack has been somewhat smaller than anticipated, and the economy is | 0 |
overheating, it is first of all required that, apart from those already decided on, no further fiscal impulses should be provided ; phrased differently, higher - than - expected revenues are to be reflected in lower public debt levels. second, moderate wage movements are to be ensured. even then, the new tax system for 2001 will boost average purchasing power by 4 % or even more, representing a powerful stimulus for consumption. many commentators view the new millennium as the start of a β new economy β. ict developments will undoubtedly have a major impact on world economic performance ; still, there is no indication whatever suggesting that economic laws have become fundamentally different. for this reason, and in order to be able to benefit to the full from the renewing economy, we must continue the structural reform policies ( further improving the operation of the labour market, especially on the supply side, and of a number of product markets ). more in general, policies must remain geared towards the achievement of well - balanced global macro - economic conditions ( low inflation, more equilibrated balance - of - payments positions ). we may well count our blessings, but should not close our eyes to reality. | dr a h e m wellink : introduction to the press conference on the 1999 annual report speech by mr a h e m wellink, president of de nederlandsche bank, at the press conference, held in amsterdam on 17 may 2000. * * * the world economy is in good shape. in 1999 gdp growth came out at 3 %, exceeding expectations. yet, this overall pattern masks a number of risks and uncertainties. the motor driving the exceptional us economic performance - at the same time the motor driving the world economy - is in danger of becoming overheated. southeast asia recorded a rapid recovery from the financial crisis, but the japanese performance remains weak. the first half of 2000, however, holds out better prospects. in europe, too, economic performance is improving. in 1999 gdp growth reached 2. 3 %. though seemingly low compared to the 3 % growth rate of the world economy, it should be noted that european growth accelerated considerably in the course of 1999. for the current year, a robust growth rate of 3 - 3. 5 % is expected. thus, prospects for europe are bright, definitely so if the structural reform policies are continued and the renewal of the economy, so evident in the united states, progresses further in europe as well. there are no grounds to suppose that the ict train will bypass europe, provided, of course, that we see to it that we are well prepared. despite the movements in the euro β s external value, europe may pride itself on a successful first year of monetary union. first and foremost, prospects for price stability in the euro area remain favourable, thanks not least to the success of the ecb : whoever would have thought two or three years ago that the launch of the euro would be as smooth as it has proved to be? in addition, europe β s vulnerability to external shocks, such as the asia crisis, has undeniably diminished as a consequence of monetary union. good, better, best : in the netherlands, we may meanwhile be doing too well. the dutch economy is experiencing its most prolonged cyclical upturn in fifty years β time, due in part to the consumer spending impulse emanating from higher asset prices. for 1999 this impulse may be roughly estimated at nlg 10 billion ( 1. 25 % of gdp ). in a sense, the situation in our country is comparable with that in the united states. we have now reached a point where caution is called for. in order to prevent the economy from | 1 |
long as it is necessary for maintaining that target in a stable manner. the other feature is large - scale monetary accommodation to underpin the commitment. in introducing qqe, the bank decided to double the monetary base β the money it directly provides β in two years and, to achieve this, the bank would purchase massive amounts of japanese government bonds ( jgbs ), including bonds with longer remaining maturities. the bank expects qqe to work via several transmission channels, and of these channels, raising inflation expectations is of particular importance. the salient feature of qqe is that it seeks to actively influence expectation formation. not only is raising inflation expectations in and of itself critical in overcoming deflation, it also provides room for further monetary easing. at the time of introducing qqe, 10 - year interest rates were below 1 percent and there was limited room for further reduction in nominal interest rates in japan. but it is real interest rates β nominal interest rates minus the expected rate of inflation β that affect decisions with regard to business fixed investment and private consumption. while there was little room for lowering nominal interest rates in japan, there was sufficient room for raising the expected rate of inflation, since it was quite low compared with the price stability target of 2 percent. therefore, if the bank can raise inflation expectations while keeping increases in nominal interest rates smaller than the rise in inflation expectations by putting downward pressure on nominal interest rates through large - scale purchases of government bonds, then real interest rates will decline. this will stimulate the real economy. monetary policy in japan, the united states, and europe next, let me compare monetary policy in japan with that in the united states and europe since the global financial crisis. the first thing to note is that monetary policy in the united states and europe since the global financial crisis has been quite similar to the monetary policy pursued by the bank since the 1990s. that is, central banks responded to the crisis by lowering policy rates as long as there was room for that ( chart 3 ). after reaching the zero lower bound, many central banks adopted policies to expand their balance sheets ( chart 6 ). bis central bankers β speeches however, since the economic and inflation situation in the united states and europe differs from that in japan, the challenges for monetary policy naturally differ. although the economies of the united states, the united kingdom, and the euro area are on a recovery trend, there does remain considerable slack in these economies, as seen in the still - high unemployment rates | ( chart 7 ). in the jargon, the output gap remains negative. on the other hand, while actual inflation has been declining, medium - to long - term inflation expectations in these economies appear to have remained more or less anchored at about 2 percent ( chart 8 ). given this economic and inflation situation, the challenge for monetary policy is how to stimulate the economy and lower the unemployment rate while keeping inflation expectations unchanged. by contrast, in japan, the unemployment rate has declined to 3. 5 percent, which is below the trough prior to the global financial crisis, and there is limited slack in the economy. on the other hand as i have explained, under 15 years of deflation, deflationary expectations became entrenched and medium - to long - term inflation expectations drifted down to a very low level. in such a situation, the policy challenge for us is how to raise inflation expectations. taking this challenge into account, qqe focuses on directly working on inflation expectations. meanwhile, switzerland has been facing a challenge that differs from that in the united states, the united kingdom, the euro area, and even japan. switzerland has seen a decline in inflation as a result of a decline in import prices due to the appreciation of the swiss franc. therefore, the swiss national bank ( snb ) set a ceiling for the swiss franc against the euro, stating that it would enforce the ceiling with unlimited interventions. the fact that the ratio of the snb β s balance sheet to nominal gdp is higher than that of the bank of japan β s reflects the increase in its holdings of foreign currency denominated assets under this policy. iii. achievements under one year of qqe developments in the past year more than one year has passed since the bank introduced qqe. during this time, qqe has produced its intended effects, with japan β s economy on track to achieving the 2 percent price stability target. under the bank β s large - scale purchases of government bonds, long - term interest rates have been stable at a low level and have recently been below 0. 6 percent ( chart 9 ). inflation expectations judged from break - even inflation rates calculated from the yield of inflation - indexed bonds and various surveys have been rising ( chart 10 ). as a result, real interest rates have declined, thereby stimulating private demand. against this backdrop, the virtuous cycle among production, income, and expenditure has kept the growth momentum intact and japan β s economy has continued | 1 |
facilitating their lives. having been instrumental in laying the foundations for the euro, the maastricht treaty will remain vital and indispensable for the successful functioning of emu. the medium - term macroeconomic policy framework laid down in the maastricht treaty has contributed to a stable macroeconomic environment, and will continue to do so. in addition, the treaty provides for a clear allocation of responsibilities between eu institutions and member states, as well as clear mandates for all involved. the maintenance of price stability β the ecb's primary objective β, the independence of the eurosystem and the provisions safeguarding fiscal discipline, in particular as enshrined in the stability and growth pact, are among the hallmarks of this framework. furthermore, the path towards participation in the euro area mapped out in the maastricht treaty, focusing on sustainable economic convergence as a prerequisite for adoption of the euro, will also serve to guide prospective member states. the name maastricht will therefore always be connected with the euro and will forever have a prominent place in the history of europe. let me now turn to our regular examination of recent monetary, financial and economic developments. the governing council concluded today that there was no reason to change its previous assessment. accordingly, the key ecb interest rates were kept unchanged at a level which remains appropriate for the maintenance of price stability over the medium term. starting with the analysis under the first pillar of our monetary policy strategy, the three - month average of the annual growth rates of m3 rose to 7. 8 % in the period from october to december 2001, from 7. 4 % in the period from september to november. the governing council considers that monetary developments thus far do not indicate risks to price stability. the build - up in liquidity reflected in these data occurred in an economic and financial environment characterised by exceptionally high uncertainty worldwide and should therefore be only temporary. this assessment of low inflationary risks is also supported by the declining trend in the growth rate of loans to the private sector. however, a continuation of strong m3 growth could call for a reassessment of monetary developments, especially if there is further evidence of a recovery in the euro area economy. regarding the second pillar, while actual euro area production growth in the fourth quarter of last year and in the early part of this year is still expected to be subdued, new data confirm our expectation of a gradual improvement in economic activity in the course of the year. uncertainty as | had fallen by 9 pp since peaking in 2013, to 4. 8 % in 2020 q1, though this was still higher than in 2007. further, in that same period, the weight of forborne exposures relative to assets had fallen by 9 pp. also, the weight of lending to construction and real estate development, which came to account for 27 % of total lending to the non - financial private sector, stood pre - pandemic at around 10 %. finally, mortgage lending standards have been much stricter and, in the case of loans to firms, these have been tied far more to firms β efficiency. the level of solvency had increased, in terms of cet1 capital, from β¬158 billion in december 2007 to β¬214 billion in december 2019, up by slightly over 35 %. this rise in capital entailed from the 2008 peak to march 2020, the number of employees fell by 48 % and branches by 35 %. a notable increase in loss - absorption capacity. indeed, almost half of all capital took the form of buffers above the minimum regulatory level, which can be released should it prove necessary. 2 in comparative terms, the cet 1 ratio of the main spanish deposit institutions stood below the european average, while their leverage ratio is slightly above. this is because spanish banks β asset risk weightings are higher, basically as a result of a more intensive use of the standardised approach to risk management. the drive spread to the entire non - financial private sector in spain, the deleveraging of which from 2010 to 2019 ( almost 30 pp of gdp for the household debt ratio and 45 pp of gdp for firms β debt level ) has contributed to it being better positioned to tackle the strong shock to activity imposed by the pandemic. one way of illustrating this resilience are the stress tests we supervisors regularly conduct. this is the case of the flesb ( forward looking exercise on spanish banks ), conducted annually by the banco de espana. its latest aggregate results were published in our autumn financial stability report. in the harshest scenario considered in this exercise ( which includes the cumulative fall of 5. 7 % in spain β s gdp from 2020 to 2022 ), the decline in the cet1 ratio totalled 3. 9 pp for significant institutions with an international presence, 4. 6 pp for other significant institutions and 1. 3 pp for institutions under the direct supervision of the banco de espana. although this impact is significant and | 0 |
andreas dombret : the cake's getting smaller. consolidation and reorientation in the german banking sector speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the frankfurt school of finance & amp ; management's fifth annual conference on integrated performance and risk management, frankfurt am main, 30 march 2017. * * * 1 introduction ladies and gentlemen thank you for inviting me to speak at this conference on integrated performance and risk management. the close ties between the deutsche bundesbank and the frankfurt school of finance & management have already become something of a tradition, and i hold them in high regard. the speech i am holding today is entitled β the cake β s getting smaller β consolidation and reorientation in the german banking sector ", and you may be wondering what managing a credit institution has in common with this city β s famous cake, the frankfurter kranz β¦ well, both are crowning achievements in their respective professions : the frankfurter kranz, invented here in frankfurt am main in 1735 by an unknown baker, is part and parcel of this city β s history in the 18th century. shaped like a wreath β kranz in german β it symbolises the emperor β s crown. unsurprisingly, then, it takes a great deal of skill and craftsmanship to prepare. similarly, managing a credit institution has emerged as one of the elite disciplines in the business world. steering an institution, with all the tasks that entails, has become far more gruelling in recent years β not just because market conditions have become harsher, but also because the cake that can be divided up in the first place has shrunk in size and is continuing to do so. and when the going gets tough, there β s no option but to tweak the recipes. 2 the cake β s getting smaller the cake that can be divided up among germany β s banks and savings banks has been shrinking for many years now. just look at how earnings have been contracting for more than 15 years β the figure for 2015 is nearly 30 % down on 1999. this malaise can be traced back to a number of factors. one is that europe, and germany especially, are often lambasted for being β overbanked ". unless these overcapacities are reduced, they will continue to take their toll on earnings. the low - interest - rate environment is having much the same effect. we are already | earlier this year, i heard from a rancher, a manufacturing consultant, and the head of a nursing school at one of these events. 1 / 6 bis - central bankers'speeches today, it's widely accepted that clear communication contributes greatly to the effective transmission of monetary policy, especially because clear communication can affect the expected path of interest rates and financial conditions more generally. loretta, in one of her speeches, describes very well the role of central bank communication : " the public will have a better understanding of monetary policy when policymakers are clear about their policy goals, those aspects of the economy monetary policy can and can't influence, and the economic information that influences their forecasts and policy decisions " ( mester, 2018 ). she went on to explain that when policymakers are systematic in their policy responses to changing economic conditions, the public will have a better idea of how the committee's monetary policy is likely to change in response to anticipated and unanticipated economic developments. in particular, she noted : " with such knowledge, households and firms can plan better ; they can make better saving, borrowing, investment, and employment decisions " ( mester, 2018 ). the evolution of federal reserve communications the view reflected in loretta's words seems commonplace now, but it wasn't always so. when loretta joined the federal reserve bank of philadelphia in 1985, the fomc didn't disclose its interest rate decisions. it didn't even report that it had made a decision. in 1981, karl brunner, the swiss monetary economist, called central banking an esoteric art and lamented central banks'" inherent impossibility to articulate its insights in explicit and intelligible words and sentences " ( brunner, 1981 ). at the time, central banking wisdom dictated that monetary policymakers should say as little as possible. some research of that vintage tried to rationalize this " secrecy " through the notion that monetary policy would be particularly effective if it surprised markets. 2 in the 1990s, central bank communication changed dramatically. in 1993, the fed started to publish fomc meeting minutes in their current form, and in 1994, it began releasing fomc meeting transcripts with a five - year lag. in february 1994, the fed started to publish post - fomc meeting statements following meetings at which there was a change in the intended federal funds rate. in may 1999, the fomc started to publish statements after every meeting | 0 |
. and the increase in the incomes of the super - rich ( the top 0. 1 per cent ) has been sharper still, with an accentuation of the concentration of wealth. 9 β secular stagnation β and the β second machine age β the fact that development is a non - linear process is perceptible, among other things, in the lack of substantial productivity gains in the advanced countries consequent to the spread of the new information and communications technologies. 10 in most of these countries per capita output has risen only modestly, where it has not actually contracted, as in italy. the global financial crisis, which stemmed from the bursting of the subprime mortgage bubble in on the enormous improvement in living and health conditions practically everywhere in the world since world war ii and on the uneven developments in the distribution of income and opportunities, with reference to environmental, health, and political disasters, see angus deaton β s profound, impassioned recent book, the great escape : health, wealth and the origins of inequality, princeton, n. j., princeton university press, 2014. a. b. atkinson, t. piketty and e. saez, β top incomes in the long run of history β, journal of economic literature, 49, 1, 2011 ; f. alvaredo, a. b. atkinson, t. piketty and e. saez, β the top 1 percent in international and historical perspective, β journal of economic perspectives, 27, 3, 2013. d. acemoglu, d. autor, d. dorn, g. h. hanson and b. price, β return of the solow paradox? it, productivity, and employment in u. s. manufacturing β, american economic review, 104, 5, 2014. bis central bankers β speeches the united states in 2007, and the euro - area sovereign debt crisis, which was triggered in early 2010 by the revelation of grave underestimates of the greek budget deficit, have been accompanied by what has come to be known, as if in contrast to the β great moderation β of the previous two decades, as the β great recession. β 11 even in the united states and the united kingdom, the countries that left the acute phase of the crisis behind them most quickly, the growth rate remains lower than in the pre - crisis years. in the euro area as a whole output is still below its pre - crisis level, which it is projected | workers who might previously have been left on the sidelines β including those with records of past incarceration or who lack a particular certification or degree. given that the large majority of working - age households, those at the middle and lower ends of the income distribution, rely primarily on wage income, advancing our employment mandate has served the country well. in today β s new normal, with the low responsiveness of inflation to labor market tightness, there appears to be little evidence so far of a tradeoff with our price - stability objective. the sustained strengthening of the labor market also adds to the productive capacity of the economy by attracting people on the sidelines to join or rejoin the labor force and move into employment. what about the risks? of course, there are also risks. the past three downturns were precipitated not by rising inflation pressure, but rather by the buildup of financial imbalances. extended periods of abovepotential growth and low interest rates tend to be accompanied by rapid credit growth and see stephanie r. aaronson, mary c. daly, william wascher, and david w. wilcox ( 2019 ), β okun revisited : who benefits most from a strong economy? β paper presented at the brookings papers on economic activity conference, held at the brookings institution, washington, march 7 β 8, https : / / www. brookings. edu / wpcontent / uploads / 2019 / 03 / okun - revisited - who - benefits - most - from - a - strong - economy. pdf. - 7elevated asset valuations, which tend to boost downside risks to the economy. 9 it is not hard to see why a high - pressure economy might be associated with elevated financial imbalances, especially late in the cycle. as an expansion continues, the memory of the previous recession fades. profits tend to rise, experienced loss rates on loans are low, and people tend to project recent trends into the future, which leads financial market participants and borrowers to become overly optimistic. risk appetite rises, asset valuations become stretched, and credit is available on easier terms and to riskier borrowers than earlier in the cycle when memories of losses were still fresh. historically, when the phillips curve was steeper, inflation tended to rise as the economy heated up, which naturally prompted the federal reserve to raise interest rates. in turn, the interest rate increases would have the collateral effect of damping increases in asset | 0 |
but not arbitrarily ) by including some elements of direct inflation targeting. the multitude of additional information could be compressed in this sense into a formal inflation forecast. personalities the ecb statute does not seek to establish a currency standard excluding all and any room for discretionary manoeuvre. consequently, a role will be played by the personalities responsible for formulating and implementing monetary policy. that applies especially to an institution which is completely new. public controversies about the filling of top posts damage credibility. monetary union will not be additionally bolstered by a political union. the leading personalities will therefore be associated almost inevitably with their respective national states, yet in the end they are to execute a common policy, namely a single european monetary policy, and to withstand political pressure. the same applies, by the way, to the governors of the national central banks. misgivings are therefore called for if, for example, there are intentions to introduce accountability towards the national parliament. iv conclusion the maastricht treaty has largely laid the foundations for a stability - oriented monetary policy as far as the institutional arrangements are concerned. those foundations need to be complemented by an appropriate strategy and a convincing decision regarding the choice of the leading personalities. the launching of a new central bank and a new currency is accompanied by uncertainty. the associated risk premium in the interest rate can be kept down by choosing an appropriate strategy and suitable top executives. the financial markets will keep a critical eye on the ecb right from the start. the initial monetary policy course thus takes on crucial importance. some people are therefore already advising the ecb to pursue a particularly restrictive course right from the outset so as to nip any mistrust in the bud, as it were. such an uncompromising approach would inevitably give rise to tensions within the council. it is also hard to imagine that the ecb would meet with general approval for such a course among the people of europe, given the high level of unemployment. at the moment we do not even know whether there is a stable european consensus on the acceptable or optimal rate of inflation. the trend towards the convergence of inflation rates at a low level is a good omen. in a monetary union without a flanking political union, we shall simply have to wait and see whether this convergence of preferences will prove to be a lasting phenomenon. the consensus regarding the preference for stable money - the common β stability culture β - is all the more important as monetary union will have to survive for the fore | norman t l chan : remarks at the hong kong academy of finance inauguration ceremony and fellowship conferment welcome remarks by mr norman t l chan, chief executive of the hong kong monetary authority, at the hong kong academy of finance inauguration ceremony cum fellowship conferment, hong kong, 26 june 2019. * * * the honourable paul chan, distinguished guests, ladies and gentlemen, 1. a very warm welcome to all of you for joining us today to witness the inauguration ceremony cum fellowship conferment of the hong kong academy of finance ( aof ). 2. i strongly believe that the most crucial factor that differentiates an international financial centre ( ifc ) from the other aspiring financial centres is its superior β soft infrastructure β or β soft power β. i am sure you will agree with me that the quality and professionalism of the people in the financial services industry are the building blocks for the β soft infrastructure β that determines the competitiveness of an ifc. the mission of the academy is to serve as a centre of excellence for developing financial leadership as well as a repository of knowledge in monetary and financial research, including applied research. 3. the aof will develop and run a leadership development programme to nurture financial leaders in hong kong. the academy will invite senior management and promising talents from financial institutions, regulators, professional firms and academia in the field of finance to join as members. aof members will be invited to participate in the leadership development programme through which they can interact with the academy β s international advisers, fellows and other top financial leaders through seminars, workshops and small group discussions. although the academy does not offer technical or professional training, which is well served by many tertiary institutions and professional bodies such as the hong kong institute of bankers, the hong kong securities and investment institute, the treasury markets association, we will collaborate closely with these institutions as our partners to achieve the maximum synergy in accomplishing our common goal of enhancing the soft power of hong kong. 4. on the research front, the hong kong institute for monetary research ( hkimr ), which was set up 20 years ago to undertake monetary and economic research, has become a subsidiary of the aof and will expand its ambit to cover applied finance research and thought leadership. the hkimr will continue to have its own board of directors and, in addition to the existing council of advisers for monetary research, a new council of advisers for applied research has been set up to oversee the applied research work of aof. | 0 |
have developed a strategy to diversify their business may make use of mergers and acquisitions. due partly to strengthening corporate governance, firms may increasingly buy back their own stocks or increase their propensity to pay dividends, both of which would increase payouts to shareholders. an increasing number of firms will be taking a more positive attitude to business activity with funds they raise, taking advantage of an accommodative financial environment. on the employment front, an increasing number of firms may raise nominal wages and bonuses and recruit a larger number of new graduates in order to ensure that they have a sufficient number of skilled workers and to better attain a more balanced composition of workers. such movements should spread in the process of the economy taking a balanced growth path, and this is in turn expected to enhance economic growth, creating cyclical momentum. so far, i have focused on corporate behavior in relation to overall economic activity. i intend to pay close attention to how these developments in the corporate sector affect prices. looking at factors that push down prices, the price fall in japan in 2001 - 02 was, to a large extent, due to the weakness in demand. recently, however, downward pressure on prices stemming from weak demand has been abating, and that stemming from other factors is increasing. while the reduction in electricity and telephone charges against the background of deregulation is one of the factors, significant factors behind the fall in prices of final goods and services are higher productivity and, above all, firms'persistent stance of restraining labor costs. two notable characteristics of the recent japanese economy - that the economy is growing at a moderate pace and that consumer prices remain relatively unresponsive to the output gap - are both a reflection of firms'cautious behavior. therefore, close attention should be paid to whether firms'activities become more positive and whether their stance of restraining labor costs might change. as expected economic growth increases, views on prices are expected to change. in fact, deflationary expectations of households and firms have been subsiding steadily since they peaked in 2001, as evident in recent surveys that show an increase in the percentage of individuals and firms expecting a rise in prices. the fact that land prices in the tokyo metropolitan area are beginning to rise after the decline came to a halt may be a sign of an increase in expected economic growth. attention should also be paid to how price expectations and land prices will develop in the future. iv. monetary policy the bank currently implements a quantitative easing policy with the outstanding balance | the outright purchases of long - term interest - bearing japanese government bonds, the bank has decided that purchases will continue at the current amount and frequency for some time. with regard to the future course of monetary policy, the bank stated that it will adjust the level of interest rates gradually in the light of developments in economic activity and prices, while maintaining the accommodative financial conditions ensuing from very low interest rates for some time. iv. thinking behind the conduct of monetary policy it takes quite a while for the effects of a monetary policy change to filter through to the economy and prices. because of the long and variable lag length, the conduct of monetary policy needs to be forward looking, based on the outlook for the economy and prices over a sufficiently long term. the bank releases the outlook for economic activity and prices ( the outlook report ) semiannually, in which it describes its forecast for the economy and prices over a horizon of one and a half to two years. the bank's conduct of monetary policy is based on this forecast. it has become a common practice among central banks to conduct monetary policy based on published forecasts for economic activity and prices. the key point of a " forward - looking policy framework " is to conduct policy on the basis of a forecast of the most likely outlook for the economy and prices, as well as identification of the accompanying upside and downside risks, by conducting a careful analysis of incoming indicators and other relevant data. especially in cases where the implications of the available data are mixed, the accuracy of the the significance of the transfer of wealth to oil - producing countries can be approximated by the difference between the growth rate of the gdp deflator and that of the domestic demand deflator. based on this estimation, the transfer of wealth accounted for on average about 0. 7 percent of nominal gdp from 2004 through 2006. if this wealth were not transferred to oil - producing countries but instead spent in japanese markets, it could be expected to deliver a positive fillip to the growth of domestic demand. for details, see k. hamada and k. iwata, " national income, terms of trade and economic welfare, " economic journal, vol. 94, december 1984. forecast should be carefully examined in making policy decisions. coming to a decision through painstaking examination of the available economic data and other relevant information, therefore, is the basis of forward - looking monetary policy. arguments that treat the assessment of available data and the conduct of forward - | 0.5 |
access to financing from sources that are highly costly, and almost inevitably against high collateral. very often, the practices are unfair and deceptive. examples in predatory lending are found to be unscrupulous and highly disadvantageous to the borrower. fourthly, in some asian societies, traditions continue to create cultural pressures that restrict a woman β s choices and liberties. though there is increased freedom for women to pursue education and careers, in some societies, cultural pressures still make it more difficult for a woman to get the exposure on financial matters. in addition, the increased incidence of divorces and single parenthood mean that more women are left to fend for themselves and their children. in certain asian societies, single women may face unusual difficulties in arranging their finances. in some cases, a woman may even have difficulty claiming her legal rights in a contract, even though the law does not dispute such a right. deeply entrenched human behaviour is not able to change as rapidly as the financial system is evolving. fifthly, statistics on life expectancy confirm that women tend to live longer. in segments of society where women earn less than men, combined with the fact that they may live longer, it is crucial to have financial acumen in order to increase the financial independence of women. this trend also magnifies the need to plan for retirement especially in an era of rising medical costs. ladies and gentlemen, enabling environment for financial literacy the promotion of greater awareness and understanding in financial issues in a dynamic and constantly changing environment has to be a continuous process. the effort needs to focus not only on providing education programmes but also on putting in place the supporting infrastructure to enhance the access to financial services, to ensure an environment of financial transparency and disclosure as well as adequate consumer protection. enhanced financial literacy is about bringing people into the financial mainstream so that they are able to make well informed decisions regarding their earnings, spending, savings and investments. the effort thus has to encompass a comprehensive set of strategies including the education process reinforced by the supporting infrastructure. the goal of any financial education programme is to increase awareness of the value of effective financial management, to show how it can contribute to financial security and improvement in the economic well - being. the most effective of programmes have been those that are targeted to specific groups. fundamental education for greater financial literacy that will have most sustainable impact are those through the school system. such educational programmes would provide the education to women from an early age. essentially, it would not result in the marginal | the pocket money book to be used in the school adoption programme was launched. the central bank of malaysia has also laid out a blueprint known as the financial sector master plan that charts the development of the malaysian financial system over a ten year period commencing in 2001. a key component of that plan is the 10 - year consumer education programme for the banking and insurance sectors. this programme is known as bankinginfo and insuranceinfo, and was launched in 2003. to reach a wide spectrum of the population, various channels are being employed to disseminate information, including through media, road shows, information brochures and a dedicated web site. there is also a dedicated outreach programme aimed at specific target groups, which includes women in rural areas, low income earners and disadvantaged women such as single mothers. to date, the bankinginfo website has received an overwhelming response - about 14 million hits and more than 2. 5 million booklets were taken up by the public. in the insurance sector, over 1. 4 million hits have been received on the insuranceinfo website, and more than 1. 3 million insurance info - booklets have been disseminated by the insurers to the public. ladies and gentlemen, similar to many other asian economies, microenterprises in malaysia are a substantial contributor to employment. women are extensively involved in microenterprises, often operated as family run businesses. to support the growth of microenterprises, dedicated agencies and funding mechanisms have been established. in order to equip the microenterprises with proper knowledge, education materials were developed on the fundamentals of starting a business, specifically addressing issues of getting access to appropriate financing within the constraints faced by microenterprises. dedicated agencies, including specialist development financial institutions, were identified to provide training and advisory services to complement these initiatives. in addition to the consumer education programmes, the central bank has put in place a consumer protection framework. in collaboration with the financial industry the central bank has established a financial mediation bureau. the financial mediation bureau aims to serve as a one - stop center for the resolution of retail consumer complaints against financial institutions regulated by the central bank. the central bank is also establishing a one - stop service centre in the bank that will function as a public information centre for the promotion of financial literacy among the malaysian public. the service centre will provide advisory services on financial matters to small and medium enterprises. ladies and gentlemen, concluding remarks financial literacy among women is all about having | 1 |
from further refinement. accordingly, i expect we will adopt a final rule in the near future that will settle the basic framework of the scb, but re - propose certain elements. to enable this process to run its course, i expect that the first scb would not go into effect before 2020. for 2019, i expect ccar will remain in place for firms with over $ 250 billion in assets or that are otherwise complex ; however, we will consider whether we can move forward with any aspects of the scb proposal for ccar 2019, such as assumptions related to balance sheet growth. i will also ask the board to exempt firms with less than $ 250 billion in assets from 2 / 6 bis central bankers'speeches the ccar quantitative assessment and supervisory stress testing in 2019 in light of the everyother - year cycle contemplated in the tailoring proposal that the board approved two weeks ago. 2 returning to the scb proposal, i would like to give you a sense of the comments we received and our approach to addressing those concerns. the issue foremost on my mind is the volatility of the stress test results. one concern frequently expressed is that the results of the supervisory stress test can lead to capital requirements that change significantly from year to year, which limits a firm's ability to manage its capital effectively. some amount of volatility is necessary to preserve the dynamism of the stress test - - by nature, the stress test will differ year - over - year based on macroeconomic conditions and contemporary understanding of salient risks in the economy. in addition, the stress test results are sensitive to changes in a firm's balance sheet, which means that a firm's capital requirements will evolve as the firm's activities and exposure evolve. however, i do think there is an important balance to be struck between preserving this dynamism and ensuring that firms have sufficient notice regarding the capital requirements to which they are held. in the first years after the financial crisis, as the banking system was dramatically ramping up the total amount of capital in the system, this volatility was less of a management problem : until we reached reasonably full capitalization, each year every bank needed to increase its capital. if one year that increment was a little higher or a little lower than the previous year, that was simply a modest difference of velocity, not direction. at the current juncture, however, both our system as a whole and each of the largest banks in | own stress tests. we expect them to make good on that representation, as the federal reserve's stress test is not, and cannot be, a full picture of a firm's resiliency in light of its idiosyncratic risks. for example, there is some risk that firms will use knowledge from additional transparency about the stress test to engage in transactions that are solely designed to reduce losses in the test, but that do not truly reduce risk in their portfolios. as supervisors, however, this is something that we can guard against through the regular examination process. we will closely monitor changes in firms'portfolios and take appropriate actions to ensure firms are holding sufficient capital, and have sufficient controls and governance, in light of the risk characteristics of their activities. qualitative objection before i close, i would like to say a few words about the role of the qualitative objection in our new chapter of stress testing. as originally conceived, ccar had both a quantitative component - based on the supervisory stress test - - and a qualitative component - - based on the federal reserve's assessment of a firm's stress testing practices. in 2017, the federal reserve eliminated the qualitative objection as part of ccar for large and noncomplex firms, in part because of improvements in risk management at these firms. 3 by incorporating supervisory stress testing into the regulatory capital regime and introducing an automatic penalty if a firm falls below its scb - derived capital requirement, the scb proposal will eliminate the quantitative objection from ccar. the natural next question is : has the ccar qualitative objection for the largest firms also run its course? in my view, the time has come to normalize the ccar qualitative assessment by removing the public objection tool, and continuing to evaluate firms'stress testing practices through normal supervision. in such an environment, firms would remain subject to the same supervisory expectations, and examiners would continue to conduct rigorous horizontal and firm - specific assessments of a firm's capital positions and capital planning, tailored to the risk profile of the firm. while much of the examination work would center on a firm's capital plan submissions, examination work would continue on a year - round basis, taking into account the firm's management of other financial risks. the evaluation of the firm's capital position and capital planning would culminate in a rating of the firm's capital position and planning. firms with deficient practices would receive supervisory findings | 1 |
basics of internal controls. it is worth stating that many of the problems at the heart of those headline cases stemmed from violations of the fundamental tenets of internal control, particularly those pertaining to operational risks. based on the headlines, it seems that boards of directors, management, auditors, and counsel need a remedial course in internal controls 101. as corporations grow larger and more diverse, internal controls become more, not less, important to the ability of management and the board to monitor activity across the company. the basics of internal controls for directors and managers are simple. directors do not serve full time, so it is important that they establish an annual agenda to focus their attention on the high - risk and emerging - risk areas while ensuring that there are effective preventive or detective controls over the low - risk areas. a board of directors has the responsibility to understand the legal, reputational, and compliance risks facing an organization ; legal professionals can assist in identifying those risks, quantifying them, and providing expertise in managing them. before a company moves into new and higher - risk areas, the boards of directors and management need assurances that the organization's governance practices are sound and effective. many of the organizations that have seen their reputations tarnished in the past few years have neglected to consider emerging conflicts of interest when the organization adds new products and lines of business. for example, if a customer service or control function must be done in an independent, fiduciary, or unbiased manner relative to other activities, appropriate firewalls must be in place before the product or activity begins. internal controls and compliance are the responsibility of line managers, who must determine the acceptable level of risk in their line of business and assure themselves that the combination of earnings, capital, and internal controls is sufficient to compensate for the risk exposures. however, supporting functions such as legal, accounting, internal audit, and risk management should independently monitor the control processes to ensure that they are effective and that risks are measured appropriately. the results of these independent reviews should be routinely reported to executive management and boards of directors. directors should be sufficiently engaged in the process to determine whether these reviews are in fact independent of the operating areas and whether the officers conducting the reviews can speak freely. where it appears that supporting functions have not been sufficiently involved, directors must demand that management adjust the processes as necessary. if the in - house legal, accounting, or audit staff believes that a supporting function has not been given adequate | in order to create a certain kind of tenancy and leasing market for the housing industry, and in order to ensure the housing mortgage loans be backed by indisputable securities, the real estate developers must utilize equity financing as the main form. as the real estate industry is a high - risk as well as a high - return industry, the problem of matching risks and returns shall only be better resolved with equity financing mode taking the dominant position. according to information provided by the report on china β s real estate market 2003 ~ 2004, the leverage ratios of china β s real estate enterprises are relatively high. the leverage ratios of the top five listed companies in hong kong are basically kept at a level between 30 % to 40 %, while those of domestic real estate companies stand at around 75 %. the report also shows that among the 24. 6 % of the self - raised capital 13. 3 % belongs to self - owned capital. such a high leverage ratio could bring huge loss to debtors once the market risks arise. according to the report, the return on self - owned capital is 21. 17 %, which does not match the risk borne by debtors when compared to the cost of financing. with the maturing of financial markets, the principle of matching risks with returns shall be absorbed into the financing mode for real estate industry, and it is an inevitable trend that the ratio of developers β equity financing will be increased. china β s economy is now in a transition period when many reforms are not compatible with each other perfectly. when we put forward the reform of housing commercialization and monetarization, the state reduced or halted direct input into the housing industry but failed to open the equity - financing channel to real estate developers. a multi - level capital market has not developed not only to real estate developers but also to all the enterprises, leading to the result that many enterprise flocked to get listed in the stock market. if they did not succeed in the direct financing market but have to develop, the financing burden thus completely falls on banks. in order to support the housing monetarization reform and promote the development of the real estate industry, the people β s bank of china has issued a series of credit policies to contribute to the development of real estate credit since 1998. the rapid development of the real estate industry should be a benefactor of the housing credit policy formulated by the pbc, otherwise the real estate industry shall not be so sensitive to the adjustment of the pbc β credit policy. | 0 |
christine lagarde : climate change and central banks - analysing, advising and acting speech by ms christine lagarde, president of the european central bank, at the international climate change conference, venice, 11 july 2021. * * * both climate change and the transition to a carbon neutral economy pose substantial challenges for the economy and the financial system, with the potential to affect growth and inflation in the short term, but also over much longer horizons. physical risks, stranded assets and greater firm default risk expose the financial system to losses, which may impair the transmission of monetary policy. and the eurosystem β s balance sheet itself is exposed to climate risk from the assets we hold, notably through our asset purchase programmes. in short, climate change has consequences for us as a central bank pursuing our primary mandate of price stability, and our other areas of competence, including financial stability and banking supervision. it is governments, not central banks, who are primarily responsible for facilitating an orderly transition, and who control the main required tools. nonetheless there are several areas where central banks can and will contribute. as a result, climate considerations were an important part of our review of monetary policy strategy, and we have published an action plan setting out our intended progress on this front. broadly speaking, the ecb β s contribution comprises three parts : analysing, advising and acting. analysing the ecb has been advancing its analysis quantifying the potential impact of climate on the economy and the financial system. for example, we are conducting an economy - wide climate related stress test of the financial system. the exercise assesses the resilience of banks to various climate scenarios and covers approximately four million companies worldwide and 1, 600 consolidated banks, in other words, almost all euro area banks. the findings demonstrate a clear benefit to acting early and ensuring an orderly transition. while transition costs may be higher in the short term, they are much lower in the long run than the costs of unrestrained climate change. indeed, physical risks are the most significant source of climate - related vulnerability. without further climate policies, the most vulnerable 10 % of banks may see a 30 % increase in the average probability of default of their credit portfolios between now and 2050. we will also accelerate the development of new models and tools to incorporate the impacts of climate change and related policies into our regular monitoring of the economy. we will include carbon prices in our common technical assumptions, regularly evaluate the impact of climate policies and | ##s to climate - related physical risks. we will introduce disclosure requirements for private sector assets as a new eligibility criterion or as a basis for a differentiated treatment for collateral and asset purchases. we will start conducting climate stress tests of the eurosystem balance sheet in 2022 to assess the eurosystem β s risk exposure to climate change, leveraging on the methodology of the ecb β s economy - wide climate stress test. we will also consider relevant climate - change risks when reviewing the valuation and risk control frameworks for assets mobilised as collateral by counterparties for eurosystem credit operations. 2 / 3 bis central bankers'speeches and we will adjust the framework guiding the allocation of corporate bond purchases to incorporate climate change criteria, in line with our mandate. our actions regarding climate change also extend beyond monetary policy operations. the ecb has committed itself to reducing its own carbon footprint in line with the paris agreement. and the ecb banking supervision will ensure that every bank is making swift progress in embedding climate risks into their organisations drawing on the full supervisory toolkit at our disposal where necessary. conclusion let me conclude. the strategy review has provided us with a framework to evaluate how our policy implementation could evolve to further incorporate climate considerations without prejudice to our primary mandate. the ecb will continue in the future to evaluate all options against this framework and as conditions develop more options may become feasible in the future. the challenges the world already faces due to the climate change will only increase over time. therefore, within our mandate, we will continue to analyse climate - related risks, to provide advice to stakeholders, and, importantly, to act. 3 / 3 bis central bankers'speeches | 1 |
can affirm that, among policymakers, there is no doubt that forward guidance helps to steer expectations. yet, the effects of forward guidance are not as straightforward as we might like them to be. unsurprisingly, the results depend on a few things : first, on the particular form of forward guidance chosen ; second, on the central bank β s credibility ; and, finally, on agents β private information and the general level of informational noise. although in practice forward guidance is rarely perceived in such pure terms, here i would like to distinguish between the so - called delphic and odyssean types. delphic guidance is a statement of how policymakers see interest likely to evolve, but it makes no promises about future policy actions. in odyssean guidance, by contrast, policymakers commit to some ( contingent ) actions in the future. the horizon of odyssean guidance can be state - contingent, have an end date, or even be left open - ended. for example, currently, the ecb β s forward guidance is that interest rates are expected to remain unchanged at least through the end of this year. research indicates that different types of forward guidance differ systematically in how they impact on expectations and reduce disagreements in the markets about the future path of interest rates. more detailed, specific forward guidance β such as time - and state - contingent odyssean guidance β seems to be more effective in guiding expectations. intuitively, this effect makes sense : such central bank communication tones down some of the informational noise and diminishes uncertainty. nonetheless, this statement should not be interpreted as advocating any particular type of guidance, as the effects should depend on the interest - rate environment in which we are living. thus, in times of low interest rates, we strengthen forward guidance and make it more explicit. when interest rates are not bounded ( and are, therefore, at higher levels ), we can rely on a β lighter β form of guidance. going further, any discussion on forward guidance would be incomplete without touching upon the controversy regarding β who is leading who β in this β game β of exchanging information. is the 2 / 4 bis central bankers'speeches central bank leading the financial markets, or have central banks become overly dependent on the market reaction function? in other words, are we β catering β to the markets? meaning, are we putting the needs of financial markets β that is, mainly private investors β before the needs of the real economy | , and thus cause unwanted market reactions. the current monetary policy normalization is unprecedented, and well - structured communication ( providing guidance on how the central bank will proceed ) is needed to smooth the process. i believe that forward guidance has become an effective supplement to conventional tools ; should we need another monetary easing cycle soon, conventional instruments would arguably play a less prominent role than in previous downturns. to wrap up, i think it is safe to say that central bank communication has become a proper monetary policy tool. the statements following monetary policy meetings in every major central bank gather a substantial attention, and watchers analyse every sentence β down to the last word. 3 / 4 bis central bankers'speeches consequently, any change in communication β either what is said or what is left unsaid β is immediately noticed and widely interpreted. to water down the statements into less detailed, more β reserved β language would be, in my opinion, going backwards in terms of the pursuit of greater transparency and credibility. it is worth bearing in mind that the latter is directly linked to achieving the core price stability target. thank you. 4 / 4 bis central bankers'speeches | 1 |
rather than disturb your lunch, we can instead consider using the wisdom of the market. given my role in the markets group at the new york fed, i'd like to focus on what financial market participants'beliefs and market prices can tell us about this question and what we should do with the answers from them. 8 let's first consider asking market participants directly and then use observed asset prices to answer the question. prior to the january 2019 fomc meeting, as part of its routine policy expectations survey, the new york fed asked market participants to report what percent chance they attach to the u. s. economy currently being in an nber recession, and what percent chance they attach to the u. s. economy being in an nber recession in six months. 9 we have been asking survey recipients 2 / 6 bis central bankers'speeches these questions for over 10 years. as shown in figure 1, the median respondent assigned a 2 percent probability to the u. s. currently being in a recession and a 12 percent probability to the u. s. being in a recession in six months, with a fairly small degree of dispersion around these predictions. separately, we posed a newer and more complicated question, asking respondents to provide a probability distribution of the timing at which they believe the u. s. economy will first enter a recession. the bubble chart shown in figure 2 illustrates the range of results, with the relative size of each bubble indicating the relative number of responses for each probability. perhaps not surprisingly, responses were much more dispersed. respondents placed the highest probability on a u. s. recession first occurring in 2020 or 2021, assigning a roughly 25 percent probability to each, on average. at about 17 percent, the distribution's average probability of a recession starting in 2019 or earlier suggests a good match with the shorter - horizon question. interestingly, our respondents demonstrated an ability to calibrate their probability assessments over a longer horizon, something some of tetlock's superforecasters struggled with. however, historical perspective may offer a cautionary tale. figure 3 shows the evolution of results from our survey's recurring questions on the probability that the u. s. economy is currently in an nber recession and that it will be in an nber recession in six months, taken over the mid2007 to late - 2008 time period. this period, of course, encompasses the start of the great recession, which the nber dated as beginning in | reason to extremize the results is that the prediction object is a recession in one particular month, rather than the probability of a recession over a period of time. marcelle chauvet and i analyzed this more general problem. 12 our goal was to avoid the problem with the probit model that a constant forecast of, for example, a 25 percent probability that the economy will be in 3 / 6 bis central bankers'speeches recession in 12 months'time implying after one year of such monthly predictions a 97 percent probability the economy would be in a recession in at least one month of the 12. this is similar to the issue i mentioned earlier, where some of the superforecasters appear to have had difficulty calibrating their probability assessments over varying time horizons. such a poor calibration would run afoul of the brier - based scoring system used in the iarpa tournament. 13 it is clear that extremizing the results lessens the impact of the poor calibration on the scoring system, but it leaves open the question of whether a better calibration is possible. another financial market indicator we could look at is the stock market. as paul samuelson famously stated, the stock market has predicted nine of the last five recessions. an alternative statement β and this is also true of yield curve inversions β is that no u. s. recession has occurred since the second world war without a yield curve inversion or stock market correction ( or worse ) proceeding it. as a recent san francisco fed economic letter carefully illustrated, yield curve inversions have the additional record of indicating only one false positive in the u. s., during the mid - 1960s. 14 if we cared equally about forecasting recessions and expansions, these properties would be well - reflected in the brier score ; however, if we view recessions β or more accurately, elevated probabilities of a recession β as more concerning than elevated probabilities of an expansion, then brier scoring is not sufficient. as tetlock writes, " one problem is that brier scores treat false alarms the same as misses. " the issue of asymmetric loss functions over outcomes is well understood by economists, and more recent research around robustness to ambiguity in probability assessments provides more formal methods of " extremizing " probabilities based on loss functions and the level of ambiguity. 15 another issue tetlock raises is that prediction of binary outcomes of clearly stated problems | 1 |
of japan, 1 which globally ranked first until 1992, gradually declined because japanese firms trailed behind in restructuring their business portfolios ( chart 3 ). corporate earnings deteriorated, due in part to the collapse of the bubble economy in early 1992 and the financial system crisis. these developments prompted large firms with high productivity to actively invest overseas and relocate their supply chains to china, southeast asia, and other countries and regions, in pursuit of lower costs and higher growth. on the other hand, in japan, large firms reformed their cost structures, by, for example, closing factories, downsizing, restraining investment, encouraging voluntary retirement, and cutting wages. the trends of cutting costs and restraining investment also spilled over to small firms, which faced dwindling orders as well as intensified price competition. as a result, despite an aging and declining population, the issue of labor shortages did not surface ( chart 4 ). employment was prioritized over wages, and firms made little headway with restructuring their business portfolios to strengthen their ability to create added value. under these circumstances, intensified price competition led to lower growth and profitability for domestic industries, and japan's economy fell into deflation in which it was difficult for wages and prices to rise. the ensuing three decades of an economy oriented toward contraction, characterized by a deflationary mindset and cost - cutting, gave rise to a persistent vicious cycle in which the output gap fell into negative territory. firms in japan grew more cautious in their wage - and price - setting behavior, falling behind in terms of business fixed investment and digitalization. thriftiness among households also seemed to take root. looking at trends in the trade balance, japan's terms of trade have deteriorated, due to lower exports of industrial products and higher imports of goods such as mineral fuels, and this has propelled a decline in firms'profitability ( chart 5 ). moreover, japan's wage levels, even those of large firms, is low compared to the group of seven ( g7 ) countries and major asian economies ( chart 6 ), and private consumption is lacking momentum. however, bold monetary easing and flexible fiscal policies have helped to bring about a situation where the economy is no longer in deflation. the imd world competitiveness booklet published by the international institute for management development ( imd ) shows that japan ranked first in international competitiveness until 1992, but is now ranked quite low, in 38th place. furthermore, the rise in global inflation and the yen's | haruhiko kuroda : japan β s economy and monetary policy speech by mr haruhiko kuroda, governor of the bank of japan, at a meeting with business leaders, nagoya, 25 november 2014. * * * introduction it is my great pleasure to have the opportunity today to exchange views with administrative, financial, and business leaders in the chubu region. i would like to take this opportunity to express my sincerest gratitude for your cooperation with the bank of japan β s nagoya branch. in april last year, the bank introduced the quantitative and qualitative monetary easing ( qqe ) to achieve the price stability target of 2 percent at the earliest possible time, with a time horizon of about 2 years. the introduction of the qqe aimed at changing the deflationary mindset, which has taken root amid prolonged deflation, and at converting the economy from being in a deflationary shrinking equilibrium to being in an expanding equilibrium through creating a situation where people base their behavior on the assumption that prices rise moderately. during the year and a half since then, conversion of the deflationary mindset has been progressing steadily. the economy has continued to see moderate recovery, and the year - on - year rate of change in the consumer price index ( cpi ) has moved from negative territory to around 1ΒΌ percent. nevertheless, the rate of increase in the cpi has slowed somewhat of late due, for example, to somewhat weak developments in demand following the consumption tax hike and a substantial decline in crude oil prices, and there has been a risk that conversion of the deflationary mindset might be delayed. the bank β s expansion of the qqe at the end of last month aims to preempt the manifestation of this risk and to maintain the improving momentum of expectation formation. today, i would first like to review japan β s economic and price developments, and then touch on the thrust of the expansion of the qqe. i. developments in economic activity and prices to begin with, let me talk about developments in japan β s economic activity and prices. real economy some weakness in japan β s economy has remained, particularly on the production side, against the background of inventory adjustments brought by the effects of a decline in demand following the front - loaded increase prior to the consumption tax hike. the real gdp growth rate declined substantially in the april - june quarter and was minus 1. 6 percent in the july - september quarter on an annualized quarter - on - | 0.5 |
lapses have been temporary, the leaps have been permanent. over the past two and a half centuries, secular innovation has dwarfed secular stagnation. in explaining rising living standards since 1750, economists have typically identified three distinct innovation phases. each was associated with a great leap forward in society β s production possibility frontier. 9 the first is the industrial revolution commencing in the middle of the 18th century ; the second, the era of mass industrialisation, starting in the second half of the 19th century ; and the third is the it revolution, which began life in the second half of the 20th century. what distinguished these three innovation phases is that they gave birth to a sequence of socalled general purchase technologies ( gpts ). 10 these technologies had applicability well beyond the sector for which they were originally designed, thereby transforming the efficiency of business practices generally. during the first industrial revolution, these gpts included the steam engine, cotton spinning and railways ; during the second, electricity, the internal combustion engine and internal water supply and sanitation ; and in the third, the personal computer and the internet. interest in innovation - led growth has re - intensified over recent years as growth prospects have dimmed. one strand of the secular stagnation debate asks β wither innovation? among some there is a concern the well of innovation may be running dry. 11 for others, the well of innovation generated by the digital revolution is poised to gush. 12 will secular stagnation or secular innovation dominate? some have focussed on demand - side deficiencies as a source of secular stagnation ( for example, summers ( 2014 ) ). my focus here is on structural, supply - side factors. to the extent say β s law operates β with supply creating its own demand, or lack of it β this distinction may not be that great over the medium - term. kahneman ( 2012 ). gordon ( 2012 ). bresnahan and trajtenberg ( 1996 ). gordon ( 2012, 2014 ), cowen ( 2011 ). brynjolfsson and mcafee ( 2014 ). bis central bankers β speeches the long history of growth to begin to address that question, let β s start by taking a longer look at the past. one reason for doing so is that the long history of growth looks rather different than the short. secularly rising living standards have become the social and economic norm. no - one can recall a time when the growth escalator has moved | ##pi - cpi wedge. data availability means that us yields are only included from 1997 so the uk provides most of the historical back - run. chart 14 : forward real interest rate yield curves percent 1. 0 0. 5 0. 0 - 0. 5 - 1. 0 - 1. 5 united kingdom - 2. 0 germany / euro area - 2. 5 horizon ( years ) sources : bloomberg and bank calculations. notes : data for the united kingdom and the united states are derived from nominal bond yields deflated using inflation swaps. the germany / ea figures are based on nominal bund yield deflated using euro - area inflation swaps ( as a proxy for the euro - area risk free rate ). the measure of inflation used is rpi for the united kingdom and cpi for the united states and the euro area. data are to close of business 9 february 2015. bis central bankers β speeches chart 15 : population growth annual percentage change source : united nations population projections ( http : / / esa. un. org / wpp / ) for 1950 onwards ; the maddison - project ( http : / / www. ggdc. net / maddison / maddison - project / home. htm ) prior to 1950. chart 16 : business expenditure on research & development south korea japan china united states united kingdom france r & d expenditure as a % of gdp 3. 5 3. 0 germany 2. 5 2. 0 1. 5 1. 0 0. 5 source : oecd. bis central bankers β speeches chart 17 : public investment uk advanced economies percent of gdp 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 source : imf world economic outlook october 2014 ; ons. notes : the advanced economies line show real public investment as a share of ppp weighted gdp. the uk line shows nominal net investment as a share of nominal gdp. this series follows a similar pattern to real general government investment, but is available over a longer time horizon. the definition of what is classified as β public β has changed over time and at different speeds in different places, which may account for some of the differences between the uk and other advanced economies. bis central bankers β speeches | 1 |
decisions of the governing council. in december 2000, the eurosystem decided to release, for the first time, its euro area economic staff projections, with a view to improving transparency and communication. thus, from the point of view of the accountability of the central bank in a democratic society β that is to say the duty to explain, justify, convince, whenever possible, and take full responsibility vis - a - vis public opinion for decisions taken β, the eurosystem strives to meet the highest standards of the main central banks in the world. 2. the euro significantly contributes to growth in europe by enhancing the co - ordination of economic policies a few years ago, it was necessary to convince a great number of sceptics, in europe as well as in the rest of the world, that the euro would really be launched. many observers believed that the single monetary policy would never succeed! facts have disproved this conclusion. however, other observers still sometimes evoke the supposed fragility of the euro area stemming from the supposed economic and structural divergences between euro area countries. how can we answer this important question? firstly, monetary union does not necessarily imply that, at any given point in time, all participating countries will have the same rate of inflation or growth, even though the creation of the euro was based on the successful completion of a convergence process. let us take inflation for example. inflation divergences across countries or regions are quite natural in a monetary union. in the euro area, long - term convergence to a common level of prices naturally gives rise to different inflation rates across countries. the convergence of productivity and living standards creates a trend towards price convergence. now, present differentials in the euro area are not very large, in comparison with those sometimes observed in the united states, which is a long established monetary union of comparable size. my intimate conviction is that we will witness further european integration and, in the medium term, an increasing correlation of economic developments in the area. several academic studies show that business cycles are becoming more synchronous across europe. secondly, the question has often been raised as to whether emu can be a success without some form of enhanced political union. indeed, to achieve this, the correct mix is required between fiscal, economic and monetary policies. in the european union, member states are responsible for conducting economic and fiscal policies. we therefore believe that these policies should be closely co - ordinated. co - ordination is stressed in the | new issuance of asset - backed securities ( abs ), which provided funding for auto loans, credit cards, student loans, and other loans to consumers and small businesses, had virtually ceased. investors had lost faith in the quality of the triple - a ratings on the securities, and the complex system that funded the securities see congressional budget office, β the budgetary impact and subsidy costs of the federal reserve β s actions during the financial crisis ( 7. 79 mb pdf ) β, may 2010. known as the β shadow banking system β broke down. without access to funding, credit for households and small businesses would have become even less available and more costly. the federal reserve designed the term asset - backed securities loan facility, or talf, to provide funds for the purchase of securities backed by new consumer loans. in the end, nearly 3 million auto loans, over 1 million student loans, about 850, 000 small business loans, and millions of credit card accounts were supported by talf - eligible securities. talf worked. it served its intended purpose of unlocking lending, the lifeblood of the u. s. economy. as pleased as i was to see that talf worked, i was even more pleased when it eventually became unnecessary. abs issuance remained stable in the months after talf ended. while liquidity helped restore the market for consumer loan securitization, liquidity alone did not solve all the consumer credit problems exposed by the crisis. additional consumer protection would also be needed to restore healthy consumer lending. enhancing consumer protection the first signs of serious consumer credit distress appeared in the subprime mortgage market, and much attention has been deservedly paid to correcting problems in that market. in hindsight, though, we also see that the developments in the u. s. mortgage market, fueled by the credit boom, revealed acute weaknesses in mortgage finance that eventually had farreaching effects on many other forms of credit. the gradual but widespread declines in underwriting standards, breakdowns in lending oversight by investors and rating agencies, and increased reliance on complex and opaque credit instruments led to the current set of circumstances in which lenders are skittish about lending, borrowers are skittish about borrowing, and investors are skittish about investing. the credit markets must reemerge in sounder and more transparent ways in order for β normal β lending activity β whatever that will mean in the coming months and years β to reemerge. essential to jumpstarting market | 0 |
24 / 26 bis central bankers'speeches exports by $ 1 billion ( a 90 % collapse ). and as regards the argument on jobs and the domestic industry, the winners from the 2009 tire safeguards were alternative foreign exporters ( in asia and mexico ), while domestic us tire producers were secondary beneficiaries. that is why the liberal consensus is that trade wars are bad for everybody. another reason why trump is wrong is his misleading focus on trade deficits ; it overlooks the fact that the total trade deficit reflects the shortfall in savings by households, businesses and the government, i. e. the excess of their combined spending over their income. a necessary condition, therefore, for narrowing the us trade deficit is to achieve a higher savings rate relative to the us investment rate. at a time when the level of savings is very low, the prospective deterioration in the us current account deficit of around us $ 150 billion a year ( due to the spending bill signed into law last month ) will almost inevitably reduce the overall level of savings. this will also cause the trade deficit to widen, bringing to mind the reagan administration, under which the us experienced twin deficits, i. e. a fiscal and a current account deficit. if tariffs are imposed to a large extent and they are persistent, a trade war will break out, which may lead to competitive devaluations between the us and china. we β ve seen all this before through currency wars and beggar - thy - neighbour policies. in economic theory and history, rising twin deficits may only be resolved by a stronger currency, as was the case of the stronger dollar in the 1980s under president reagan and post - german reunification with a stronger deutschmark ( see figure 18 ). today, economic theory and investment portfolio developments point to a strong us dollar, but measures of protectionism ( the opposite pole to globalisation ) focusing on the domestic economy self - interest and not taking account of the interconnections in a global economy, negatively affect the us dollar exchange rate. the us current account deficit can be funded by countries with large current - account surpluses coming from private sector investors in japan and europe, who have been pushed out of their domestic markets as a result of extensive quantitative easing programmes by their respective central banks. but, as central banks start tapering their asset purchases and wind down their unconventional easing monetary policies, there is little prospect for increased demand. at the moment, markets seem to expect that the us | , it is timely for insurers including intermediaries, to assess how best to improve insurance penetration going forward. there are some fundamental questions that need to be asked. would attracting a larger agency force be the most effective solution in this more liberalized environment? or, should the focus perhaps be on expanding the diversity of the intermediaries in general, to ensure consumers have more alternatives to receive high - quality and suitable advice? whatever the response to these questions, what is obvious is that investing in human capital is an important common denominator, not only to enhance the existing level of expertise of intermediaries but also to attract the right people to ensure a continuous supply of talents into the profession. it is from this perspective that an incentive package is being considered by the bank to subsidize the costs related to minimum professional qualifications for fas. we hope that it will entice more agents to consider upgrading themselves to become successful fas. growing demand for independent financial advisory services as our economy continues its track towards high income nation status, and as our society becomes more affluent and discerning, we envisage an increasing demand and preference for high - quality, independent and personalized advisory services among financially - savvy consumers. apart from rising levels of disposable income and financial sophistication, malaysians are expected to live longer now than ever before. it is projected that by 2040, 17 % of the malaysian population will live beyond the age of 60 years old compared to about only 8 % of the total population in 2010. this creates the need for more effective long - term financial planning on the part of consumers to ensure they have sufficient funds to see them through their golden years. in this respect, as part of the government β s initiative to encourage savings among malaysians to better prepare for their retirement, the government had announced a tax relief of rm3, 000 for individuals who have bought an annuity plan for the next 10 years commencing in 2012. bis central bankers β speeches an increased competition within the financial sector and evolving demographic structures has also led to the introduction of new and more complex financial products offered by financial service providers. while financial consumers now have a greater array of choice, the challenge is in choosing the most appropriate financial product commensurate to their needs. lessons learned from other markets showed that high - profile cases of mis - selling of investment - linked and pension products extols the importance of ensuring consumers are properly advice | 0 |
with ease. today, the european central bank β more than 300 years younger than the bank of england β has already successfully established a reputation for guaranteeing price stability in the euro zone. the three - year - period from 1998 to 2000 saw an average rate of inflation of 1. 1 %. this early euro - period is remarkable : it was one of the three most outstanding periods of price stability performance in germany since the 1950s. since last summer high energy costs, in part linked to the external value of the euro, and demand shifts due to the european food crisis have taken their toll. thus, from today β s point of view, it looks probable that in 2001 we will not be able to meet our target of holding inflation below the 2 % ceiling. however, on may 10, the governing council decided to lower official interest rates by 25 basis points. the interest rate for the main refinancing operation is now 4. 5 %. this decision was based on the twopillar strategy, i. e. monetary growth in the first pillar and the broader assessment of the outlook for price developments in the second pillar. in the period since last spring, monetary growth came ever closer to the reference value of 4. 5 %. furthermore, indications that monetary growth is somewhat overstated have been confirmed recently. non - euro area residents β purchases of negotiable paper included in m3 β that is money market fund units and other marketable paper β are sizeable as well as rising. however, the relevant concept of m3 is residents β holdings. once these distortions are accounted for, the first pillar indicates no further risks for price stability. the second pillar also points in the direction of receding upward risks for price stability. external developments are dampening the prospects for euro - area growth. wages are rising, but only moderately. on balance, both pillars of the ecb β s monetary strategy paint a rather favourable picture for the medium - term outlook for price stability. thus, we are confident that the hicp will drop below the 2 % threshold during the course of the next year. in the run - up to european monetary union, prices in those european countries with a history of higher inflation rates had been remarkably stable. all countries met the inflation criterion with ease. recently, the sustainability of this monetary convergence process has been questioned. the spread between the lowest and the highest inflation rates in the euro area is now wider than it was at the outset of monetary union. in january 1998 | ##ges bank's mandate, monetary policy is to be aimed at maintaining a stable krone exchange rate against european currencies, based on the range of the exchange rate maintained since the krone was floated on 10 december 1992. in the event of significant changes in the exchange rate, monetary policy instruments will be oriented with a view to returning the exchange rate over time to its initial range. in its conduct of monetary policy, norges bank focuses on the fundamental preconditions for achieving exchange rate stability against the euro. first, price and cost inflation must be brought down towards the corresponding aim for inflation for the european central bank ( ecb ). at the same time, monetary policy must not in itself contribute to deflationary recessions as this could undermine confidence in the krone. there are few significant differences between norway's actual response pattern and that of countries with explicit inflation targets. price and cost inflation must be steered towards that aimed at by the ecb. however, in norway fiscal policy has traditionally had an important role in stabilisation policy. this has reduced the burden on monetary policy. in addition, the norwegian wage determination system has probably contributed in periods to dampening the impact of shocks hitting the economy. monetary policy influences price and cost inflation with a time lag of perhaps one to three years. in consequence, projections for price and cost inflation with a horizon of a couple of years play an important part in the setting of interest rates. from the time interest rate decisions are taken until the interest rate has an impact on prices and costs, various types of disturbance occur which influence price and cost inflation. thus it is not possible to maintain full control over developments in prices and costs. actual price and cost developments normally deviate somewhat from earlier projections. on the basis of the deviation between actual price inflation and norges bank's projections over the last few years, an uncertainty interval for price inflation can be calculated. how can monetary policy be credible when it is so difficult to control price inflation? the answer is to be found in two factors. first, economic agents base their decisions on the probable inflation outcome. although there is considerable uncertainty, monetary policy will be credible if the outcome they consider most probable, and thus base their decisions on, is consistent with the nominal anchor. second, confidence is linked to the response pattern. if price inflation in norway is higher than that aimed at by the ecb as a result of shocks, there must be confidence that monetary policy instruments are | 0 |
, stablecoins and the response from regulation 3 / 5 bis central bankers'speeches and oversight. but is this the road that leads to security and efficiency in tomorrow β s payments? or are there already new roads under construction that link previously distinct areas of the payment market? one of the first and most prominent examples was the announcement by facebook β or meta, as it is now known β to issue a stablecoin called libra, later renamed diem. although, this specific project has been abandoned ; meta only recently launched a pilot with paxos to allow stablecoin payments with its dedicated novi app from the united states to guatemala. paypal is also aiming to issue its own stablecoin. 2 visa and mastercard have both announced plans to offer stablecoins as part of their payment services. in short, governments and central banks worldwide are concerned about the prospect of billions of platform users exchanging fiat currency into private money that may become locked into private ecosystems of global players, calling monetary sovereignty into question. as agustin carstens, general manager at the bis, said only recently : β let me be clear : it is undesirable to rely solely on private money. users may initially find great convenience in paying with a big tech global stablecoin. but in doing so they may be handing the keys to our monetary system over to private entities, driven by profits and accountable only to their shareholders and other insiders. such an arrangement could erode trust. a public good like money needs oversight with the public interest in mind. β 3 yet, besides proper regulation and oversight, central banks around the world have been initiating projects with the ultimate destination of issuing their own digital currencies. while nigeria and the bahamas have already launched their enaira and sand dollar currencies, a dozen other central banks are piloting central bank digital currencies of their own, most prominently china. so far, the digital yuan has been distributed to a limited number of citizens to test its functioning. but, in the course of the 2022 winter olympics in beijing, which started on 4 february, locals as well as athletes and visitors from abroad should be able to try out the e - cny, presumably via fancy smart payment cards. last summer, the eurosystem, too, decided to explore the benefits and downsides of introducing a central bank digital currency, the digital euro, in greater depth. until mid - 2023, the eurosystem will be investigating use | and models. 1 / 4 bis - central bankers'speeches we have to scale back the use of backward - looking models fed with historical data. looking back does not help, because this does not fully reveal the economic and financial implications of climate change in the future. furthermore, there are a lot of uncertainties when dealing with climate risks. we do not know when and how physical risks will materialise. neither do we know what climate policies will be implemented at what time. what we need is to set up different scenarios that could be the reality of tomorrow. so we have to turn to scenario analysis to guide us. the ngfs has developed a set of climate scenarios that we regularly update and enhance. these describe β both qualitatively and quantitatively β different futures for the world, ranging from a hot - house scenario to a net - zero future or the scenario of a fragmented world. by comparing these scenarios and what they mean in terms of economic developments, we can assess the risks β and these paint an unsettling picture. without timely and appropriate climate action, physical risks could lead to a global output loss of around $ 15 trillion by 2050. 4 this means that the financial cost of standing by and watching is close to the size of the euro area economy. 5 whereas, so far our scenarios have focused on the long - term impacts, the ngfs is currently preparing scenarios that zoom in on the next three to five years β a timeframe that is key to decision - making by both supervisors and many investors. in short, the ngfs climate scenarios illustrate the scale of climate risk to the economy and the financial sector. this information is relevant for us as central banks and supervisors, and can also provide a valuable signal for the wider financial markets. 2. 2 climate transition plans while global warming continues, the number of droughts and floods, hurricanes and wildfires will increase significantly over the next years. at some point, we will see tougher climate policies in place that will affect business models in many industries. it is crucial that corporates are prepared for these climate policies. otherwise, their business models, including their profitability, might be significantly affected. many market participants understand this transitional risk already. that is why they are increasingly calling for robust transition plans. these plans lay down the concrete steps and milestones on businesses'respective journeys to net zero. here, businesses can draw on frameworks such as the one provided by the tpt ( transition plan taskforce ) | 0.5 |
rise relative to the overnight rate, and premiums for credit risk also rise. reductions in the overnight rate targeted by central banks, therefore, may not flow through to the same extent as usual to interest rates charged on loans ; and β’ third, if banks become capital constrained, their willingness and capacity to lend at any interest rate will be diminished. as you know, over the past year, many countries have found that the normal monetary transmission mechanism has become less effective. interest rates as i noted, many central banks have responded to this by reducing official interest rates to abnormally low levels, in some cases close to zero. most of this has happened since september last year. up until then, monetary policy settings around the globe had been following a relatively normal path, guided mainly by inflationary pressures. global monetary policy entered a tightening phase around 2004 and the majority of central banks continued to tighten policy into 2008. of the 35 largest countries or monetary areas, 23 had higher interest rates at september 2008 than at the start of the year, seven had unchanged rates and five had lower rates ( see table 1 ). this is not surprising because global inflationary pressures were still rising in the middle of 2008. commodity markets did not peak until july 2008, and indicators of pressure on global capacity β such as prices charged on shipping contracts β were at extreme levels. table 1 : changes in monetary policy change from 1 jan change from 1 sep level to sep 08 08 to present current ( basis points ) ( basis points ) ( per cent ) developed markets united states β β 0. 125 euro area β β 1. 00 β 0. 10 japan united kingdom β β 0. 50 canada β β 0. 25 australia β β 3. 00 sweden β β 0. 50 β 0. 25 switzerland norway β β 1. 50 denmark β β 1. 65 new zealand β β 2. 50 β 5. 31 emerging asia china south korea β β 2. 00 india β β 4. 75 taiwan β β 1. 25 indonesia β β 7. 25 thailand β β 1. 25 hong kong β β 0. 50 β 2. 00 β β 14. 00 β β 4. 50 β β 12. 00 turkey β β 9. 25 poland β β 3. 75 β 1. 50 β β 9. 50 brazil β β 10. 25 mexico β β 5. 25 chile β β 1. 25 colombia β β 6. 00 peru β β 4. 00 malaysia pakistan * philippines emerging europe russia * * czech republic | romania latin america other saudi arabia south africa β israel iceland * * * β β 2. 00 β 8. 50 β 0. 05 β 13. 00 sources : bloomberg ; central banks * after raising its policy rate by 200 basis points in november 2008, pakistan's central bank lowered its policy rate by 100 basis points in april 2009. * * russia's central bank increased its policy rate by a cumulative 200 basis points during november 2008 in moves aimed at stemming capital outflows and mitigating the downward pressure on the ruble. * * * after initially lowering rates by 350 basis points in mid october 2008, the icelandic central bank increased its policy rate by 600 basis points two weeks later as part of the conditions of the imf's rescue package. subsequent easings have amounted to 500 basis points. the unusual period of monetary policy began in september 2008, after the failure of lehman brothers dramatically escalated the financial crisis. this in turn led to a collapse of household and business confidence around the world. official interest rates have since been cut very sharply across virtually all countries due to the highly synchronised nature of the current economic cycle. the average reduction in interest rates has been 330 basis points in the developed economies and about 300 basis points in emerging economies. among the developed economies, only four β australia, new zealand, denmark and norway β still have official interest rates above 1 per cent. official interest rates have never been this low in the developed world in the 150 - year period for which we have data ( graph 1 ). graph 1 the reason why official interest rates have been reduced to such extreme levels is that frictions in markets had made interest rates on loans to households and businesses less responsive to cuts in official rates. in the case of the us, for example, even though the fed had reduced official rates by 325 basis points by september 2008, the standard mortgage rate had hardly changed ( graph 2 ). bigger cuts in official rates were therefore needed in order to bring about a given fall in interest rates on loans. graph 2 table 2 : mortgage rates on new housing loans * predominant mortgage type current rate 10 - year average rate deviation from average australia standard variable 5. 16 6. 85 - 1. 70 united states 30 - year fixed 4. 63 6. 42 - 1. 79 canada 5 - year fixed 3. 89 5. 65 - 1. 76 united kingdom standard variable 3. 83 6. 5 - 2. 67 united kingdom 3 - year fixed 4. | 1 |
the price situation from next month onward. v. future monetary policy let me conclude my speech by briefly mentioning monetary policy for the near future. as i have indicated today, we believe it is necessary to achieve the 2 percent price stability target as swiftly as possible in order to overcome 15 years of deflation and prevent a recurrence of deflation. as the state of deflation has continued for many years, in the process of transitioning to the 2 percent target, various changes might occur in the economic and social system. however, if comparing the economy in which good and expanding equilibrium has been achieved under the 2 percent price stability target with that of deflationary equilibrium during these 15 years, there will be no room for denying that the former is desirable. what is important is not to fear changes but to look for a style of business and living that suits the economy after overcoming deflation. the qqe has been steadily exerting its intended effects and japan β s economy has been following a path toward achieving the 2 percent price stability target as expected. the bank will continue with the qqe, aiming to achieve the 2 percent price stability target, as long as it is necessary for maintaining that target in a stable manner. it will thoroughly examine both upside and downside risks to economic activity and prices, and make adjustments as appropriate. if, in the future, the outlook will change due to the manifestation of some risk bis central bankers β speeches factors and adjustments become necessary in order to achieve the 2 percent price stability target, the bank will make them without hesitation. with such monetary policy, we look to overcome deflation at the earliest possible time. thank you. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | the non - banking sector expands, the risks they carry may also change. we should be particularly mindful of the risks in this sector, posed by the decreasing trend of interest rates amid a declining and aging population. if a low interest rate environment persists, investors tend to become more active in searching for higher yields on assets. this leads non - banking investors to make riskier loans and invest in riskier financial products. if such behavior becomes widespread, they could lead to threatening the stability of the financial system. amid the increase in demand for insurance and pension products, financial intermediation by asset management companies has expanded in recent years. this basically diversifies the channels of financial intermediation and facilitates efficient allocation of funds. however, it could also lead to complex changes in the risk propagation process under a stressed financial environment and in responses to emergency situations. for instance, asset management companies tend to adopt similar investment strategies. therefore, their investments may carry the risk of fire sales that could cause asset prices to collapse to levels far below their fundamentals when a negative shock occurs. for the same reason, there is also the risk of drying up of liquidity in the markets. as a result of the financial regulation reforms after the lehman shock, the banking sector has indeed become more resilient in terms of both capital and liquidity. nevertheless, there are several issues that still need to be addressed in order to make the global financial system, including the non - banking sector, more resilient. iv. households'needs for financial services in a low interest rate environment, households also tend to become more active in searching for higher yields on assets, and their engagement in risk taking may affect the financial system in multifaceted ways through diversified financial services. compared with other countries, households in japan have a strong tendency to favor safe assets, and even in a prolonged low interest rate environment, a large proportion of household financial assets continue to be deposits. in japan, however, the elderly hold more stocks than younger people. 4 also, some people seem to begin investing in stocks after retirement. attention needs to be paid to possible changes in household asset allocation as aging continues. another important issue in providing financial services to the elderly is the issue of physical weakening and cognitive decline. in general, the elderly are prone to become more vulnerable to financial fraud, and the number of elderly people having difficulty in accessing financial services and making financial decisions is on an increasing trend. all financial institutions, whether in the | 0.5 |
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